The District Consumer Disputes Redressal Commission-II, U.T. Chandigarh has held SBI Cards & Payment Services Pvt. Ltd. guilty of deficiency in service and unfair trade practice for wrongly reporting a customer as a CIBIL defaulter, even though his credit card dues had been fully settled many years earlier.
The Commission ruled that once a borrower clears all outstanding dues and the creditor acknowledges full and final settlement, the account cannot be treated as a default account. The Commission further held that such settled accounts cannot be reported negatively to credit bureaus, as it directly harms the consumer’s credit record.
Background of the Case
The complainant, Sanjay Singla, was issued a credit card by SBI Cards & Payment Services Pvt. Ltd. In January 2007, he cleared all his outstanding credit card dues by making a full and final payment of ₹18,000. After receiving the payment, SBI Cards issued a receipt clearly stating “No Dues”, confirming that the account was fully settled.
However, in October 2020, SBI Cards suddenly started demanding an additional amount of ₹11,652 from the complainant. At the same time, the company reported him as a defaulter to CIBIL, which severely affected his credit score and credit history.
When Mr. Singla checked his credit report, he found that his credit profile had been negatively impacted. Despite repeatedly showing the No Dues receipt issued by SBI Cards, the incorrect reporting was not corrected.
Transfer of Account to Kotak Mahindra Bank
During the proceedings, it also came to light that SBI Cards had assigned the already settled account to Kotak Mahindra Bank in 2016. Later, Kotak Mahindra Bank also issued a No Dues Certificate, confirming that the account had been fully and finally settled. Despite this clear confirmation, the complainant continued to face harassment and incorrect reporting in his credit records.
Complaint Before the Consumer Commission
Aggrieved by the wrongful reporting and continuous harassment, the complainant approached the Consumer Commission, seeking:
- Removal of his name from the CIBIL defaulters list
- Correction of his credit record
- Compensation for mental agony and harassment
Arguments of SBI Cards
SBI Cards argued that the credit card account had been sold and assigned to Kotak Mahindra Bank in 2016, and therefore, Kotak was responsible for any further action. The company claimed that:
- No demand was raised after 2016
- The No Dues Certificate was obtained from Kotak only as a special measure, without admitting liability
- There was no deficiency in service on its part
Findings of the Commission
After examining the records, the Commission observed that:
- The complainant had made a full and final settlement on 28 January 2007, which was duly acknowledged
- SBI Cards had issued a No Dues receipt
- Kotak Mahindra Bank had also issued a No Dues Certificate, confirming full settlement
The Commission held that reporting a settled account as defaulted, and transferring such an account to another bank, despite full payment, clearly amounted to deficiency in service and unfair trade practice.
Final Order
The Consumer Commission directed SBI Cards & Payment Services Pvt. Ltd. to:
- Remove the complainant’s name from the CIBIL defaulters list, if not already done
- Pay ₹20,000 as compensation to the complainant for mental agony, harassment, and litigation costs
Why This Decision Is Important
This ruling reinforces that banks and card companies cannot damage a consumer’s credit history once dues are fully settled. It sends a strong message that wrongful CIBIL reporting is a serious violation of consumer rights, and financial institutions must act responsibly and maintain accurate records.
The decision provides relief to consumers who face long-term financial harm due to incorrect credit reporting, even years after settling their dues.
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