Kerala High Court
Anila vs The Canara Bank on 20 January, 2021
Equivalent citations: AIRONLINE 2021 KER 39
Author: S. Manikumar
Bench: S.Manikumar, Shaji P.Chaly
WA.No.108 OF 2021 -1-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 20TH DAY OF JANUARY 2021 / 30TH POUSHA, 1942
WA.No.108 OF 2021
AGAINST THE JUDGMENT IN WP(C) 11586/2020(W) OF HIGH COURT OF
KERALA
APPELLANT/S:
ANILA
AGED 43 YEARS
W/O.MICHAEL, MURINGAYIL, ONNAMKARA, THEKKEKKARA
P.O., CHAMPAKULAM VILLAGE, ALAPPUZHA, PIN-688 505.
BY ADV. SMT.PREETHY R. NAIR
RESPONDENT/S:
1 THE CANARA BANK
ALAPPUZHA BRANCH, VSV BUILDINGS, CCNB ROAD,
ALAPPUZHA-688 011, REPRESENTED BY ITS CHIEF
MANAGER.
2 UNNIKRISHNAN NAIR,
AGED 83 YEARS
S/O.ACHUTHAN NAIR, CHITTADITHARA HOUSE, CHAMPAKULAM
P.O., KUTTANADU TALUK, ALAPPUZHA DISTRICT-688 505.
3 AJITH KUMAR,
AGED 52 YEARS
S/O.UNNIKRISHNAN NAIR, CHITTADITHARA HOUSE,
CHAMPAKULAM P.O., KUTTANADU TALUK, ALAPPUZHA
DISTRICT-688 505.
4 AITHA KUMARI,
AGED 49 YEARS
D/O.UNNIKRISHNAN NAIR, CHITTADITHARA HOUSE,
CHAMPAKULAM P.O., KUTTANADU TALUK, ALAPPUZHA
DISTRICT-688 505.
WA.No.108 OF 2021 -2-
OTHER PRESENT:
SRI.M. GOPIKRISHNAN NAMBIAR SC FOR R1 REPRESENTED
BY SMT PARVATHY MENON,
SRI.R.AZAD BABU FOR R3 AND R4
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
20.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WA.No.108 OF 2021 -3-
JUDGMENT
Dated this the 20th day of January, 2021 S. Manikumar, C.J.
Instant writ appeal is filed challenging the judgment in W. P. (C) No. 11586 of 2020 dated 09.10.2020, whereby a learned Single Judge of this Court, after considering the rival submissions, declined to grant the reliefs sought for. Writ court, however, permitted the petitioner to furnish any other security to the satisfaction of the Bank.
2. W. P. (C) No. 11586 was filed for a direction to call for the records leading to the issuance of Ext. P4 and to issue a writ of certiorari, quashing the same.
3. Writ petitioner has also sought for a mandamus commanding the 1st respondent to disburse the balance amount of loan sanctioned as per Ext. P3.
4. Short facts leading to the filing of writ appeal are as hereunder:-
Appellant herein is the mother of Amej Michael, on whose WA.No.108 OF 2021 -4- behalf an education loan was availed from Canara Bank, Alappuzha Branch, 1st respondent for the purpose of doing Basic Science Program at Columbus Central University School of Medicine, Belize, Central America. Appellant submitted that her son had joined the Columbus University on the strength of loan sanctioned to him by the 1 st respondent Bank. Appellant's mother had mortgaged her property as a collateral security. She expired on 01.12.2019 leaving her legal heirs, who are the appellant and respondents 2 to 4 (husband, son and daughter). The Bank had agreed to disburse an amount of Rs.
29,00,000/- as education loan under Vidya Sagar Scheme, after proper scrutiny of the required documents produced before them.
According to the appellant, after the initial payment, the Bank had abruptly stopped the disbursal of balance loan amount by issuing Ext. P4 letter. This letter was issued by the 1 st respondent Bank on the instance of 3rd and 4th respondents, who are in inimical terms with the appellant. Appellant's son could not pay the tuition fee for the 3 rd year and also the fee for food and accommodation. He was kept out of the institution from 26.08.2020. Due to the present pandemic condition, the university further extended time to make payment till 31.01.2021 and the appellant's son is continuing there with the help and mercy of WA.No.108 OF 2021 -5- friends, anticipating the receipt of the remaining loan amount. She also submitted that if the Bank is not providing the remaining loan amount, he would be facing the utter consequence of discontinuation of his course in America.
Challenging Ext. P4 and to get relief by directing the Bank to disburse the balance loan amount, appellant had filed W. P. (C) No. 11586 of 2020 before this Court. Learned Single Judge by the judgment dated 09.10.2020 dismissed the same. Being aggrieved, instant writ appeal is filed.
5. Earlier, when the matter came up for hearing, we were informed that two of the respondents are abroad. Considering the difficulties expressed by the son of the appellant, on whose behalf education loan has been availed, and the likelihood of discontinuation of his education in the midst of his four year programme, consequent to the death of the guarantor and taking note of the fact that the payment of fee for the current semester has been extended up to 31.01.2021, we requested the parties to reconcile all the differences and make suitable arrangements, so as to enable continuation of the guarantee and consequently, education of the student. However, our persuasion has not given any desired result.
WA.No.108 OF 2021 -6-
6. From the material on record, it could be further deduced that respondents Nos. 3 and 4, brother and sister of the appellant, have filed a suit in O. S. No. 137 of 2020 on the file of the Munsiff's Court, Alappuzha, for a partition of the schedule mentioned properties therein, which includes the subject property mortgaged with the Canara Bank, Alappuzha Branch, for availing education loan.
7. During the course of arguments, it was submitted that a sum of Rs. 29 lakhs has been sanctioned as education loan. Mother of the appellant who stood as guarantor for the loan is no more. Consequently, the difficulties in payment of fees and partition suit.
8. Out of 29 lakhs, 11 lakhs has already been disbursed. According to the learned counsel for the appellant, a sum of Rs. 19 lakhs is required for payment of tuition fee and other expenses for continuing the studies abroad, to be paid in two installments.
9. Smt. Parvathy Menon, learned counsel for the Bank submitted that for availing the education loan, Bank has valued the property and as per the report, valuation is 63 lakhs. Admittedly, a sum of Rs. 11 lakhs alone has been disbursed. Guarantor died on 04.12.2019. There cannot be any quarrel that the legal representatives of the deceased WA.No.108 OF 2021 -7- guarantor have to discharge the amount disbursed, with interest. Said aspect, is also fairly conceded by Mr. R. Azad Babu, learned counsel appearing for respondents 3 and 4.
10. The relevant portion of the Master Circular on revised guidelines on 'IBA Model Education Loan Scheme for Pursing Higher Education in India and Abroad' is reproduced hereunder:-
"Introduction:
Education is central to the human resources development and empowerment in any country. National and State level policies are framed to ensure that this basic need of the population is met through appropriate public and private sector initiatives. While government endeavor to provide primary education to all on a universal basis, public funding of higher education is not considered feasible. Cost of education has been going up in recent times and since the student has to bear most of the cost, there is a clear case for institutional funding in this area. This model education loan scheme is an attempt to bring out a viable and sustainable bank loan scheme to meet the aspirations of our society.
Knowledge and information would be the driving force for economic growth in the coming years. The current rate of economic growth of the country demands technically and professionally trained man power in large numbers. In this backdrop, loans for education are seen as investments for WA.No.108 OF 2021 -8- economic development and prosperity. The model Education Loan Scheme was developed by the Indian Banks' Association to help meritorious students pursue higher education in technical and professional courses. As the focus is on development of human capital, repayment of the loan is expected to come from future earnings of the student after completion of education. Hence the assessment of the loan will be based on employability and earning potential of the student upon completion of the course and not the parental income/family wealth.
The Educational Loan Scheme outlined below aims at providing financial support from the banking system to meritorious students for pursuing higher education in India and abroad. The main emphasis is that a meritorious student, though poor, is provided with an opportunity to pursue education with the financial support from the banking system with affordable terms and conditions.
1.1.1 OBJECTIVES OF THE SCHEME:
The Educational Loan Scheme outlined below aims at providing financial support from the banking system to meritorious students for pursuing higher education in India and abroad. The main emphasis is that a meritorious student, though poor, is provided with an opportunity to pursue education with the financial support from the banking system with affordable terms and conditions.
1.1.2 The scheme aims at providing financial assistance on reasonable terms to the poor and needy meritorious students to pursue higher education including professional/technical courses.WA.No.108 OF 2021 -9-
1.1.3 STUDENT ELIGIBILITY:
d) Parent will be co-borrower, both in case of minor and major students. Branches /offices to be guided by the revised norms for CIBIL Vide HO 560/2015 dated 01.12.2015, while taking co- borrowership.
e) Where parents are not available, legally appointed guardians may be accepted as co-borrower.
f) In cases of students, who are major (> 18 years of age) and parents are not available due to death or any other valid reason for offering joint borrowership such cases have to be referred to Circle Head for necessary clearance, with joint borrowership of any other close relative of the student, acceptable to the Bank.
g)Should have secured admission to a higher education course in recognized institutions in India or Abroad through Entrance Test/Merit Based Selection process after completion of HSC(10 plus 2 or equivalent). It would be in order for banks to consider a meritorious student (who qualifies for a seat under merit quota) eligible for loan under this scheme even if the student chooses to pursue a course under Management Quota.
h) For admissions to higher studies in majority cases, selections are done through Entrance Tests/merit based selection process.
For all other Courses (either Under Graduate /Post Graduate courses) where admission is secured through entrance tests/selection process, admission letter to the course to be treated as eligibility for education loan, without looking into marks, in the previous examination.
i)Where entrance test or selection purely based on marks obtained in qualifying examination, may not be the criterion for admission to some of the Post Graduate courses or research WA.No.108 OF 2021 -10- programmes, submission of admission letter to the course to be treated as eligibility for education loan, without looking into marks, in the previous examination.
j) Wherever Colleges are allowing admissions on the basis of CET, GRE, G-MAT, CAT, etc., admission to the College shall be the criteria for considering educational loan.
k) Wherever student is directly getting admission to the College without undergoing any selection process, (i.e., Entrance Tests/scoring in eligibility tests/merit based selection process) then educational loan can be considered if the Student has scored minimum 60% marks in the previous qualifying examination in case of candidates belonging to General category and 50 % in case of girl students and students from SC/ ST communities.
1.1.3.1. Education Loan for pursuing undergraduate medical course in Foreign Medical Institutions can be considered subject to fulfillment of all other terms and conditions ( Refer 1.1.4.3) by the student as per prevailing norms for education loan for studies abroad. Production of eligibility Certificate from Medical Council of India has been waived.
1.1.20 REPAYMENT:
Repayment holiday/ Moratorium:
1) Repayment of the loan will be in equated monthly installments for periods as under (excluding the course period plus the moratorium period).
2) Uniform one year moratorium period is available for repayment after completion of studies in all cases. i.e. Repayment holiday consists of Course period + (1 year after WA.No.108 OF 2021 -11- completion of course).
3) Repayment of the loan is to be in equated monthly installments for a period of 15 years for all loans irrespective of loan amount.
4) Moratorium can be considered during incubation period if the student wants to take up a startup unit. The respective sanctioning authority may permit extension of moratorium period on a Case to Case basis keeping in view of the nature of entrepreneurship activity and income generation ability.
5)If the student is not able to complete the course within tne Scheduled time, extension of time for completion of course may be permitted for a maximum period of 2 years. If the student is not able to complete the course for reasons beyond his control, sanctioning authority may at his discretion consider such extensions as may be deemed necessary to complete the course.
6) In case the student discontinues the course midway, appropriate repayment schedule will be worked out by the Sanctioning Authority in consultation with the student/parent.
7) The repayment will be by way of EMIs arrived on the total outstanding amount (i.e., Principal + accrued interest), at the end of the moratorium period.
8) Penal interest wherever applicable at the appropriate rate is to be charged for overdue loans.
9) Branches have to arrive at the EMI on the total outstanding amount (principal + interest accumulated during the repayment holiday period) and inform the equated monthly installment amount to the borrowers in writing by Regd. Post Acknowledgement Due, before the commencement of the repayment period. The acknowledgement received from the WA.No.108 OF 2021 -12- party and the duplicate copy of such notice/letter is to be kept along with the loan papers.
10) If a student who has availed an education loan takes up higher studies with/ without availing education loan for second course, the repayment of the first loan can be postponed till the date of completion of the higher course including moratorium period, provided sufficient proof is obtained that he is pursuing the course and branch is satisfied that the student is in need of repayment holiday.
11) In addition to the above branches/offices have been permitted to consider the following:
a. Whenever the student requests for telescoping of repayments, branches can consider on merits of the case.
b. The telescoping repayment shall be fixed with stepped up installments with passage of time.
C. The telescoping repayment can be considered after duly assessing the capacity of the student.
12) Recall of Education Loans: Branches may recall the loan during the study period or before completion of extended period of two years, if there are reasons to believe that the student will not be able to complete the course /has intentionally abandoned the course."
Reading of the above makes it clear that proceedings for recovery of any outstanding amount can be taken only after completion of the period of studies and thereafter, one year moratorium period is also provided.
WA.No.108 OF 2021 -13-
11. Ms. Preethy R. Nair, learned counsel for the appellant submitted that the remaining period of study is 2 years. As stated supra, there is one year moratorium period. The only impediment expressed by the Bank in disbursing the remaining loan amount of 19 lakhs is that, there is no adequate security.
12. As stated supra, even according to the submission of Ms. Parvathy Menon, learned counsel for the Bank, the valuation of the subject property mortgaged with the bank is 63 lakhs. Even going by the array of parties in O. S. No. 137 of 2020 on the files of the Munsiff's Court, Alappuzha, there are only three sharers, namely Ajithkumar and Ajitha Kumary plaintiffs / respondents 3 and 4 in the writ appeal and Anila, the appellant herein. Prayer in the suit is to allow partition by metes and bounds of the plaintiffs' 2/3rd share or the plaint scheduled items 1 to 3 properties declaring that the gift deed No.2613 dated 17.11.2017 of the Sub Registrar's office, Pulincunnu as void ab initio.
13. Thus in the event of the suit being decreed as prayed for, the appellant would be entitled to 1/3rd of the plaint schedule properties, which includes the subject property mortgaged for availing education WA.No.108 OF 2021 -14- loan, in which event, she would get 1/3rd share of the property worth 21 lakhs, as per the valuation of the Bank. The appellant who is admittedly one of the sharers in the subject property mortgaged with the bank also concedes that she would be entitled to only 1/3rd share of the property. The only apprehension of the Bank is that there would be delay and uncertainty, in reaching finality in the suit and demarcation of the property, in the legal battle.
14. Considering the plight of the son of the appellant, who is abroad, continuing his education with his grand mother supporting him, by availing education loan and taken up the responsibility of discharging the same with her own source, by offering the subject property, now left without any support on the sudden demise and the consequential action of filing a suit for partition and the irreparable hardships, likely to be caused if the education is discontinued, in the middle of a programme and the later effects, we deem it fit, to direct the Canara Bank, 1st respondent, to release the balance amount of Rs. 19 lakhs for continuation of the education, in two installments, subject to the condition that the bank, though not a party to the suit in O. S. No. 137 of 2020 on the files of the Munsiff's Court, Alappuzha, will have a charge on the share on the property to be partitioned. WA.No.108 OF 2021 -15-
15. As stated supra, in the foregoing powers, Mr. R. Azad Babu, learned counsel for the respondent Nos. 3 and 4 fairly admitted that their liability to pay the outstanding amount of Rs. 11 lakhs with interest have to be discharged by all the legal representatives of the deceased / guarantor.
16. Bank can always proceed against them in the event of any default, after the completion of the course, with an extended period of one year moratorium. Bank is also at liberty to take appropriate proceedings against the share of the appellant. Considering the time scheduled for initiation of recovery proceedings, steps can be taken by the Bank. In view of the apprehension raised by the Bank, parties in the suit may take necessary steps for speedy disposal of the suit.
17. Ms. Preethy R. Nair, learned counsel appearing for the appellant and Ms. Parvathy Menon, learned counsel for the Bank submitted that the education loan amount is directly sent to the University. The schedule for payment of fee reads thus:-
ELIGIBLE LOAN AMOUNT (85% OF THE PROJECT COST) SECOND YEAR THIRD YEAR FOURTH YEAR TOTAL IN USD IN INR IN USD IN INR IN USD IN INR ELIGIBLE TUITION 11950 824500 9940 685860 9940 685840 LOAN FEES AMOUNT LIVING 3400 234600 3400 234600 3400 234600 COST TOTAL 15350 1059100 13340 920460 13340 920440 2900000.00 WA.No.108 OF 2021 -16-
18. Last date for payment of fees for the current semester or the period of study is 31.01.2021. Having regard to the urgency, Canara Bank, Alappuzha Branch, respondent No. 1 is directed to disburse the balance amount of Rs. 9,97,560/-, as part payment, towards the disbursement of the entire loan amount, as agreed to upon between the parties. The bank is directed to disburse the amount at the earliest and at any rate before 25.01.2020. Bank is also directed to send the 2 nd installment, as per the schedule of payment, for the subsequent period.
With the above directions, writ appeal is disposed of. Before parting with the case, we sincerely hope the Bank to be proactive.
Sd/-
S. MANIKUMAR CHIEF JUSTICE Sd/-
SHAJI P. CHALY JUDGE Eb ///TRUE COPY/// P. A. TO JUDGE