IMPORTANT POINT
The main legal point established in the judgment is that upon settlement of a loan by way of One-Time Settlement (OTS), the credit facility status should be accurately reflected in the CIBIL records, and the petitioner is entitled to have the status re-written as 'partially written-off post-OTS' to reflect the actual repayment made.

JUDGMENT :

Sabyasachi Bhattacharyya, J.

1. The petitioner took term loan facilities from the respondent no.3-Bank. Subsequently, having failed to service the said loans, an One-Time Settlement (OTS) was arrived at between the petitioner and the said Bank, in terms of which the petitioner paid off the entire settled amount and obtained a No Dues Certificate from the Bank.

2. Subsequently, the petitioner approached a financial assistance provider for grant of a business loan which was refused on the ground that the CIBIL [Credit Information Bureau (India) Limited] score of the petitioner is only 706. Due to such low credit rating, the petitioner was denied further financial assistance. Coming to know of the same, the petitioner obtained a report dated August 29, 2023 and learnt that the credit facility status of the petitioner was shown as “written-off” in the CIBIL report. The said status was shown on the basis of the communication made by the respondent no. 3-Bank.

3. Even after numerous attempts to have the said rating altered, the petitioner’s requests allegedly fell on deaf ears, for which the present writ petition has been preferred. Learned counsel for the petitioner cites Sujith Prasad Vs. Reserve Bank of India and others, reported at 2021 SCC OnLine Ker 221, for the proposition that in cases of repayment of loan, the CIBIL rating should be upgraded accordingly.

4. Learned counsel also argued that in respect of a different loan with another Bank, upon settlement of the account, the credit facility status was shown as “Post (WO) Settled”.

5. Learned counsel appearing for the Bank places reliance on the Write-Off Policy of the State Bank of India, a copy of which is handed over in Court and argues that the petitioner failed to repay the entire amount of loan taken by him and the Bank had to write-off a major portion the dues after the OTS. As such, learned counsel justifies the intimation by the respondent no. 3-Bank to the CIBIL Authorities with regard to the petitioner’s credit status as “written-off”.

6. The issue in contention here is whether upon settlement of the loan by way of OTS, the petitioner is entitled as a matter of right to have his credit facility status re-written and the endorsement “written-off” removed from the CIBIL records.

7. The judgment cited by the petitioner rendered by a learned Single Judge of the Kerala High Court is not relevant for adjudication of the present case. In paragraph no. 2 of the said judgment, it is recorded that the petitioner there repaid the entire loan, upon which the CIBIL ratings were not modified accordingly. By placing reliance on Section 21 of the Credit Information Companies (Regulation) Act, 2005, which deals with alteration of credit information files and credit reports, the Court proceeded to direct the CIBIL ratings of the petitioner therein to be altered accordingly without undertaking any further inquiry on the issue. In the present case, however, the petitioner admittedly did not repay the full loan amount but entered into an OTS.

8. There are two perspectives to the issue. The first perspective is that of the petitioner who was relieved of payment of the entire amount of loan by dint of entering the OTS. The No Dues Certificate issued by the Bank dated December 27, 2017 accordingly reflects that the settlement amount was paid by the borrower in full. However, even in the said certificate, it was mentioned that the same does not preclude the Bank to proceed against the borrower/guarantor as the case may be in respect of other loan liabilities if any.

9. Even if the last sentence is discounted and taken to refer to other loans which are not the subject-matter of the present writ petition, the fact remains that the petitioner was absolved from the liability to pay the rest of the Bank’s dues at a price. The price was that the petitioner’s credit ratings would reflect the fact that the petitioner had not repaid the entire amount.

10. From the perspective of the Bank,