Calcutta High Court (Appellete Side)
Sunil Agarwal vs M/S. Lic Housing Finance Limited & Ors on 5 May, 2011
Author: Jayanta Kumar Biswas
Bench: Jayanta Kumar Biswas
1
In The High Court At Calcutta
Constitutional Writ Jurisdiction
Appellate Side
Present : The Hon'ble Mr Justice Jayanta Kumar Biswas
W.P.No.22233(W) of 2010
Sunil Agarwal
-vs-
M/s. LIC Housing Finance Limited & Ors.
with
C.A.N. No.3067 of 2011
Mr. Susobhan Sengupta
Ms. Priyanka S. Tibrewal ....for the petitioner
Mr. Pallab Kumar Chakraborti
Mr. Sandipan Mitra ....for the Finance Company
Mr. Kunaljit Bhattcharjee ....for the Information Bureau
Mr. Amalendu Mitra
Mr. Prasun Ghosh ....for the RBI
Heard on : May 5, 2011
Judgment on : May 5, 2011
The Court : The petitioner in this art.226 petition dated November 12,
2010 is alleging that on the basis of his application dated July 20, 2010 (at p.59)
under s.18 of the Credit Information Companies (Regulation) Act, 2005 the
respondents have not taken steps for settlement of the disputes.
The petitioner was a Director of one Siddharta Carriers Pvt. Limited of which one Sudip Sen was an employee. Showing the petitioner as a guarantor Sudip borrowed money from LIC Housing Finance Limited that, on Sudip's default on the loan, supplied information to one Credit Information Bureau (India) Ltd., which recorded information showing the petitioner as a defaulter. Noticing the information, the petitioner submitted the s.18 application.
2Mr Sengupta appearing for the petitioner has submitted that Credit Information Bureau (India) Ltd., a State within the meaning of art.12, for its activities are regulated by the provisions of the Credit Information Companies (Regulation) Act, 2005, is under a statutory obligation to record only accurate information.
His argument is that since in view of the provisions of s.18 of the Act the Reserve Bank of India was under a statutory obligation to appoint an arbitrator for deciding the dispute between the petitioner and Credit Information Bureau (India) Ltd, and both this company and the Reserve Bank of India have failed to discharge their statutory duties, the petitioner is entitled to a mandamus commanding them to settle the disputes.
LIC Housing Finance Limited is a credit institution within the meaning of the provisions of the Credit Information Companies (Regulation) Act, 2005.
And Credit Information Bureau (India) Limited is a credit information company. It is a company registered under the Companies Act, 1956 and the Reserve Bank of India has granted it a certificate of registration under sub-s.(2) of s.5 of the Credit Information Companies (Regulation) Act, 2005 to commence and carry on the business of credit information.
I do not find any reason to hold that Credit Information Bureau (India) Limited is a State within the meaning of art.12 of the Constitution of India. Simply because its activities are regulated under the provisions of the Credit Information Companies (Regulation) Act, 2005 it cannot be treated as a State within the meaning of art.12. It is just a private company not amenable to the art.226 jurisdiction of the High Courts.
Being a credit institution within the meaning of the Credit Information Companies (Regulation) Act, 2005, LIC Housing Finance Limited was required to be a member of a Credit Information Company; this is a requirement of s.15 of 3 the Act. Accordingly, it became a member of the Credit Information Bureau (India) Ltd.
In view of the provisions of s.17 of the Act, as a credit institution LIC Housing Finance Limited was required to provide credit information to Credit Information Bureau (India) Ltd. Accordingly, it provided credit information that included the information concerning Sudip, and Credit Information Bureau (India) Ltd. has stored information showing the petitioner as a defaulter on Sudip's loan as Sudip's guarantor.
Storage of information concerning the petitioner by Credit Information Bureau (India) Ltd. has made the petitioner aggrieved, because, according to him, the information is totally incorrect. His case is that he never did anything to give guarantee or security for the loan granted to Sudip by LIC Housing Finance Limited.
Under the provisions of the Credit Information Companies (Regulation) Act, 2005 a borrower includes a client of a credit institution, and a client includes a guarantor or a person who proposes to give guarantee or security for a borrower of a credit institution.
It is, therefore, evident that the real dispute raising which this petition has been filed is about the accuracy of the information showing the petitioner as guarantor for the loan LIC Housing Finance Limited granted to Sudip and collection, storage and use of the information by Credit Information Bureau (India) Ltd. The question is how the dispute is to be settled.
Sub-section(1) of s.18 of the Credit Information Companies (Regulation) Act, 2005 provides as follows:
"(1)Notwithstanding anything contained in any law for the time being in force, if any dispute arises amongst, credit information companies, credit institutions, borrowers and clients on matters relating to business of credit information and for which no remedy has been provided under this Act, such disputes shall be settled by conciliation or arbitration as provided in the Arbitration and Conciliation Act, 1996 (26 of 1996), as if 4 the parties to the dispute have consented in writing for determination of such dispute by conciliation or arbitration and provisions of that Act shall apply accordingly."
Sub-section(2) of s.18 of the Act provides as follows:
"(2)Where a dispute has been referred to arbitration under Sub-section (1), the same shall be settled or decided,-
(a) by the arbitrator to the appointed by the Reserve Bank;
(b) within three months of making a reference by the parties to the dispute:
Provided that the arbitrator may, after recording the reasons therefor, extend the said period up to a maximum period of six months:
Provided further that, in an appropriate case or cases, the Reserve Bank may, if it considers necessary to do so (reasons to be recorded in writing), direct the parties to the dispute to appoint an arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996), for settlement of their dispute in accordance with the provisions of that Act."
Sub-section(3) of s.18 provides as follows:
"(3)Save as otherwise provided under this Act, the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) shall apply to all arbitration under this Act as if the proceedings for arbitration under this Act as if the proceedings for arbitration were referred for settlement or decision under the provisions of the Arbitration and Conciliation Act, 1996."
It seems to me that the petitioner has reason to feel aggrieved by inaction on the part of the Reserve Bank of India to which the s.18 application dated July 20, 2010 was sent. In my opinion, treating the application as a reference (for the provisions of the Act do not provide any specific mode for referring a dispute to arbitration under sub-s.(1) of s.18), the Reserve Bank of India ought to have taken steps in terms of sub-s.(2) of s.18.
It is nobody's case that with respect to the present dispute concerning the credit information collected and stored by Credit Information Bureau (India) Ltd. the petitioner has some other remedy under the Credit Information Companies (Regulation) Act, 2005.
It is to be noted that counsel for LIC Housing Finance Limited, Credit Information Bureau (India) Ltd. and the Reserve Bank of India have not argued that the petitioner's s.18(1) application referring the dispute between him and Credit Information Bureau (India) Ltd. was not entertainable by the Reserve Bank 5 of India. On the contrary, counsel for the Reserve Bank of India has submitted that the bank will need at least four weeks for taking decision in terms of s.18(2) of the Act.
For these reasons, I dispose of the petition ordering as follows. Within four weeks from the date of communication of this order the Reserve Bank of India shall give its decision dealing with the petitioner's application dated July 20, 2010 treating it as a reference under s.18(1) of the Credit Information Companies (Regulation) Act, 2005. The decision shall be communicated to all concerned. CAN No.3067 of 2011 shall be deemed to be disposed of. No costs. Certified xerox.
(Jayanta Kumar Biswas, J) sb