The District Consumer Commission in Kozhikode, Kerala, has ordered IDBI Bank to pay Rs 10 lakh in compensation to a customer after it failed to return his original property documents.
As per IDBI Bank, documents were destroyed in a fire at a document storage facility in 2017. The commission observed that the loss of the original documents reduced the property’s value and caused significant hardship to the borrower.
The bench, comprising President Priya S and Member V. Balakrishnan, was hearing a complaint filed by a teacher and entrepreneur who had taken a housing loan of Rs 33 lakh from IDBI Bank in 2016. As security for the loan, he had deposited the original title deeds of his property, including land and a villa valued at around Rs 1.3 crore.
In its order dated May 30, the commission held that the bank was guilty of deficiency in service and unfair trade practice. It directed the bank to pay Rs 10 lakh as compensation to the complainant.
The commission noted that the complainant’s legal ownership rights had been adversely affected because the bank lost the original title documents while they were in its custody. It observed that seeking compensation for such negligence was a legitimate claim.
According to the complaint, the borrower had regularly paid the loan EMIs from his wife’s account and also made additional lump-sum payments. He stated that after his wife, who was the co-borrower and the family’s salaried member, passed away in March 2020, he decided to sell the mortgaged property and close the loan account.
The complainant cleared the outstanding loan amount by paying Rs 15.1 lakh in June 2020. However, despite repeated requests, the bank failed to return the original title deeds.
He alleged that the bank initially gave different explanations, claiming the documents were under closure formalities, then saying they were misplaced, later stating they were lost in floods, and finally admitting in November 2020 that the documents had actually been destroyed in a fire at the Stock Holding Corporation’s storage facility in December 2017.
The complainant argued that the bank’s concealment of facts, negligence and irresponsible conduct caused him substantial financial loss. He claimed that he lost a profitable property sale, had to return the buyer’s advance by borrowing money and pledging jewellery, and suffered a reduction in the property’s market value because the original title deeds were no longer available.
He further alleged that the bank failed to take basic steps such as filing an FIR or issuing timely public notices regarding the loss of the documents. According to him, the bank acted only after intervention by the Banking Ombudsman.
In 2021, the Banking Ombudsman directed the bank to provide certified copies of the documents, issue a public notice about their loss, and pay Rs 60,000 as compensation, including Rs 50,000 for deficiency in service and Rs 10,000 for delay.
The complainant accepted the amount under protest, stating that it was inadequate. He then approached the Consumer Commission seeking Rs 35 lakh in compensation for negligence, deficiency in service and unfair trade practices.
Representing the bank, advocate A.M. Bhaskaran denied the allegations of negligence. He argued that the borrower and his wife had entered into a standard 20-year housing loan agreement and that there was no evidence to support the claim that it was intended as a short-term arrangement.
The bank admitted that the documents were destroyed in the 2017 fire at Stock Holding Document Management Services Ltd., where many banks and government institutions store important records. However, it argued that the fire was an unforeseen incident beyond its control.
The bank also contended that the Banking Ombudsman had already decided the matter and awarded compensation of Rs 60,000, which the complainant accepted without filing an appeal. Therefore, according to the bank, the Ombudsman’s decision was final and the fresh complaint was not maintainable.
After considering the matter, the Consumer Commission ruled in favour of the complainant and directed IDBI Bank to pay Rs 10 lakh as compensation.
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