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2018 Supreme(Mad) 767
IN THE HIGH COURT OF JUDICATURE AT MADRAS
K.K. SASIDHARAN, P. VELMURUGAN, JJ.
The Senior Manager, Indian Overseas Bank, Thiruvannamalai - Appellant
Versus
R. Muthazhagi - Respondent
W.A. No. 2420 of 2013 & M.P. No. 1 of 2013
Decided On : 14-02-2018
For the Appellant :Ananda Gomathy Sivakumar, Advocate.
Public sector banks have a social commitment to provide financial assistance to deserving students, and the professional degree obtained by the student must be considered as an asset by the banks.
Headnote:
Education Loan - Poor Student - The court criticized the bank for not considering the application for an education loan of a poor student, highlighting the importance of providing financial assistance to deserving students and the social commitment of public sector banks.
Fact of the Case:
The respondent, a poor student, applied for an education loan to pay for her engineering course fees. The bank did not consider her application, leading to a writ petition and a direction from the court to reconsider the loan request.
Finding of the Court:
The court found that the bank failed to consider the loan application despite the bona fide certificate from the college. It criticized the bank for rushing to appeal in court to delay the matter and wasting public money on unnecessary litigation.
Issues: The main issue was the bank's refusal to consider the education loan application of a poor student, leading to a writ petition and an intra court appeal.
Ratio Decidendi: The court emphasized the importance of providing financial assistance to deserving students and criticized the bank for not fulfilling its social commitment. It dismissed the appeal and ordered the bank to pay costs to the respondent.
Final Decision: The writ appeal was dismissed with costs, and the appellant was ordered to pay a sum of Rs.25,000/- as costs to the respondent.
K.K. SASIDHARAN, J.
Introductory Note:-
1. Though the banks would sanction loans and letters of understanding to the billionaire businessmen and affluent, even without sufficient collateral security and would take action for recovery only when the scam spinning out of control, they are adopting a totally different yardstick in the case of middle income group and poor people across India. The banks are not concerned with the directives issued by the Central Government and Reserve Bank of India to help the poor students by giving them education loan. Such instructions are violated by the banks with impunity. The present case is a classic example as to how the Indian Overseas Bank dragged the daughter of a poor farmer belonging to a most backward community in Tamil Nadu, from pillar to post, without considering her application for an education loan of Rs.3,45,000/- to enable her to pay the college fees and complete the course. The bank by filing the intra court appeal against the order passed by the learned Single Judge on 30.11.2012, succeeded in dragging the matter till the completion of the course so as to make the matter infructuous. The Himalayan arrears in courts and the inability of the system to prioritise the cases also contributed for the delay and denial of justice to the poor student.
The facts:-
2. The respondent joined the first year Engineering course in a private engineering college during the academic year 2011-12. She was not in a position to pay the fees prescribed by the Engineering College. Therefore, she submitted an application for education loan before the Kelur Branch of Indian Overseas Bank.
3. The respondent filed a writ petition in W.P.No.22698 of 2012 directing the appellant to consider her application for education loan. The learned Single Judge issued a Mandamus directing the appellant to reconsider the request of the respondent based on the bona fide certificate issued by the College. The said order is under challenge at the instance of a Public Sector Bank.
Submissions:-
4. The learned counsel for the bank contended that the respondent completed her Engineering Course in 2015 and as such, the prayer in the writ petition has become infructuous.
5. None appeared for the respondent.
Discussion:-
6. The respondent filed the writ petition for a direction to the Bank to consider her application for loan. The learned Single Judge taking into account the bona fide certificate produced by the respondent, directed the Bank to consider the case for education loan emergently. There was no positive direction given by the learned Single Judge for sanctioning the loan.
7. The application for loan was given on 08 November, 2011 and it was followed by a reminder dated 23 March, 2012. The appellant being a Public Sector undertaking was expected to consider the application for loan in accordance with the guidelines issued by the Reserve Bank of India. The appellant without even making an attempt to consider the request from a poor student, pursuant to the order passed by the writ court, rushed to this Court by way of this intra court appeal with a view to see that the student completes the course in the mean time.
8. The banks have no case that the education loan defaulters have contributed for the accumulation of the bad loans. We are informed that the cumulative total of more than 50 companies or groups each with over Rs.250 crores of loan arrears, classified as wilful default, works out to about Rs.48,000 crores.
9. The banks are reluctant to sanction education loan in the absence of sufficient collateral security. Education is not considered as an “Asset” by the banks. The country would be denied of the service of scientists, doctors, engineers and other professionals, in case financial assistance is not given to the deserving students to come up in life. The educated youth are an asset to the nation and their talents can be utilized for the growth of the country. The banks must realize this fundamental fact. The p
