IMPORTANT POINT
The Union Bank of India ought to have sanctioned the loan, having regard to the objectives of the Scheme and in particular, that more focus should be given to Shishu, i.e. loans upto Rs. 50,000/- and the other aspects which we have extracted supra, it is manifestly clear that the Scheme itself is to benefit only the above mentioned persons, who are forced to borrow from informal sources or use their own limited funds.

JUDGMENT :

S. MANIKUMAR, J.

1. Being aggrieved by judgment made in W.P. (C) No. 20292 of 2016 dated 04.10.2017, by which the writ court declined to quash Exhibit-P2, rejection order on the application submitted by the appellant under Pradhan Manthri Mudra Yojana Scheme (for brevity, PMMY), instant writ appeal is filed.

2. Short facts leading to the writ appeal are that, the appellant is doing business in paints of various companies from 2004 onwards. He is providing employment directly to seven persons and indirectly to many. In order to expand his business, the appellant made an application under the above said Scheme, for loan of Rs. 10 lakhs. By communication dated 17.10.2015, Union Bank of India, Kottayam branch, rejected the loan application on the ground that the total turnover of the appellant's firm for the financial year 2014-2015 was Rs. 19,51,639.40/- and based upon the turnover, the appellant is not eligible for the working capital of Rs. 10 lakhs.

3. Being aggrieved, writ petition has been filed for a writ of mandamus directing Union Bank of India, Kottayam district, respondent no. 3, to consider the appellant's loan application under the PMMY Scheme afresh, in accordance with the guidelines and give loan to the appellant. Writ court declined to grant the relief sought for.

4. Assailing the correctness of the judgment made in W.P. (C) No. 20292 of 2016, instant writ appeal has been filed on the grounds extracted hereunder:

“(a) Pradhan Manthri Mudra Bank Yojana is said to benefit more than 58 million small business owners in the country. This is one sector under which more than 120 million people are employed and this working population mostly comes from less privileged sections of society.

(b) The majority of small business owners in India have always remain outside the ambit of main stream bank credit. This is just because banks and financial institutions often focus their products and services for the secure business lot, who would repay at higher interest and have their monies secured. PM Mudra Bank Yojana would held in getting this trend changed.

(c) Institutional finance has always been relevant to small businesses. However, inadequate corpus and unorganized management of credit facility to small entrepreneurs never really made it reach the need entrepreneurs. A PM Mudra Bank Yojana comes with a dream to get the dreams of many yound and budding entrepreneurs fulfilled.

(d) Repayment has always been a concern why financial institutions could provide required finance to small business owners. With this initiative from the PM Office, the scheme is said to take care of this part as well and thus help both financial institutions and needy small business owners of one single platform.”

5. Learned counsel for the appellant made submissions on the above grounds. In addition to the above, learned counsel for the appellant contended that as there is no restriction in the Scheme regarding turnover, writ court ought to have interfered with the rejection order.

6. Heard learned counsel for the appellant and perused the materials available on record.

7. Communication dated 17.10.2015 of Union Bank of India addressed to the appellant rejecting the loan application reads thus:

“Ref:

Dated: 17.10.2015

To,

M/s. Kuttemperoor Paints & Hardwares

Kuttemperoor Building

Near SBHSS

Changanacherry

Ref: Rejection of Loan application

We refer your loan application dated 07-10-2015 for availing working capital limit from out bank. After carefully analyzing your loan application we regret to inform you that we are unable to consider loan application due to following reason:

As per your request you need financial assistant of Rs. 10.00 lacs in the form of Working capital for handling your day to day business operations. As financial statement submitted by you, total turnover of your firm for the financial year 2014-15 is Rs. 1951639.40 and based upon the turnover you are not eligible for working capital of Rs. 10.00 lacs.

Thanking you

Sd/-

Branch Manager.”

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