S. Kiran Kumar vs Chief Manager, State Bank of Hyderabad and Others

The petitioner applied for loan to the tune of Rs. 94,000/- for starting a photo-studio under the Prime Minister'' Rozgar Ypjana (for short'' the Scheme''). He was interviewed by the Task Force Committee on 25-2-1997. His name was recommended by the said Committee for advancing loan. State Bank of Hyderabad Jubilee Hills Branch, Hyderabad (1st respondent) was indicated as the financing branch for the petitioner, but no action was taken by the 1st respondent for advancing loan to the petitioner. Further, according to the petitioner, the 2nd respondent wrote a letter dated 23-4-1997 to the 1st respondent pointing out that necessary action was required to be taken within 60 days from the date of receipt of application from the District Industries Centre, but the 1st respondent did not pay any heed to the same. Granting of loan only to four applicants and not extending the same to the petitioner, according to the petitioner, was illegal, arbitrary and discriminatory and violative of Articles 14, 19(g) and 21 of the Constitution of India and was also violative of the norms of the Scheme" under which the loan was sanctioned. The petitioner, therefore, made a representation to a Member of Parliament who wrote a letter to the 3rd respondent to take appropriate action in the matter, but, the same was also ignored by the respondents 1 and 3.

According to the 1st respondent-bank, the selection of the petitioner by the Task Force Committee did not make it obligatory on the 1st respondent to release the amount. The letter dated 27-2-1997 itself contains a statement that the application was sent for taking further necessary action and that the respondent-bank had to scrunitse the same, check the genuineness of the same and viability of the business proposed. On receipt of the application form, the 1st respondent deputed a Field Officer to conduct a pre-sanction survey and on reaching the place, the address of which was given by the petitioner, it was found that the petitioner did not reside at that place, but he was the resident of Gokulnagar, Tamaka, Secunderabad. When petitioner came to the bank on 12-3-1997 he replied in an offensive tone when the Field Officer enquired about his correct address and did not furnish the relevant details. The petitioner also did not furnish the details of his project and started threatening the Manager that he would report the matter to the Managing Director, Ombudsman, etc. The respondent-bank was, therefore, not left with any choice, according to the 1st respondent, but to return the application to the 2nd respondent vide letter dated 21-3-1997. It is further contended by the 1st respondent that in all cases where the bank advanced loan the amount was released after verification and after conducting presentation survey. There was no obligation, according to the 1st respondent, on the 1st respondent to advance loans to all applicants referred to by the 2nd respondent. The bank denies the receipt of any letter dated 23-4-1997 from the 2nd respondent asking the bank to release the loan amount within 60 days. Further, according to the 1st respondent, the petitioner''s integrity was doubtful and, therefore, the question of reconsidering the matter did not arise after the receipt of the letter dated 24-3-1997 from the Member of Parliament. The bank reiterates that the petitioner did not clarify any points raised by the respondent-bank even till the date on which the deponent filed the counter affidavit. The application of the petitioner was rejected not on flimsy grounds but by giving reasons and, therefore, according to the 1st respondent, the act of the 1st respondent could not-be termed as illegal, arbitrary or discriminatory or violative of the Fundamental Rights of the petitioner. It is further contended by the bank that the petitioner had no contractual or statutory right for sanction of loan. It was necessary for the bank to derive satisfaction whether the purpose for which the loan was sanctioned was likely to be served and whether the norms for granting loan were satisfied. Further, according to the 1st respondent, the stand taken by the petitioner that he was unemployed was negatived by his own documents. He produced a certificate stating that he (petitioner) was working as a still photographer from 1991 and, therefore, the application of the petitioner was violative of the object of the scheme. It also belied the petitioner''s contention that due to non releasing of the loan the petitioner was not in a position to start business and that it was the only source of his livelihood. Further, according to the 1st respondent, the non-sanctioning of the loan did not entitle the petitioner to invoke the writ jurisdiction of this High Court for a direction to release the loan amount to the petitioner.

It is true indeed that the High Court in exercise of its writ jurisdiction cannot compel a financial institution to advance loan to a particular individual or to any applicant in view of the fact that the financier would be the best Judge of the eligibility criteria and to view the proposal from an angle as to how the amount to be advanced as loan was safe and what were the factors which render satisfaction to the financier that the loan would be repaid by the borrower. If the financier believes that the loan was likely to be misused on the basis of any fact which came to the financier''s notice at the stage of scrutiny and that the chances of the loan being returned were likely to be doubtful, no compulsion could be exerted even if it is shown that ostensibly the application for loan was meeting with the requirements of the Scheme. In the instant case, mainly two factors gave the 1st respondent a reason to believe that the loan would not be in safe hands, namely, that the petitioner was not found to be residing at the place where he stated in the application that he was residing and secondly the petitioner was not found to be unemployed which according to the respondent was one of the most important criteria On the other hand, the learned Counsel for the petitioner emphasised that the bank was not entitled or empowered to re-scrutinise the application when once the same is processed by the Task Force Committee and recommended for advancing loan. The learned Counsel also drew my attention to the fact that a representative of the 1st respondent-bank was also a member of the Task Force Committee which scrutinised the petitioner''s application for loan and recorded a satisfaction for granting the loan It is not open to the 1st respondent-bank to scrutinise [he application again and come to a different conclusion from the Task Force Committee where the bank was also represented. If the representative of the bank was not present in the meeting where the present petitioner''s application was considered and processed, it was none of the concern of the petitioner and the petitioner could not be deprived of his right under the Scheme for negligence on part of the 1st respondent to be represented in the meeting where the petitioner''s application for loan was considered.

It is true that it was not a matter of any concern to the petitioner as to whether the 1st respondent-bank was represented in the meeting of the Task Force Committee where the petitioner''s application for loan was considered. However, it is rather unethical to expect the actual financier to proceed to make disbursement of loan without making any scrutiny altogether and without ascertaining the correctness of the applicant''s version about his residence so as to acquire satisfaction whether it would be possible to contact the petitioner at that place in case the applicant commits default in repayment.

As far as the question whether it was necessary to ascertain that the applicant was unemployed so as to consider him eligible for granting loan under the Scheme is concerned, it goes to the root of the case and I am firmly of the opinion that the applicant would instantly make himself ineligible if it is found that he was not an unemployed youth because in that case the objective of the Scheme to provide means of livelihood to the unemployed youth in the country would be abjectly defeated.

The Prime Minister''s Rozgar Yojana in its very preamble opens with a statement that ''''any unemployed educated person living in any part of the country, fulfilling the following conditions is eligible for coverage under PMRY". One of the five basic conditions for eligibility includes in clause (c) of Guideline Np.4 a condition with regard to the residence with and emphasis that he should be a permanent resident of the area for at least three years. If the applicant is not found to be residing at the place where he claims to be residing in his application for loan under the Scheme., the financier would be deprived of ensuring that the borrower would be traceable in the event of any default in repayment. Clause No.6 of the Scheme envisages that the beneficiary should be the permanent resident of the area for at least three years. Clause No.7 thereof envisages that the Scheme was proposed to encourage educated unemployed youth to set up micro enterprises in industry/services and business sectors. The petitioner is conscious of this objective of the Scheme which is evident from the contents of paragraph 3 of his affidavit which is reproduced below:

"That, the Prime Minister Rozgar Yojana has been introduced/launched by the Government of India to curb unemployment to some extent. In view of the fact that unemployment is one of the biggest problem of the country the Government of India thought it fit to uplift the morale of unemployed youth and to avoid the unemployed to go wayward, the Scheme has been introduced. Such a step has been taken by the Government of India as it has a duty to the citizens being a Welfare State."

If it comes to the knowledge of the financier that a particular fact was not correctly reflected in the application, the doors are not closed for the financier to make a further enquiry even after the Task Force Committee has rendered its satisfaction on the eligibility criteria

Although the High Court in exercise of its writ jurisdiction under Article 226 of the Constitution is not expected to ensure whether the reason for which the financier refused to grant loan was correct or not, but the fact which flies at our face from the record itself cannot be overlooked. The letter dated 17-2-1997 from one M. Murli Mohan certifies that the petitioner " has been working as still Photographer from October 1991 to till date". It is further stated in the said Certificate that "we find his work satisfactory. He is also a member in A.P. Cine Still Photographers Association". Certificate dated 14-5-1997 from A. Madhava Reddy, Minister for Home, Cinematography, Film Development Corporation, NCC and Sainik Welfare, certifies that the petitioner "is a good professional photographer''''. It also becomes evident from the details given in the application form for membership made by the petitioner to the A.P. Cine Still Photographers Association that he applied for membership as Still Photographer on 15-2-1997 and paid a fee of Rs. 1,0007- for such membership.

We need not repeat the reasons advanced by the 1st respondent for not disbursing the loan when confronted with the above facts staring at our face. Hence, the Writ Petition is dismissed. No costs.