Upholding an order passed by a single judge, a division bench of the Kerala High Court (HC) ruled that if credit rating assigned by a credit information company (CIC) like TransUnion CIBIL Ltd is not updated on time to reflect actual creditworthiness at any given point in time, it would affect the fundamental rights to dignity and reputation of the borrower.
In an
order last week, the division bench of justice AK Jayasankaran Nambiar and justice Syam Kumar VM says, "As the credit institutions are required to mandatorily become members of CICs such as TransUnion CIBIL and obtain credit ratings of its customers from such companies, the actions of the CICs have the propensity to affect the reputation of a borrower like the petitioner. This is equally so when the CIC fails to act in a timely manner to obtain the credit rating of a borrower from a credit institution so as to update his credit rating. A borrower's reputation is an integral aspect of his dignity and his right to privacy which is today recognised not only as a common law right but also a fundamental right under Article 21 of our Constitution."
"Under the statutory scheme of Credit Information Companies (Regulation) Act, 2005 (CICRA), it is TransUnion CIBIL who possesses the expertise to assign a credit rating to the borrower from a credit institution such as the writ petitioner. If the credit rating of the petitioner is not updated, to reflect his actual creditworthiness at any given point in time, the inaction of TransUnion CIBIL would affect the fundamental rights to dignity and reputation of the petitioner. As the hearing directed by the single judge will avoid such an eventuality, we see no reason to interdict that direction in these writ appeals," the HC says.
Sajeed VM from Poochackal, Kerala, had obtained and settled loans from three lenders. However, he claimed due to the non-receipt of comments from these lenders, there was a delay in the rectification of his credit rating by TransUnion CIBIL. He filed a petition before the Kerala HC.
In an order, a single judge directed TransUnion CIBIL to consider Mr Sajeed's request to rectify his credit rating.
However, stating that under the CIRCA, it is not empowered to carry out the orders to rectify Mr Sajeed's credit rating, TransUnion CIBIL filed an appeal. It stated, "With reference to Section 21 of the CICRA, a CIC can only make corrections, deletions or additions to the credit information after such corrections, deletions or additions have been certified as correct by the credit institution concerned."
After perusing some Sections of the CIRCA, the division bench noted that Section 21 of the CICRA obliges the credit institutions to furnish a person requesting credit reports with such a report and, on receiving a request from him to update the information in his credit report, to do so as well.
It says, "In our view, complying with the directions of the single judge is the bare minimum that is expected of TransUnion CIBIL in the discharge of its obligations towards a borrower from a credit institution, whose fate hinges on the credit rating given to him by the appellant based on the data received from the credit institutions concerned."
"We believe that an authority like TransUnion CIBIL herein, whose actions have the propensity to affect the fundamental rights of a citizen, has to act in a manner that demonstrates fairness and offers justification for such actions as may be adverse to the interest of the citizen. The culture of justification is now seen as a necessary and essential feature of administrative decision-making. The administrative authority must demonstrate responsiveness, justification and demonstrated expertise," the bench added.
