Thrissur Consumer Commission awards ₹2.5 lakh after bank loses original property title deed deposited for loan.

April 29, 2026 : The Consumer Disputes Redressal Commission, Thrissur, has directed the Central Bank of India to pay compensation of ₹2.5 lakh to a woman after finding that the bank had negligently lost the original title document of her property that had been deposited as security for an agricultural loan. Holding the bank liable for deficiency in service under the Consumer Protection Act, 2019, the Commission observed that the loss of such a crucial document had caused significant financial hardship, uncertainty, and mental agony to the complainant.

The order was passed in a consumer complaint filed by Sathyavalli and her son Saseendran against the Central Bank of India, Thanikkudam Branch, Thrissur. According to the complaint, the family had availed an agricultural loan of ₹3 lakh in 2014 by mortgaging property measuring approximately 2 acres and 20 cents situated in Madakkathara Village. As security for the loan, the complainants deposited the original Pattayam (title deed) with the bank.

The dispute came to light in April 2018 when the second complainant approached the bank seeking an additional loan. During the process, bank officials informed him that the original Pattayam document was missing. The complainants alleged that despite repeated representations and legal notices over several years, the bank failed to recover the document. In February 2023, the branch manager formally acknowledged in writing that the title deed was missing and stated that the matter had been reported to higher authorities.

The complainants contended that the loss of the original property document deprived them of the ability to sell the land, secure fresh loans against the property, or otherwise exercise their ownership rights effectively. They sought compensation of ₹20 lakh for financial loss, mental agony, and hardship caused by the bank’s negligence.

Although notices were issued to the bank and its branch manager, they failed to file a written version within the statutory period, leading the Commission to proceed ex parte against them. However, the Commission later considered their written arguments and permitted cross-examination of the second complainant in accordance with the principles laid down by the Supreme Court.

In its defence, the bank argued that the complainants had defaulted in repaying the loan and therefore were not entitled to seek return of the original documents. It also questioned the standing of the second complainant to pursue the litigation. The Commission rejected both contentions, noting that the complaint had been jointly filed by both borrowers and that bank records themselves showed that both complainants were co-borrowers under the loan account.

Examining the documentary evidence, the Commission found clear proof that the original Pattayam had indeed been deposited with the bank and was subsequently lost while in its custody. It relied on the bank’s own communications acknowledging that the title deed and equitable mortgage records were missing. The Commission concluded that the loss was irreversible and directly attributable to the bank’s negligence.

Emphasising the responsibility of financial institutions to safeguard customer documents, the Commission observed that a bank acts as a custodian of valuable securities entrusted by borrowers and is legally obligated to preserve them with utmost care. It held that loan default cannot serve as a defence to excuse negligence in maintaining custody of title documents. The Commission stated that even if the borrowers were to clear the entire loan liability, the bank would still be unable to return the original deed, thereby causing continuing prejudice to the complainants.

The Commission made significant observations regarding the practical consequences of losing original property documents. It noted that the absence of the title deed would substantially affect the marketability and value of the property and make it difficult for the owners to obtain future financing from banks or other financial institutions. Explaining the impact in simple terms, the Commission observed that “even full repayment of the debt would not make the property scot-free” because the owner would still be deprived of the original title document necessary for establishing ownership and conducting transactions.

The Commission further remarked that the knowledge that the document could never be restored created “persistent anxiety, frustration, and a feeling of helplessness” for the complainants. It recognised that the inability to regain the original deed after repayment deprived the property owner of the benefit of returning to the position she occupied before mortgaging the property.

While acknowledging that the complainants had suffered genuine hardship, the Commission declined to award the ₹20 lakh compensation sought because no documentary evidence had been produced to establish the exact financial loss or market value of the property. Referring to settled legal principles and recent Supreme Court jurisprudence, it held that compensation must be based on evidence and case-specific circumstances rather than mere assertions.

Balancing the circumstances, the Commission awarded a consolidated compensation of ₹2.5 lakh for financial loss, mental agony, and hardship, along with ₹10,000 towards litigation expenses. Both amounts will carry interest at the rate of 9% per annum until realization. The bank has been directed to comply with the order within 45 days. At the same time, the Commission clarified that the order would not prevent the bank from taking lawful steps to recover any outstanding loan dues from the complainants.

The ruling reinforces the accountability of banks and financial institutions in handling original property documents deposited by customers. It underscores that negligence in safeguarding title deeds can constitute deficiency in service under the Consumer Protection Act, 2019, even where borrowers may have defaulted on loan repayments. The decision is likely to serve as an important precedent for consumers facing similar issues involving the loss of original property documents by lending institutions.

Case Reference: Sathyavalli & Anr. v. Central Bank of India & Anr., CC No. 421/2023.