IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN MONDAY, THE 1ST SEPTEMBER 2008 / 10TH BHADRA 1930 WP(C).No. 8606 of 2005(Y) PETITIONERS: 1. ABRAHAM REJI MATHEW,AGED 45 YEARS, S/O. K.M.ABRAHAM, HAVING PERMANENT RESIDENTIAL ADDRESS AT ILLATHPUTHENVEEDU, CHALUKUNNU,KOTTAYAM-1,AND PRESENTLY WORKING AS SUPERVISOR,CUSTOMER SERVICES, QUATAR AVIATION SERVICE, POST BOX NO.383, DOHA INTERNATIONAL AIRPORT, DOHA, QUATAR. 2. ABRAHAM THOMAS,AGED 42,S/O.K.M.ABRAHAM, HAVING AT ILLATHPUTHENVEEDU,CHALAKUNNU,KTM.-1,AND WORKING AS RESERVATION TICKETING AGENT,GULF AIR,PB 3314,DOHA,QUATAR.(PETITIONERS ARE REP.BY THEIR P.A HOLDER,MANI IYPE, AGED 56, S/O.S.E.MANI, R/A. SRAMBIKKAL(H),THAZHATHANGADI, KOTTAYAM. BY ADV. SRI.V.VENUGOPALAN NAIR SRI.S.HARIKRISHNAN RESPONDENTS: 1. THE SOUTH INDIAN BANK LIMITED, REPRESENTED BY ITS MANAGING DIRECTOR, REGISTERED OFFICE, "S.I.B. HOUSE", T.B.ROAD, MISSION QUARTERS, THRISSUR. 2. THE BRANCH MANAGER, SOUTH INDIAN BANK LIMITED, NRI BRANCH, BAKERY JUNCTION, KOTTAYAM. 3. THE BRANCH MANAGER, SOUTH INDIAN BANK LIMITED, CENTRAL JUNCTION BRANCH, KOTTAYAM. 4. THE BANKING OMBUDSMAN OF THE STATE OF KERALA, RESERVE BANK OF INDIA BUILDING, BAKERY JUNCTION, TRIVANDRUM-33. 5. RONNIE MUKKADA, S/O. DR JOYKUTTY MUKKADA, MUKKADA HOUSE, PRIYADARSHINI NAGAR, PUTHUR, PALAKKAD – 678 001. 6. ABRAHAM MANIMALETH, S/O. LATE M.I. JOSEPH, MANIMALETH HOUSE, MUTTAMBALAM P.O., KOTTAYAM-4. BY ADV. SRI.GEORGE VARGHESE (MANACHIRACKEL) FOR R1,2&3 SRI.C.M.ANDREWS FOR ADDLR5,6. ADDL. R5 AND R6 ARE IMPLEADED AS PER ORDER DT. 17-8-2007 IN I.A.NO. 9079/2007. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01/09/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J U D G M E N T NONE APPEARS FOR THE PETITIONERS. THE PETITIONERS ARE ALSO ABSENT. DISMISSED FOR DEFAULT. 1-9-2008. SD/- S. SIRI JAGAN, JUDGE. [TRUE COPY] P.S TO JUDGE. C.K.ABDUL REHIM, J. ---------------------------------- W.P.(C).No.8606 OF 2005 ---------------------------------- Dated this the day of November, 2009 J U D G M E N T ---------------------- 1. The petitioners are brothers employed in Qatar since the last several years. The challenge in this writ petition is against Ext.P7 order of the 4th respondent, Banking Ombudsman, rejecting a complaint submitted by the petitioners against respondents 1 to 3. The petitioners were holding various Fixed Deposits with respondent Nos.2 and 3 Banks, in their individual name as well as in the joint name of the petitioners along with their father and mother. Ext.P1 is a power of attorney executed by the petitioners in favour of their father Sri.K.M.Abraham, inter alia authorizing to take loan or advances on behalf of the petitioners from the South Indian Bank Limited and to create charge on the deposits held with the Bank for availing advance from the Bank in the name of the petitioners or in other names. According to the petitioners the intention in creating such a power of attorney was only to enable their father to avail loan in case of emergency. The complaint of the petitioners is that their father who was one of the Directors of a company incorporated had availed loan from the said Bank by pledging Fixed Deposits W.P.(C).8606/05-Y 2 misutilising Ext.P1 Power of Attorney and the Bank had appropriated Fixed Deposits held by the petitioners, on default committed by the company in repaying the loan amounts, without knowledge or consent of the petitioners. The petitioners submitted Ext.P2 complaint in this regard to the 4th respondent. Thereafter the Bank had intimated the petitioners that the Fixed Deposits can be reinstated only if the petitioners make payment of the entire arrears due in the loan account. Followed by this the 4th respondent had issued Ext.P4 proceedings to the petitioners informing that since the Bank had already replied on the issue there is no need for further intervention by the 4th respondent. 2. The petitioners have approached this Court challenging Ext.P4, and this Court was pleased to dispose of the writ petition directing the 4th respondent to adjudicate on Ext.P2 complaint on merits. Thereafter the 4th respondent afforded a personal hearing and the Power of Attorney holder of the petitioners was heard. Ext.P7 is the proceedings issued by the 4th respondent after hearing all the parties. It is revealed that the 4th respondent had referred the matter to the Legal Department of the RBI Central Office and the report received from the Legal Department of the RBI confirmed that the Bank’s action is not in violation of any law or banking practice, since the W.P.(C).8606/05-Y 3 Bank had obtained loan documents executed by the father of the petitioners on the basis of the Power of Attorney as collateral security after obtaining signature from the Power of Attorney on all relevant documents. On the basis of the legal opinion of the RBI the Ombudsman declined further interference. 3. According to the petitioners Ext.P7 decision of the 4th respondent is highly illegal, improper and erroneous. The Ombudsman ought to have interfered in the matter and directed reinstatement of the Fixed Deposits because the same was appropriated without knowledge and consent of the petitioners. The petitioners further contented that Ext.P1 Power of Attorney have not created any valid authorisation for pledging of the Fixed Deposits which stands in the name of the petitioners. It is also contended that the Bank have appropriated even Fixed Deposits made in the joint name of the petitioners and their mother, who had not even issued any Power of Attorney. 4. In the counter affidavit filed by the 3rd respondent it is stated that the loan sanctioned to the company has been collaterally secured with the Fixed Deposits in the name of the petitioners. Such charge was created by Power of Attorney holder of the petitioners by virtue of power derived through Ext.P1 document. When the loan was declared as NPA, the Bank appropriated the amount in the Fixed Deposits against arrears in W.P.(C).8606/05-Y 4 the loan account. The Bank had filed a case before the DRT to recover arrears in the loan account, in which the father of the petitioners, who is the Power of Attorney holder, was also a defendant. But inspite of service of summons he had not filed any written statement. Thereafter the defendants including the father of the petitioners have filed petition to set aside the exparte order, which was rejected by the DRT. Along with the counter affidavit of the 3rd respondent Ext.R3(a), a letter, is produced which is issued by the person who is representing the petitioners in this writ petition, to the counsel for the petitioners, instructing to withdraw this writ petition. But the counsel took no steps to withdraw the case, is the contention. The respondents 1 to 3 had filed an additional counter affidavit in which the copy of the loan sanctioning letter issued by the Bank to the company is produced as Ext.R3(b). It is pointed out that in the items of security the term deposits aggregating to 29.58 lakhs is mentioned therein. The said letter is acknowledged by all the Directors of the company including Power of Attorney holder of the petitioners. It is further stated that the Bank had given specimen of a letter to the petitioners through the Power of Attorney holder, which is to be signed by them as token of having acknowledged the charge created on Fixed Deposit by their Power of Attorney holder. Eventhough the receipt of such W.P.(C).8606/05-Y 5 letter was admitted in Ext.P2 complaint, they have not raised any objection regarding creation of charge over the Fixed Deposits. Therefore it is contended that the petitioners were having knowledge about creation of charge and they have not raised any objection during that time. But only when the loan account became defaulted and only when the Bank appropriated the Fixed Deposits the petitioners have come out with such objections. 5. One of the directors of the company, which had taken the loan, and legal heir of another deceased director were got impleaded themselves in the above writ petition as additional respondents 5 and 6. Along with the affidavit in support of the impleading application they have produced Ext.R5(a), a letter issued by the directors of the company to the Bank assuring to settle the account fully on payment of Rs.57 lakhs and further assuring to withdraw this writ petition. The father of the petitioners, who is the Power of Attorney holder, who created charge over the Fixed Deposits, is one of the signatories to the said letter produced as Ext.R5(a). According to the additional respondents the letter for withdrawal of this writ petition was issued to the counsel, only on the basis of the above settlement. 6. On an anxious consideration of the rival contentions I am of the view that the disputed issue regarding creation of W.P.(C).8606/05-Y 6 charge on the Fixed Deposits or the validity of such charge created on the basis of Ext.P1 Power of Attorney, is not a question which can be resolved in this writ petition invoking jurisdiction under Article 226 of the Constitution of India. The dispute need adjudication before the appropriate fact finding forums and it required appreciation of evidence. The next question to be considered is regarding legality, propriety and regularity of the decision taken by the 4th respondent. The 4th respondent refused to grant any relief on the complaint, based on the legal opinion obtained by it from the RBI Central Office. Before Ext.P7 the 4th respondent had expressed his view that, the Bank had already taken action in the manner in which redressal of the grievance is legally possible. The petitioners could not point out any infirmity in the order of the 4th respondent based on any provisions contained in the Banking Ombudsman Scheme, 2002. On the basis of the materials available with the 4th respondent it could not be held that the decision rendered by the 4th respondent is illegal, erroneous or unjustifiable. Hence I do not find any ground to interfere with the impugned order of the 4th respondent. 7. On the basis of the above findings the writ petition deserves no merits and the same is accordingly dismissed. However it is made clear that dismissal of this writ petition or W.P.(C).8606/05-Y 7 any of the observations made in this judgment, will not affect rights if any available to the petitioners to approach the appropriate Civil court seeking remedy on the issue. C.K.ABDUL REHIM, JUDGE. okb