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Judgment
N. Paul Vasanthakumar, J.—The prayer in the writ petition is to quash the order of the second respondent dated 8.4.2010 declining to
sanction educational loan to the petitioner and direct the respondents to sanction educational loan to the petitioner, who is pursuing B.E. Degree
course in Electronics and Communication in MRK Institute of Technology, Nattarmangalam Village, Kattumannarkoil-608301, a Self-Finance
Private Engineering College.
The case of the petitioner is that he is a resident of Puducherry Union Territory, and is undergoing B.E. degree course in Electronics and
Communication course in MRK Institute of Technology, Nattarmangalam Village, Kattumannarkoil-608301. Now the petitioner is doing second
semester. The course in which the petitioner is undergoing B.E degree is approved by the AICTE and College is affiliated to Anna University,
Trichy. Petitioner was selected in management quota and he belongs to most backward community (MBC). According to the petitioner, he is the
first member in his family to pursue higher studies.
Petitioner states that the course fee is Rs. 2,50,000/- apart from hostel charges and expenses towards purchase of books. Approximately a sum
of Rs. 90,000/- is required for one semester towards fees and expenses. Petitioner paid the first semester fees and charges and is yet to pay the
fees for the second semester.
The petitioner applied for the sanction of educational loan of Rs. 3,40,000/- before the second respondent along with his parents. On 8.4.2010
the second respondent rejected the application on the ground that the petitioner was admitted under the management quota and not through
selection process. The said order is challenged in this writ petition by contending that the petitioner is entitled to get educational loan as per the
guidelines issued on 4.2.2008 by the Indian Banks Association approved by the Reserve Bank of India; that the scheme nowhere states that the
students admitted under the management quota are not eligible to avail loan facility; that the purpose for which the claim was introduced is defeated
by the action of the second respondent by rejecting the request of the petitioner raising technicalities.
When the writ petition was posted for admission, the learned Counsel for the petitioner was directed to serve notice to the respondent bank
through telegram, pursuant to which Mr. A.V. Radhakrishnan, learned standing counsel for the respondent bank appeared and argued the writ
petition based on the instructions given by the respondent bank.
The learned Senior Counsel appearing for the petitioner argued that the scheme for the sanction of loan, framed by the Central Government as
well as the Reserve Bank of India is bound to be followed by the respondents and the action of the respondents in declining sanction of education
loan on the ground that the petitioner was admitted in the College in the management quota, is not only contrary to the scheme but also arbitrary
and whimsical and the petitioner, who is a deserving candidate, is entitled to get sanction of education loan for his pursuing the B.E. Degree course.
The learned Counsel for the respondents on the other hand submitted that the scheme of the bank provides sanction of education loan to the
students, who are admitted under the single window selection and the petitioner having been admitted in the management quota, is not entitled to
sanction loan and there is no illegality in the impugned order.
I have considered the rival submissions made by the learned Counsel for the petitioner as well as respondents.
The respondent Bank announced the scheme - Vidya Jyothi Educational Loan Scheme for the year 2007-2008. The eligibility criteria provided
therein are that a candidate must be an Indian national, secured admission to professional/technical course in India or abroad through entrance
test/merit based selection process. The course of study mentioned for the sanction of loan includes regular degree/diploma courses approved by
the competent authority. The quantum of finance is need based subject to repaying capacity of the parents/students. Upto an amount of Rs. 4
lakhs, parents can stand as security and for an amount beyond Rs. 4 lakhs to Rs. 7.50 lakhs, parents can be co-applicant together with collateral
security in the form of suitable third party guarantee is to be provided.
Petitioner had submitted an application for the sanction of loan for a sum of Rs. 3.40 lakhs. He has stated in his application that he is a student
of Engineering B.E degree course in a private Engineering College, which is approved by the AICTE and affiliated to Anna University, Trichy, and
that the date of the commencement of the course is 15.9.2009 and the date of completion of the course is 1.1.2013. The college management also
furnished the estimated expenses for undergoing the course viz., tuition fees at the rate of Rs. 62,500/- per year for 4 years and Rs. 22,500/- per
year towards books and hostel charges. The certificate issued by the college in favour of the petitioner dated 30.7.2009 is filed in the typed set of
papers.
In the impugned order the second respondent has stated that since the petitioner has secured admission in management quota and not went
through the selection process, the petitioner is not eligible to get sanction of education loan. The said stand of the respondents is contrary to the
scheme announced by the respondents viz., Vidya Jyothi Educational Loan Scheme. Though in the said scheme it is stated that admission could be
claimed by writing entrance examination, it is common knowledge to all concerned that in the state of Tamil Nadu no entrance examination is
conducted for admission to B.E. Degree course or for any professional course. Admittedly there are two modes of admissions to professional
course in self-financing colleges in the state of Tamil Nadu viz., Government quota, i.e., candidates are selected through single window selection
and management quota. The said allocation of seats is also approved every year by the Monitoring Committee headed by a retired High Court
Judge, constituted by the State Government as per the Judgment of the Supreme Court in the decision reported in Islamic Academy of Education
and Another Vs. State of Karnataka and Others, .
The fact that the petitioner was selected and admitted in the management quota seat and pursuing his studies cannot be a debarment for
submitting application to avail education loan. It is not the case of the respondents that the petitioner is not eligible to be admitted in the B.E degree
course due to lack of minimum marks, age or otherwise. Once eligibility for admission is established and a candidate is selected through anyone of
the mode of selection, which is permitted by the Monitoring Committee and the University having approved the admission of the petitioner, it is not
open to the respondent bank to refuse loan facility viz., education loan to a deserving candidate like the petitioner. The Central Government as well
as the Reserve Bank of India gave guidelines to the banking sectors to sanction education loan to all deserving candidates. The requirements, the
banks can insist upon is whether the candidate is eligible to be admitted in the course, whether the course is approved by the competent body, and
whether the college is affiliated to the University which conducts examinations.
The Schemes and Policies are framed by the Central Government and the benefit should reach the deserving persons. Rejecting the claim of
education loan to the petitioner by the second respondent by raising untenable and hypertechnical ground establishes the mindset of the person,
who is in charge of the bank. The Bank is not entitled to take a rigid and hairsplitting interpretation in cases like this, without bearing in mind the
object of the Scheme. In all other Banks, education loan is sanctioned to students admitted in management quota. In some cases though initially the
loan applications were not considered favourably, on receiving notice, the concerned banks readily sanctioned loans on the basis of valuable legal
advise given by the standing counsels. If the attitude of the respondent bank is accepted or given a seal of approval, it would be discriminatory and
violative of Article 14 of the Constitution of India which prohibit discriminatory treatment to a citizen. The higher officials of the respondent bank
are bound to give proper instructions to branch Managers as to how the applications seeking education loan are to be processed, so that such kind
of unreasonable attitude can be avoided.
It is well settled principle of law that while interpreting the Scheme, the object of the scheme is to be borne-in-mind. The second respondent
has not even suspected the repaying capacity of the petitioner or that of his parents in the impugned order. The reason stated in the order is
patently illegal and the impugned order is passed without application of mind. The second respondent also failed to give any opportunity of hearing
to the petitioner before declining education loan, which has got civil consequences. Thus, there is violation of principles of natural justice.
Identical issue as to whether a candidate who was having poor academic career can be denied of educational loan by the Bank of Baroda was
considered in W.P. No. 33933 of 2007 and by order dated 16.11.2007 this Court set aside the order rejecting the request and directed to
sanction education loan to the petitioner therein within four weeks. In the said order, the learned Judge considered the object for which the
educational loan is sanctioned, i.e., to encourage education among students. Finding that there is no prohibition to sanction education loan to
academically poor students, the learned Judge allowed the writ petition.
Applying the principle laid down in the above said judgment to the facts of this case and the only reason to deny the educational loan by the
respondent bank being that the petitioner is admitted in the management quota, I am of the view that the respondents are not justified in rejecting
the claim of the petitioner as there is no prohibition to sanction education loan to students admitted in the management quota. If the stand taken by
the respondents is accepted, no student admitted under the management quota in any private self-financing college will be in a position to get
education loan, which will defeat the purpose for which the Government of India and Reserve Bank of India introduced the scheme.
The action of the respondents in giving narrow interpretation to the scheme and denying loan to the deserving candidate like the petitioner
cannot be sustained as the same is found arbitrary. The respondents are directed to sanction education loan to the petitioner based on his
application already submitted and sanction the eligible amount within two weeks from the date or receipt of copy of this order.
The writ petition is allowed. No costs.