The Kerala High Court, led by Justice Bechu Kurian Thomas, has penalised South Indian Bank’s Aluva Branch for unlawfully retaining original property documents even after the full loan repayment by the borrowers.
The petitioners—Sheela Francis Parakkal and her sons—had availed a housing loan from the bank in 2009. As part of the loan agreement, they submitted four title deeds as collateral. These included two exchange deeds, a release deed, and a sale deed, all registered in the Aluva Sub Registry Office. Despite clearing the loan in August 2015 by paying ₹58,01,320, the bank failed to return the original documents.
Read Also:- Rajasthan High Court Reiterates Section 15 of Rent Control Act Is Directory, Not Mandatory
Repeated requests were made, including through letters and legal notices, but the bank neither returned the documents nor provided any explanation. The petitioners contended that withholding the deeds without valid authority, especially after the loan closure, was illegal. They approached the High Court seeking the return of documents and compensation of ₹10 lakhs.
In defence, the bank claimed it had released the documents and was no longer in possession. The branch manager stated that the office had relocated in July 2023 and many closed files were disposed of during the move. A thorough internal search did not reveal the title deeds. The bank also tried to shift blame to HDB Financial Services, which had taken over the loan, alleging they might have collected the deeds.
Read Also:- Delhi High Court Sets Clear Rules for Sentence Review Board on Premature Release of Prisoners
However, the Court found this argument baseless. It was confirmed that the HDB loan was secured against other properties. There was no evidence of the return of the deeds or that HDB had received them. Thus, the responsibility rested squarely with South Indian Bank.
"There is no document evidencing return of the title deeds. Hence, the second respondent is bound to answer the whereabouts of the title deeds," the Court observed.
Justice Thomas referred to the Reserve Bank of India Circular dated 13.09.2023 (No. DOR.MCS.REC.38/01.01.001/2023-24), which mandates compensation of ₹5,000 per day for delays in returning original documents after loan closure.
Read Also:- Orissa High Court Upholds Divorce on Grounds of Mental Cruelty Over Wife’s Remarks on Husband’s Disability
However, the Court clarified that compensation under Article 226 of the Constitution could not be granted in this case, as it was not a violation of fundamental rights. The petitioners were directed to approach an appropriate forum for compensation claims.
Still, recognising the irresponsible conduct and attempts to mislead the Court, Justice Thomas imposed a total cost of ₹50,000 on South Indian Bank. Out of this, ₹25,000 must be paid to the petitioners and ₹25,000 to the Kerala Legal Services Authority within 15 days of receiving the judgment.
"It has to be declared that the second respondent has no authority to retain the original title deeds of the petitioner after closure of a loan account," the Court ruled.
Case Title: Sheela Francis Parakkal and Others v The Authorised Officer and Others
Case No: WP(C) NO. 11247 OF 2024
