Banjara Hills, Hyderabad, Sri. K. J v. Nagaraja, S/o. K. Krishna Murthy, aged about

circumstances stated in the affidavit filed therewith, the High Court may be pleased to call for the records and pass appropriate order or directions more particularly one in the nature writ of certiorari or any appropriate thereby declaring the impugned order dated 17. 05. 2024 passed by the Appellate Authority under the Reserve Bank - lntegrated Ombudsman Scheme as arbitrary, illegal, invalid and violative of Clause 16(2)(e) of the Reserve Bank - lntegrated Ombudsman Scheme, as the Appellate Authority has not properly exercised its jurisdiction and in violation of settled legal position and consequently set aside the order dated 17 -05.2024 and issue appropriate other ord eridirections as may be necessary and deemed fil in facts and circumstances of the case. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to dispense with filing of Certified Copies of order dated 17.O5.2024 of the Appellate Authority under the Reserve Bank-lntegrated Ombudsman Scheme in the interest of justice, pending disposal of the above writ petition. lA NO: 2 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to stay the operation of the order dated 17.05.2024 of the Appellate Authority under the Reserve Bank - lntegrated Ombudsman Scheme until the disposal of this writ petition and pass such other order and issue other directions as may be necessary and deemed fit in facts and circumstances of the case. lA NO: 3 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to extend the interim orders granted in W.P.No.'16798 o'f 2024 on 03.07.2024 until the final disposal of this Writ Petition. lA NO: 4 OF 2024 Between: '1 . Ashish Sharma, Sio Dayal Saran Sharma, Aged'. 47 Years, Occ: Pvt. Service, 2. Dr. Rani Sharma, Wo Shri Ashish Sharma, Aged about 46 Years, Occupation: Government Service,

3. Payal S_aran Sharma, S/o Late Shri Ram Saroop Sharma, Aged about 78 Years, Occ: Retd. Central Govt. Servant.

4. Sharda Rani Sharma, Wo Dayal Saran Sharma, Aged about 73 Years, Occ: Retd Pvt School Teacher,

5. Saloni Sharma, Rep. by (M and G) Smt. Rani Sharma and Rdp. by (F and G) Sri Ashish Sharma D/o Ashish Sharma, Age Not known

6. Tanmay Sharma, Rep. by (M and G) Smt. Rani Sharma S/o Ashish Sharma, Age Not known, (All are Rl/o. H.No.5-1-234120 to 22, Flat No. 302, Arihant Kunj Apartments, Sunder Bhavan, Jambagh, Hyderabad-S00 095 ...PETITIONERS/RESPONDENTS 2 to 7 AND

1. Andhra Pradesh Mahesh Co-Operative Urban Bank Limited, Abids Branch, Hyderabad, (HR, Admin and Ops. Head Office, 8-2-68011 and 2, Road No.'|2, Banjara Hills, Hyderabad, Represented by its Deputy General Manager Sri. K. J. V. Nagaraja, S/o. K. Krishna Murthy, aged about 61 years. ...RESPONDENTM/RIT PETITIONER 2. Executive Director and Appellate Authority, Office of Consumer Education and Protection Department, Reserve Bank of lndia, Central Office, Amar Building, '1.'Floor, Sir P. M. Road, Fort, Mumbai- 40000'1 ...RESPONDENT/RESPONDENT Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to expedite the hearing of the main Writ Petition by fixing an early date of hearing. lA NO: 5 OF 2024 Petition under Section 15'1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to vacate the lnterim Order daled 3.O7.2024 passed in l.A. 212024 in W.P.No. 16798 of 2024 Counsel for the Petitioner: SRI PRAVEEN KUMAR JAIN, REPRESENTING SRI V. V. S. N. RAJU Counsel for the Respondent No.1: Ms. PRATUSA BOPPANA FOR M/s. N LEGAL HYDERABAD Counsel for the Respondent Nos.2 to 7: SRI SUNIL B. GANU, SENIOR COUNSEL REPRESENTING SRI M. SRIKANTH The Court made the following: ORDER THE HON'BLE JUSTICE MOUSHUMI BHATTACHARYA - WRIT PETITION No.16298 of 2O2zL Mr. Praveen Kumar Jain, learned counsel representing Mr. V.V.S.N. Raju, learned counsel for the petitioner. Ms. Pratusa Boppana, learned counsel for the respondent No.l. Mr. Sunil B Galu, learned Senior Counsel representing Mr.M.Srikanth, learned counsel for the respondent Nos.2 to 7. ORDER: The writ petitioner prays for a declaration of the order passed by the Appellate Authority under Reserve Bank_Integrated Ombudsman Scheme, 2027, d,ated_ 17.O5.2O24, as arbitrarv and illegal.

2. The impugned order dated 17.05.2O24 r.r,as passed in an Appeal filed by the respondent No.2 against the petitioner_Andhra Pradesh Mahesh Co-operative Urban Bank Limited (Bank) on a Complaint that the petitioner-Bank failed to convert tO4 o;i ll7 Fixed Deposit Receipts (FDRs) placed with the Bank by the respondent No.2 (appellant before the Appellate Authority) and his family members into 6 FDRs as promised and also failed to return the maturity amount. 2

3. The brief facts u'hich led to the Writ Petition are as follows: The respondent Nos.2-7 invested substantial amounts in the 4. petitioner-Bank in the form of 117 FDRs payable on maturity' 'Ihe TDRs mature d' in 2O|9-2O2O. The petitioner-Bank committed certain irregular dealings at its Abids Branch which were reported to Law ald Enlorcement Agencies followed by an investigation' Thc respondent Nos.2-7 accordingly made a ' complaint to the Ombudsman since substantial amounts were involved in the foul play caused by certain Oflicers of the petitioner-Bank' The Ombudsman closed the complaint under Clause i6(2)(e) of The Reserve Bank - Integrated Ombudsman Scheme, 2O2l (fhe Scheme") as requiring consideration of elaborate documentary and oral evidence. The respondcnl No.2/appellant filed the Appeal before thc Appellate Authority for setting aside of the order dated 2a.Oa.2O23 passed by the Ombudsman and lbr a direction on the petitioner-Bank to refund the misappropriated funds'

5. After considering the contentions advanced on behalf of the parties, the Appellate Authority recorded the fraud for Rs'186'42 Lakhs which was reported by the staff of the petitioner-Bank covering 14 borrowal accounts, several of which pertained to ( amounts invested by the respondents in FDRs and affected the respondent No.2/appellant. By the impugned order, the Appellate Authority concluded that the petitioner_Balk accepted the involvement of its staff members in the fraud in the First Information Report (FIR) as well as the Fraud Monitoring Report (FMR-I), Statement to the Reserve Bank of India, but Iailed to settle the claim of the appellalt which amounted to deficiency of service. The FMR-I dated O9.O4.2021 was submitted by the petitioner_Bank to the Reserve Bank of India. The Appellate Authority accordingly directed the petitioner_Bank to lift the lien on the disputed FDRs amounting to Rs.70.o5 Lakhs and reinstate tl:e same in exchange of indemnity from the FDR Holders that they will be liable for. any involvement in the perpetrated fraud if established by the Law Enforcement Agencies. 6' Learned counser appearing for the petitioner submits that the impugned order passed by the Appeilate Authority should be set aside since the complaint Iiled by the respondent No.2/appellaat was itself not maintainable under Ciause 1O(2) of the Scheme and should have been rejected under Clause 16 of the said Scheme as the Complaint required elaborate documentarv 4 and ora-1 evidence '"r/hich the Ombudsman rvas not capable of adjudicating. Counsel submits that the Appellate Authority exceeded its jurisdiction in passing the impugned order and that the petitioner-Bank cannot be made liable lor the fraud perpetrated by its staff members.

7. Learned Senior Counsel appearing for the respondent Nos.2- 7 relies on the FMR-I which categorically states that the fraud was committed by the staff members/officers of the petitioner-Bank without any involvement of the respondent Nos.2-7. Counsel submits that the respondent Nos.2 7 have invested their hard- earned money in the form of FDRs and should not be penalized or made to wait for the admitted wrongdoing on the part of the staff members/officers of the petitioner-Bank. It is also su bmitted that the petitioner-Balk has already returned the money in respect of 2 FDRs which means that the petitioner-Bank has accepted the fraud perpetrated by its oflicers. Counsel submits that approximately Rs.7O.05 Lakhs is required to be returned for 1O4 PDRs.

8. Upon considering the submissions made by learned counsel appearing for the parties, it is undisputed that the staff of the petitioner-Bank perpetrated fraud in respect of Rs. 1g6.42 Lakhs at the Abids Branch of the petitioner-Bank which covered a substantial amount of the money invested by the respondent Nos.2-7 in the form of FDRs.

9. The FMR-I on record categorically states that the fraud was committed by the staff members of the petitioner-Bank and _ not by its customers or outsiders. Moreover, the FIR filed pursuant to the complaint of the respondent No.2 specifically states that the complainant (Branch In-charge of the petitioner-Bank at Abids Branch, Hyderabad) noticed grave irregularities committed by the previous Branch Manager involving signatures appended in the loans against the Term Deposit Receipts which were not found to be tallying with the Deposit Application Forms. The FIR also records that the lien confirmation letters were not available in the loans availed against the pledge of Term Deposit Receipts and loan adjustment was also not made on maturity of term deposits. Other irregularities recorded in lhe FIR include signatures of the depositors not tallying with the application forms and replacement of Term Deposit Receipts. The total estimated ioss committed by 6 the concerned Branch Manager of the Bank was found to be approximately Rs. 186.42 Lakhs. 10- Therefore, the admitted case is that the respondent Nos'2-7/ the FDR Holders were in no way concerned with the fraud perpetrated by the Branch Manager of the petitioner-Bank' The Appellate Authority passed the impugned order directing the petitioner-Bank to lift the lien on the disputed FDRs, amounting to Rs.7O.O5 Lakhs. The Appellate Authority considered the fact of the ongoing police investigation on the involvement of the petitioner- Bank/the erstwhile Branch Manager of the Bank and the absence of explanation/evidence by the petitioner-Bank with regard to the involvement of the appetlant/ respondent No'2' 'lhe Appellate Authority also found that the original FDRs were in the custody of the petitioner and were'released to the respondcnt No'2/appellant a only after the complaint was {iled in 2O2l which should have been with the customer and not with thc petitioner-Bank' The Appellate Authority accordingly found the failure of the petitioner-Bank to settle the claim of the appellant amounting to deficiency of service' I 1. The reasons given by the Appcllatc Authority in the impugned order are clear and comprehensive. 'lhis Court does not q ri:*a:X*f/ 7 find any basis to interfere or substitute those reasons with the facts placed before the Court

72. The objection taken with regard to Clause 1O(2) of the Scheme on the complaint not being maintainable in view of the ongoing investigation is not acceptable.

13. Clause 10(2)(b) (iii) of the Scheme provides that a complaint under the Scheme shall not lie unless the complaint involves an independent cause of action ivhich is not already pending before any Court, Tribunal or Arbitrator or any other Forum or Authority or settled or dealt with on merits, by any Court, Tribuna] or Arbitrator or any other Forum or Authority.

74. In the present case, the FIR was filed by the Branch Manager of the petitioner-Bank itself and not by any of the respondents. Moreover, the petitioner_Bank has not placed any material to assure the Court that the investigation rvill be completed in the foreseeable future. Therefore, equity would demand that the respondent Nos.2-7, who are honest and bona ftd.e FDR Holders without having any role to play in the fraud perpetrated by the I i {\ 8 petitioner-Bank, should not be penali zc.d. in any form or made to wait till completion of the investigation.

15. It is important to state that there is no complaint as to the jurisdiction since the Appeal was filed under Clause 17 of the Scheme which provides for a Right of Appeal before the Appellate Authority by the Reguiated Entity which is aggrieved by an Award.

16. The petitioner's contention with regard to the Appellate Authority having overstepped its iimits is also not acceptable in view of Clause 17 of the Scheme which sets out the powers of the Appeliate Authority including setting aside the order of the Ombudsman, which the Appellate Authority has done in the present case. 77 . Durgo Hotel Complex Vs. Reserue Bank of India t was concerned with the powers of the Ombudsmall as an Authority constituted under The Banking Ombudsman Scheme, 1995, which was created for redressal of grievances against Cefrciency in banking services concerning loans and advances. the-.6up.eme Court dealt with the question of the continued exercise of power by ' (zooz) s scc rzo 9 the Ombudsmal which was only permissible subject to the Ombudsman having jurisdiction to proceed with the complaint. M/s. WPIL Limited Vs. State Bank of Indiaz, a decision of a learned Single Judge of the Calcutta High Court, was pronounced on a totally different set of facts where the petitioner/customer lodged a complaint against the respondent_SBl for debiting the petitioner,s Cash Credit Account maintained with the respondent_Bank. The learned Judge accordingly found the petitioner to be entitled to refund of the amount lying with one of the respondent Banks on the ground that certain transactions were effected contrarv to the instructions of the petitioner/ cu stomers.

18. In the present case, the complainant is the Balk itself and the complaint has been made against onc of its own ofhcers for an admitted case of fraud/hnancial irregularities. The hnancial irregularities have undeniably affected the respondent Nos.2_7 who are the FDR Holders.

19. The above reasons persuade this Court to dismiss the-5rrit petition. There is no scope of interference w.ith the impugned eAer passed by the Appellate Authority on 17.O5.2O24. This Court also t 'weo No.2429 of 2022 dated 08.09.2023 1 10 accepts the contentions of the answering respondents that not having played a part in the fraud, the answering respondcnts cannot be made to suffer the consequences thereof. In any event, the Appeilate Authority directed the petitioner-Bank to lift the lien on the disputed FDRs on accepting indemnity from the FDR Holders to the extent that the tatter will be liable if their involvement in the fraud is established by the Law Enforcement Agencies.

20. W.P.No. 16798 of 2024 is accordingly dismissed. All connected applications stand disposed of. Interin orders, if any, shall stand vacated. There shall be no order as to costs. To, //TRUE COPYII SD/.L. LAKSHMI BABU ASS ISTA T REGISTRAR SE ON OFFICER 1

2. J-

4. One CC to SRI V. V. S. N. RAJU, Advocate [OPUC] One CC to M/s. N LEGAL HYDERABAD, Advocates [OPUC] One CC to SRt M. SR|KANTH, Advocate tOpUCl Two CD Copies IVP BS v t--] -.-, HIGH COURT DATED:2410112025 i{fi S I4 14: i K, 3 0 Jiii 2025 c * SP^.TCH ORDER WP.No.16798 of 2024 DISMISSING THE WRIT PETITION WITHOUT COSTS 7 4l