The Credit Guarantee Fund Scheme is not a scheme for granting educational loans, but a guarantee mechanism for loans issued by lending institutions.

J U D G M E N T

(Dated this the 6th day of June 2023)

Basant Balaji J., The appellant is the petitioner in W.P.(C).No.3990/2023.

The petitioner approached this Court under Article 226 of the Constitution of India to call for records leading to Ext.P9, P13 to P17 and to issue a writ of certiorari or other appropriate writ or order or direction quashing Ext.P19. He also seeks a declaration that the petitioner is entitled to get an educational loan for Rs. 7.49 lakhs under the Credit Guarantee Fund Scheme (hereafter referred to as ‘the scheme’) for Educational Loans issued by the Ministry of Human Resource Development (Department of Higher Education).

2. The petitioner is an Advocate by profession. He obtained admission for LLM in Intellectual Property at Bournemouth University in the United Kingdom. The tuition fee for the course is 14,500 Pounds. Based on the offer letter, he had made an initial payment of 3000 pounds. The petitioner is only able to arrange part of the tuition fee. Therefore, he approached the 4th respondent bank to avail of the educational loan under the scheme issued by the Ministry of Human Resource Development. Though an application was made before the 4th respondent bank with all relevant documents, the 4th respondent, via email, intimated the petitioner to produce the documents physically.

3. On the same day, the documents’ physical copies were submitted to the 4th respondent bank. Thereafter, the 4th respondent bank directed the petitioner to contact the 5th respondent, and all the documents were transferred to the 5th respondent by way of an email. The petitioner contacted the 5th respondent bank and, by abundant caution, forwarded the request and the documents on 16.12.2022 by email. The 5th respondent bank, after verifying the documents, directed the petitioner to be personally present on 19.12.2022, and he appeared before the bank personally. After that, there was no response from the bank. Since there was a delay in considering the petitioner’s request, he approached this Court with W.P.(C)

No. 694 of 2023.

4. The 5th respondent informed that all the papers were forwarded to the 6th respondent for consideration. The counsel for the respondent bank submitted before this Court when W.P.(C) No. 694 of 2023 was being considered that the application would be considered if the defects noted are cured, and accordingly recording the same, the writ petition was disposed of on 13.01.2023.

5. Immediately after the disposal of the Writ Petition, the petitioner was served with a letter dated 12.01.2023 issued by the 6th respondent. The said letter was produced as Ext.P19, in which it was stated that certain irregularities were observed on scrutiny of the files, and he was directed to resubmit the file after rectifying the deficiencies mentioned.

6. The petitioner's case is that, as per Ext.P8 scheme, the bank cannot reject this application as the necessary records have been forwarded, and the bank is bound to sanction the loan of 7.49 lakhs to him.

7. A statement has been filed by Respondents 4 to 6. The main contention raised is that Ext.P8 is not a scheme for granting Educational Loan Facility to any person. It is a notification issued by the Department of Higher Education, Ministry of Human Resource Department, and it is a notification giving guarantee funds for educational loans. Being a notification, it cannot override any statutory provisions of Rules and Regulations framed by the statutory authorities.

8. As per 5(i) of the definition of the scheme, ‘Amount in Default’ means the loan outstanding in the loan account of the student borrower, inclusive of accrued interest as on the date of the account becoming NPA, or the date of lodgment of claim applications, whichever is lower, or such other amount as may be specified by the Fund for preferring any claim against the guarantee cover subject to a maximum of ‘Guarantee Cover’.

9. Clause 6 deals with Guarantees by the Fund. It states that, subject to the other provis