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Harish Bhatia (Director)     17 November 2010

banking ombudsman declined to pass an award

Complaint was with Banking Ombudsman in Nov'08 concerning wrong NPA classification of our SSI unit's term loan and working capital accounts, hasty sarfaesi action within 3 months of NPA, non upgraddation accounts to standard after payment of all overdues after sarfaesi, refusal to consider debt restructure/nursing etc etc.

After over one year of written and oral submissions, BO declined to pass and award/order on grounds that the core issue is wrong NPA classification and this needs elaborate and detailed investigation. In the same letter he states that the "The bank has reitrated that it has all the rights to classify accounts as NPA as per its internal guidlines and take recovery action under sarfaesi act". Appeal against this order was also rejected on same grounds.

Bank has given false and contradictary overdue amounts to BO towards NPA classification. Bank never gave us any letter as why and when our accounts were classified as NPA. Before serving 13(2) notice bank never gave any letter intending to recall the entire advances.

Before NPA, various payments received from our oversewas buyers was not credited to any of our accounts and the bank is unable to explain till date where the amopunts have disappeared. This led to default of one EMI of Rs. 8000 for over 90 days. The total sanctioned limit in all accounts was Rs. 1.44 crores.

After sarfaesi we kept on paying overdues to the bank but bank refused to upgrade the accounts to standard.

Bank sold residential property under sarfaesi act inspite of continously clearinmg all overdues.

Out of Rs80 lakhs total exposure on NPA date - 07.04.07, we paid - by 15.09.08, Rs 50 Lakhs and rs. 30 Lakhs has been received from ECGC claim under banks preshipment whole turnover policy. This amount is not credited to our account but lying in suspence account at bank.

Bank has filed OA at DRT for recovery of this 30 lakhs + uncharged interset after NPA. Bank is still holding security of our self occupied residential property of high value. OA was filed in August'09 whle the matter was pending at BO.

Now, can we file a crimnal case against bank officials?

Can we file case at CMM court for penalties under Sarfaesi ac??

How can we compell Banking Ombudsman to review his decision.

Please guide.


 5 Replies

Nu.Delhi.Law.Fora. (Advocate-on-Record Supreme Court of India)     17 November 2010

Dear Querist,


Please be advised that Bank customers can now (from May 2007) file appeal against the Order of the Banking Ombudsman. The RBI has amended the Banking Ombudsman Scheme, 2006 to enable the customers to appeal against the BO's Order. The appellate authority for the Banking Ombudsman Scheme is the Deputy Governor of the RBI.

However, the Scheme covers all Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks.


Trust this would suffice.

Harish Bhatia (Director)     19 November 2010

Thanks. Our appeal was rejected on same grounds " subject matter needs detailed investigation and therefore out of purview of BOS 2006".

The major issue now is - we are an SSI unit. We have a strong case for wrong NPA, wrong sarfaesi, non upgrading accounts to standard etc etc. Forum of Banking Ombudsman refuses to pass an speaking order on frivolous grounds and inspite of observing deficiencies in service on 12 grounds. We have copies of minutes of meeting held at BO hearings to proove. Inspite of all this justice is denied by BO. No other RBI dept wants to intervene since the bank has approached DRT with fictious and inflated principal and interest dues.

We have no other forum to fight the bank except DRT where it would take several years and prohibitive expensive since the bank would fight right upto supreme court. Inspite of never being a defaulter and paying 100% of banks entire dues after NPA honestly, we had to shut our manufactuirng unit. Over 50 employees and us are beggars.

Can someone please guide us any other quicker judicial option.

SACHIN AGARWAL (ADVOCATE)     13 December 2010

Dear Querist,

You should have filed the S.A. under sectyion 17(1) of teh act against the Bank action under Serfaci Act. It appears that you have not filed any S.A.


Since the Bank has not credited the amounts received on your behalf in your acciount, you can file a Accounting Suit and as per your version, you would certainly get success in the matter.

Get the O.A. stayed on some ground in consultation with your Advocate till the Accounting Suit is not finally dispossed off.


Your case appears to be very good.

Harish Bhatia (Director)     13 December 2010

Dear Mr. Agarwal,

Sincere thanks for this valuable advise. OA is filed at DRT III, Mumbai.

Where can I file the accounting suite??

Please guide on one more important point - Rs. 30 Lakhs ECGC claim amount was received in Dec'07. Bank does not credit this amount to our Packing credit a/c till date. The amount is lying in bank in suspense account.

1. As per bank records Asset classification of our account is Daubtful C. Can the bank indefinetly keep the amount in suspense account and not credit our account or is there any time limit within which the amount should pass credit to our account?? The Bank is still holding huge value property mortgage as asecurity against our Personal Home Loan in same bank.

2. The only outstanding at bank is Rs. 30 Lakhs in Packing Credit account and this amount is received from ECGC as claim and is parked in suspense account. Can the bank file OA recovery suit? What stand should I take at DRT where the argument process is yet to start and the bank has not yet replied to our written submission.

3. Can our accounts be substandard in view of the clam amounts received from ECGC but parked in suspense account.

4. Since the bank has recovered ECGC monthly premium by debiting our account, the claim amount should be credited to our account and not recovered from us for paying it back to ECGC. How good is this argument??


Harish Bhatia


Ritwick Dave (Lawyer)     12 August 2013


Is there any format of appeal available for filing appeal againt the banking ombudsman order. kindly guide me in this light.


Ritwick Dave

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