The Bombay High Court has reiterated that banks are responsible for safeguarding and returning original title papers, ordering the SBI to pay compensation for missing property deeds decades after loan repayment. This ruling highlights systemic issues in India’s property record management.
The Bombay High Court has sent a clear message to banks: once a loan has been repaid, the duty to safeguard and return original title papers does not end with the customer’s silence. In a case involving the State Bank of India, the court held that the lender remained responsible for missing property documents that had been handed over as security decades earlier, and it ordered the bank to pay compensation until the records are rebuilt.
According to reports by The Indian Express, The Economic Times and other publications, the dispute involved a Mumbai partnership firm that had deposited original agreements, share certificates and a registered lease deed with SBI in 1979 to secure credit facilities. The loan was fully repaid in 2003, and the bank issued a no-dues certificate. But when the firm later sought the return of its papers, the bank said it could not trace them, blaming a branch shift and later record-handling problems.
The bench, led by Acting Chief Justice Ravindra V Ghuge and Justice Gautam A Ankhad, rejected the argument that the borrower’s long delay in asking for the documents removed the bank’s responsibility. The court said the obligation to preserve, identify and return valuable papers lies with the institution that accepted them. It also noted that the borrower had already done what was required by settling the debt, while the bank had not completed the administrative step of returning the security documents.
The court directed SBI to pay Rs 5,000 a day from December 1, 2023, until it supplies certified copies and reconstructs the title record. Reports said the bank had also deposited Rs 1 lakh in compensation after the matter was taken up through the Banking Ombudsman, but the petitioner did not accept that amount. The missing papers were important because the firm said the copies it could obtain from other bodies were incomplete and did not fully establish title, including details linked to stamp duty.
Beyond the immediate dispute, the ruling highlights a wider problem in India’s property and lending system. Original deeds, leases and related records can be central to proving ownership, and their loss can block a sale, transfer or mortgage long after a loan has been closed. The court’s decision suggests that branch relocations, staff changes or internal file movements cannot be used as excuses when institutions fail to protect documents entrusted to them.
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