Handing over Chennai woman’s title deed to another family member costs Bank of India Rs 10 lakh; here’s why

“The Bank had clearly acted on its own without any instructions of the Complainant on its perception about the registered settlement deed and has proceeded to deliver the same to the grand-daughter without any communication to the Complainant prior to its release. This is a clear deficiency on the part of the Bank,” the commission observed on May 29.

Justice A P Sahi (NCDRC president) and Bharatkumar Pandya (member) heard the matter on May 29.

Following the woman’s death in 2015, the proceedings were continued by her two daughters as legal heirs.

Bank ‘clearly deficient’

• The bank has been clearly deficient and has acted unfairly, and to that extent, we find that the complainant has rightly instituted this complaint, the apex consumer body noted.
• The complainant has proved, based on the documents of the bank itself, that the release of the title deed to the granddaughter by the bank was a clear breach and deficiency for which the complainant deserves to be compensated.
• The property has already been sold by the granddaughter, and the matter is now being contested before the civil court because of the conduct of the bank as discussed where the title deed was handed over to the granddaughter.
• The contention of the counsel for the bank that no loss has been caused is misconceived since not only the right of redemption but also the property now stands sold to third parties.
• The complainants, who are the heirs, will have to find their way out in the civil court to recover the loss so far as the property or its value is concerned.
• Consequently, to say that no loss has been suffered is an argument that defies logic.

‘No authority’

• The bank had no authority to decide the entitlement of return of the deed contrary to its own transactions, where the title deed was admittedly relating to the residential house of the complainant and had been deposited by the complainant as collateral security for the loan account and cash credit account for her son’s concern.
• The deed was returned without the closure of the cash credit account.
• In all fairness, even if the bank was proposing to return the title deed to the granddaughter based on the settlement deed, it ought to have informed the complainant or sought for an authorisation.
• Even otherwise, if it wanted to release the title deed to the granddaughter, it ought to have deliberated upon it with some order of any competent authority, as the release of the title deed resulted in a form of denial of an opportunity of redemption to the complainant.
• This is the loss about which the complaint has been made.

How dispute began

The case traces its roots to 1997, when Annamma Chinnan deposited the title deeds of her residential property in Chennai as collateral security for loans and cash credit facilities extended by Bank of India to her son Chinnan Sherry’s proprietorship concern, M/s Square Connections.

The family’s circumstances changed after Chinnan Sherry died on February 12, 2008. His widow, Premila Sherry, subsequently took over the business.

According to the complaint, Annamma did not wish to continue as guarantor after her son’s death and repeatedly sought information from the bank regarding the outstanding dues so that her property documents could be returned.

Bank’s assurances and surprising revelation

Documents before the consumer commission showed that the bank had informed Annamma through a letter dated August 2, 2010, that the property papers would be handed over only after closure of the cash credit account.

However, months later, the bank disclosed through another letter dated February 10, 2011, that the title deeds had in fact already been handed over to Annamma’s granddaughter, Shermila Ann Sherry, on January 24, 2009.

The contradiction became one of the central issues in the case.

The complainant argued that the bank had concealed the release of the documents and continued to give misleading information despite repeated requests.

Settlement deed at heart of controversy

The bank defended its actions by claiming that the documents had been released on the basis of a registered settlement deed allegedly executed by Annamma in favour of her granddaughter on August 15, 2008, and registered on November 4, 2008.

But the elderly woman disputed the validity of the settlement deed and approached the Madras High Court in 2013 seeking its cancellation.

She also challenged a subsequent sale deed executed by the granddaughter after the property was sold to a third party. That civil suit remains pending.

Before the NCDRC, the complainant argued that the bank had no authority to assume that ownership had validly passed to the granddaughter and release the original title deeds without her consent.

What commission found

• After examining the records, the consumer commission found that the bank could not produce any document, authorisation, instruction or internal order showing why the title deeds had been handed over to the granddaughter.
• The bench noted that the bank itself had admitted that the cash credit account remained operational until August 24, 2011. Yet the title deeds had been released more than two years earlier on January 24, 2009.
• There is “no explanation by the Bank” as to why the title deeds were released to the granddaughter on January 24, 2009, without the closure of the cash credit account, the commission observed.
• The commission also found it significant that the bank never informed Annamma beforehand that it intended to release the documents based on the settlement deed.
• According to the bench, even if the bank believed the settlement deed was genuine, it ought to have informed the owner, sought her authorisation or obtained a proper decision from a competent authority before releasing the documents.
• Instead, the bank acted solely on its own interpretation of the settlement deed.

Loss of redemption rights

• A key finding of the consumer commission was that the bank’s conduct deprived Annamma of her right to redeem the mortgage.
• The bench observed that the title deeds had originally been deposited by her and were linked to both the term loan and cash credit accounts. Therefore, the documents should not have been released before all liabilities were cleared.
• The commission said the bank effectively facilitated the transfer of possession of the title deeds to the granddaughter, who later sold the property, resulting in prolonged litigation and loss to the complainant and her heirs.
• Rejecting the bank’s argument that no actual loss had been caused, the consumer commission said the contention “defies logic” because the property had already been sold and the family was now forced to pursue legal remedies in civil court.

Compensation awarded

• Holding the bank guilty of deficiency in service and unfair conduct, the commission awarded a lump-sum compensation of Rs 10 lakh.
• The amount will carry interest at 6 per cent per annum from January 24, 2009, the date on which the title deeds were handed over, until actual payment.
• The commission further directed that if the amount is not paid within three months, the interest rate would increase to 9 per cent per annum.
• The compensation will be divided equally between Annamma Chinnan’s two daughters, who were substituted as legal heirs during the proceedings.

Why ruling matters

The ruling serves as a reminder that banks holding original title deeds as mortgage security cannot independently determine ownership disputes or decide who is entitled to receive such documents.

The NCDRC made it clear that even where a transfer document exists, financial institutions must exercise caution, follow due process and ensure that the rights of the person who deposited the security are protected before releasing original property papers.

Why top consumer body ordered SBI to refund Rs 13 lakh siphoned off from retired professor’s account

The National Consumer Disputes Redressal Commission (NCDRC) has directed the State Bank of India (SBI) to refund Rs 12.93 lakh fraudulently siphoned off from the account of a retired Bengaluru professor in an alleged digital scam, ruling that the customer was entitled to “zero liability” protection under RBI guidelines.

A bench comprising Justice A P Sahi (president) and Bharatkumar Pandya (member) was hearing a second appeal filed by SBI against concurrent findings of the district consumer commission, Bengaluru, and the Karnataka State Consumer Disputes Redressal Commission, both of which had ruled in favour of one K P Sreenath, a retired professor of Botany at Bangalore University.