Padamchand Agarwal, a resident of Mathura's Kosi Kalan in Uttar Pradesh, is a harried man. So would you be if the bank which lent you money lost your original documents related to mortgaged property.
For the past five months, Agarwal has been pleading with the bank to return his original title deeds or at least give him a letter saying that they have been lost. The bank is doing neither. All it says is that the papers have been "misplaced".
Agarwal is not the first consumer to suffer the consequences of such negligence on the part of a bank. In recent weeks, I have come across several such cases.
This calls for a thorough probe by the banking regulator into the practices adopted by banks and housing finance companies to transport and store property papers entrusted to their care. The regulator should also put in place strict guidelines on safekeeping of papers and the measures to be taken in case of their loss.
When such papers are lost, banks should take full responsibility, follow the "due process" required to get the consumer a certified copy and also compensate the consumer for the consequential loss. The bank should also execute an indemnity bond against any loss or damage that the consumer may suffer on account of the non-availability of original title deeds.
The "due process" for obtaining a certified copy requires the bank to first file an FIR about the loss of the papers, issue a public notice in English and a local language newspaper regarding the loss and subsequently get a certified copy from the competent authority.
In the case of CL Khanna Vs Dena Bank (OP No. 70 of 2002, decided on September 2, 2005), the National Consumer Disputes Redressal Commission directed the bank to do all these and also pay a compensation of Rs. 1 lakh, besides waiving the interest on the loan amount from June 1989 and also pay Rs. 25,000 as costs.
In a recent order, the UP State Consumer Disputes Redressal Commission has, however, taken a tougher and a more realistic stand. Referring to the ground realities, it observed that once the original papers are lost, the consumer would not be able to take a loan from a bank on the basis of certified copies. It, therefore, directed LIC Housing Finance Ltd to pay the consumer 85% of the current market value of the property.
A couple of lawyers who advise banks and housing finance companies on these matters admitted that they do not accept "certified copies" though legally there is no bar on them.
"Because of the fear that the consumer may have pledged the original papers elsewhere, we do not accept certified copies," one of them said. Buyers of properties, too, are wary of such certified copies.
This is all the more reason for the regulator as well as the consumer courts to get tough on banks that lose important property documents.
Prem Kumar: It's been two years since I repaid my home loan. But the bank is yet to return the property papers. Every time I ask it gives some excuse and promises to return them, but never does. What should I do?
If the value of the property and the compensation being sought is between Rs. 20 lakh and Rs. 1 crore, file a complaint before the State Consumer Disputes Redressal Commission. If its value is over Rs. 1 crore, complain to the National Commission. And do it immediately.