A consumer commission in Hyderabad has ordered a bank branch manager to compensate a retired employee after the original property documents submitted against her housing loan could not be returned despite full repayment.
The branch manager has been directed to hand over the original papers and related documents to the woman. If they cannot be located, the manager must arrange reconstructed and certified copies at the branch’s expense, Indian Express reported.
The commission also awarded the complainant Rs 2 lakh as compensation and Rs 15,000 towards costs. The directions must be complied with within 45 days.
The order was passed by commission president B Uma Venkata Subba Lakshmi and member C Lakshmi Prasanna on a complaint filed by the 60-year-old retired bank employee.
Documents remained unavailable after repayment
According to Indian Express, the woman had borrowed Rs 7.5 lakh from the bank in 2012 to finance a house. As is customary in mortgage-backed lending, she deposited the original title papers relating to the property with the bank when the loan was sanctioned.
The dispute arose after she repaid the entire outstanding amount, including interest, but did not receive the original documents from the branch.
“Not returning the original title deeds even after receiving the total loan amount along with interest is nothing but deficiency in service on the part of the opposite party number 2 (branch manager). There is nothing on the record to establish deficiency in service on the part of opposite party number 1 (bank),” the August 27 order read, according to the report.
The case underlined the responsibility of lenders to safely retain documents deposited as security and release them promptly once a loan account is closed.
Original title papers are particularly important in property transactions. Their absence can complicate the process of establishing clear ownership and may create difficulties if the owner wants to sell, transfer or mortgage the asset later.
Commission flags risk of financial loss
While deciding the complaint, the commission noted that the loss of original property records goes beyond inconvenience for a borrower. A buyer or another lender may be reluctant to proceed with a transaction when only copies are available, potentially reducing the property’s marketability and value.
The missing papers may also raise concerns over possible misuse, since the owner cannot be certain about where the documents are or whether they could be used improperly.
The Indian Express reported that the commission took these practical and financial risks into account while granting relief to the complainant.
Under the order, the branch manager must first attempt to return the original property documents, along with any other papers deposited by the woman while obtaining the housing loan.
If the originals remain untraceable, the manager will have to secure reconstructed documents and certified copies from the relevant authorities. The entire cost of that exercise must be borne by the branch rather than the borrower.
The Rs 2 lakh compensation is intended to address the hardship caused by the failure to release the papers after the loan had been repaid. The additional award of Rs 15,000 covers the costs incurred by the complainant in pursuing the case.
The ruling adds to the consumer-law scrutiny of how banks handle documents provided by borrowers as collateral. For home-loan customers, the return of title papers is a crucial part of closing the lending relationship because repayment alone does not restore full control over the property if the documents remain unavailable.