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2017 Supreme(Mad) 3474
IN THE HIGH COURT OF JUDICATURE AT MADRAS
G. JAYACHANDRAN, J.
INMA International Limited, Represented by its Chief Executive Officer/Authorised Signatory, J. Thiruvarasan, Chennai – Petitioner
Versus
The Secretary, Department of Financial Services, Ministry of Finance, Government of India, New Delhi & Others – Respondent
Writ Petition No. 1421 of 2017 & W.M.P. No. 4510 of 2017
Decided On : 13-11-2017
For the Petitioner:M. Purushothaman, Advocate.
For the Respondents:K.Srinivasan, Special Public Prosecutor (CBI cases), F.B. Benjamin George, Advocate.
The main legal point established in the judgment is the responsibility of credit institutions in furnishing accurate credit information and the possibility of seeking damages under common law remedy for erroneous credit information.
Headnote:
CIBIL - Credit Information - Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) - [SARFAESI Act, 2002, Section 13(2)] - The court discussed the erroneous credit information provided by CIBIL based on data from IOB, the responsibilities of credit institutions in furnishing accurate data, and the procedures for dispute settlement under the Credit Information Company Regulation Act, 2005.
Fact of the Case:
The petitioner company availed a credit facility with Indian Overseas Bank (IOB) for a project, but due to the project's abandonment, the company was unable to repay the loan. The company's credit information provided by CIBIL was erroneous, leading to difficulties in securing loans from other financial institutions.
Finding of the Court:
The court found that while there were lapses on the part of IOB in furnishing correct account details, there was no evidence of willful omission or false statement knowingly furnished by IOB officials. The court dismissed the writ petition but allowed the petitioner to seek relief under common law procedure.
Issues: The issues revolved around the erroneous credit information provided by CIBIL, the responsibilities of credit institutions in furnishing accurate data, and the possibility of seeking damages under common law remedy.
Ratio Decidendi: The court determined that there was no prima facie material to infer any willful omission or false statement knowingly furnished by IOB officials, and therefore, dismissed the writ petition. However, the petitioner was allowed to seek relief under common law procedure.
Final Decision: The writ petition was dismissed, but the petitioner was given the option to seek relief under common law procedure.
1. INMA International Limited, is the writ petitioner before this Court. According to the affidavit filed by the Chief Executive Officer of the petitioner company, it is a 25 year old reputed Turnkey Construction and Infrastructure Project Development Company and it has undertaken important projects in India and Abroad.
2. In the year 2000, the petitioner company has availed a credit facility with Indian Overseas Bank (hereinafter referred to as “the IOB”), Chennai, for executing its contract for the Chennai Metro Rail Limited (hereinafter referred to as “the CMRL”) Project. In the year 2012, the petitioner's cash credit limit with the IOB was Rs.13,00,00,000/- and Inland Letter of Credit was Rs.6,00,00,000/-, as against security of property worth Rs.30 crores.
3. The Russian company 'Mosmetro' which was carrying the CMRL project, abandoned the project and vanished without paying around Rs.20 crores to the petitioner company. In turn, the petitioner company was not able to repay its loan with the IOB. As on 05.01.2015, the liability of the petitioner company with the IOB was Rs.16,34,74,930.20/- with interest.
4. The IOB has classified its loan account as sub-standard with effect from 31.12.2014 and also issued notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”), calling upon the company to discharge the liability. In order to settle the outstanding, the petitioner has approached other banks/financial institutions for credit facility. Though, those institutions initially came forward to assist the petitioner company, later, denied the financial assistance for the reasons not known.
5. In November 2015, when the petitioner company approached a Bank for securing loan, it was informed that as per Credit Information Bureau (India) Limited (hereinafter referred to as “the CIBIL”) report, the petitioner's company owe about Rs.32 crores to the IOB. Thus, the report of CIBIL has indicated that the writ petitioner company owe Rs.32 crores to the IOB and its asset being shown as non standard, the other financial institutions were reluctant to advance loan to the petitioner.
6. While the writ petitioner company actually owe only Rs.15,76,56,258/- to the IOB, the information furnished by CIBIL was misleading and detrimental to the writ petitioner company. Suspecting the officials of the IOB as the cause for wrong reporting, the writ petitioner company has brought to the notice of CIBIL about the wrong information. The matter was taken up by CIBIL with IOB and later, the error was rectified only on 31.12.2015.
7. The contention of the learned counsel for the writ petitioner is that one Mr.S.Umapathy, Chief Regional Manager of the fourth respondent Bank has given the wrong and disceptive information about the petitioner company, so as to prevent the petitioner company from availing loan from other financial institutions and thereby bringing the prime property of the writ petitioner worth more than Rs.30 crores under auction and knock away the property without providing any opportunity to repay the loan availing one time settlement scheme. Further, the writ petitioner is under the suspicion that the officials of IOB have created dubious account that of the petitioner account and swindled huge money.
8. With this information and apprehension, the writ petitioner had sent a complaint to the Governor, Reserve Bank of India on 26.12.2016 to probe into the matter. The present writ petition is filed seeking mandamus directing the CBI to take on file the complaint of the petitioner and investigate the alleged dubious fraudulent parallel account created by the IOB officials.
9. IOB is the fourth respondent and CIBIL is the fifth respondent in this writ petition. They have filed independent counter affidavits admitting that there was error in the report of CIBIL dated 21.11.2014. This error was due to conversion of 17 d
