If you are stuck in such a situation, here is what to do.

Mr. Sameer, a resident of Nagpur, had been unable to pay his credit card bills from “Cosmo Bank” for nearly ten months due to a personal financial crisis. He had been receiving calls from recovery agents, but one day he received a text message that caused him significant alarm. The message read: “Your Petition has been created successfully. Your ID: NGPOL/NAG_CBPL/240725/00189. MAHANAGAR POLICE.” Worried about the police involvement and potential arrest, Mr. Sameer sought to understand if this was a genuine police notice and what his legal options were.

Advice in such cases

Receiving a message that appears to be from the police can be intimidating, especially in cases of financial default. Here is some immediate advice:

• Verify the Notice: First, determine the authenticity of the message. Police petitions and FIRs are not typically initiated via a simple text message. It could be a pressure tactic from a recovery agency. You can discreetly check the official portal of the concerned police department or visit the local station mentioned.
• Do Not Ignore It: Whether it’s a genuine notice or a tactic, do not ignore the underlying issue of the default. The bank can and will take legal steps to recover the amount.
• Gather All Documents: Collect all your credit card statements, the initial agreement with the bank, and any communication, including emails and letters exchanged with the bank or their recovery agents.
• Avoid Making Promises: Do not make any verbal or written promises to recovery agents or bank officials without first understanding your legal position.
• 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 of 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.

Applicable Sections of Law

Primarily, non-payment of a credit card bill is a civil offense, not a criminal one. The bank’s primary recourse is to recover the money owed.

• Civil Law: The bank can file a civil suit for recovery of money under the Code of Civil Procedure, 1908. They can also initiate proceedings before the Debt Recovery Tribunal (DRT) if the amount exceeds a certain threshold, under the Recovery of Debts and Bankruptcy Act, 1993.
• Bharatiya Nyaya Sanhita, 2023 (BNS): A criminal case is generally not applicable for a simple default. However, if the bank can prove that you had a dishonest intention from the very beginning (i.e., you took the card with no intention of ever paying), they might try to file a complaint for cheating under Section 316 of the BNS. This is difficult to prove.
• Intimidation by Agents: If recovery agents harass, threaten, or intimidate you, you can file a police complaint against them for criminal intimidation, extortion, etc., under the relevant sections of the BNS.

If you are the complainant

If you represent the bank or financial institution, the proper legal course is as follows:

• Send a Legal Notice: The first step is to send a formal legal notice to the defaulter through a lawyer, demanding payment of the outstanding amount.
• Initiate Civil Proceedings: If the payment is not made, file a summary suit or a regular civil suit for the recovery of the money in the appropriate civil court.
• Debt Recovery Tribunal (DRT): For larger amounts, you can approach the DRT for a faster recovery process.
• Negotiate a Settlement: It is often more practical to negotiate a one-time settlement (OTS) with the defaulter.
• 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 of 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.

If you are the victim

If you are the one who has defaulted and are receiving such notices, here is what you should do:

• Stay Calm: Panicking can lead to poor decisions. Remember that defaulting on a credit card is a civil issue, and you cannot be arrested for it without a court order, which is rare in such matters.
• Verify the Communication: As stated earlier, check if the “petition” is real. Messages from unofficial-looking sources are often just scare tactics.
• Do Not Engage with Recovery Agents Aggressively: Be polite but firm. Inform them that all future communication should be through formal, written channels or through your lawyer.
• Explore Settlement: Be open to negotiating a settlement with the bank. Banks are often willing to settle for a lesser amount to close the account.
• 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 of 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.

How the police behave in such cases

The police are generally reluctant to get involved in civil recovery matters. Their role is to maintain law and order and investigate criminal offenses. In a credit card default case:

• The police will not entertain a complaint for simple non-payment. It is a civil dispute.
• They will only register a case if there are elements of a cognizable crime, such as cheating with dishonest intent from the outset, forgery of documents, etc.
• Sometimes, recovery agents file a complaint to pressure the defaulter. In such cases, the police may call you to the station for a preliminary inquiry (as per the provisions of the Bharatiya Nagarik Suraksha Sanhita, 2023) to understand the matter. They cannot force you to pay or settle the matter.
• If you are being harassed by recovery agents, the police are obligated to accept your complaint against them.

FAQs people normally have

• Can I be arrested for not paying my credit card bill?
  

  No, you cannot be arrested for simply failing to pay your credit card bill. It is a civil liability. Arrest is only possible if a criminal court finds you guilty of an offense like fraud and issues a warrant, which is highly unlikely in a standard default case.

  
  
• Will this affect my CIBIL score?
  

  Yes, absolutely. Defaulting on payments will severely damage your credit score, making it very difficult to get loans or other credit facilities in the future.

  
  
• What if I cannot pay the full amount?
  

  You can approach the bank for a settlement. They may waive a portion of the interest and penalties and agree on a one-time settlement amount or a structured repayment plan.

  
  

What evidence is required?

For the bank (complainant), the key evidence includes:

• The signed credit card application and agreement.
• Monthly statements showing the transactions and the outstanding balance.
• Records of communication (calls, emails, notices) sent to the cardholder.
• The legal notice sent before filing the suit.

For the cardholder (defaulter), important evidence includes:

• Proof of any payments made.
• Records of any disputes raised with the bank regarding transactions.
• All communication received from the bank and recovery agents.

How long will the investigation take?

Since this is primarily a civil matter, the term “investigation” is not directly applicable unless a criminal complaint is filed. A civil recovery suit can be a lengthy process, often taking anywhere from a few months to several years to be decided by the court, depending on the court’s workload and the complexity of the case. If a police investigation is initiated on a related criminal complaint, its duration will depend on the investigation’s progress as per the timelines suggested in the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023.

Advocate Sudhir Rao, Supreme Court of India