What If Your Bank Loses Your Sale Deed?

After a home loan borrower pays his outstanding debt in entirely, a no-dues certificate is issued by the bank. After that, the bank returns him the sale deed that is kept with it after property registration. That is a simple fact home loan borrowers are aware of. Now, what happens if the bank, somehow, loses your sale deed? It is the responsibility of the bank to apply for a new copy of the sale deed from the Sub-Registrar’s Office. Meanwhile you could also file a complaint with the district consumer disputes redressal commission to claim compensation for loss of time and money.  The bank will also have to pay dearly for causing you mental agony. A recent ruling by the Maharashtra State Consumer Disputes Redressal Commission is case worth discussing here.

Case study 1

On January 9, 2020, the National Consumer Disputes Redressal Commission (NCDRC) directed State Bank of India to pay Rs 5 lakhs as compensation to a Kolkata-based borrower over the public lender’s failure to trace the title deed documents submitted with it. Additionally, the bank will have to pay the borrower Rs 30,000 as litigation cost.

The borrowers had taken a loan of Rs 13.5 lakhs from SBI against the title deed of the property.

"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 the seller," the NCDRC said.

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Case study 2

It was in 2004 that Pradeep Shetty took a loan from Standard Chartered Bank Lower Parel branch. While the bank issued a no-dues certificate to Shetty after he was done paying all his EMIs (equated monthly installments), it could not return the sale deed document to the borrower owing to its loss. According to the complaint filed by Shetty, his plans of selling the property, for which he had taken a loan of Rs 9 lakh from the lender, are struck owing to the loss of the sale deed.

In 2015, the district consumer commission directed the British banking major offers the man Rs 60,000 as compensation. Of this, the Rs-50,000 penalty on the bank was for losing the paper while Rs 5,000 for causing mental agony to the borrower and another Rs 5,000 for the cost he incurred to file the complaint. Dissatisfied with the compensation amount, Shetty approached the Maharashtra State Consumer Disputes Redressal Commission. The state commission has now increased the compensation amount to Rs 1.15 lakh—it increased the penalty for causing mental agony to Rs 50,000 from Rs 5,000. While giving the bank an earful on its oversight, the consumers’ panel also told it to pay an additional monthly penalty of Rs 50,000 in case it fails to return the lost sale deed in a matter of three months.

“Considering the increasing prices of flats in Mumbai, the complainant may suffer on account of not selling the flat and to get the full and expected consideration. Therefore, a balanced view has to be taken,” the panel said in its order while directing the aggrieved man to co-operate with the lender while the latter tries to obtain another copy of the sale  deed from the Sub-Registrar’s Office.