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HIGH COURT OF KERALA
V. G. Arun, J
VAISAKH T.P – Appellant
Versus
THE UNION OF INDIA – Respondent
WP(C) 15376/2022
Loan - Education Loan - Model Education Loan Scheme - Sections Related to Cap on Expenses - The court held that capping certain components of educational expenses at 20% is illegal, ensuring full disbursement of sanctioned education loans.
Fact of the Case:
The petitioners, pursuing PGDM studies, sought an education loan of Rs.3,75,000 but received only Rs.3,30,000, leading to a grievance regarding the bank's deduction, allegedly justified under a Model Education Loan Scheme.
Finding of the Court:
The court found that deductions made by the bank were contrary to previous judgments, which deemed such capping of payments illegal, thereby entitling the petitioners to the full loan amount.
Issues: Whether the bank's deduction from the sanctioned loan amount complies with legal provisions and previous court rulings regarding educational loans.
Ratio Decidendi: The court affirmed prior judgments that disallowed banks from capping tuition fees at 20%, emphasizing the requirement for full loan disbursement as per the sanctioned amount.
Final Decision: The writ petitions are allowed, directing immediate disbursement of the remaining loan amount.
JUDGMENT
Dated this the 21st day of December, 2022 The petitioners are pursuing full time course in Post Graduate Programme in Management (PGDM) in the Sadanam Institute of Commerce and Management Studies in Palakkad District. The total fees for the course is Rs.3,75,000/-. As the petitioners are from financially poor background, they submitted application for education loan of Rs.3,75,000/- The petitioners grievance is that although their application for loan is sanctioned, only Rs.3,30,000/- is disbursed towards fees. The petitioners rely on the judgment in W.P.(C) No.5009 of 2015 wherein a learned Single Judge of this Court held that banks are not justified in withholding a portion of the loan sanctioned to students, towards margin money. Reliance is also placed on the judgment in W.P.(C) No.1815 of 2015, wherein, after considering an identical Circular, this Court held that capping of the tuition fee on a few components goes against the spirit of the education loan scheme.
2. In its counter affidavit, the Bank has contended that deduction from the sanctioned amount is not effected towards margin money and on the other hand, the deduction is strictly in accordance with the Model Education Loan Scheme for pursuing higher education in India and abroad published by the Indian Bank Association and the Master Circular issued by the Bank adopting the scheme.
3. A perusal of the Model Education Loan Scheme and the Master Circular shows that the banks can cap the maximum expenses towards purchase of books/equipment/instruments/uniform, purchase of computer and other expenses like study tours, project work, thesis etc, at 20%.
The deduction from the sanctioned amount is seen effected strictly in terms of the Scheme and the Circular. Even then, this Court having already held the capping of payment for certain components at 20% of the tuition fees to be illegal and there being no reason to come to a different conclusion, the petitioners are entitled for the relief sought.
The writ petitions are hence allowed, directing the Branch Managers concerned to disburse the balance amount due towards the education loan of Rs.4,00,000/- sanctioned to the petitioners, within two weeks of receipt of a copy of this judgment.
Sd/-
V.G.ARUN JUDGE Scl/
APPENDIX OF WP(C) 15376/2022 PETITIONER EXHIBITS Exhibit-P1 A TRUE COPY OF THE LETTER OF APPROVAL IN RESPECT OF THE COURSE PURSUED BY THE PETITIONERS IN THE 7TH RESPONDENT COLLEGE FOR THE ACADEMIC YEAR 2021-22 DATED 25.06.2021.
Exhibit-P2 A TRUE COPY OF THE APPLICATION FOR LOAN SUBMITTED BY THE FIRST PETITIONER BEFORE THE FOURTH RESPONDENT DATED
28.12.2021.
Exhibit-P3 A TRUE COPY OF THE APPLICATION FOR LOAN SUBMITTED BY THE SECOND PETITIONER BEFORE THE FOURTH RESPONDENT DATED 15.11.2021.
Exhibit-P4 A TRUE COPY OF THE APPLICATION FOR LOAN SUBMITTED BY THE THIRD PETITIONER BEFORE THE FOURTH RESPONDENT DATED
29.12.2021.
Exhibit-P5 A TRUE COPY OF THE APPLICATION FOR LOAN SUBMITTED BY THE FOURTH PETITIONER BEFORE THE FIFTH RESPONDENT DATED 29.12.2021.
Exhibit-P6 A TRUE COPY OF THE APPLICATION FOR LOAN SUBMITTED BY THE FIFTH PETITIONER BEFORE THE SIXTH RESPONDENT DATED
28.12.2021.
Exhibit-P7 A TRUE COPY OF THE LETTER DATED
25.04.2022 ISSUED TO THE FIRST PETITIONER BY THE SEVENTH RESPONDENT.
Exhibit-P8 A TRUE COPY OF LETTER DATED 28.04.2001 ISSUED BY THE GENERAL MANAGER, RESERVE BANK OF INDIA TO ALL COMMERCIAL BANKS.
Exhibit-P9 A TRUE COPY OF LETTER DATED 04.11.2003 ISSUED BY RESERVE BANK OF INDIA TO ALL COMMERCIAL BANKS.
Exhibit-P10 A TRUE COPY OF MODEL EDUCATIONAL LOAN SCHEME FORMULATED AND PUBLISHED ON
03.06.2016 BY INDIAN BANKS'
ASSOCIATION.
Exhibit-P11 A TRUE COPY OF THE RELEVANT WEB PAGES IN THE OFFICIAL WEBSITE OF THE RESPONDENT BANK.
Exhibit-P12 A TRUE COPY OF THE JUDGMENT DATED
12.08.2016 IN W.P.(C) NO.5009/2015 OF THIS HONOURABLE COURT.
Exhibit-P13 A TRUE COPY OF THE LOAN SANCTION LETTER IN RESPECT OF NAYANA SHERON F ISSUED BY THE THIRD RESPONDENT BANK DATED 10.02.2022.
Exhibit-P14 A TRUE COPY OF THE LOAN SANCTION LETTER I
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