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awadheshjha   25 July 2015

Arbitration clause invoked by bank without any dispute

Respected Members,

I have received a notice from  a sole arbitrator appointed by bank. The grounds for invoking the arbitration has been mentioned the dispute over some X amount due over my credit card balance. The arbitrator has called for initial meeting and has asked to attend such meeting mandatorily.

Before receipt of this notice of arbitration, i received a legal notice from bank for the payment of X amount due against my credit card and asked me to pay such amount within 15 days alongwith the notice fee of Rs. Y.

Now the real Facts

The amount claimed by bank in legal notice was made 20 days prior to receipt of notice and well before the due date of the credit card. Hence there was no amount due in my credit card account which even the credit card statement clearly shows.hence i ignored the legal notice and did not replied to that legal notice.


Suddenly that bank (afetr 2.5 months of receipt of all pending amount) has sent this notice from their arbitrator appointed by them. Hence the legal notice and then this invoking of arbitration clause is not at all valid as the grounds mentioned in the arbitration letter does not arise. There is no amount due and there is no dispute over any of such amount.

My question:

1. I will reply the letter of this arbitrator to quash this aribtration proceeding as no grounds for arbitration arise. 

What else should I do apart from asking him to qaush the arbitration proceeding?

Can bank be criminally prosecuted for harrassing me for dues which has already been paid

can bank be prosecuted for extortion for demanding money which has already been paid.


Would highly appreciate advice and comments.


Thank you & best regards,



 7 Replies

G.L.N. Prasad (Retired employee.)     26 July 2015

The most important thing is whether you are a defaulter ? and if not you have preserved their monthly statement or having receipts of demand and settlement as evidence and have you disputed in the past about any of your settlements and dispute any demand from them ?

Unless this important fact is stated, the issue remains incomplete.


If U R sure that U have completely cleared the dues,U can reply tothe Arbitration Notice stating the same along with UR latest  CC statement.Even if U owe 1000 U are termed as a defaulter.Hence instead of stretching the issue and incurring penalities,better  respond to the arbitratiion letter.U need not attend in person.

G.L.N. Prasad (Retired employee.)     27 July 2015

If you have disputes, then attend Arbitration.,  Just check in whether they have made your credit rating less, showing you as defaulter as it is difficult to raise any loan from financial institution with such record.  Then you have to take up the matter seriously, if Bank has dragged you to arbitration, and given less credit rating.

T. Kalaiselvan, Advocate (Advocate)     01 August 2015

The question was repeated in another thread too, you may visit that thread for knowing more answers. Any subsequent questions may be posted on the original thread itself. 

G.L.N. Prasad (Retired employee.)     01 August 2015

From 6 days there is no interaction / response whereas 4 responses/nteraction were there by other members, every member who resonds treat the query Urgent/important, but the query poster takes it so casually and seldom sends his interaction / response every day.  This causual approach from poster member is not proper conduct.

awadheshjha   01 August 2015

Dear Mr. G.L.N. Prasad

Thank you for your reply. I assure you that there is no such intention or I never take such sugestions casually. The post is also in arbitration forum and has been answered briefly by Shri Kumar Doab Sir. Kumar Doab Sir has clearly understood my query and replied in detail. I have also thaked them and incorporated his several advice in my response.

Bank issued arbitration notice and started arbitration proceedings without applying their mind.So, though you advise to attend the arbitration proceedings, I am not attending the arbitration proceedings as there is no grounds for arbitration. Instead I have already replied the arbitratior providing him the entire documentation and evidences and asked him to withdraw this arbitration notice with immediate effect. Also I am in proces of sending legal notice to bank along with filing cpmplaint with RBI Ombudsman, RBI governor and consumer court in phased manner.

I once again apologise for my lae eply and assure this forum that I am in no way taking such response lightly and very thankful to all the members for their valuabe time and suggestions.




G.L.N. Prasad (Retired employee.)     01 August 2015

Before that seek exact information and records of the Bank either through RTI or as an affected party.

Please provide the following documents as certified copy.

1)Please provide the dispute in the transaction, and the office note preparred by concerned official for referring the matter to arbitration.

2)Please provide with correspondence made with card holder before referring this to arbitration.

3)How much money was spent so far by Bank right from raising a dispute which was not there to final settlement of arbitration.

4)Please provide extract of that clause which permits the Bank to resort to arbitration without taking up the matter with concerned credit card holder.

5)Please inform the number of cases referred to arbitrator since 2014-15, and total amount paid or payable to him for this arbitration, and total amount recovered through such arbitration process.

(With due respects to that Bank, I know cases, where some banks are referring the matter to arbitration only to give business to arbitrator, and in turn they receive back some sort of commission from arbitrators for referring the cases to them.  The more they refer, the more benefits the officer receives.  This process should be curtailed)

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