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Bank Liable For Misplacing Original Title Deeds: Kanchipuram Commission
In a landmark order, the in Kanchipuram, led by President Thiru. U. Kasipandian and Member Thiru. M. Jawahar, has ruled that the () committed a severe by losing a borrower’s . The Commission has imposed heavy on the bank, setting a formidable precedent for .
The Case Background The complainants, Mr. Somasekhar Gangarapu and Mrs. Sai Sireesha Nidiginti, had availed a home loan of ₹46.35 lakh from in 2012. As is customary, they deposited the original sale deed, construction agreement, and memorandum of deposit of title deeds with the bank as security.
Upon clearing their full loan amount on , the complainants expected the standard return of their documents. Instead, they were met with the startling admission that the documents had been misplaced. Despite subsequent email communications and a formal legal notice, the bank failed to provide the originals. The complainants, unable to complete a potential property sale and facing reputational and financial risks, approached the Commission under the .
Arguments and Legal Battle The complainants argued that the bank’s negligence—admitted through email correspondence—amounted to a gross . They cited the Circular dated , which strictly mandates that regulated entities must release property documents within 30 days of loan closure and provides for daily compensation of ₹5,000 for delays.
The bank, in its written version, admitted to the misplacement of the files. It contended that it had taken "remedial steps," including publishing a notice in local newspapers and providing certified copies to the complainants, and argued that the originals were not "mandatory" for registration. The Commission dismissed these arguments, characterizing the bank’s stance as "arrogant" and "lethargic."
Key Observations The judgment pulls no punches regarding the bank's conduct. The Bench noted:
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"The Opposite party is not even ready to regret for such lethargic, deficient and unfair acts against the interest of barrower-consumers."
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"Such arrogant attitude of the unnamed deponent who verified the written version prove the of Opposite party and it’s employees."
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"The complainant is entitled to the benefit of Ex-C1 [RBI Circular] in addition to actual harm and injury suffered by the complainant."
Court’s Decision The Commission ruled in favor of the complainants, delivering a multi-pronged directive: 1. Restitution: The bank must trace and return the documents or pay the current market value of the property and takeover the property officially. 2. Compensation: The bank is ordered to pay ₹5,000 per day from , until realization, as stipulated by the RBI circular. 3. Financial Penalty: Interest at 18% per annum on the original loan amount of ₹46.35 lakh is to be paid from the date of loan repayment until realization. 4. Punitive Measure: In a strong signal to banking institutions, the Commission ordered a payment of ₹50 lakh to the . 5. : ₹25,000 was awarded to the complainants to cover legal expenses.
This order serves as a stark warning: banks are not merely custodians of funds but hold a for the security of property documents. Any breach of this trust will now carry significant financial risk for the institution.
