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Judgment
Antony Dominic, J.—Petitioner is a first year MBBS student in the Jawaharlal Nehru Medical College, Belgaum. Parents of the Petitioner are lawyers. She made an application to the Haripad Branch of the Indian Overseas Bank for an education loan of Rs. 10 lakhs. Ext.P3 is the copy of the scheme for education loan. According to the Petitioner, as collateral security for the loan, her parents had offered 38 cents of property of a near relative, which was valued by the Bank at Rs. 46,30,000/-. However, when the Petitioner went to the Bank to avail of the loan, she was handed over Ext.P6, a communication issued by the Chief Manager of the Bank addressed to the Haripad Branch, expressing their inability to consider the proposal for the reasons mentioned therein. The reasons mentioned in Ext.P6 are the following:
(1) The borrower is residing > 8 kms from the branch. It will be difficult for the branch to follow up this account at a later date and ours is not the nearest bank branch to the applicants. Moreover, student''s father is the panel lawyer for UBI/Syndicate Bank.
(2) The property offered as security is not belonging to the applicant''s parents.
(3) Though the applicants maintain SB account with the branch, only very few transactions were carried out in the account.
(4) Documentary proof for affiliation/approval of the institution not available.
It is challenging Ext.P6, this writ petition is filed.
Relying on Ext.P3, counsel for the Petitioner contended that the nearest/convenient branch of the Respondent Bank was at Haripad and it was therefore that the application was made to that branch. As far as the second objection that the property offered as security does not belong to the parents of the Petitioner is concerned, Ext.P3 itself is relied on to contend that the collateral security could be that of third parties. Counsel further contended that the objection that very few transactions were carried out in the SB account of the parents is incorrect, in view of the entries in Ext.P8 pass book. As far as the 4th objection mentioned in Ext.P6 is concerned, it is submitted that nobody asked for such documents and that therefore the loan could not have been denied on that ground.
On the other hand, the objections raised by the learned Counsel for the Respondents are several. It was contended that a District Level Committee has been constituted and that, if the Petitioner is aggrieved, Petitioner has a right to take up her grievances before the District Level Committee, of which the Chairman is the District Collector. It is also stated that, as per the RBI guidelines, applications should have made to the branch, which is the nearest to the residence of the applicants and the applicants should have an operating account in the branch to which application is made.
It is also pointed out that the annual income and the repaying capacity of the parents was not sufficient to discharge the loan liability. Further, it was also argued that Ext.P6 is only an internal communication and that the documents submitted by the Petitioner were returned to her on 05-01-2011. On this basis, counsel for the Bank contended that the Petitioner cannot successfully impugn the stand taken by the Bank.
Going by the pleadings, it is the specific case of the Petitioner that when she presented herself before the Bank for availing of the loan, she was handed over Ext.P6 and it was informed that for the reasons mentioned therein, the Bank was unable to extend the loan to the Petitioner. According to her, it was therefore that she challenged Ext.P6. In that view of the matter, irrespective of whether Ext.P6 is addressed to the Petitioner or not, since the Petitioner has been served Ext.P6, she cannot be faulted if she has relied on Ext.P6 as an order of rejection of her application for loan. Nor can the writ petition be dismissed on the ground that Ext.P6 is only an internal communication.
A reading of Ext.P6 shows that the Bank has expressed its inability to consider the proposal for the reasons mentioned in Ext.P6. Ext.P6 contains four reasons and, therefore, the Bank will have to justify its action on the basis of those reasons and the Bank cannot be permitted to supplement those reasons through its counter affidavit or arguments before this Court. Therefore, this Court need only to consider the validity of Ext.P6, referring to the reasons stated in Ext.P6 and I shall proceed to do so.
The first reason stated in Ext.P6 is that the borrower is residing 8 km away from the Bank and, therefore, it will be difficult for the Bank to follow up this addressee. First of all, in Ext.P6, the Bank does not rely on any RBI guidelines in support of the first reason. Therefore, the RBI guidelines now relied on by the counsel for the Bank are alien to Ext.P6.
That apart, Ext.P3, which contains the details of the scheme for education loan, entitles an applicant to submit the application to the nearest/convenient branch and according to the Petitioner, Haripad Branch is the most convenient Branch. In the absence of any material to reject this contention, the first reason stated in Ext.P6 does not carry any weight. As far as the second reason stated that the property offered as security does not belong to the applicant''s parents is concerned, this again is contrary to Ext.P3, which enables an applicant to offer collateral security of third party also. As far as the statement about the SB account maintained by the parents of the Petitioner is concerned, the only objection raised in Ext.P6 is that only very few transactions carried out. On the other hand, what is now contended is that the account is not an operating account. Volume of transactions in the account is not a requirement laid down in Ext.P3. That apart, while assessing the volume of transactions, the Bank has to be realistic and cannot adopt a yardstick which it may adopt in the case of a business concern. Ext.P8 is the pass book. This shows that there are transactions carried out by the Petitioner''s parents. Therefore, irrespective of the volume of transactions, so long as transactions are carried out through the account in question, even if the transactions are few, in my view, that cannot be a reason to hold that the account is not an operating one and to reject an application for education loan. As far as want of documentary proof for affiliation/approval of the institution is concerned, the Bankhas no case that despite having been called upon, Petitioner did not produce such documents. If that be so, I cannot uphold even that reason mentioned in Ext.P6. In this context, it may not be inappropriate to say that, this type of hyper technical approach of Banks will only defeat laudable schemes framed by Government of India and other authorities. In my view, Banks, which are instrumentalities of State should imbibe the true spirit of such schemes and conduct itself in such a manner as only to advance the scheme and not to defeat it.
For the aforesaid reasons, I set aside Ext.P6 and direct Respondents 2 and 3 to pass immediate orders on the application made by the Petitioner for education loan, provided, the Petitioner re-submits an application with supporting documents within ten days from today. It is clarified that it will be open to the Bank to require the Petitioner to produce such other documents which it deems appropriate to pass orders on the application for loan.
Writ petition is disposed of as above.