Bank Lost Title Deeds – RBI Circular of 2023 f
Judgment dated 2.9.2026 of the High Court of Bombay in Writ Petition No.10241 of 2025 of M/s In Vogue Creations Vs. State Bank of India
Loss of Original Title Deeds by SBI
In 1973, the petitioner purchased units in the Society at Prabhadevi Mumbai and in 1979, the original Agreements with share certificates with lease deed were deposited with the Respondent SBI at Dadar, Mumbai.
The loan was fully paid by the petitioner on 28.8.2003. No dues certificate was also given. However, the Bank has lost the original documents.
Aggrieved by the failure of the Respondent to locate the original title deeds and pay compensation under Circular dated 13th September, 2023 on “Responsible Lending Conduct – Release of Movable/Immovable Property Documents on Repayment/Settlement of Personal Loans” issued by the Reserve Bank of India (“Circular”) the present Petition has been filed.
in light of the RBI Circular dated 13th September, 2023, which provides for compensation at the rate of Rs.5,000/- per day for delay from 2003 in returning original property documents after repayment of the loan. The Respondent ought to be directed to also furnish legally valid certified copies of all the lost documents, together with such endorsements, declarations and other supporting documents as may be necessary to enable the Petitioner to establish clear title and facilitate the sale of the properties.
The Respondent contends that there was a substantial delay of almost two decades by the Petitioner in demanding its title documents. During this period the Branch premises were shifted and, despite efforts made subsequently, the title documents could not be traced. We are unable to accept this contention. The fact that the Petitioner may not have immediately approached the Respondent after repayment of the loan seeking return of the original documents cannot absolve the Respondent of its obligation to preserve the title documents. In our view, a borrower who has fully discharged the loan is entitled to proceed on the legitimate assumption that the Bank or a Financial Institution entrusted with the custody of valuable original title documents, will maintain proper custody of those documents and return them upon discharge of the secured liability. The burden of maintaining a proper system for preservation, identification, retrieval and return of documents is solely on the Respondent. It cannot be shifted to the borrower merely because the borrower did not immediately seek their return. The Petitioner has nothing to do with the change in Branch premises, internal transfer of records or change of personnel. These are all matters falling within the Respondent’s exclusive internal administrative domain. The obligation to preserve title documents and to return them upon discharge of the underlying liability cannot depend upon the borrower reminding the Bank to perform that obligation. To hold otherwise would mean that a Bank could lose original title documents in its custody and thereafter seek to avoid responsibility merely because the borrower did not demand their return immediately upon repayment of the loan. Such a proposition cannot be accepted.
The Respondent’s steps, of filing an FIR, issuing newspaper advertisements and procuring copies from M.I.D.C. etc, in assisting the Petitioner may assist in mitigating the consequences of the loss. They do not, however, erase the primary default of the Bank. The original title documents are important in the chain of title and are ordinarily required when the owner seeks to sell, mortgage, transfer or otherwise deal with the property. Hence, we direct the Respondent to take all steps in obtaining duplicate or certified copies of the documents which have been lost and in completing the reconstructed title record, including all necessary endorsements, declarations, affidavits, indemnities, certifications and other supporting documents required by the concerned statutory authorities, society or prospective transferee for confirming the Petitioner’s title to the properties.
