Supreme Court Seeks Bank Affidavits in CIBIL Score Dispute

New Delhi, October 2024 – In a significant intervention into the realm of credit reporting and consumer financial rights, the Supreme Court of India has directed Punjab National Bank (PNB) and State Bank of India (SBI) to file affidavits clarifying the loan status of petitioner Rajendra Singh Panwar. The court's order addresses long-standing grievances over an allegedly erroneous negative CIBIL score that has plagued the petitioner since 2020, despite his claims of having no outstanding loans or defaults. This development underscores the growing scrutiny on credit bureaus and financial institutions for inaccuracies in credit information, potentially setting precedents for how such disputes are resolved in India's burgeoning digital financial ecosystem.

The bench, comprising Justice K.V. Viswanathan and Justice S.V.N. Bhatti, heard arguments in Special Leave Petition (Civil) Diary No. 59436/2025, titled Rajendra Singh Panwar v. Jay Prakash & Anr. . The petition challenges a Uttarakhand High Court order dismissing a contempt proceeding against CIBIL Mumbai for alleged non-compliance with prior directives. As the case unfolds, legal experts are watching closely, anticipating implications for consumer protection laws, data accuracy in banking, and the interplay between judicial oversight and financial regulatory bodies.

Background of the Dispute

Rajendra Singh Panwar's ordeal began in 2020 when he discovered his CIBIL score had plummeted to a "very high-risk" category, severely restricting his access to loans, credit cards, and other financial facilities essential for personal and business needs. Panwar maintains that he has never taken any loans from PNB or SBI, the institutions flagged in his credit report. Instead, he attributes the negative rating to a case of mistaken identity: his Permanent Account Number (PAN) is shared with two other individuals named Rajendra Singh, whose defaults are erroneously reflected in his records.

This issue persisted even after the Income Tax Department issued Panwar a new PAN card. According to his counsel, Senior Advocate P.S. Patwalia, the new PAN remains linked to the old one, perpetuating the error in CIBIL's database. "The petitioner's PAN number is also held by two other individuals, also named Rajendra Singh, and that any default by them is being reflected in his CIBIL records," Patwalia submitted to the Supreme Court. He further highlighted that despite the Income Tax Department's intervention, the linkage has not been severed, leading to ongoing financial exclusion.

Panwar's legal battle traces back to representations made to CIBIL, India's premier credit information company, urging it to rectify the discrepancies. CIBIL, in its defense, has consistently maintained a neutral stance, asserting that it merely collates and reports data furnished by member banks and financial institutions. As the court noted during the hearing, "CIBIL's stand [is] that it only collates information furnished by banks." This positions banks like PNB and SBI at the heart of the dispute, as their reporting practices directly influence credit scores.

The petitioner's frustration escalated when the Uttarakhand High Court initially directed CIBIL to decide on his representation within three months. However, alleging willful disobedience, Panwar filed a contempt petition. CIBIL's Chairman, Mavila Vishwanathan Nair, responded in a counter-affidavit claiming a decision had already been taken. The High Court accepted this and closed the first contempt case, prompting Panwar to file a second one on similar grounds. The dismissal of this second petition forms the crux of the Supreme Court appeal.

Supreme Court Proceedings and Key Orders

During Monday's hearing, the Supreme Court bench expressed dissatisfaction with the lack of direct input from the implicated banks. "We do not have the versions of the banks, namely, Punjab National Bank and State Bank of India. We want both the Punjab National Bank and State Bank of India to file affidavit setting out whether the petitioner has any loan and if there is any default," the court ordered. This directive aims to pierce the veil of intermediary reporting by CIBIL and compel the banks to provide verifiable evidence of Panwar's loan history.

Patwalia argued that an earlier Supreme Court order dated July 30, 2024, had not been adequately addressed by the High Court, urging the apex court to intervene. The bench, acknowledging the procedural gaps, issued notices to all respondents, dispensed with their personal appearances, and scheduled the next hearing for January 9, 2026. This extended timeline reflects the court's intent to thoroughly examine the affidavits and underlying evidence before proceeding further.

The case highlights procedural nuances in contempt proceedings under the Contempt of Courts Act, 1971. Panwar's dual petitions raise questions about the finality of high court orders when compliance is contested, and whether repeated filings constitute abuse of process or legitimate pursuit of justice. For legal practitioners, this serves as a reminder of the Supreme Court's supervisory jurisdiction under Article 136 of the Constitution, which allows it to step in where lower courts fail to address substantive grievances.

Legal Implications and Analysis

At its core, this dispute intersects several legal domains: consumer protection under the Consumer Protection Act, 2019; data privacy and accuracy as per the Credit Information Companies (Regulation) Act, 2005 (CICRA); and banking regulations governed by the Reserve Bank of India (RBI). CICRA mandates credit information companies like CIBIL to maintain accurate records and provide mechanisms for dispute resolution. Section 21 of the Act empowers the RBI to oversee compliance, but judicial intervention becomes necessary when administrative remedies falter, as seen here.

A key issue is the reliability of PAN as an identifier in financial systems. The Income Tax Act, 1961, requires unique PANs, yet duplications—especially with common names like Rajendra Singh—expose systemic vulnerabilities. Panwar's claim of PAN linkage persisting post-issuance points to lapses in inter-departmental coordination between the Income Tax Department, RBI, and credit bureaus. Legal scholars argue this could necessitate amendments to CICRA or RBI guidelines, mandating stricter verification protocols, such as biometric or Aadhaar integration, to prevent identity fraud in credit reporting.

From a broader perspective, the case amplifies concerns over "credit invisibility" and erroneous reporting, which affect millions in India. A 2023 RBI report estimated that over 10% of credit files contain inaccuracies, leading to denied credit worthiness and economic exclusion, particularly for small entrepreneurs and rural litigants like Panwar. If the Supreme Court rules in his favor, it could embolden similar challenges, pressuring banks to enhance data hygiene and CIBIL to implement robust appeal mechanisms.

Moreover, the affidavits ordered from PNB and SBI may reveal deeper issues in loan origination and reporting. Under RBI's Master Circular on Loans and Advances, banks must ensure accurate NPA (Non-Performing Asset) classifications. Any proven misreporting could invite regulatory penalties or class-action suits, reshaping liability frameworks in financial litigation.

For the legal community, this matter underscores the evolving role of courts in digital finance disputes. With India's credit penetration projected to double by 2030, per a FICCI-NASSCOM study, precedents like this will guide how Article 21's right to livelihood intersects with financial data rights. Practitioners in banking and consumer law should monitor developments, as they may influence strategies in writ petitions under Article 226 or 32.

Potential Impacts on Legal Practice and the Justice System

The Panwar case has ripple effects across legal practice areas. For banking lawyers, it signals heightened scrutiny on compliance with CICRA's disclosure norms; failure to respond accurately to court directives could lead to contempt findings against institutions. Consumer advocates may leverage this to push for faster dispute resolutions, potentially invoking the RBI's Integrated Ombudsman Scheme for quicker grievance redressal.

On the justice system front, the Supreme Court's intervention highlights the backlog in financial disputes. With over 50,000 banking-related cases pending in high courts (as per National Judicial Data Grid data), specialized benches or fast-track mechanisms under the Commercial Courts Act, 2015, could be warranted. Additionally, the case exposes gaps in digital infrastructure: while the Insolvency and Bankruptcy Code, 2016, has digitized creditor claims, credit scoring lags in accuracy, affecting IBC proceedings where CIBIL reports are pivotal.

Ethically, attorneys must navigate dual PAN issues sensitively, ensuring client PANs are delinked without compromising privacy under the Digital Personal Data Protection Act, 2023. Patwalia's advocacy exemplifies ethical persistence in pro bono-like consumer cases, inspiring junior counsel to take up similar causes.

Looking ahead, if affidavits confirm no defaults by Panwar, the court may direct CIBIL to purge erroneous data, potentially awarding compensation under tort principles for financial loss. Conversely, evidence of loans could validate CIBIL's role, reinforcing its passive aggregator status. Either way, the January 2026 hearing promises to refine the jurisprudence on credit rights, urging stakeholders to prioritize accuracy over expediency.

Conclusion: A Call for Systemic Reform

Rajendra Singh Panwar's protracted fight against a shadowy negative credit score encapsulates the human cost of bureaucratic and technological silos in India's financial sector. As the Supreme Court demands transparency from PNB and SBI, it not only seeks justice for one man but also paves the way for safeguarding millions from similar plights. Legal professionals are urged to engage with this evolving narrative, advocating for reforms that align credit systems with constitutional imperatives of fairness and equity.

This case, though rooted in individual grievance, holds the potential to catalyze broader changes—ensuring that credit information serves as a tool for empowerment, not exclusion. As hearings progress, the bar and bench alike will await clarifications that could redefine accountability in credit ecosystems.