Bombay High Court Orders Bank to Compensate Rs 5,000 Daily for Lost Property Papers Since 2003
The Bombay High Court has ordered the State Bank of India (SBI) to pay Rs 5,000 per day in compensation to In Vogue Creations after the bank admitted it could not locate the original title documents for two properties used as loan security. The ruling comes after the bank failed to return the documents following the repayment of a loan taken in 1979, which was fully settled in 2003.
Background of the Case
In Vogue Creations secured a loan from SBI in 1979, providing agreements and share certificates for two units at Bussa Industrial Premises Co-operative Society in Mumbai as collateral. The firm also deposited documents related to a plot leased from the Maharashtra Industrial Development Corporation (MIDC). After repaying the loan in 2003, In Vogue Creations received a No Dues/No Claims Certificate from SBI, confirming no remaining claims on the properties. However, the original title documents were not returned.
SBI later acknowledged the loss of the documents, informing relevant authorities in December 2023 that it could not trace them. The bank requested certified copies from the Bussa Industrial Premises Co-operative Society and MIDC.
Arguments from Both Sides
In Vogue Creations took several steps to recover the missing documents, including publishing a newspaper advertisement and filing a complaint with the Dadar Police Station. The Banking Ombudsman advised SBI to pay Rs 1 lakh as compensation, which the bank deposited but the firm did not accept. In Vogue Creations argued that the replacement documents provided by SBI were incomplete and did not resolve issues related to stamp duty.
SBI contended that the firm did not request the return of the documents until more than 15 years after the loan was repaid. The bank claimed it made efforts to locate the documents but was unsuccessful. SBI also challenged the maintainability of the firm’s petition, stating that the compensation ordered by the Banking Ombudsman had already been addressed.
Court’s Decision
On September 2, 2026, the Bombay High Court ruled against SBI’s argument regarding the delay in requesting the documents. The court referenced the Reserve Bank of India’s September 13, 2023 Circular, which mandates the return of original property documents within 30 days after loan repayment. The court found that while the Circular could not be applied retrospectively to the 2003 loan, the Rs 5,000-per-day compensation would apply from December 1, 2023, onwards.
The court emphasized that once the loan was fully repaid, SBI had no right to retain the original title documents. It placed the responsibility for preserving and returning the documents on the bank, stating that internal issues within the bank could not be used as a justification for the loss. The court recognized the ongoing difficulties caused by the missing documents, which are essential for property transactions. SBI’s previously deposited Rs 1 lakh will be adjusted against the compensation owed, which will continue until the bank provides certified copies of the missing documents and completes the necessary title record reconstruction.
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