2002 (4) TMI 880 - HC - Companies Law

Court quashes Ombudsman's order, cites lack of reasoning & procedural fairness.

The court held that the Ombudsman's order lacked proper reasoning and procedural fairness, violating natural justice principles. The court quashed the ... Banking Ombudsman - Powers and functions of Issues Involved:1. Jurisdiction and authority of the Ombudsman.2. Application of natural justice principles.3. Procedural fairness in complaint handling.4. Timeliness and limitation in filing the complaint.Issue-Wise Detailed Analysis:1. Jurisdiction and Authority of the Ombudsman:The petitioner, a company engaged in non-banking finance activities, sought a writ of certiorari to quash the respondent's proceedings related to a complaint against the Bank of Madura Ltd. The court examined whether the Ombudsman had the authority to reject the complaint without a detailed examination. The court emphasized that the Ombudsman, under the Banking Ombudsman Scheme, 1995, framed by the Reserve Bank of India (RBI) under section 35A of the Banking Regulation Act, 1949, is a quasi-judicial authority. The Ombudsman is required to act in terms of the Scheme, which includes receiving complaints, considering them, and facilitating their settlement. The court held that the Ombudsman exercises quasi-judicial functions and must act judicially, assigning reasons for its conclusions.2. Application of Natural Justice Principles:The court found that the Ombudsman failed to adhere to the principles of natural justice. The impugned order did not provide any reasoned decision and merely stated that the bank's reply was in order. The court highlighted that the decision-making process must involve examining the merits of the complaint and providing an opportunity for the petitioner to be heard. The Ombudsman did not forward the bank's objections to the petitioner, nor did it afford the petitioner an opportunity to respond. This lack of procedural fairness and transparency was deemed a violation of natural justice principles.3. Procedural Fairness in Complaint Handling:The court scrutinized the procedural aspects of how the complaint was handled. The Ombudsman rejected the complaint without a detailed examination of the petitioner's 60-page complaint and the bank's objections. The court noted that the Ombudsman must follow the minimum procedural requirements, including forwarding the bank's objections to the petitioner and allowing the petitioner to substantiate its grievance. The court held that the Ombudsman failed to apply its mind to the complaint and did not provide a reasoned decision, which amounted to a failure to exercise its jurisdiction.4. Timeliness and Limitation in Filing the Complaint:The respondent contended that the complaint was barred by limitation and that the petitioner had no right to reopen a previously rejected complaint. The court rejected this argument, noting that the earlier complaint had been returned for being presented before the appropriate Ombudsman. Due to the absence of an Ombudsman for a considerable period, the complaint was kept pending and later forwarded to the appropriate Ombudsman. The court held that the plea of delay or laches did not arise, as no such reason was mentioned in the impugned order.Conclusion:The court concluded that the Ombudsman's order was vitiated by non-application of mind and procedural unfairness. The Ombudsman failed to follow the principles of natural justice and did not provide a reasoned decision. The court quashed the impugned proceedings and directed the respondent to restore the complaint, forward the bank's objections to the petitioner, allow the petitioner to respond, and provide an opportunity for a hearing. The Ombudsman was instructed to pass a reasoned order in accordance with the Scheme.Judgment:The writ petition was allowed, and the impugned proceedings were quashed. The respondent was directed to restore the complaint, follow procedural fairness, and pass a reasoned order in accordance with the Banking Ombudsman Scheme, 1995.