In a writ petition by a partnership firm whose original property documents were lost by the Bank after full repayment of the loan in 2003, the Bombay High Court has rejected SBI’s plea of retrospective inapplicability of RBI Circular and two-decade delay by the borrower, and directed reconstruction of the title record within 12 weeks. The Court said that a borrower who has fully repaid the loan is entitled to assume that the Bank will preserve and return the original title documents. Thus, the obligation to maintain proper custody, identification, retrieval and return rests solely on the Bank and cannot be shifted to the borrower merely because the borrower did not immediately seek return of the documents.
The Court clarified that internal administrative matters such as shifting of branch premises, transfer of records or change of personnel are within the Bank’s exclusive domain, and the obligation to preserve and return title documents does not depend upon the borrower reminding the Bank to perform that obligation. Specifically, the High Court held that the RBI Circular dated 13 September 2023 on Responsible Lending Conduct – Release of Movable/Immovable Property Documents on Repayment/Settlement of Personal Loans cannot be applied retrospectively to a period starting from 2003, but the prescribed compensation of Rs. 5,000 per day will apply prospectively from 1 December 2023 onwards where the loss of original documents is admitted and continuing prejudice is established.
Moving ahead, the Court emphasised that the proceedings before the Banking Ombudsman and a writ petition operate in different fields, and the Ombudsman’s advisory compensation of Rs. 1 lakh does not exhaust the borrower’s remedy. Further, the compensation under the RBI Circular is expressly without prejudice to the borrower’s right to seek any other compensation under applicable law. Strongly, the High Court directed that the bank is required to assist the borrower in obtaining duplicate or certified copies of the lost documents, bear the associated costs, and complete the reconstructed title record, including all necessary endorsements, affidavits, indemnities, certifications and supporting documents, within 12 weeks of the order, failing which the daily compensation continues to accrue.
The Division Bench comprising the Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad noted that there was no dispute on facts and that the Bank had admitted, both in correspondence dated 5th December 2023, 7th December 2023 and 15th March 2024, and in its affidavit in reply dated 23rd September 2025, that the original title documents were no longer traceable, thereby establishing the loss of the documents while in the Bank’s custody. The Bank’s contention that the petitioner had delayed by almost two decades in seeking return of the documents, and that during this period the Branch premises had been shifted, was rejected by the Court.
The Court observed that a borrower who has fully discharged the loan is entitled to proceed on the legitimate assumption that the Bank will preserve and return the original title documents, and that the burden of maintaining a proper system for preservation, identification, retrieval and return of documents rests solely on the Bank and cannot be shifted to the borrower merely because the borrower did not immediately seek their return. Internal administrative matters such as shifting of Branch premises, transfer of records or change of personnel were held to be within the Bank’s exclusive domain, and the obligation to preserve and return title documents cannot depend upon the borrower reminding the Bank to perform that obligation.
The Court further observed that the steps taken by the Bank, filing an FIR, issuing newspaper advertisements, and procuring copies from MIDC, may assist in mitigating the consequences of the loss but do not erase the primary default of the Bank, since original title documents are important in the chain of title and ordinarily required when the owner seeks to sell, mortgage, transfer or otherwise deal with the property. The Court also rejected the Bank’s plea that the proceedings before the Banking Ombudsman exhausted the petitioner’s remedy, holding that the Ombudsman proceedings and the writ petition operate in different fields, and that the Rs. 1 lakh advisory compensation paid by the Ombudsman does not prevent the Court from examining the admitted loss, the continuing prejudice and the adequacy of remedial measures.
Briefly, a partnership firm, M/s. In Vogue Creations, purchased two properties at Bussa Industrial Premises Co-operative Society, Prabhadevi, Mumbai, and an MIDC plot at Taloja, Panvel, and deposited the original title documents along with share certificates and the registered Lease Deed with the State Bank of India’s Commercial Branch at Dadar, Mumbai in 1979 as security for loan facilities. The loan was fully repaid by the petitioner on 28th August 2003, and the Bank issued a No Dues/No Claims Certificate on 27th July 2023 confirming that it had no claim or mortgage over the properties, yet the original title documents were never returned.
By letters dated 5th and 7th December 2023, the Bank acknowledged to the Society and MIDC that it was unable to locate the title documents and requested them to issue certified/true copies to the petitioner. The petitioner lodged a police complaint, published newspaper advertisements, and approached the Banking Ombudsman-RBI, who on 21st November 2024 advised the Bank to pay compensation of Rs. 1 lakh. The Bank deposited this amount in the petitioner’s account on 22nd November 2024, but the petitioner declined to accept it as adequate.
The Bank thereafter lodged an FIR on 14th January 2024, published newspaper advertisements, and obtained true copies of certain MIDC documents which were forwarded to the petitioner on 15th March 2024. The petitioner contended that the documents furnished constituted an incomplete set and that the Bank had failed to address the stamp duty aspect, and correspondence continued through 2024-25 with the petitioner calling upon the Bank to trace and return the originals to enable sale of both properties. Aggrieved by the failure to return the originals and the inadequacy of compensation under the RBI Circular dated 13th September 2023 on ‘Responsible Lending Conduct – Release of Movable/Immovable Property Documents on Repayment/Settlement of Personal Loans’, the petitioner filed the writ.
