SBI Liable For Losing Borrower's Original Property Documents After Home Loan Repayment: Kanchipuram Consumer Commission
RAMANI NV
Kalyanasundaram Subramaniam
MADHAV JOSHI
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Kalyanasundaram Subramaniam
The principal shortcomings are discussed below.
1. Relief Granted Beyond the Pleadings (Most Serious Defect)
The complainants sought:
- Return of the original documents;
- ₹20 lakh as compensation;
- ₹20 lakh towards litigation costs.
However, the Commission granted:
- Market value of the property if documents cannot be traced;
- ₹5,000 per day compensation;
- 18% interest on the entire property value;
- ₹25,000 litigation costs;
- ₹50 lakh payable to the Consumer Welfare Fund.
None of these additional monetary reliefs (except return of documents) were specifically prayed for.
Although a consumer forum has wide powers under Section 39 of the Consumer Protection Act, courts generally avoid granting entirely new remedies without amendment of pleadings or proper justification.
This is a substantial appellate ground.
2. Wrong Interpretation of the RBI Circular
The judgment relies heavily upon the RBI Circular dated 13 September 2023.
The circular provides:
- ₹5,000 per day compensation for delay;
- assistance in obtaining duplicate documents;
- compensation without prejudice to any other legal remedy.
However, the Commission simultaneously awarded:
- RBI compensation of ₹5,000/day; and
- 18% interest on ₹46.35 lakh.
The order never explains:
- whether both remedies compensate the same injury;
- why both should coexist;
- whether this amounts to double compensation.
The absence of legal reasoning makes this part vulnerable.
3. Interest Award Has No Legal Basis
The Commission held:
complainant entitled to interest @18% on ₹46.35 lakh from 16.04.2024.
However:
- there was no contractual clause providing such interest;
- no statutory provision cited;
- no judicial precedent relied upon.
Normally, consumer forums award interest on compensation awarded—not on the entire market value of the property unless actual pecuniary loss is proved.
This appears arbitrary.
4. Market Value Direction is Unworkable
The order directs SBI either:
- trace and return documents; or
- pay present market value and take over the property.
The judgment never explains:
- who will determine market value;
- valuation date;
- whether encumbrances are to be considered;
- whether stamp duty implications arise;
- how title will pass;
- whether the complainant must execute a sale deed.
The relief is practically incapable of execution.
5. No Assessment of Actual Damages
The Commission repeatedly states that:
- property value fell;
- buyer withdrew;
- future loans impossible.
But there is no evidence discussed regarding:
- cancelled sale agreement;
- proposed purchaser;
- valuation report;
- actual reduction in market value;
- refusal by another bank.
The findings rest largely on assertions.
6. Reliance on Strong Language Instead of Legal Analysis
The judgment uses expressions such as:
- "arrogant attitude";
- "habitually indulging in anti-consumer activities";
- "lethargic";
- "unfair".
However, no evidence establishes:
- habitual misconduct,
- previous similar cases,
- systemic negligence.
Judicial orders generally require restrained language supported by evidence.
7. Section 39(1)(k) Applied Without Discussion
The Commission invokes Section 39(1)(k).
Yet it does not explain:
- why that clause specifically applies;
- how statutory conditions are satisfied;
- why the extraordinary relief is necessary.
The provision is merely cited.
8. ₹50 Lakh to Consumer Welfare Fund Appears Unsupported
The Commission directed SBI to pay:
₹50 lakh to the Tamil Nadu State Consumer Welfare Fund.
The judgment contains no reasoning regarding:
- statutory authority;
- basis for quantum;
- relationship with consumer's loss.
Since the complainants themselves claimed only ₹20 lakh compensation, directing ₹50 lakh to the Fund appears disproportionate unless clearly justified under Section 39. The absence of such reasoning makes this one of the weakest portions of the order.
9. Inconsistent Dates
The order contains multiple inconsistent dates.
Examples:
The loan was repaid on:
- 16.04.2024 (body)
- 19.04.2025 (MOD cancellation letter)
- compensation starts from 16.06.2024
- reasoning refers to 19.04.2024
- interest awarded from 16.04.2024.
These inconsistencies create uncertainty regarding:
- when the cause of action arose;
- commencement of RBI compensation;
- commencement of interest.
10. Failure to Consider SBI's Compliance Measures
SBI pleaded that it had:
- lodged police complaint;
- published newspaper notices;
- obtained certified copies;
- issued MOD cancellation letter;
- complied with RBI directions.
The Commission rejected these submissions mainly by observing that the bank failed to prove publication and had not issued a non-traceable certificate.
However, it does not analyze:
- whether certified copies substantially mitigated the loss;
- whether the omission reduced quantum of damages;
- whether partial compliance should affect compensation.
11. No Discussion of Binding Supreme Court Principles
The judgment cites NCDRC precedents regarding lost title deeds but does not analyze:
- binding Supreme Court principles on compensation,
- proportionality,
- restitution,
- avoidance of unjust enrichment.
A stronger appellate-proof judgment would have reconciled RBI directions with higher judicial precedent.
(With assistance from AI)