Bank failed to return property papers after home loan closure: How a Delhi couple got ₹15.5 lakh compensation

Imagine clearing your home loan after years of repayments, only to find that the bank has lost your original property documents. That is what happened to a Delhi-based couple, who had to fight a legal battle after Axis Bank reportedly failed to return their original sale deed even after their loan was closed.

According to a report by The Economic Times, the Delhi State Consumer Disputes Redressal Commission directed Axis Bank to pay ₹15.5 lakh as compensation to the couple for misplacing the original property papers.

What was the case?

As reported by The Economic Times, the couple had taken a housing loan of ₹1,41,75,151 from Axis Bank on 16 March 2018, to purchase a property in DLF Capital Green, Karampura, West Delhi. The original title documents of the property were deposited with the bank as mortgage security.

After repaying the loan in full on 3 March 2021, they requested the bank to return their original property papers. Despite repeated follow-ups, the documents were not handed over.

In April 2021, the bank informed the couple that the original sale deed could not be traced. Axis Bank formally acknowledged the loss on 10 July 2021 and later provided a lawyer's certificate, a public notice, a police report dated 29 June, 2021, and a certified copy of the sale deed obtained from the office of the Sub-Registrar.

What happened after the documents went missing?

According to The Economic Times report, the couple first approached the Banking Ombudsman in September 2021 seeking redressal. During the proceedings, Axis Bank admitted that the original documents had been deposited with it but were no longer traceable.

On 18 January 2022, the Ombudsman awarded the couple ₹5 lakh as compensation while giving them the liberty to pursue further legal remedies before a competent forum.

However, the couple considered the compensation inadequate and subsequently approached the Delhi State Consumer Disputes Redressal Commission.

What did the couple seek?

Before the consumer commission, the couple alleged deficiency in service and negligence by the bank.

They sought:

• Recovery of the original sale deed, if possible, or
• ₹1 crore as compensation for the loss of the original property documents, and
• ₹1 lakh towards mental harassment and trauma.

Axis Bank opposed the claim, arguing that the compensation sought was excessive and not maintainable in law.

What did the Consumer Commission say?

As reported by The Economic Times, the commission observed that the loss of the original title documents while they were in the bank's custody was clearly established.

It noted that although the bank lodged a police complaint, issued a public notice, obtained a certified copy of the sale deed and furnished a lawyer's certificate, these steps were only meant to mitigate the consequences of the loss.

They did not absolve the bank of its responsibility to safely preserve the original documents entrusted to it.

The commission also relied on the 2023 decision in Manoj Madhusudhanan v. ICICI Bank Ltd., observing that the absence of the original sale deed can seriously affect an owner's ability to sell, mortgage or otherwise transfer the property.

Taking note of the fact that the property had been purchased through a ₹1.41 crore home loan, reflecting its significant value, the commission held that the loss of the original title deed could not be treated lightly.

It directed Axis Bank to pay:

• ₹15 lakh as compensation for the loss of the original title deed.
• ₹50,000 towards litigation costs and the financial and legal prejudice suffered by the couple.
• This took the total compensation to ₹15.5 lakh.

The commission also directed that if Axis Bank fails to make the payment within two months, it must pay the entire amount along with 9% annual interest, calculated from 3 March 2021, when the loan was fully repaid, until the date of actual payment.

Mint has not been able to independently verify the authenticity of the report.

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