Partly allowed

Beena Joseph v. State Bank of India and Others

Kerala HC2 Mar 2017WP(C)/35589/2009

Case brief

AI extract

What is this about?

This judgment quashes the Banking Ombudsman's order to the extent it denied jurisdiction over specific loan-related grievances, such as unauthorized charges and excess interest. The court directed the Ombudsman to reconsider valid claims under the 2006 Scheme while confirming the rejection of claims for unnecessary paid interest and compensation, which fall outside its purview. A timeline for reco

What did the court decide?

Quashed the Ombudsman's orders denying jurisdiction regarding unauthorized charges and excess interest; directed reconsideration of those claims within 4 months, while confirming rejection of claims f

Beena Joseph Vs State Bank of India and Others — Consumer Protection | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN

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THURSDAY, THE 2ND DAY OF MARCH 2017/11TH PHALGUNA, 1938

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WP(C).No. 35589 of 2009 (P)

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PETITIONER:

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SMT.BEENA JOSEPH, AGED 45, W/O.K.L.JOSEPH KUPERTHENOSE, KADUNGAMPARAMBIL HOUSE, CHERIYAKADAVU, KANNAMALI P.O., KOCHI-682 007.

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BY ADV. SRI.S.VINOD BHAT

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RESPONDENTS:

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1. STATE BANK OF INDIA, MATTANCHERRY BRANCH, SHAN COMPLEX, BAZAR ROAD, MATTANCHERRY, KOCHI-2.

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2. STATE BANK OF INDIA, STRESSED ASSETS RESOLUTION CENTRE, 40/974, 2ND FLOOR, R.S.BUILDING, M.G.ROAD, KOCHI-11.

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3. THE RESERVE BANK OF INDIA, BAKERY JUNCTION, THIRUVANANTHAPURAM, PIN-695 033.

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R1 & R2 BY SRI.K.K.CHANDRAN PILLAI (SENIOR SC) BY ADV. SRI.S.SUNIL

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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mbr/

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WP(C).No. 35589 of 2009 (P)

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APPENDIX

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PETITIONERS' EXHIBITS:

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EXT. P1:	COPY OF THE LETTER NO.SARC/1573 DATED 14.12.2007 ISSUED BY THE 2ND RESPONDENT.
EXT. P2:	COPY OF THE LETTER DATED 16.1.2008 ISSUED BY THE 2ND RESPONDENT.
EXT. P3:	COPY OF THE COMPLAINT DATED 18.8.2009 MADE BY THE PETITIONER BEFORE THE BANKING OMBUDSMAN.
EXT. P4:	COPY OF THE LETTER NO.OBO(T)/1501/12127/2009-10 DATED 26.8.2009 ISSUED BY THE BANKING OMBUDSMAN.
EXT. P5:	COPY OF THE LETTER DATED 9.9.2009 ISSUED BY THE PETITIONER TO THE BANKING OMBUDSMAN.
EXT. P6:	COPY OF THE LETTER NO.OBO(T)2280/12127/2009-10 DATED 9.10.2009 ISSUED BY THE BANKING OMBUDSMAN.
EXT. P7:	COPY OF THE LETTER NO.OBO(T)3787/12127/2009-10 DATED 18.11.2009 ISSUED BY THE BANKING OMBUDSMAN.

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RESPONDENTS' EXHIBITS: NIL. //TRUE COPY// P.S. TO JUDGE mbr/

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DEVAN RAMACHANDRAN, J.

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============================== W.P.(C)No.35589 of 2009

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============================== Dated this, the 02^nd day of March, 2017.

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J U D G M E N T

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The Banking Ombudsman Scheme 2006 (hereinafter referred to as 'the Scheme' for short) was introduced with the object of enabling resolution of complaints relating to a certain services rendered by the banks and to facilitate the satisfaction or settlement of such

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complaints.

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This scheme was notified in exercise of the powers under Section 35A of the Banking Regulation Act, 1949, because, it was found necessary in public interest and the requirements of banking policies to enlarge and extend the scope of the authority and functions of the banking Ombudsman for redressal of grievances against deficiency in banking, loans and advances and other specified matters. The matters specified for redressal under the Scheme is available in Clause 8 thereof.

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There are several categories therein and what

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W.P.(C)No.35589 of 2009 : 2 :

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is of interest to this Court for the resolution of the disputes in this case is Clause (m) which provides that a complaint regarding a levy of charge by a bank without adequate prior notice to a customer would be within the jurisdictional domain of the Ombudsman. Clause 8(2) of the Scheme also provides that a complaint on one of the grounds iterated therein relating to banking service in respect of loans and advances may be filed with the Banking Ombudsman having jurisdiction on the causes mentioned therein, which are: non observance of Reserve Bank Directives on interest rates; delays in sanction, disbursement or non-observance of prescribed time schedule for disposal of loan applications; non-acceptance of application for loans without furnishing valid reasons to the applicant; and non-adherence to the provisions of the fair practices code for lenders as adopted by the bank or Code of Bank's Commitment to Customers, as the case may be; non-observance of Reserve Bank guidelines on engagement of recovery agents by banks; and nonobservance of any other direction or instruction of the

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W.P.(C)No.35589 of 2009 : 3 :

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Reserve Bank as may be specified by the Reserve Bank for this purpose from time to time.

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The petitioner, who was a loanee under the first respondent Bank, made Ext.P3 complaint before the Banking Ombudsman, detailing various grievances. The sum total of the grievances is available in paragraph 14 of his complaint which is as under:

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14. To sum up, the Complainant humbly plead and pray that the Hon'ble Banking Ombudsman may be pleased to call for and examine the relevant files from the Manager, State Bank of India, Mattancherry Branch, Kochi – 682 002 and also from the Chief Manager, SARC Branch, M.G.Road, Kochi – 682 011 and render justice by directing to reimburse the following sums for the reasons stated already:

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(b) 'Debit adjustment' charged without any basis, vide para 13(b) above Rs.10,000

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(c) 'Valuation Fees' charged unnecessarily, vide para 13(c) above Rs.10,000 (d) “Inspection Charges' for an inspection which never took place, vide para 13(d) Rs.10,000 (e) 'Minimum Balance Charge' imposed on

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W.P.(C)No.35589 of 2009 : 4 :

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the Complainant, vide para 13(e)

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Rs.2,000

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(f) Excess interest charged over and above

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the normal rate, vide para 13(f) above

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Rs.1,97,803

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(g) Towards unnecessarily paid interest, vide para 13(g) above Rs.1,78,363

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(h) Towards Compensation for Losses and Damages, vide para 13(h) Rs.2,00,000

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___________ TOTAL Rs.6,38,641 ========_

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The Banking Ombudsman considered the

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complaint, but rejected it on the ground that none of the complaints that have been raised by the petitioner would fall within its jurisdictional domain for consideration. The order of the Banking Ombudsman has been appended to this writ petition as Ext.P4. The petitioner impugns Ext.P4 as being illegal and illogical because, according to him, most of the complaints raised in the complaint are squarely governed by Clause 8(1)(m) and Clause 8(2) of the Scheme.

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I have heard Shri.S.Vinod Bhat, the learned counsel for the petitioner and the learned Standing

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W.P.(C)No.35589 of 2009 : 5 :

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Counsel appearing for the first and second respondents and the learned Standing appearing Counsel for the third respondent.

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I see that a statement has been filed on behalf of the Bank, wherein, they support the order of the learned Ombudsman impugned in this writ petition. They say that the allegations contained in Ext.P3 complaint are completely without basis and that it is a mere after thought of the petitioner, who had availed of certain financial assistance and had not complied with the terms of such sanction. According to the bank, the petitioner had defaulted in repayment of the loan and had to, therefore, suffer the consequences of such default by having to pay the applicable interest, charges and other expenses including that which the bank had to incur for recovery. They therefore, maintain that the order of the Ombudsman is justified and within the parameters of competence invested with it. They say that, as it is seen from Ext.P3, none of the grievances would come within the operational ambit of any of the provisions of the

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W.P.(C)No.35589 of 2009 : 6 :

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Scheme.

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I see from Ext.P3 that the petitioner's claims

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are essentially with respect to interest and damages. According to her, the bank has charged certain amounts as charges, debit adjustments, valuation fees, inspection charges and minimum balance charges without informing her in advance. She, therefore, asserts that this would come squarely within the confines of Clause 8(1)(m) of the Scheme which provides that levying of charges without adequate prior notice to the customer would amount to be a deficiency in service. The petitioner also avouches that interest has been charged in excess in her account and that the bank has unilaterally debited the account with large amounts of money on the assertion that these are applicable interest under the Reserve Bank Guidelines. It is the specific case of the petitioner that these debits are unauthorized and in excess of the mandate of the Reserve Bank of India.

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As regards claims shown as (a) to (f) as extracted above, I am of the view that the learned

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W.P.(C)No.35589 of 2009 : 7 :

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Banking Ombudsman was perhaps not correct in holding that they do not come within its jurisdictional purview. The question is not whether those complaints are genuine or whether those claims are credible. The question is whether these would come within the ambit of Clause 8 (1)(m) of the Scheme. I have no doubt that this would be and that, therefore, that the learned Ombudsman was required, in terms of the Scheme, to consider the validity or otherwise of those Schemes.

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As regards the question of excess interest, I see that the bank has specifically contended in their statement that they have only charged interest in terms of the applicable guidelines and notifications of the RBI from time to time. This may be so, however, when the petitioner asserts that interest has been charged by the bank arbitrarily, the learned Ombudsman was obligated in terms of the Scheme, specifically clause 8(2) thereof, to verify if the stand of the bank was right or not. In that view of the matter, claim (f) made by the petitioner extracted above would also come within the purlieu of the

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W.P.(C)No.35589 of 2009 : 8 :

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competence of the Ombudsman under the Scheme.

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I am not for a moment saying that any of the

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claims are correct or otherwise. I have not entered into any conclusion on the merits of this case. I have considered the contentions and submissions of the parties only for the purpose of adjudicating as to whether Exts.P4 and P7 orders of the learned Ombudsman, to the extent to which it holds that it has no jurisdiction in these matters, would be legally justified.

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I conclude, based on my observations above that at least with respect to claims (a) to (f) extracted above from Ext.P3, the Ombudsman would have the competence and therefore, would be obligated in terms of the Scheme to consider and issue orders thereon. As regards claims (g) and (h) extracted above, I am of the view that those are beyond the purview of the learned Ombudsman and to that extent, the impugned orders have to be sustained.

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In such circumstances, I quash Exts.P4 and P7 orders to the extent to which the learned Ombudsman

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W.P.(C)No.35589 of 2009 : 9 :

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has concluded that he has no jurisdiction to consider claims (a) to (f) in paragraph 14 of Ext.P3 extracted above and direct the learned Ombudsman to re-consider the matter with respect to those claims in the manner prescribed in law. As regards the conclusions in Exts.P4 and P7 relating to claims (g) and (h) of paragraph 14 of Ext.P3 extracted above, I confirm the orders and direct that when the learned Ombudsman re-considers the issue, those two claims need not be considered at all.

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Since this writ petition has been pending before

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this Court for the last more than 8 years, I request the learned Ombudsman to complete the exercise of reconsideration of the issues as indicated herein above, as expeditiously as possible, but, not later than 4 months from the date of receipt of a copy of this judgment.

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The writ petition is thus ordered and I direct the parties to suffer their respective costs.

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Sd/-

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DEVAN RAMACHANDRAN, JUDGE.

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Bb/13/03/2017

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[True copy] P.A to Judge

Beena Joseph v. State Bank of India and Others

Case brief

What is this about?

What did the court decide?

Beena Joseph v. State Bank of India and Others

Case brief

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