Loss Of Title Deed Amounts To Deficiency In Service, District Commission Holds Federal Bank Liable

Brief Facts:

The complainant availed a housing loan from Federal Bank, the opposite party, by mortgaging his land . Along with the other necessary documents, he despoited original Sale Deed .The loan was subsequently closed on 07.12.2021 under a one-time settlement scheme and the opposite party confirmed the settlement vide letter dated 21.12.2021.

Despite loan closure, the bank failed to return the original title deed. He was informed by the bank that the title deed was destroyed by the Sub Court, North Paravur, where it was filed in connection with a suit filed against the complainant. The complainant contended that the bank was responsible for collecting the document after the court proceedings.

Based on the above, the complainant approached the district commission alleging deficiency of service. It was further contended that in view of lack of title deed he could not sell the property or secure a loan.

Contentions by the Bank

The Bank contented that the complainant availed Federal Housing Loan and Educational Loan from the Bank. Since the complainant failed to repay the loan, the bank filed recovery suits before the Sub Court, Paravur. The complainant's title deed was submitted as a suit document in the Court. The suit was decreed and the bank-initiated execution proceedings. Thereafter, at the complainant's request, the bank agreed to a one-time settlement, waiving interest and expenses, leading to a financial loss of 2,09,465 for the bank.

Meanwhile, the Sub Court, Paravur, destroyed the title deed. The bank obtained a certificate from the court confirming the destruction and issued a letter along with a certified copy of the title deed, at the complainant's request, The bank asserted that it has taken all necessary steps and denied any deficiency in service.

According to the bank that the complainant has not suffered financial loss or mental agony, as a certified copy of the title deed, supported by a court certificate, is legally valid for transactions, including loan applications.

Observations By the Commission:

The commission relied upon the order passed by NCDRC in First Appeal No. 288 of 2014 ( III (2017) CPJ 156 (NC), wherein it was held that the bank is liable for deficiency in service due to the loss of the original title deed while in its custody.

The District Commission observed that the opposite party Bank, being the custodian of the title deed, had a legal duty to ensure its safekeeping and retrieval. As per Section 2(1) (g) of the Consumer Protection Act, a deficiency in service includes any fault, imperfection, shortcoming, or inadequacy in the quality of service that is required to be maintained under any law. The loss of the original title deed due to negligence clearly falls within the ambit of deficiency in service.

The Commission further observed that the destruction of the deed by the Sub Court does not absolve the liability of the bank, as it was their responsibility to reclaim and return the document. The loss of title deeds by a bank amount to a deficiency in service and impacts the property's value. The complainant's inability to sell or mortgage the property due to the absence of the original title deed caused substantial loss.

In view of the above observations, the Commission held that there is significant service deficiency on the part of the Opposite Party, Bank.

Therefore, the District Commission directed Federal Bank to pay Rs. 8,00,000/- as compensation to the Complainant for the financial loss, mental agony, and hardships suffered due to the loss of the original title deed. The Commission further directed the bank to Pay Rs. 10,000/- to the Complainant towards the cost of the proceedings.

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