District Commission Holds Federal Bank Liable for Losing Title Deed, Awards ₹8 Lakh Compensation
Pranav B Prem
The District Consumer Disputes Redressal Commission, Ernakulam, comprising Shri D.B. Binu (President), Shri V. Ramachandran (Member), and Smt. Sreevidhia T.N (Member), has held Federal Bank liable for the loss of the original title deed due to its negligence. The Commission directed the bank to compensate the complainant for the financial loss and mental agony suffered due to the missing document.
Background of the Case
The complainant had availed of a housing loan from Federal Bank, mortgaging his land and depositing the original sale deed along with other necessary documents. Upon full repayment of the loan under a one-time settlement scheme, the bank confirmed closure on December 21, 2021. However, the complainant was later informed that the bank could not return the original title deed, as it had been destroyed by the Sub Court, North Paravur, where it was submitted in a legal proceeding initiated by the bank itself.
Due to the unavailability of the original title deed, the complainant was unable to sell the property or secure a new loan. Alleging deficiency in service, he approached the District Commission, contending that the bank had a duty to reclaim the document after the conclusion of court proceedings.
Bank's Defense
Federal Bank contended that the complainant had availed both housing and educational loans but defaulted on repayment, prompting the bank to file recovery suits before the Sub Court, North Paravur. The title deed was submitted as part of the legal proceedings. Subsequently, a one-time settlement was agreed upon at the complainant’s request, leading to a financial loss of Rs. 2,09,465 for the bank due to waived interest and expenses.
The bank further argued that since the Sub Court had destroyed the original title deed, it obtained a certificate from the court confirming the destruction and issued the complainant a certified copy of the deed. The bank asserted that a certified copy, along with the court certificate, was legally valid for property transactions and did not cause the complainant any financial loss or mental agony.
Findings of the Commission
The District Commission relied on the ruling of the National Consumer Disputes Redressal Commission (NCDRC) in First Appeal No. 288 of 2014 (III (2017) CPJ 156 (NC)), which held that a bank is liable for deficiency in service if it loses an original title deed while in its custody. The Commission noted that, as a custodian of the title deed, Federal Bank had a legal duty to ensure its safekeeping and retrieval.
Citing Section 2(1)(g) of the Consumer Protection Act, the Commission emphasized that a deficiency in service includes any fault, imperfection, shortcoming, or inadequacy in service quality that is legally mandated. The Commission determined that the bank’s failure to reclaim and return the document, despite knowing its importance to the complainant, constituted negligence.
Furthermore, the Commission rejected the bank’s argument that the Sub Court’s destruction of the title deed absolved it of liability. It ruled that the bank’s failure to retrieve the document resulted in a significant deficiency in service, affecting the complainant’s property rights and financial stability.
Commission’s Verdict and Compensation
In view of the findings, the District Commission concluded that Federal Bank was responsible for the loss of the title deed, causing hardship to the complainant. The bank was directed to pay Rs. 8,00,000/- as compensation for financial loss, mental agony, and hardship suffered by the complainant. Additionally, the Commission ordered the bank to pay Rs. 10,000/- towards the cost of proceedings.
This ruling reinforces the duty of financial institutions to exercise due diligence in handling documents entrusted to them. The decision highlights that a bank’s failure to safeguard such critical documents amounts to a deficiency in service, warranting compensation to the affected party.
Appearance
For the Complainant: Adv. Tom Joseph
For the Opposite Pary: Adv. Raju Augustine, Siraj R Krishnan
Cause Title: Jolly Mathew V. M/s Federal Bank
Case No: CC No. 382 of 2023
Coram: Shri. D.B. Binu [President], Shri. V. Ramachandran [Member], Smt. Sreevidhia T.N [Member]
[Read/Download order]
