Dispute Between Borrowers & Credit Institutions is Covered u/s 21(3) of CIC Act Which Mandates CIC to Update Credit Info. in 30 Days | HC

Case Details: V. Ramalingam v. Reserve Bank of India - [2024] 163 taxmann.com 705 (HC-Madras)

Judiciary and Counsel Details

• G.K. Ilanthiraiyan, J.
• K. Bijai Sundar for the Petitioner.
• C. Mohan & S.R. Sundar for the Respondent.

Facts of the Case

In the instant case, the petitioner used to avail loans from respondent no. 2 bank against immovable properties. Due to various reasons, the petitioner ran into a severe financial crisis. Therefore, he approached nationalised banks to meet his financial requirements.

However, nationalised banks refused to extend any working capital facility to the petitioner. Later, the petitioner found CIBIL records that explained the reason for the refusal of the loan. According to the petitioner, respondent no. 2 failed to record the closure of previous loans availed by the petitioner and update the credit score of the petitioner.

The failure to update credit scores and the delay in updating the petitioner’s credit scores caused significant loss and hardship for the petitioner. Consequently, the petitioner suffered financially and economically and was subjected to mental trauma and loss.

It was noted that since, respondent no. 1 was empowered to permit credit information companies to register under itself, the petitioner requested respondent no 1 to invoke the provisions of section 18(1) of the Credit Information Companies (Regulation) Act, 2005, for disputes and differences that had arisen between the petitioner and respondent no. 2 and to refer same to arbitration and request for an arbitrator to be appointed by respondent no 1 in terms of section 18(2) of the Act. However, there was no reply. Hence, the instant writ.

High Court Held

The High Court held that the dispute between the borrower and credit institution is not covered under section 18 of the Act. Such a grievance is specifically covered under section 21(3), which mandates credit institutions or credit information companies, as the case may be, to take appropriate steps to update credit information within 30 days of being requested.

Further, the High Court held that the petitioner’s grievance had already been addressed to the Ombudsman of NBFC by way of complaint, and the same was resolved upon receipt of a reply from respondent no. 2. Further, apart from the petitioner’s allegation, a remedy had been provided under section 21(3) and rule 22 of the Credit Information Companies Rules, 2006.

Therefore, the instant case did not fall under any category to entertain a writ petition under Article 226 of the Constitution of India. Hence, the instant writ was not maintainable and, thus, was to be dismissed.