Bank Wrongfully Keeps Lawyer's Name In Loan Defaulters List; Supreme Court Affirms Rs 5 Lakhs Compensation

The Supreme Court, on Monday, upheld the order of National Consumers Disputes Redressal Commission Directing Canara Bank to pay Rs. 5 lakhs to a lawyer, who was kept in the loan defaulter’s list as per CIBIL, for about 7.5 years after discharging his loan obligations.

A Bench comprising Justice Aniruddha Bose and Justice Sudhanshu Dhulia recorded it its order -

“We do not find any reason to interfere with the order of the National Consumers Disputes Redressal Commission, New Delhi as we are satisfied with the reasoning given for awarding compensation of Rs. 5,00,000/- (Rupees five Lac).”

The complainant had availed a vehicle loan from Canara Bank in 2002 and purchased a Maruti 800 Car. The entire loan was closed by 2008. Thereafter, the complainant had taken another vehicle loan from Vijaya Bank in 2010. When the complainant went to Vijaya Bank, he was informed that he was arrayed as a loan defaulter by Canara Bank as per the Consumer Credit Information Report of Credit Information Bureau (India) Ltd. (CIBIL). It appears that even though the loan amount was discharged Canara Bank did not inform CIBIL. A complaint was filed before the Kerala State Commission seeking compensation for mental agony and for hampering his reputation. He made a demand of Rs. 25 lakhs to be paid as compensation along with a cost of Rs. 25,000.

The Kerala State Consumer Dispute Redressal Commission had directed Canara Bank to pay Rs. 5 lakhs to the lawyer with interest. Aggrieved, Canara Bank had filed an appeal before the National Consumers Disputes Redressal Commission. The NCDRC upheld the order of the State Commission, but set aside the interest awarded.

The NCDRC noted that Canara Bank had rectified the error only after the complainant informed it in 2015, almost 7.5 years after the loan amount was discharged. Addressing the submission of the Bank that no financial loss has been actually incurred by the complainant, the National Commission stated,

“The stigma of a person, who is shown as a defaulter on CIBIL website for a period of 7½ years cannot be undermined.”

However, the National Commission thought it fit to set aside the interest imposed by the State Commission. It noted -

“In view of the aforesaid discussion, though we agree with the finding of the State Commission that there was deficiency in service on the part of the Bank in not rectifying the defect immediately and also not informing to CIBIL that the Complainant had discharged the loan, we are of the considered view that compensation awarded at Rs.5.00 Lakhs is on the higher side as interest also at 12% p.a. has been directed to be paid.”

On February 13, the Supreme Court dismissed the Special Leave Petition filed by Canara Bank against the NCDRC order.

"We do not find any reason to interfere with the order of the National Consumers Disputes Redressal Commission, New Delhi as we are satisfied with the reasoning given for awarding compensation of Rs. 5,00,000/-", the bench comprising Justices Aniruddha Bose and Sudhanshu Dhulia noted.

Advocate Jaimon Andrews and Advocate Piyo Harold Jaimon appeared on behalf of the complainant lawyer.

[Case Title: M/s. Canara Bank And Ors. v. S. Reghukumar And Anr. SLP(C) No. 695/2020]

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