After IDBI Bank failed to return a customer's original property documents, the District Consumer Commission in Kozhikode, Kerala, ordered the bank to compensate the customer with Rs 10 lakh. In 2017, a fire at a document storage facility destroyed papers, according to IDBI Bank.
The commission noted that the borrower experienced severe hardship and that the loss of the original documents decreased the property's worth. A teacher and businessman who had taken out a Rs 33 lakh home loan from IDBI Bank in 2016 filed a case with the bench, which was made up of President Priya S and Member V. Balakrishnan. He had put the original title deeds to his properties, which included a villa and land, as security for the loan valued at around 1.3 crore.
The commission found the bank guilty of unfair commercial practices and service deficiencies in its order of May 30. It ordered the bank to compensate the plaintiff with Rs 10 lakh. The commission observed that because the bank misplaced the original title documents while they were in its possession, the complainant's lawful ownership rights had been negatively impacted.
It noted that it was a valid claim to seek damages for such carelessness. The complaint claims that the borrower made extra lump-sum payments in addition to routinely using his wife's account to make loan EMIs. He said that he made the decision to sell the mortgaged property and close the loan account,following the death of his wife, the co-borrower and salaried family member, in March 2020.
In June 2020, the complainant paid Rs 15.1 lakh to settle the outstanding loan balance. Nevertheless, the bank did not return the actual title deeds in spite of repeated requests.
He claimed that the bank gave various explanations at first, first stating that the documents were undergoing closure procedures, then claiming they were lost in floods, and finally acknowledging in November 2020 that the documents had been destroyed in a fire at the Stock Holding Corporation's storage facility in December 2017.
The complaint claimed that he suffered a significant financial loss as a result of the bank's dishonesty, carelessness, and reckless behavior. He said that because the original title deeds were no longer available, he lost a lucrative property sale, had to borrow money and pledge jewelry to return the buyer's advance, and saw a decline in the property's market value.
He also claimed that the bank neglected to take fundamental actions, such submitting a formal complaint or promptly notifying the public about the documents' loss. He claimed that the Banking Ombudsman's participation was the only reason the bank took action.
The Banking Ombudsman ordered the bank in 2021 to give certified copies of the documents, notify the public of their loss, and pay Rs 60,000 in compensation, which included Rs 10,000 for delay and Rs 50,000 for service inadequacy. Despite protesting that the amount was insufficient, the complaint accepted it. He then went to the Consumer Commission to demand compensation of Rs 35 lakh for unfair commercial practices, carelessness, and poor service.
Advocate A.M. Bhaskaran, representing the bank, refuted the claims of carelessness. He contended that the borrower and his spouse had signed a typical 20-year house loan contract and that there was no proof that it was meant to be a temporary arrangement.
The bank admitted that the documents were destroyed in the 2017 fire at Stock Holding Document Management Services Ltd., where many banks and government institutions store important records. However, it argued that the fire was an unforeseen incident beyond its control.
The bank also contended that the Banking Ombudsman had already decided the matter and awarded compensation of Rs 60,000, which the complainant accepted without filing an appeal. Therefore, according to the bank, the Ombudsman’s decision was final and the fresh complaint was not maintainable.
After considering the matter, the Consumer Commission ruled in favour of the complainant and directed IDBI Bank to pay Rs 10 lakh as compensation.
