New Delhi | In a significant ruling reinforcing consumer rights, the Delhi State Consumer Disputes Redressal Commission has upheld an order directing LIC Housing Finance to pay ₹10 lakh in compensation for losing a borrower’s original property documents. The Commission observed that safeguarding original documents entrusted by customers is a fundamental responsibility of financial institutions and that failure to return them amounts to a serious deficiency in service.
The dispute relates to a residential property located in Hauz Khas, South Delhi. Complainant Bindu Roy had obtained a home loan of ₹1 lakh from LIC Housing Finance in December 1994 for the purchase of the property. She later secured an additional loan of ₹2 lakh for renovation work. As security for the loans, all original ownership and title documents of the property were deposited with the lender.
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According to court records, the complainant fully repaid the loan in August 2010. Following repayment, she sought the return of her original property documents. However, the company failed to hand over the papers despite repeated requests. The complainant sent written communications in October 2010, May 2011, September 2013 and April 2014, yet received no satisfactory explanation regarding the whereabouts of the documents.
A crucial piece of evidence emerged during the proceedings in the form of a certificate issued by LIC Housing Finance on January 31, 1996. The certificate explicitly stated that the property was mortgaged with the company and that all original documents relating to the property were in its custody. The Commission relied heavily on this document, holding that it clearly established that the original papers had indeed been deposited with the lender.
When the matter reached the consumer forum, LIC Housing Finance argued that the complainant had never deposited the original sale deed or title documents with the company. It further contended that the ₹10 lakh compensation awarded by the district forum was excessive, as there was no evidence that the missing documents had been misused or had caused direct financial loss.
The company also submitted that it was willing to assist the complainant by lodging a police complaint, issuing a public notice, and obtaining certified copies of the lost documents at its own expense. However, the Commission observed that such offers could not absolve the lender of responsibility for losing documents that had been entrusted to it for safekeeping.
In its order, the State Commission noted that there was no material on record to support the company’s claim that the original documents had never been deposited. On the contrary, the certificate issued by LIC Housing Finance itself conclusively showed that the documents were under its custody. The Commission remarked that the lender’s denial appeared to be an afterthought and was not supported by credible evidence.
The Commission further emphasized that original title deeds are among the most important documents a property owner possesses. Their absence can create significant obstacles in selling, mortgaging, transferring, or otherwise dealing with a property. Prospective buyers and financial institutions may view such properties as risky, potentially affecting both their marketability and value.
The order also highlighted that banks and housing finance companies act as custodians of documents entrusted by customers. As such, they are expected to maintain high standards of record management and document security. Failure to discharge this responsibility, the Commission held, makes them liable under consumer protection laws.
After examining the evidence and hearing both parties, the State Commission found no illegality or irregularity in the district forum’s findings. Consequently, it dismissed LIC Housing Finance’s appeal and upheld the direction to pay ₹10 lakh compensation to the complainant. The ruling is being viewed as an important precedent for consumer protection, sending a strong message that safeguarding customers’ original property documents is not merely an administrative obligation but a serious legal responsibility.
