The court affirmed the authority to award liquidated damages under Reserve Bank of India guidelines for delays in document release, emphasizing the inadequacy of initial compensation.

ORDER :

D.Bharatha Chakravarthy, J.

This writ petition is for a direction to the first respondent to issue an order regarding the petitioner’s complaint dated 12.08.2024 and to direct the second respondent to compensate the petitioner for the delay in releasing the original sale deed document No.124/1996, dated 20.01.1996.

2. The brief facts leading to the filing of this writ petition are that the petitioner was an employee of the second respondent bank. He took a loan from the second respondent bank. At the verge of his retirement in April 2021, he settled the loan amount. The petitioner states that the loan was settled on 07.04.2021. However, the second respondent bank claims that the loan amount was finally settled on 06.05.2021. Be that as it may, once the loan amount is settled, the Reserve Bank of India has issued guidelines regarding the handing over of the original documents in its proceedings dated 13.09.2023. These guidelines state that ordinarily, the bank should release the documents within 30 days from the date on which the loan amount is fully settled. The guidelines also specify in Clause 6 that for every day of delay, the borrower is entitled to compensation of Rs.5,000/- per day. In the event of lost documents, the guidelines mention that an additional period of 30 days will be allowed for the bank to assist the borrower in obtaining duplicate certified copies, and the bank shall bear the associated costs. Clause 7 specifically states that the delay will be calculated only after a period of 60 days. The entire Clause 6 and 7 of the said circular issued by the Reserve Bank of India is extracted hereunder for ready reference:

“6. In case of delay in releasing of original movable / immovable property documents or failing to file charge satisfaction form with relevant registry beyond 30 days after full repayment/ settlement of loan, the RE shall communicate to the borrower reasons for such delay. In case where the delay is attributable to the RE, it shall compensate the borrower at the rate of Rs.5,000/- for each day of delay.

7. In case of loss/damage to original movable/ immovable property documents, either in part or in full, the REs shall assist the borrower in obtaining duplicate/certified copies of the movable / immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated at paragraph 6 above. However, in such cases, an additional time of 30 days will be available to the REs to complete this procedure and the delayed period penalty will be calculated thereafter (i.e., after a total period of 60 days).”

3. Under these circumstances, the petitioner claims that he has made repeated representations, but there has been absolutely no response from the second respondent bank. The petitioner finally petitioned the Banking Ombudsman, the Reserve Bank of India, the first respondent herein, on 12.08.2024. After receiving notice from the Reserve Bank of India, the second respondent bank, for the first time on 21.10.2024, communicated with the writ petitioner. In this communication, the bank acknowledged that the property was mortgaged with their branch. It was further stated that, upon the retirement of the petitioner, the loan was closed on 06.05.2021. The second respondent bank mentioned that despite their best efforts to trace the original documents, they were unable to do so and expressed regret for the inconvenience caused. Following the bank’s guidelines, they obtained a certified copy of the document and forwarded it to the petitioner on 21.10.2024. The Reserve Bank of India then proceeded to consider the complaint and, upon noting that the bank was ready to issue a no objection certificate and had already provided a certified copy of the document, awarded compensation of Rs.50,000/- due to the 3-month delay. The communication dated 25.11.2024 was addressed to the second respondent bank and has now been produced by the second respondent bank. Accordingly, on 27.11.20