The Bombay High Court has ordered the State Bank of India to pay daily compensation of ₹5,000 to a Mumbai company after the bank failed to return original property-title documents submitted as security for a loan that was fully repaid, while directing it to recreate and provide legally valid documents within 12 weeks.
A division bench comprising Acting Chief Justice Ravindra Ghuge and Justice Gautam Ankhad issued the order while hearing a petition filed by M/s In Vogue Creations. The petition was filed by 78-year-old Achala Joshi, a partner in the company, which had deposited the original title documents of two commercial properties in Prabhadevi and Taloja with SBI’s Dadar branch in 1979 to obtain a loan facility.
According to the report, the company completed repayment of the loan in August 2003. However, the original property documents were not returned. The bank later informed Joshi that the documents could not be located after the branch was shifted.
The High Court observed that safeguarding original documents that establish ownership and returning them after full repayment of a loan are legal responsibilities of a bank. It also said borrowers are entitled to assume that a bank or financial institution will properly preserve valuable original title documents and return them after the loan is cleared. Borrowers should not have to repeatedly remind the lender to fulfil that responsibility, the court said.
The petitioners had sought compensation of ₹3.93 crore under a Reserve Bank of India circular. The company told the court that it had waited 15 years for the documents to be returned. SBI argued that the ₹1 lakh compensation previously awarded by the banking ombudsman was sufficient.
The court rejected the bank’s defence that internal administrative delays or the shifting of branches could explain the failure to preserve the documents. Relying on the RBI’s September 2023 guidelines concerning responsible lending, the bench directed SBI to pay ₹5,000 per day from December 1, 2023, until legally valid original documents and certified copies are made available.
The order also allows SBI to adjust the ₹1 lakh already paid through the banking ombudsman process against the amount payable under the High Court’s direction. The bank has been given 12 weeks to recreate the documents. The daily compensation will continue until the required documents or legally valid replacements and certified copies are provided.
