CIBIL Score: StanChart Asked To Pay Rs2.10 Lakh Compensation for Messing up with Credit Rating
Moneylife Digital Team 18 April 2024
Holding Standard Chartered Bank (StanChart) responsible for deficiency in service and messing up the Credit Information Bureau of India Ltd (CIBIL) credit score of the complainant, the national consumer disputes redressal commission (NCDRC) asked StanChart to pay Rs2 lakh as compensation and Rs10,000 litigation cost with an interest of 6%pa (per annum).
 
In an order last week, the NCDRC bench of Dr Inder Jit Singh (presiding member) says, "It has been clearly established that outstanding amounts were wrongly shown in the credit card account of the complainant, which adversely impacted his CIBIL score. StanChart ultimately reversed all the wrongful entries towards interest and settled the credit card account. Hence, we uphold the findings of the state commission with respect to deficiency in service on the part of StanChart."  
 
"However, the state commission has awarded compensation under multiple heads, Rs2 lakh towards deficient service and Rs50,000 towards mental pain and agony. In view of the observations of the Supreme Court in DLF Homes Panchkula Pvt Ltd vs DS Dhanda (2019) SCC Online SC 689, we are of the view that compensation under multiple heads for the same deficiency in service cannot be given. Mental pain and agony are on account of deficiency in service. Hence, we modify the order of the state commission with respect to compensation," the bench says.
 
The case is related to Malad, Mumbai-based Dr Vinod Kumar Bhalla and his bad CIBIL score since StanChart showed Rs1.74 lakh as an outstanding due against actual dues of Rs5,640 which he had already paid. 
 
Dr Bhalla had a credit card from American Express with a credit limit of Rs3.20 lakh. However, on 30 April 2012, he was informed by American Express that his credit limit was reduced to Rs2.48 lakh due to his lower CIBIL rating. 
 
A shocked Dr Bhalla obtained his credit score from CIBIL and found that StanChart had shown Rs1.74 lakh as outstanding against Rs5,640. Dr Bhalla claimed that he had already paid the dues of Rs5,640 to StanChart and personally handed over the proof of payment to the credit card division of StanChart, located in Bengaluru.
 
Dr Bhalla filed a complaint with the nodal officer of StanChart, sharing all proofs and documents related to his payment of Rs5,640. However, except for an acknowledgement, he received no further communication from StanChart. Then, on 6 December 2012, Dr Bhalla approached the banking ombudsman. 
 
Meanwhile, on 28 December 2012, he received a letter from American Express denying him his credit card due to his bad CIBIL score.
 
In response to a letter from the banking ombudsman, the nodal officer of StanChart forwarded a copy of the reply dated 8 January 2013 to Dr Bhalla stating that the lender has not received the payment and the amount due from him is now Rs2.17 lakh. StanChart also directed Dr Bhalla to take up the matter with UTI Bank (now Axis Bank), with whom he had no relation.
 
On 12 January 2013, Dr Bhalla sent a detailed reply requesting that the banking ombudsman issue directions to StanChart to investigate the matter with Axis Bank and clear the outstanding status mentioned on his credit record. 
 
However, Dr Bhalla says the matter was not closed and the small amount of Rs5,640, which he already paid, has amounted to an outstanding amount of Rs2.17 lakh.
 
Meanwhile, he received a letter from ICICI Bank confirming the payment to StanChart through UTI Bank along with a copy of the cheque with a stamp dated 3 February 2003.
 
In an email on 19 March 2013, StanChart accepted that the payment had been made. The banking ombudsman, in a letter dated 23 March 2013, found the complaint to be true and closed the complaint of Dr Bhalla. 
 
Dr Bhalla then lodged a complaint with the nodal officer of StanChart and also sent a legal notice. He then filed a complaint before the south Mumbai district consumer disputes redressal forum. However, on 7 January 2016, the district forum dismissed the complaint.
 
Dr Bhalla then challenged the order before the Maharashtra state consumer disputes redressal commission, which allowed the complaint and directed StanChart to pay a compensation of Rs2 lakh for deficiency in service and Rs50,000 for mental pain and agony. 
 
StanChart filed a first appeal before NCDRC. It contended that there was a default in making payment towards the credit card dues by Dr Bhalla and, in that case, the reporting of the defaulter with CIBIL cannot be held to be deficient in providing services.
 
Further, it says, "The state commission ought to have appreciated that there was no cause of action arose in January 2014 in favour of respondent for filing a consumer complaint when the grievance raised by way of complaint dated 6 December 2012 filed before the banking ombudsman were duly redressed."
 
The counsel for Dr Bhalla argued that despite paying credit card dues, the outstanding was shown in the system. "This affected Dr Bhalla's credit score, which resulted in a reduction of credit limit and denial of a new credit card. After 10 years of litigation, StanChart accepted that they had received the payment and agreed to waive off the illegal interest they had charged on the alleged outstanding."
 
After hearing both sides and perusing documents available on record, Dr Singh from NCDRC observed that the state commission, after considering the evidence adduced by both sides, came to a finding that the accumulation of the outstanding amount was only because of a mistake of StanChart and the bank is guilty of deficiency in service. 
 
"The state commission also observed that StanChart tried to misguide the banking ombudsman vide letter dated 8 January 2013. Due to the mistake of StanChart, (Dr Bhalla's) CIBIL rating was badly affected, and he was branded as defaulter, his credit limit with American Express was lowered," he says.
 
While dismissing the appeal, NCDRC directed StanChart to pay within 30 days Rs2 lakh compensation, a litigation cost of Rs10,000, along with an interest of 6%pa from 30 July 2019 to Dr Bhalla.
 
(Revision Petition No2388 of 2019 Date: 9 April 2024)
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