In a recent case, the High Court of Karnataka has taken a firm stance against a public sector bank that refused to return documents of a mortgaged property to the 85-year-old father of the deceased borrower. Despite accepting the loan repayment from the father, the bank insisted on returning the documents to the original borrower, who tragically took his own life. This unreasonable behavior by the bank has shocked the court, leading to a cost of ₹2 lakh being imposed on the bank.
The court ruling came as a response to a petition filed by Embee Agro Food Industries Pvt. Ltd., represented by its director, M.B. Somashekhar Gowda, who is 85 years old. The court noted that the original borrower, the son of the petitioner, had passed away, and the bank was fully aware of this fact. The bank had even offered a one-time settlement scheme to the petitioner, acknowledging the son’s death. However, it still insisted on returning the documents to the deceased borrower, which the court found unacceptable.
Describing the bank’s behavior as similar to that of an unreasonable private lender, the court criticized the bank for its actions, especially considering that it had received the full repayment amount. The court deemed the bank’s actions as beyond comprehension and preposterous, given its knowledge of the borrower’s demise. The borrower, Animesh Gowda M.S., had borrowed the loan from Canara Bank but tragically ended his life due to mounting debt.
In light of the borrower’s father stepping forward to repay the loan after his son’s death, the bank offered an OTS scheme, requiring a payment of ₹19.75 crore within 90 days. However, the father could only repay ₹9.35 crore by February 2023 and requested an extension to settle the remaining amount. Instead of granting an extension, the bank initiated steps to take possession of the mortgaged property, prompting the father to seek legal intervention. Recognizing the father’s sincerity, the court granted three more months to repay the outstanding amount.
Despite the bank’s unsuccessful challenge before a Division Bench, the father managed to repay the entire amount owed, including interest and legal expenses for the delayed period. However, the bank began evading the father’s request to return the property documents, even though he had cleared all dues by December 31, 2023. The bank’s counsel argued that the documents could only be returned to the original owner. Only after being reprimanded by the court did the bank agree to return the documents to the father.
Expressing its disapproval of the bank’s conduct, the court directed the bank to return the documents to the petitioner-father and imposed a cost of ₹2 lakh. This ruling serves as a reminder to financial institutions to act responsibly and consider the circumstances of their borrowers, even in the unfortunate event of a borrower’s death.
The Bank is correct to
The extent that the original title deeds can be given only to the owner. However the legal heir can get them after following due process. The bank should have clarified this at the outset before agreeing for OTS. But end of the day the bank has harassed a senior citizen. The penalty is too less for the ordeal faced by the elderly gentleman.
After the death of the borrower, the loan is repaid by none other than the father, and than asked for return of the originals of the documents,
It is quite natural to return the documents to father, but resusal stating to return to original dead borrower is always unacceptable, nice judgement given
The stand taken by the Bank to return the original documents of property to the borrower is a foolishness of the Bank keeping in view of the fact that Bank has full knowledge of demise of the borrower. How and where the bank will deliver documents to the dead person is known to Bank only……..Ha….Ha….Ha…
When it was established that father is repaying the loan , the bank could have done little more inquiry as regards legal heirs and taken the affidavit .
Denying handing over document was unjustified and Court should have ordered penalty of ₹5 lacs at least .
In what stated is true of the bank officials In such case i would have directed the person to personally visit the demised owner. Now a days bank officials lack the basic common sense. The compensation is nothing for the person who settled 20 crores. Instead a month of social service should have been a lesson for them