Allowed

Rajasree R Kamath, v. the Union of India

Kerala HC15 Jan 2021WP(C)/25336/2020

Case brief

AI extract

What is this about?

The High Court of Kerala held that a bank cannot deny an education loan due to an unsatisfactory credit score of the co-obligant parent, as the student's future repayment capacity is the deciding factor. The court also directed the bank to consider the loan application for the third academic year, which had not yet commenced.

What did the court decide?

Ext.P12 set aside; 2nd respondent directed to consider loan application for 3rd to 5th academic years for 10.80 lakhs.

Rajasree R Kamath, Vs the Union of India — Education and Admissions | 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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FRIDAY, THE 15TH DAY OF JANUARY 2021/25TH POUSHA, 1942

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WP(C).No.25336 OF 2020(N)

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PETITIONERS:

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1 RAJASREE R KAMATH, AGED 48 YEARS, W/O. RAJEEV R KAMATH, RESIDING AT J.M. GARDENS 47, NEAR CHINMAYAVIDHYALAYA, VADUTHALA, CHERANALOOR, ERNAKULAM DISTRICT-682 023.

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2 SHIVALI R KAMATH, AGED 21 YEARS, D/O. RAJEEV R KAMATH, RESIDING AT DO..DO..

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BY ADV. SRI.RINU. S. ASWAN

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RESPONDENTS:

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1 THE UNION OF INDIA, REP. THROUGH ITS SECRETARY, MINISTRY OF BANKING AND FINANCE, NORTH BLOCK, NEW DELHI 110 001.

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2 STATE BANK OF INDIA, REPRESENTED BY ITS BRANCH MANAGER, VADUTHALA BRANCH, NEAR BPCL PUMP, CHITOOR ROAD, VADUTHALA, ERNAKULAM DISTRICT-682 023.

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3 PRINCIPAL, AMRITHA SCHOOL OF PHARMACY, AMRITA VISHWA VIDYAPEETHAM, HEALTH CARE CAMPUS, ELAMMAKKARA P.O., ERNAKULAM DISTRICT 682 041.

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R2 BY ADV. SRI.M.JITHESH MENON, SC R3 BY ADV. SRI.K.MANOJ CHANDRAN R1 BY SRI P.VIJAYAKUMAR, ASGI

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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J U D G M E N T

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Dated this the 15^th day of January, 2021

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Petitioners 1 and 2 have approached this Court, aggrieved by the refusal of the 2^nd respondent-Bank to sanction education loan to the 2^nd petitioner, who is daughter of the 1^st petitioner, for pursuing Pharm-D Course in Amrita School of Pharmacy headed by the 3^rd respondent.

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The 2^nd petitioner is a bright student who has secured 9.8 GPA in her matriculation and 86.7% marks in 12^th Standard Board Examination. Considering the meritorious record, the 3^rd respondent-Principal admitted the 2^nd petitioner to the Doctoral Course in Pharmacy (Regular) for the academic year 2017-'22. The 2^nd petitioner secured distinction in her first year of Pharm-D Course and a First Class in the second year. The student even presented a research paper on “ Detailed View on Repurposed Drugs, Tracking of

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Vaccines and brief view of Prophylactic Nanomedicines as an Alternative Approach and Patient Care for COVID-19 ”, the manuscript of which is acknowledged for publication in international journals.

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Estimated course fee for Pharm-D is ₹16.73 lakhs

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and the 1^st petitioner could pay course fee of her daughter for the first two years. The extended last date for paying third year’s course fee was 31.12.2020 and 2^nd petitioner applied for education loan for the the 3^rd to the 5^th years of Pharm-D, making her mother, the 1^st petitioner as co-applicant. As against the loan application for ₹10.80 lakhs for three years, the 2^nd respondent as per Ext.P12 informed that the petitioners are eligible for ₹7.27 lakhs as loan for the 4^th and 5^th year of the Course only and that the credit score of the co-applicant is unsatisfactory.

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The learned counsel for the petitioner Sri. Rinu S. Aswan argued that application for education loan was made for the 3^rd to 5^th year of the Course and the 2^nd respondentBank is declining loan for the 3^rd year of the Course for no

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conceivable reason. Non-santioning of eligible amount of loan takes away valuable right of the 2^nd petitioner.

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The learned counsel further argued that disallowing loan citing unsatisfactory credit score of the co-obligant, is illegal and unsustainable. It is the paying capacity of the student after completion of the Course, which is relevant in determining repayment capacity of loanee. This Court has held in Ext.P14 judgment that credit score of co-obligant is not at all a deciding factor while considering application for education loan. Ext.P12 communication is therefore not at all acceptable or sustainable.

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Sri. Jithesh Menon, learned Standing Counsel appearing for the 2^nd respondent, argued that the 2^nd petitioner has already completed her 3^rd year of the Pharm-D Course and hence can seek education loan only for the 4^th and 5^th years. As per Annexure-R2(a) certificate issued by the 3^rd respondent-Principal, the total fee for the said two years will be only ₹7,65,470/- and the petitioners cannot aspire for a larger amount as education loan.

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The learned Standing Counsel strenuously argued

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that the 1^st petitioner is a defaulter to three other credit facilities extended and hence her credit score is unsatisfactory. Ext.P14 judgment of a learned Single Judge of this Court, was passed on a wrong appreciation and understanding of an earlier judgment of this Court in W.P.(C) No.19248/2019 and hence need not be followed.

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I have heard the learned counsel for the petitioners

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and the learned Standing Counsel appearing for the 2^nd respondent and 3^rd respondent and also the learned ASGI representing the 1^st respondent.

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The Government of India has notified Ext.R2(b) the Credit Guarantee Fund Scheme for Education Loans (CGFSEL) on 16.09.2015. The maximum loan limit, without any collateral security and third party guarantee, is ₹7.5 lakhs. The Indian Banks' Association has made Model Education Loans Scheme for pursuing higher education as per Ext.P13, Clause 8 of of which would show that the Banks may sanction loan above ₹7.5 lakhs subject to the condition that the

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parent(s) should be joint borrower(s). The National Credit Guarantee Company set up by the Government of India would undertake to provide guarantee against default in repayment of education loan extended under Ext.R2(b) Scheme by the Lending Institutions, up to ₹7.5 lakhs.

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The 2^nd respondent is resisting sanction and disbursement of education loan applied for by the petitioners for two reasons. According to the 2^nd respondent, the credit score of the co-applicant (1^st petitioner herein) is less than 650. Secondly, the eligible loan amount is only 7.27 lakhs as against the request of the petitioners for sanction of ₹10.80 lakhs.

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As regards the stand of the 2^nd respondent that the credit score of 1^st petitioner is unsatisfactory, a learned Single Judge of this Court in Ext.P14 judgment in W.P.(C) No.10968/2020 has held that unsatisfactory credit scores of the parents of students cannot be a ground for rejecting an education loan in view of the fact that the repayment capacity of the student after education, should be the deciding factor as

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per the Scheme. The learned counsel for the 2^nd respondent would contend that Ext.P14 judgment was delivered on a wrong appreciation of an earlier judgment of this Court in another writ petition. However, since Ext.P14 judgment has not been reversed by a Division Bench of this Court, I am inclined to follow the law laid down in Ext.P14 judgment in W.P.(C) No.10968/2020. It is therefore declared that the 2^nd respondent cannot deny the loan applied for by the petitioners on the ground of unsatisfactory credit score of the 1^st petitioner.

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As regards the amount of eligibility of the petitioner, it may be noted that the petitioners have applied for loan for the 3^rd to 5^th academic years of the 2^nd petitioner. The contention of the 2^nd respondent is that the 2^nd petitioner has already completed the third year and is in to the 4^th year and therefore a loan cannot be extended to cover the educational expenses of the third year. In this regard, it may be noted that the petitioners had applied for the loan before the 4^th academic year. Ext.P10 certificate could show that the 2^nd

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petitioner has not paid fee payable in respect of the third year. It is due to unavailability of funds to pay the fee for third year also that the 2^nd petitioner has approached the 2^nd respondent. In the circumstances, the 2^nd respondent will not be justified in declining education loan to the petitioners to meet the educational expenses of third year.

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The learned Standing Counsel for the 2^nd respondent pointed out that in Ext.R2(c) application of the petitioners, the loan required is shown as ₹7,50,000/-. The counsel for the petitioners on the other hand, would submit that the petitioners have correctly shown the total educational expenses for the three years as 11,20,820/-. The figure ₹7,50,000/- in Ext.R2(c) was at the instance of the officials of the 2^nd respondent.

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In view of the facts and reasons stated above, this Court is of the firm opinion that the 2^nd respondent is bound to consider the education loan application submitted by the petitioners for the 3^rd to 5^th academic years of the petitioners on merits and under Ext.R2(b) and Ext.P13 Schemes.

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Accordingly, Ext.P12 is set aside. The 2^nd

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respondent is directed to consider the loan application of the petitioners for an amount of ₹10.80 lakhs, in the light of the observations made above. The petitioners shall be permitted to make a fresh application or to make necessary corrections in Ext.R2(c) application, if found necessary by the 2^nd respondent.

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Since the 3^rd respondent submitted that without payment of the third year's fees, they may not be able to publish the third year results of the petitioners, the 2^nd respondent shall consider the education loan application submitted by the petitioners with promptitude.

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Writ petition is disposed of as above.

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Sd/-

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N. NAGARESH, JUDGE

aks/18.01.2021

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APPENDIX

PETITIONERS' EXHIBITS:

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EXHIBIT P1 A TRUE COPY OF THE APPLICATION FORM OF THE PETITIONERS THROUGH VIDYA LAKSHMI PORTAL DATED 25.08.2020.

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EXHIBIT P2 A TRUE COPY OF THE MARK STATEMENT ISSUED TO THE 2ND PETITIONER FROM THE CENTRAL BOARD OF SECONDARY EXAMINATION DATED NIL. EXHIBIT P3 A TRUE COPY OF THE MARK STATEMENT ISSUED TO THE 2ND PETITIONER FROM THE CENTRAL BOARD OF SECONDARY EXAMINATION DATED 16.06.2017. EXHIBIT P4 A TRUE COPY OF THE STUDENT DETAILS OF THE 2ND PETITIONER ISSUED FROM THE 3RD RESPONDENT DATED 25.08.2020. EXHIBIT P5 A TRUE COPY OF THE STATEMENT OF MARKS ISSUED TO THE 2ND PETITIONER FROM THE 3RD RESPONDENT INSTITUTION DATED 12.04.2019.

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EXHIBIT P6 A TRUE COPY OF THE STATEMENT OF MARKS ISSUED TO THE 2ND PETITIONER FROM THE 3RD RESPONDENT INSTITUTION DATED 25.09.2019.

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EXHIBIT P7 A TRUE COPY OF THE CERTIFICATE OF PARTICIPATION ISSUED BY THE 3RD RESPONDENT TO THE 2ND PETITIONER FOR THE EXPERIMENTAL RESEARCH CONDUCTED IN DETAILED VIEW OF REPURPOSED DRUGS, TRACKING OF VACCINES AND BRIEF VIEW ON PROPHYLACTIC NANO MEDICINES AS AN ALTERNATIVE APPROACH AND PATIENT CARE FOR COVID 19 DATED NIL.

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EXHIBIT P8 A TRUE COPY OF MAIL COMMUNICATION ISSUED FROM INTERNATIONAL JOURNAL OF APPLIED PHARMACEUTICALS TO THE 2ND PETITIONER DATED 20.10.2020. EXHIBIT P9 A TRUE COPY OF THE COURSE DETAILS INDICATIVE OF FEES AND OTHER EXPENDITURE ISSUED FROM THE 3RD RESPONDENT DATED 21.7.2017. EXHIBIT P10 A TRUE COPY OF STUDENT PARTICULARS OF THE 2ND PETITIONER WITH FEE STRUCTURE ISSUED FROM THE 3RD RESPONDENT DATED 15.07.2020. EXHIBIT P11 A TRUE COPY OF MAIL COMMUNICATION ISSUED FROM THE 3RD RESPONDENT TO THE FATHER OF THE 2ND PETITIONER DATED 30.09.2020. EXHIBIT P12 A TRUE COPY OF THE REPLY LETTER ISSUED TO THE PETITIONERS BY THE 2ND RESPONDENT DATED 08.10.2020. EXHIBIT P13 A TRUE COPY OF THE MODEL EDUCATIONAL LOAN SCHEME FOR PURSUING HIGHER EDUCATION IN INDIA AND ABROAD ISSUED BY INDIAN BANKS ASSOCIATION DATED NIL. EXHIBIT P14 A TRUE COPY OF THE JUDGMENT OF THIS HONBLE COURT IN WP(C) NO. 10968 OF 2020 DATED 03.07.2020. EXHIBIT P15 TRUE COPY OF EXAMINATION NOTIFICATION ISSUED BY 3RD RESPONDENT INSTITUTION TO THE 2ND PETITIONER FOR THE THIRD YEAR PHARM.D EXAMINATION DATED 26.12.2020. EXHIBIT P16 A TRUE COPY OF TAX RECEIPT ISSUED FROM MANNAKUNNAM VILLAGE OFFICE DATED 16.04.2019. EXHIBIT P17 A TRUE COPY OF CERTIFICATE OF ENCUMBRANCE DATED 14.02.2020.

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EXHIBIT P18

A TRUE COPY OF POSSESSION CERTIFICATE ISSUED FROM MANAKUNNAM VILLAGE OFFICE DATED 27.03.2019.

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EXHIBIT P19

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A TRUE COPY OF LOCATION SKETCH ISSUED FROM VILLAGE OFFICER, MANAKUNNAM DATED 12.03.2020.

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RESPONDENTS' EXHIBITS:

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ANNEXURE-R2(A) TRUE COPY OF THE CERTIFICATE ISSUED BY THE 3RD RESPONDENT INSTITUTION DATED 29-07-2019

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ANNEXURE-R2(B) TRUE COPY OF THE RELEVANT PAGE OF THE NOTIFICATION ISSUED BY THE MINISTRY OF HUMAN RESOURCE DEVELOPMENT DATED 1609-2015

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ANNEXURE-R2(C) TRUE COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT

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Rajasree R Kamath, v. the Union of India

Case brief

What is this about?

What did the court decide?

Rajasree R Kamath, v. the Union of India

Case brief

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