Failure To Return Pledged Property Documents Upon Repayment Of Loan, Bangalore District Commission Holds Central Bank of India Liable

Brief Facts:

Mr. Syed Ismail and Mr. Syed Hussain (“Complainants”) and their father, availed a joint loan of Rs. 20,00,000/- from the Central Bank of India (“Bank”) by pledging property documents. Following the death of the father of the Complainants, one of the Complainants, as the legal representative, fully discharged the outstanding liability of the loan account. The bank issued a 'No Due Certificate' on 12.12.2022. However, on 23.12.2021, the bank informed the Complainants that the documents were misplaced and would be returned when found. Despite a letter from the Complainants requesting the return of documents, the bank failed to respond. The Complainant made several communications with the bank but didn't receive any satisfactory response from the bank. Feeling aggrieved, the Complainant approached Bangalore I Additional District Consumer Disputes Redressal Commission (“District Commission”) and filed a consumer complaint against the bank.

In response to the complaint, the bank contended that the complaint was false, frivolous, and malicious. While admitting that the loan was repaid by the legal representatives, Complainants, the bank claimed to have misplaced the original title deeds and other documents during the premises' relocation from CMH Road to a new location. The bank informed the Complainants about the misplacement on 23.12.2021 and subsequently filed a police complaint. The police authorized the bank to obtain certified copies of the documents, and the bank published a notice.

Observations by the District Commission:

The District Commission, referring to the 'No Due Certificate' issued by the bank to the Complainants, held that the housing loan of Rs. 20,00,000/- availed jointly by the Complainant and his late father was closed on 14.12.2020. It noted that the missing documents included sale deeds, possession certificates, khatha certificates, tax receipts, building licenses, approved plans, and encumbrance certificates. Therefore, the District Commission held the bank liable for deficiency in services for failure to return the documents submitted by the Complainants.

Consequently, the District Commission directed the bank to compensate the Complainants with an amount of Rs. 2,50,000/- along with interest. In addition to compensation, the bank was directed to pay the cost of litigation amounting to Rs. 10,000/- and a further Rs. 5,000/- for the deficiency in service.