Delhi couple repaid Rs 1.41 crore home loan, but the bank lost their original sale deed property papers; consumer commission orders Rs 15 lakh compensation plus Rs 50,000 costs

After the bank failed to return their original property papers, the couple approached the Banking Ombudsman. (Image for representative purpose only)

You take a home loan and you repay it in full, but the bank loses the property papers. What do you do and what are your rights?A Delhi-based couple faced precisely this situation. After the bank failed to return their original property papers, the couple approached the Banking Ombudsman and eventually secured compensation.

What the case is about

On March 16, 2018, the couple took a housing loan of Rs 1,41,75,151 from the bank to purchase a property in New Delhi. The property’s title deeds were mortgaged in favour of the bank as security for the loan.The couple repaid the loan and closed the Rs 1.41 crore account around three years later. They then asked the bank to hand back the original title documents. Despite making repeated requests, they did not receive the papers.In April 2021, the bank informed the husband and wife that it had been unable to trace the original deed. The bank formally acknowledged the loss on July 10, 2021.That was when the couple decided to take up the matter formally and seek compensation.As part of its response, the bank provided a lawyer’s letter dated July 19, 2021, along with a public notice, a police report dated June 29, 2021 and a certified copy of the sale deed obtained from the Sub-Registrar’s office.The couple then approached the Banking Ombudsman on September 7, 2021, seeking redressal of their grievance. During the proceedings, the bank acknowledged that the original papers had indeed been deposited with the bank but could not be traced.

Why the couple won the compensation

On January 18, 2022, the Ombudsman awarded Rs 5 lakh as compensation to the couple. It also gave them the liberty to pursue any further appropriate remedy before the competent forum.The Rs 5 lakh compensation awarded by the Banking Ombudsman did not satisfy the Delhi couple. They considered the amount “inadequate” and decided to pursue the matter before the Delhi State Consumer Disputes Redressal Commission.The couple filed a consumer complaint against the bank, alleging negligence and deficiency in service after the lender failed to return their original property documents. They sought Rs 1 crore as compensation for the loss. the bank opposed the demand, describing it as “highly excessive” and “not maintainable in law”.The couple’s original prayer before the consumer commission was:

After examining the material placed before it, the commission concluded that the original property papers had been lost while they were in the bank’s custody.“The subsequent actions taken by the Opposite Party, including lodging a police report, issuing a public notice, obtaining a certified copy of the Sale Deed, and furnishing a lawyer’s certificate, unequivocally indicate that the original title document was misplaced during the period it remained in the possession of the Bank,” the commission said.The commission noted that the steps taken by the bank were intended to deal with the consequences of the missing document. However, it said those measures did not remove the bank’s responsibility to keep the documents entrusted to it safely.The Delhi State Consumer Disputes Redressal Commission referred to the 2023 case of ‘Manoj Madhusudhanan v. ICICI Bank Ltd.’ while examining the consequences of the missing original sale deed, according to an ET report.The commission noted that not having the original document could restrict the couple’s ability to freely deal with their property, including through a subsequent sale, mortgage or transfer.The bank “has been clearly and demonstrably deficient in service, by failing to safeguard and return the original sale deed entrusted to them and therefore, the Complainants are entitled to adequate compensation for the loss suffered by them,” the commission ruled.The commission also took into account the Rs 1.41 crore housing loan obtained by the couple and described the loan amount as “reflecting its significant market value”. In its view, the loss of the original title deed relating to a property of such value could not be treated as a minor matter.It directed the bank to pay Rs 15 lakh to the couple as compensation for the loss of the original title deed. The bank was given two months from the date of the order to make the payment.Apart from this, the bank was ordered to pay another Rs 50,000 towards the financial and legal prejudice suffered by the couple, along with litigation costs.The order also specifies the consequence if the bank does not make the payment within the prescribed period. In that situation, the bank will have to pay the entire amount with interest at 9% per annum.The interest will be calculated from March 3, 2021, the date on which the couple repaid the loan, until the amount is actually realised.