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2026 Supreme(Online)(DC) 34
DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, PALAKKAD
Vinay Menon V., President, Vidya A., Member, Krishnankutty N.K., Member
Shabina M.A. – Appellant
Versus
Federal Bank – Respondent
DC/563/CC/425/2024
For the Appellants/Petitioners: M.S. Scaria, Redson Scaria, Rejina M.K.
For the Respondents: Ullas Sudhakar
The arbitrary and illegal retention of title deeds by a bank after the closure of a loan account, particularly when the remaining loan scheme does not require such security, constitutes a deficiency in service.
Headnote:The complainant availed a Prathyasa Loan in 2016 and a PMEGP loan in 2019, submitting title deeds as security. Despite the closure of the initial loan in 2021 and the PMEGP loan not requiring mortgage documents for amounts below Rs. 10 lakhs, the bank retained the title deeds until July 2024. The complainant alleged that this illegal retention caused mental agony and financial loss due to the forced sale of another property at a lower price. The court framed issues regarding whether the bank illegally withheld title deeds after loan closure and whether such action constituted a deficiency in service. The court reasoned that since the PMEGP loan did not require security and the previous loan was closed, the retention of documents for nearly one year and four months was arbitrary and illegal, thereby amounting to a deficiency in service. Accordingly, we allow this complaint in part holding as herein below: 1) There is deficiency in service on the part of O.P2. 2) Complainant is entitled to a compensation of Rs.2,00,000/- (Rupees Two lakhs only). 3) Complainant is entitled to a cost of Rs.50,000/- (Rupees Fifty thousand only) 4) OP2 is directed to comply with directives 2&3 within 45 days of receipt of a copy of this Order, failing which the complainant shall be entitled to a solatium of Rs.1,000/- (Rupees One thousand only) per month or part thereof from the date of this Order till the date of payment.
| Table of Content |
|---|
| 1. allegation of deficiency in service due to illegal retention of security documents by a bank. (Para 1 , 2) |
| 2. procedural framing of issues and evaluation of evidence provided by both parties. (Para 3 , 4) |
| 3. arbitrary retention of title deeds after loan closure constitutes illegal action. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 4. determination that illegal withholding of documents amounts to deficiency in service. (Para 12 , 13) |
| 5. assessment of damages and awarding of compensation for deficiency in service. (Para 14 , 15 , 16 , 17) |
O R D E R
By Sri. Vinay Menon V., President
1. Complainant had availed a Prathyasa Loan from OP during 2016 by submitting original title deeds of her property with OP2. The loan was closed without any default in the year 2021. During 2019 the complainant availed PMEGP loan from OP. This loan comprised of Rs.1 lakh as over draft facility and Rs.1 lakh as term loan. The documents submitted as collateral for Prathyassa loan was extended as security for these two loans as well. Even though complainant learned that mortgage documents are not required for loans below Rs.10lakhs. The OP threatened that complainant will not be granted subsidy if title deeds were taken back. Despite closure of the initial loan account the bank retained title deeds illegally without returning them even for covering the wedding expenses of complainant’s daughter. This lead to the complainants daughter loosing a good marriage proposal. Complainant initiated a complaint to the head office of Federal bank regarding the illegal actions of the manager of the OP1 branch. But the reply received was not satisfactory. Therefore complainant approached Prime Ministers Grievance Portal by way of complaint dated 19/6/2024 stating these issues. On receipt of this complaint the OP replied that no property is charged against the PMEGP loan. However, the loan documents were returned on 10/8/2024. Retention of this security documents for this loan tantamount to deficiency in service. This complaint is filed seeking compensation of Rs.4lakhs for loss sustained on account of sale of a property for much lesser amount, compensation of Rs.2 lakhs for mental agony and Rs.50,000/- towards cost.
2. OPs filed joined version. They admitted availing of the financial assistance under various heads. But denied any illegality or deficiency in service. The documents offered as security were returned on 18/7/2024 and not 10/8/2024. This complaint is only an attempt to vengeance. Complainant was having an SB delite account for which a minimum balance of Rs.3000/- was required to be maintained. When the amounts in the complainant’s account wert below this margin there was automatic debit by the software installed by OP. Complainant had argued with the staff of OP1. Even after trying to convince her she could not be convinced. Complainant also alleged that the OP1 bank cheated her by not crediting the subsidy in her loan account. The bank official calmly try to make her understand that subsidy were being granted by DIC officials after their completion of site inspection and subsequent reporting to the bank. There is no deficiency in service whatsoever. Complaint is only to be dismissed.
3. The following issues were framed:
1. Whether the OPs had withheld the title deeds deposited in the bank even after the closure of the loan?
2. Whether the issues related to subsidy in the PMEGP loan due to the failure on the part of the complainant to carry out necessary follow ups?
3. Whether the OP is entitled to retain the title deeds of the complainant as security for the PMEGP loan availed by him?
4. Whether there is deficiency in service/unfair trade practice on the part of O.P.?
5. Whether the complainant is entitled to any of the reliefs claimed?
6. Any other reliefs?
4.
(i) Complainant filed proof affidavit and marked Exts. A1 to A5. Marking of Exts.A1 & A2 are objected to as they are fabricated documents and was not handed over to the OP. Further no endorsement b
