Delhi High Court directs Citibank to pay 1 lakh costs to customer for Credit Card fraud

The Delhi High Court has ordered that costs of Rs.1 lakh to be paid to a credit card holder without whose permission or request a new credit card was issued to him by the Bank, and Rs.76,777/- was debited from credit card towards a rent payment transaction on Paytm without his knowledge.

The long and arduous journey that a credit card holder has to undergo, when any fraudulent transactions take place on a credit card, was at the crux of the petition before the High Court.

Sarwar Raza, a practicing advocate in Delhi, was issued a credit card by Citibank in January 2022. On 5th April, 2022, a new credit card was issued to him without any request made from his side. He raised a complaint on the customer care number of the Bank with respect to the issuance of the credit card no. 2 and was assured that if he did not activate the card, the same shall not be updated in the records of the Bank. However, on 12th April, 2022, the credit card statement that was sent on his e-mail id contained the details of the credit card no. 2, which the Petitioner is stated to have had neither requested for, nor activated. The statement issued for credit card no. 2 showed a debit of an amount of Rs. 76,777/-, which was undertaken on 6th April, 2022, i.e., a day after credit card no.2 was issued.

On 12th April, 2022, Raza filed a complaint with the Bank on the very same date, as also with the Cyber Cell of Delhi Police. 

Pursuant to the complaints made by Raza, the Bank provisionally credited back the said amount of Rs.76,777/. However, in July 2022 the Bank closed the complaint made by the Petitioner, reversed the provisional credit granted to the Petitioner, and commenced billing the disputed amount in the billing cycles from July 2022. 

High Court noted that Raza's complaint was rejected because the said complaint was stated to be filed by an advocate. In the second instance, the reason given by the RBI was that there was some inadvertent field which was wrongly filled. 

"The rejection of complaints filed by the public due to such technical reasons show that the functioning of the Ombudsman of the RBI is not more consumer friendly. Thus, both, the The Reserve Bank-Integrated Ombudsman Scheme, 2021 and the Circular No. RBI/2017-18/15 dated 6th July, 2017 on ‘Customer Protection - Limiting Liability of Customers in Unauthorised Electronic Banking Transactions' ought to be implemented in its letter & spirit.", a Justice Pratibha M Singh's bench held.

The bench went on to issue the following directions:

(1) The amount of Rs.76,777/- has already been re-credited to the Petitioner. No payment of late fee, interest charge, or any amount in respect of the said amount shall be charged by the Bank.

(2) The CIBIL score of the Petitioner shall not be changed merely based on the disputed transactions and the same shall be restored, if there are no other grounds for changing the score.

(3) For the conduct of the recovery agents of the bank, the Court deems it appropriate to hold the Bank responsible for the harassment caused to the Petitioner. Accordingly, costs of Rs.1 lakh is directed to be paid to the Petitioner by the Bank by 15th January, 2026.

(4) Insofar as the RBI is concerned, steps shall be taken for ensuring that all complaints filed by the customers are not rejected simply by a mechanised process. If there are any mistakes made by complainants, an opportunity ought to be given to them to correct any errors or mistakes. Rejection of complaints by the Ombudsman by a mechanised model results in more disputes being filed in consumer forums, commercial Courts, civil Courts and writ petitions. Issues which ought to be resolved at the level of the Ombudsman of the RBI shall be resolved at that stage itself and for the said purpose, if any strengthening, expansion or supplementing of the human resource at the Ombudsman’s office is required, the same shall be undertaken.

(5) Whenever the complaints filed before the RBI Ombudsman are finally rejected, the same shall undergo a second level human supervision process, by trained legal personnel for e.g. retired judicial officers, lawyers, etc., who are legally trained for at least ten years, so that complaints are not rejected due to small errors. If the complaint redressal mechanism adopted by the Ombudsman is made more effective and efficient, litigation in Courts and consumer forum/s can be reduced considerably.

(6) RBI shall issue directions to all banks regulated by them to create a flowchart in the complaints tab on their respective websites where the manner in which a customer can register a complaint with the customer care executive, branch manager, as well as the nodal officer can be communicated to the customers.

(7) The Ombudsman of RBI shall also ensure that all banks and financial institutions clearly reflect on their respective websites, the hierarchy of all such officers who deal with consumer complaints, in the form of a flowchart. 

"These directions shall be brought to the notice of the office of the concerned Deputy Governor, RBI, through the Assistant General Manager, RBI, as also, through Mr. Ramesh Babu, ld. Counsel. The Deputy Governor, RBI shall then place an affidavit on record, by 15th January 2026, stating as to what measures have been taken to implement the directions given above.", the order added.

Case Title: SARWAR RAZA OMBUDSMAN vs. RESERVE BANK OF INDIA & ANR. 

Bench: Justice Pratibha M Singh

Order Date: November 27, 2025