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2025 Supreme(Mad) 2359
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Anita Sumanth, C.Kumarappan, JJ.
Reserve Bank of India - Appellant
Versus
P.V.R.S.Mani Kumar and ors. - Respondents
O.S.A.No.326 of 2019
Decided On : 09-04-2025
Advocate Appeared:
For the Appellant : Mr. Mr.C.Mohan for M/s.King And Partridge
For the Respondent: Mr. B.Mohan, M/s.Vandana Parasuram, Mr.D.Ferdinand for M/s.BFS Legal Mr.G.Sethuraman
A party must exhaust available administrative remedies before seeking arbitration under the CICRA, negating the necessity for arbitration when an adequate alternate remedy exists.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 and Section 18 - Credit Information Companies Regulations, 2006 - Reference to arbitration - The appellant challenged the interim injunction granted against a credit information company. The main issue was whether the respondent could invoke the arbitration clause against the company based on a disputed Credit Information Report (CIR). The court held that there was an existing efficacious remedy under Section 21 of the CICRA for alteration of information in the CIR, thus precluding arbitration. (Paras 6, 20, 24, 39)
(B) Alternative Remedy - The court found that sufficient remedy under CICRA and related regulations exists, negating the necessity for arbitration. The respondent's failure to exhaust this remedy led to the dismissal of the arbitration request. (Paras 22, 26, 39)
| Table of Content |
|---|
| 1. rbi appeals against injunction order. (Para 1 , 2) |
| 2. r1's credit information issues. (Para 4 , 5 , 6) |
| 3. availability of alternate remedy under cicra. (Para 8 , 22 , 23) |
| 4. cicra regulates credit information. (Para 10 , 11 , 12) |
| 5. conditions under which arbitration can be invoked. (Para 18 , 20) |
| 6. discussion on available remedies under cicra. (Para 24) |
| 7. exhaustion of remedies before arbitration. (Para 26 , 27 , 32) |
| 8. uncontested claims against r1's credit worthiness. (Para 34 , 35 , 36 , 37 , 38) |
| 9. final decision allowing the appeal. (Para 39) |
JUDGMENT :
Anita Sumanth J.
The Reserve Bank of India (RBI) had preferred this appeal against an order passed by the learned Judge in O.A.360 of 2015 on 27.08.2019.
2. The Original Application had been filed by R1 herein seeking an interim injunction as against TransUnion CIBIL Limited (in short ‘R2’) from continuing to publish data furnished by it in its Credit Information Report (in short ‘CIR’) dated 10.07.2014. The application has come to be allowed by way of the impugned order. The legal question that arises for determination is as to whether R1 could have invoked the arbitration clause as against R2 based on the CIR.
3. The facts in question as this Court has culled from the detailed submissions of Mr.C.Mohan learned counsel appearing for RBI, Mr.B.Mohan, learned counsel for R1, Ms.Vandana Parasuram, learned counsel for R2, BFS Legal for R5 and Mr.G.Senthilkumar, learned counsel for R3 and R6, (impleaded on 07.01.2021 in the Original Side Appeal), are set out below.
4. R1 had been operating a personal bank account with Andhra Bank Chetput Branch, Chennai (in short ‘Andhra Bank’) and had approached that Bank seeking credit facilities. As per established procedure relating to due diligence for sanction of the loan, a CIR had been sought which reflected a negative score. Andhra Bank had thus not proceeded to process the request for credit facility.
5. According to the credit score, R1 fell under the category of ‘high-risk’, based on two credit cards held by him, one with City Bank and other with Standard Chartered Bank. As regards the Standard Chartered credit card, there had been a dispute that had culminated in a criminal case. The matter travelled before this Court in Crl.O.P.No.7670 of 2000 and came to be settled only at that stage by R1 in full. The criminal case came to a conclusion on 08.08.2003.
6. The CIR revealed that four entities had stated that R1 owed them cumulatively, dues of Rs.1,27,14,413/-, which R1 disputed. Thus, O.A.No.360 of 2015 had come to be filed by R1 in terms of Section 9 of the Arbitration and Conciliation Act, 1996 (in short ‘A & C Act’) wherein he sought appropriate interim relief pending initiation of arbitration proceedings for settlement of the dispute. The maintainability of the application had been challenged by R2.
7. The stand of R2 was that there was an effective remedy available to R1 in terms of Section 21 of the Credit Information Companies Regulations, 2006 (in short ‘ CICRA ’). Hence there was no necessity for R1 to approach this Court under Section 9 of the A & C Act, and the invocation of the arbitration clause was erroneous in law. After hearing the parties in detail, the learned Judge allows the application noting the relevant provisions of the CICRA as well as the Credit Information Companies (Regulation) Act, 2005 (in short ‘CIC Act’).
8. Taking note of the decision of the learned Judge of the Calcutta High Court in Sunil Agarwal v. LIC Housing Finance Limited and others ,2011 SCC OnLine Cal 5473, the Bombay High Court in DSL Enterprises Private Limited and others v Chief General Manager, DBOD, Reserve Bank of India and others , W.P. No. 6409 of 2010 dated 24.11.2010 (Bombay High Court) and the Andhra Pradesh High Court in Srikanth Vairagare v. ICICI Bank Limited and others , 2018 SCC Online Hyd 274, learned Judge concludes that there was no hindrance to R1 to invoke the remedy of arbitration under Section 18 of the CIR
