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IN THE HIGH COURT OF KERALA AT ERNAKULAM
SHAJI P.CHALY, J.
Nizamudheen P., Represented By His Power Of Attorney Holder, P.M Muhammed Rifa, Sumayyas, Vembadi, Sivapuram P.O, Mattannur, Kannur, Pin – 670702 – Petitioner
Versus
Union Of India, Represented By The Secretary, Ministry Of Education, Shastri Bhavan, Dr. Rajendra Prasad Road, New Delhi., PIN – 110001 and 5 Ors. – Respondents
WP(C) No. 3990 Of 2023
Decided On : 28-03-2023
Banking Regulations Act, 1949 - Section 22(3)(e) - Companies Act, 1956 - Admission for course - Foreign university - Loan application - Collateral security and third party guarantee- Petition filed by petitioner who got admission for LLM course in a foreign university, seeking to quash Exhibit P19 communication of State Bank of India, whereby loan application submitted by petitioner was directed to be rectified – Exhibit P8 notification is not a composite document for granting and releasing, and guaranteeing an education loan - Para 22.
Finding of the Court: Court is of view that contention advanced by petitioner relying upon notification, that respondent bank is liable to grant education loan without any guarantee, collateral security etc., cannot be sustained under law - Whenever a decision is taken by bank in te matter of granting and releasing loans, it is a policy decision of bank; which can only be interfered with by this Court exercising powers of discretionary relief conferred under article 226 of Constitution of India ,only if writ petitioner was able to establish that policy formulated by bank is illegal, arbitrary, irrational or mala fide - There is no case for the petitioner that the policy of the bank suffers from any such vice - reliefs sought for by the petitioner to quash Exhibit P19 communication of the bank and consequential direction to the bank to release the loan amount cannot be sustained under law. Therefore, the reliefs sought for by the petitioner are declined.
Result: Ordered accordingly.
JUDGMENT :
1. This writ petition is filed by the petitioner, a student, who got admission for LLM course in a foreign university, seeking to quash Exhibit P19 communication of the State Bank of India, Koduvally Branch, Kozhikode District; whereby the loan application submitted by the petitioner was directed to be rectified, assigning the following reasons; and for other related & consequential reliefs, including a direction for releasing education loan to the petitioner:
2. If the applicant is eligible for Government of India Subsidy under Dr.Ambedkar Central Sector Scheme of interest subsidy on Education Loan for Overseas Studies for Other Backward Classes (OBCs), the applicant should apply through Jansamarth Portal and acknowledgement to be submitted. As proof of Family income, Income Certificate issued by Village Officer to be submitted. If the student is not willing to avail the subsidy, Affidavit for the same may be produced.
3. Application-All fields to be filled. Any correction in the application to be duly authenticated by the applicants.
4. Copy of PAN card of the applicant duly verified by the branch official not on record.
5. As per CIBIL report of Mr.Nizamudheen P with control number 5362992955 dated 12.01.2023, the following irregularities are observed:
- The CIBIL score of the applicant Mr.Nizamudheen P is 632. As per the extant instructions of the Bank, in unsecured loans, CIBIL score should be -1 or more than 685.
- Overdue observed in 3 personal loans, one auto loan and one consumer loan availed from other financial institutions. As the asset category of the loans are unavailable & DPD is observed in the said loans, statement of account and letter mentioning account status from the concerned financial institution to be obtained.
6. As per CIBIL report of Mr.Shoukhathali P with control number 5359910973 dated 11.1.2023, the following irregularities are observed:
- The CIBIL score of the applicant Mr.Shoukhathali P is 637. As per the extant instructions of the Bank, in unsecured loans CIBIL score should be -1 or more than 685.
- Overdue of Rs.21,95,780/- observed in Housing loan availed from financial institutions. Statement of account and letter mentioning account status from the concerned financial institution to be obtained.
- Personal loans, in loss asset category availed from a financial institution found. Statement of account and letter mentioning account status from the concerned financial institution to be obtained.
- Multiple DPD observed in two commercial vehicle loans and auto loan availed from a financial institution.
If the CIBIL score of the Co-applicant Mr.Shoukhathall P upgrades to more than 685, based on the amount of Overdue and DPD, Deviation approval from the appropriate authority may be obtained. In case, the co-borrower/guarantor is not eligible due to poor credit score as prescribed, he/she can be substituted in order of priority (other parents, spouse, parent-in-law, grandparents, Brother, relatives or a 3rd Party with good financial standing as a co-borrower)
7. As cost of study which includes Tuition fees and living expenses is higher than the loan amount applied, margin as stipulated in the loan document/agreement to be contributed on a pro-rata basis during each disbursement.
8. Affidavits as per extant instructions to be obtained.
9. Telegraphic Transfer statement & statement of account to be produced for considering the fees paid (GBP 3000).
2. Brief material facts for the disposal of the writ petition are as follows: According to the petitioner, he is an Advocate by profession and obtained admission for LLM in Intellectual Property at Bournemouth University, United Kingdom and the course would start on 23-01-2023. It is submitted that petitioner made partial payment towards the tuition fee as per Exhibit P4. According to the petitioner, Exhibits P1, P2, P3, P5 to P7 will show that the petitioner is meritorious and eligible to get an education loan as per Cla
As per section 22(3)(e) of Banking Regulations Act, 1949, banking licence has been given to State Bank of India for due performance of public interest while carrying on banking business.
Educational loans must primarily benefit the student, and cannot be denied based on the co-applicant's credit score, as it contradicts the scheme's purpose.
Point of law: There cannot be any negative equality.
CIBIL score of co-applicant cannot justify rejection of educational loan; banks must reconsider with eligible co-applicant.
The Writ Court has a limited jurisdiction in contractual matters and the issue of release of education loan to a different college was purely a matter relating to contractual obligations of the parti....
The court established that the government has the authority to formulate scholarship policies and eligibility criteria, provided they are not arbitrary or in violation of statutory provisions, and th....
For educational loans, the repayment possibilities are to be decided not on the financial position of the parents but solely on the projected future earnings of the students on employment after educa....
Banks must disburse the entire loan amount as requested by students unless valid reasons are stated in sanction memoranda.
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