Alikunj P.M. Alias Shoukath Ali vs The Branch Manager, South Indian ...
2021 Latest Caselaw 21264 Ker

         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                          PRESENT
           THE HONOURABLE MR.JUSTICE N.NAGARESH
 FRIDAY, THE 29TH DAY OF OCTOBER 2021 / 7TH KARTHIKA, 1943
                  WP(C) NO. 17538 OF 2021
PETITIONERS:
    1     ALIKUNJ P.M. ALIAS SHOUKATH ALI,
          AGED 53 YEARS
          S/O.LATE MR. P.A.MUHAMMED,
          PUTHENPURAYIL HOUSE,
          NEAR AYURVEDA HOSPITAL,
          NOCHIMA, EDATHALA,
          NAD, ALUVA-683563.

    2    MOHSINA ALI,
         D/O.ALIKUNJU P.M. ALIAS SHOUKATH ALI,
         PUTHENPURAYIL HOUSE,
         NEAR AYURVEDA HOSPITAL,
         NOCHIMA, EDATHALA,
         NAD, ALUVA-683563.

         BY ADVS.
         SRI.P.T.MOHANKUMAR
         SRI.GEORGE CHERIAN
         SRI.RAJESH CHERIAN KARIPPAPARAMBIL


RESPONDENTS:

    1    THE BRANCH MANAGER,
         SOUTH INDIAN BANK LTD.,
         EDAPPALLY BRANCH,
         EDAPPALLY P.O., ERNAKULAM-682024.

    2    THE RESERVE BANK OF INDIA,
         REPRESENTED BY ITS REGIONAL DIRECTOR,
         BAKERY JUNCTION,
         THIRUVANANTHAPURAM-695033.

          BY ADV SMT.FARHA MATHER
          SRI.SUNIL SHANKER
          SRI.K.K.JOHN, SC
     THIS WRIT PETITION (CIVIL) HAVING COME UP          FOR
ADMISSION ON 29.10.2021, THE COURT ON THE SAME          DAY
DELIVERED THE FOLLOWING:
 WP(C) No.17538/2021
                                :2 :



                        JUDGMENT

~~~~~~~~~

Dated this the 29th day of October, 2021

Petitioners are before this Court seeking to

command the 1st respondent to reconsider Ext.P5 loan

application of the petitioners in the light of Ext.P7 Model

Educational Loan Scheme formed by the Indian Banks

Association and approved by the 2nd respondent. The

petitioners further seek to direct the 2 nd respondent to issue

appropriate orders or directions to the 1 st respondent ensuring

strict compliance of the provisions of the above Scheme in its

letter and spirit.

2. The 1st petitioner is father of the 2nd petitioner. The

1st petitioner is serving under a private employer as Marketing

Head. The 2nd petitioner successfully completed her Higher

Secondary Course under CBSE stream with 68% marks. The

2nd petitioner applied for admission to a Degree Course in

Audiology and Speech Language Technology (BASLP) at WP(C) No.17538/2021

Yenepoya Faculty of Allied and Healthcare Professionals,

Mangalore.

3. The petitioners submit that the said College in

Mangalore has a Certificate of Accreditation issued by the

National Assessment of Accreditation Council. The Institution

is approved by the Rehabilitation Council of India also. The

admission obtained by the 2 nd petitioner in the said Institution

is purely on merit, based on the marks obtained in Plus Two

examination.

4. The 1st petitioner submitted an application to the 1 st

respondent-Branch Manager for educational loan of ₹15

lakhs. The application was submitted on 11.11.2020 as per

Ext.P5. The 1st petitioner had already availed another loan

from the same Bank for the purpose of the education of his

elder son. The said loan was availed depositing title deeds as

security to the loan.

5. The 1st petitioner would contend that he has not

defaulted in repayment of the said loan. The 1 st petitioner is

having a sufficiently high credit score. He therefore bona fide WP(C) No.17538/2021

believed that the loan will be sanctioned. The 1 st respondent,

however, decided not to sanction the loan applied for by the

1st petitioner. In Ext.P6, it was stated that the 2 nd petitioner

has not secured the minimum cut off marks fixed by the Bank

at 80% in each subjects. Aggrieved by the decision of the 1 st

respondent as reflected in Ext.P6, the petitioner has

approached this Court.

6. The learned counsel for the petitioners would

submit that the Reserve Bank of India, after considering the

recommendations of the Indian Banks Association, has issued

Ext.P7 Circular in the year 2001. In Ext.P7, it has been

specifically directed that the Scheme attached to Ext.P7 be

adopted by all Commercial Banks.

7. The learned counsel for the petitioners pointed out

that as per Clause 4.2 of the Model Educational Loan

Scheme, under the head 'Student eligibility', it has been

precisely stated that the student should have scored minimum

60% in the qualifying examination for admission to graduation

courses. The 2nd petitioner, in fact, has obtained 68% marks WP(C) No.17538/2021

and therefore she will definitely satisfy the eligibility criteria as

laid down by the Reserve Bank of India in Ext.P7.

8. However, the 1st respondent sought to deny the

educational loan applied for by the petitioner based on

Annexures-R1(a) and R1(b). In Annexure-R1(b), which is the

revised Guidance Notes on Model Educational Loan Scheme

for Pursuing Higher Education in India and Abroad, 2015, it

has been stated that for rating purpose, the Banks could use

rating of educational institutions and student as a tool for

targeting students borrowers and improving asset quality. The

academic record and ranking in the selection test would be

core for the initial rating.

9. The learned counsel for the petitioners urged that

Annexures-R1(a) and R1(b) issued by the Indian Banks

Association do not have a statutory flavour, whereas Ext.P7

Circular issued by the Reserve Bank of India has the support

of law. The respondent-Bank cannot be permitted to depart

from a statutory stipulation made by the Reserve Bank of India

and frame their own private rules which go against the norms WP(C) No.17538/2021

laid down by the Reserve Bank of India.

10. The learned counsel for the petitioners further

argued that the 1 st petitioner had obtained a loan for the elder

son from the Bank and his repayment in respect of the said

loan was prompt. There is no allegation that the credit score

of the 1st petitioner is insufficient. The petitioner had provided

collateral security for the earlier loan which is still remaining

with the Bank and therefore the Bank need not worry about

the security for the loan applied for by the 1 st petitioner now for

the education of the 2nd petitioner. Unless the educational

loan is sanctioned by the 1st respondent, the petitioners will be

put to untold hardship, contended the learned counsel for the

petitioners.

11. The learned Standing Counsel representing the 1 st

respondent opposed the writ petition. The learned Standing

Counsel pointed out that the Indian Banks Association has

framed Annexures-R1(a) Model Educational Loan Scheme

and R1(b) Revised Guidance Notes on Model Educational

Loan Scheme for Pursuing Higher Education in India and WP(C) No.17538/2021

Abroad. Annexure-R1(b) categorically states that academic

record and ranking in the selection test would be core for the

initial rating of students. The individual Banks, who are

Members of the Indian Banks Association, can adopt their

own Scheme or make departure from the advisory guidance.

The learned Standing Counsel for the 1 st respondent also

submitted that the Revised Guidance Notes issued by the

Indian Banks Association also state that where the admission

is purely based on marks secured in qualifying examinations,

the Bank may fix cut off marks (percentage) for loan eligibility.

12. The learned Standing Counsel for the 1 st

respondent submitted that the Bank has framed their own

criteria relating to eligibility of applicant for various types of

loan. In Annexure-R1(c) criteria so fixed by the 1st

respondent-Bank, the student eligibility is laid down. In

Annexure-R1(c), it is clearly stated that a meritorious student

means a student who has secured minimum cut off marks of

80% in each subjects which are considered as qualifying

subjects or 75% in aggregate in HSC (10 plus 2 or equivalent) WP(C) No.17538/2021

for such higher education in States where no separate

entrance test is required for admission. The 1 st respondent-

Bank is competent and has a right to frame its own policies

and guidelines in the matter of sanctioning of all types of

loans. As long as the 1st respondent has not violated any

statute or RBI Instructions having the force of law, the

petitioners cannot find fault with the 1 st respondent.

13. I have heard the learned counsel for the petitioners

and the learned Standing Counsel appearing for the 1 st

respondent.

14. Annexures-R1(a) and R1(b) are Model Educational

Loan Scheme and Revised Guidance Notes on Model

Educational Loan Scheme for Pursuing Higher Education in

India and Abroad, prepared by the Indian Banks Association.

In Annexure-R1(a), under Clause 4 dealing with Eligibility

Criteria, it is stated that where entrance test or selection

purely based on marks obtained in qualifying examination may

not be the criterion for admission to some of the post graduate

courses or research programmes, the Bank will have to adopt WP(C) No.17538/2021

appropriate criteria based on employability and reputation of

the institution concerned. In Annexure-R1(b) Revised

Guidance Notes on Model Educational Loan Scheme for

Pursuing Higher Education in India and Abroad, it has been

stated that where the admission is purely based on the marks

scored in qualifying examinations, the bank may fix cut off

marks (percentage) for loan eligibility.

15. In view of the said provisions, the 1st respondent-

Bank has fixed its criteria for grant of educational loans. As

per the said criteria as reflected in Annexure-R1(c), the Bank

can give educational loans to meritorious students. The

definition of meritorious student for undergraduate course is

that one who secured minimum cut off marks of 80% in those

subjects which are considered as qualifying subjects and 75%

in aggregate in HSC (10 plus 2 or equivalent) for such higher

education in States where no separate entrance test is

required for admission.

16. In the case of the educational course opted by the

2nd petitioner, it is clear that admission to the course was not WP(C) No.17538/2021

as a result from any entrance examination. Therefore, the 1 st

respondent will be justified in following its already fixed cut off

marks for grant of educational loan.

17. It has to be noted that the 1 st respondent is a

Banking institution and has its own rules for grant of loans

whether educational loans or otherwise. The Banks should

enjoy a certain amount of flexibility in handling their funds

which, in fact, are public funds. Going through Ext.P7, which

is a Circular issued by the Reserve Bank of India, it does not

appear that it mandates every Bank to follow the fixed criteria

for grant of educational loans. Every Scheduled Banks will be

at liberty to adopt their own Scheme, in the larger public

interest, in the absence of any statutory compulsions.

For all the above reasons, I do not find any merit in

the writ petition and therefore the writ petition is dismissed.

Sd/-

N. NAGARESH, JUDGE

aks/01.11.2021 WP(C) No.17538/2021

APPENDIX OF WP(C) 17538/2021

PETITIONER'S EXHIBITS:

Exhibit P1 TRUE COPY OF THE MARK LIST OF THE 2ND PETITIONER FOR PLUS TWO EXAMINATIONS, DATED 13.7.2020.

Exhibit P2 TRUE COPY OF THE CERTIFICATE OF ACCREDITATION ISSUED BY THE NATIONAL ASSOCIATION OF ACCREDITATION COUNCIL, NEW DELHI TO YENOPOYA FACULTY OF ALLIED & HEALTH CARE PROFESSIONALS, MANGALORE, DATED 16.11.2015.

Exhibit P3 TRUE COPY OF THE CERTIFICATE OF APPROVAL ISSUED BY THE REHABILITATION COUNCIL OF INDIA TO YENOPOYA FACULTY OF ALLIED & HEALTH CARE PROFESSIONALS, MANGALORE, DATED 1.10.2020.

Exhibit P4 TRUE COPY OF THE CERTIFICATE ISSUED BY YENOPOYA FACULTY OF ALLIED & HEALTH CARE PROFESSIONALS, MANGALORE SHOWING THE DETAILS OF ADMISSION AND FEES STRUCTURE, DATED 6.11.2020.

Exhibit P5            TRUE COPY OF THE APPLICATION DATED
                      11.11.2020    SUBMITTED   BY   THE   1ST
                      PETITIONER BEFORE THE 1ST RESPONDENT.
Exhibit P6            TRUE COPY OF THE PRINT-OUT, CONTAINING
                      RECOMMENDATIONS MADE BY THE CREDIT
                      MANAGER OF THE 1ST RESPONDENT, TO
                      REJECT THE LOAN APPLICATION OF THE
                      PETITIONERS.
Exhibit P7            TRUE     COPY     OF    THE     CIRCULAR

NO.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 DATED 28.4.2001 ISSUED BY THE 2ND RESPONDENT BANK.

RESPONDENTS' ANNEXURE:

Annexure R1(A) TRUE COPY OF THE IBA CIRCULAR CIR/RB-

ELS/6 TOGETHER WITH THE REVISED IBA MODEL EDUCATIONAL SCHEME, 2015 DATED 17.8.2015.

WP(C) No.17538/2021

Annexure R1(B) TRUE COPY OF THE REVISED GUIDANCE NOTES ON EDUCATIONAL LOAN SCHEME FOR PURSUING HIGHER EDUCATION IN INDIA AND ABROAD (2015) DATED 17.8.2015.

Annexure R1(C) TRUE COPY OF THE CIRCULAR OF THE 1ST RESPONDENT BANK AND THE RELEVANT PAGES OF THE ANNEXURE THERETO DATED 1.6.2020.

SR