NCDRC Holds SBT Liable for Losing Original Title Deed Secured for Loan

Brief Facts:

The Complainant had taken a housing loan from the State Bank of Travancore (“Bank”). He submitted a sale deed, certain tax receipts, possession certificate, location certificate, encumbrance certificate, and title clearance certificate as security for the loan. After the loan was closed, the Complainant approached the Bank to retrieve the title deed. However, it was discovered that the title deed had been lost. Feeling aggrieved, the Complainant filed a consumer complaint before the State Consumer Disputes Redressal Commission, Kerala (“State Commission”).

The State Commission held the Bank liable and directed it to pay Rs. 5,00,000/- as compensation to the Complainant. Dissatisfied with the order, the Bank filed an appeal before the National Consumer Disputes Redressal Commission (NCDRC).

Observations of the NCDRC:

The NCDRC observed that the Bank had admitted to losing the original title deed, which had been mortgaged by the Complainant. The Bank argued that it had made genuine efforts to locate the documents and, when unsuccessful, obtained a certified copy from the Sub-Registrar's office, offering it to the Complainant. The Bank contended that no actual loss or injury was caused to the complainant, as there was no evidence to show any loss. However, the Complainant emphasized that the loss of the original title deed had diminished the property's value and would prevent him from obtaining future loans against the property.

The NCDRC agreed that the loss of the original title deed by the Bank constituted a deficiency in service, as the Bank, being the custodian of the documents, was responsible for their safekeeping. The NCDRC stated that the loss of the original property documents compromised the Complainant's legal title, and the provision of certified copies did not negate the loss. It referred to the case of Pooja Pincha & Anr. Vs. State Bank of India [IV (2016) CPJ 28 (NC)], where it was held that the loss of ownership documents was a serious matter and that the bank had failed in its duty.

The NCDRC also cited the case of Citi Bank & Ors. Vs. Ramesh Kalyan Durg & Ors. [MANU/CF/0180/2016], where it was held that the complainant should be compensated, the publication cost should be borne by the bank, and the bank should obtain certified copies of all documents at its expense, in addition to compensating and indemnifying the complainant for any future loss due to the missing documents.

Additionally, the NCDRC referred to Bank of India vs. Mustafa Ibrahim Nadiadwala [MANU/CF/0809/2016], where it was held that the Bank was liable to pay compensation as the property's value would be affected by the loss of the original title deed.

Based on these considerations, the NCDRC concluded that the State Commission had passed a well-reasoned order and that the compensation awarded was appropriate and proportionate to the loss and injury suffered by the Complainant. Consequently, the appeal was dismissed.

Case Title: State Bank of Travancore vs Dr. S. Sunil

Case No.: First Appeal No. 1652 of 2017

Advocate for the Appellant: Mr Ritesh Khare (Proxy) for Mr Siddharth Sangal

Advocate for the Respondent: Mr Jaimon Andrews with Mr Shyam Padman and Mr Piyo Narold Jaimon

Date of Pronouncement: 19th August 2024

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