Delhi couple wins Rs 15.5 lakh after bank misplaces original property papers

The Delhi State Consumer Disputes Redressal Commission recently held Axis Bank liable for deficiency in service after it lost the original title deed of a couple’s flat that had been deposited with the bank as security for a home loan, and directed it to pay Rs 15.50 lakh as compensation, pointing out that the loss of original documents creates a “continuing cloud” on title.

President Sangita Dhingra Sehgal and Bimla Kumari (member) were hearing the complaint filed by a Delhi couple who were seeking directions to Axis Bank either to trace and return the original title deed of their property or compensate them for its loss.

“It is evident that the legal title of a complainant stands compromised on account of the loss of original title documents, and seeking compensation on the ground of negligence is a legitimate claim. We further observed that the contention raised by the opposite party (Axis Bank), that the complainants are not financially impacted since the property is in their possession, cannot be sustained, as the loss of original documents creates a continuing cloud on title,” the June 22 order read.

The commission pointed out that the actions taken by Axis Bank, including lodging a police report, issuing a public notice, obtaining a certified copy of the sale deed, and furnishing a lawyer’s certificate, clearly indicate that the original title document was “misplaced” during the period it remained in its possession.

However, the consumer body added, “These measures, though undertaken to mitigate the consequences of such loss, do not absolve the opposite party (Axis Bank) of its responsibility to safely preserve the documents entrusted to it by the borrowers/complainants.”

Loan closed, but paper lost

The couple claimed that they are owners and residents of a property in Delhi, and for purchasing the said property, they availed a housing loan of Rs 1.41 crore from Axis Bank in March 2018, creating a mortgage over the title deeds of the said property in favour of the bank.

It was claimed that the original title documents, including the original title deed, were deposited with the Axis Bank, which was acknowledged by the bank by a receipt dated February 5, 2021.

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The couple allegedly repaid the entire loan amount, and the loan account was closed in March 2021, after which they requested the bank to return their original title documents.

However, despite repeated follow-ups, Axis Bank failed to return the original sale deed. Later, the bank informed them that the document could not be traced and subsequently acknowledged its loss, furnishing a lawyer’s letter, a public notice, a police report and a certified copy of the sale deed obtained from the office of the sub-registrar.

The complainant then approached the concerned authority, before whom the bank admitted that the original sale deed deposited with it was untraceable. By a communication in January 2022, the authority awarded compensation of Rs 5 lakh for the loss of the document while granting liberty to the couple to seek appropriate remedies before the competent forum.

The couple claimed that they did not accept the said compensation and requested the recovery of the original title deed, pointing out that the compensation offered was “inadequate”.

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Aggrieved by the resolution offered by the bank, the couple moved the commission alleging deficiency of service and negligence on the part of Axis Bank in losing the original title document entrusted to them.  The couple was represented by advocates Rahul Malik and Ashish Aggarwal in the matter.

‘Bank lost couple’s property papers’

The consumer commission observed that though the couple are in “possession” of their property, the absence of the original title deed significantly affects their ability to deal with the property “freely”.

Concerning compensation, the commission clarified that it has the power under the Consumer Protection Act to independently determine and award compensation based on the deficiency in service, the loss suffered, and the facts of each case.

Consequently, the commission directed Axis Bank to pay Rs 15 lakh to the couple, holding that the loss of the original title deed of such a “significantly valued property” cannot be viewed lightly, as it exposes the owners to “inconvenience, uncertainty, and potential complications in future transactions” concerning the property.

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The bank was also directed to pay Rs 50,000 to the couple for the “financial and legal prejudice” suffered by them.

Axis Bank’s defence

Representing the Axis Bank, advocate Saloni Dwary submitted that upon becoming aware of the loss of the original title documents, the bank duly informed the couple and undertook necessary remedial measures as per the directions issued by the National Consumer Disputes Redressal Commission in matters relating to loss of original title deeds by financial institutions.

It was further submitted that the bank obtained a certified copy of the sale deed from the office of the sub-registrar, published a public notice regarding the loss of documents, and furnished the police report along with the advocate’s certificate.

The bank further argued that compensation to the tune of Rs 5 lakh had already been awarded to the couple and, therefore, the present complaint claiming compensation of Rs 1 crore is highly excessive and not maintainable in law.

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For consumer-related grievances, individuals may contact the consumer helpline in their respective states (National Consumer Commission Helpline: 1800-11-4000) or call the National Consumer Helpline at 1915 for assistance.