Banks can't ask for more funds after one-time settlement

When a bank or financial institution finds it difficult to recover loan dues, it dangles a carrot before the customer by offering a one-time settlement, hoping to recover whatever is possible. Often, once the amount is paid by the customer, the bank tries to by-pass the settlement and keep up the pressure to recover the remaining amount. This is not permissible, and constitutes a deficiency in service, as recently held by the Mumbai Suburban District Forum in the case of Anant Nitare versus the Managing Director, ICICI Bank.

Nitare held a credit card issued by ICICI Bank. Between November 5, 2008 and November 12, 2008, there were transactions which Nitare disputed and suspected misuse of his card. He wrote to the bank, for which a service request number was allotted. Later, Nitare was asked to pay Rs 5,000 for one-time settlement. After he paid, the bank asked him to pay the remaining amount. Aggrieved, Nitare filed a consumer complaint. He also claimed compensation for harassment and costs of litigation.

ICICI Bank contested, claiming misuse of a credit card can occur only when the holder is careless. The bank alleged there were 63 disputed transactions which had occurred due to the Nitare's negligence in keeping his password and other credit card details private. The bank claimed it could not be held liable in such circumstances.

The bank also alleged Nitare had fabricated the acknowledgement to show he had lodged a complaint with the bank regarding the misuse of his credit card but no such complaint had been lodged.

The Forum observed Nitare's complaint had been registered and a service request number allotted. The one-time settlement had a serial number and the bank's stamp and acknowledgement. Hence, the Forum refused to believe the bank's allegations.

The bank then argued Nitare's complaint was filed against the managing director of the bank and not against the bank itself, so it should be dismissed. Rejecting this, the Forum noted the reply to the complaint had been filed by the bank and not by its managing director. So, it had to be interpreted that the complaint against the bank had been filed through its managing director. Hence, the Forum concluded the complaint was maintainable.

On merits, the Forum held the one-time settlement had been signed, stamped and sealed and acknowledged by the bank. Thereafter, the bank was not entitled to make a demand for further payment of the amount which had been waived off.

In its order dated October 11, 2013, delivered by Presiding Officer J L Deshpande, along with member S R Sanap, the Forum declared Nitare had cleared the dues through the one-time settlement. It restrained ICICI Bank from making any further demand. The Forum awarded costs of Rs 5,000 to Nitare, who argued his complaint in person.

A bank cannot induce a customer to opt for a one-time settlement and then back out on the settlement.

The author is a consumer activist