Thrissur Consumer Commission Holds Central Bank Liable For Loss Of Original Pattayam Deposited For Loan; Awards ₹2.5 Lakh Compensation

The District Consumer Disputes Redressal Commission, Thrissur, comprising Sri. C.T. Sabu (President), Smt. Sreeja S. (Member) and Sri. Ram Mohan R. (Member), held the Central Bank of India liable for deficiency in service for losing the original Pattayam deposited by a borrower as security for an agricultural loan and directed it to pay compensation of ₹2.5 lakh along with litigation costs.

Brief Facts

The complainants, Sathyavalli and her son Saseendran, had availed an agricultural loan of ₹3 lakh from the Central Bank of India, Thanikkudam Branch, in 2014. As security for the loan, Sathyavalli deposited the original Pattayam relating to her property measuring 0.8903 hectares in Madakkathara Village.

According to the complainants, when Saseendran approached the bank in 2018 seeking an additional loan, the bank informed him that the original Pattayam document was missing. Subsequently, in February 2023, the bank issued a communication acknowledging that the document had been lost.

Alleging that the loss of the title document prevented them from dealing with the property and caused mental agony and financial hardship, the complainants approached the Consumer Commission seeking compensation of ₹20 lakh.

Contentions of the Opposite Parties

The opposite parties failed to file their written version within the prescribed period despite service of notice and were consequently proceeded ex parte. However, the Commission subsequently considered the arguments submitted by the Bank and permitted it to cross-examine the second complainant.

The Bank contended that the second complainant lacked locus standi to pursue the complaint as he had not been authorised by the first complainant to litigate on her behalf. It further argued that the complainants had defaulted in repayment of the loan and, therefore, were not entitled to seek return of the original property documents.

Observations and Decision

The Commission rejected the bank's objection regarding the second complainant's locus standi, noting that the complaint had been jointly filed by both complainants and that the bank's own records showed both of them as borrowers under the loan account.

The Commission observed that documentary evidence, including the bank's own communications, established that the original Pattayam had been deposited with the bank and was subsequently lost while in its custody. It noted that the bank had acknowledged the loss of the document and had even procured a duplicate copy.

Holding that a bank acts as the custodian of valuable securities entrusted by its customers, the Commission observed that it is under a legal obligation to preserve such documents with utmost care and diligence. It held that the complainants' alleged default in repayment could not absolve the bank of its responsibility to safely maintain the documents deposited with it.

The Commission further observed that even if the complainants discharged the entire loan liability, the bank would still be unable to return the original Pattayam, thereby depriving them of the benefit of being restored to their pre-pledge position. It noted that the loss of the original title document would adversely affect the complainants' ability to sell the property, realise its true market value, or obtain financial assistance by mortgaging it. Reliance was also placed on the National Consumer Disputes Redressal Commission's decision in State Bank of India v. Amitesh Mazumdar (RP No. 2732/2019).

Holding that the bank's negligence amounted to deficiency in service, the Commission partly allowed the complaint. While declining to award the claimed compensation of ₹20 lakh for want of evidence regarding the extent of loss suffered, it found that the loss of the original title deed had caused financial hardship, mental agony and prejudice to the complainants.

Accordingly, the Commission directed the opposite parties to jointly and severally pay the first complainant ₹2,50,000 as compensation and ₹10,000 towards litigation costs, both carrying interest at 9% per annum till realization. The Commission also clarified that the order would not prevent the bank from pursuing lawful remedies for recovery of any outstanding loan dues.

Case Title: Sathyavalli & Anr. v. Central Bank of India & Anr.

Case No.: CC No. 421/2023

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