Demanding ₹33.83 Lakh After Credit Card Closure Is Unfair Trade Practice: Karnataka State Consumer Commission Directs Standard Chartered Bank To Pay ₹5 Lakh Compensation
Pranav B Prem
The Karnataka State Consumer Disputes Redressal Commission, Bengaluru (Additional Bench) has held Standard Chartered Bank liable for unfair trade practice for raising a demand of ₹33.83 lakh against a consumer years after his credit card account had already been closed. The Bench comprising Judicial Member Ravi Shankar and Member Sunita Channabasappa Bagewadi enhanced the compensation awarded to the consumer, observing that the bank’s conduct caused significant mental agony and adversely affected his financial reputation.
The appeal was filed by V.V. Venkatesh Babu, proprietor of Vasavamba Super Bazaar in Mysuru, challenging the order of the Bangalore I Additional District Consumer Disputes Redressal Commission in Consumer Complaint No.74/2023. The District Commission had earlier awarded compensation of ₹1,00,000 along with interest at 10% per annum and ₹3,000 towards litigation costs for deficiency in service and unfair trade practice. Dissatisfied with the quantum of compensation, the complainant approached the State Commission seeking enhancement.
According to the complainant, he had made a payment of ₹15,500 on 27 August 2010 towards settlement of his credit card dues and had requested the bank to close the credit card account. The bank acknowledged the request and issued confirmation regarding the closure of the credit card on the same date.
However, several years later, the bank issued a demand notice claiming an outstanding amount of ₹33,83,173.12. The complainant stated that despite the earlier closure of the account, the bank continued to demand payment through phone calls, messages and legal notices dated 25 December 2020 and 15 June 2022. He also issued a legal notice dated 18 June 2022 asserting that the credit card account had already been closed in 2010, but the bank allegedly continued its demands. Aggrieved by the repeated demands, the complainant approached the District Consumer Commission alleging deficiency in service and unfair trade practice, seeking substantial compensation for the harassment caused by the bank’s actions.
During the appeal proceedings before the State Commission, the respondents—Standard Chartered Bank and Shaha Finlease Pvt. Ltd.—failed to appear despite service of notice and were placed ex parte. The appellant relied on judicial precedents, including the decision of the Supreme Court in M/s Canara Bank & Ors. v. S. Reghukumar & Anr. (SLP (C) No.695/2020) and the decision of the National Consumer Disputes Redressal Commission in Anil Milkiram Goyel & Anr. v. Hongkong and Shanghai Banking Corporation Ltd. (2023 SCC OnLine NCDRC 216) to argue that higher compensation should be awarded in cases where consumers suffer harassment and reputational harm due to the actions of financial institutions.
The appellant also relied on the Reserve Bank of India guidelines dated 21 April 2022 regarding closure of credit cards. The guidelines state that any request for closure of a credit card must be honoured within seven working days, subject to payment of dues, and failure to do so may attract a penalty of ₹500 per day until closure of the account.
After examining the records and the order passed by the District Commission, the State Commission observed that the complainant had clearly intimated the bank on 27 August 2010 about closure of the credit card after making the payment of ₹15,500, and the bank had issued an endorsement confirming the closure of the account.
Despite this confirmation, the bank issued a demand notice in 2018 seeking payment of ₹33,83,173 without providing any explanation as to why the account had not been treated as closed when the representation was made in 2010. The Commission noted that the demand was made nearly seven years after the closure and lacked any basis.
The Commission held that such conduct clearly amounted to an unfair trade practice on the part of the bank. It observed that the complainant suffered adverse consequences due to the bank’s actions, including a negative impact on his CIBIL score for nearly ten years. The Commission also noted that repeated emails and communications from the bank demanding payment caused mental harassment to the complainant.
The State Commission further observed that the compensation awarded by the District Commission was inadequate considering the extent of harassment and reputational damage suffered by the complainant. Taking into account the circumstances of the case and the judicial precedents cited, the Commission found it appropriate to enhance the compensation.
Accordingly, the Karnataka State Consumer Disputes Redressal Commission, Bengaluru modified the order passed by the District Commission and directed the respondents to pay ₹5,00,000 as compensation for unfair trade practice. The Commission also directed payment of ₹1,00,000 towards advocate’s fees and ₹50,000 towards litigation costs to the complainant. The Commission further ordered that the respondents must comply with the directions within 30 days from the date of the order, failing which the amounts shall carry interest at the rate of 9% per annum until realization.
Cause Title: V.V. Venkatesh Babu v. Standard Chartered Bank & Anr.
Case No.: SC/29/A/716/2024
Coram: Judicial Member Ravi Shankar and Member Sunita Channabasappa Bagewadi
