Credit cards

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Introduction

Credit cards are ubiquitous instruments of modern commerce. Far from being mere plastic tokens of convenience, they sit at the intersection of contract law, banking regulation, consumer protection, cyber law and criminal law. For the practising lawyer in India—whether advising a bank, a merchant, or a consumer—credit-card disputes raise recurring practical problems: enforceability of card agreements, recovery of dues, liability for unauthorised transactions, admissibility of digital transaction logs, and criminal prosecution for card fraud. This article isolates the legal framework, the evidence and litigation tactics that win or lose these matters in Indian courts.

Core Legal Framework

Primary statutes and provisions a practitioner must keep front-of-mind:

Practical Application and Nuances

How credit-card issues play out in day‑to‑day litigation and enforcement.

  1. Civil recovery (bank/issuer v. cardholder)
  2. Cause of action and limitation: A bank’s suit is contractual—recovery of unpaid card dues is a suit founded on contract (Article 113 — three-year limitation). The cause accrues on each missed payment or on the date the bank demands payment, so watch for acknowledgements or part-payments that reset limitation (Section 18, Limitation Act).
  3. Pleadings and documents: Bank’s plaint must rely on the card agreement, account statements, demand/notice, default and calculation of dues (interest, late charges). The statement of account is a central document; secure its admissibility as an electronic record (see evidence below).
  4. Interim relief: Freezing or attachment orders are rarely granted in routine card suits unless there is urgency or risk of asset dissipation. Preservation of evidence (preservation notices to banks/merchants and applications for interim injunctions to restrain further disposition of specific assets) can be effective when fraud or dissipation is pleaded.

  5. Defences commonly pleaded by cardholder: (a) unauthorised transactions; (b) lack of consent or identity theft; (c) lender’s failure to follow RBI authentication protocols; (d) service failures (incorrect billing); (e) exaggeration of dues/interest. Documentation, audit trails, dispute logs, and bank’s internal investigation reports determine outcome.

  6. Consumer fora and alternate remedies

  7. Consumer complaints (under CPA, 2019) are the common route for disputed unauthorised transactions and deficiency of service. Reliefs include refund, refund of charges/penalties, compensation, and directives to the bank to modify practices. Consumer fora take a pragmatic approach: banks are expected to have robust grievance redressal and fraud-detection procedures; failure attracts liability.

  8. Pre-litigation steps: file a detailed written complaint to the bank/issuer, follow the bank’s grievance process and escalate to the banking ombudsman if unresolved — ombudsman awards can be persuasive evidence in later adjudication.

  9. Criminal prosecution (card fraud)

  10. Offences: misuse of a card, cloning, POS manipulation, ATM skimming, OTP theft, and impersonation can attract IPC offences (cheating, forgery) and IT Act offences (identity theft, cheating by personation). Criminal prosecutions often rely heavily on digital forensics and logs.
  11. Proof issues: Prosecution must prove dishonest intention and causal link between accused’s acts and the loss. Mere unauthorised debit does not automatically translate into criminal culpability without proof of deception or dishonest inducement.

  12. Hybrid strategy: Consumers often pursue a criminal FIR while simultaneously seeking civil/consumer remedies. Banks may require a FIR for crediting disputed amounts under their own policy frameworks.

  13. Evidence and electronic records — the critical battleground

  14. Section 65B of the Indian Evidence Act governs admissibility of electronic records. For a bank’s electronic transaction logs, statements, or merchant logs to be admitted as secondary evidence, a certificate under Section 65B(4) is generally required (see Anvar P. V. v. P. K. Basheer, 2014). Recent Supreme Court guidance (Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal, 2019) clarified that where original electronic devices or the primary electronic record is produced, the requirement of a 65B certificate may not arise for primary evidence. Practitioners must therefore:
    • Seek and preserve primary sources (servers, devices) where feasible.
    • Procure a 65B certificate in the ordinary course when relying on copies/exported logs.
    • Maintain chain-of-custody and contemporaneous preservation letters to avoid admissibility objections.

  15. Key items of evidence in card disputes:

    • Card transaction slips (POS receipts), merchant invoices, and reversal/chargeback records.
    • Bank’s transaction logs, IP addresses, device identifiers, timestamped logs, merchant acquirer logs.
    • CCTV footage from POS/merchant premises.
    • Mobile network call records (where OTP interception is alleged).
    • Forensic analysis reports (device forensics, PC logs, malware analysis).
    • Merchant’s PCI DSS compliance records and evidence of whether card data storage rules/tokenisation were violated.

  16. Regulatory/compliance defences and bank liability

  17. RBI guidelines set out liability allocation between customer and bank in unauthorised transactions depending on whether:
    • the customer complied with security requirements (non-disclosure of credentials, not sharing OTPs) and
    • loss is due to the bank’s or its third-party service provider’s negligence (failure of authentication systems, failure to block after notice).
  18. Banks’ internal policies (and RBI instructions) on “zero liability” vary; most require customer co-operation and timely reporting. In court, the bank’s defence often rests on showing customer negligence (e.g., shared OTP) and compliance with authentication standards.

Landmark Judgments

  • Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473

  • Principle: For electronic records produced as secondary evidence, a certificate under Section 65B of the Evidence Act is mandatory. This judgment is foundational for admission of transaction logs, statements and other digital records in credit-card litigation.

  • Arjun Panditrao Khotkar v. Kailash Kushanrao Gorantyal & Anr., (2019) 9 SCC 1

  • Principle: Clarified the scope of Anvar — if the original electronic record is produced and shown to the court as primary evidence, then reliance on Section 65B(4) certificate pertained to secondary evidence; practical implication: where the device/server is produced or the original is available, the 65B certification requirement may not be an absolute bar. Lawyers must therefore structure evidence strategy to either produce primary sources or obtain the 65B certificate.

(Practitioners should also note numerous National and State Consumer Commission decisions that impose strict liability on banks for unauthorised card transactions where banks fail to follow RBI-prescribed procedures; rely on up-to-date tribunal jurisprudence at the state level for persuasive authority in consumer matters.)

Strategic Considerations for Practitioners

Actionable tips to leverage the concept of “credit card” issues in litigation and advisory:

For claimants (banks/issuers/merchants)
– Preserve evidence immediately: issue preservation notices to merchant acquirers, PSPs and banks; obtain forensic images; seek court orders restraining deletion of logs.
– Build a documents-first case: obtain Section 65B certificates for exported logs; if practicable, produce primary electronic records or server snapshots.
– Use RBI circulars to shore up procedural compliance: plead that authentication standards and OTP processes were followed to rebut allegations of bank negligence.
– Consider split remedies: while pursuing recovery, seek summary adjudication on liability or preliminary injunctions where the defendant is dissipating assets.
– Where merchant fraud is suspected, institute parallel proceedings against acquirers/merchants and pursue chargeback rights as an immediate commercial remedy.

For defendants (cardholders)
– Immediately file a written dispute with the bank and obtain written acknowledgement; this may trigger bank grievance processes and is material for consumer forums and courts.
– Secure documentary proof: merchant receipts, delivery proofs, travel records (if card used elsewhere), and CCTV if an impersonation is alleged.
– Challenge bank’s internal investigation: obtain details of authentication logs, whether OTPs were generated/sent/validated, device IDs, and merchant compliance with RBI tokenisation/storage rules.
– Use consumer fora to obtain interim relief quickly (refunds) while criminal investigation proceeds; consumer fora are often more expeditious than civil courts for small-value disputes.
– Examine terms and conditions: assess any mandatory arbitration or forum clauses in the card agreement; consumer-protective forums sometimes read down unfair standard-form clauses.

For criminal counsel
– Ensure prompt FIR and preservation: request FIR and give prosecution a precise list of digital artifacts to be preserved and seized.
– Seek expert witnesses early: digital forensics specialists to trace IPs, malware, SIM swap evidence and OTP logs.
– Focus on mens rea: show acts of deception (forgery, personation) and connect the accused to transaction chains (POS evidence, CCTV, merchant testimony).

Common pitfalls to avoid
– Relying on paper copies of transaction logs without a Section 65B certificate or producing primary electronic material.
– Failing to secure preservation orders early — servers/logs can be deleted or overwritten quickly.
– Treating RBI circulars as mere guidance; litigators should press regulatory non-compliance where it undermines a bank’s defence.
– Overlooking merchant and acquirer liability — in many card-fraud scenarios the weakest link is merchant non-compliance with storage/token rules.
– Ignoring the consumer‑forum route for small-value disputes that are disproportionate to civil litigation costs.

Checklist for evidence in credit-card litigation (practical)
– Cardholder agreement and T&Cs (signed/accepted copy)
– Card issuance records and KYC documents
– Account statements and periodic bills (with 65B certificate if exported copy)
– Transaction logs: timestamps, terminal IDs, merchant acquirer reference numbers
– OTP logs, SMS delivery reports and device IMEI/IP records
– POS receipts, merchant invoices, delivery proofs
– CCTV footage from merchant/ATM premises
– Forensic reports and chain-of-custody documentation
– Bank’s internal communication and dispute-handling register
– RBI circulars and bank’s policy documents relied upon in the transaction period

Conclusion

Credit-card disputes in India are multi-dimensional: contractual recovery, consumer protection, cybercrime and regulatory compliance converge. Litigation is won or lost on early preservation of digital evidence, the admissibility of electronic records under Section 65B, the interplay of RBI guidelines on liability, and the ability to show (or rebut) authentication failures. For practitioners, the practical priority is clear: issue preservation demands immediately, secure primary electronic sources or 65B certificates, marshal forensic evidence, and frame a cogent blame-map among cardholder, bank, merchant and intermediaries. Skillful use of consumer fora and regulatory prescriptions alongside civil or criminal remedies yields the most effective outcomes in credit-card disputes.