Court Directs Ombudsman to Reconsider Complaint with Proper Hearing and Reasoned Order
In a significant ruling, the Kerala High Court has set aside an order issued by the Reserve Bank of India (RBI) Ombudsman for failing to provide a reasoned decision. The judgment, delivered by Justice Bechu Kurian Thomas, emphasized the necessity for transparency and accountability in orders affecting the rights of parties.
The case involved M/s. Unique Enterprises, which had filed a complaint against the Reserve Bank of India and another respondent regarding foreclosure charges levied by their bank. The petitioners had initially approached the RBI Ombudsman under the Integrated Ombudsman Scheme, 2021, following dissatisfaction with the bank’s services and subsequent actions. However, the Ombudsman dismissed their complaint without delving into the merits, stating there was no deficiency in service.
Justice Thomas observed that the Ombudsman, constituted under the RBI’s Integrated Ombudsman Scheme, 2021, is subject to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The court highlighted that the Ombudsman is required to provide a reasoned order, whether accepting or rejecting a complaint, to ensure that parties have a fair opportunity to appeal or challenge the decision.
The judgment criticized the Ombudsman’s reliance on system-generated communications lacking signatures or the name of the deciding authority, deeming them inappropriate and non-compliant with legal requirements. Justice Thomas noted that the impugned order, communicated via an email, merely reiterated the parties' contentions without any independent analysis or reasoning.
The court referenced the RBI’s Ombudsman Scheme provisions, which mandate the issuance of speaking orders to substantiate decisions, especially when these decisions impact the rights of parties. It was noted that such orders must include the principles of banking law, RBI guidelines, and other relevant factors. The absence of a detailed rationale in the Ombudsman’s order led the court to conclude that the decision was arbitrary and warranted judicial intervention.
In directing the Ombudsman to reconsider the matter, the court stressed the importance of granting an opportunity for both parties to present their case. The judgment serves as a reminder of the judiciary’s role in ensuring administrative bodies adhere to principles of natural justice and procedural fairness.
The case references cited in the judgment include Authorised Officer v. Sheela Francis Parakkal, Santhosh Kumar R.S. v. South Indian Bank Ltd., and Sasikumar v. State of Kerala, which underline the necessity of reasoned judgments in administrative and quasi-judicial proceedings.
The court’s decision reinforces the accountability mechanisms within the RBI’s Ombudsman Scheme, urging more robust procedural adherence and reasoned decision-making.
Bottom line:-
The Ombudsman under the Reserve Bank - Integrated Ombudsman Scheme, 2021 is an authority amenable to writ jurisdiction under Article 226 of the Constitution of India. Orders passed by the Ombudsman must contain reasons and cannot be issued in the form of system-generated communication without signature or name of the authority.
Statutory provision(s): Article 226 of the Constitution of India, Reserve Bank - Integrated Ombudsman Scheme, 2021, Section 35A of the Banking Regulation Act, 1949, Section 45L of the Reserve Bank of India Act, 1934
Unique Enterprises v. Reserve Bank of India, (Kerala) : Law Finder Doc id # 2928152
