2024 (6) TMI 838 - HC - Indian Laws

Maintainability of petition - efficacious remedy of appeal - Appointment of an arbitrator as envisaged under Section 18(2)a of the Credit Information Companies (Regulation) Act, 2005 - ds to non updation of credit information by the second respondent for which remedy has been provided under Section 21(3) of the Act and Rule 22 of its Rules, 2006 - HELD THAT - The dispute between the borrower and the credit institution are not covered under Section 18 of the Act. Such grievance is specifically covered under Section 21 (3) of the Act which mandates credit institutions / credit information company, as the case may be, to take appropriate steps to update the credit information within 30 days after being requested to do so. However, if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by the Hon'ble Supreme Court of India not to operate as a bar in at least three contingencies i.e. where the writ petition has been filed for the enforcement of any of the fundamental rights or where there has been a violation of principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. The case on hand does not fall under any of the category to entertain the writ petition under Article 226 of the Constitution of India. Therefore, this writ petition is not maintainable - Though Debt Recovery Tribunal granted interim order on condition to pay 25% of the demand amount, the said interim order was not complied with and auction was concluded in respect of four properties and realised a sum of Rs. 216.50 lakhs - the petitioner was declared as wilful defaulter. The direction sought for in this writ petition cannot be granted and the writ petition itself is devoid of merits and liable to be dismissed - Petition dismissed.

Summary

Issues Involved:
The issues involved in this case are the appointment of an arbitrator u/s 18(2)a of the Credit Information Companies (Regulation) Act, 2005 and the maintainability of the writ petition when a dispute arises between the borrower and the credit institution.

Appointment of Arbitrator (u/s 18(2)a of the Act):
The petitioner, a proprietor of a transport group, sought the appointment of an arbitrator under Section 18(2)a of the Act due to disputes with the second respondent regarding the updating of credit information. The petitioner faced financial crisis and alleged that the second respondent's failure to update credit scores caused significant loss and hardship. Despite complaints to the Ombudsman, the petitioner requested the first respondent to appoint an arbitrator, but received no response. However, the NBFC Ombudsman intervened, resolved the grievance, and communicated the resolution to the petitioner. The first respondent contended that the writ petition seeking an arbitrator was not maintainable as the dispute did not pertain to the business of credit information u/s 18(1) & (2) of the Act.

Maintainability of Writ Petition:
The Court determined that the dispute between the borrower and the credit institution regarding credit information updation was not covered under Section 18 of the Act. Instead, such grievances were specifically addressed under Section 21(3) of the Act, which mandates credit institutions to update credit information upon request. The Court highlighted that the availability of an effective remedy would normally preclude High Court intervention, citing Supreme Court precedents. As the case did not fall under exceptions where alternative remedies are disregarded, the Court held that the writ petition was not maintainable under Article 226 of the Constitution of India.

Conclusion:
The Court dismissed the writ petition, ruling that the direction to appoint an arbitrator could not be granted as the petition lacked merit. The petitioner's claims against the second respondent, including being declared a wilful defaulter, were considered in light of actions taken by the second respondent under the SARFAESI Act. The Court found the writ petition devoid of merit and ordered its dismissal, with no costs awarded.