Title Deed of Property lost by Bank

There are instances where the title deeds of property deposited with Banks for
loans taken are lost by the Banks. What then?

This issue came up before the National Consumer Disputes Redressal Commission, New Delhi.

By its order dated 10 January 2018, the National Consumer Disputes Redressal Commission awarded compensation of  Rs. 10,00,000.

Facts

1.  The Complainants, Sheel Sohal and her husband, took a housing loan of Rs. 30,37,202/-  from the OP namely Axis Bank Ltd. In order to secure the said loan, the Complainants deposited the original title documents of a residential flat no. 218 in Block-D, Pocket-A of Shalimar Bagh, Delhi with Axis Bank Ltd.

2.  After the said loan had  been repaid, the Complainants approached Axis Bank Ltd. for returning the aforesaid title documents.  The title documents had been lost or misplaced by Axis Bank Ltd.  and could not be returned to the Complainants.  Being aggrieved, the Complainants approached the  National Consumer Disputes Redressal Commission seeking the following reliefs:

1. To direct the opposite party to give market price of the flat in lieu of original papers retained by them. 
2. To direct the respondent to give damage of Rs.1.10 Crore (One Crore & Ten Lacs) towards damaged caused on account of loss of property papers which devalued the property in open market and to waive off the balance outstanding in the loan account. 
3. To direct the responded to compensate the loss of business to the tune of Rs.30 lakhs (Thirty lacks) for non-completion of commitments/obligations of the parties due to non-availability of funds as other financial institutions have refused to grant credit facility in the absence of original property documents. 
4. To direct the Chairman, CIBIL “NOT TO DISPLAY THE NAME OF APPLICANT & CO APPLICANT AS DEFAULTER” as the fault is on the part of the Bank. 
5. To direct Axis Bank Ltd. to pay interest & EMI of loan sanctioned & disbursed by Yes Bank Ltd. for taking over the balance outstanding. 
6. To direct the respondent to pay a sum of Rs.20,00,000/- (Rs. Twenty Lacs Only) for mental agony to the entire family due to loss of papers. 
7. Pass an order directing the opposite parties to pay cost of litigation to the complainant. 
8. Pass any other order/orders which this Hon’ble Commission may deem fit and proper in the facts and circumstances of the case in favour of the complainant and against the opposite party/parties, in the interest of justice. 

3.      The Complaint was resisted by Axis Bank Ltd. which admitted the loan extended to the Complainants as well as the repayment of the said loan.  Axis Bank Ltd. also admitted that the title documents of residential flat number 218 in Block-D, Pocket-A of Shalimar Bagh, Delhi which were deposited with them at the time of sanction of the loan were not traceable with them.

4.      The National Consumer Disputes Redressal Commission observed that it would thus be seen that Axis Bank Ltd. had lost or misplaced the original title documents of the residential flat owned by the Complainants.  Axis Bank Ltd. ought to have kept the aforesaid valuable documents in safe custody and ought to have ensured that the same were duly returned to the borrower after repayment of the loan;  that it was evident that Axis Bank Ltd. had been negligent or deficient in rendering services to the Complainants who were their consumers.

5.      The learned counsel for Axis Bank Ltd. submitted that pursuant to the direction issued by the Banking Ombudsman, Axis Bank Ltd. had published a public notice in the newspaper, admitting therein that the original documents mentioned in the said public notice had been lost and were not traceable.  A police report had also been lodged by Axis Bank Ltd. referring to the loss of the original title documents of the flat.  The National Consumer Disputes Redressal Commission held that the aforesaid steps taken by the bank, in their opinion, did not compensate the Complainants for the loss they had suffered on account of loss of the valuable title documents and their use.  No one would extend a loan against equitable mortgage of the property only by deposit of the copies of the title documents of the house and the lender would insist upon deposit of the original title documents in order to safeguard its own interest.  In fact, the Complainants had applied for grant of loan from a number of institutions including Yes Bank, IDFC Bank.  Despite having been sanctioned, the loan could not be disbursed for want of deposit of original title documents.  The learned counsel for Axis Bank Ltd. stated that realizing the difficulty being faced by the Complainants, they had already extended commercial loan to them against this very property i.e. flat no. 218 in Block-D, Pocket-A of Shalimar Bagh, Delhi. The National Consumer Disputes Redressal Commission held that  it was not necessary that every time the Complainants would approach only Axis Bank Ltd. for advancement of a loan and in the event of the Complainants approaching some other bank or financial institution, they are not likely to succeed in the absence of the original title documents of the house. 

Title of the Complaint

 NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION