High Court Puts a Hold on Human Review Mandate

The Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia of the Division Bench granted an interim stay on the order of a single judge, which was issued in November 2025. The prime order required the Reserve Bank of India (RBI) to ensure that a person with legal qualifications, for example, a retired judge or a senior advocate, would conduct the manual review of the complaint rejected by its Integrated Ombudsman Scheme to avoid “mechanical rejections.” The Division Bench observed that the appeal had raised significant issues concerning the degree of judicial intervention in statutory regulatory frameworks.

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Regulatory Autonomy and Statutory Schemes

The RBI, represented by Solicitor General Tushar Mehta, claimed that the single judge had overstepped the court’s powers under Article 226 of the Constitution. The central bank asserted that the Integrated Ombudsman Scheme is a statutory framework created under the Banking Regulation Act and the Payment and Settlement Systems Act. The RBI argued that it is the designated legislative authorities, not the courts, who should exclusively handle any modification or “rewriting” of the scheme.

Concerns for the Ombudsman Operational

In addition to legal aspects, the need for a human supervisor at the second level was an enormous operational challenge. The RBI explained that, with millions of digital transactions taking place daily, the requirement for human review of every complaint that was rejected would not only drain the system’s resources but also cause significantly long delays. Such a circumstance could completely erode the main goal of the ombudsman, which is to offer “fast and inexpensive” grievance redressal. The court’s stay allows the RBI to exercise the required operational flexibility in deciding the manner in which it wants to run its redressal mechanism without an immediate structural overhaul.

Consumer Redressal Future Outlook

The stay could be a temporary win for the RBI, but the case reveals the judges’ increasing concern about the adoption of Automated Decision-Making systems in the finance sector. The initial ruling by the single judge was based on a situation where a person had been wrongly billed for credit card use, and the complainant’s appeal was turned down by the automatic system on technical grounds. This review, which has been put on hold until the next hearing on March 17, 2026, will give the banking sector a chance to demonstrate that its “mechanized” processes do not deny customers or miss their legitimate complaints.