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TMI Blog2007 (3) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... person, who had a grievance against the Bank, to make a complaint in writing to the Banking Ombudsman. The complaint had to be in writing and it had to be accompanied by supporting documents, if any, relied on by the complainant. It had also to set out the nature and extent of the loss caused to the complainant and the relief sought from the Banking Ombudsman and a statement about the compli-ance of the conditions referred to in that clause. The appellant made the complaint about what it called the unauthorised or fraudulent withdrawal from the account of the appellant and the non-credit of proceeds to the account of the appellant. It was contended that the crediting of Rs. 3,41,250 or withdrawal thereof from the account of the appellant was unauthorised, and that the appellant had suffered considerable loss because of the delay on the part of the respondent-Bank in advancing the loan and in not permitting the higher credit facility recommended in the Technical Cell Report binding on the Bank. By way of relief it was claimed that the Bank should further credit the remaining sanctioned loan to the account of the appellant. The total interest for the period should be exempted and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and in view of non-disbursement of the loan, the period of moratorium had to be enhanced according to the Rules and the interest be charged strictly in accordance with the guidelines of the Reserve Bank of India. This award was passed on 30-3-2002. 5. The respondent-Bank sought the permission of the Reserve Bank of India to challenge the award passed by the Banking Ombudsman in a court of law. Meanwhile, the appellant found that the respondent-Bank was not complying with the directions in the award of the Banking Ombudsman. The appellant therefore filed CWJC No. 10756 of 2002 before the High Court of Patna under Article 226 of the Constitution of India praying for the issue of a writ of mandamus directing the respondent-Bank to implement the award of the Banking Ombudsman. The respondent-Bank, in its turn, filed CWJC 1882 of 2003 challenging the award of the Banking Ombudsman essentially on the ground that it was one without jurisdiction, both on the basis that the matter was pending before the Debts Recovery Tribunal when he rendered his award and on the further ground that the subject-matter of adjudication by him in the present case was beyond his ken under the Banking Ombuds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will notice the relevant provisions. Under section 35A of the Banking Regulation Act, 1949, the Reserve Bank of India has the power to issue directions to banking companies generally or to any banking company in particular, as it deems fit, and the banking companies shall be bound to comply with such directions. The Reserve Bank of India could, on its own motion or on representation made to it also modify or cancel any direction it had earlier issued. In consonance with this power, on 14-6-1995, the Reserve Bank of India notified the Banking Ombudsman Scheme, 1995. We think it profitable to extract the relevant Notification herein : "NOTIFICATION Ref. RCPC No. 1070/BOS-1994-95 14-6-1995 In exercise of the powers conferred by section 35A of the Banking Regulation Act, 1949 (10 of 1949), Reserve Bank being satisfied that it is necessary in public interest and in the interest of banking policy to provide for a system of Banking Ombudsman for redressal of grievances against deficiency in banking services, concerning loans and advances and other specified matters hereby directs that all commercial banks should comply with the Banking Ombudsman Scheme, 1995 annexed hereto. Sd/- (R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use 16 provided for making a complaint. Since what is involved is an interpretation of the scope of the power of the Ombudsman on a complaint, we think it proper to extract Clause 16 hereunder : "16. Complaint .-(1) Any person who has a grievance against a bank, may himself or through an authorised representative make a complaint in writing to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. (2) The complaint shall be in writing duly signed by the complainant or his authorised representative and shall state clearly the name and address of the complainant, the name and address of the branch or officer of the bank against which the complaint is made, the facts giving rise to the complaint supported by documents, if any, relied on by the complainant, the nature and extent of the loss caused to the complainant and the relief sought from the Banking Ombudsman and a statement about the compliance of the conditions referred to in sub-clause (3) of this clause. (3) No complaint to the Banking Ombudsman shall lie unless,- (a )The complainant had before making a complaint to the Banking Ombudsman made a written representation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have jurisdiction to render the award, or has lost his jurisdiction to render the award. Clause 16 of the Scheme in sub-clause (1) speaks of a person making a complaint in writing to the Banking Ombudsman. Clause (3) read in conjunction with sub-clause (d) indicates that no complaint to the Banking Ombudsman shall lie if on the subject-matter that is put forward before the Ombudsman, there is a proceeding pending before a Court, Arbitrator, Tribunal or forum or a decree or final adjudication had earlier been made by any one of them. This would suggest that the bar is attracted only when on the date of the filing of the complaint before the Ombuds-man, a claim on the subject-matter is pending before, say, the Debts Recovery Tribunal. Here admittedly, on the day the jurisdiction of the Banking Ombudsman was invoked, no such claim was pending before any Court, Arbitrator, the Debts Recovery Tribunal or any other forum. To that extent, prima facie, there is merit in the contention that clause 16(3) may not be attracted to the case on hand. 10. Clause 16(3) of the Scheme says, "No complaint to the Banking Ombudsman shall lie". According to Black's Law Dictionary "lie" means, "to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of jurisdiction or power by the Ombudsman would depend on his having jurisdiction not only to entertain a claim but also to bring it to an end. The continued exercise of power by him would depend on his continuing to have jurisdiction. Once he is deprived of his jurisdiction or gets deprived of his jurisdiction over the subject-matter, he could no more proceed with a complaint which was earlier filed. In other words, to render an Award valid in terms of the Scheme, the Ombudsman must continue to retain jurisdiction over the subject-matter of the concerned complaint. A complaint goes out of his purview when the subject-matter of it is taken to a Court, Arbitrator, Tribunal or forum. The relief that can be granted by the Ombudsman are limited and confined to the matters coming within clause 13 of the Scheme. The intention behind incorporating clause 16(3)(d) appears to be to ensure that the relief an Ombudsman may give, may not conflict with a more comprehensive adjudication by a Court, Arbitrator, Tribunal or forum with wider powers. When there is conferment of a power on an authority or Tribunal with limited jurisdiction, that conferred power must continue to exist, when the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with particular reference to clause 3(d) thereof, that on one of the parties approaching an adjudicatory forum on an adversarial system, the non-adversarial adjudicator, the Ombudsman must lose his power or authority to bring about a resolution of the complaint by way of a non-adversarial adjudication. An Ombudsman is not defined in the Banking Regulation Act, 1949 or in the Banking Ombudsman Scheme, 1995 constituting him as adversarial adjudicator. Clause 12 of the Scheme constitutes him a facilitator to bring about a satisfaction of the complaint, in one of the modes referred to therein. An adversarial adjudication necessarily stands on a higher plane than a settlement of a complaint at the instance of an Ombudsman. When such a forum for adversarial adjudication of disputes takes seisin of the subject-matter of a complaint, it will be logical to postulate, on an interpretation of clause 16 of the Scheme, that the Ombudsman loses his jurisdiction over the subject-matter of the complaint and consequently the complaint itself. 13. Thus we are of the view that the High Court was justified in interfering with the Award of the Banking Ombudsman on the ground that he could not have pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the loan or for granting additional loan to a hotel industry like the one for which the appellant was claiming a loan from the Bank and hence there was no question of any of the complaints of the appellant coming within the purview of the Banking Ombudsman. A reading of the Award of the Banking Ombudsman shows that the directions issued by him regarding the advancing of the balance amount of Rs. 3,41,250 out of the original loan of Rs. 15 lakhs sanctioned, his direction to the Bank to make available additional finances merely on the basis of the recommendation of the Committee in that behalf and his directing the maintaining the financing ratio of 75:25 and his fixing a repayment schedule as seven years exclusive of one year of moratorium and the enhancement of the period of moratorium consequent on non-disbursement of the loan amount by the respondent-Bank, are all outside Clause 13(b) of the Scheme and consequently outside the jurisdiction of the Banking Ombudsman. The Banking Ombudsman has no authority to compel the Bank to make further advances which as a prudent banker it might not find feasible. Nor can the Banking Ombudsman interfere with the agreement regarding the repa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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