Quasi-judicial banking grievance redressal requires reasons and hearing; an unreasoned rejection without disclosure of remarks was set aside.

A statutory complaint mechanism determining banking-service grievances must operate quasi-judicially, within the Banking Ombudsman Scheme, 1995, and with reasons. The Madras High Court held that the Banking Ombudsman was bound to consider complaints in accordance with the scheme because the process affected parties' rights and required reasoned decision-making. A rejection made without hearing the complainant, without disclosing the bank's remarks, and without recording reasons was held to violate natural justice, reflect non-application of mind, and be unsustainable. The complaint was therefore quashed and required fresh reconsideration after disclosure of remarks and an opportunity of hearing and further representation.

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Issues: (i) Whether the Banking Ombudsman under the Banking Ombudsman Scheme, 1995 functions as a quasi-judicial authority bound to decide complaints in accordance with the statutory scheme and by assigning reasons. (ii) Whether the rejection of the complaint without giving the complainant an opportunity of hearing, without communicating the bank's remarks, and without recording reasons was sustainable.

Issue (i): Whether the Banking Ombudsman under the Banking Ombudsman Scheme, 1995 functions as a quasi-judicial authority bound to decide complaints in accordance with the statutory scheme and by assigning reasons.

Analysis: The scheme was framed in exercise of statutory power under the Banking Regulation Act, 1949, and the Ombudsman was required to act within the framework of the scheme while dealing with complaints concerning deficiency in banking service. The authority was empowered to receive complaints, call for information, and facilitate settlement or pass appropriate directions or awards. Since the function affects rights of parties and involves determination of complaints under statutory authority, the decision-making process had to be judicial in character and supported by reasons.

Conclusion: The Banking Ombudsman was held to be a quasi-judicial authority, obliged to act in accordance with the scheme and to give reasons for its conclusion.

Issue (ii): Whether the rejection of the complaint without giving the complainant an opportunity of hearing, without communicating the bank's remarks, and without recording reasons was sustainable.

Analysis: The impugned communication merely accepted the bank's reply and declined to entertain the complaint, without examining the complaint on merits, without forwarding the bank's objections to the complainant, and without affording an opportunity to rebut them or substantiate the grievance. The order disclosed no independent reasoning and therefore suffered from non-application of mind, failure to exercise jurisdiction, and violation of natural justice. Such a decision-making process could not be sustained in judicial review.

Conclusion: The rejection of the complaint was held unsustainable and was quashed.

Final Conclusion: The complaint was directed to be reconsidered afresh after disclosure of the bank's remarks and after granting an opportunity of hearing and further representation to the parties, in accordance with the scheme.

Ratio Decidendi: A statutory complaint mechanism that determines rights of parties must be exercised quasi-judicially, with reasons and observance of natural justice, and an unreasoned rejection without hearing the complainant is liable to be set aside.

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