To compensate or not to.

Hi I work in the hospitality industry. We had received a major complaint by one of our guests sometime ago. The issue was that the guest wanted to make an online payment for his reservation and even though he could have done it himself on our website. He chose to call our customer service and make the reservation and asked for a payment link to be sent. It was done as per request. But the issue seemed to have occurred at the time of the guest's check-out as the balance was still reflecting the amount payable, due to some negligence from our part in updating the amount paid for the particular reservation. Now the front desk manager seeing the balance as unpaid, asked the guest for the payment. That is where things became a little unpleasant. The guest had to wait maybe for half an hour till he chose to make a cash payment therein. We have promised the refund for the amount paid online of course, but guest now threatens to file a suit against us for causing emotional trauma and wants 5 lacs INR as compensation Need a little advice in this matter. Looking forward to hear from someone.