Delhi High Court’s Landmark Judgment: Sarwar Raza vs RBI Ombudsman & Citibank (2025)
The Delhi High Court’s 2025 judgment in Sarwar Raza vs RBI Ombudsman & Citibank is one of the most significant consumer protection rulings in India. This decision not only exposed deep flaws in the banking grievance mechanism but also strengthened the rights of millions of banking consumers, especially victims of digital fraud, wrongful recoveries, and unjust CIBIL score damage.
Background of the Case: How a Fraudulent Transaction Triggered a National Debate
In January 2022, Delhi-based advocate Sarwar Raza was issued a credit card by Citibank. Everything seemed normal until 5 April 2022 when the bank unexpectedly issued a second credit card without any application, request, or permission.
This second card was never activated by the customer, yet the very next day—6 April 2022—a fraudulent transaction of ₹76,777 occurred under “Paytm Rent Payment.” When the monthly email statement arrived on 12 April, the fraud came to light, and the customer immediately filed complaints with the bank and cyber cell.
The Key Question: Where Did the OTP Go?
Initially, the bank granted a provisional refund. But within months, the bank closed the complaint claiming that the transaction was authenticated using APIN, IPIN, and OTP. The most critical question that arose was—where was the OTP sent?
The customer confirmed he never changed his mobile number. Later, it was discovered that his registered number had been altered in the bank’s system without authorization. This is a common cyber fraud technique known as SIM Swap or OTP Redirection.
The bank reversed the provisional refund and initiated recovery with interest and penalties.
Ombudsman’s Auto-Rejection: Court Questions the System
When the customer escalated the matter to the RBI Ombudsman, he expected justice. Instead, both complaints were automatically rejected.
The first was rejected because it was filed through a lawyer, and the second due to an incorrectly filled column. Shockingly, both rejections were system-generated—not by a human officer.
The High Court strongly criticized this automated system, calling it arbitrary, unjust, and harmful to consumer rights.
Violation of Court Orders and Misconduct by Recovery Agents
Even after the High Court ordered the bank not to pressurize the customer during the case, the bank issued demand notices, made recovery calls, and eventually sent recovery agents to his home.
Recovery agents allegedly told the customer to pay ₹80,000 to “settle” the matter. This led to a contempt petition.
Court’s Concern About Lack of Transparency in Banking Systems
The High Court summoned the General Manager of the bank and questioned:
- Who is responsible for automated emails?
- Who reviews customer complaints?
- Why is there no transparency in decision-making?
The Court noted that customers have no idea who is handling their complaints, making the system opaque and unfair.
Seven Powerful Directions Issued by the Delhi High Court
1. No interest, penalty, or charges shall be imposed on the disputed amount.
2. The customer’s CIBIL score must be restored immediately.
3. The bank must pay ₹1,00,000 compensation for misconduct by recovery agents.
4. RBI Ombudsman cannot auto-reject any complaint.
Final rejection must be done only by a human officer with at least 10 years of legal experience.
5. RBI must increase staff in Ombudsman offices for timely and fair disposal of complaints.
6. All banks must publish a clear “complaint escalation flowchart” on their websites.
7. The RBI Deputy Governor must submit an implementation report to the Court by 15 January 2026.
Nationwide Impact of This Judgment
This ruling is a milestone in India’s consumer rights landscape. It ensures transparency, accountability, and fairness in digital banking systems.
Banks can no longer hide behind automated systems. Recovery agents can no longer intimidate customers. CIBIL scores cannot be damaged due to fraudulent activities. Justice will now come through trained human authorities—not machines.
If You Are Facing Banking Fraud or Unfair Recovery
If you are dealing with bank fraud, wrongful transactions, credit card disputes, cyber scams, recovery harassment, or Ombudsman rejection—this judgment is a powerful legal remedy.
Delhi Law Firm handles cases across India related to banking fraud, consumer rights, cybercrime, and court marriage matters.
Conclusion and Contact Information
Know your rights and take the right legal steps. For expert legal guidance, visit our website or contact our helpline.
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