Partly allowed

Sujith Prasad v. the Reserve Bank of India

Kerala HC6 Jan 2021WP(C)/22108/2020

Case brief

AI extract

What is this about?

The Court directed the ICICI Bank Branch Manager to respond to CIBIL's request for account verification within two weeks. Upon confirming discrepancies, CIBIL must update the petitioner's CIBIL report. The petitioner, a lawyer, sought removal of adverse entries despite full loan repayment.

What did the court decide?

Directed the 2nd respondent to respond to the 3rd respondent's confirmation mails within two weeks, enabling the 3rd respondent to make warranted changes in the credit report.

Sujith Prasad Vs the Reserve Bank of India — Consumer Protection | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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WEDNESDAY, THE 06TH DAY OF JANUARY 2021/16TH POUSHA, 1942

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WP(C).No.22108 OF 2020(K)

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PETITIONER:

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SUJITH PRASAD, AGED 53 YEARS, S/O SIVARAMA PILLAI, 'SARAS', FLAT NO.208, KSHB, CHINNAKADA P.O., KOLLAM TALUK, KOLLAM DISTRICT-691 001.

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BY ADVS. SRI.C.R.JAYAKUMAR SRI.NOBEL RAJU

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RESPONDENTS:

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1 THE RESERVE BANK OF INDIA, BRANCH OFFICE, P.B NO 6507, NANDAVANAM, PALAYAM, THIRUVANANTHAPURAM, KERALA-695 033.

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2 THE BRANCH MANAGER, ICICI BANK LTD, VAIDYA COMMERCIAL ARCADE, RESIDENCY ROAD, CHINNAKADA P.O., KOLLAM-691 001.

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3 THE DIRECTOR, TRANS UNION CIBIL LIMITED, ONE INDIA BULLS CENTER, TOWER 2A, 19TH FLOOR, SENAPATI BAPAT MARG, ELPHINSTONE ROADS, MUMBAI-400 013.

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R3 BY ADV. SRI.C.AJITH KUMAR SRI. MILLU DANDAPANI FOR R1 (B/O)

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 06.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C) No.22108/2020

[CR]

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J U D G M E N T

~ ~ ~ ~ ~ ~ ~ ~ ~

Dated this the 6^th day of January, 2021

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The petitioner, who is a practising Lawyer, seeks to direct the 2^nd respondent-Branch Manager, ICICI Bank Limited to recall the petitioner's entries in the CIBIL report of the petitioner and to direct the 2^nd respondent to delete the adverse entries.

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The petitioner states that he had availed a personal loan of ₹3 lakhs from the 2^nd respondent. The loan was sanctioned on 16.12.2006. The petitioner repaid the entire loan. The 2^nd respondent, however, issued a notice on 12.08.2016 demanding the petitioner to pay ₹42,895/-. The petitioner remitted the said amount as demanded by the 2^nd

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respondent on 30.08.2016.

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The 2^nd respondent sanctioned to the petitioner an amount of ₹37,337/-, on 16.07.2007. The petitioner repaid the said amount also. Yet the 2^nd respondent demanded an additional amount of ₹11,000/-, as per Ext.P3. The petitioner remitted the said amount also as evidenced by Ext.P4.

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The petitioner wanted to avail a vehicle loan from another bank. The Manager was satisfied with the eligibility of the petitioner for availing loan. The Manager, however, did not sanction the loan pointing out that there are some adverse entries in the CIBIL report in respect of the petitioner.

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The petitioner would state that the repayment of the loans availed by the petitioner from the 2^nd respondent, may not have been made with the desired promptitude. However, the petitioner had remitted all the amounts demanded by the 2^nd respondent which were alleged to be due, in the loan accounts of the petitioner. However, in spite of remittance of all the dues, the 2^nd respondent made adverse reports on the basis of which the 3^rd respondent entered adverse entries in

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their records. The action of the 2^nd respondent in not communicating true state of affairs in respect of the petitioner's loan accounts has caused untold hardship to the petitioner. The 2^nd respondent is therefore liable to be directed to delete adverse entries in the CIBIL report of the petitioner, contended the learned counsel for the petitioner.

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The 2^nd respondent-Bank did not enter appearance. The 3^rd respondent-Company, however, filed a statement. The 3^rd respondent stated that it is a Credit Information Company certified by the Reserve Bank of India. When information/data is submitted by a member-Bank or financial institution, the 3^rd respondent enters the same in their records. The 3^rd respondent is only a repository of information. The 3^rd respondent is not bound to ascertain the correctness or otherwise of the information submitted to them, by financial institution.

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On receipt of notice of the writ petition, the 3^rd respondent sent Exts.R3(a) and R3(b) mails to the 2^nd respondent requiring to confirm whether the information

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provided by them in respect of the petitioner is correct or requires any correction. The 2^nd respondent so far has not responded to the mails sent by the 3^rd respondent. Unless the 2^nd respondent reports any change in records maintained by them, the 3^rd respondent will not be in a position to make any corrections.

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I have heard the learned counsel for the petitioner and learned Standing Counsel appearing for the 1^st respondent and the learned Standing Counsel appearing for the 3^rd respondent.

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It is the credit report of the 3^rd respondent by which the petitioner is aggrieved. Financial Institutions try to mitigate the risk of lending to borrowers by making a credit analysis on individuals and institutions applying for new credit facilities or loan. The analysis is normally based on a review of Capacity, Capital, Conditions, Character and Collaterals, called “the Five Cs” of credit. Financial Institutions in India rely on credit scores given by Credit Information Companies formed under the Credit Information Companies (Regulation) Act, 2005.

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The 3^rd respondent is a Credit Information Company functioning in accordance with the provisions of the Credit Information Companies (Regulation) Act, 2005. The 3^rd respondent gives credit scores in respect of the customers of Credit Institutions. A credit score is a numerical expression based on an analysis of the credit history of an individual. A credit score in effect represents the creditworthiness of an individual. Credit scores are used by Credit Institutions like banks and other financial entities to evaluate the potential risk passed by lending money to consumers and to mitigate loans due to bad debt. By the very nature of credit score, it has positive or negative impact on the financial credibility of an individual.

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It is taking into account the said fact that the Parliament has enacted Credit Information Companies (Regulation) Act, 2005.

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Section 21(3) of the Act, 2005 reads as follows:-

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“ 21. Alteration of credit information files and credit reports —(1) Any person, who applies for grant or sanction of credit facility, from any credit institution,

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may request to such institution to furnish him a copy of the credit information obtained by such institution from the credit information company.

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(2) Every credit institution shall, on receipt of request under sub-section (1), furnish to the person referred to in that sub-section a copy of the credit information subject to payment of such charges, as may be specified by regulations, by the Reserve Bank in this regard.

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(3) If a credit information company or specified user or credit institution in possession or control of the credit information, has not updated the information maintained by it, a borrower or client may request all or any of them to update the information; whether by making an appropriate correction, or addition or otherwise, and on such request the credit information company or the specified user or the credit institution, as the case may be, shall take appropriate steps to update the credit information within thirty days after being requested to do so:

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Provided that the credit information company and the specified user shall make the correction, deletion or addition in the credit information only after such correction, deletion or addition has been certified as correct by the concerned credit institution:

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Provided further that no such correction, deletion or addition shall be made in the credit information if any dispute relating to such correction, deletion or addition is pending before any arbitrator or tribunal or court and in cases where such dispute is pending, the entries in the books of the concerned credit institution shall be taken into account for the purpose of credit information.”

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In view of the first proviso to Section 21(3), a Credit Information Company can make a correction, deletion or

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addition of the credit information, after such correction, deletion or addition has been certified as credit by the concerned credit institution. The 2^nd proviso would indicate that the right over a credit information is solely that of the concerned bank or financial institution.

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In view of the fact that credit score given by the credit information companies like the 3^rd respondent can have serious adverse civil consequences on individuals, the 3^rd respondent is bound to ascertain the true state of affairs with its member-Banks/financial institutions, whenever any anomaly is pointed out by individuals. Updation of credit information is a statutory right of a borrower or client of a Credit Institution, in view of Section 21(3) of the Act, 2005.

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The statement filed by the 3^rd respondent would show that as soon as the 3^rd respondent received information about the grievance of the petitioner, the 3^rd respondent promptly addressed the 2^nd respondent to confirm on the complete account details of the accounts of the petitioner. The 3^rd respondent required the 2^nd respondent-Bank that in

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case of any incorrect information, the correct information shall be provided to the 3^rd respondent. However, the 2^nd respondent has not responded to Exts.R3(a) and R3(b) communications made by the 3^rd respondent.

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Since the failure of the 2^nd respondent to act on Exts.R3(a) and R3(b) has grave consequences on the financial credibility and creditworthiness of the petitioner and since updation of credit information is a statutory right conferred on the petitioner under Section 21(3) of the Credit Information Companies (Regulation) Act, 2005, this Court finds that relief should be granted to the petitioner, in this writ petition.

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In such circumstances, the 2^nd respondent is directed to respond to Ext.R3(a) mail dated 01.11.2020 and Ext.R3(b) mail dated 08.12.2020 of the 3^rd respondent seeking confirmation on the complete account details in respect of the petitioner, within a period of two weeks. The 3^rd respondent, on receipt of such information, should make changes in the credit report in respect of the petitioner if found warranted on

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the basis of information provided by the 2^nd respondent, without further delay.

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Writ petition is disposed of as above.

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Sd/- N. NAGARESH, JUDGE

aks/07.01.2021

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APPENDIX

PETITIONER'S EXHIBITS:

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EXHIBIT P1 THE TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 2ND RESPONDENT DATED 12.8.2016 VIDE REF NO PL/1608/0604932. EXHIBIT P2 THE TRUE COPY OF THE REMITTANCE SLIP DATED 30.8.2016 FOR AN AMOUNT OF RS.42,895/EXHIBIT P3 THE TRUE COPY OF THE DEMAND NOTICE ISSUED BY THE 2ND RESPONDENT DATED 11.8.2016 VIDES REF.NO.PL/1608/ 0604930. EXHIBIT P4 THE TRUE COPY OF THE REMITTANCE SLIP DATED 30.8.2016 FOR AN AMOUNT OF RS.11,000/EXHIBIT P5 TRUE COPY OF THE PASS BOOK ISSUED BY THE ORIENTAL BACK OF COMMERCE TO THE PETITIONER VIDES ACCOUNT NO 13942011003271

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RESPONDENTS' EXHIBITS: EXHIBIT R3(A) TRUE COPY OT THE E-MAIL DATED 02/11/2020 SENT BY 3RD RESPONDENT TO THE OFFICIALS CONCERNED OF THE 2ND RESPONDENT.

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EXHIBIT R3(B) TRUE COPY OF THE E-MAIL DATED 08/12/2020 SENT BY 3RD RESPONDENT TO THE OFFICIALS CONCERNED OF THE 2ND RESPONDENT.

Sujith Prasad v. the Reserve Bank of India

Case brief

What is this about?

What did the court decide?

Sujith Prasad v. the Reserve Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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