Quasi-judicial authorities must provide reasoned orders to ensure fairness and transparency in decision-making, confirming that even administrative decisions require justification to uphold judicial accountability.

JUDGMENT :

Harisankar V. Menon, J.

The petitioners have obtained certain credit facilities by pledging gold ornaments with the 1^st respondent herein, through its different branches. The petitioners contend that the rate of interest which ought to have been satisfied by them was 14.5% alone; however, the 1^st respondent bank unilaterally increased the same to 17%, in total disregard of the guidelines issued by the Reserve Bank of India. In such circumstances, the petitioners submitted Ext.P1 complaint before Banking Ombudsman (the 4^th respondent herein). The 1^st respondent Bank also submitted their written statement. Later, the Ombudsman issued Ext.P3 dated 18.08.2014, finding that the Bank had sanctioned the cash credit facilities to the petitioners below the BPLR, which was changed to the above base rate, and the same was also communicated to the petitioners from time to time, and therefore, the allegations raised by the petitioners were incorrect. In such circumstances, exercising the power under Clause 13 (1)(a) of the Banking Ombudsman Scheme, 2006 (hereinafter referred to as the ‘Scheme’), the complaint filed by the petitioners was rejected. The afore order was challenged before this Court by filing W.P.(C) No.4151 of 2015, which came to be disposed of by Ext.P5 dated 07.11.2022. While passing the judgment as above, this Court noticed that the power under Clause 13(1)(a) of the Scheme could be exercised only with reference to “frivolous, vexatious, or mala fide” complaints and the Ombudsman never had such a case. Therefore, this Court allowed the afore writ petition, setting aside Ext.P3, directing the Banking Ombudsman to reconsider Ext.P1 complaint and pass “a reasoned order” in accordance with the procedure prescribed. The petitioners state that in the meantime, the Scheme for making a complaint to the Ombudsman, having undergone a sea of change, as evidenced by Ext.P7 Scheme, they submitted a fresh complaint, as evidenced by Ext.P6. They further contend that they were called for a hearing by the Ombudsman, as evidenced by the record of proceedings of the Ombudsman dated 15.02.2023 at Ext.P8. A perusal of the afore proceedings would show that the Ombudsman considered the complaint raised by the petitioners, the response made by the 1^st respondent herein, the points for consideration, and thereafter issued the following directions:-

“7. The Ombudsman directed the bank to submit the credit policy of the bank during the tenure of the loan. The bank was also advised to submit a table showing the interest rate (base rate+spread) for the three loans during the tenure of the loan. The Ombudsman on conclusion informed that the complaint shall be examined on merits taking into account all information submitted in the hearing.”

(Underlining supplied)

2. The petitioners state that although they were expecting intimation from the Bank pursuant to the observations of the Ombudsman at paragraph 7 referred to above, or at least a communication from the Ombudsman, they did not receive any communication from the Bank or the Ombudsman. Instead, it is the case of the petitioners that they were served with Ext.P9 dated 18.03.2023 by the Ombudsman, wherein the complaint at Ext.P6 was rejected for the following reasons: -

“2. It is observed that the credit facilities sanctioned were at floating rate of interest under Base Rate system during 2011-12. The complainant is contesting the increase in RoI to 17% from 14.5% in 20,11-12. It ls observed that the bank had increased the spread in all Gold Power scheme borrowers in 2011-12 as per its Asset Liability Committee's decision across the board for all borrowers under