Imagine this situation: you take a loan from a bank and hand over as security, original title deeds of a property that you own and when the time comes for you to take back those papers, the bank says that it has lost them!

This is exactly what happened to Mr C.L. Khanna, forcing him to eventually seek the help of the consumer court. The apex consumer court’s order, awarding him compensation should force banks to be far more careful with the valuables entrusted to their care.

A small scale industrialist, Mr Khanna took a loan in 1973, against the collateral security of his plot of land in the Okhla industrial area, Delhi. Fifteen years later, when he offered to clear the loan and demanded the title deeds, he learnt that the bank had actually lost the documents.

So, he kept the loan account alive and demanded that the bank return his papers as a pre-condition to his clearing the loan. But the bank apparently continued to charge him interest on his loan, without returning the title deeds.

Mr Khanna then approached the Banking Ombudsman, with a prayer that the outstanding amount against his loan be waived, and the bank return his documents. He also wanted compensation for all the harassment he underwent on account of the negligence on the part of the bank.

The Ombudsman directed the bank to file an FIR with the police about the loss of the title deed, advertise in newspapers and help him get a duplicate title deed. And the Ombudsman said all this should be done at the bank’s expense. However, he rejected the other pleas of the consumer on the grounds that it did not fall within the ambit of the Ombudsman Scheme.

Accordingly, Mr Khanna filed a complaint before the apex consumer court, which held the bank guilty of negligence in losing the title deeds.

It, therefore, directed the bank to: a) help the consumer get back his title deed as suggested by the Ombudsman and b) not to charge any interest on the loan amount from the year 1989, when the consumer was prepared to clear the loan, but held back because of the bank’s failure to return the papers.

In addition, it asked the bank to pay the consumer Rs 1 lakh as compensation and Rs 25,000 towards costs of litigation.

(C.L. Khanna Vs Dena Bank,OP no 70 of 2002, decided on September 2, 2005)