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TMI Blog2000 (9) TMI 977X X X X Extracts X X X X X X X X Extracts X X X X ..... t along with some other blank cheques were missing. Therefore, he made a complaint to the police and also intimated the loss of draft and cheques to the State Bank of Hyderabad at Hyderabad and Guntur branch. Later on, he came to know that on 18-12-1996, the draft was encashed in Karur Vysya Bank Ltd., Guntur branch, the 3rd respon-dent herein. It is submitted by the petitioner that a fake bank account was opened in the name of the petitioner in 3rd respondent bank in Guntur branch on 18-12-1996, the bank draft was encashed on the same day. The process of opening the bank account and encashment on the same day was contrary to the guidelines issued by the RBI. Thus, on account of the negligence on the part of the 3rd respondent, the petitioner incurred a loss of Rs. 13,07,135. Therefore, he filed a complaint before the 2nd respondent-Ombudsman. The complaint was registered and after enquiry, the learned Ombudsman passed Orders on 23-5-1998 directing the 3rd respondent-Bank to pay a sum of Rs. 13,07,135 with interest from 18-12-1996 till the date of payment at the rate applicable to the fixed deposits. The amount was directed to be paid to the petitioner against indemnity and one sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d still the matter has not been cleared by the RBI. Therefore, the writ petition is premature. 4. The RBI 1st respondent filed a counter stating that in public interest and in the interest of the banking policy, the institution of the Banking Ombudsman was established for the redressal of the grievance in banking service concerning the loans and advances and for other specific matters. Accordingly, the RBI framed a scheme by virtue of the powers conferred under section 35A of the Banking Regulation Act (Banking Ombudsman Scheme, 1995). Under the scheme, the award passed by the Ombudsman is required to be complied within one month from the date of receipt of the award. The petitioner also stated that he was prepared to furnish the surety and also furnished a letter on 16-6-1998 to the 3rd respondent Branch and in the meanwhile, the 3rd respondent-Bank has sent a letter to the 1st respondent RBI stating that the award was not acceptable. The 3rd respondent approached the 1st respondent for permission to challenge the award. However, the award was not complied with and the 3rd respondent preferred an appeal before the RBI, which is pending. In the meanwhile, the writ petition was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue directions to banking companies generally or to any banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply, with such directions. (2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect." 10. Therefore, under the aforesaid provision, the RBI is entitled to issue directions in the interest of the public and also in the interest of the banking policy and for various other reasons mentioned in the said provision to the banking companies. Therefore, any directions issued by the RBI under section 35A have a statutory force and they are binding on the banking companies. Under the scheme, the Banking Ombudsman is appointed by the RBI. He has the powers to receive the complaints relating to the provisions of the banking services, consider such complaints and facilitate their satisfaction or settlement by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Ombudsman. (7) The Banking Ombudsman shall report to the Reserve Bank the non-compliance by any bank of an award which became binding on its pursuance to sub-clause ( 6 )." 11. In the instant case, the award was passed by the 2nd respondent and according to the counter filed by the RBI, the petitioner-complainant accepted the award and, thus, the award became binding as far as the petitioner is concerned. But, however, it is the case of the 3rd respondent-bank that it has not accepted the award and that it has sought for the permission of the RBI for challenging the award. As can be seen from the scheme, no permission is contemplated under the scheme, and it is only after the acceptance is made by the complaint, the bank shall comply with the award and intimate the compliance to the Banking Ombudsman. There is no provision for challenging the award. However, if there is non-compliance on the part of the Bank, the Ombudsman shall report the same to the RBI. 12. The learned senior counsel appearing for the petitioner, however, submits that the circulars issued by the Reserve Bank of India under section 21 or 35 of the Banking (Regulation) Act are statutory in nature and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med in pursuance of section 35A, has a statutory force. The award passed by the Ombudsman also equally takes the colour of a statutory direction and any directions issued by the Ombudsman shall be treated as if the directions under section 35A. Therefore, such directions are equally statutory in nature and they have to be complied with, unless the award is challenged before the appropriate authority or Court. Under the scheme no appeal is provided against the award. The circular issued by the RBI dated 21-2-1998 is clear on this aspect which says that the scheme seeks to establish a system of expeditious and inexpensive resolution of customer complaints relating to banking services concerning loans and advances and other specified matters. It is also stated that since the Banking Ombudsman Scheme was formulated to get fair and speedy and inexpensive resolution to the customers, it was expected that the award of the Ombudsman is accepted and implemented by the Banks and in very exceptional cases, where it is likely to create precedents to the Bank and banking system, bank should refer the matter to the RBI before contest-ing in any manner the award passed by the Ombudsman. Pending a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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