The West Bengal State Consumer Disputes Redressal Commission has clarified that financial institutions cannot withhold critical loan documentation while penalizing consumers for defaults. In a landmark ruling, the Commission held that a consumer’s clear willingness to settle a loan account on a specific date, contingent upon full disclosure, extinguishes the right of the lender to impose further charges beyond that date when non-disclosure is the root cause of the dispute.
Background & Facts
The Dispute
The dispute arose from the purchase of an Oppo mobile phone on 28.01.2022 for Rs.15,990/- through an alleged "interest-free EMI" financing scheme facilitated by HDFC Bank (Respondent/O.P. Nos. 1 & 2) and sold by Bharat Gift & Enterprise (Respondent/O.P. No. 3). The Appellant paid Rs.5,000/- upfront and agreed to pay the balance in seven EMIs of Rs.1,599/- each. Only one EMI was successfully paid. Two subsequent EMIs, tendered via cheques, were dishonoured, triggering banking penalties.
Key Facts
The Appellant received no formal loan agreement or detailed documentation, only an online repayment schedule.
The tax invoice issued by the retailer showed the entire Rs.15,990/- as financed amount, without disclosing the Rs.5,000/- upfront payment.
The Appellant discovered unauthorized debits of Rs.295/- from his IDBI Bank account, traced to a blank cheque submitted at the time of purchase.
Despite repeated requests, the Respondents failed to provide a statement of account, interest rate, or breakdown of charges.
On 30.04.2022, the Appellant offered to settle the entire outstanding amount, subject to receipt of a complete and intelligible account statement.
The Respondents did not respond to this offer or provide the requested documentation.
Procedural History
28.01.2022: Purchase of mobile phone and initiation of EMI financing.
March - April 2022: Two EMIs dishonoured; penalties imposed.
May - July 2022: Appellant sent multiple written requests for account statement and interest details.
15.08.2022: Complaint filed before District Consumer Disputes Redressal Commission, South 24 Parganas (CC/168/2022).
05.08.2024: District Commission ordered refund of Rs.295/-, compensation of Rs.5,000/-, litigation cost of Rs.5,000/-, and issuance of account statement.
07.05.2026: First Appeal filed before State Commission (FA No. SC/19/A/255/2024).
The Parties' Positions
For the Appellant
Argued that non-disclosure of loan terms constituted deficiency in service under Section 2(1)(g) of the Consumer Protection Act, 2019.
Contended that the Rs.15,990/- invoice misrepresented the financing structure, amounting to unfair trade practice under Section 2(1)(r).
Asserted that the Rs.295/- debit from the IDBI account was unauthorized and fraudulent.
Emphasized that his willingness to settle on 30.04.2022 demonstrated bona fides and that the Respondents’ failure to provide documentation prevented performance.
Relied on Ghaziabad Development Authority v. Balbir Singh (2004), Fortune Infrastructure v. Trevor D'Lima (2018), and Laxmi Engineering Works v. P.S.G Industrial Institute (1995) to argue for enhanced compensation.
For the Respondents
Claimed the scheme was truly interest-free and the total repayment matched the phone’s price.
Argued that the Appellant defaulted by dishonouring cheques, justifying penalties.
Stated that online access to repayment schedule satisfied disclosure obligations.
Asserted that the Rs.295/- debit was a legitimate charge and the cheque return was due to incorrect address.
Maintained that Respondent/O.P. No. 3 (retailer) had no role in financing and thus no liability.
Relief Sought
The Appellant sought:
Enhancement of compensation from Rs.5,000/- to Rs.25,000/- for mental agony and financial loss.
A direction to freeze all further charges beyond 30.04.2022.
A clear, auditable statement of account reflecting principal, interest, and charges as of 30.04.2022.
Costs and interest on the refund amount.
The Legal Issue
The central question was whether a consumer’s unequivocal willingness to settle a loan account on a specific date, contingent upon disclosure of terms, extinguishes the lender’s right to impose further charges when the lender’s non-disclosure is the primary cause of the dispute.
Arguments Presented
For the Appellant
The Appellant’s counsel argued that non-disclosure of material information - such as interest rate, breakdown of EMIs, and nature of charges - constitutes deficiency in service under Section 2(1)(g) of the Consumer Protection Act, 2019. Reliance was placed on Laxmi Engineering Works and New India Assurance Co. Ltd. v. Abhilash Jewellery to establish that failure to provide intelligible financial information deprives the consumer of informed choice. The willingness to settle on 30.04.2022 was framed as a legal act of readiness to perform, invoking the equitable doctrine that no party can benefit from its own wrong. Counsel contended that the District Commission’s failure to recognize this rendered the order incomplete and unjust.
For the Respondent
The Respondent’s counsel argued that the financing was transparent and interest-free, with the total repayment equal to the product price. They maintained that dishonour of cheques triggered legitimate banking penalties and that online access to repayment schedules fulfilled disclosure obligations. The Rs.295/- debit was claimed as a processing fee, and the failure to deliver the account statement was attributed to the Appellant’s incorrect address. The Respondent further argued that the Appellant’s default negated any claim of equitable relief.
The Court's Analysis
The Commission undertook a detailed analysis of the interplay between consumer rights and contractual obligations. It affirmed that the obligation to provide clear, complete, and intelligible financial information is not optional but a statutory duty under Section 2(1)(g) and Section 2(1)(r) of the Consumer Protection Act, 2019. The Commission rejected the Respondents’ argument that online access sufficed, noting that meaningful disclosure requires proactive provision upon request.
"The failure to furnish the statement of account effectively disabled the Appellant from performing his reciprocal obligation. This attracts the equitable doctrine that no party can take advantage of its own wrong."
The Commission held that the Appellant’s offer to settle on 30.04.2022 was not a mere expression of intent but a legally significant act demonstrating absence of wilful default. It cited the principle that a party ready and willing to perform cannot be prejudiced by the other party’s failure. The Commission emphasized:
"The continuing accrual of charges, if any, beyond 30.04.2022, without affording the Appellant an opportunity to settle the account, would be unjust and contrary to the well settled principle that a consumer cannot be penalised for delays attributable to the service provider."
While acknowledging the dishonour of cheques as a default, the Commission found it was contributory, not wilful, given the lack of transparency. It distinguished between charges incurred prior to 30.04.2022 (which could stand) and those accruing thereafter (which were barred). The Commission also upheld the exoneration of the retailer, noting no evidence of its involvement in financing.
The Verdict
The Appellant succeeded in part. The State Commission enhanced compensation from Rs.5,000/- to Rs.10,000/- for mental agony and harassment, affirmed the Rs.5,000/- litigation cost, and upheld the refund of Rs.295/-. Respondents were directed to furnish a complete statement of account within 30 days, clearly indicating principal, charges, interest rate, and EMI structure, reflecting the position as on 30.04.2022. No further charges beyond that date were permitted, except those already incurred due to cheque dishonour prior to 30.04.2022. The exoneration of Respondent/O.P. No. 3 was affirmed.
What This Means For Similar Cases
Disclosure Is Not Optional - It Is Foundational
Financial institutions must proactively provide loan statements upon request, not rely on online portals.
Silence or delay in disclosure constitutes continuing deficiency under Section 2(1)(g) of the Consumer Protection Act, 2019.
Practitioners should argue that non-disclosure vitiates the consumer’s ability to perform contractual obligations.
Willingness to Settle Can Freeze Liability
A clear, documented offer to settle on a specific date, contingent on disclosure, creates a legal cutoff for further charges.
Courts will treat such offers as evidence of bona fides, reducing culpability for defaults.
Practitioners should always include such offers in complaints and evidence logs.
Shared Fault Requires Balanced Remedies
Dishonour of cheques does not automatically justify punitive charges if the lender has failed in disclosure.
Compensation must reflect shared responsibility - neither fully penalizing the consumer nor absolving the institution.
Enhancement of compensation is warranted where non-disclosure causes prolonged uncertainty and mental distress.
