BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 24^th DAY OF AUGUST 2023

ORDER

SMT. K. ANITA SHIVAKUMAR, MEMBER

Complainant filed this complaint U/S 35 of Consumer Protection Act 2019, seeking direction to OP to return the schedule items/original documents, which are in their custody from 27.11.2001, to pay exemplary damages, compensation, cost in case OP has misplaced the original documents along with securing secondary copies from the competent authorities, direction to OP to declare in writing that they have lost/misplaced the documents to pay compensation of Rs.2,00,000/-, direction to hold enquiry on the same, to pay cost of Rs.25,000/- and such other reliefs.

2. Brief facts of this case are as follows:-

Complainant stated in his complaint that he is customer of Op Bank, approached bank seeking financial assistance by way of housing loan for the purpose of construction of his house. On this regard OP instructed complainant to produce original registered partition deed dated 08.05.2000, Katha certificate dated 25.09.2000 and sanction plan dated 09.10.2000 issued by BBMP (hereafter referred as ‘schedule items’). OP stated that the said documents are necessary for proposing loan, verification and security which is part and parcel of the purpose followed by OP Bank. In due course of sanctioning the loan, complainant has obliged for the same and has delivered the above mentioned schedule items to OP and pledged before it on 27.11.2001. In view of the afore said loan transaction OP has acknowledged the receipt of the same on 28.11.2001 for which they have also delivered an acknowledgement duly issued by bank bearing No.R.F.No.255 COMP No.40115 which came to be sanctioned by the authorized chief manager issued to complainant with regard to the receipt of original documents namely the schedule items.

3. On perusal of the same OP after thorough verification of original documents produced before them by complainant has demanded by OP. OP being satisfied on the same and consulted for lending the loan amount as sought for. Thereafter it has sanctioned the loan to the complainant, loan account bearing No.0091 30029 001355 in the OP Bank.

4. Complainant further stated that he has subsequently sought before the OP for further loan in respect of the same property and its documents which he had earlier sought loan. OP being satisfied after thorough verification, has approved, sanctioned and granted further loan amount also with regard to the subject matter of original documents namely schedule items which were already in the custody of the OP. The complainant has availed a total of 5 loans from OP. During the purpose of last/5^th loan transaction in which even OP instructed and directed the complainant to produce the certified copies of partition deed dated 08.05.2000 and it was produced before the OP on 04.11.2017 with an intention to create and equitable mortgage in favor of the bank for the purpose of securing repayments. OP in receipt of certified copies of aforesaid documents have also executed ‘Memorandum of Deposit of Title Deeds’ dated 04.11.2017 which came to be registered as documents No.CMP-1-05202-2017-18 in CD No.CMPD 189 on 08.11.2017 before the office of sub-registrar, Basavanagudi, Chamrajapete, Bangalore. Complainant stated that it is not out of place to mention that since it was well within the knowledge that original documents aforesaid were already in the custody of OP, they have not requested for the production of it for the loan subsequent to the loan availed. Only during the period of processing the 5^th loan, OP demanded for certified copies of schedule items along with other necessary documents which came to be requested stating that it is required for the purpose of their records. OP also approved and sanctioned the subsequent loan, a total of 5 loans which fact is well within the knowledge of OP and it is subject matter of records.

5. Complainant further stated that he has promptly paid EMI’s towards the aforesaid loan sanctioned without committing any default. Under various loan transactions complainant has paid the entire loan amount along with accrued interest from time to time which he was liable towards the OP in view of loan/financial assistance taken by OP Bank. They further stated that he has cleared all loan amount which was to be paid by him from time to time with accrued interest for that OP has issued “No Due Certificate” on 15.07.2021 acknowledging and confirming the complete repayments of loan amount availed by him and a careful perusal of the same indicates that OP has also affectively declared that complainant has paid entire amount with interest. The loan transactions availed by complainant has closed on 13.07.2021 itself.

6. Complainant stated that after performing his part of obligation to pay the entire loan amount with accrued interest has demanded the OP to return original documents as schedule items pledged before OP on 27.11.2001 pertaining to the afore said loan transactions. But OP has failed to return back schedule items which are in original form. Complainant has repeatedly requested the competent authority of OP personally for deliver back the original documents since he has cleared all the loan amounts with interest. Despite of that OP failed to return back the same by giving evasive replies and unlawfully holding the schedule items in the possession without any justifiable cause.

7. With no other alternative, complainant issued legal notice on 24.08.2021 demanding the OP No.2 to return back his original documents which are entrusted, delivered and pledged before OP on 27.11.2001 at the time of availing financial assistance. OP has given untenable reply on 30.08.2021, OP stated in the reply that he agreed to return back only the certified copies which were produced before them in the course of subsequent loan transactions. But OP not assured to deliver the aforementioned original documents which are in their possession. Till date OP has not returned back the schedule items which are still in their possession even after clearing the loan transactions.

7. Complainant further stated that taking into the consideration of behavior of OP, left with no other alternative he approached Commissioner of Police and logged written complaint on 28.09.2021 which was registered on 30.09.2021 stating that the OP has authority to hold on the original documents even after paying back the entire loan transactions amount which was confirmed by OP by delivering no due certificate on 15.07.2021 itself. Commissioner of Police performed a necessary enquiries, has issued an endorsement dated 03.02.2022 and directed the complainant to collect aforementioned original documents from OP which is produced herewith. On this pretext, in directions issued by Commissioner of Police, complainant has demanded OP to return back his original documents as mentioned below:-

i) Original registered partition deed dated 08.05.2000 executed among K. Prabhavathi, K. Raghavendra, K. Anand and K. Mohan Rao in respect of property bearing House No.670/10, 5^th cross, Banashankari 1^st stage, 2^nd block, Bangalore.

ii) Original Khata Certificate dated 25.09.2000 issued by Asst. Revenue Office, BBMP, Padmanaba Nagar and;

iii) Original permission and Approved Plan for construction dated 09.10.2000.

8. Complainant further stated that OP has no authority to hold the original documents after entire amount has paid with interest without committing default. Considering that OP has issued ‘Interest Certificate’ on 25.11.2011 for having paid the interest. Therefore complainant alleged that OP has caused deficiency of service and failed to perform his obligations and also OP has indulged in unlawful, dishonest and malafide intention to withhold the original documents. Complainant stated that he has issued another legal notice to OP through his counsel on 14.03.2022 and rejoinder notices on 31.03.2022 calling upon OP to deliver back original documents and to perform their part of obligations within 7 days from the date of receipt of this legal notice. In spite of receipt of legal notice OP has not delivered the same instead given false and frivolous reply for justifying their action. Hence complainant approached this commission seeking direction to OP’s as referred supra.

9. OP represented through its counsel, filed their statements of obligations denied the allegations of complainant, OP even denied that complainant has deposited the original partition deeds.  OP stated that complainant has only deposited certified copies of the said partition deed in respect of the property bearing No.671/10. OP admitted that complainant has produced certified copies of said partition deed and executed registered ‘Memorandum of Deposit of Title Deed’ in documents No.5202 of 2017-18 stored in CD No. CMPD 189 on 08.11.2017 against the loan. OP stated in his version that on 15.07.2021 OP has issued ‘No Due Certificate’ managing and confirming the complete repayment of loan amount by complainant. OP further denied that the original partition deed dated 08.05.2000 was not returned to complainant in spite of repeated request and issuance of legal notices. Accordingly OP has replied to the legal notice of complainant and denied the same. OP further denied that complainant deposited the original partition deed with OP on 27.11.2001. Hence, OP has stated that there is no deficiency in service on the part of bank as alleged by complainant and prays for dismissal of complainant with exemplary cost.

10. After the stage of version the case is set down to adduce affidavit evidence of complainant. Accordingly he filed his affidavit evidence with 10 documents which are marked as Ex.P.1 to Ex.P.12(1). One S. Vishwalatha, the assistant general manager of OP bank as filed affidavit evidence on behalf of OP bank and filed 2 documents which are marked as Ex.R.1 and Ex.R.2. Thereafter OP filed interrogatories, for that complainant has replied to OP. Both the counsel filed their written arguments and also submitted oral arguments on their party’s behalf. Heard arguments from both the sides and perused the records. We proceed to pass the order.

11. On the basis of above pleadings for our consideration are as follows:-

i) Whether the complainant proves the deficiency of service on the part of OP?

ii) Whether complainant is entitled for the relief?

iii) What order?

12.  Our answers to the above points are as follows:-

Point No.1:- In the affirmative

Point No.2:- Partly affirmative

Point No.3:- As per the final order.

REASONS

13. Point No.1&2:- These points are inter-connected to each other and for the sake of convenience, to avoid repetition of facts, these points are taken up together for common discussion.

14. Complainant stated in his complaint that he availed housing loan from OP bank in the year 2001 by pledging the original registered partition deed dated 08.05.2000, Katha certificate dated 25.09.2000 and sanction plan dated 09.10.2000 issued by BBMP (hereafter referred as schedule items). As he stated that OP has demanded and instructed to pledge the schedule items if in case of sanction of required loan amount. Accordingly complainant has produced schedule items to OP Bank to get sanctioned loan amount on 27.11.2001, OP has acknowledged the same 28.11.2001 in vide bearing No. R.F. No.255 COMP No. 40115, which is at Ex.P.1. After perusal of Ex.P.1 the representation made by complainant, is disclosed as the loan of documents as mentioned above were handed over to the OP Bank and OP Bank with its letter head issued the said documents. As complainant stated he has availed a total of 5loans one after the other from OP Bank on security of single documents which he had pledged in the first/earlier loan.

15. Upon perusal of the pleading of both the parties, no where OP has denied that complainant has availed loan in the year 2001, but its only contention is the bank has not having custody of original documents as complainant is alleging in the complaint. Here the question arises that at the time of granting loan in the year 2001 on the basis of the security on which the OP has released the amount but OP’s contention is complainant has availed loan in the year 2017 during sanction of that 5^th loan which is last one, OP has obtained certified copies of said property documents, not original which is at Ex.P.2 and Ex.R.1. Both the parties has produced the said documents which clearly discloses that the documents with regard to the registered on partition deed executed in favor of 5 parties, complainant is also one among them. In Ex.P.2 which is ‘Memorandum of Deposit of Title Deeds’ issued on 04.11.2017 by Assistant General Manager of OP Bank, categorically stated in clause 3 of 7 documents in original. OP has also produced in continuation document of Ex.R.1 addressed to sub registrar date 08.11.2017 with regard to the sanction of Rs.10,90,793/- is registered before authority.

15. The crux of the matter here is, not about the default in repayment by the complainant or about that regard to the EMI is due. It is clearly the case of deficiency of service on the part of OP by non returning the original documents pledged before OP bank while availing the housing loan. In the version of OP no where sated that he is due of some amount or alleged about his repayment, OP admitted that complainant has repaid the entire amount of loan with accrued interest on loan amount. Considering that OP has issued No Due Certificate on 15.07.2021 which is at Ex.P.3. Even after the entire loan amount and interest has paid, OP did not return the original documents though, it was the bonafide responsibility of OP bank to return the documents which are pledged before him as security but OP did not returned till date. Even complainant has requested personally and also by issuing legal notice to OP on 24.08.2021 and on 14.03.2022 which is at Ex.P.4 and Ex.P.9 and on 31.03.2022 which is at Ex.P.10 respectively calling upon OP No.2 to return his original documents. OP replied untenable, frivolous replies to his legal notice which is at Ex.P.5 and Ex.P.11 stating the original documents which are not in its custody.

16. After exhausting all other avenues from his side, complainant approached Police Commissioner of Bangalore for the same cause submitted written complaint on 30.09.2021 which is at Ex.P.6. After the enquiry with OP, Police Commissioner of Bangalore has issued endorsement on 03.02.2022 that clearing observations and instructions to complainant which is at Ex.P.7. It is pertinent to note that complainant has filed interrogatories to get more information from the OP when he has taken stand that original documents are not with its custody, OP replied to it. In the said interrogatories complainant has asked OP in question No.2:-

i) Can the OP produce any banking norms or recorded proceedings of loan amount based on certified copy of title deed.

ii) OP answered that they have practice of obtaining some original, some true copies and some photocopies of documents from the consumers based on the legal opinion and the advice of their empanelled advocate.

Hence we are referring the legal opinion submitted by OP bank which is at Annexure-B produced by OP at the time of reply to the interrogatories. The said Annexure-B clearly exhibits the documents which are in original, which are in certified copy, in column No.3 to 7 in Annexure-B pertains to the documents which are in question? The said documents are in original as per the Annexure-B issued by empanelled advocate of OP bank, since answer to question No.2 is depends on the legal opinion of bank advocate and as per the legal opinion the said documents are in original, having possession of OP. Hence his denial cannot be valid in respect of custody of original documents.

17. When OP has issued No Due Certificate on 19.03.2022, hence with regard to the loan amount of Rs.7,50,000/- on 09.11.2017 in the loan account No. 009130100050534 which was closed on 13.07.2021, which is at Ex.P.8. Another No Due Certificate issued by OP with regard to the housing loan of Rs.5,15,793/- on 27.11.2001 in loan account No.009130029001355 which was closed on 13.07.2021 which is at Ex.P.8(1). This Ex.P.8(1) clearly shows that complainant has availed loan on 27.11.2001 for Rs.5,15,793/- . Here the question arises that on which security documents OP has sanctioned and release the amount of Rs,5,15,793/- to complainant on 27.11.2001. OP neither stated in his version nor in the interrogatories that complainant has availed loan on 27.11.2001 and also no where bank stated about the collateral security for the loan amount has obtained at the time of releasing first loan. OP only stated about the documents has received and obtained in the year 2017 that too it is not original document. Based on the certified documents OP has released the loan of Rs.7,50,000/- on 09.07.2017 is unbelievable, without the security no bank will release the amount as a loan.

18. Complainant requested several times that return of original documents, OP neither returned the documents nor replied in fair way. After perusal of Ex.P.7 the endorsement given by Commissioner of Police after due enquiry with OP in clause No.9, they clearly stated that manager of Union Bank, Cooketown branch has agreed to return the documents to complainant. Primafacie manager of OP Bank has agreed that the original documents are with him before the Commissioner of Police. Hence the OP bank has caused deficiency of services by retaining original documents with them even after the entire loan amount has repaid with interest and also after issuance of No Due Certificate to the complainant, is unjust and unfair. Hence OP is liable to compensate the same.

19. It is clear that when the OP has not returned the original documents and also taking contention that he has not obtained from complainant, that OP has misplaced the original documents which were in their custody. We can also observe that in the year 2017, OP has called and instructed complainant to produce certified copies of documents and the same were taken on records for subsequent loan amount. Here the question also arises that when the OP has taken documents to release first and earlier loan on the documents procured as security, complainant availed further loan on the same security documents while the OP has instructed complainant to produce certified copies. It clearly indicates that OP has misplaced the original documents, as complainant alleged in his complaint and he is not ready to return even after several requests, legal notices and also after the directions given by Commissioner of Police. With regard to non-return of original title deed by banking institutions, several judgments have passed by NCDRC and observed as observed below:-

“the original documents including original title deeds were deposited by the complainants in order to secure the loan and it was Op’s bounded duty to keep those important documents in safe custody and return them to the complainants on repayment of the loan The very fact that the documents are still untraceable, clearly exhibits negligent in rendering services of OP to complainants since due care was not taken to keep the documents in safe custody. The issue involved in this matter came up for consideration of this commission in State bank of India vs Amitesh Mazumdar RP No 2732 decided on 3.1.2020 and the following view was taken: Even if all the steps like issue of certificate to the complainant admitting the deposit of title deeds with finance company/bank and its inability to return the same to the complainant,  bank shall bear the cost of issuing a public notice in news papers with respect of the title deed, that would not result in the complainant realizing the true market value of the immovable property in question, if he decides to sell the same in the market. No one in the market will agree to purchase an immovable property on payment of its prevailing market value, if he knows that the original title deed of the property will not be delivered to him by seller. There will always be an apprehension of the misuse of the Title Deeds of the immovable property by an unscrupulous person, by depositing the same with a bonafide lender, since an Equitable Mortgage can be created by deposit of the Title Deeds.  The erosion in the value of the property if it is to be sold without the Title Deeds, would be substantial and in fact even the compensation awarded by the District Forum and maintained by the State Commission may not be sufficient to make up such erosion in the market value of the property.  Moreover, if the complainant decides to take a loan by deposit of the Title Deeds of the property against the property, he will not be able to get a ready lender in the market unless the Title Deeds of the property are deposited.  In fact, even a bank may be unwilling to give a loan against an immovable property unless the Title Deeds of the property are deposited with it.  Therefore, the compensation awarded by the Fora below was eminently justified on account of the petitioner bank having lost the Title Deeds of the immovable property of the complainant.”

On the above reasons the Hon’ble NCDRC upheld the judgement passed by Hon’ble State Commission by dismissing the appeal.

20. The above judgement is having exactly similar facts and circumstances with present case in hand. Considering the above judgement, there was bounded duty of OP to handover the concerned documents to the complainants.  OP failed to return original title deed of complainant which were in its custody.  OP though denied the custody of original registered partition deed dated 08.05.2000, Katha certificate dated 25.09.2000, and sanction plan dated 09.10.2000 by complainant, but the act of OP bank proved the same. When the financial institutions are insist for security, the original documents of a property are very much required to release the loan, it is bounded duty of finance company to keep the deposited documents in a safe custody and preserve them till it is handed over to the concerned customers after repayment of entire loan. 

21. In our considered view, Op caused deficiency of service, OP also caused dereliction of duty by failed  to keep the important documents of property in safe custody, which caused heavy financial loss and mental agony to the complainant, for which Op is liable to compensate. Complainant has proved his case, also entitle to get compensation.

22. OP neither declaring that the documents are misplaced nor returning them since 2021. Therefore, OP has to take necessary steps, therefore obtain duplicate copy of documents by bearing the expenses and issuing public notice in respect of the documents and hand over the same to the complainant.

23. Since the complainant has not clearly mentioned the worth of property and the amount he availed loan against the property. Considering the amount of loan complainant borrowed from OP and also considering the loans sanctioned on the same property for 5 times, which satisfies the requirement of bank, might be having good market value. This would mean that the value of the property cannot be less than 80 lakhs at present. Compensation of Rs.7,00,000/- does not even constitute 10% of market value of the property. Hence, OP is liable to pay Rs. 7,00,000/- towards compensation for loss of original documents which is calculated with regard to the property market value and  OP is also liable to pay Rs. 60,000/- towards the deficiency of service (in total Rs. 7,60,000/-)  and also liable to pay Rs. 10,000/- towards cost of litigation to the complainant. Hence, for the foregoing reasons we answer point no. 1 and 2 accordingly.

22. Point No.3:- In view of the discussion referred above, we proceed to pass the following:-

ORDER

i) Complaint filed U/s 35 of Consumer Protection Act 2019, is allowed in part.

ii) OP is directed to pay Rs.7,00,000/- towards compensation for damages caused due to loss of original documents and Rs.60,000/- towards deficiency of service.

iii) OP is further directed to pay Rs.10,000/- towards cost of litigation within 45 days from this day, failing which OP shall pay interest @ 10% per annum on Award amount from 13.07.2021 (From the date of closure of loan amount) till realization.

 (Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 24^th day of AUGUST, 2023)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party – R.W.1;