State Consumer Disputes Redressal Commission
Dewan Housing Finance Corporation ... vs Ravuri Sainath on 6 April, 2026
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BEFORE THE TELANGANA STATE CONSUM ER DISPUTES
REDRESSAL COM M ISSION : HYDERABAD.
F.A.No.157 OF 2020
AGAINST ORDERS IN C.C.445/2018
DISTRICT CONSUM ER COM M ISSION-II, HYDERABAD
Between:
Piramal Capital and Housing Finance Ltd.,
(Substituted as per order dated 03.11.2022),
(Formerly known as Dewan Housing Finance Corporation Ltd.,),
8-3-948/949, Flat No.301, 302, 303,
3rd Floor, Solitaire Plaza, Behind Image Hospital,
Ameerpet, Hyderabad-500 073,
Represented by its Manager-Legal,
Mr.Idrees Hassan, R/o Hyderabad.
...........Appellant/ Opposite Party
And:
Ravuri Sainath, S/o R.Narasimha Rao,
Age : 51 years, H.No.1-10-397/1 to 7,
Flat No.B-106, Nilaya's Lake View Mirra Residency,
Bramhanawadi, Hyderabad- 500 082.
.........Respondent/ Complainant
Counsel for the Appellant/ Opposite Party : M/s P. Ramachandran
Counsel for the Respondent/Complainant : Sri M.R.B.Manikandan
HON'BLE SM T. JUSTICE DR.G.RADHA RANI, PRESIDENT
HON'BLE SM T. M EENA RAMANATHAN, M EMBER - (NON-JUDICIAL)
M ONDAY, THE 06th DAY OF APRIL
TW O THOUSAND TW ENTY SIX
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Order :
PER HON'BLE SMT. MEENA RAMANATHAN, MEMBER (NON-JUDICIAL)
1.The appeal is filed u/s 15 of Consumer Protection Act, 1986 by the Opposite Party, aggrieved by the order of District Consumer Commission-II, Hyderabad, dated 08.01.2020 in CC 445/2018, where under, the opposite party is directed to (i) make the alternate arrangements enlisted in (Vide Separate Oder) in place of original title deed; (ii) to pay a compensation of Rs.2,00,000/- only and (iii) to pay Rs.5,000/- towards costs. Time for compliance is 45 days from the date of receipt of this order.
2. The parties are herein after referred to as they were arrayed before the District Commission, as complainant and opposite party.
3. a) The brief averments of the complaint are that the complainant approached the opposite party for loan facility for purchase of flat in Hyderabad. After scrutinizing the credentials of the complainant, the opposite party sanctioned a loan of Rs.14.35.000/- vide loan Account No.HYB32996. The amount was repayable in monthly installments. Towards security for loan, the complainant mortgaged the flat by depositing the title deeds with the opposite party. The loan was repaid and account closed on 10.12.2017 and opposite party issued the letter accordingly on 07.03.2018. The opposite party informed the complainant the original documents are misplaced and the complainant has been waiting for the original documents to be traced out but there has been no follow up by the opposite party.
3b) The complainant is unable to obtain personal loan from other financial institutions as the original title deeds are not available. He is unable to sell the property to intending purchasers as the original documents are unavailable. Under these circumstances, the complainant is left with no other alternative except to approach the District Commission for redressal of his grievance.
4. The opposite party filed their written version admitting that the complainant availed the loan by depositing original title deeds. It is also admitted that the complainant repaid the total loan amount and they issued closure of loan letter on 07.03.2018. They further state that they intimated the complainant vide letter dated 07.03.2018 that they are searching for the original documents and if it is not traced, they will lodge the police complaint and initiate the procedure for paper publication. They have not done anything intentionally and deny that the complainant is not able to sell the flat due to non-availability of original documents. With the above submissions they seek the present complaint be dismissed.
5. Before the Commission below, complainant filed evidence affidavit as PW1 and marked Ex. A1 to A3. One Sri T.N.Sreenivasulu, Senior Manager Legal of opposite party filed evidence affidavit as DW1 and reported that no documents to be marked. Complainant has filed his written arguments. The opposite party filed memo stating that to treat their written version as their written arguments.
6. Aggrieved by the above orders, the Opposite Party preferred this appeal contending that the Commission below failed to consider the following grounds:
The Commission below erred in interpreting the word creditor and thereby exceeded its jurisdiction. The Consumer Forum can 4 interpret the law laid down under Consumer Protection Act, 2019, but not creditors as the same lies within the jurisdiction of NCLT.
That the Commission below erred in its finding the Section 14 of Insolvency and Bankruptcy Code, 2016 will apply only against the creditors of the Corporate debtor.
That the Commission below has allowed the complaint and passed an order without considering the order of Moratorium passed by the Hon'ble NCLT-Mumbai Bench on 03.01.2019 in C.P.(IB) 4258/MB/2019.
That exercising its powers under the above Section, the Ministry of Corporate Affairs/Central Government issued a Notification on 15.11.2019 formulating Rules called as "Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to adjudicating Authority Rules, 2019)'. These Rules shall apply to such "Financial Service Providers" (in short FSP) or "Categories of Financial Service Providers" as notified by Central Government u/s 227 of the Insolvency Code for the purpose of their Insolvency and Liquidation proceedings under these Rules. By notifying the above said rules, the Central Government brought financial service providers under the purview of Insolvency and Bankruptcy code 2016. This was not considered by the District Commission.
That on 18.11.2019 another notification was issued by the Ministry of Corporate Affairs, according to which it was decided that the following category of Financial Service Providers were to be brought under the Code: "Non-banking finance Companies (which include housing finance Companies) with asset size of Rs.500 crore or more, as per last audited balance sheet".
That the above cited statutory provisions and the above said order it is evident that an interim moratorium commences on and from the date of filing of the application till its admission or rejection, since the application has been filed by the Reserve Bank of India on 29.11.2019 so from the said date, the interim moratorium has commenced. That vide its order passed on 03.12.2019, the Ld.NCLT,Mumbai Bench has pronounced commencement of "moratorium" under Section 14 of the Code.5
It is pertinent to state here that the appellant is a financial service provider which is regulated by the RBI and has an asset size of more than 500 crores. Hence, the appellant fulfilled all the conditions necessary to be brought under the code. This aspect was not considered.
With these grounds and others that will be urged at the time of arguments, requested to set aside the order of the Commission below and to dismiss the complaint.
7. On 27.02.2026, heard the arguments on both sides.
8. The point that arises for consideration is whether the impugned order as passed by the District Commission suffers from any error or irregularity or whether it is liable to be set aside, modified or interfered with in any manner ? To what relief ?
9. POINT: The facts not in dispute are that the complainant availed housing loan from opposite party by depositing the original title deeds bearing No. 1576/2010, dated 20.09.2010 and the details are as follows:-
Loan A/c Number HYB32996
Loan Amount Rs.14,35,000/-
Number of EMIs 180
EMI Amount Rs.14,769/-
The complainant repaid the loan amount and opposite party issued loan closure letter dated 07.03.2018 but the document deposited with them were misplaced. The opposite party has informed the complainant vide Ex.A1 dated 07.03.2018 that the documents are not traceable and 6 they have secured certified true copy of the sale deed and that they propose to initiate the lost documents procedures.
10. The complainant has pleaded that he cannot avail loans from any financial institutions as the original document is not available for deposit and he is unable to sell the above flat as purchasers are not willing to come forward as original documents are lost/misplaced.
11. The Commission below erroneously observed that the complainant failed to put-forth any evidence that prospective buyers are not evincing any interest to purchase the property. It is a known fact that if the original title deeds are lost/misplaced, it often leads to a more delayed and most often a discounted sale process. The certified copy filed reveals the property value to be Rs.22,00,000/- as supported by Ex.A3. The complainant had availed a loan of only Rs.14,35,000/- and paid the entire amount and has to suffer the consequences of loss of original document. Although the opposite party has assured to follow the essential steps for loss of title deeds as ordered by the Commission below, he deserves to be adequately compensated for the loss. The Commission below awarded a modest compensation which must be paid to the complainant.
12. We rely on the following judgment of the Hon'ble National Consumer Disputes Redressal Commission in Manoj Madhusudhanana vs. ICICI Bank Ltd., and another in CC No.129/2017, dated 31.08.2023, wherein, it was held that "the complainant is impacted financially since, the legal title of the complainant does stand compromised on account of the loss of irigninal documents by opposite party No.1. Seeking compensa tion on the ground of deficiency in service is, therefore, a legitimate claim. The claim of compensation from Opposite party No.1 is legitimate since the papers were in their custody under the terms of loan".
7Compensation is awarded for the reduction in the property's market value as the loss of original documents affects resale and loan availability.
13. In their grounds, the opposite party has urged that the y are only a financial service provider regulated by the RBI and filed order dated 03.12.2019 of NCLT wherein insolvency proceedings have been initiated against the opposite party. Point 7.4 of the order reads as under:-
"7.4 Upon Admission it is hereby pronounced that "Moratorium" as defined u/s 14 of the Insolvency Code shall commence with effect from the date of application i.e. 29.11.2019 as prescribed under Rule 5(b) (i) of FSP Rules 2019. On commencement of "Moratorium" the institution of any Suit or continuation of proceedings or execution of any decree against the Financial Service provider (DHFL) shall be prohibited. Likewise, transferring, alienating or disposing of any action to foreclose, recover or enforce any security interest created by FSP in respect of its property is also debarred. However, supply of essential goods or services to FSP continue uninterrupted and not to be terminated or suspended during "Moratorium"
by the supplier. As prescribed u/s 14(4), the order of "Moratorium" shall have effect till the completion of Insolvency Process".
14. The Commission below has rightly addressed this aspect and observed that it is only a bar with respect to creditors who intend to proceed against the corporate debtor. This is to ensure that the Company's assets remain intact.
A moratorium under the insolvency and Bankruptcy code does not apply to compensation claims imposed by Consumer Commission for deficiency in service and negligence. These awards are punitive in nature 8 and not a "debt" under IBC. In support of our view we rely on the following judgment of the Hon'ble Apex Court In Saranga Anilkumar Aggarwal vs Bhavesh Dhirajlal Sheth on 4 March, 2025, in Civil Appeal No.4048/2024 wherein it was held as follows:-
"27. We find that there is a fundamental distinction between civil and criminal proceedings concerning a debt moratorium. While civil proceedings are generally stayed under IBC provisions, criminal proceedings, including penalty enforcement, do not automatically fall within its ambit unless explicitly stated by law. The penalties imposed by the NCDRC are regulatory in nature and arise due to non- compliance with consumer protection laws. They are distinct from "debt recovery proceedings" under the IBC.
28. A moratorium under Section 96 of the IBC is distinct from a corporate moratorium under Section 14 of the IBC. Section 96 of the IBC applies to individuals and personal guarantors and provides that during the inte rim moratorium period, "any legal action or proceedings relating to any debt shall be deemed to have been stayed." However, it is pertinent to note that this provision applies only to "debt" as defined under the IBC and not to regulatory penalties imposed for non-compliance with consumer protection laws. A careful reading of the statutory scheme of the IBC suggests that penalties arising from regulatory infractions are not covered under the ambit of "debt" as envisioned under the Code ".
In the present case, the damages awarded arise from a consumer dispute and such damages are not contractual debts but are awarded to compensate the consumers for the loss suffered and are distinct from financial debts. For the foregoing reasons we confirm the impugned order and the appeal is dismissed with additional costs of Rs.20,000/-.
15. We find no force in the arguments and grounds urged by the opposite party and accordingly the appeal raised by the appellant is dismissed.
916. In the result, the appeal is dismissed with additional costs of Rs.20,000/- payable to the complainant, by confirming the impugned order, dated 08.01.2020 in CC 445/2018 passed by the District Consumer Commission-II, Hyderabad.
The Respondent/Complainant is at liberty to withdraw the amount deposited by appellant/Opposite Party to the credit of this appeal along with accrued interest thereon, towards part satisfaction of the decretal amount after the lapse of revision time.
Typed to my dictation by Stenographer on the System; corrected by me and pronounced by us in the Open Court on this the 06th day of April' 2026.
Sd/- Sd/-
PRESIDENT M EM BER (NON-JUDICIAL)
Dated : 06.04.2026
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