Never took a bike loan, but branded defaulter: Kerala man wins Rs 60,000 after decade-long fight
A consumer commission in Kerala has ruled against Muthoot Capital Services Ltd for marking a man as a loan defaulter even though he never availed any loan. The Pathanamthitta District Consumer Disputes Redressal Commission directed the finance company to pay Rs 60,000 as compensation to the complainant, Abhijith Balan, and to remove all adverse entries from his credit history.
The case dates back to August 2016, when Balan visited a Yamaha showroom in Mulakuzha to purchase a Fazer motorbike. He paid an advance of Rs 20,000 and submitted documents for a vehicle loan. However, before the transaction was completed, the showroom abruptly closed, and no vehicle was delivered. Balan never received the bike, and no loan was disbursed.
Years later, Balan faced difficulties in obtaining loans and credit cards due to adverse entries in his credit report. In November 2024, he received a legal notice from Muthoot Capital alleging that he had availed a vehicle loan under an agreement dated August 6, 2016, and had defaulted on repayments. The notice further claimed that the financed vehicle had been surrendered and sold. Balan denied these allegations and demanded correction of his credit records, but Muthoot Capital failed to respond.
The commission noted that Muthoot Capital did not file any version contesting the complaint and produced no documents to prove the existence of a valid loan transaction. The order stated, 'Credit information maintained by financial institutions directly affects the financial reputation and borrowing capacity of a consumer. Reporting an alleged loan liability without establishing its authenticity and thereafter failing to rectify the same despite receipt of objections amounts to a serious deficiency in service and unfair trade practice.'
Finding that Balan suffered mental agony, inconvenience, and loss of financial opportunities, the commission ordered Muthoot Capital to pay Rs 60,000 in compensation, rectify all adverse entries, and restore his credit status. The order was passed by President George Baby and member Nishad Thankappan.
