Order Name: State Bank Of Travancore vs. Dr. S. Sunil
Case No.: F.A. No. 1652/2017
The National Consumer Disputes Redressal Commission (NCDRC), led by Mr. Subhash Chandra and Dr. Sadhna Shanker, has ruled that a bank’s loss of a customer’s ownership documents constitutes negligence. Consequently, the bank is required to compensate the customer for any resulting losses.
Summary of the Case
A customer, who had taken a housing loan from the State Bank of Travancore, provided several documents as security, including the sale deed, tax receipts, possession certificate, location certificate, encumbrance certificates, and title clearance certificate. When the customer later requested the title deed from the bank, it was discovered that the bank had lost it. The customer then filed a complaint with the State Commission for Kerala, alleging deficiency in service. The State Commission ruled in favor of the customer, ordering the bank to pay Rs. 5,00,000 with interest at 12% per annum. The bank subsequently appealed to the National Commission.
Bank’s Arguments
The bank contended that the customer had not disclosed a prior complaint made to the Banking Ombudsman and argued that the case was barred by the doctrine of estoppel. Additionally, the bank claimed that the State Commission lacked jurisdiction over such matters, which should be addressed in a civil court due to their legal and factual complexities.
National Commission’s Observations
The primary issue before the National Commission was whether the bank’s actions amounted to a deficiency in service. The Commission noted that the customer had fully repaid the housing loan, and the bank, which was responsible for holding the title deeds, was at fault for losing them. This constituted a service deficiency. The Commission emphasized that a certified copy does not compensate for the loss of original documents.
The Commission referenced several precedents, including:
- Pooja Pincha & Anr vs. State Bank of India: Highlighted the significance of losing ownership documents and the bank’s negligence.
- Citi Bank & Ors vs. Ramesh Kalyan Durg & Ors: Stated that the bank must reimburse the customer for losses due to document loss.
- Bank of India vs. Mustafa Ibrahim Nadiadwala: Confirmed that the bank is liable for compensation as the property’s value diminishes without the title deed.
Based on these cases, the NCDRC upheld the State Commission’s decision and dismissed the bank’s appeal.
Takeaway
This judgment underscores that banks have a crucial responsibility to safeguard customers’ documents. Losing such important papers is a serious lapse that can lead to significant financial and legal repercussions for the customer. Therefore, banks must ensure stringent measures to prevent such incidents and be prepared to compensate for any lapses in their duty of care.
