Kerala High Court
Dr.K.C.Ajayakumar vs The Banking Ombudsman on 17 March, 2026
WP(C) No.85 of 2022 1
2026:KER:24444
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE VIJU ABRAHAM
TUESDAY, THE 17TH DAY OF MARCH 2026 / 26TH PHALGUNA, 1947
WP(C) NO. 85 OF 2022
PETITIONER:
DR.K.C.AJAYAKUMAR, AGED 57 YEARS
S/O. K.V CHANDRAN NAIR,
RESIDING AT 93A TEJUS, KATTACHAL ROAD,
TIRUMALA, THIRUVANANTHAPURAM,
PIN CODE 695 006
BY ADVS.
SRI.P.VISWANATHAN (SR.)
SRI.SHIBU JOSEPH
SRI.AJITH VISWANATHAN
SRI. SAYED MANSOOR BAFAKHY THANGAL
SRI.JEFFIN JOHN
SRI.FADIL FAZIL
SRI.M.SRIRAM
SMT.VRINDA BABU
RESPONDENTS:
1 THE BANKING OMBUDSMAN
KERALA AND UNION TERRITORY OF LAKSHADWEEP AND MAHE,
HAVING OFFICE AT RESERVE BANK OF INDIA,
BAKERY JUNCTION, THIRUVANANTHAPURAM,
PIN CODE 695 033
WP(C) No.85 of 2022 2
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2 INDIAN OVERSEAS BANK
GANDHINAGAR BRANCH,VAZHUTHACAUD,
THIRUVANANTHAPURAM, PIN CODE 695 014,
REPRESENTED BY ITS BRANCH MANAGER
BY ADVS.
SHRI.SUNIL SHANKER
SHRI.KEVIN VARGHESE JACOB
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
17.03.2026, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) No.85 of 2022 3
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VIJU ABRAHAM, J.
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W.P.(C) No.85 of 2022
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Dated this the 17th day of March, 2026
JUDGMENT
The above writ petition is filed challenging Ext.P1 order passed by the 1st respondent-Banking Ombudsman. The brief facts in the writ petition are as follows: The petitioner's wife late Dr.Sindhu K.C. has availed a housing loan under the "Subha Gruha Scheme" from the 2nd respondent Bank. It was agreed that the loan was for a principle sum of Rs.7 Lakhs, which is repayable with interest at the rate of 7.5% per annum on floating rate basis and the same was agreed to be repaid in 168 equated monthly installments [EMI] of Rs.7,742/- each from October, 2005 and the petitioner was the guarantor for the loan advanced by the 2nd respondent. The petitioner submits that the EMI was regularly deducted at the rate of Rs.6,742/- every month without any default. When exorbitant amount was charged on the loan account, the petitioner apprehended a change in interest and sought information in this regard, to which Ext.P3 reply was submitted, wherein it was declared that the Central Assistant Public WP(C) No.85 of 2022 4 2026:KER:24444 Information Officer of the respondent Bank is not obliged to provide any clarification, because the information sought does not exist in any available documents or file. Later, petitioner submitted a request before the 2 nd respondent for issuance of a closure certificate pointing out that the petitioner had paid all the EMIs as per Ext.P1 and sought for release of the security furnished. While so, the petitioner got information over phone stating that there was an overdue amount to the tune of Rs.3,99,979.45 with accrued interest. The petitioner sought clarification vide Ext.P5. Petitioner's case is that though as per Ext.P1 the interest rates were agreed to be on floating basis, the 2nd respondent Bank had to make such intimations duly, when the rates of interest changes, which has not been done by the respondent-Bank.
2. Reliance was placed on Exts.P6 & P7 Circulars issued by the Reserve Bank of India [RBI] and the relevant pages of the Banking Codes and Standards Board of India [for short, 'BCSBI Code'] and the Code of Commitment to Customers, 2014. Ext.P6 mandates that Banks have the freedom to offer all categories of loans on fixed or floating rates, subject to conformity to their Asset-Liability Management (ALM) guidelines and the WP(C) No.85 of 2022 5 2026:KER:24444 methodology of computing the floating rates should be objective, transparent and mutually acceptable to counter parties. Relying on Ext.P7, the learned Counsel for the petitioner submits that if at all any change is made in the rates of interest, that should be informed to the customers either by way of a letter, e-mail or SMS and also display the same in the notice board of the Branches and also in the website of the Bank.
3. The specific grievance raised by the petitioner is that the rate of interest was changed without any such intimation as mandated in Exts.P6 & P7. Aggrieved by the same, the petitioner approached the 1 st respondent-Banking Ombudsman raising a complaint. During the course of the proceedings, the 1st respondent issued various advisories and in one of the advisories, the Bank was advised to reverse the excess interest applied, ie. the difference between Benchmark Prime Lending Rate [BPLR] and Marginal Cost of Funds Based Lending Rate [MCLR], to the account of the petitioner and also advised the Bank to pay Rs.50,000/- to the petitioner as compensation for the lost time and mental agony, as evident from Ext.P10. The learned Counsel on both sides submit that the Bank has complied with one of the advisories and credited the excess interest WP(C) No.85 of 2022 6 2026:KER:24444 [difference of BPLC to NCLR] amount of Rs.45,630.75 to the account of the petitioner on 31.03.2020.
4. As regards the further direction for payment of compensation, the Banking Ombudsman, relying on Ext.R2(a) letter dated 05.03.2011 issued by the Bank, intimating the petitioner that there may be a change of interest, did not further proceed with the complaint preferred by the petitioner and closed the same as per Ext.P11 relying on Clause 13(a) of the Banking Ombudsman Scheme, 2006 (As amended up to July, 01, 2017) [for short, 'the Scheme, 2006']. The petitioner would submit that the order issued as per Ext.P11 is absolutely arbitrary and unjust inasmuch as the complaint has been closed without any valid reason. It is under these circumstances that the present writ petition has been filed.
5. A detailed counter affidavit has been filed by the 2 nd respondent Bank stating that the award of the Ombudsman is not binding on the petitioner unless the petitioner accept the same in writing and, therefore, there is no cause of action for the petitioner to agitate in the present writ petition against the orders of the Ombudsman and that he will have to agitate the same before the competent Civil Court or other Forums and not WP(C) No.85 of 2022 7 2026:KER:24444 in a writ petition. It is further submitted that during the pendency of the writ petition, the loan account was closed on 05.09.2022 and the original title deeds were released to him and, therefore, no further grievance subsists. Relying on Ext.R2(a) letter dated 05.03.2011 it is contended that the 2 nd respondent has duly informed the petitioner about the availability of extension of tenure.
6. In reply to the same, the learned Counsel for the petitioner submits that he has not received Ext.R2(a) letter and that the loan was closed after deducting the amount in the account of the petitioner and that he has received the title deeds of the document under protest.
7. Heard the rival contentions on both sides.
8. A perusal of Exts.P7 & P8 would show that the bank is obliged to inform the customer any change in interest rate by the methods envisged in Ext.P7 ie., through letter, e-mail and SMS and also by displaying the same in the notice board and also in the website of the Bank. The complaint was considered by the 1st respondent and as revealed from Ext.P10, it was found that the Bank has not informed the borrower or guarantor of the change from BPLR to MCLR as require under the BCSBI WP(C) No.85 of 2022 8 2026:KER:24444 Code and hence the Bank has to reverse the excess interest (difference of BPLR to MCLR) of Rs.45.630.75 to the guarantor. It is the admitted case that the said aspect has been accepted by the Bank and has reversed the said amount to the account of the guarantor. Thereafter the complaint was closed as per Ext.P11 relying on Clause 13(a) if the Banking Ombudsman Scheme, 2006 (As amended up to July, 01, 2017).
9. The petitioner contends that due to the closing of the complaint rather than passing an award, he could not file any appeal before the Appellate Authority as provided under the Clause 15 of the Scheme, 2006, wherein complainant could file an appeal only against an award under Clause (6) or rejection of a complaint for the reasons referred to in sub- clause (d) to (g) of Clause 13.
10. The Ombudsman has relied on Clause 13(a) to reject the complaint of the petitioner. Clause 13(a) provides that the Banking Ombudsman may reject a complaint at any state if it appears to him that the complaint made is not on the grounds of complaint referred to in Clause 8 or for the other reasons stated in Clause 13. Clause 8 deals with the grounds of complaint, of which Clause 8(1) provides that any person may WP(C) No.85 of 2022 9 2026:KER:24444 file a complaint with the Banking Ombudsman having jurisdiction on grounds alleging deficiency in banking, including internet banking or other services and sub-clause (h) of Clause 8 mandates that delays, non-credit of proceeds to parties' accounts, non-payment of deposit or non- observance of the Reserve Bank directives, if any, applicable to rate of interest on deposits in any savings, current or other account maintained with a bank is a ground for preferring a complaint before the Banking Ombudsman. That exactly what is done by the petitioner as revealed on a perusal of Ext.P8 and also subsequent proceedings as evidenced from Exts.P10 & P11. When a complaint has been placed regarding the non- observance of the Reserve Bank directives and when in Ext.P10 the Ombudsman has found that there is violation of the same, since the Bank has not informed the borrower or guarantor about the change of BPLR to MCLR and directed the Bank to reverse excess interest of Rs.45,630.75 to the guarantor and that the Bank has complied with the same, I am of the view that the rejection of the complaint relying on Clause 13(a) of the Scheme, 2006 is absolutely without any basis and liable to be interfered with.
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11. In the light of the above, I am of the view that the matter requires reconsideration at the hands of the 1st respondent-Banking Ombudsman and hence the writ petition is disposed of with the following directions:
(i) Ext.P11 is set aside.
(ii) There will be a direction to the 1 st respondent-Banking Ombudsman to reconsider Ext.P7 complaint preferred by the petitioner after affording sufficient opportunity to the petitioner and the 2nd respondent Bank to produce necessary documents in evidence to substantiate their contention and after considering the same on merits, fresh decision shall be taken by the 1st respondent without any delay, at any rate, within an outer limit of three months from the date of receipt of a certified copy of this judgment.
Sd/-
VIJU ABRAHAM JUDGE sp WP(C) No.85 of 2022 11 2026:KER:24444 APPENDIX OF WP(C) NO. 85 OF 2022 PETITIONER EXHIBITS Exhibit P1 THE TRUE PHOTOSTAT COPY OF THE SANCTION LETTER CUM LOGIN AGREEMENT DATED 21-10- 2004 Exhibit P2 THE TRUE PHOTOSTAT COPY OF THE LETTER DATED 18-10-2019 ISSUED BY THE PETITIONER TO THE CHIEF INFORMATION OFFICER OF THE INDIAN OVERSEAS BANK Exhibit P3 THE TRUE PHOTOSTAT COPY OF THE REPLY DATED 21-11-2019 ISSUED BY THE CHIEF INFORMATION OFFICER OF THE INDIAN OVERSEAS BANK, REGIONAL OFFICE, THIRUVANANTHAPURAM TO THE PETITIONER Exhibit P4 THE TRUE PHOTOSTAT COPY OF THE LETTER DATED 13-11-2019 ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT BANK Exhibit P4A THE TRUE PHOTOSTAT COPY OF THE LETTER DATED 27-11-2019, ISSUED BY THE PETITIONER TO THE 2ND RESPONDENT Exhibit P5 THE TRUE PHOTOSTAT COPY OF THE LETTER DATED 04-12-2019 ISSUED BY THE PETITIONER TO 2ND RESPONDENT BANK Exhibit P6 THE TRUE PHOTOSTAT COPY OF THE MASTER CIRCULAR DATED 01-07-2010 ISSUED BY THE RBI Exhibit P7 THE TRUE PHOTOSTAT COPY OF RELEVANT PAGES OF THE BCSBI CODE OF 2014 Exhibit P8 THE TRUE PHOTOSTAT COPY OF THE LETTER DATED 16-12-2019, ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT Exhibit P9 THE TRUE PHOTOSTAT COPY OF THE LETTER DATED 16-12-2019 ISSUED BY THE 2ND RESPONDENT BANK TO THE PETITIONER Exhibit P10 THE TRUE PHOTOSTAT COPY OF RELEVANT PAGES OF THE ADVISORIES ISSUED BY THE 1ST RESPONDENT WP(C) No.85 of 2022 12 2026:KER:24444 Exhibit P11 THE TRUE PHOTOSTAT COPY OF THE ORDER DATED 20-04-2020 PASSED BY THE 1ST RESPONDENT Exhibit P12 TRUE PHOTOSTAT COPY OF THE STATEMENT OF ACCOUNT OF THE HOUSING LOAN (SUBHAGRUHA HOUSING LOANS) ACCOUNT BEARING NO.117103350400025 FOR THE PERIOD FROM 12- 01-2016 TO 05-09-2022 ISSUED ON 09-09-2022 Exhibit P 13 TRUE COPY OF THE EMAIL DATED DATED 15-5- 2011
Exhibit P 14 TRUE COPY OF THE NOTES OF THE 1ST
RESPONDENT SHOWING THIS RELEVANT
SUBMISSION OF THE 2ND RESPONDENT
Exhibit P 15 TRUE COPY OF THE PHOTOGRAPH OF THE DEPOSIT
RECITAL REGISTER MAINTAINED BY THE 2ND
RESPONDENT BANK
RESPONDENT EXHIBITS
Exhibit R2(A) TRUE COPY OF LETTER DATED 05/03/2011
INFORMING PETITIONER ABOUT AVAILABILITY OF EXTENSION OF TENURE.