In a case that might make many loan customers double-check their paperwork, the Ernakulam District Consumer Disputes Redressal Commission has directed Federal Bank's Angamaly branch to pay ₹8 lakh as compensation and ₹10,000 as legal costs to a housing loan customer for losing his original property document.
The order was passed on a complaint filed by Jolly Mathew, a resident of Malayattoor, who had taken a housing loan by mortgaging 2.23 ares of land in Malayattoor village. As part of the loan process, he had handed over a bunch of documents to the bank.
Jolly closed his housing loan on December 7, 2021, under a one-time settlement scheme. The bank officially confirmed the closure in a letter dated December 21, 2021. But despite the closure, the bank did not return the original title deed. When he followed up, Jolly was informed that the document had been destroyed by the sub-court in North Paravur.
The bank appeared to have had submitted the title deed as part of legal proceedings in two recovery suits filed against Jolly for defaulting on his earlier housing and educational loans. After the court cases concluded, the deed, along with other old case documents, was destroyed.
Jolly’s main argument was that it was up to the bank to get the original deed back once the legal case was done. Losing such an important document, he claimed, amounted to a lapse in service. Since the title deed was gone, he said he couldn’t sell his property or take out a new loan, which led to financial loss and mental stress. He asked for a compensation of ₹10 lakh.
The bank, on its part, said it had done all it could. It even got a certificate from the court confirming that the deed had been destroyed, and handed over a certified copy of the title deed to Jolly. The bank also reminded the court that it had agreed to settle the case by waiving interest and other charges, even though it suffered financial losses.
The bank further claimed that a certified copy is good enough for transactions and that Jolly hadn't really suffered any major financial loss or emotional distress. It asked for the complaint to be dismissed.
The commission, however, wasn’t convinced. A bench comprising D.B. Binu V. Ramachandran, and T.N. Sreevidya observed that banks are responsible for safeguarding documents submitted by customers, especially original property deeds. Once legal proceedings are over, it's the bank’s job to collect and return those documents.
According to the commission, the loss of the original deed could create serious hurdles in future property deals and might even reduce the property’s value. It termed the incident a deficiency in service and directed the bank to pay ₹8 lakh in compensation and ₹10,000 towards court expenses—within 45 days.
