National Consumer Disputes Redressal Commission, New Delhi
Revision petition No. 1177 of 2014

(Against the Order dated 24/10/2013 in Appeal No. 1076/2013 of the State Commission Punjab)

State Bank of India
Ludhiana, Punjab ……………. Petitioner
Vs
Jatinder Pal Singh
Ludhiana, Punjab ………………. Respondent

On 3rd January 2023, the National Consumer Disputes Redressal Commission (“NCDRC”) held the bank liable for deficiency in service on account of loss of property title deeds of its customer who mortgaged the property with the Bank to avail loan.

A look at important details of the case.

1. Facts
   Jatinder Pal Singh (“Jatinder”) was the proprietor of M/s Sherry Knitwears. He availed advance credit limit of Rs. 2 lakhs from State Bank of India, Ludhiana branch (“SBI”) in 1977. As security, Jatinder mortgaged his property measuring 100 Sq yards in Ludhiana in favour of the Bank. Equitable mortgage of the property was created by deposit of title deeds (original sale deed) of the property with the Bank.
2. On clearing all dues of the Bank, Jatinder requested for the return of the original sale deed from the Bank. The Bank intimated that the documents were untraceable and take time to return them. Despite repeated requests, the Bank did not return the documents. Subsequently, Jatinder came to know that the Bank lost the original sale deed. Despite applying to Bank for tracing the documents and returning them, the Bank failed to do so due to which Jatinder was unable to sell his property.
3. Aggrieved, Jatinder filed a ‘deficiency in service’ complaint against the Bank with the District consumer forum praying for return of documents along with compensation of Rs. 1 Lakh for financial loss and mental harassment. The Bank submitted that the case was barred by limitation and that the asset was a non- performing asset (NPA) due to irregularities in repayment. The amount was settled as part of a one-time settlement scheme in 2010. Due to this the documents were transferred from the branch to the Stressed Assets Resolution Centre (SARC). The Bank submitted that during the shifting of the file from one department to another, the documents got misplaced. The Bank tried to obtain a certified copy from the concerned Sub Registrar. However, the request was returned due to documents being damaged in rainwater. The Bank submitted that it was taking all reasonable and there was no deficiency in service. However, the District consumer forum held the Bank liable for deficiency in service and levied cost for mental agony and litigation cost. Further the Bank was directed to initiate inquiry against erring officials.
4. Aggrieved by the Order of District consumer forum, the Bank filed an appeal before the State Commission. This was dismissed by the State commission in limine (preliminary stage before hearing).
5. Aggrieved, the Bank filed a revision petition before the National Consumer Commission NCDRC.

Submission(s)

1. The Bank submitted that misplacement of title deeds does not amount to deficiency in service under the Consumer Protection Act 1986 as there was no lack of good faith or negligence or carelessness on the part of the Bank.
2. There was no ‘unfair trade’ practice by the Bank it did not withhold the documents deliberately. Jatinder was not at loss or mental agony as it was possible to sell the property with the help of photocopies, certified true copies, other related documents such as Khata documents etc.
3. The Bank also submitted that it was willing to give a certificate stating that documents were misplaced by it along with an undertaking that it will return the documents once found.

Analysis
In arriving at a decision, the NCDRC relied on judgment of cases – Kamlesh Meena v. HongKong and Shanghai Banking Corporation Ltd. (F.A No. 377 of 2019) and State Bank of India v. Amitesh Mazumdar, (2020 SCC OnLine NCDRC 263).

The NCDRC observed that:

1. Non availability of original title documents puts the property under suspicion in the eyes of prospective buyers and hence adversely impacts its value / price. Such adverse effects will continue even when property is passed on to legal heirs.
2. Even if the Bank undertook all steps as submitted by the Bank, the complainant may not realize the true market value of the property. No one would like to purchase a property which does not have original title deeds.
3. There is always a chance of misuse or original title deeds of property if it falls into unscrupulous hands as an equitable mortgage of property can be created by depositing such original title deeds.
4. If sold without the original title deeds, there will be substantial erosion of value / price.
5. The complainant will be unable to obtain loan without deposit of title deeds with the Bank. If fact, even Banks may be unwilling to give loan in such cases until title deeds are deposited.

Judgment
The NCDRC held that the Bank was responsible for the loss of the title deeds of the immovable property of Jatinder. The Bank was bound in duty to preserve the documents. There is clear deficiency in service on the part of the Bank as reasonable steps were not taken to preserve the title deeds.

The NCDRC concurred with the view taken by the district consumer forum and accordingly dismissed the revision petition filed by the Bank.

For full text of Order

http://cms.nic.in/ncdrcusersWeb/GetJudgement.do?method=GetJudgement&caseidin=0%2F0%2FRP%2F1177%2F2014&dtofhearing=2023-01-03