National Consumer Disputes Redressal
T. Prem Kumar vs Branch Manager, Indiabulls Housing ... on 30 August, 2023
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 412 OF 2020 1. T. PREM KUMAR ...........Complainant(s) Versus 1. BRANCH MANAGER, INDIABULLS HOUSING FINANCE LTD (IBHFL) ...........Opp.Party(s)
BEFORE: HON'BLE DR. INDER JIT SINGH,PRESIDING MEMBER
FOR THE COMPLAINANT : MR. T. PREM KUMAR IN PERSON FOR THE OPP. PARTY : MR. SHASHWANT ROY, ADVOCATE ALONGWITH
MR. UTTAM KUMAR, AR
Dated : 30 August 2023 ORDER
1.The present Consumer Complaint (CC) has been filed by the Complainant against Opposite Party (OP) as detailed above, inter alia praying for directions to the OP to:-
(i) Pay the compensation for a sum of Rs.61,73,004/- for deficiency in services, wilful negligence, unfair trade practices and restrictive trade practices;
(ii) Return the complainants deposited original title documents or to pay the complainant entire loan amount foreclosed by LICHFL as the complainant is unable to meet the declaration given to LICHFL to handover the documents within 30 days timeline;
(iii) Pay twice the current market valuation of the complainant property for the irreparable loss caused to the complainant for a sum of Rs. 3,62,40,626/-.
(iv) Pay 13% interest p.a. till the realization of the compensation and damages awarded if any;
(v) Pay the litigation expenses and cost.
2. Notice was issued to the OP on 15.07.2020. Parties filed Written Statement/Reply, Rejoinder, Evidence by way of an Affidavit and Written Arguments/Synopsis etc. as per details given below.1
D/o Filing CC in NCDRC 01.07.2020 2 D/o Issue of Notice to OP 15.07.2020 3 D/o Filing Reply/Written Statement by OP 15.10.2020 4 D/o filing Rejoinder by the Complainant 22.12.2020 01.01.2021 5 D/o Filing Evidence by way of Affidavit by the Complainant 01.02.2021 6 D/o Filing Evidence by way of Affidavit by the OP 19.01.2021 7 D/o filing Written Synopsis by the Complainant 05.04.2021 8 D/o filing Written Synopsis by the OP 05.04.2021
3. It is averred/stated in the Complaint that: -
(i) The complainant obtained a housing loan with Loan A/c No. HHLBAG00121623, dated 03.09.2012, amounting to Rs. 29,93,153/-. This loan facilitated the acquisition of a plot, and the complainant entrusted Indiabulls Housing Finance Ltd. (IBHFL) with the original title deeds, expecting their safekeeping and return within the stipulated 30-day timeframe as per RBI guidelines. Subsequently, the complainant acquired a Composite Loan (A/c No. HHLBAN00226520) of Rs. 39,20,788/- for construction, with a commitment to commence within two years. These loans were consolidated into a new account, HHLBAN00315577, dated 16.02.2017, with an outstanding balance of Rs. 65,88,187/-. An additional Top-up Loan of Rs. 15,00,000/- was also secured. The complainant alleges IBHFL engaged in unfair practices by significantly increasing the Rate of Interest (ROI) without prior notice. The ROI for Loan A/c No. HHLBAN00315577 rose from 8.7% to 11.2%, and for Loan A/c No. HHLBAN00387974, it increased from 8.4% to 10.9%, spanning April 2018 to July 2019. This lack of disclosure deprived complainant of informed decision-making regarding options like foreclosure or balance transfer.
(ii) That IBHFL engaged in unfavorable practices related to online loan accounts and concealed the Rate of Interest (ROI) field, preventing access to crucial information. Despite multiple requests, IBHFL failed to provide sufficient evidence of communications about Rate of Interest (ROI) increases, contravening RBI guidelines. The complainant, seeking to transfer loans to L.I.C. Housing Finance Limited (LICHFL), obtained approval for a Rs. 76,00,000/- housing loan, conditional on IBHFL promptly furnishing original documents. The IBHFL's response to their Foreclosure Letter request was evasive, suggesting delay tactics to hinder successful loan transfer to LICHFL.
(iii) That LICHFL partially disbursed and fully settled the outstanding loan amount of Rs. 61,73,004/- with IBHFL. This transaction involved two cheques: one worth Rs. 57,82,378/- and another valued at Rs. 3,90,626/-. These cheques were submitted to IBHFL on 22.10.2019. That despite meeting all EMI obligations and making substantial interest payments, IBHFL failed to promptly transfer the original title documents to LICHFL upon loan closure. Repeated reminders were communicated to IBHFL via email and in-person visits, urgently requesting the timely handover of the original registered title documents. However, LICHFL notified the complainant of their continued wait for the necessary documents from IBHFL and indicated the possibility of initiating legal actions in line with RBI guidelines. In response, the complainant escalated the matter to various authorities, including IBHFL's Grievance Cell, the General Manager of National Housing Bank, and the RBI Ombudsman. Despite efforts to seek compensation from IBHFL for the resulting delays, the complainant encountered unresponsiveness, with IBHFL failing to provide the requested Compensation Policy Document. Furthermore, LICHFL communicated their intent to initiate legal proceedings against IBHFL regarding this issue.
(iv) On 22.01.2020, IBHFL Grievance Cell responded by requesting a further 15 working days for the handover of documents, despite a prior commitment to a revised timeline of 15 working days. The complainant promptly notified IBHFL Grievance Cell that certified copies of the documents were not acceptable, emphasizing the requirement for original documents. That IBHFL's repeated extensions exceeded the initial 30 working days timeframe stipulated for returning the documents after loan closure and the actions raise suspicions of ulterior motives, suggesting deliberate prolongation of the process to pressure the complainant into recalling their home loan and returning to IBHFL. Responding to persistent delays, the complainant's legal representative issued a notice to IBHFL on 27.01.2020, demanding the immediate return of original registered documents within five days. This legal notice was addressed to various IBHFL offices, the National Housing Bank, and RBI Grievance Cell. In response, LICHFL communicated with the complainant on 06.02.2020, stating that they had not yet received the original documents from IBHFL and indicated consideration of recalling the loan. Despite the ongoing complaint process, LICHFL communicated on 13.02.2020, that they could no longer wait and demanded that the complainant either foreclose the loan using personal funds or transfer the loan back to IBHFL.
(v) The complainant refused to transfer the loan back to IBHFL due to the erosion of trust and deep dissatisfaction arising from IBHFL's involvement in unfair trade practices and provision of inadequate services. The complainant emphasizes their financial incapacity to foreclose the loan using personal funds and state the impracticality of pursuing a balance transfer without the original title documents, particularly given LICHFL's explicit rejection of certified copies. In response to IBHFL's communication on 25.02.2020, the company (OP) acknowledges entrusting the complainant's title documents to a third-party vendor of their choice, which resulted in the subsequent misplacement of the documents. The complainant states that this decision rested solely with IBHFL, thus assigning full responsibility to the company for the loss of the documents. That there are certain inconsistencies within IBHFL's statements, pointing out discrepancies between the records of Haryana Police, which indicate the loss of the documents on 20.02.2020, and IBHFL's own response, which suggests a mere misplacement of the documents.
(vi) That IBHFL raised the interest rate without prior notice, resulting in a loss of trust in the institution. That the loss of the original title documents significantly curtails access to future loans from other financial institutions. The complainant asserts their consumer rights and accuses IBHFL of engaging in "restrictive trade practices." Complainants contend that IBHFL's failure to return the original title deeds was a deliberate strategy to compel the complainant into returning to IBHFL, thereby diminishing their capacity to obtain loans from alternative institutions.
4. Initially, as per order dated 12.10.2020, right of the OP to file written version was closed as the same was not filed within the statutory period of 45 days. Later on, vide order dated 02.12.2020, Application filed by OP for review of order dated 12.10.2020 was allowed in view of extention of limitation period by the Hon'ble Supreme Court on account of Covid Pandemic and written version filed by the OP was taken on record.
5. The OP in their written statement/reply stated that: -
(i) The OP acknowledges keeping the original title documents but states that they were lost despite diligent efforts to retrieve them. The OP filed a Non-Cognizable Report (NCR) with the police and informed the Complainant about it and offered to provide certified true copies of the title deeds to establish ownership. OP assert that certified copies can establish property ownership and that no deficiency in services or unfair practices can be attributed to them. The OP accuses the Complainant of overvaluing the claim, and asserts that they are cooperating to provide certified copies. That the Complainant's actions are meant to pressure the OP for illegal gains. The OP disputes the Complainant's status as a consumer under the Consumer Protection Act, citing the purpose of the loan and the property.
(ii) That the Complainant was indeed kept informed about changes in interest rates through email notifications. The OP denies the allegations asserting that they take reasonable time to process foreclosure requests and cooperated with the Complainant's transfer efforts. The OP refutes the claim that the Complainant always paid instalments on time, citing lapses in payment as evident from the Statement of Accounts. The OP maintains that they sought time from the Complainant and that no wilful negligence or deficiency occurred on their part. The OP states they are willing to provide certified copies and took measures to secure the Complainant's property title.
(iii) The OP conducted a detailed and thorough search before informing the Complainant about supplying certified copies of the title deeds and complying with other formalities. It is denied that the OP kept the Complainant hanging or took the issue lightly, as they continuously kept the Complainant informed about their efforts to trace the documents and sought additional time. The OP refutes any allegations of ulterior motives, deficiency in services, or unfair trade practices. They assert that they were diligent in their efforts to arrange the documents and comply with formalities.
(iv) The OP reiterate that the certified copies of title deeds, Non-Cognizable Report (NCR), and newspaper publication are sufficient to establish the Complainant's title to the property. The OP denies any inconsistencies or contradictions in the lost property report filed with the police and emphasizes that they have made sincere efforts to trace the documents. They state that no ulterior intentions can be attributed to them in this regard and denies any involvement in the Complainant's dealings with LICHFL and asserts that they have made diligent efforts to trace documents and offer support. The OP rejects claims of unethical behaviour and emphasize their commitment to securing the Complainant's title to the property. They deny any liability for restrictive trade practices and assert that they have proactively offered to secure the title of the Complainant's property. The OP denies the jurisdiction of the Hon'ble Commission to entertain the complaint.
6. Complainant in his rejoinder stated that: -
That the OP has not provided substantiation that all pieces of evidence were conveyed to the Complainant in response to their numerous appeals. The OP engaged in unfair trade practices and displayed service inadequacy by neglecting to furnish records of correspondence concerning the increase in Rate of Interest (ROI), a pivotal and essential piece of information. That the OP disclaims the ROI field being left vacant but admits to the online removal of the ROI field, citing "site under maintenance," which implies ill intentions.
That the loan agreement initially executed on 03.09.2012 was intended for the acquisition of a plot, coupled with an undertaking to construct a dwelling within a specified timeframe, thereby categorizing it as a Housing Loan. Subsequently, an additional loan was granted on 15.05.2015 for the explicit purpose of constructing a residence on the aforementioned property. The National Commission possesses the requisite jurisdiction to consider and address the complaint based on several grounds. These include the Complainant's loss of trust in the OP arising from the deliberate removal of the Rate of Interest (ROI) field, the OP's failure to furnish requested records, the inability to deliver the Original Property Title documents within the stipulated 30-day period, and the subsequent provision of Certified Copies in lieu of the lost Original documents. The alleged actions by the OP potentially amount to violations of the Consumer Right of Free Choice and imposition of unjustified restrictions on the Complainant.
7. Heard complainant, who appeared and argued in person and counsel for OP. The present case was earlier heard by a different Division Bench and orders were reserved on 07.07.2021. However, the orders could not be pronounced till the retirement of both the then Hon'ble Presiding Member (Hon'ble President) and then Hon'ble Member, the matter had to be heard a fresh by the new Bench. As the matter got listed for final hearing before a Single Member Bench today i.e. 07.07.2023, both sides were specifically asked whether they wish the matter to be re-heard a fresh by a Division Bench. Both sides stated that they have no objection if matter being re-heard a fresh by a Single Member Bench. Accordingly, the matter was re-heard a fresh. Contentions/pleas of the parties, on various issues raised in the Complaint, based on their Complaint/Reply, Rejoinder, Evidence, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.
The complainant asserts that the complainant unequivocally falls within the purview of a "consumer" as defined by the Consumer Protection Act. The complainant entered into a home loan arrangement with IBHFL, for the purpose of financing a residential property. During the course of this arrangement, the rate of interest associated with the loan was deliberately expunged from the online records by IBHFL. The deliberate removal of the Rate of Interest (ROI) field from the online interface, coupled with the assertion that the "site is under maintenance," serves as a potent indication of the OP's malevolent intent. Further, contention advanced by the complainant pertains to the OP's failure to fulfill the obligation of returning the authentic Title Deeds to the complainant. Instead, the OP preferred Certified Copies as a substitute. By imposing such a substitution, the OP created a scenario wherein the consumer's autonomy and choices are limited. This situation essentially leaves the consumer constantly reliant on the OP for any future credit transactions. This dependence hampers the consumer's ability to accurately assess the true market value of the property if they decide to sell it. Furthermore, there's the added concern of potential misuse of the property's title deeds by unscrupulous individuals, making the situation even more unfair. The OP's behaviour not only constitutes a Deficiency of Service but also encompasses Unfair Trade Practices and Restrictive Trade Practices. The combined impact of these actions has significantly infringed upon the complainant's rights, independence, and fair position within the consumer relationship.
The complainant relies on several judgements, wherein ICICI Bank vs Rajesh Khandelwal, Prabha Khandelwal (RP/90/2020), the National Commission stated that "Consumer Protection Act. 1986 - Section 2(1)(g); 14(1)(d), 21(a)(i) - Banking and Financial Institutions Services Loan account closed - Non-return of documents - Documents lost - Deficiency in service - OP has failed to return all documents which were entrusted to them by complainant - Opposite party cannot at this stage take plea that documents which they failed to return were of no value - Had that been so, there was no occasion for OP to ask complainant to deposit these documents for sanction of loan.
According to the settled principles of the Hon'ble National Commission, the non-returning of Original documents depicts deficiency in services and is an Unfair Trade Practice."
In State Bank of India vs. Amitesh Mazumdar (2020 SCC OnLine NCDRC 263), NCDRC held that "5. Three submissions have been made by the learned counsel for the petitioner. His first submission is that the bank is ready to provide the certified copy of the Title Deeds to the complainant. His second submission is that the bank will issue a Certificate to the complainant admitting the deposit of Title Deeds with the bank and its inability to return the same to the complainant. His third submission is that the petitioner bank shall bear the cost of issuing a public notice in the newspapers with respect to the loss of the Title Deed. This is also the submission of the learned counsel for the petitioner bank that the revenue record in respect of the immovable property in question is available with the complainant and can be used by him to establish his title.
In my opinion, even if all the steps suggested by the learned counsel for the petitioner are taken by the petitioner bank, that would not result in the complainant realizing the true market value of the immovable property in question, if he decides to sell the same in the market. No one in the market will agree to purchase an immovable property on payment of its prevailing market value, if he knows that the original Title Deed of the property will not be delivered to him by the seller. There will always be an apprehension of the misuse of the Title Deeds of the immovable property by an unscrupulous person, by depositing the same with a bonafide lender, since an Equitable Mortgage can be created by deposit of the Title Deeds. The erosion in the value of the property if it is to be sold without the Title Deeds, would be substantial and in fact even the compensation awarded by the District Forum and maintained by the State Commission may not be sufficient to make up such erosion in the market value of the property. Moreover, if the complainant decides to take a loan by deposit of the Title Deeds of the property against the property, he will not be able to get a ready lender in the market unless the Title Deeds of the property are deposited. In fact, even a bank may be unwilling to give a loan against an immovable property unless the Title Deeds of the property are deposited with it. Therefore, the compensation awarded by the fora below was eminently justified on account of the petitioner bank having lost the Title Deeds of the immovable property of the complainant. The view taken by the fora below does not call for any interference by this Commission in exercise of its revisional jurisdiction. The Revision Petition is therefore, dismissed with no order as to costs."
In Sheel Sohal & Anr. Vs. Axis Bank Ltd. (CC/ 1021/2016), it was held that "3. It would thus be seen that the OP namely Axis Bank Ltd. has lost or misplaced the original title documents of the residential flat owned by the complainants. The OP ought to have kept the aforesaid valuable documents in safe custody and ought to have ensured that the same are duly returned to the borrower after repayment of the loan. That having not been done, it is evident that the OP has been negligent or deficient in rendering services to the complainants who were their consumers.
4.The learned counsel for the OP submits that pursuant to the direction issued by the Banking Ombudsman, they have published a public notice in the newspaper, admitting therein that the original documents mentioned in the said public notice have been lost and are not traceable. A police report has also been lodged by the OP referring to the loss of the original title documents of the flat. The aforesaid steps taken by the bank, in my opinion, do not compensate the complainants for the loss they have suffered on account of loss of the valuable title documents and their use. No one would extend a loan against equitable mortgage of the property only by deposit of the copies of the title documents of the house and the lender would insist upon deposit of the original title documents in order to safeguard its own interest. In fact, the complainants did apply for grant of loan from a number of institutions including Yes Bank, IDFC Bank. Despite having been sanctioned, the loan could not be disbursed for want of deposit of original title documents. The learned counsel for the OP states that realizing the difficulty being faced by the complainants, they have already extended commercial loan to them against this very property i.e. flat no. 218 in Block-D, Pocket-A of Shalimar Bagh, Delhi though had the documents of the flat not been lost by the OP, it would not have extended the aforesaid concession to the complainants. However, it is not necessary that every time the complainant would approach only the OP namely Axis Bank Ltd. for advancement of a loan and in the event of the complainants approaching some other bank or financial institution, they are not likely to succeed in the absence of the original title documents of the house.
5. More importantly, it cannot be disputed that a property, if sold in the market, will not fetch its true price if the seller is not in a position to deliver the original title documents of the house to the purchaser. No purchaser will give full value of the house to the seller unless he is able to receive all the original title documents of the immovable property subject matter of the transaction. Therefore, it cannot be disputed that there will be erosion in the market value of the flat if it is sold in the market without original title documents, though no evidence has been led by the parties to prove what precisely is likely to be the loss if the said house/flat is sold in the open market without original title documents."
The counsel for the OP argues that the allegation concerning the ROI, the Complainant obtained loans at a Floating Rate of Interest, subject to fluctuations based on market factors. That the OP consistently informed the Complainant of such changes through multiple emails sent to the Complainant's provided email address. Additionally, the Complainant's loan documents were executed with the aforementioned email address and that communication regarding the ROI changes was exclusively transmitted to the address. Regarding the allegation of property value loss, the OP's counsel argues that it followed the common industry practice of safeguarding customers' original title documents with a designated vendor. Upon the closure and transfer of the Complainant's loan accounts to another financial institution, the OP promptly requested the return of the original title documents from the vendor. However, when the vendor could not locate the documents, the OP undertook proactive measures by lodging a Lost Property Report with the police and publishing notifications in newspapers. OP also assured the Complainant of its willingness to facilitate Certified True Copies of the title deeds. OP acted in accordance with the terms of the Loan Agreement, consistently provided requested documents and information to the Complainant, and even facilitated the transfer of loan accounts to the new financial institution upon the Complainant's request.
The counsel for OP further argues that the inability of the new institution (LICHFL) to accept Certified True Copies, is a matter between the Complainant and LICHFL, and OP should not be held responsible for their policies. The OP states that neither LICHFL nor the OP's vendor were included as parties in the present complaint. OP maintains that it has acted diligently, including taking steps to remedy the loss of original title documents and offering cooperation to secure Certified True Copies. OP asserts that the pecuniary jurisdiction of the current Commission is not appropriate for the complaint, as the claimed value of Rs.3,62,40,626/- is unsupported and lacks any factual basis.
OP relies on several judgements, wherein CAN FIN Homes Ltd. vs. J. Bhaskaran and Others (2020 SCC OnLine NCDRC 216), it was observed that "Three submissions have been made by the learned counsel for the petitioner. His first submission is that the bank is ready to provide the certified copy of the Title Deeds to the complainant. His second submission is that the bank will issue a Certificate to the complainant admitting the deposit of Title Deeds with the bank and its inability to return the same to the complainant. His third submission is that the petitioner bank shall bear the cost of issuing a public notice in the newspapers with respect to the loss of the Title Deed. This is also the submission of the learned counsel for the petitioner bank that the revenue record in respect of the immovable property in question is available with the complainant and can be used by him to establish his title.
ICICI Bank Ltd. vs Maharaj Krishan Datta And Ors. (2020 SCC OnLine NCDRC 263) "that a housing loan can be advanced either on a fixed rate of interest or on a floating rate of interest. In cases of floating rate of interest, the rate of interest is not fixed and varies from time to time with the changes in the economic environment and resultant changes in the borrowing cost of the Bank. For calculating such rates of interest, a bench mark rate is adopted, which in the present case is the Floating Reference Rate(FRR). The interest payable by the Borrower is determined by adding or subtracting the margin percentage from such a bench mark rate as agreed between the parties."
8. I have carefully gone through all the relevant case records, rival contentions of the parties and case laws relied upon by the parties. The fact of having received the original title deed documents and its misplacement is admitted by the OP. This in my opinion is a very serious lapse on the part of OP. Certified copy of the original documents is by no stretch of imagination a substitute of original documents. OP is fully liable vicariously for the wrongful action of its vendor having misplaced the original documents. It was the bounden duty of the OP to take proper care in keeping the documents safely and return the same to the complainant on foreclosure of the loan account/its transfer to another financial institution, a duty in which OP has failed miserably. I tend to agree with the contention of complainant that by imposing substitution of original copies with the certified ones, complainant's autonomy and choices have been compromised and restricted and leaves the complainant reliant on the OP for any future credit transactions on the security of property in question, and this also hampers complainant's ability to sell the property at its true market price as no prudent purchaser will be willing to pay the full prevalent market price for a property whose original title deeds are not available as it causes doubts in the mind of prospective buyers about the correctness of seller's title to property, his right to sell it, its non-encumbrance status, possibility of any defect in the title, possibility of future litigation and so on. This is a clear case of deficiency of service on the part of OP, with unfair trade practices and restrictive trade practices. I am of the considered view that issues covered in the present case are fully covered by the earlier judgments of this Commission relied upon by the Complainant. In ICICI Bank Vs. Rajesh Khandelwal (supra) this Commission had held that non-return of original documents depicts deficiency in services and unfair trade practices. In State Bank of India Vs. Amitesh Mazumdar (supra) this Commission had held that even if all the steps suggested by the Petitioner Bank, viz provision of certified copies of title deeds, issuing a certificate to complainant admitting deposit of title deeds with the bank and its inability to return the same to the complainant, bank bearing the cost of public notice in the newspapers with respect to the loss of the title deeds, and that revenue record in respect of the immovable property in question is available to complainant and can be used by him to establish his title, are taken by the bank, that would not result in the complainant realizing the true market value of the immovable property in question, if he decides to sell the same in the market. This Commission observed further - "No one in the market will agree to purchase an immovable property on payment of its prevailing market value, if he knows that the original Title Deed of the property will not be delivered to him by the seller. There will always be an apprehension of the misuse of the Title Deeds of the immovable property by an unscrupulous person, by depositing the same with a bonafide lender, since an Equitable Mortgage can be created by deposit of the Title Deeds. The erosion in the value of the property if it is to be sold without the Title Deeds, would be substantial and in fact even the compensation awarded by the District Forum and maintained by the State Commission may not be sufficient to make up such erosion in the market value of the property. Moreover, if the complainant decides to take a loan by deposit of the Title Deeds of the property against the property, he will not be able to get a ready lender in the market unless the Title Deeds of the property are deposited. In fact, even a bank may be unwilling to give a loan against an immovable property unless the Title Deeds of the property are deposited with it." In Sheel Sohal (supra) the Commission held "The OP ought to have kept the aforesaid valuable documents in safe custody and ought to have ensured that the same are duly returned to the borrower after repayment of the loan. That having not been done, it is evident that the OP has been negligent or deficient in rendering services to the complainants who were their consumers".
9. Commission has further observed in this case "The learned counsel for the OP submits that pursuant to the direction issued by the Banking Ombudsman, they have published a public notice in the newspaper, admitting therein that the original documents mentioned in the said public notice have been lost and are not traceable. A police report has also been lodged by the OP referring to the loss of the original title documents of the flat. The aforesaid steps taken by the bank, in my opinion, do not compensate the complainants for the loss they have suffered on account of loss of the valuable title documents and their use. No one would extend a loan against equitable mortgage of the property only by deposit of the copies of the title documents of the house and the lender would insist upon deposit of the original title documents in order to safeguard its own interest. ..... However, it is not necessary that every time the complainant would approach only the OP namely Axis Bank Ltd. for advancement of a loan and in the event of the complainants approaching some other bank or financial institution, they are not likely to succeed in the absence of the original title documents of the house. More importantly, it cannot be disputed that a property, if sold in the market, will not fetch its true price if the seller is not in a position to deliver the original title documents of the house to the purchaser. No purchaser will give full value of the house to the seller unless he is able to receive all the original title documents of the immovable property subject matter of the transaction. Therefore, it cannot be disputed that there will be erosion in the market value of the flat if it is sold in the market without original title documents, though no evidence has been led by the parties to prove what precisely is likely to be the loss if the said house/flat is sold in the open market without original title documents."
10. Hence, I am of the considered view that OP's contention that when vender could not locate the documents, OP took proactive measures by lodging a lost property report with the police, publishing notifications in newspapers, assuring the complainant of its willingness to facilitate certified true copy of title deeds etc. are not at all sufficient to absolve the OP against its liability to compensate the complainant for deficiency of service and negligence on its (OP's) part in having misplaced complainant's original title deeds.
11. As per valuation report dated 23.06.2019 by a registered valuer, done at the behest of Complainant, total estimated market value of the property (land & building) is Rs.1.81 crore.
12. In their reply dated 20.02.2020 to the legal notice dated 27.01.2020 sent by the Complainant, the OP stated as follows:-
"Please be informed that there is no negligence on part of the Lender. We wish to inform you that during the ordinary course of business, we handover the title deeds of the Borrowers with our Vendor(s) for safe custody and accordingly, we had deposited the title deeds, in connection to the Said property, with Vendor i.e. P.N. Writer and Company Pvt. Ltd. for safe custody. As a part of the due diligence, we inspect the loan documents and the title deeds pertaining to the security and as such, we had requested the Vendor to retrieve the title deeds of the Said Property from their safe custody. However, on further enquiry in regards to the status of retrieval of the title deeds, the Vendor has intimated us that they were not able to trace the whereabouts of title deeds of the Said Property and further assured that they were conducting extensive search in their premises to trace the title deeds/ documents of the Said Property. Please take note that with an endeavor to value and honor the customer relationship, we have already filed police complaint, in connection with the misplaced title deeds of the Said Property and also, we will take below mentioned steps to protect your interest -
1) Newspaper Publication will be done pertaining to the misplaced title deeds of the Said Property;
2) Certified True Copy of the registered Title Deeds of the Said Property will be retrieved from the office of the concerned Sub-Registrar;
As regards to your concerns pertaining to Certified True Copy of the title deeds pertaining to the Said Property, it is hereby clarified that you have all the opportunity to sell/ transfer and/or avail loan(s) from other banks/ financial institutions on the basis of the certified true copies of the title deeds of the Said Property along with police complaint/ first information report and newspaper publication. There is no mandate under the Law that the original title deeds of the property should be deposited to create security against the Loan facilities.
You would appreciate, there is no fault of Indiabulls Housing Finance Limited, and we had put our best efforts to trace the documents, which were misplaced by the Vendor. It was beyond our control when the Title Deed were misplaced/lost. We had taken all necessary steps which a prudent institution would do under such circumstances and all due procedure has been complied solely to protect your interest."
13. I have perused various communications between Complainant and OP on this issue as well as complaints filed by complainant with various authorities. Some of these are listed below.
(a) In its communication dated 30.12.2019, OP informed complainant as follows:-
"This is with reference to the Property Documents of the mortgaged Property, which were deposited and mortgaged with Indiabulls Housing Finance Limited ("the Lender") as security to secure the repayment of your Loan availed from the Lender vide loan account number HHLBAN00387974/HHLBAN00315577. The Lender has handed over the Property documents to vendor for the purpose of keeping the Property Documents in their safe custody, on behalf of the Lender.
Subsequent to closure of the Said Loan, we had requested for retrieval of your Property documents from our safe custody with our vendor. However, there has been a little delay on part of vendor in retrieving the same.
We are striving hard and doing everything to ensure that the documents would reach you in time. We request your forbearance towards this delay."
(b) Further a communication dated 09.01.2020 reads as follows:-
"As per the telephonic conversation with our executive, it is to informed you that your property documents of the mortgaged Property, which were deposited and mortgaged with Indiabulls Housing Finance Limited ('the Lender") as security to secure the repayment of your Loan availed from the Lender vide loan account number HHLBAN00387974/ HHLBAN00315577. The Lender has handed over the Property documents to vendor for the purpose of keeping the Property Documents in their safe custody, on behalf of the Lender.
Subsequent to closure of the Said Loan, we had requested for retrieval of your Property documents from our safe custody with our vendor. However, there has been a little delay on part of vendor in retrieving the same. We are striving hard and doing everything to ensure that the documents would reach you in time, However it will take 10 to 15 working days to process your request. We request your forbearance towards this delay."
(c) Similar thing was repeated in their mail dated 22.01.2020, relevant portion of which is reproduced below:-
"Despite our best efforts to deliver the documents on time, there has been a delay in arranging the return of documents. We request your forbearance towards this delay and allow us the time till 31st January, 2020. We will surely get back to you within the said time. We regret for the inconveniences that you have encountered. We understand the severity of the situation and be assured that we are doing everything to ensure the return of documents.
Further, with an endeavor to value and honor this relationship with you, the necessary steps will be taken in case the documents cannot be located-
A complaint will be lodged by the Vendor in the concerned Police Station, The Vendor shall issue a Newspapers publication in at least two national newspapers, Certified True Copy of the registered title deeds of the Said Property will be retrieved from the office of the Sub-Registrar concerned.
Also, it is to be notified that the said process will be initiated once we receive a go-ahead from your side and the said process will be finished in next 30 working days."
(d) Complainant again wrote to OP vide mail dated 23.01.2020 as follows:
"I need my Original Documents immediately as I cannot afford to provide any more timeline to Indiabulls as already multiple revision of Timelines missed with expiry of Full Three Calendar Months Till now. If not payback the Entire Loan Amount to LICHFL [paid by LICHFL for taking over my home loans from Indiabulls] as Compensation from Indiabulls for the loss of my Original Title Documents & associated negligence & all the inconvenience caused to me."
(e) This was followed by mail dated 25.02.2020, which is reproduced below:-
"Please note that the below Email which IBHFL Homeloans & Grievance Cell sent to me on 25/Feb/2020 is the copy paste of the same Email which IBHFL sent to me earlier on 07/Feb/2020 as well as 22/Jan/2020.
It is fully internal decision of IBHFL to handover my Original Registered Property. Title documents to a third-party vendor of IBHFL choice without my knowledge or any concurrence or go-ahead from myside & accordingly IBHFL must own the responsibility for the loss of my documents by IBHFL & vendors of IBHFL whomever it is & it's the call of IBHFL to lodge a police complaint against your vendor to secure my documents instead of asking me to concur & give go-ahead" from my side to initiate the above process while the responsibility of IBHFL is to Handover only my Registered Original property Title Documents. This clearly exposes the criminal attitude of IBHFL in washing off the responsibility of IBHFL & cover up the failure of IBHFL to safeguard my documents & handover it within original 30 days timeline committed while in turn trying to coerce me & forcibly get my concurrence for your failure by inducing further delays while it is already delayed by four Calendar months as on 25/Feb/2020 which is 126 days [while Loans foreclosed by LICHFL through Balance Takeover on 22/Oct/2019].
I need my Original Registered Property Title Documents & as communicated earlier & also reiterated many times that I wont accept any Certified Documents & it is the responsibility of IBHFL to return my Original Registered property Title documents.
With this background, I hereby "DEMAND IMMEDIATE RETURN OF ALL MY ORIGINAL REGISTERED PROPERTY TITLE DOCUMENTS" along with a "DEMAND OF ENTIRE LOAN AMOUNT FORECLOSED BY LICHFL AS COMPENSATION FROM IBHFL" for negligence of IBHFL & associated delays in return of my original documents, failure to meet the original timelines committed, as well as non-compliance towards the standard fair practices, deficiency in services, also failure to respond & failure to meet even the Revised Timelines committed by IBHFL & failure to respond and comply to my legal notice and all the inconvenience & mental agony caused to me through this. Further, if in case IBHFL fails to return my Original Registered Property Title Documents immediately, then it is very evident that my Original Registered Property Title documents are lost by IBHFL & IBHFL is just trying to employ cheap tactics to buy further time & induce further delays to coerce me & forcibly get my concurrence. With the above evident fact which is very much clear that IBHFL lost my Original Registered Property Title documents, then in addition to the above compensation, I also DEMAND TWICE THE CURRENT VALUATION OF MY PROPERTY [for which IBHFL took my Original Registered Property Title Documents under IBHFL custody as security for the above home loans] AS DAMAGES towards irreparable loss caused to me by IBHFL through the failure safeguard & leading to loss of my Original Registered Property Title Documents."
(f) In his mail dated 05.03.2020, complainant stated as follows:-
"Please find attached Notifications from LICHFL [dated 04/Mar/2020, 13/Feb/2020 & 06/Feb/2020] stating that they wont Accept Certified Documents & Foreclose the home Loan immediately pending receipt of my original documents even after 136 Days after my Homeloan foreclosure with IBHFL through Balance Transfer by LICHFL on 22/Oct/2019.
I am unable to Produce my Original Title Documents to LICHFL due to the FAULT OF IBHFL having Lost my Original Title Documents [as mentioned in your Poilce Complaint & Legal Notice Reply by Email stating that your Vendor who was tasked to store has Lost my Original Title documents].
LICHFL had communicated in their last Reply dated 04/Mar/2020 stating that "Pending handover of my Original Title documents Maximum by 07/Mar/2020 LICHFL legal team and collection team will be visiting your property and start process of take necessary steps to take control of property such as, legal proceedings against you in court and paste legal notice on property".
WITH THIS INDIABULLS HOUSING FINANCE LTD. IS BOUND AS PER LAW WITH VICARIOUS LIABILITY TO REPAY & FORECLOSE MY HOMELOAN WITH LICHFL AS DEMANDED BY THEM PENDING HANDOVER OF MY ORIGINAL TITLE DOCUMENTS.
Pending Handover of My Original Registered Title Documents immediately before 05/Mar/2020 ALONG WITH THE CLAIMED COMPENSATION FOR THE DELAYS, THE SAME CASE WILL BE FILED IN NATIONAL CONSUMER COURT AGAINST INDIABULLS HOUSING FINANCE LTD. INVITING HEAVY PENALTY ALONG WITH THE ASSOCIATED COMPENSATION & DAMAGES CLAIMED THROUGH COURT".
14. I have also gone through following documents:-
Code of Bank's Commitment to Customers -January 2014- issued by Banking Codes and Standards Board of India. The relevant para 8.12.1.2 -Applications for loans and their processing, is reproduced here as under.
"r. In the event of our losing the securities/documents/title deeds you have provided to us when you availed a loan, we will compensate you for the loss. We will issue a certificate indicating the securities/documents/ title deeds lost and extend all assistance to you for obtaining duplicate documents etc."
RBI has compiled various principles based on various decisions of Consumer Commissions and Supreme Court and put summary of same on its website under the heading 'Consumer Cases on Banking'. The para under 'Security for Loans' reads as follows:
(iv) Security for Loans " Non-return of documents Bank are liable for deficiency in service in cases where they fail to return the security documents even after repayment of the whole loan".
Recently RBI appointed committee to review Customer Service Standards in RBI Regulated Entities (Banks and other lending institutes) has given its recommendations (Report dated April 24, 2023). The Committee has suggested stipulating a time line for banks to return the property documents to borrowers from the date of closure of loan account, failing which a penalty or a compensation linked to the extent of delay should automatically be paid by the banks to the borrower.
15. Normally Banks ask for original documents and keep them until the loans are fully repaid. Original documents are essential, as they help in establishing ownership and preventing disputes. These documents are also required for future transactions and other property related matters. Ownership documents like title deeds, serve as legal validation of one's property ownership. Having these documents in their original form also reduces the risk of potential disputes or fraud in future. Hence, the original property documents are very valuable and essential documents for the owner of a property and its non-availability with him brings many adverse impacts/consequences.
16. As regards issue/allegation relating to unfair trade practice on the part of OP by significantly increasing the rate of interest (ROI) without prior notice and engaging in an unfavourable practice relating to online loan account and concealing the ROI field, preventing access to crucial information, failure to provide sufficient evidence of communications about ROI increases, contravening of RBI guidelines etc., OP argued that complainant obtained loan at a floating ROI, subject to fluctuation based on market factors, OP consistently informed the complainant of such charges through multiple emails to complainant sent on provided email address. We have gone through various communications made by complainant on this issue. Vide his email dated 10.01.2019, complainant has specifically asked "In online, why interest field is not mentioned for my loans. Earlier I have seen his field mentioned the interest rate. Kindly clarify and make sure the interest rate is visible." In his e-mail dated 12.01.2019, complainant writes that OP is increasing the ROI on their own without any communication. There was further mails dated 16.01.2019 to which the OP responded on 17.01.2019 stating that loan was under floating ROI, subject to IMLR hence rate changes are made strictly as per agreed terms and conditions of the loan agreement for all customers, to which the complainant replied on 22.01.2019 that he has not received any communication for most of ROI hikes done in the past 6 months and sought proof and associated references of any communications on this. Complainant reiterated his request for proof of communication on interest hikes vide his e-mail dated 27.04.2019. Complainant has contended that ROI for one of his loan account increased from 8.7% to 11.2% and for the others it increased from 8.4% to 10.9% spanning April 2018 to July 2019. The lack of disclosure deprived complainant of informed decision making regarding options like foreclosure or balance transfer.
17. In their reply dated 25.02.2020 to the Legal Notice dated 27.01.2020 sent by Complainant, OP have explained how the ROI is charged/changed from time to time when loan is sanctioned under floating rate of interest. OP has enclosed copies of intimation letters pertaining to increase in ROI along with their reply, denying the allegation pertaining to non-reflection of details pertaining to ROI on online platform.
18. Although we find that the loan being under 'floating rate of interest', the OP was entitled to revise the ROI from time to time as per terms and conditions of the loan/sanction order based on changes in IMLR, but OP was under obligation to notify such changes to the complainant and reflect the ROI/changes in it on the online account of complainant, a duty which the OP has not performed diligently. Hence, to this extent, there is a deficiency of service on the part of OP. The lack of proper intimation regarding such charges and its due reflections in the online account deprived the complainant of informed decision making regarding options like foreclosure or balance transfer, as contended by him. Hence, complainant is entitled to some compensation on account of such default on the part of OP.
19. The contention of OP(s) that this Commission lacks pecuniary jurisdiction is not valid. Under Section 21 of the Act, Commission has the jurisdiction where value of goods and services and compensation claimed, if any, exceeds Rs.one crore. In this case, the value of property whose documents have been misplaced, is more than Rs.one crore and complainant has claimed compensation of more than Rs. three crore along with interest etc.
20. From the foregoing, it is clear that there is deficiency in service on the part of OP. Hence, the complainant is entitled for compensation. The Hon'ble Supreme Court in Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. vs DLF Southern Homes Pvt. Ltd. & Ors. (2020) 16 SCC 512 held "The word "Compensation" is of a very vide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done". In Ireo Grace Realtech Pvt Ltd Vs Abhisekh Khanna and Ors (2021)3 SCC 241 Hon'ble Supreme Court held "Consumer Fora had jurisdiction to award just and reasonable compensation as an incident of power to direct removal of deficiency in service". Hence, in the instant case, complainant is entitled to compensation on account of negligence and deficiency in service on the part of OP as detailed in the foregoing paras.
21. Now the question arises is as to what should be the quantum of compensation. Quantum of compensation to be awarded has to take into account the hardship and mental agony which the complainant has undergone/undergoing on account of acts of omission/commission on the part of OP leading to misplacement of his original title deeds, which amount to deficiency in service, as well as expected loss on account of likely reduction in market value of the property on sale in future on account of complainant not having its original title deeds. Although there are no parameters to precisely determine such likely loss to the complainant in future, if and when he sells its property, I am of the considered view that such loss/reduction in value would be atleast 25%, but could be more as many factors may determine its future market value, and it may be difficult to precisely determine the contribution of factor of non-availability of original title deeds to such reduction. Hence, keeping in view various facts and circumstances of this case, I fix such loss/reduction in value at 25%. Taking the value of property as per valuation done by a registered valuer, as on 23.06.2019 (ignoring the appreciation in value of land since then as well as annual depreciation in value of building thereon), which is Rs.1.81 crore, 25% of which comes to Rs.45 lakhs. To this, I would like to add a reasonable amount of compensation of Rs.15 lakhs for harassment, suffering and mental agony gone through by the complainant. Hence, I fix the total value of compensation at Rs.60 lakhs to be payable by OP to complainant. The total compensation of Rs.60 Lakhs (Rs.15 Lakhs + Rs. 45 Lakhs) shall be payable in two parts as detailed below.
22. For the reasons stated hereinabove, and after giving a thoughtful consideration to the entire facts and circumstances of the case, various pleas raised by the learned Counsel for the Parties, the Consumer Complaint is allowed/disposed off with the following directions/reliefs: -
OP shall, within 2 months of date of this order, pay a compensation of Rs.15 lakhs to the complainant for the mental agony, suffering and harassment undergone so far on account of OP's acts of negligence and deficiency leading to misplacement of original title deeds as well as on account of not giving timely intimations about changes in ROI under the floating Rate of Interest and non-reflection of ROI field on the interest account.
OP shall, during the next six months from the date of this order, continue/revive its efforts to locate/trace the original title deeds with the help of police, its vender as well as its own efforts, taking all available measures to locate the missing original title deeds, and if successful, intimate the complainant through e-mail as well as registered post, within one week of the event of locating the original title deeds and hand over the same to the complainant, under due acknowledgement, within two weeks of locating such original documents. In case the OP fails to locate the original title deeds and hand over the same to the complainant within six months from the date of this order, then the complainant shall be entitled to a lump sum compensation of Rs.45 lakhs as determined in para 21 above on account of the negligence and deficiency in service on the part of the OP leading to misplacement of the original title deeds of the property and its failure to locate the same even within next six months of the date of this order thereby causing hardships and possible reduction in the value of the property and consequent potential/expected loss to the complainant. This payment shall be made to the complainant within a maximum of two months of expiry of the six months i.e. within a maximum of eight months from the date of this order. It is to be noted that if the OP fails to locate the document/original title deed within six months as per the para above, compensation of Rs.45 lakhs is to be paid, in addition to the payment of compensation of Rs.15 lakhs as per para 22 (i) above.
In case OP fails to locate and handover the original title deeds as per para 22 (ii) above, in addition to the compensation of Rs.45 lakhs payable under para 22 (ii) and compensation of Rs.15 lakhs payable under para 22 (i) above, OP shall also, within two months of expiry of six months i.e. within a maximum of eight months, issue a certificate on its official stationary, signed by duly authorized and competent authority of OP stating inter alia clearly:
That the complainant deposited the original title deeds of the property in question with OP for the purpose of availing a loan (giving all requisite details).
That the said original documents, while remaining in its custody during the pendency of said loan, got lost/misplaced, for which a police complaint was also lodged and public notice issued in the newspapers (giving all relevant details), but despite best efforts of the police and OP, the said documents could not be located/traced/retrieved.
That the certified true copy of the said property document, as obtained from the office of concerned Registrar/Competent Authority be enclosed with the certificate.
That OP shall extend credit facility to Complainant or any prospective buyer of such property against such certified true copy of the property, without insisting on original property documents, subject to applicant fulfilling other terms and conditions and/or procedural formalities for grant of loan against security of such property, on the same ROI/terms and conditions as it could have granted in case original property documents were available.
(iv) In case, the OP fails to make payment to the complainant within the time-lines stated in this order, it shall carry interest @9% p.a. from the due date as per this order till the date of actual payment.
23. The pending IAs, in the Consumer Complaint, if any, also stand disposed off.
................................................ DR. INDER JIT SINGH PRESIDING MEMBER