A complaint before the Banking Ombudsman must relate to non-observance of RBI directives on interest rates or delay in sanctioning the loan. The Banking Ombudsman Scheme does not provide for a hearing before a decision is made.

AR. Lakshmanan, J.

The petitioner in the Original Petition is the appellant in this appeal. This appeal is directed against the judgment dated 9.9.1999 in the Original Petition. The appellant made an application for enhancement of loan to Rupees Ten Lakhs on 21.5.1997 before the State Bank of Travancore, Ambalamughal Branch, Ambalamughal on the strength of a property belonging to him. It is the case of the appellant that the earlier loan sanctioned was only Rs. 75,000/- and there was no default whatsoever in the repayment of the said loan. According to the appellant, he submitted all documents necessary for scrutiny of the loan application including the original title deed, tax receipts, possession certificate, No Encumbrance certificate, non-attachment certificate, etc. and the Bank had not taken any steps for sanction of the loan for certain extraneous reasons. Hence the appellant made a complaint about this matter to the second respondent - the General Manager, Zonal Office, State Bank of Travancore, Thiruvanathapuram. The appellant was asked to approach the Assistant General Manager, Zonal Office, Ernakulam on 16.2.1998, which was followed by a letter dated 3.7.1998 by the second respondent stating that the enhancement of C.C. limit is not based on the value of collateral security, but purely on the merits of the proposal. The appellant again made a complaint on 30.11.1998 before the Banking Ombudsman, Thiruvanathapuram as per the provisions of the Banking Ombudsman Scheme, 1995. The said complaint was rejected by Exhibit P6 proceedings by the Banking Ombudsman without following the principles of natural justice, including a personal hearing. It is action on the part of the Banking Ombudsman was challenged in the Writ Petition.

2. In the Writ Petition, the appellant after narrating the details about the loan application, etc., has alleged that the Banking Ombudsman has failed to observe the principle so natural justice and fair play in action while disposing of Ext. P5 complaint and that there is complete non-application of mind with regard to the merits of the appellant's case and the powers vested in the Banking Ombudsman under the Banking Ombudsman Scheme. It is further alleged that the first respondent should have found that Clause 13(a) and 13(b) under the Scheme clothe the Ombudsman with vast and comprehensive powers to deal with any deficiency or misconduct in the banking services rendered by the State Bank of Travancore.

3. Along with the Original Petition, the appellant filed Exts. P1 to P6. Ext. P1 is, the representation submitted by the appellant before the the State Bank of Travancore on 6.4.1998. Exts. P2, P3 and P4 are the reply letters sent by the Bank. Ext. P5 is the complaint before the Banking Ombudsman for the State of Kerala and Union Territory of Lakshadweep under the Banking Ombudsman Scheme, 1995 and Ext. P6 is the order impugned in the Writ Petition.

4. The State Bank of Travancore filed a counter affidavit in the Original Petition and in C.M.P. 2515/1999. According to them, the Bank has a subsisting cause of action against the appellant, who is a defaulter, for recovery of money and that the complaint ' now made is merely an attempt of the appellant to wriggle out of his liabilities to the Bank. It is also stated that the complaint is not sustainable within the frame work of the Banking Ombudsman Scheme and, therefore, it has been rightly rejected by the Rank Ombudsman. They also say that the Scheme does not envisage any hearing before a decision, in the nature of the complaint in Ext P5, that contained in Ext. P6.

5. The appellant filed a reply, denying the allegations. According to the appellant, respondents 2 and 3 have no subsisting cause of action against the appellant and on account of the deficiency in the service of the Bank, the appellant has suffered heavy loss and, therefore, the Bank is liable to compensate for the loss sustained by him and that the appellant has issued reply to