Bombay HC Orders SBI To Pay ₹5,000 Daily For Lost Property Deeds

The Bombay High Court has ruled that banks are legally obligated to safely maintain and return original property documents once a loan is fully repaid.

In a recent case, the court ordered the State Bank of India (SBI) to compensate a Mumbai-based firm, M/s In Vogue Creations, ₹5,000 per day from December 2023, for misplaced title deeds.

The firm had deposited the original title documents for two commercial properties located in Prabhadevi and Taloja with SBI's Dadar branch in 1979 to secure credit facilities. Although the loan was cleared in August 2003, SBI failed to return the original papers, later stating that the documents could not be traced following a branch relocation.

The petitioner claimed compensation of ₹3.93 crores, as per RBI circular. SBI argued that the firm waited nearly 15 years to request the documents and contended that a previous ₹1 lakh compensation awarded by the Banking Ombudsman was sufficient.

Rejecting the bank’s defense, the court emphasized that internal administrative delays or branch shifts do not excuse a failure of custody. The court held that a borrower who has fully discharged the loan is entitled to proceed on the legitimate assumption that the bank will maintain proper custody of the documents and return them upon discharge of the secured liability.

The court directed SBI to pay ₹5,000 per day from December 1, 2023, until complete, legally valid title records and certified copies are provided. The court granted SBI 12 weeks to finish the reconstruction of documents, allowing the bank to adjust the ₹1 lakh already paid.

This ruling highlights the importance of banks' responsibility in maintaining and returning original property documents. The court's decision is a significant victory for the petitioner and sets a precedent for similar cases in the future.

The Reserve Bank of India's (RBI) September 2023 guidelines on responsible lending were also invoked in the court's decision. The guidelines emphasize the importance of banks' obligations to their customers, including the safekeeping and return of original documents.

The case is a reminder to banks to prioritize their customers' needs and to take responsibility for their actions. The court's ruling is a step towards ensuring that banks are held accountable for their mistakes and that customers are protected from unnecessary harm.

In conclusion, the Bombay High Court's ruling is a significant development in the banking sector, emphasizing the importance of banks' responsibility in maintaining and returning original property documents. The decision is a victory for the petitioner and sets a precedent for similar cases in the future.

The ruling also highlights the need for banks to prioritize their customers' needs and to take responsibility for their actions. As the banking sector continues to evolve, it is essential that banks are held accountable for their mistakes and that customers are protected from unnecessary harm.

The court's decision is a reminder that banks have a critical role to play in maintaining the trust of their customers, and that they must take their responsibilities seriously. By doing so, banks can ensure that they provide the best possible service to their customers and maintain their reputation as trustworthy institutions.

In the end, the Bombay High Court's ruling is a significant step towards ensuring that banks are held accountable for their actions and that customers are protected from unnecessary harm. The decision is a victory for the petitioner and sets a precedent for similar cases in the future, highlighting the importance of banks' responsibility in maintaining and returning original property documents.