Disposed

Benny P.L v. State Bank of India SBI

Kerala HC16 Dec 2021WP(C)/21303/2021

Case brief

AI extract

What is this about?

Petitioner sought writ relief to amend loan ratios and release funds for daughter's education in Canada. Court accepted that bank ignored prior fee payments. Directing bank to compute disbursement amounts considering the student account statement and release dues. Matters of interest rates and processing fees directed to grievance forum.

What did the court decide?

Respondents directed to compute disbursable amount considering the student account statement and disburse the loan amount found due at the earliest.

Benny P.L Vs State Bank of India SBI — Service and Employment | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE N.NAGARESH

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THURSDAY, THE 16^TH DAY OF DECEMBER 2021/25TH AGRAHAYANA, 1943 WP(C) NO. 21303 OF 2021

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PETITIONER:

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BENNY P.L AGED 52 YEARS S/O.LUKA, POONTHURUTHI HOUSE, IDUKKI COLONY.P.O, VAZHATHOPE, IDUKKI DISTRICT-685602.

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BY ADVS. S.K.MURALEEDHARA KAIMAL P.P.RAJESH

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RESPONDENTS:

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1 STATE BANK OF INDIA IDUKKI BRANCH, IDUKKI, PAINAVU-685601, REPRESENTED BY ITS MANAGER.

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2 DEPUTY GENERAL MANAGER, STATE BANK OF INDIA, AMINISTRATIVE OFFICE, 1ST FLOOR, SHANMUGHAM ROAD, ERNAKULAM-682031.

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3 UNION OF INDIA, REPRESENTED BY MINISTRY OF FINANCE, DEPARTMENT OF ECONOMIC AFFAIRS, (BANKING DIVISION), NEW DELHI-110001.

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BY ADV JAWAHAR JOSE SMT.MINI GOPINATH, CGC

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W.P.(C) No.21303/2021

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N. NAGARESH, J.

W.P.(C) No.21303 of 2021

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Dated this the 16^th day of December, 2021

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J U D G M E N T

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~ ~ ~ ~ ~ ~ ~ ~ ~

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The petitioner seeks to direct the 1^st respondent to amend the sanctioned ratio 60:40 to the prescribed 85:15 and to recalculate and provide and grant the maximum loan to the petitioner against his mortgaged property rightly and judiciously upon its valuation within a time frame.

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The petitioner's daughter Miss Liya Rose Benny is enrolled in Lake Head University, Canada and is studying in

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the third year at present, of the H.B.Comm.ACCT.(Honours B.Com Accountancy). The petitioner's daughter is offered placement after the fourth year course.

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To pursue studies in Canada, the petitioner and

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his daughter applied for educational loan of ₹85 lakhs. The 1^st respondent-Bank sanctioned only ₹51 lakhs. After sanctioning the loan, the 1^st respondent took a stand that a maximum amount of ₹10 lakhs will be released on agreeing the ratio 60:40 to be adjusted in the next year. The petitioner made request for release of sufficient amounts. The request was rejected as per Ext.P6. The petitioner states that the non-payment of the sanctioned amount is adversely affecting the petitioner and it will ruin the career of the petitioner's daughter.

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The 1^st respondent resisted the writ petition. The 1^st respondent stated that total fees and accommodation expenses for the four year course was ₹83,50,528/-. On processing the application, the Bank found that the petitioner's daughter is eligible for a total amount of ₹51,21,128/-. The property of the petitioner having 20.03 Ares was mortgaged as security. The petitioner's daughter was sanctioned lesser amount as educational loan because

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the petitioner has another cash credit loan of ₹10 lakhs with the Bank and with the available security, the petitioner is not eligible for any amount over and above ₹51,21,128/-.

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Out of the amounts payable to the petitioner's daughter, a life insurance premium of ₹98,401/- was deducted as one time payment. An amount of ₹11,800/- was also deducted as processing fee for the loan application. The petitioner's daughter is therefore eligible for an amount of ₹50,10,927/-.

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The 1^st respondent stated that University fee for the first year is ₹20,87,632/-. So, the student is eligible for ₹12,50,000/- in the first year. The petitioner sought disbursement of ₹20 lakhs as against eligible amount of ₹12,50,000/-. The petitioner's daughter was not eligible for receiving the said amount of ₹20 lakhs. However, the Bank considered the application sympathetically and disbursed an amount of ₹16,50,000/-.

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During the second year, the petitioner's daughter was eligible for ₹8,50,000/-. The petitioner demanded

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W.P.(C) No.21303/2021

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₹12,75,000/-. Again, the Bank took a sympathetic view and disbursed an amount of ₹12,75,000/-. The balance amount to be disbursed to the petitioner's daughter for the third and fourth academic years is ₹20,85,927/-. The petitioner's daughter submitted an e-mail seeking disbursal of ₹18 lakhs. The student is eligible only for ₹8,25,000/- now. However, on a sympathetic consideration, the Bank informed the petitioner's daughter that an amount of ₹10 lakhs can be disbursed. The respondents submitted that the petitioner and his daughter has to bring the margin of the loan up front along with release of loan amount on pro rata basis. The petitioner is not entitled to relief in the above writ petition, contended the 1^st respondent.

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I have heard the learned counsel for the petitioner and the learned Standing Counsel appearing on behalf of the respondents.

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The contention of the petitioner is that for loan of higher amounts, the maximum margin requirement can only be 15%. In the petitioner’s case, the respondents are

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insisting 40%. The interest rate should be PLR + 1%. The respondents are demanding 10.45%. The collateral security should be equal to 100%. The petitioner has provided security worth 200%. No processing charge is leviable. There is denial of 0.5 % concession on interest which is to be extended to girl students. The Bank can relax margin norms, to pay the petitioner the amount required for the current year. As regards margin, Ext.P1 Model Education Loan Scheme, in Clause 7 stipulates the margin as 25% for studies abroad and provides that scholarship and assistantship is to be included in the margin.

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The said clause does not indicate that irrespective of the loan amount sanctioned, the Banks should advance 75% of the required fee every year. The said clause can apply only when a Bank sanctions 75% of the total course fee as educational loan. In the petitioner’s case, the total course expenditure is about 80 lakhs and the total loan amount available for disbursement to the petitioner is 50,10,927/- out of the sanctioned loan of `51,21,128/- which

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would be around 60% of the total requirement. Therefore, the petitioner is bound to arrange the balance 40% amount from other sources.

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The petitioner cannot contend that the Bank should pay the entire loan amount as per institution’s requirement from year to year during the initial years of study. That would amount to over financing. Petitioner is expected to raise proportionate fee/expenses every year. The argument of the petitioner that the Bank is bound to release 85% of the required amount is therefore unacceptable.

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The further argument of the petitioner is that the Bank has discretion to relax margin norms and the Bank should relax the norm in favour of the petitioner to enable payment of requisite fee this year. In this regard, it is to be noted that in the first year of study, though the amount payable by the Bank was 12,50,000/-, the Bank disbursed 20 lakhs. During the 2^nd year, the Bank disbursed 12,75,000/- as against the eligibility of 8,50,000/-. The

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amount available for disbursement in the 3^rd and 4^th year is 20,85,927/-. The student is eligible for only 8,25,000/- this year. But, the Bank has considered the requirement sympathetically and has offered to disburse `10,00,000/-. In such circumstances, this Court finds that the 1^st respondent has exercised their discretion in the matter of margin, taking into account legitimate requirements of the student.

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The petitioner would contend that the petitioner

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has given security worth 200% of the loan amount and hence the Bank need not hesitate to disburse the sanctioned loan as per the requirements of the student and the educational institution. The property of the petitioner having an extent of 20.03 Ares stood already mortgaged while the petitioner’s daughter applied for educational loan and the Bank had sanctioned only `51,121,128/- out of the loan amount applied for by the student, taking into account the value of the mortgaged property. Therefore, the argument of the petitioner in this regard cannot be accepted.

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This Court do not deem it proper to adjudicate the

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issues raised by the petitioner as regards rate of interest, concession on interest available to girl students and charging of processing fee, in these writ proceedings, as those issues relate to the terms of agreement signed by the loanee. The petitioner can agitate those grievances before appropriate and competent forum.

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However, this Court finds that the respondents have not taken into consideration the amount paid by the student in the year 2021 as evidenced by Ext.P7(3) Student Account, for the reason that the student has not produced fee receipt. The petitioner would contend that Ext.P7(3) is an account statement downloaded from the website of the University. This Court has no reason to assume that Ext.P7(3) is not genuine. The respondents will not be justified in ignoring Ext.P7(3) Student Account while calculating the amount of loan to be disbursed this year.

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In the facts and circumstances of the case, the writ petition is disposed of directing respondents 1 and 2 to

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compute the amount that can be disbursed to the petitioner’s

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daughter this year taking into account Ext.P7(3) Student Account statement also and disburse the loan amount found

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due, at the earliest.

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Sd/-

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N. NAGARESH, JUDGE

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aks/16.12.2021

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W.P.(C) No.21303/2021

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APPENDIX OF WP(C) 21303/2021

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PETITIONER'S EXHIBITS

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Exhibit P1	TRUE COPY 28.4.2001 SCHEME.	OF THE CIRCULAR DATED WITH THE EDUCATION LOAN
Exhibit P2	TRUE COPY	OF THE SANCTION ORDER OF
	LOAN DATED RESPONDENT	25.7.,2019 ISSUED BY 1ST TO THE PETITIONER.
Exhibit P3	TRUE COPY O DATED 17.	F THE STATEMENT OF ACCOUNTS 8.2021 & 18.8.2021 WITH
	CURRENT Y ENROLMENT RESPONDENT.	EAR PAYMENT ACCOUNT AND VERIFICATION ISSUED TO 1ST
Exhibit P4	TRUE COPY ISSUED TO OMBUDSMAN.	OF REPLY DATED 10.8.2021 THE STUDENT BY BANKING
Exhibit P5	TRUE COPY BEFORE THE PETITIONER	OF THE COMPLAINT FILED BANKING OMBUDSMAN BY THE DATED 23.9.2021.
Exhibit P6	TRUE COPY O 10.8.2021 I THE PETITIO	F THE REQUEST LETTER DATED SSUED TO 1ST RESPONDENT BY NER.
Exhibit P7	TRUE COPY SANCTION OF TO THE PETI	OF THE REPLY REFUSING TO LOAN BY THE 1ST RESPONDENT TIONER DATED 13/8/2021
Exhibit P8	TRUE COPY SCHEME-MOST CONDITIONS-	OF THE SBI-STUDENT LOAN IMPORTANT TERMS AND AVAILABLE FROM WEBSITE.

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RESPONDENT'S EXTS:

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R1(a) COPY OF LOAN ARRANGEMENT LETTER DT 25.7.2019. R1(b) COPY OF RELEVANT PAGES OF THE SAID CIRCULAR DT 30.6.2017.

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R1(c) COPY OF THE REPRESENTATION DT 20.8.2019. R1(d) COPY OF THE REPRESENTATION DT 13.8.2020.

Benny P.L v. State Bank of India SBI

Case brief

What is this about?

What did the court decide?

Benny P.L v. State Bank of India SBI

Case brief

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What did the court decide?

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