The Hon’ble High Court of Madras, while dismissing a mandamus writ petition, compelling respondent 1, Reserve Bank of India, to appoint an arbitrator, under section 18 (2)(a) of the Credit Information Companies (Regulation) Act, 2005 (‘CIC Act’), with regard to dispute over credit information updates, between credit institution and a borrower, held that such disputes are not covered under section 18 of the CIC Act, 2005 , and that the same are covered under section 21(3) of the Act, which mandates the Credit Information Companies to update the credit information within 30 days, after being requested to do so.
The petitioner previously secured loans from the second respondent, a credit institution, against immovable properties, which were subsequently settled. However, when the Petitioner approached nationalized banks for an extension of a working capital facility, amidst the financial crisis, the same was refused due to bad CIBIL score. According to the petitioner, the second respondent has failed to update the zero balance accounts with CIBIL, even after full settlement of financial loans.
Subsequently, the petitioner lodged a complaint to the Ombudsman and requested to invoke provision under Section 18(1) of the CIC Act, 2005 to resolve the disputes with the second respondent through arbitration. Consequently, with no action taken in response, the petitioner proceeded to file writ petition.
The Hon’ble High Court, while dealing with the maintainability of the petition took note of section 18(2) of the CIC Act, 2005 and held that such disputes between the borrower and the Credit Institution are not covered under Section 18 of the Act. The Court further observed that, arbitration under Section 18 of the Act should be sought only where no remedy has been provided under this Act for dispute arising amongst Credit Information Companies, Credit Institutions, borrowers and clients, concerning matters relating to the business of credit information.
In view of the above, since the grievance raised in the petition falls specifically under Section 21 (3) of the Act, the Hon’ble Court dismissed the petition and determined that the requested direction cannot be granted.
[2024] 163 taxmann.com 705 (Madras)
V. Ramalingam v. Reserve Bank of India
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