Disclaimer: This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.
Delhi High Court: In a writ petition filed by the petitioner, a credit card holder, seeking issuance of an appropriate writ, order or direction to the respondents in matter related to credit card fraudulent transactions and grievance system of banks, a single-judge bench of Prathiba M. Singh,* J., refused to engage in factual findings on how the mobile number was changed, noting that it remained “shrouded in mystery,” but issued regulatory directives to the RBI on RBI Ombudsman functioning, mandatory human review, grievance system of banks and strengthening consumer protection against automated-system defaults.
Factual Matrix
In the instant matter, the Petitioner, a practicing advocate in Delhi, was issued credit card No.1 in January 2022 by Citibank. On 05-04-2022, Citibank issued another card (credit card No.2), which, according to the petitioner, was issued entirely “without any request made from his side.” The statement for credit card No.2 revealed a debit of Rs. 76,777/- on 06-04-2022 towards a Paytm rent payment.
The petitioner contended that the same “was never undertaken by him.” He immediately lodged complaints with both Citibank and the Delhi Police Cyber Cell on 12-04-2022. Citibank initially provisionally credited the disputed amount but later reversed the credit and resumed billing from July 2022 onward.
The Bank claimed that the IPIN was changed using the OTP sent to the Petitioner’s registered mobile, that the registered mobile number was changed, and that virtual card view was accessed and transaction limits modified, leading to the transaction. However, the petitioner categorically denied all such actions and maintained that no OTP or authorization was done by him.
When the Petitioner approached the RBI Ombudsman with complaints bearing Nos. N202223022001847 and N202223022001848, the complaints were rejected through system-generated closures, citing (i) filing through an advocate, and (ii) procedural technicalities.
The petitioner filed the present writ petition seeking issuance of an appropriate writ, order or direction “in the nature of mandamus or any other writ of similar nature” directing the respondents to —
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Refund the amount of Rs.76,777/- along with applicable interest, as was levied by Respondent No.2 — the Bank.
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Restore the CIBIL score of the petitioner to the level existing prior to the disputed transactions.
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Refund the penalty charges imposed over the disputed transaction amount.
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Grant the costs of the proceedings to the petitioner.
During pendency of this case, despite the Court’s unequivocal interim direction on 05-12-2022 that “no coercive steps shall be taken,” Citibank issued further demand notices, calls, and even sent a collection agent to the petitioner’s home, resulted in contempt proceedings.
Moot Point
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Whether the Bank could attribute liability for the fraudulent transaction to the petitioner on the basis of alleged OTP/IPIN use?
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Whether Citibank’s actions, including collection pressure, despite Court orders, were contemptuous and constituted harassment?
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Whether the RBI Ombudsman’s rejection of the complaints through mechanical automated processes improper?
Court’s Analysis
The Court noted that the central grievance throughout the proceedings was that the petitioner had never received any intimation on his registered mobile number regarding the alleged fraudulent transaction. However, the bank produced a list of SMS alerts and a chart of messages claiming continuous intimation between 03-04-2022 and 07-04-2022.
The Court took note of bank’s records and observed that the petitioner did not lodge a complaint on the dates mentioned in the records, even though transactions occurred on 07-04-2022 on platforms such as Flipkart and Paytm and the first complaint came only on 12-04-2022.
The Court remarked that the manner in which the registered mobile number was changed remained “shrouded in mystery.” The Court emphasised that whether the petitioner inadvertently shared an OTP, or whether someone else misused his phone, required a factual analysis that could not be undertaken in writ jurisdiction. The Court explicitly stated that they are not inclined to determine whether all SMS alerts produced were actually received by the petitioner.
The Court expressed “consternation” at the conduct of Citibank’s recovery agents, who sent threatening messages, visited the petitioner’s residence, and demanded payment of alleged outstanding dues. The Court held such behaviour to be “condemnable and not at all permissible.” The Court further stated that even if a customer may have inadvertently shared credentials, there must be an immediate mechanism for blocking the credit card to prevent misuse.
The Court firmly held that —
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Recovery harassment was “condemnable and not at all permissible.”
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A consumer must have immediate access to the bank for blocking cards.
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Charging interest and penalties during unresolved disputes is not permissible.
While taking note of the Reserve Bank—Integrated Ombudsman Scheme, 2021, the Court observed that the Scheme must function as an effective consumer redressal system and “not a mere toothless division of the RBI.”
The Court reproduced Clause 10(2) of the Scheme (grounds for non-maintainability) and observed that the petitioner’s complaints were automatically rejected by a “system generated” mechanism because (i) the complaint was allegedly filed through an advocate; and (ii) due to a “wrongly filled field” in the complaint form.
The Court criticised such mechanical, automated rejections, stated that the same frustrate consumer rights and force litigants into civil courts, consumer forums, and writ courts unnecessarily. The Court further emphasised that the RBI Circular titled “Customer Protection — Limiting Liability of Customers in Unauthorised Electronic Banking Transactions” (2017) must be implemented “in its letter and spirit.”
Court’s Directions on strengthening grievance system of banks
The Court stated that the foundational purpose of financial regulators and banks must be,
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to put in place adequate safeguards to avoid misuse,
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take stringent action against perpetrators, and
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ensure that innocent credit card holders are not made to undergo harassment through incessant emails, messages and demands.
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RBI must ensure that Ombudsman complaints are not rejected by mechanised model.
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Whenever a complaint is finally rejected by the Ombudsman, the rejection must undergo a “second level human supervision process.”
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RBI to direct all banks to provide website complaint flowcharts showing escalation hierarchy.
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RBI Deputy Governor must file a compliance affidavit by 15-01-2026.
Accordingly, the Court issued the following directions —
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Amount of Rs. 76,777/- already re-credited shall stand final; no interest, penalty, or late fee shall be charged.
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CIBIL score shall be restored.
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Citibank shall pay Rs. 1 lakh as costs to the petitioner for harassment caused by recovery conduct.
[Sarwar Raza v. Ombudsman RBI, W.P.(C) 16659/2022, Decided on 27-11-2025]
*Judgment by Justice Prathiba M. Singh
Advocates who appeared in this case:
Mr. Ramesh Babu along with Mr. Rohan Srivastava, Ms. Jagriti Bharti and Ms. Tanya Chowdhary, Counsel for the RBI
Mr. Sanjeev Sindhwani, Sr. Adv. with Ms. Suruchi Suri, Counsel for the Respondent 2