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2024 Supreme(Ker) 844
IN THE HIGH COURT OF KERALA AT ERNAKULAM
A.K. JAYASANKARAN NAMBIAR, SYAM KUMAR V.M., JJ.
The Director, Trams Union CIBIL Limited – Appellant
Versus
Sajeed V.M., S/o. Moosakutty and Ors. – Respondents
W.A. No.445 Of 2024, W.A. No.444 Of 2024, W.A. No.447 Of 2024
Decided On : 09-08-2024
For the Appellant : Sri. C. Ajith Kumar, Sri. Rajeevu L.G., Smt. Varsha S.S.
For the Respondents: Sri. C.S. Abdul Sammad, Sri. Lal K. Joseph, Sri. V.D. Balakrishna Kartha (B-77), Sri. Suresh Sukumar, Sri. Anzil Salim.
IMPORTANT POINT
Credit information companies are obligated to act fairly and expeditiously in updating credit ratings, as their actions can affect the fundamental rights of borrowers.
Headnote:
CREDIT RATING - RECTIFICATION OF CREDIT RATING - CICRA - SECTIONS 15, 17, 21 - The court discussed the Credit Information Companies (Regulation) Act, 2005, particularly Sections 15, 17, and 21, which mandate credit institutions to be members of credit information companies, obligate these companies to collect and update credit information, and require timely rectification of credit reports. The court interpreted these provisions to emphasize the responsibility of credit information companies to act fairly and expeditiously in updating credit ratings, as delays could infringe on a borrower's fundamental rights to dignity and reputation.
Fact of the Case:
The appellant, a credit information company, was aggrieved by a judgment directing it to rectify a borrower's credit rating after he had settled his loans. The appellant argued that it lacked the authority to adjudicate on credit ratings without input from the credit institutions.
Finding of the Court:
The court found that the learned Single Judge's direction for the appellant to consider the borrower's request for rectification was reasonable and necessary to ensure timely updates to credit ratings, which are crucial for a borrower's reputation and dignity.
Issues: Whether the appellant was required to rectify the borrower's credit rating despite the lack of comments from the credit institutions, and whether the learned Single Judge's directions were within the scope of the appellant's powers under the CICRA.
Ratio Decidendi: The court held that the appellant, as a credit information company, has a duty to act fairly and expeditiously in updating credit ratings, as mandated by the CICRA. The court emphasized that the actions of credit information companies can significantly impact a borrower's fundamental rights.
Final Decision: The court dismissed the writ appeals, affirming the learned Single Judge's direction for the appellant to consider the borrower's request for rectification of his credit rating.
JUDGMENT :
(Dr. A.K. Jayasankaran Nambiar, J.) :
The 3rd respondent in W.P.(C).Nos.42469 of 2023, 863 of 2024 and 2623 of 2024 is the appellant before us aggrieved by the common judgment dated 23.02.2024 of a learned Single Judge in the writ petitions.
2. The writ petitions were filed by a person, who had availed loans from three credit institutions, and he was essentially aggrieved by the inaction on the part of the appellant herein to rectify his credit rating notwithstanding that he had settled the loan accounts with the credit institutions honourably. The stand of the appellant before the writ court was that the delay in rectification of the writ petitioner's credit rating was on account of non-receipt of comments from the respective credit institutions on the writ petitioner's request.
3. The learned Single Judge, who considered the matter, disposed the writ petition by directing the appellant herein to consider the request of the writ petitioner for a rectification of his credit rating, after hearing the credit institutions concerned and the writ petitioner, and to take a decision in the matter within three months from the date of receipt of a copy of the judgment.
4. Before us, the contention of the appellant is that the directions of the learned Single Judge as against the appellant, to the extent it requires the appellant to adjudicate on the credit rating of the writ petitioner, is unworkable inasmuch as it would force the appellant to do something for which it is not empowered by the regulating statute namely, the Credit Information Companies (Regulation) Act, 2005 [hereinafter referred to as the “CICRA”]. It is stated, with reference to Section 21 of the CICRA, that the appellant 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.
5. We have heard Sri.Ajith Kumar, the learned counsel for the appellant, Sri.C.S.Abdul Sammad, the learned counsel for the 1st respondent as also Sri.Lal K. Joseph, the learned counsel for the 3rd respondent.
6. At the very outset, we must admit to being quite perplexed by the submission made on behalf of the appellant. After all, the learned Single Judge had only directed the appellant to look into the request of the writ petitioner for an expeditious rectification of his credit rating after getting the necessary data for completing the said exercise from the credit institutions concerned.
7. The appellant is a credit information company whose activities are regulated by the provisions of the CICRA. A reading of the statement of objects and reasons to the said enactment indicates that institutions such as the appellant were found to be necessary to arrest the accretion of fresh non-performing assets [NPAs] in the banking sector through an efficient system of credit information on borrowers as a first step to credit risk management. The requirement of an adequate, comprehensive and reliable information system on the borrowers, through an efficient database, was felt by the Reserve Bank of India, the Central Government, credit institutions and other players in the banking and financial sector. While the statutory provisions under the CICRA are largely geared towards regulating the functioning of credit information companies like the appellant herein, Section 15 of the CICRA makes it mandatory for every credit institution to be a member of a credit information company. Section 17 obliges credit information companies to collect credit information from their member credit institutions and the latter are obliged to furnish such information when required by the credit information companies. Section 21 of the CICRA obliges the credit institutions to furnish a person requesting for 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.
8. It is against the backdrop of the above st
