Case at a Glance
A Standard Chartered Bank customer complained to the RBI Ombudsman that the bank had failed to honour its assurance that premiums on eight life insurance policies would be serviced from mutual fund returns. The Ombudsman issued an advisory for reimbursement of ₹5 lakh and compensation of ₹1 lakh; the bank credited ₹6 lakh two days later and the Ombudsman closed the complaint as ‘resolved’ under Clause 14(9)(a) of the RBI Integrated Ombudsman Scheme, 2021. The Kerala High Court held that a complaint can be treated as resolved under that clause only when there is an agreement between the parties, and that a bank’s payment of an advisory amount before the complainant accepts it is not a settlement. It quashed the closure order and directed the Ombudsman to pass an Award under Clause 15 within three months.
The petitioner, a customer of Standard Chartered Bank, said he took eight life insurance policies between March 2023 and October 2024 on the bank’s assurance that the premiums would be serviced from mutual fund returns, an arrangement he said was confirmed in a bank letter dated 1 November 2024. In 2025 the bank required him to pay renewal premiums himself and reimbursed only part, leaving ₹5 lakh unpaid; in October 2025 it credited ₹17 lakh towards later premiums. He filed a complaint before the Banking Ombudsman on 26 February 2026.
On 23 March 2026 the Ombudsman issued an advisory for reimbursement of ₹5 lakh and compensation of ₹1 lakh. The bank credited ₹6 lakh on 25 March 2026, and on 26 March 2026 the Ombudsman closed the complaint as resolved under Clause 14(9)(a). The bank told the High Court that the 2024 letter was drafted by the petitioner and issued by a former branch manager in collusion with him, that the ₹17 lakh was a goodwill gesture, that the writ was not maintainable because civil and consumer remedies existed, and that the ₹6 lakh payment ended the matter.
The Key Question Before the Court
Can the RBI Ombudsman treat a complaint as ‘resolved’ under Clause 14(9)(a) of the Integrated Ombudsman Scheme merely because the bank paid the amount suggested in an advisory, without the complainant’s agreement?
Resolution Needs Agreement; an Advisory Binds the Bank Only After the Customer Accepts It
Justice M.A. Abdul Hakhim declined to decide the merits of the dispute, since they turned on disputed facts. But he held the writ maintainable: the Scheme is a statutory scheme and the Ombudsman a statutory authority, so the Court could examine whether the Scheme had been followed. The bank’s unilateral credit of ₹6 lakh, made without consensus, did not bar the writ.
On the Scheme itself, the Court held that Clause 14(9)(a) requires an agreement between the parties, reached directly or through the Ombudsman’s intervention, and there was none here. Under Clause 15(7) and (8), accepting an Award is the complainant’s choice. In the Court’s words, “Banks need to pay the amount directed in the Advisory only if the Advisory is accepted by the Complainant.” It concluded: “The Ombudsman acted illegally in treating the Complaint as resolved under Clause 14(9)(a) of the Scheme.”
What the Court Actually Held
- A writ petition lies against the Banking Ombudsman to test whether the RBI Integrated Ombudsman Scheme, 2021 was followed, as the Ombudsman is a statutory authority.
- A complaint can be treated as resolved under Clause 14(9)(a) only on an agreement between the parties; a bank’s payment of the advisory amount before the complainant accepts it is not a settlement.
- The order closing the complaint was quashed by a writ of certiorari.
- The Ombudsman must decide the complaint by passing an Award under Clause 15 within three months, and the ₹6 lakh already paid is subject to that Award.
Why This Judgment Matters
- Bank customers using the free RBI Ombudsman route cannot have their complaints closed simply because the bank pays a sum of its own choosing.
- It clarifies the difference between an advisory, a settlement and an Award under the 2021 Scheme, and why the complainant’s consent matters.
- It confirms that the High Court can correct procedural illegality by the Ombudsman even where the underlying facts are disputed.
What Should Advocates Take Away From the Judgment?
For Bank Customers
- If the bank pays an advisory amount you have not accepted, you can object to the complaint being treated as ‘resolved’.
- Keep your complaint, the advisory and any closure order; the closure order can be challenged if the Scheme was not followed.
For Counsel
- Frame the challenge around Clauses 14(9)(a) and 15 of the Scheme rather than the merits, which the writ court may not decide on disputed facts.
- A unilateral payment by the bank does not, by itself, defeat maintainability of the writ.
Key Takeaways
- Clause 14(9)(a) closure requires agreement between the complainant and the bank.
- An advisory becomes binding on the bank only once the complainant accepts it.
- Where there is no settlement, the Ombudsman must proceed to an Award under Clause 15.
- The writ court left the merits of the insurance-premium dispute open.
Frequently Asked Questions
Did the High Court decide whether the bank must pay more?
No. It said the merits involve disputed facts and did not decide them. It only set aside the closure order and sent the complaint back for an Award.
What happens to the ₹6 lakh the bank already paid?
The Court said that amount is subject to the final Award the Ombudsman passes.
How long does the Ombudsman have?
Three months from receiving a copy of the judgment.
Conclusion
The judgment keeps the Ombudsman process honest: a complaint is not ‘resolved’ because one side has paid what it chose to pay. Unless the customer agrees, the Ombudsman must hear both sides and pass a reasoned Award.
Practical takeaway: If your banking complaint is closed after the bank credits an advisory amount you never accepted, the closure can be challenged as contrary to Clause 14(9)(a) of the RBI Integrated Ombudsman Scheme, 2021.
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