Bombay High Court Orders SBI to Pay ₹5,000 Daily for Lost Title Deeds; Holds Bank Responsible Despite Borrower’s Two-Decade Delay in Seeking Return Post Repayment
Bombay High Court Orders SBI to Compensate Borrower ₹5,000 Per Day After Losing Original Property Documents Kept as Security for Repaid Loan
Facts
M/s In Vogue Creations had purchased Units/Gala Nos. 317 and 318 at Bussa Industrial Premises Co-operative Society, Prabhadevi, Mumbai, under agreements dated 4 December 1973 and 3 August 1978. The original agreements and share certificates were deposited with State Bank of India in July 1979 as security for credit facilities.
The petitioner also held a second property at Plot W-154, MIDC, Taloja, Panvel, under a registered lease dated 22 March 1979. That lease deed was also deposited with SBI as security.
The loan facilities were fully repaid on 28 August 2003. SBI later issued a No Dues/No Claims Certificate confirming that no mortgage or claim survived over the properties. However, the original title documents were never returned. SBI eventually admitted that it was unable to locate them.
The petitioner lodged a police complaint, published a newspaper notice and approached the Banking Ombudsman. The Ombudsman advised SBI to pay ₹1 lakh compensation, which the petitioner declined, although SBI credited the amount to its account.
The petitioner thereafter approached the Bombay High Court seeking compensation and directions requiring SBI to reconstruct legally valid title records.
Issues
The Court considered whether SBI was liable for losing original property documents deposited with it as security; whether the borrower’s failure to demand the documents for nearly two decades after repayment absolved the Bank; whether the RBI Circular dated 13 September 2023 providing ₹5,000 per day compensation applied; whether the Circular could operate retrospectively from 2003; and whether the earlier ₹1 lakh Ombudsman compensation exhausted the petitioner’s remedies.
Petitioner’s Arguments
The petitioner argued that the loan had been fully repaid and SBI itself admitted that the original title deeds were lost while in its custody.
The loss was causing continuing prejudice because the petitioner wished to sell the properties but could not effectively establish a complete marketable title without the originals.
It relied upon the RBI Circular dated 13 September 2023, contending that SBI should pay compensation at ₹5,000 per day, originally claiming that the amount should run from 2003. It also sought legally valid certified copies together with endorsements, declarations, affidavits and other documentation necessary for dealing with the properties.
Respondent’s Arguments
SBI admitted that it could not trace the original title documents.
However, it argued that the petitioner itself had not sought return of the documents for more than 15 years after repayment. During that period, the branch had shifted premises, and despite subsequent searches, the documents could not be located.
SBI further contended that the RBI Circular could not operate retrospectively and therefore the petitioner’s claim of approximately ₹3.93 crore was untenable.
It also relied upon the ₹1 lakh already paid pursuant to the Banking Ombudsman proceedings and the various remedial steps it had taken, including FIRs, newspaper advertisements, affidavits and efforts to procure substitute documents.
Analysis of the Law
Bank’s Duty to Preserve Original Documents
The High Court held that once the loan was fully discharged in 2003, SBI had no subsisting right to retain the original title deeds.
The Bank’s own correspondence and affidavit established that the original documents were no longer traceable. Their loss while in SBI’s custody was therefore proved.
The Court rejected SBI’s argument that the borrower’s long delay in demanding return of the documents shifted responsibility.
It held that a borrower who has repaid the secured liability is entitled to legitimately assume that the bank entrusted with valuable originals will preserve and return them.
The burden of establishing systems for preservation, identification, retrieval and return of documents rests solely upon the bank. Internal events such as branch relocation, record transfers or personnel changes cannot be used against the borrower.
Reconstruction of Title Is Bank’s Responsibility
The Court recognized that original title documents form an important part of the chain of title and are routinely required for sale, mortgage, transfer and other property dealings.
Accordingly, SBI was directed not merely to provide whatever photocopies were available but to reconstruct the title record comprehensively by obtaining duplicate or certified copies and securing all required endorsements, declarations, affidavits, indemnities and certifications.
RBI Circular and ₹5,000 Daily Compensation
The RBI Circular dated 13 September 2023 requires regulated entities to release original movable and immovable property documents within 30 days after full repayment or settlement.
Where the delay is attributable to the regulated entity, compensation is prescribed at ₹5,000 for every day of delay. In cases involving lost or damaged originals, the bank must additionally assist the borrower in obtaining duplicate or certified documents and bear the associated costs.
The High Court agreed with SBI on one limited point: the Circular could not be retrospectively applied from 2003.
Its express applicability covers cases where release of original documents falls due on or after 1 December 2023.
However, because the original documents remained lost and the prejudice continued, the Court held that the RBI-prescribed rate of ₹5,000 per day became payable from 1 December 2023 onwards.
Precedent / Regulatory Analysis
The judgment is driven principally by the RBI Circular dated 13 September 2023 on “Responsible Lending Conduct – Release of Movable/Immovable Property Documents on Repayment/Settlement of Personal Loans.”
The Court noted that the Circular itself builds upon RBI’s Fair Practices Code regime existing since 2003 and reflects RBI’s recognition that timely release of title documents is an important part of responsible lending conduct.
The Court treated the prescribed ₹5,000 daily amount as more than an arbitrary penalty. It regarded the figure as an objective and rational regulatory measure of prejudice caused when a regulated entity fails to fulfil its obligations concerning original property documents.
Court’s Reasoning
The Court drew a clear distinction between the date when the Bank’s underlying default began and the date from which the RBI’s quantified compensation mechanism could legally operate.
SBI had been obliged to safeguard and return the documents after repayment in 2003. But the specific ₹5,000-per-day formula introduced in 2023 could operate only prospectively from 1 December 2023.
The Court also rejected SBI’s argument that the ₹1 lakh Ombudsman amount foreclosed further relief.
The Banking Ombudsman proceedings and the writ petition operated in different fields. More importantly, the RBI Circular itself expressly states that compensation under it is without prejudice to a borrower’s right to seek other compensation under applicable law.
Therefore, the ₹1 lakh already credited merely had to be adjusted against the compensation payable under the High Court’s order.
Conclusion
The Bombay High Court allowed the writ petition.
It directed SBI to:
- pay the petitioner ₹5,000 per day from 1 December 2023;
- adjust the ₹1 lakh already credited pursuant to the Banking Ombudsman proceedings;
- continue paying the ₹5,000 daily amount until certified copies for both properties are provided and the complete title record is reconstructed;
- obtain all necessary endorsements, affidavits, indemnities and supporting title documents;
- bear the consequences and costs associated with reconstruction; and
- complete the entire exercise within 12 weeks.
The judgment establishes a significant banking-law principle: a bank cannot shift responsibility for lost title deeds onto a borrower merely because the borrower did not immediately demand their return after repayment. Preservation and return of documents is the bank’s continuing custodial obligation.
Case Details
Case: M/s In Vogue Creations v. State Bank of India
Citation: 2026:BHC-AS:36037-DB
Court: Bombay High Court, Civil Appellate Jurisdiction
Case Number: Writ Petition No. 10241 of 2025
Bench: Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad
Judgment by: Justice Gautam A. Ankhad
Reserved on: 28 August 2026
Pronounced on: 2 September 2026
Result: Petition allowed; SBI directed to pay ₹5,000 per day from 1 December 2023 until full reconstruction of both property title records, after adjusting ₹1 lakh already paid, and to complete reconstruction within 12 weeks
