IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 30.10.2009 CORAM THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM W.P.No.19008/1998, W.P.No.6483/2001 W.P.No.8061/2007 & W.P.No.8062/2007 1.R.Lakshmanan .. Petitioner (in W.P.No.19008/1998) 2.Indian Overseas Bank Rep. By its Chief Manager, Nungambakkam Branch, Chennai-600 034 .. Petitioner (in W.P.No.6483/2001) 3.V.Indira Stephen .. Petitioner (in W.P.No.8061/2009 & W.P.No.8062/2009) Vs 1.Indian Overseas Bank Nungambakkam Branch, rep. By its Chief Manager, 109, Nungambakkam High Road, Chennai-600 034. .. I Respondent (in W.P.No.19008/1998 and II Respondent in W.P.No.8061/2007 and in W.P.No.8062/2007) 2.Indian Overseas Bank, rep. By its Chairman cum Managing Director, Mount Road, Chennai-600 002 .. II Respondent (in W.P.No.19008/1998 & W.P.Nos.8061 & 8062/2007 3.Reserve Bank of India, Department of Supervision, Mumbai .. 3rd Respondent (in W.P.No.19008/1998) 4.Banking Ombudsman (Tamil Nadu Union Territories of Pondicherry and Andaman Nicobar Islands), Challa Mall, 8th Floor, 11/11A, Sir Theagaraya Road, https://hcservices.ecourts.gov.in/hcservices/ T.Nagar, Chennai-600 0-17 .. 4th Respondent (in W.P.No.19008/1998 and I Respondent & W.P.No.6483/2001) 5.The Banking Ombudsman Reserve Bank of India Second Floor, Fort Glacis, Post Box No.40, Rajaji Salai, Chennai-600 001. .. I Respondent (in W.P.No.8061/2007 & W.P.No.8062/2007) 6.R.Lakshmanan 38, Third Street, Abiramapuram, Chennai-600018. .. II Respondent (in W.P.No.6483/2001, and 3rd Respondent in W.P.No.8061/2007 & W.P.No.8062/2007) 7.M/s.Pappu Benefit Fund Ltd., No.18, Dr.Nair Road, T.Nagar, Chennai-600 017. .. Respondent (in W.P.Nos.8061 & 8062/2007) ******** Prayer in W.P.No.19008/1998: Writ petition filed under Article 226 of the Constitution of India praying for a Writ of Mandamus directing the first and second respondents to comply with the award dated 26.2.1998 passed by the fourth respondent. Prayer in W.P.No.6483/2001: Writ petition filed under Article 226 of the Constitution of India praying for a Writ of Certiorari calling for the records of the first respondent in passing the award dated 26.02.1998 in his proceedings No.BO(CHN)/AC 001/97-98 and to quash the same. Prayer in W.P.No.8061/2007: Writ petition filed under Article 226 of the Constitution of India praying for a Writ of Certiorari or order or direction in the nature of the writ relating to the charge sheets initiated by the 2nd respondent in No.ENQ/PAD/213/22 dated 9.1.99 and quash the same as illegal, arbitrary and against law. Prayer in W.P.No.8062/2007: Writ petition filed under Article 226 of the Constitution of India praying for a Writ of Certiorari or order or direction in the nature of the writ relating to the charge sheets initiated by the 1st respondent in No.BO(CHN)/AC 001/97-98 dated 26.02.1998 on the file of the 1st respondent and quash the same as illegal, arbitrary and against law. https://hcservices.ecourts.gov.in/hcservices/ For Petitioners : M/s.R.Margabandhu (in W.P.No.19008/1998) M/s.T.RaviKumar (in W.P.No.6483/2001) Mr.A.Thiyagarajan, Senior Counsel for Mr.S.Rameshkumar (in W.P.Nos.8061 & 8062/2007) For Respondents : Mr.T.Ravi Kumar and Mr.P.T.Narendravasan (for R1 & R2 in W.P.No.19008/98 & for R2 in W.P Nos.8061 & 8062/07) Mr.R.Margabandur for R2 (in W.P.No.6483/2001) C O M M O N O R D E R Since the issue involved in these writ petitions are common they are taken up together for disposal. 2. The matter pertains to an award passed by the Banking Ombudsman in exercise of his powers conferred under the Banking Ombudsman Scheme 1995. 3. The Indian Oversees Bank (hereinafter referred to as the Bank) is aggrieved by the said award. The complainant before the Banking Ombudsman seeks for implementation of the award. One Mrs.V.Indira Stephen, who is also an employee of the bank has challenged the award, since the award directs funds to be withdrawn from her savings bank account. She has also challenged the charge memo issued to her by the Bank in W.P.No.8061/2007. For the purpose of deciding the issue, I propose to take up first W.P.No.6483/2001 filed by the bank, challenging the award passed by the Ombudsman. 4. Mr.R.Lakshmanan, the petitioner in W.P.No.19008/1998, has made a complaint to the Ombudsman on 29.8.1997. The allegation in the complaint is that Mrs.V.Indira Stephen, petitioner in W.P.Nos.8061 & 8062/2007, the employee of the Bank received Rs.3,00,000/- from Mr.R.Lakshmanan to repay her housing loan and release the documents and sell the property to Mr.R.Lakshmanan. It is further stated that she obtained loan from a finance company under the name and style of M/s. Pappu Benefit Fund Ltd., 4th respondent in W.P.No.8062/2009 and the finance company gave a cheque in favour of the Indian Oversees Bank, Nungambakkam Branch a/c of Mrs.V.Indira Stephen. Since the cheque was issued to the bank, and as Mrs. Indira Stephen did not have savings account in Indian Oversees Bank, Nungambakkam Branch at that time the money was kept in suspense account. According to the said Mr.R.Lakshmanan, he had lodged a complaint with the Vigilance https://hcservices.ecourts.gov.in/hcservices/ Department of the Bank and after the complaint was lodged Mrs.V.Indira Stephen had taken the money which was kept in suspense account. Based on these facts, Mr.R.Lakshmanan claimed the sum of Rs.3,00,000/- with full interest. 5. The Ombudsman took up the matter and since the complaint remained unsettled by agreement, in exercise of his powers under Clause 20 of the Scheme proposed to pass award. The Ombudsman by award dated 26.2.1998 issued two directions as hereunder: (i) directing the bank to refund the sum of Rs.3,00,000/- with interest at 21% p.a to M/s.Paapu Benefit Fund Limited with instruction to credit to the loan account of Mr.R.Lakshmanan or to refund to him by M/s.Paapu Benefit Fund Ltd., if he had repaid the loan either wholly or in part. (ii) bank should pay the compensation of Rs.1,000/- to the complainant Mr.R.Lakshmanan for the expenses incurred by him in prosecuting his claim. 6. Mr.T.Ravi Kumar, Learned Standing Counsel for the Bank assailed the correctness of the award passed by the Ombudsman by contending that the transaction between Mr.R.Lakshmanan and Mrs.V.Indira Stephen is purely a private dispute and the action of the Ombudsman in passing the award amounts to improper exercise of jurisdiction. That the Ombudsman ought to have seen that the subject matter does not relate to any deficiency in banking service. On the date when the cheque was deposited, Mrs.V.Indira Stephen was a staff of the Mount Road Branch and had availed housing loan from the Nungambakkam branch of the bank and that the bank collects the proceeds of the instrument on behalf of the beneficiary of the instrument. 7. Since the instruments was to the account of Mrs.V.Indira Stephen, she had every right, based on that and the bank cannot be held responsible in respect of any private dispute between Mr.R.Lakshmanan and Mrs.V.Indira Stephen. That Mr.R.Lakshmanan has no locus standi to file a complaint in the instant case as he is not the customer of the Bank and if there is any dispute between himself and Mrs.V.Indira Stephen, his remedy is elsewhere. The learned counsel would further submit that neither Mrs.V.Indira Stephen nor M/s. Paapu Benefit Fund Ltd., were arrayed as respondents before the Ombudsman and the award is wholly erroneous and without jurisdiction. 8.The complainant Mr.R.Lakshmanan filed a counter affidavit and reiterated the stand taken before the Ombudsman. Mr.R.Maargabandhu, Learned counsel appearing on behalf of Mr.R.Lakshmanan would contend that Mrs.Indira Stephen and the bank colluded together to benefit her and transferred the cheque amount of Rs.3,00,000/- from the suspense https://hcservices.ecourts.gov.in/hcservices/ account to her savings bank account on 10.6.1996 and she has withdrawn the entire amount of Rs.3,00,000/-. It is further contended that, as per the banking practice, the Bank should have intimated either Mr.R.Lakshmanan or M/s.Paapu Benefit Fund Ltd., to which account the amounts should be transferred on finding that Mrs.V.Indira Stephen did not have a savings account in Nungambakkam Branch. In fact, the said Mrs.V.Indira Stephen opened the account on 8.6.1996 and had withdrawn the money two days later on 10.6.1996, without discharging the housing loan. Therefore, the learned counsel would contend that the Bank has committed deficiency of service, as per Clause 13(a)(vii) of the Banking Ombudsman Scheme 1995. Since Mr.R.Lakshmanan is an aggrieved person, he is entitled to maintain the complaint before the Ombudsman and there is sufficient cause of action in terms of clause 16(3) of the scheme to maintain the complaint. On these grounds, the learned counsel would submit that the writ petition filed by the Bank is liable to be dismissed and the award should be implemented by allowing the W.P.No.19008/1998. 9. Mr.A.Thiyagarajan, Learned Senior Counsel appearing for Mrs.V.Indira Stephen would contend that, she is not a party to the proceedings before the Ombudsman and has not been impleaded as respondent in both the writ petitions in W.P.No.6483/2001 and W.P.No.19008/1998. The learned senior counsel would contend that the Ombudsman heard the matter without issuing notice to Mrs.V.Indira Stephen. That in terms of clause 16(d) of the scheme, the complaint filed by Mr.R.Lakshmanan should not have been proceeded further as in respect of the same subject matter he has filed criminal complaint and the Crime Branch, Madras had registered a case against the petitioner Mrs.Indira Stephen on 2.9.1997 for offence under section 420 I.P.C. Therefore, the learned senior counsel would submit that the award of the Ombudsman is liable to be set aside. In respect of the charge memo issued to Mrs.V.Indira Stephen which is impugned in W.P.No.8061/2007, the learned senior counsel would submit that the criminal case which was registered against the petitioner had ended in acquittal by judgment dated 14.12.2004 in C.C.No.9562/1999 on the file of the learned Additional Chief Metropolitan Magistrate, Egmore, Chennai-8. In view of the acquittal, the department proceedings initiated based on the same set of charges cannot be proceeded. Therefore, the learned senior counsel would submit that the departmental charge memo is also liable to be set aside. 10. I have carefully considered the submissions made by the learned counsels on either side and perused the entire materials on record. 11.The main contention raised by the Bank is that the Ombudsman does not have jurisdiction to entertain the complaint and to give directions as given in the impugned award. It is their further contention that the complainant Mr.R.Lakshmanan has no locus standi https://hcservices.ecourts.gov.in/hcservices/ to make such complaint as he is not a customer of the Bank and the dispute is purely a dispute between Mr.R.Lakshmanan and Mrs.V.Indira Stephen and the Ombudsman, ought not to have entertained such a complaint. 12. The scheme which is relevant for the purpose of the present case is the Banking Ombudsman Scheme, 1995. Oxford English Dictionary defines "Ombudsman" to be an official appointed to investigate individual complaints against an organisation, especially a public authority. 13. Pursuant to the notification issued by the Reserve Bank of India, dated 14.6.1995, in exercise of the powers conferred under section 35A of the Banking Regulation Act 1949, the Scheme was introduced in public interest and in the interest of banking policy to provide for a system of Banking Ombudsman for redressal of grievances against deficiency in banking services, concerning loans and advances and other specified matters. In terms of the Clause 2 of the Scheme, the object is to enable resolution of complaints relating to provision of banking services and to facilitate the satisfaction, or settlement of such complaints. In terms of Clause 12(a), the powers and duties of the Banking Ombudsman will be to receive complaints relating to the provision of banking service. Clause 13 of the scheme specifies the ambit of authority of the Ombudsman as regards banking services and the same shall include complaints pertaining to the operations in any saving, current or any other account maintained with a bank, such as delays, non-credit of proceeds of parties accounts, non-payment of deposit or non- observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits. In terms of Clause 16(1) of the Scheme, any person who has a grievance against a bank may himself or through an authorised representative make a complaint in writing to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. 14. On a perusal of the provisions as stated above, the object of the Scheme is to enable resolution of complaints and the Ombudsman is entitled to receive complaints relating to provision of banking services and if the complaint pertains to an operation of savings bank account or current account maintained by the bank, the Ombudsman would have jurisdiction to entertain such complaint. The provisions of Clause 16(1) are very widely couched by stating that any person who has a grievance against the Bank could lodge a complaint. Therefore, the objections raised by the Bank that the Ombudsman has no jurisdiction to entertain the complaint is not tenable. Therefore, I am of the view that the Ombudsman is entitled to entertain complaint at the instance of any person who has grievance against the Bank and he not be a customer of that Bank and therefore the complaint filed by the said Mr.R.Lakshmanan cannot be said to be barred under the provisions of the Scheme. https://hcservices.ecourts.gov.in/hcservices/ 15. Having held that the Ombudsman has jurisdiction to lodge the complaint, the next issue to be seen is whether Mr.R.Lakshman has locus standi to maintain the complaint. As stated above, Clause 16 (1) of the Scheme empowers any person who has grievance against the Bank may himself or through an authorised representative make a complaint in writing to the Banking Ombudsman within whose jurisdiction the branch or office of the bank complained against is located. Therefore, it cannot be said that Mr.R.Lakshman has no locus standi to lodge the complaint, as he would fall within the meaning of the expression “any person”. 16. Next, it has to be seen whether the direction issued by the Ombudsman is within the ambit of authority of the Ombudsman and whether it is in consonance with the procedure of disposal of such complaint in accordance with Clause 16. It is to be noted that the complaint pertains to an operation in a Bank account with the respondent Bank. It is not in dispute that Mrs.V.Indira Stephen is an employee of the Bank and employed in Mount Road Branch and availed housing loan in Nungambakkam Branch. The cheque in question was drawn by M/s. Pappu Benefit Fund Ltd., in favour of Indian Overseas Bank a/c of Mrs.V.Indira Stephen. It is not in dispute that, on the day when the said cheque was presented before the Indian Overseas Bank, Nungambakkam Branch M/s.V.Indira Stephen did not have a savings account and there was only loan account. Therefore, it is contended by Mr.R.Lakshmanan that the cheque in question was intended to close the housing loan account availed by Mrs.Indira Stephen in the Nungambakkam Branch and that he had obtained the said amount from M/s. Pappu Benefit Fund Ltd., and it is on the understanding between the Mr.Lakshman and Mrs.V.Indira Stephen such cheque was drawn in such a manner. 17. However, the said Mr.R.Lakshmanan did not implead Mrs.V.Indira Stephen or M/s.Pappu Benefit Fund Ltd., as respondents before the Ombudsman. Undoubtedly, both these persons were proper and necessary parties to the proceedings. Therefore in my view, the Ombudsman committed gross error in proceeding with the complaint without issuing notice and hearing proper and necessary parties. Thus, on this ground itself, the award ought to be rendered as not binding on persons who were not impleaded as respondents. 18. Further in terms of Clause 16(3)(d), no complaint to the Banking Ombudsman shall lie unless the complaint is not the subject matter, for which any proceedings before any Court, Tribunal or Arbitrator or any other forum is pending or a degree or Award or order of dismissal has already been passed. In the instant case, in respect of the same instrument, the said Mr.R.Lakshman filed a criminal complaint before the Crime Branch, Chennai and the complaint said to have lodged on 18.9.1997. However on the date of filing the https://hcservices.ecourts.gov.in/hcservices/ complaint before the Ombudsman i.e., on 29.8.1997, a criminal complaint was not pending as it had been lodged subsequently i.e., on 18.9.1997. In such circumstances, by considering the scope of Clause 16(3)(d), the Ombudsman ought not to have proceeded further since the same subject matter was pending before another forum. This view is supported by the judgment of the Hon'ble Supreme Court in Durga Hotel Complex Vs. Reserve Bank of India and Others reported in 2007 (5) SCC 120 and the Hon'ble Supreme Court while considering the stage at which the bar of jurisdiction could operate and held as follows:- “12. It is clear that when the appellant invoked the jurisdiction of the Banking Ombudsman, the respondent Bank had not approached the Debts Recovery Tribunal with its application for recovery of the amounts due under the loan transaction. Therefore, this was a case where on the day the complaint was filed, no proceeding before any Tribunal on the subject-matter was pending or in which a final order had been passed or decision rendered. At the stage of initiation, there was no impediment in the way of the Ombudsman in entertaining the complaint or in proceeding with it. The impediment, if any, was caused by the Bank's subsequent filing of O.A No.157 of 2000 before the Debts Recovery Tribunal. The High Court has taken the view that since by the time the Ombudsman rendered this award, the Bank had already approached the Debts Recovery Tribunal with its claim under the Recovery of Debts Act, the Banking Ombudsman did not have jurisdiction to render the award, or has lost his jurisdiction to render the award. Clause 16 of the Scheme in sub-clause (1) speaks of a person making a complaint in writing to the Banking Ombudsman. Clause (3) read in conjunction with sub-clause(d) indicates that no complaint to the Banking Ombudsman shall lie if on the subject-matter that is put forward before the Ombudsman, there is a proceeding pending before a court, arbitrator, tribunal or forum or a decree or final adjudication had earlier been made by any one of them. This would suggest that the bar is attracted only when on the date of the filing of the complaint before the Ombudsman, a claim on the subject-matter is pending before, say, the Debts Recovery Tribunal. Here admittedly, on the day the jurisdiction of the Banking Ombudsman was invoked, no such claim was pending before any court, arbitrator, the Debts Recovery Tribunal or any other forum. To that extent, prima facie, there is merit in the contention that clause 16(3) may not be attracted to the case on hand. 13.Clause 16(3) of the Scheme says, “ No complaint to the Banking Ombudsman shall lie.” According to Black's Law Dictionary “lie” means, “to have foundation in the law; to be legally supportable, sustainable, or proper”. In the context of the power conferred on the Ombudsman by the Scheme read in the https://hcservices.ecourts.gov.in/hcservices/ light of Section 35-A of the Banking Regulation Act, it would be appropriate to understand the expression as having a foundation in law in the sense that the claim must have a foundation in law. A Banking Ombudsman, though might initially have jurisdiction to entertain a complaint on the basis that it has a legal foundation, here in terms of the Scheme, he may be divested of that jurisdiction or the foundation in law might be lost on either of the parties approaching the court, the arbitrator or the Debts Recovery Tribunal in respect of the same subject-matter. Dealing with the expression “entertain” this Court held in Lakshmiratan Engg. Works Ltd. V. CST that it means to deal with or admit to consideration. The Court approved the views expressed by some of the High Courts that the word “entertain” meant not “receive” or “accept” but “proceed to consider on merits” or adjudicate upon. The Court also accepted the dictionary meaning of the word as “admit to consider”. This was also the view that was subsequently taken by this Court in Hindusthan Commercial Bank Ltd. v. Punnu Sahu. It was held that therein that the expression “entertain” in Order 21 Rule 90 of the Code meant, to “adjudicate upon” or to “proceed to consider on merits” and not “initiation of proceeding” along. Drawing an analogy, it is possible to say that the complaint must continue to have a foundation in law at the time the Ombudsman takes up the claim for his consideration and renders his decision or award. The foundation would be lost when a court, arbitrator, tribunal or any other competent forum is moved on the same subject-matter. When the subject-matter of the complaint is taken to any other competent forum, the complaint loses its foundation in law. In other words, the subject-matter of the complaint should not be pending in any other tribunal, or court or before an arbitrator not merely when it is filed but also when it is taken up for consideration and disposal.” (emphasis supplied) 19. Thus, in view of the law declared by the Hon'ble Supreme Court, the bar under Clause 16(3)(d) in the instant case has occurred subsequent to the filing of the complaint before the Ombudsman since the criminal complaint came to be given on the same subject matter on 18.9.1997 by Mr.R.Lakshmanan himself. However, there is no record to show whether this fact was brought to the notice of this Ombudsman by the complainant himself. Had the proper and necessary parties been impleaded before the Ombudsman, this fact would have come to the notice of the Ombudsman. In any event, the fact that such criminal complaint was pending before the appropriate forum and which also subsequently came to be registered as C.C.No.9562/1999 on the file of the learned Additional Chief Metropolitan Magistrate, Egmore, Chennai-8 for the offence under section 420 I.P.C. It has to be necesssarily held that the complaint before the Ombudsman loses its foundation and the jurisdiction of the https://hcservices.ecourts.gov.in/hcservices/ Ombudsman had been taken away on and after that stage. Therefore, the Ombudsman stands statutorily barred from proceedings further. 20. Further, it is seen that certain directions have been issued by the Ombudsman to the Bank to effect payment in favour of the complainant Mr.R.Lakshmanan or in the alternative to refund the money to M/s. Pappu Benefit Fund Ltd. In my view, such directions are beyond the jurisdiction of the Ombudsman more so in the absence of proper and necessary parties having been made parties to the proceedings. Whether there was a civil transaction relating to purchase of a property between Mr.R.Lakshmanan and Mrs.V.Indira Stephen is a question of fact which is now being disputed. Whether at the instance of the said Mr.R.Lakshmanan, M/s. Pappu Benefit Fund Ltd., released the amount and issued the cheque favouring Indian Oversees Bank account of Mrs.V.Indira Stephen is also a disputed question of fact. Further, was there any civil transaction between Mr.R.Lakshmanan and Mrs.V.Indira Stephen in respect of the immovable property in question or as to whether any third parties were involved in the matter are also disputed question of fact. These aspects obviously cannot be adjudicated by the Ombudsman and they would all fall outside the ambit of authority as enumerated under Clause 13 of the Scheme. Therefore, I am of the view that the award passed by the Ombudsman is not sustainable. However, it is always open to the parties to work out their rights before the competent forum and if such proceedings are initiated, it is needless to state that such forum shall independently decide the issue based on oral and documentary evidence without being in any manner influenced by the observations of this Order. 21.Therefore, W.P.No.6483/2001 and W.P.No.8062/2007 are allowed and W.P.No.19008/1998 is dismissed. There shall be no order as to costs. 22. W.P.No.8061/2007, this writ petition has been filed by Mrs.V.Indira Stephen questioning the departmental charge memo dated 26.2.1998. The main ground on which the writ petition has been filed is that the Bank has initiated departmental proceedings on the same set of charges as that of the charge in the criminal case and the same ended in an acquittal before Criminal Court in C.C.No.9562/1998 dated 14.5.2004 on the file of the Additional Chief Metropolitan Magistrate, Egmore, Chennai-8 and since the charge sheet issued by the Bank has been issued based on same set of allegations the Bank cannot proceed further in the epartmental charge sheet. 23.In the departmental charge, a statement of imputations of