One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: If an EdTech company has acknowledged your cancellation in writing but has not refunded the loan amount, and the NBFC lender refuses to stop auto-debits, you can file a consumer complaint. The written cancellation email overrides their "no refund" T&C, and the consumer forum can order a full refund with compensation and interest for delay. Filing early stops the bleeding.
Take the case of Rohan Mehta, a software engineer from Indore. In early March 2025, he enrolled in a course offered by an EdTech platform, CodeSpark (name changed), for a fee of ₹1,30,000. The platform arranged financing through a non-banking financial company, Fincorp Financial Services (name changed), for a 36-month loan at an EMI of ₹4,333 per month via NACH auto-debit. The loan principal was disbursed directly to CodeSpark.
Within a week, Rohan realised the course was not for him and requested a cancellation. CodeSpark initially refused, citing their "no cancellation" policy. After lodging a complaint on the National Consumer Helpline (NCH), the company responded that he had accepted the terms, and the docket was closed. But then, in a surprising turn, CodeSpark sent an official email on 20 March 2025 stating: "Cancellation is in progress, it will take 60–75 days." Rohan waited. 75 days passed. When he followed up, the company sent another email claiming it would take 35 more business days. By July 2025, over 3.5 months had elapsed, and the EMIs kept deducting. Fincorp Financial Services refused to stop the auto-debits, stating they would only act once CodeSpark remitted the refunded principal.
That's when Rohan approached the Chamber of Advocate Sudhir Rao. The office immediately analysed the situation — the written cancellation email was key. Advocate Sudhir Rao and his office argued that the email constituted a clear admission of liability, overriding the company's earlier T&C defence. A consumer complaint was filed before the District Consumer Disputes Redressal Commission in Indore. The specialised handling of the evidentiary strategy and procedural timelines secured an interim order stopping further NACH debits and directing CodeSpark to refund the full principal amount within 45 days. The case is still in final arguments for compensation, but the refund has already been released.
Key Facts of the Case
- Rohan enrolled in an EdTech course worth ₹1,30,000 and took a 36-month loan from Fincorp Financial Services (NBFC).
- The EdTech company initially denied cancellation citing its "no refund" T&C.
- After an NCH complaint, the company sent a written email confirming cancellation was "in progress" within 60–75 days.
- The company then extended the timeline by another 35 business days, causing the total delay to exceed 3.5 months.
- The NBFC lender refused to stop NACH auto-debits, stating refund could only be processed after the EdTech company returned the principal.
- The client approached the Chamber of Advocate Sudhir Rao after initial efforts with the NCH and lender failed.
- The consumer complaint was filed under Section 35 of the Consumer Protection Act, 2019 before the District Commission in Indore.
- The refund was ordered and released within 45 days of the interim order.
The Direct Legal Answer
1. Does the written cancellation email override the "no refund" T&C?
Yes. Under the Indian Contract Act, 1872, once a party (the EdTech company) has by its own conduct — the written cancellation email — admitted its liability, it cannot revert to its earlier "no refund" clause. This is a classic case of estoppel. The email is an unequivocal acceptance of cancellation, and the company cannot delay it indefinitely. The Supreme Court has held in multiple consumer cases that such conduct amounts to an unfair trade practice.
2. Can an RBI Ombudsman complaint be filed against the NBFC for continuing auto-debits?
Yes, but it will not stop the EMIs quickly. The RBI Ombudsman can direct the NBFC to resolve the grievance, but it does not have the power to injunct the loan account mid-term. The better strategy is to file a consumer complaint and seek an interim order from the District Commission under Section 38 of the Consumer Protection Act, 2019, for a stay on the NACH debits. An experienced advocate can move for this on the very first hearing.
3. Should I serve a legal notice or file an e-Daakhil complaint first?
Both can work. A legal notice is mandatory only when the contract requires it (most loan agreements do not). In practice, serving a clear legal notice through an advocate often prompts the company to settle before litigation. But if you have already exhausted 90+ days of delay and the NCH is unresponsive, file directly on the e-Daakhil portal. The District Commission will issue notice to both the EdTech company and the NBFC.
4. Can I temporarily stop NACH debits without damaging my CIBIL score?
No. Stopping the NACH mandate (by revoking it with your bank) will result in bounced EMIs and a mark on your CIBIL score. The only safe way is to obtain a court or consumer forum order directing the lender to pause the debits. Such orders are routinely granted where the lender has been put on notice of the dispute and yet continues to deduct.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Second, preserve every communication. The written cancellation email from the EdTech company is your strongest evidence. Print it, save it, and do not delete the email thread. Third, do not stop paying EMIs on your own — let a court or consumer forum order the pause. Fourth, this type of matter — loan-cum-service disputes with an NBFC — requires an advocate who regularly handles consumer and banking cases. General practitioners often miss the procedural urgency of interim reliefs like a stay on the NACH mandate.
Applicable Sections of Law
- Section 35 of the Consumer Protection Act, 2019: Provides for filing a complaint before the District Consumer Disputes Redressal Commission for deficiency in service and unfair trade practice.
- Section 38 of the Consumer Protection Act, 2019: Allows the District Commission to pass interim orders, including injunctions against further debit or directions for refund.
- Section 2(11) of the Consumer Protection Act, 2019: Defines "deficiency" — and a company's failure to refund after a written cancellation clearly falls within it.
- Section 73 under the Indian Contract Act, 1872: Covers compensation for loss or damage caused by breach of contract — applies where the EdTech company fails to honour its cancellation promise.
Jurisdiction — Where to File the Case
For a consumer complaint, the forum is determined by the value of the service and compensation claimed. Since the loan principal is ₹1,30,000, this falls within the pecuniary jurisdiction of the District Consumer Disputes Redressal Commission in the city where the complainant resides or where the cause of action arises (the EdTech company's office or the place of enrollment). In Rohan's case, the complaint was filed in Indore. Territorial jurisdiction matters because the consumer forum must have authority over the opposite parties. Filing in the wrong forum wastes time and money.
Limitation Period
Under the Consumer Protection Act, 2019, a complaint must be filed within two years from the date on which the cause of action arises. Here, the cause of action arose when the EdTech company failed to refund after the 60–75 day deadline expired. Missing this limitation period is fatal. However, a condonation of delay can be sought if there is sufficient cause for the delay. Do not assume the limitation clock starts from the date of enrollment — it starts from the date of the breach or failure of service.
Interim Reliefs Available
In a consumer case, you can seek an interim order under Section 38 of the Consumer Protection Act, 2019. The District Commission can direct the NBFC to stay the NACH auto-debits pending the final hearing. It can also direct the EdTech company to deposit the refunded amount in a tribunal or with a third party. Such interim reliefs are critical — they stop the financial bleeding immediately. The Commission can also order the opposite party to pay an interim maintenance or compensation in certain cases. An experienced advocate will move for these reliefs on the very first hearing date.
If You Are the Victim
- Document everything: Save all emails, NCH complaint records, bank statements showing EMI deductions, and any written confirmation of cancellation.
- Do not cancel the NACH mandate yourself: Doing so will result in bounced EMIs and a CIBIL hit. Wait for a court or consumer forum order.
- File the consumer complaint quickly: Every day you delay, another EMI is deducted. File on the e-Daakhil portal or through a lawyer.
- Do not engage with the company or lender directly: Let your lawyer handle all communication. Everything you say can be used against you.
- Check your credit report: A dispute with the NBFC does not automatically protect your credit score. Monitor it regularly.
Documents You Must Keep Ready
- Aadhaar card and PAN card for identity and address proof
- Loan agreement with the NBFC (Fincorp Financial Services)
- All email communications with the EdTech company (especially the cancellation confirmation email)
- Bank statements showing monthly EMI deductions
- NCH complaint and response letters
- Any correspondence with the NBFC regarding the dispute
- Payment receipts (if any) for the course fee
- Legal notice sent by the advocate (if served)
What Evidence Is Required?
- Primary evidence: The written email from the EdTech company confirming cancellation and stating the refund timeline.
- Financial evidence: Bank statements proving the continuous EMI deductions despite the cancellation confirmation.
- Documentary evidence: The loan agreement showing the terms, especially any clause about cancellation and refund.
- Procedural evidence: Records of your NCH complaint and the company's dismissive response.
- Secondary evidence: Screenshots of any online chat or phone call logs with the company and the NBFC.
- Correspondence evidence: Any legal notice sent and the responses (or lack thereof) from the opposite parties.
How Courts Typically Approach Such Cases
Consumer forums in India take a pro-consumer stance in EdTech loan disputes. They recognise that a written cancellation admission by the company is binding. The typical approach is to first examine whether there was a deficiency in service — and a failure to refund after a written promise is a clear deficiency. The forum will often pass interim orders like a direction to the NBFC to stay the auto-debits and order the EdTech company to deposit the disputed amount. Full refunds are almost always ordered, with interest at 9-12% per annum and compensation for mental agony. The key is filing promptly and presenting the written cancellation evidence early.
Timeline of Legal Process
- Step 1 — Legal notice (optional): 2 to 3 weeks after sending through a lawyer.
- Step 2 — Filing the consumer complaint: On e-Daakhil portal or through a lawyer; takes 1 to 2 days.
- Step 3 — Issuance of notice to opposite parties: 2 to 4 weeks after filing.
- Step 4 — First hearing and interim orders: Usually within 4 to 6 weeks of filing; the forum may pass a stay on NACH debits or order refund.
- Step 5 — Written statements and evidence: 2 to 4 months after notice is served.
- Step 6 — Final arguments and judgment: 6 to 12 months from the first hearing, depending on the workload of the forum.
- Step 7 — Appeal: 30 to 45 days to file before the State Commission if either party is dissatisfied.
Understanding the Costs
The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.
A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.
Can the Matter Be Settled Out of Court?
Yes. Many EdTech loan disputes are settled through mediation or direct negotiation after a legal notice is served. The consumer forum itself often refers matters to mediation under Section 37 of the Consumer Protection Act, 2019. If the EdTech company refunds the loan principal and the NBFC agrees to waive the accrued interest and not report a default to CIBIL, you can withdraw the case with the forum's consent. Settlement is advisable if it meets two conditions: full refund of the principal and a clear letter from the NBFC confirming no adverse CIBIL reporting. Do not accept a part-refund without a full discussion with your lawyer.
Common Mistakes People Make
- Delaying action: Waiting too long while EMIs keep deducting — every month lost is another month of financial damage.
- Engaging an advocate without domain-specific experience: Consumer and NBFC loan disputes require knowledge of interim reliefs like stay on NACH debits. A general practitioner may not know to move for this on day one, weakening your position.
- Speaking to the company or lender without a lawyer: Anything you say can be used to argue that you accepted the delay or agreed to revised terms.
- Stopping EMIs on your own: Revoking the NACH mandate without a court order will damage your CIBIL score and may trigger recovery action.
- Posting about the dispute on social media: This can prejudice your case and may be used by the opposite party to argue that you are harassing them.
- Not preserving all evidence: Deleting emails or chat records can make it harder to prove the written cancellation promise.
FAQs People Normally Have
Can I get the EMI amount refunded back to me?
Yes. In such cases, the consumer forum typically orders the EdTech company to refund the entire loan principal (which was disbursed to it), and the NBFC is directed to adjust the EMIs already paid. The net result is that you get back all the EMIs you paid, plus interest and compensation.
Will my CIBIL score be affected if I file a consumer case?
Not directly. Filing a consumer case does not affect your CIBIL score. However, if you stop paying EMIs without an interim order from the forum, the NBFC will report defaults. That is why the first step in court is to seek a stay on the NACH mandate.
How long does a consumer case take in practice?
For interim reliefs like a stay on auto-debits, you can get an order within 4 to 6 weeks. For a full refund and compensation, the final disposal typically takes 6 to 12 months. More complex cases can take longer.
Do I need to pay the full EMI even after filing the case?
Only until the interim order is passed. Once the consumer forum issues a direction to the NBFC to stay the NACH debits, no further EMIs are deducted. Until then, you must keep paying to avoid a CIBIL default.
Can I file the case from my own city?
Yes. Under the Consumer Protection Act, you can file in the district where you reside, where the EdTech company has its office, or where the cause of action arose (e.g., where you enrolled). Filing from your home city is generally more convenient.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India