Denial of education loan based on co-borrower's default must be in line with the Model Education Loan Scheme and RBI guidelines, emphasizing the importance of providing financial support for higher education.

1. With the consent of the learned counsel appearing for the petitioner and learned counsel appearing for the respondent bank, the main writ petition itself is taken up for disposal.

2. The writ petition has been filed, challenging the order passed by the respondent bank, dated 28.02.2011, in and by which, the application made by the petitioner's father for educational loan for the petitioner was refused, on the ground that the petitioner's father is a defaulter.

3. The case of the petitioner is that after completing her higher secondary course, she applied for selection for engineering course and was allotted a seat in the Government quota for B.Tech (Information Technology) course in the Sastha Institute of Engineering and Technology, Chennai. The college directed the petitioner to pay the course fee of Rs.75,000/- per year and since the petitioner's father is working in a private company with a meager salary and the petitioner's mother being a house wife, her father did not have sufficient income to support the petitioner's education for the entire course. It is stated that with great difficulty, the petitioner's parents were able to pay the fees for the first year, by obtaining the loan from third parities. At present, petitioner is undergoing second year course and she is required to pay the fees of Rs.75,000/-. Therefore, the petitioner through her father approached the respondent bank during February 2011 and submitted an application for sanction of education loan. The respondent bank, by the impugned communication dated 28.02.2011, informed the petitioner's father that the loan cannot be extended, since as per the Credit Investigation Bureau of India Ltd (CIBIL) report, the petitioner's father being a co-borrower was a defaulter in respect of another transaction. Challenging the said order, the petitioner has approached this Court by way of this writ petition.

4. The learned counsel appearing for the petitioner submitted that there is no clause in the scheme announced by the Central Government that if the co-borrower has taken a loan for other than education purpose, the education loan applied for the ward will not be sanctioned. It is further submitted that the denial of education loan is arbitrary and unreasonable and violative of Article 14 & 21 of the Constitution of India. The learned counsel placed reliance on a decision of this Court in W.P.No.17507 of 2010, dated 28.10.2010, [G.Dhivya vs. The Branch Manager, Canara Bank].

5. The learned counsel appearing for the respondent bank by relying upon the counter affidavit submitted that RBI has formulated the educational loan scheme and issued guidelines, based on which, individual banks have framed its own policy in granting education loans. It is further submitted that on verification of the CIBIL report, it was found that the petitioner's father is a defaulter of a loan granted by the bank and as per the circular issued by the Head office of the respondent bank, the loan proposal cannot be entertained. It is further submitted that the status of the previous loan obtained by the petitioner's father was ascertained, based on a discrete enquiry through CIBIL. On the above grounds, the learned counsel for the respondent bank, prayed for dismissal of the writ petition.

6. Heard the learned counsel appearing for the petitioner as well as the learned counsel appearing for the respondent bank and perused the materials available on record.

7. The issue, which has to be decided is as to whether, the petitioner can be denied education loan on the ground that her father was defaulter in another transaction with the respondent bank. Before we examine the rival claims, it is necessary to have a broad view about the policy decision taken by the Government in this regard.

8. Based on the policy decision of Government of India, the Model Education Loan Scheme was announced during the month of November 2007. Under the scheme, it has been stated that Education is central to