Holding

The Banking Ombudsman lost jurisdiction once the bank filed a claim before the Debts Recovery Tribunal, and the appellant's complaints were outside the Ombudsman's jurisdiction under Clause 13(b), rendering the award invalid.

Summary

M/s. Durga Hotel Complex obtained a loan of Rs.15 lakh from a bank, which later recalled part of the amount and denied an additional advance. The hotel filed a complaint with the Banking Ombudsman under Clause 16 of the Banking Ombudsman Scheme, 1995, alleging unauthorized withdrawals and non‑credit of proceeds. While the Ombudsman issued an award directing the bank to disburse the balance and make further advances, the bank had simultaneously filed a claim before the Debts Recovery Tribunal. The High Court held that the Ombudsman lost jurisdiction because of the pending tribunal proceedings and that the award exceeded the Ombudsman's limited powers under Clause 13(b) of the Scheme. The Supreme Court affirmed that the filing of the claim before the Tribunal divested the Ombudsman of jurisdiction and that the complaints were outside the Ombudsman's scope, thus upholding the High Court’s decision and dismissing the appeal.

Issues considered

The filing of a claim by the bank before the Debts Recovery Tribunal ousts the Banking Ombudsman's jurisdiction over a complaint filed earlier before him.
Whether the appellant's complaints fall within the jurisdiction of the Banking Ombudsman under Clause 13(b) of the Banking Ombudsman Scheme, 1995.
Whether the directions issued by the Banking Ombudsman were within his statutory powers.

Legislation cited

Banking Regulation Act, 1949s. 35A
Recovery of Debts Due to Banks and Financial Institutions Act, 1993s. 19(8-11)

Subjects

Banking OmbudsmanjurisdictionBanking Regulation ActDebts Recovery TribunalClause 13(b)Clause 16(3)(d)loan and advanceslimited jurisdictionaward set aside

Judgment

A M/S. DURGA HOTEL COMPLEX
v.
RESERVE BANK OF INDIA AND ORS.

MARCH 15, 2007

B [H.K. SEMA AND P.K. BALASUBRAMANY AN, JJ.)

Banking Ombudsman Scheme, 1995:

Clauses 13 and 16-Jurisdiction of the Banking Ombudsman-Scope
C of-Complaint filed before the Banking Ombudsman-Subsequent filing of
the claim by Bank before Debts Recovery Tribunal-Held, Banking
Ombudsman loses jurisdiction to entertain the complaint-Banking
Regulation Act, 1949.

Clauses 13 and 16-Banking Ombudsman-Jurisdiction of-Held, Is
D limited-He has no authority to compel the Bank to make further advances-
He cannot interfere with agreement regarding repayment schedule fixed by
parties or financing ratio that may be maintained between Bank and borrower
or direct increase of period of moratorium or fix a schedule of repayment of
the loan.

E Jurisdiction:

Limited jurisdiction-When there is conferment ofpower on an authority
or Tribunal with limited jurisdiction, that coriferred power must continue to
exist, when the decision is rendered by that authority or Tribunal-Once the
conferred authority or power is taken away or impeded, the authority or
F Tribunal can no more exercise it.

Words and phrases:

'Lie '-Meaning of-Discussed.

Ombudsman-Who is-Discussed.
G
The third respondent-Bank sanctioned a loan of Rs. 15 lakhs to the
appellant. The Bank disbursed a sum of Rs. I I ,58,750/-. The appellant sought
for an additional advance. The proposal in that behalf was not accepted by the
Bank. The Bank recalled the loan after crediting Rs. 3,41,250/- out of the

H 1074
DURGA HOTEL COMPLEX 1·. RESERVE BANK OF INDIA 1075

) original loan sanctioned. A
The appellant made a complaint before the Banking Ombudsman under
Clause 16 of the Banking Ombudsman Scheme, 1995, allcging\mauthorised/
fraudulent withdrawal from its account and non credit of proceeds. The
respondent-Bank questioned the jurisdiction of Banking Ombudsman to
entertain such a complaint. B
On 1.11.2000, the respondent-Bank approached the Debts Recovery
Tribunal for recovery of amounts alleged to be due from the appellant. Before
the Banking Ombudsman, the Bank, contended that the complaint of the
appellant before him had ceased to be maintainable in view of the pendency of
the proceedings before the Debts Recovery Tribunal and that, even otherwise,
c
the claims raised by the appellant did not come within the purview of the
Banking Ombudsman under the Banking Ombudsman Scheme, 1995. The
Banking Ombudsman brushed aside these contentions and passed an award
directing disbursal of the sum of Rs. 3,41,250/- to the complainant and
' directing the Bank to make further advances in terms of the recommendations D
of the concerned Cell of the State Bank of India maintaining financing ratio
of75:25 between the Bank and the complainant.

The appellant found that the respondent-Bank was not complying with
the directions in the award of the Banking Ombudsman hence filed writ
petition before the High Court for issuance of writ of mandamus. The E
respondent-bank also filed writ petition challenging the award of Banking
Ombudsman on the ground that it was without jurisdiction. The High Court
allowed the writ petition of respondent-Bank holding that on the claim being
filed by the respondent-Bank before the Debts Recovery Tribunal, the
jurisdiction of the Banking Ombudsman to deal with the complaint of the
F
.~ appellant had come to end and on the further ground that the Banking
Ombudsman had exceeded his jurisdiction in rendering the award since the
disputes raised were beyond his purview.

The question for consideration in these appeals is whether the
subsequent filing of the claim by the Bank before the Debts Recovery Tribunal G
~
would oust the jurisdiction of the Banking Ombudsman in a complaint earlier
instituted before him and whether the claims put forward before the Banking
Ombudsman in its complaint by the appellant fell within the jurisdiction of
th~ Ombudsman under the Scheme and consequently whether the directions
issued by him were within his province under the Scheme.
H
1076 SUPREME COURT REPORTS [2007) 3 S.C.R.

A Dismissing the appeal, the Court

HELD: 1. 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
B filed, no proceedings 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 ofO.A. before the Debts Recovery
C Tribunal. !Para 9) (1085-F-G)

2.1. Clause 16 (3) of the Scheme says,"No complaint to the Banking
Ombuudsman 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
D Scheme read in the light of s.35A 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 have initially 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
E parties approaching the Court, the Arbitrator or the Debts Recovery Tribunal
in respect of the same subject matter. jPara 10) [1086-D-E I

Lakshmi Rattan Engineering Works Ltd. v. Asstt. Commr. Sales Tax
Kanpur & Anr., (1968) I S.C.R. 505 and Hindustan Commercial Bank Ltd v.
F Punnu Sahu (Dead) Through Legal Representatives, [1971 I 3 S.C.C. 124,
referred to.

2.2. 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,
G 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. [Para 10) 11086-H; 1087-A[

3.1. The Ombudsman, is an Authority or Tribunal of limited jurisdiction
constituted under the Scheme. It is a jurisdiction conferred by the Scheme.
H The exercise of jurisdiction or power by the Ombudsman would depend on
DURGA HOTEL COMPLEX r. RESERVEBANK OF INDIA 1077
)- his having jurisdiction not only to entertain a claim but also to bring it to an A
end. The continued exercise of power by him would depend on his continuing
to have jurisdiction. Once he is deprived of his jurisdiction or gets depdved
of his jurisdiction over the subject matter, he could no more proceed with a
complaint which was earlier filed. The relief that can be granted by the
Ombudsman are limited and confined to the matters coming within clause 13
of the Scheme. The intention behind incorporating clause 16(3Xd) is to ensure B
that the relief an Ombudsman may give, may not conflict with a more
comprehensive adjudication by a Court, Arbitrator, Tribunal or forum with
wider powers. When there is conferment of a power on an authority or
Tribunal with limited jurisdiction, that conferred power must continue to exist,
when the decision is rendered by that authority or Tribunal Once the conferred C
authority or power is taken away or impeded, the Authority or Tribunal can
no more exercise it. It is not, as if, a bar of jurisdiction can occur only at the
stage of initially entertaining a claim. It could also occur at a subsequent
stage either in view of the jurisdiction being taken away or in view of any
other impediment created by the very Legislation, Rule or Scheme that
conferred the initial jurisdiction. Thus having lost his jurisdiction over the D
complaint in view of clause 16(3)(d) of the Scheme, the Ombudsman will have
to decline jurisdiction to pass any order or award on the complaint.
(Para 11) (1027-C-G)

3.2. Conceptually, an Ombudsman is only a non-adversarial adjudicator
of disputes. An Ombudsman by definition is only an official appointed to E
receive, investigate, and report on private citizen's complaints about the
government; a similar appointee in a non-governmental organisation. He
serves as an alternative to the adversary system for resolving disputes,
especially between citizens and government agencies. He is an independent
and non-partisan officer who deals with specific complaints from the public F
against the administrative injustice and mal-administration. Therefore, by
its very nature, an Ombudsman is an alternative to an adversary system for
resolution of disputes, when the subject matter of a complaint before the
Ombudsman under the Scheme is taken to a Court, Tribunal, Arbitrator or
other competent forum, the subject matter is taken away from the pL rview of
the Ombudsman to an adjudicatory forum under an adversarial system. An G
Ombudsman is not defined in the Banking Regulation Act, 1949 or in the
Banking Ombudsman Scheme 1995 constituting him as adversarial
adjudicator. Clause 12 of the Scheme constitutes him a facilitator to bring
about a satisfaction of the complaint, in one of the modes referred to therein.
An adversarial adjudication necessarily stands on a higher plane than a H
1078 SUPREME COURT REPORTS 12007] 3 S.C.R.

A settlement of a complaint at the instance of an Ombudsman. When such a \
forum for adversarial adjudication of disputes takes seisin of the subject
matter of a complaint, it will be logical to postulate, on an interpretation of
clause 16 of the Scheme, that the Ombudsman loss his jurisdiction over the
subject matter of the complaint and consequently the complaint itself.
!Para 12111088-B-GI
B
United Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd. & Ors.. 120001
Supp. 3 S.C.R. 153 and State Bank of India v. Rcmjan Chemicals ltd. & Anr.,
1200711 S.C.R. 97, relied on.

Black's Laws Dictionary; 4 American Jurisprudence 2d, referred to.
c 4. Clause 13 (b) of the Scheme indicates the jurisdiction of the
Ombudsman. Clause (b) provides that he could entertain complaints concerning
loans and advances only insofar as they relate to non-observance of the
directives of the Reserve Bank of India on interest rates, delays in sanction/
non-observance of prescribed time schedule for disposal of loan applications
D and non-observance of any other directions or instructions of the Reserve
Bank of India, as may be specified for the purpose of the Scheme from time
to time. It is seen, as found by the High Court, that there was no claim that
the respondent-Bank was guilty of non-observance of any directive of the
Reserve Bank of India on interest rates. There is also no case that any other
E directions or instruction of the Reserve Bank of India made for the purpose
of the Scheme had not been observed by the respondent-Bank. At best, the
appellant can claim that it was complaining of delay in sanction/non-
observance of prescribed time schedule for disposal of its loan application for
additional finance. The case of the respondent-Bank is that there was no time
schedule prescribed for enhancing the limit of the loan or for granting
F additional loan to a hotel industry like the one for which the appellant was
claiming a loan from the Bank and hence there was no question of any ofthe-
complai:its of the appellant coming within the purview of the Banking
Ombudsman. A reading of the Award of the Banking Ombudsman shows that
the directions issued by him regarding advancing of the balance amount of
Rs. 3,41,250/- out of the original loan of Rs. 15 lakhs sanctioned, his direction
G to the Bank to make available additional finances merely on the basis of the
recommendation of the Committee in that behalf and his directing the
maintaining the financing ratio of75:25 and his fixing a repayment schedule
as seven years exclusive of one year of moratorium and the enhancement of
the period of moratorium consequent on non-disbursement of the loan amount
H by the respondent-Bank, are all outside Clause 13(b) of the Scheme and
DURGA HOTEL COMPLEX 1·. RESERVE BANK OF INDIA [BALASUBRAMANYAN, J.] ) 079

consequently outside the jurisdiction of the Banking Ombudsman. The A
) Banking Ombudsman has no authority to compel the Bank to make further
advances which as a prudent banker it might not find feasible. Nor can the
Banking Ombudsman interfere with the agreement regarding the repayment
schedule fixed by the parties or the financing ratio that may be maintained
between the Bank and the borrower. Nor can the Ombudsman direct the
increase of the period of moratorium or fix a schedule of repayment of the
B
loan. There is no case that any of the directives of the Reserve Bank of India
in respect of any of these matters had been violated by the respondent-Bank.
The High Court was correct in finding that the Banking Ombudsman had
exceeded his jurisdiction in passing the Award that he has passed. None of
the directions come within the purview of Clause 13(b) of the Scheme. The C
jurisdiction of the Banking Ombudsman under the Scheme is cribbed,
confined and cabined by clause 13 of the Scheme. Therefore, in any event, the
directions issued by the Banking Ombudsman are outside his jurisdiction.
(Para 15( (1089-D-H; 1090-A-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1389 of2007. D
From the Judgment and Order dated 23.11.2004 of the High Court of
Judicature at Patna in L.P.A. Nos. 309 of 2004 and 313 of 2004.

Ranjeet Kumar, Rudreshwar Singh, Kaushik Poddar, Kumar Ranjan and
Sanjay Jain for the Appellant.
E
R. Sudaravaradan, R.N. Trivedi, R.N. Keshwani, Ram Lal Roy, H.S.
Parihar and Kuldeep Parihar for the Respondents.

The Judgment of the Court was delivered by

P.K. BALASUBRAMANY AN, J. Leave granted.
F
I. The appellant, a partnership firm, sought a loan from the third
respondent-Bank for putting up a hotel. In April 1997, a loan of Rs. 15 lakhs
was sanctioned by the Bank. The Bank disbursed a sum of Rs. 1 I,58,750/-.
The appellant sought an additional advance. The proposal in that behalf was
not accepted by the Bank. The Bank recalled the loan after crediting Rs. G
3,41,250/- out of the original loan sanctioned.

2. The appellant made a complaint before the Banking Ombudsman for
the State of Bihar at Patna under clause 16 of the Banking Ombudsman
Scheme, 1995. Clause 16 enabled any person, who had a grievance against
the Bank, to make a complaint in writing to the Banking Ombudsman. The H
1080 SUPREME COURT REPORTS [2007] 3 S.C.R.

A complaint had to be in writing and it had to be accompanied by supporting
documents, if any, relied on by the complainant. It had also to set out the
nature and extent of the loss caused to the complainant and the relief sought
from the Banking Ombudsman and a statement about the compliance of the
conditions referred to in that clause. The appellant made the complaint about
what it called the unauthorised or fraudulent withdrawal from the account of
B the appellant and the non credit of proceeds to the account of the appellant.
It was contended that the crediting of Rs. 3,41,250/- or withdrawal thereof
from the account of the appellant was unauthorised, and that the appellant
had suffered considerable loss because of the delay on the part of the
respondent - Bank in advancing the loan and in not permitting the higher
C credit facility recommended in the Technical Cell Report binding on the Bank.
By way of relief it was claimed that the Bank should further credit the
remaining sanctioned loan to the account of the appellant. The total interest
for the period should be exempted and there should be a direction to pay
towards loss of the appellant a sum of Rs. 16.9 lakhs. The respondent- Bank
opposed the complaint. The respondent - Bank questioned the jurisdiction
D of the Banking Ombudsman to entertain such a complaint. It contended that
the jurisdiction of the Banking Ombudsman was confined to certain matters
specified in that behalf and the claims of the appellant were not within the
purview of the Banking Ombudsman.

E 3. On 1.11.2000, the respondent - Bank approached the Debts Recovery
Tribunal constituted under the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (for short, "the Recovery of Debts Act") for recovery
of amounts alleged to be due from the appellant. The complaint of the Bank
was numbered as 0.A. No. 157 of 2000 and was being dealt with by the
Tribunal.
F
4. Before the Banking Ombudsman, the Bank, inter alia, contended that
the complaint of the appellant before him had ceased to be maintainable in
view of the pendency of the proceedings before the Debts Recovery Tribunal
and that, even otherwise, the claims raised by the appellant did not come
within the purview of the Banking Ombudsman under the Banking Ombudsman
G Scheme, 1995. It was contended that the jurisdiction of the Banking
Ombudsman was a limited one and the claims of the appellant were not those
that could be entertained by him. The Banking Ombudsman brushed aside
these contentions. He found that his jurisdiction was invoked by the appellant ·
before the respondent - Bank approached the Debts Recovery Tribunal with
H its claim and hence he was not precluded from adjudicating on the complaint
DURGA HOTEL COMPLEX v. RESERVE BANK OF INDIA [BALASUBRAMANYAN,J.] ) 08 J

- ) of the appellant before him. He also brushed aside the objection of the A
respondent regarding his jurisdiction to entertain the complaint made by the
appellant. The Banking Ombudsman is seen to have made some suggestions
or recommendations to settle the dispute between the parties. They were not
acceptable to the Bank. The Banking Ombudsman thereupon proceeded to
pass an award directing disbursal of the sum of Rs. 3,41,250/-to the complainant B
and directing the Bank to make further advances in terms of the
recommendations of the concerned Cell of the State Bank of India maintaining
financing ratio of75:25 between the Bank and the complainant. The Banking
Ombudsman further directed that the period of repayment should be fixed as
seven years exclusive of one year of moratorium and in view of non-
disbursement of the loan, the period of moratorium had to be enhanced C
according to the Ru Jes and the interest be charged strictly in accordance with
the guidelines of the Reserve Bank of India. This award was passed on
30.3.2002.

5. The respondent - Bank sought the permission of the Reserve Bank
of India to challenge the award passed by the Banking Ombudsman in a court D
of law. Meanwhile, the appellant found that the respondent - Bank was not
complying with the directions in the award of the Banking Ombudsman. The
appellant therefore filed C.W.J.C. No. 10756 of2002 before the High Court of
Patna under Article 226 of the Constitution of India praying for the issue of
a writ of mandamus directing the respondent - Bank to implement the award E
of the Banking Ombudsman. The respondent - Bank, in its tum, filed C.W.J.C.
1882 of 2003 challenging the award of the Banking Ombudsman essentially
on the ground that it was one without jurisdiction, both on the basis that the
matter was pending before the Debts Recovery Tribunal when he rendered his
award and on the further ground that the subject matter of adjudication by
him in the present case was beyond his ken under the Banking Ombudsman F
Scheme, 1995. The learned Single Judge ofthe High Court upheld the
contentions of the respondent - Bank and held that on the claim being filed
by the respondent - Bank before the Debts Recovery Tribunal as O.A. No.
157 of 2000, the jurisdiction of the Banking Ombudsman to deal with the
complaint of the appellant had come to an end and on the further ground that G
the Banking Ombudsman had exceeded his jurisdiction in rendering the award
since the disputes raised were beyond his purview. As a consequence, the
learned Single Judge allowed the Writ Petition filed by the respondent - Bank
and quashed the award passed by the Banking Ombudsman leaving the
appellant to raise all his claims before the Debts Recovery Tribunal, by way
of a.counter-claim. Resultantly, the High Court also dismissed the Writ Petition H
1082 SUPREME COURT REPORTS [2007] 3 S.C.R.

A of the appellant seeking enforcement of the award of the Banking Ombudsman.
Being aggrieved by the decision of the learned Single Judge, the appellant
filed two Letters Patent Appeals in the High Court as L.P.A. Nos. 309 and 313
of 2004. The Division Bench of the High Court agreed with the conclusions
of the learned single judge and dismissed the appeals filed by the appellant.
B Feeling aggrieved thereby, the appellant filed these Petitions for Special Leave
to Appeal before this Court. On 10.5.2005, this Court while not entertaining
the Petition of the appellant on the merits of its claim, issued notice confined
to the questions of law arising in the case, clarifying at the same time that
the proceedings before the Debts Recovery Tribunal could proceed. Thus,
what is involved in this appeal is only the question of the jurisdiction of the
C Banking Ombudsman and not the merits of the claims of the appellant in the
case on hand. Learned counsel also argued the appeal before us consistent
with the notice issued by this Com1 earlier.

· 6. Thertfore, the two questions that arise are, whether the subsequent
filing of the claim by the Bank before the Debts Recovery Tribunal would oust
D the jurisdiction of the Banking Ombudsman in a complaint earlier instituted
before him and whether the claims put forward before the Banking Ombudsman
in its complaint by the appellant fell within the jurisdiction of the Ombudsman
under the Scheme and consequently whether the directions issued by him •
were within his province under the Scheme.
E 7. Before we proceed to deal with the arguments, we will notice the
relevant provisions. Under Section 35A of the Banking Regulation Act, 1949,
the Reserve Bank of India has the power to issue directions to banking
companies generally or to any banking company in particular, as it deems fit,
and the banking companies shall be bound to comply with such directions.
F The Reserve Bank of India could, on its own motion or on representation
made to it also modify or cancel any direction it had earlier issued. In
consonance with this power, on 14.6.1995, the Reserve Bank of India notified
the Banking Ombudsman Scheme, 1995. We think it profitable to extract the
relevant Notification herein:

G NOTIFICATION

Ref. RCPC No. 1070/BOS-94-95

14th June, 1995

H In exercise of the powers conferred by Section 35A of the Banking
DURGA HOTEL COMPLEX 1•. RESERVE BANK OF INDIA [BALASUBRAMANYAN, J.] 1083
Regulation Act, J949 (I 0 of 1949), Reserve Bank being satisfied that A
) it is necessary 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 hereby directs that all
commercial banks should comply with the Banking Ombudsman
• B
Scheme, 1995 annexed hereto.

Sd/-

(R.V. Gupta)

Deputy Governor" c
By a notification dated 15.6.1995, the Scheme was also extended to Scheduled
Primary Cooperative Banks. Admittedly, the Scheme so notified, was in force
at the relevant time. As per clause 2, the object of the Scheme was to enable
resolution of complaints relating to provision of banking services and to
D
facilitate the satisfaction, or settlement of such complaints. Under clause 4
of Chapter II, the Reserve Bank of India could appoint a Banking Ombudsman
to carry out the functions entrusted to him by or under the Scheme. The
Banking Ombudsman was to hold office during the pleasure of the Governor
of the Reserve Bank of India. Chapter III dealt with the jurisdiction, powers
and duties of the Banking Ombudsman. Clause 12 provided that the Banking E
Ombudsman had the power and duty to receive complaints relating to the
provision of banking services and to consider such complaints and facilitate
their satisfaction, or settlement by agreement, by making a recommendation,
or Award in accordance with the Scheme. Clause 13 specified that as regards
banking services, the authority of the Banking Ombudsman would include all
complaints concerning deficiency in service such as, non-payment/inordinate
F
> delay in the payment or collection of cheques, drafts/bills etc. The other
deficiencies that could be looked into on a complaint are enumerated in
clauses (ii) to (ix) to sub-clause (a) of Clause 13. We are not concerned with
them in the present case. Since we are concerned with a complaint regarding
loan and advances, we may extract the Clause with particular reference to G
clause 13(b), which has relevance thereto:
-{
"13. SPECIFIC AMBIT OF AUTHORITY

As regards banking services, the Banking Ombudsman's authority
will include:-
H
1084 SUPREME COURT REPORTS (2007] 3 S.C.R.

A (a) ............................................ .
(b) Complaints concerning loans and advances only insofar as they
relate to:-
(i) non-observance of Reserve Bank Directives on interest rates,

B (ii) delays in sanction/non-observance of prescribed time schedule
for disposal of loan applications, and
(iii) non-observance of any other directions or instructions of the
Reserve Bank, as may be specified for this purpose, from time to
time."

C Under clause 14, the Banking Ombudsman had general superintendence and
control over his office and he had power to incur expenditure on behalf of
his office. Chapter IV dealt with the procedure for redressal of grievance.
Clause 16 provided for making a complaint. Since what is involved is an
interpretation of the scope of the power of the Ombudsman on a complaint,
D we think it proper to extract Clause 16 hereunder:

"16. COMPLAINT

(1) 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
E
or office of the bank complained against is located.
(2) The complaint shall be in writing duly signed by the complainant
or his authorised representative and shall state clearly the name
and address of the complainant, the name and address of the
branch or officer of the bank against which the complaint is made,
F
the facts giving rise to the complaint supported by documents, if
any, relied on by the complainant, the nature and extent of the
loss caused to the complainant and the relief sought from the '
Banking Ombudsman and a statement about the compliance of the
conditions referred to in sub-clause (3) of this clause.
G (3) No complaint to the Banking Ombudsman shall lie unless,-
(a) The complainant had before making a complaint to the Banking
Ombudsman made a written representation to the bank named in
the complaint and either the bank had rejected the complaint or
the complainant had not received any reply within a period of two
H
DURGA HOTEL COMPLEX 1·. RESERVE BANK OF INDIA [BALASUBRAMANYAN, J.] 1085

j
months after the bank concerned received his representation or A
the complainant is not satisfied with the reply given to him by the
bank;
(b) The complaint is made not later than one year after the bank had
rejected the representation or sent its final reply on the
representation of the complainant; B
(c) The complaint is not in respect of the same subject matter which
was settled through the office of the Banking Ombudsman in any
previous proceedings whether received from the same complainant
or any one or more of the parties concerned with the subject
matter; c
(d) The complaint is not the same subject matter, for which any
proceedings before any Court, Tribunal or Arbitrator or any other
forum is pending or a decree or Award or order of dismissal has
already been passed by any such Court, Tribunal, Arbitrator or
forum; D
(e) The complaint is not frivolous or vexatious in nature."

8. As regards the first aspect as to whether the Banking Ombudsman
had lost his jurisdiction in view of the approach made by the respondent -
Bank to the Debts Recovery Tribunal, what is relevant is clause 16(3)(d)
quoted above and as regards the question whether the Banking Ombudsman E
had jurisdiction to entertain the claims made by the appellant, what is involved
is the understanding of the scope of clause 13(b), quoted above.

9. It is clear that when the appellant invoked the jurisdiction of the
Banking Ombudsman, the respondent - Bank had not approached the Debts F
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 G
impediment, if any, was caused by the Bank's subsequent filing of O.A. No.
15 7 of 2000 before the Debts Recovery Tribunal. The High Court has taken
- the view that since by the time the Ombudsman rendered.his 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 H
1086 SUPREME COURT REPORTS (2007] 3 S.C.R.

A render the award, or has lost his jurisdiction to render the award. Clause 16
of the Scheme in sub-clause (I) 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
B 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
C 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.

10. Clause 16(3) of the Scheme says, "No complaint to the Banking
Ombudsman shall lie''. According to Black's Law Dictionary "lie" means, "to
D 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 light of Section 35A 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,
E though might have initially 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 Lakshmi Rattan Engineering Works Ltd. v. Asstt. Commr.
F Sales Tax, Kanpur and Anr., [1968] l S.C.R. 505 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
G view that was subsequently taken by this Court in Hindustan Commercial
Bank ltd. v. Punnu Sahu (Dead) Through legal Representatives, [1971] 3
S.C.C. 124. It was held therein that the expression "entertain" in Order XX!
Rule 90 of the Code meant, to 'adjudicate upon' or to 'proceed to consider on
merits' and not 'initiation of proceeding' alone. Drawing an analogy, it is
. possible to say that the complaint must continue to have a foundation in 'law
H at the time the Ombudsman takes up the claim for his consideration and
DURGA HOTEL COMPLEX v. RESERVE BANK OF INDIA [BALASUBRAMANYAN,J.] ] 087

) renders his decision or award. The foundation would be lost when a Court, A
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 B
when it is taken up for consideration and disposal.

11. There is a more fundamental aspect. The Ombudsman, at best, is
an Authority or Tribunal of limited jurisdiction constituted under the Scheme.
It is a jurisdiction conferred by the Scheme. The exercise of jurisdiction or
power by the Ombudsman would depend on his having jurisdiction not only C
to entertain a claim but also to bring it to an end. The continued exercise
of power by him would depend on his continuing to have jurisdiction. Once
he is deprived of his jurisdiction or gets deprived of his jurisdiction over the
subject matter, he could no more proceed with a complaint which was earlier
filed. In other words, to rend~r an Award valid in terms of the Scheme, the D
Ombudsman must continue to retain jurisdiction over the subject matter of the
concerned complaint. A complaint goes out of his purview when the subject
matter of it is taken to a Court, Arbitrator, Tribunal or forum. The relief that
can be granted by the Ombudsman are limited and confined to the matters
coming within clause 13 of the Scheme. The intention behind incorporating
clause 16(3)(d) appears to be to ensure that the relief an Ombudsman may E
give, may not conflict with a more comprehensive adjudication by a Court,
Arbitrator, Tribunal or forum with wider powers. When there is conferment
of a power on an authority or Tribunal with limited jurisdiction, that conferred
power must continue to exist, when the decision is rendered by that authority
or Tribunal. Once the conferred authority or power is taken away or impeded, F
the Authority or Tribunal can no more exercise it. This will be the position
when one of the parties in a complaint before the Ombudsman takes the
subject matter to a Court, Arbitrator, Tribunal or forum. In other words, when
ultimately he is about to pronounce his Award, the Ombudsman finds that the
subject matter of the dispute has been taken to the Debts Recovery Tribunal G
or a Civil Court or an Arbitrator or to any other competent forum, he gets
divested of his jurisdiction, on a harmonious reading of clause 16(1) with
clause 16(3)(d) of the Scheme. It is not, as if, a bar of jurisdiction can occur
only at the stage of initially entertaining a claim. It could also occur at a
subsequent stage either in view of the jurisdiction being taken away or in
H
1088 SUPREME COURT REPORTS [2007) 3 S.C.R.

A view of any other impediment created by the very Legislation, Rule or Scheme .\,
that conferred the initial jurisdiction. Thus, having lost his jurisdiction over
the complaint in view of clause 16(3)(d) of the Scheme, the Ombudsman will
have to decline jurisdiction to pass any order or award on the complaint.
This, we think would be the proper way of understanding the bar created by
B clause 16(3 )( d) of the Scheme.

12. Conceptually, an Ombudsman is only a non-adversarial adjudicator
of disputes. An Ombudsman by definition is only an official appointed to
receive, investigate, and report on private citizen's complaints about the
government; a similar appointee in a non-governmental organisation (such as
C a company or university). (See Black's Law Dictionary). He serves as an
alternative to the adversary system for resolving disputes, especially between
citizens and government agencies. He is an independent and non-partisan
officer who deals with specific complaints from the public against the
administrative injustice and mal-administration. (See 4 American Jurisprudence
2d). Therefore, by its very nature, an Ombudsman is an alternative to an
D adversary system for resolution of disputes. When the subject matter of a
complaint before the Ombudsman under the Scheme is taken to a Court,
Tribunal, Arbitrator or other competent forum, the subject matter is takwn
away from the purview of the Ombudsman to an adjudicatory forum under an
adversarial system. It is therefore logical to understand clause 16 of the
E Scheme with particular reference to sub-clause 3(d) thereof, that on one of the
parties approaching an adjudicatory forum on an adversarial system, the non-
adversarial adjudicator, the Ombudsman must lose his power or authority to
bring a~out a resolution of the complaint by way of a non adversarial
adjudication. An Ombudsman is not defined m the Banking Regulation Act,
1949 or in the Banking Ombudsman Scheme 1995 constituting him as adversarial
F adjudicator. Clause 12 of the Scheme constitutes him a facilitator to bring
about a satisfaction of the complaint, in one of the modes referred to therein.
An adversarial adjudication necessarily stands on a higher plane than a
settlement of a complaint at the instance of an Ombudsman. When such a
forum for adversarial adjudication of disputes takes seisin of the subject
G matter of a complaint, it will be logical to postulate, on an interpretation of
clause 16 of the Scheme, that the Ombudsman loses his jurisdiction over the
subject matter of the complaint and consequently the complaint itself.
13. Thus we are of the view that the High Court was justified in ' .
interfering with the Award of the Banking Ombudsman on the ground that he
H could not have passed the Award in view of the divestiture of his jurisdiction.
DURGA HOTELCOMPLEXv. RESERVE BANK OF INDIA [BALASUBRAMANYAN, J.] J089

). 14. After all, a complainant before the Ombudsman like the appellant will A
not be prejudiced by this interpretation. It has now been clarified in United
Bank of India, Calcutta v. Abhijit Tea Co. Pvt. Ltd. & Ors., [2000] Supp 3
S.C.R 153 that the expression 'counter-claim' in sub-Sections (8) to (11) of
Section 19 of the Recovery of Debts Act will take in even a claim for damages
based on the same transaction and would include even an independent claim B
the respondent before the Debts Recovery Tribunal may have against the
claimant - Financial Institution. It has thus been held that a counter-claim in
a wide sense will lie before the Debts Recovery Tribunal and the respondent
will be entitled to raise a comprehensive counter-claim. This ratio has also
been accepted subsequently in State Bank of India v. Ranjan Chemicals Ltd.
& Anr., [2007] I S.C.C. 97. It is therefore obvious that the appellant can make C
all his claims before the Debts Recovery Tribunal while defending the claim
of the Bank, including the ones he has put forward before the Banking
Ombudsman.

15. Then the question is whether the subject matter of the complaint
came within the purview of the Banking Ombudsman. Clause I 3(b) of the D
Scheme indicates the jurisdiction of the Ombudsman. Clause (b) provides
that he could entertain complaints concerning loans and advances only insofar
as they relate to non-observance of the directives of the Reserve Bank of
India on interest rates, delays in sanction/non-observance of prescribed time
schedule for disposal of loan applications and non-observance of any other E
directions or instructions of the Reserve Bank of India, as may be specified
for the purpose of the Scheme from time to time. It is seen, as found by the
High Court, that there was no claim that the respondent - Bank was guilty
of non-observance of any directive of the Reserve Bank of India on interest
rates. There is also no case that any other direction or instruction of the
Reserve Bank of India made for the purpose of the Scheme had not been F
observed by the respondent - Bank. At best, the appellant can claim that it
was complaining of delay in sanction/non-observance of prescribed time
schedule for disposal of its loan application for additional finance. Even here,
the case of the respondent - Bank is that there was no time schedule prescribed
for enhancing the limit of the loan or for granting additional loan to a hotel G
industry like the one for which the appellant was claiming a loan from the
~ 1 Bank and hence there was no question of any of the complaints of the
appellant coming within the purview of the Banking Ombudsman. A reading
of the Award of the Banking Ombudsman shows that the directions issued
by him regarding the advancing of the balance amount of Rs.3,4 I ,250/- out
of the original loan of Rs. 15 lakhs sanctioned, his direction to the Bank to H
1090 SUPREME COURT REPORTS (2007] 3 S.C.R.

A make available additional finances merely on the basis of the recommendation \
of the Committee in that behalf and his directing the maintaining the financing
ratio of 75:25 and his fixing a repayment schedule as seven years exclusive
of one year of moratorium and the enhancement of the period of moratorium
consequent on non-disbursement of the loan amount by the respondent -
B Bank, are all outside Clause 13(b) of the Scheme and consequently outside
the jurisdiction of the Banking Ombudsman. The Banking Ombudsman has no
authority to compel the Bank to make further advances which as a prudent
banker it might not find feasible. Nor can the Banking Ombudsman interfere
with the agreement regarding the repayment schedule fixed by the parties or
the financing ratio that may be maintained between the Bank and the borrower.
C Nor can the Ombudsman direct the increase of the period of moratorium or
fix a schedule of repayment of the loan. As we have indicated, there is no
case that any of the directives of the Reserve Bank of India in respect of any
of these matters had been violated by the respondent - Bank. The High Court,
in our view, was correct in finding that the Banking Ombudsman had exceeded
his jurisdiction in passing the Award that he has passed. None of the directions
D come within the purview of Clause 13(b) of the Scheme. The jurisdiction of
the Banking Ombudsman under the Scheme is cribbed, confined and cabined
by clause 13 of the Scheme. Therefore, in any event, the directions issued by
the Banking Ombudsman are outside his jurisdiction. In this context, we do
not think it necessary to consider whether there can be a specific performance
E of an agreement to lend or the issuance of a direction to lend more money
than the Bank was willing to lend considering the creditworthiness of the
borrower and his prior conduct in respect of the repayment of the loan which
the Bank had already granted.

16. We thus find that the High Court was justified in interfering with the
F award of the Banking Ombudsman. We therefore answer both the questions
raised on behalf of the appellant against the appellant and in favour of the
respondent - Bank. The questions of law thus stand answered.

17. We dismiss the appeal.

GRP. Appeal dismissed.