Gujarat High Court
Aayush Sampat S/O Joyesh Sampat vs Chief Manager State Bank Of India on 10 December, 2018
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/8453/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8453 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
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1 Whether Reporters of Local Papers may be allowed to YES
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
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AAYUSH SAMPAT S/O JOYESH SAMPAT
Versus
CHIEF MANAGER STATE BANK OF INDIA
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Appearance:
MR HIMANSHU C DESAI(6832) for the PETITIONER(s) No. 1
MR RITURAJ M MEENA(3224) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 10/12/2018
ORAL JUDGMENT
1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant, a student pursuing his studies in the Management Programme (PGDM) has prayed for the following reliefs :
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"a. Issue writ of certiorari or any other writ or direction to
respondent to sanction the education loan application of the applicant and disburse the loan amount of Re.16.75 lakhs on completion of formality to the applicant and oblige.
b. Pass order quashing and setting aside the letter dated 24.05.2018 issued by the respondent to the applicant and oblige.
c. Pass any other and further necessary, just and proper order which Your Lordship may deem fit in light of the facts and circumstances of the case and oblige."
2. The case of the writ-applicant in his own words as pleaded in the writ-application is as under :
"The applicant is a student who has completed his graduation in business administration from the Maharaja Sayajirao University of Baroda during June 2017. The applicant thereafter appeared at CAT 2017 examination conducted by Indian of Management and secured 84.87 percentile. Copy of the result of CAT is annexed hereto and marked as Annexure:B. Based on performance at CAT 2017 examination, International Management Institute (IMI), Kolkata granted admission to Post Graduate Diploma IN Management program (PGDM) 2018-2020 to he applicant. The applicant is required to pay a sum of Rs. 14,67,598/- (Re.fourteen lakhs sixty seven thousand five hundred ninety eighty only) towards total fees to the IMI. Copy of the admission Page 2 of 45 C/SCA/8453/2018 JUDGMENT letter and schedule for payment of fees is annexed hereto and marked as Annexure C. The applicant has already made a payment of Re.2,22,500/- (re. two lakh twenty two thousand five hundred only).
The applicant received a letter from State Bank of India congratulating him for selection in PGDM course in IMI Kolkata and informed that a loan up to Re.20,00,000/- (Re. twenty lakh only) without any collateral security can be sanctioned. Copy of the said letter from State Bank of India is annexed hereto and marked as Annexure:D. Based on the above offer and as parents of the applicant are unable to raise required amount for payment of fees the applicant made an application to the respondent on 03.05.2018 and submitted all necessary document alongwith application. Copy of the said application is annexed hereto and marked as Annexure"E. The respondent sent E-mail acknowledging the receipt of the loan application and stated that the application is "prima facie eligible" on 08.05.2018. Copy of the said acknowledgement is annexed hereto and marked as Annexure:F. Thereafter there was delay in receiving any response from the respondent bank. Therefore, the applicant personally approached the respondent bank. As a result the respondent bank sent letter dated 24.05.2018 informing that they are unable to process the education Page 3 of 45 C/SCA/8453/2018 JUDGMENT loan file of the applicant for the reason that the CIBIL credit report score of co-borrower is 300 and 588 in CRIF High Mark and CIBIL respectively. Copy of said letter is annexed at Annexure:A."
3. Thus, it appears that the writ-applicant applied with the State Bank of India, Natubhai Circle Branch, Vadodara, for a student loan of Rs.16.75 lakh towards the total fees to be paid to the International Management Institute, Kolkata. The Bank asked for a collateral security in the form of a co-borrower, ready and willing to undertake the liability to repay the loan amount. The Bank rejected the father of the writ-applicant as the co- borrower having regard to his poor financial report. In such circumstances, the writ-applicant, being aggrieved and dissatisfied with the decision of the Bank in declining to disburse or sanction the student loan, has come up with this writ-application invoking the writ jurisdiction of this Court under Article 226 of the Constitution of India.
4. The grounds of challenge as raised in the writ-application are as under :
a. On the basis of recommendation of the committee appointed by Central Government, Indian Bank Association has framed a Model Education Loan Scheme for pursuing higher education. The same scheme known as Model education loan scheme announced during November 2007. Under the scheme, it has been stated that education is central to the human resources development and empowerment in any country. National and state level policy are framed Page 4 of 45 C/SCA/8453/2018 JUDGMENT to ensured that this basic need of the population is met through appropriate public an private sector initiatives. While government endeavour to provide primary education is progressively moving in to the domain of private sector. With a gradual reduction in government sub sides higher education is getting more and more costly and hence the need for institutional funding in this area. The scope of education has vided both in India and abroad covering new coursed in diversified area. As knowledge and information becoming the driving force for economic growth, loan for education should be seen as an investment for economic development and prosperity. Model Educational Loan Scheme was prepared by Indian Bank Association and banks were advised for implementation by Reserve Bank of India Notification No. RPCD.PLNFS. BC. No.83/06.12.05/2000/01 dated April 28 2001. The said notification is applicable to the respondent bank. Copy of the RBI notification is annexed hereto and marked as Annexure:G. b. IBA had communicated certain changes in norms applicable to education loans following announcement made in budget speech of the year 2004-205. Finally revised scheme which is being followed by the banks was circulated during 2016. Copy of the said scheme is annexed hereto and marked as Annexure: H. The applicant is eligible to avail loan under said scheme.
c. The object of the scheme is that every meritorious student though poor is provided with an opportunity to Page 5 of 45 C/SCA/8453/2018 JUDGMENT pursue education with the financial support from the banking system with affordable term and conditions. The applicant is meritorious student and has secured admission in higher education course.
d. The principle borrower in case of education loan is the student who avails the loan. It is the student who will repay the loan after completion of the course of study. The bank gives moratorium for repayment of the loan. Therefore the position of the co-borrower is hardly a factor, which could be basis for rejection for application.
e. The purpose of loan is for completion of education of the applicant. The loan amount is not being disbursed or directed to the co-borrower.
f. If the bank refusing to grant education loan to the applicant on account of weak financial report of the parents of the applicant, it would amount to depriving the applicant from availing opportunity to get higher education.
g. The respondent is not justified in refusing the loan to the applicant on ground of low CIBIL score of the co- borrower. Status or standing of the co-borrower is not a criteria at all.
h. In case of denial by the respondent to sanction and disburse loan as requested by the applicant, the applicant will be deprived of undergoing the PGDM course at IMI."Page 6 of 45
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5. In response to the notice issued by this Court to the respondent Bank, Mr.Meena, the learned counsel has appeared on behalf of the Bank. Mr.Meena vehemently submitted that the relief which has been prayed for cannot be granted in exercise of the writ jurisdiction of this Court under Article 226 of the Constitution of India. Mr.Meena would submit that this Court may not issue a writ of mandamus to the Bank to sanction the student loan. Whether a loan should be granted, is a matter for evaluation by the Bank based on its policy and also on the credit worthiness of the borrower as well as the co-borrower. Mr.Meena would submit that having regard to the 'CIBIL' and 'CRIF' score of the father of the writ-applicant and also having regard to the policy of the Bank, it is not feasible for the Bank to sanction the loan as prayed for by the writ-applicant. Mr.Meena placed strong reliance on the following averments made in the affidavit-in-reply filed on behalf of the respondent Bank duly affirmed by one Shri Ravish Kumar Sinha, Chief Manager, Natubhai Circle Branch, Vadodara.
6. It is submitted that the petitioner has essentially prayed for sanctioning of educational loan to the amount of Rs.16.75 Lakhs. It is submitted that the petitioner, being a student, is eligible for student loan subject to compliance of circular which was issued by the bank and amended from time to time. It is submitted that the petitioner had made an application on 3/5/18 under the "SBI scholar loan scheme" for an amount of Rs.16.75 Lakhs.Page 7 of 45
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7. It is submitted that the "SBI scholar loan scheme" is governed under the circular dated 4/1/2018 along with circular dated 10/7/2017 which has been amended/clarified vide circular dated 17/1/2018.
8. It is further submitted that since the petitioner had applied for "Scholar loan" above Rs.7.5 Lakhs, the report of the petitioner along with the co-borrower is required to be cross checked with 2 credit bureaus.
That in compliance of circular dated 17/1/2018, the background of the petitioner and the co-borrower was checked with two credit bureaus namely "CIBIL" and CRIF High Mark". That both the reports gave a negative opinion with respect to the background of the co- borrower as the co-borrower had a low score of 300 in "CIBIL" and 588 in "CRIF High Mark" which is not acceptable. It is also submitted that the co-borrower i.e. the father of the petitioner happens to be a habitual defaulter with respect to various credit cards. A chart showing the number of defaults so far as the credit cards are concerned is as under:
Sr. Name Account Sanction Disbursal Written Suit Out-
No Type Amount Date Off Filed standing
Total
1. JOYESH Credit 162467 30-11-2006 162467
MUKUND
Card
SAMPAT
2. JOYESH Credit 174423 29-03-2006 174423
MUKUND
Card
SAMPAT
3. JOYESH Credit 168834 18-09-2007 168834
MUKUND
Card
SAMPAT
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4. JOYESH Personal 535911 09-12-2009 327950
MUKUND
Loan
SAMPAT
5. JOYESH Housing 4700000 09-09-2009 0 Yes 54,75,419
MUKUND
Loan
SAMPAT
6. JOYESH Credit 27735 29-04-2008 27735
MUKUND
Card
SAMPAT
7. JOYESH Credit 741357 26-11-2001 38484
MUKUND
Card
SAMPAT
9. From the aforesaid chart, it would be clear that the co-
borrower in the present case is a habitual defaulter and is likely to defaults again in an event; the petitioner is unable to pay the proposed loan. Further, it has come to the notice of the bank that the co- borrower has also defaulted in a housing loan which was given by the axis bank amounting to Rs.37 Lakhs.
10. It is further submitted that as per circular dated 17/1/2018 (annexed herewith as Annexure R1), the applicant's proposal can be rejected by the bank if the account status for secured loan/unsecured loan/ credit card is :
a. Suit filed b. Willful default c. Suit Filed (willful default) d. Suit filed and written off e. Suit filed (Willful default) and written off
11. It is in light of these abovementioned facts, that the bank had no option but to reject the application of Page 9 of 45 C/SCA/8453/2018 JUDGMENT the applicant as the co-borrower had a low score of 300 and falls within the definition of "high-risk" in the report of credit bureau.
12. It is submitted that the circular relied by the petitioner is concerned, the same are old circular and the same is not applicable as on today especially since the petitioner had applied for loan in the month of May, 2018."
6. Mr.Meena has also filed an additional affidavit on behalf of the Bank, wherein the following has been stated :
"...It is submitted that the petitioner herein has subsequently approached the answering respondent bank with another co- obligator/co-borrower for the student loan. However the definition of co-obligator/co-borrower has been defined in the circular dated 31.08.2018, wherein the following requirements must be fulfilled by the co-obligator/co- borrower :
i. The co-obligator should be parent/natural guardian of the student borrower.
ii. In the case of married person, co-obligator can be spouse or the parent(s)/parent-in-law.
iii. Wherever parents/guardians are not there, the branches may consider grandparent as co-borrower to the loan taking into account their net worth.Page 10 of 45
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iv. The co-obligator should not have an adverse credit
history.
The copy of the circular dated 31.08.2018 is annexed herewith and marked as "Annexure R1"."
7. Mr.Desai, the learned counsel appearing for the writ- applicant, in rejoinder, submitted that the eligibility criteria which is now being sought to be fixed for the purpose of grant of student loan is something contrary to the contents of the letter in the form of an email received by the writ-applicant from the State Bank of India, Alipore Branch, Kolkata. The contents of the letter relied upon by Mr.Desai are as under :
"Madam / Dear Sir, Greetings from SBI Alipore Branch.
Congratulations on your selection for PGDM course in IMI Kolkate.
Our Branch is the designated Branch for Sanction of SBI Scholar (Education) Loan for the above Course should you require Loan for admission to the given Course, we will be happy to assist you. We can sanction Loan up to Rs.20,000 Lacs for the given Course without any Collateral Security. We are attaching a Write-up containing all features of the Loan. We are also attaching the Loan Application Form for your use in case you decide to avail the facility.Page 11 of 45
C/SCA/8453/2018 JUDGMENT If you have any further queries, please contact us at [email protected]. You can also call the following Officers of our Branch at the numbers given below:
Chief Manager- 9674713350
Relationship Manager-
(Premier Banking) 9674719922
Deputy Manager (Loan) 9674713918
You can also send SMS by "IMI" at numbers given above for a callback.
Yours faithfully, Chief Manager State Bank of India Alipore Branch Kolkata Mobile: 9674713350."
8. Thus, placing reliance on the above referred communication of the Bank, Mr.Desai submitted that the insistence on the part of the Bank for a collateral security is something contrary to their own policy and would also defeat the very object of providing financial assistance to a student for higher studies. In such circumstances referred to above, Mr.Desai prays that there being merit in the writ-application, the Page 12 of 45 C/SCA/8453/2018 JUDGMENT same be allowed and a mandamus be issued to the Bank to sanction and disburse the loan in favour of the writ-applicant.
ANALYSIS :
9. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for my consideration is, whether the writ- applicant is entitled to the reliefs as prayed for in the writ- application.
10. Before I advert to the rival submissions canvassed on either side, let me give a fair idea about the educational loan scheme, the objective of the scheme, etc.
11. In the aforesaid context, I have to my advantage a very exhaustive judgment delivered by a Division Bench of the Madras High Court authored by Hon'ble Justice R.Banumathi (as Her Ladyship then was) in the case of A.Kasinathan v. The Branch Manager, Canara Bank, Town Hall Road, Madurai (Writ Appeal filed under Clause 15 of the Letters Patent in W.P. (MD) No.10425 of 2011, decided on 20.04.2012).
12. Educational Loan Scheme - Background facts :- 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 endeavour to provide primary education to all on a universal basis, higher education is progressively moving Page 13 of 45 C/SCA/8453/2018 JUDGMENT into the domain of private sector. With a gradual reduction in government subsidies higher education is getting more and more costly and hence the need for institutional funding in this area. (vide Reserve Bank of India Guidelines for "A Model Educational Loan Scheme").
13. It was felt that loans for education should be seen as an investment for economic development and prosperity. In the meeting held on 13.06.2000, the Honourable Finance Minister highlighted the role of commercial banks in facilitating pursuit of higher education by poor and meritorious students and expressed the need to have a comprehensive educational loan scheme prepared that could be adopted by all the Banks.
14. In pursuance thereof, the Indian Banks Association constituted a study group to examine the issue. Based on the recommendations of the study group, a comprehensive Model Educational Loan Scheme was prepared by the Indian Banks Association for adoption by all banks. The Scheme aids at providing financial support from the banking system to deserving/meritorious students for pursuing higher education in India and abroad.
15. Objectives of the Scheme : Model Scheme prepared by Indian Banks Association was accepted by the Government of India, Ministry of Finance, Department of Economic Affairs. The Model Educational Scheme so prepared by IBA was circulated by the Reserve Bank of India in RPCD.PLNFS.BC.No.83/ 06.12.05/ 2000-01 dated 28.4.2001 for implementation by banks. The Page 14 of 45 C/SCA/8453/2018 JUDGMENT Educational Loan Scheme outlined below aims at providing financial support from the banking system to deserving/ meritorious students for pursuing higher education in India and abroad. The main emphasis is that every 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. No deserving student is denied an opportunity to pursue higher education for want of financial support. In short, the scheme aims at providing financial assistance on reasonable terms to the poor and needy to undertake basic education, to the meritorious students to pursue higher/professional/ technical education. The said educational loan scheme contains broad outlines as to student eligibility, expenses considered for loan, quantum of finance, security, sanction/disbursement, repayment, follow up, processing charges, capability certificate and other conditions.
16. As per the IBA Scheme, for studies in India, students will be eligible for a maximum loan of Rs.7.50 lakhs and for studies abroad, the students will be eligible for a maximum of Rs.15 lakhs. The students, who borrow the amount need not repay the loan during the course of education plus one year. After one year of their studies, the students will have 5-7 years to repay the loan amount.
17. Based on the guidelines framed by IBA circulated by the Reserve Bank of India (RPCD. PLNFS. BC.No.83/06.12.05/2000- 01 dated 28.04.2011), the Nationalised Banks have been implementing the guidelines while granting educational loan to students.
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18. Let me now look into the scheme framed by the State Bank of India as regards the student loan.
"SBI SCHOLAR LOAN SCHEME 2.1 PURPOSE Loans will be granted to deserving / meritorious students for pursuing full time courses in India at selected premier and reputed institutions identified by the Bank.
2.2 STUDENT ELIGIBILITY • Should be an Indian National.
• Secured admission to full time professional / technical courses through Entrance Test / Selection process in any of the selected Premier Institutes as given in Annexure-VIII'.
(For latest list of Institutions covered under this Scheme, refer to website www.sbi.co.in or latest circulars).
NOTE : Customers who are visually challenged / persons with disabilities are not barred from availing loans if they fulfill scheme specific criteria.
2.3 ELIGIBLE EXPENSES • Fee payable to college / school/ hostel. • Examination /Library /Laboratory fees • Purchase of books/equipments/instruments/uniforms • Caution deposit/building fund/refundable deposit supported by institution bills/receipts [not to exceed 10% of tuition fees for the entire course] Page 16 of 45 C/SCA/8453/2018 JUDGMENT • Travel expenses/expenses on exchange programme* • Purchase of computer/laptop, if essential for completion of course* • Any other expense required to complete the course like study tours, visits to foreign universities in exchange programs, project, work, thesis, etc* *No voucher/receipt required, purpose (end use) need to e self-certified. Expenditure not to exceed 25% of the loan amount (upto a lumpsum amount of max Rs.1 Lac). Expenditure beyond 25% cap permitted subject to production of voucher/receipt.
NOTE: As a measure of de-risking the Education Loan portfolio, every effort must be made that the students who are availing Education Loans above Rs.7.5 Lacs from the Bank should be suitable covered by Life Insurance Policy. The Policy should cover the loan amount plus approximate estimated accrued interest as at the commencement of the repayment, for the full tenure of the loan i.e. study and moratorium period plus the loan repayment period as applicable. However, in case of students who are eligible for Interest Subsidy, the amount of life Insurance policy will be obtained for the loan amount only.
Though various insurance policies issued by different Banks/ Insurance Companies are available in the market, the students may be appropriately conseled to obtain suitable insurance policy from the SBI Group viz. Rinn Raksha Or Shield. However, the choice of Insurance Page 17 of 45 C/SCA/8453/2018 JUDGMENT company should be left to the borrower and the policy needs to be assigned in favour of the Bank. Since Rinn Raksha is a Group Credit Life Insurance Policy no separate assignment is required. However, Smart Shielf has to be assigned in favour of the Bank.
2.4 TYPE OF LOAN The loan will be sanctioned as a term loan.
2.5 OPENING OF LOAN ACCOUNT All Education Loans under SBI Students Loan Scheme (Except Staff Education Loans) are to be opened through LOS w.e.f. 01.07.2014. Opening of accounts (except Staff Education Loans) is now restricted from front end in CBs.
2.6 LOAN ACCOUNT
CATEGORY MAXIMUM LOAN LIMIT
Without any tangible With tangible collateral of full
collateral, only Parent/ value and Parent/Guardian as
Guardian as co-borrower co-borrower
List 'AA' Upto Rs.30 Lacs ---
List 'A' Upto Rs.20 Lacs Upto Rs.30 Lacs
List 'B" Upto Rs.20 Lacs ---
List 'C' Upto Rs.7.5 Lacs Above Rs.7.5 Lacs and upto
Rs.30 Lacs
2.7 COURSES COVERED
Regular full time Degree/Diploma Courses and not
certificate/part-time-courses, through entrance test/
selection process. SBI Scholar Loans are to be sanctioned for:Page 18 of 45
C/SCA/8453/2018 JUDGMENT • Core progammes only i.e. regular full time Degree / Diploma Courses and Executive Management Courses like PGPX EPGP of all IIMs and other reputed institutions like KLRI- Jamshedpur, MDI and ISB Hyderabad • Post Graduate Diploma in Business Analystics (PGDBA) offered by IIM Calcutta is also covered under this scheme.
• 15 month Part time 'Executive MBA Course' of Narse Monjee Institute of Management Studies (NMIMS), Mumbai • 3 years Post-Graduation Programme for Working Executives (PGPWE) of IIM Lucknow-Noida Campus, also known as Working Managers Programme (WMP) • 5 year integrated Progamme in Management course conducted by the Indian Institute of management (IIM) Indore is NOT covered under the scheme.
In respect of the following Institutions, Scholar Loans shall be sanctioned to the students seeking admission only for the following specific courses offered by the Institutions as mentioned below :
Institutions Courses eligible for finance under scholar loans IIT Kharagpur, IIT, Chennai, IIT B.Tech. and MBA (Regular 2 year Delhi, IIT Kanpur program) NIT Warangal B.Tech.
IIM Bangalore Regular 2 year PGP course and 1 year
EPGP for working executives
ISM Dhanbad B.Tech
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IIM Indore MBA (Regular 2 year program)
BITS Pilani B.Tech.
IIT Gandhinagar B.Tech.
LIBA Chennai Regular 2 year PGDM course
IIM Lucknow -Noida Campus Programme for Working Executives
(PGPWE)
Programme for Working Executives
(PGPWE)
For other course offered by the above Institutions, students, shall be sanctioned loans under SBI students Loan Scheme.
2.8 MARGIN • Upto Rs.4 Lacs : NIL • Above Rs.4 Lacs & Upto Rs.7.5 Lacs : 5% • Above Rs.7.5 Lacs : NIL 2.9 RATE OF INTEREST (Please refer to latest circular for current rate of interest and the latest product codes) List ROI (linked to 1 year MCLR (As on 30.06.2017) List AA MCLR + 0.35% (No further concession) List ALL IIMS MCLR + 0.35% A (No further concession) Other MCLR + 0.35% Institutes (No further concession) List B Further concession Page 20 of 45 C/SCA/8453/2018 JUDGMENT • 0.25% - if collateral security >= loan amount, • 0.25% - work experience of more than 2 years List C MCLR + 2.00% Further concession • 1% concession, if interest is serviced during course and moratorium period.
• Loans to be sanctioned only on floating rate basis. • Interest is to be debited on simple interest rate basis during the course period and the repayment holiday / moratorium period.
• Penal interest for loans above Rs.4 lacs @ 2% on the amount of default for the period of default, over and above the applicable rate if the EMIs remain unpaid for a period of 30 days from the due date, for any reason, including a bounced cheque.
• The existing borrowers under Base Rate linked rate will be permitted to switch-over to the MCLR linked rated for which a fee of Rs.500+ applicable Service Tax will be charged.
2.10 PROCESSING FEE : NIL 2.11 SECURITY The loan would be sanctioned jointly in the name of the student and his parent / guardian. In case of married person, co- obligator can either be spouse or parent -in- law, Parental co- obligation can also be substituted by a suitable third party guarantee.
Category Maximum loan limit
List 'AA' Upto Rs.30 Lacs -NA-
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List 'A' Upto Rs.20 lacs Upto Rs.30 lacs
List "B" Upto Rs.20 lacs -NA-
List 'C' Upto Rs.7.5 lacs Above Rs.7.5 lacs and upto
Rs.30 lacs
2.12 SECURITY AND RECOMMENDED MARGINS
AGAINST SECURITY
• The security can be in the form of land / building / Govt. Securities/ Bond issued by PSUs / Units of UTI, NSC, KVP, LIC policy, gold, shares / debentures, Bank Deposit in the name of student/ parent / guardian / any other third party and such other tangible liquid securities as may be deemed appropriate by the sanctioning authority subject to the margins stipulated in the scheme for finance against the securities concerned.
• The recommended margins for type of security is as under:
i. Land & Building - 10%
ii. Govt. Securities, Bond issued by PSUs, NSCs, Bank
Deposits, RBI Relief Bonds etc - NIL (fact value or issue Price of the security / bond, whichever is lower, to be reckoned as value of security), iii. Life Insurance Policies- Surrender Value.
• In case of immovable property offered as collateral, SARFAESI complaint property only to be taken as security Page 22 of 45 C/SCA/8453/2018 JUDGMENT • Wherever the land/ building is already mortgaged, the unencumbered portion can be taken as security on 2nd charge provided it covers the required loan amount. We clarify that a second charge on the property can be accepted provided the market value thereof, as per acceptable current valuation, is adequate to cover our loan also after providing for liability towards the 1st mortgage.
• In case the loan is given for purchase of compute the same to be hypothecated to the Bank.
• All charges in connection with valuation of property, search report from Bank Advocate and Stamp Duty etc. to be borne by the borrower.
2.13 SANCTION AND DISBURSEMENT OF LOAN • Scholar loan to students, who have secured admission to the selected institutions, will be sanctioned and disbursed from the Campus/ designated branch or RBO and de-linked from CPCs. However, the loan will be sanctioned as per the Delegation of Financial powers vested with the Branch.
• In addition to existing designated campus branches, all MMGS-III and above incumbency branches will also sanction the Scholar Loans, as per the convenience of student / parent.
• If the loan amount exceeds the Delegation powers of the Campus / Designated branch, the same will be sanctioned by the RBO concerned.
Page 23 of 45C/SCA/8453/2018 JUDGMENT • Loan Documents will be maintained at Campus / designated branch till the loan is fully disbursed, after which it will be handed over to the CPC concerned."
19. Mr.Meena, the learned counsel appearing for the Bank also invited my attention to one e-circular issued by the Bank dated 17th January 2018 as regards the 'CIBIL'/'CIC' report requirement and deviation/discretionary powers for approval of deviation. The same reads as under :
"CIBIL Consumer Credit Information Report (CIR) is used in the Bank for the purpose of ascertaining the loan applicant's credit discipline. Among other things CIR contains repayment history of up to 36 months in each loan / credit facility availed by the borrower from the CIBIL member institutions.
2. Extent Instructions:
As per extant instruction regarding CIBIL / CIC under Education Loans, it is mentioned in our Educational Loan Master Circular No. NBG/PBU/PL-EDUCATION/14/2017- 2018 dated 10.07.2017, as under:
"The sanctioning authority may consider loan proposals from students in cases where the parent / guardian is defaulter after satisfying about the background of the student and if the margins and security norms etc., are met by the student and de- linked from such defaulter/co-borrower and replaced by another co-borrower."Page 24 of 45
C/SCA/8453/2018 JUDGMENT Operating units have to obtain Credit Information Report (CIR) from one or two CICs as applicable based on the following table:
Sr. Educational Loan Variants CIR to be taken No.
1. Student Limit up to Rs.4 lacs Report from One Credit Loans (unsecured) Bureau Limit above Rs.4 Lac & Report from Two Credit upto Rs.7 Lac (unsecured) Bureau Limit above Rs.7.5 Lacs Report from Two Credit (Secured) Bureaus.
2. Scholar Limit upto Rs.4 Lacs Report from Two Credit Loans (unsecured) bureaus Limit above Rs.4 Lacs & Report from Two Credit upto Rs.7.5 Lacs Bureaus Limit above 7.5 Lacs (Both Report from Two Credit Secured & Unsecured, as Bureau.
the case may be)
3. Global Ed-Vantage Loans (secured) Report from Two Credit Bureau.
4. Skill Loan (Unsecured) Report from One Credit Bureau.
5. Other Limit upto Rs.4 Lacs Report from One Credit Education (unsecured) Bureau Loan Variants Limit upto Rs.4 Lacs & Report from Two Credit upto Rs.7.5 Lacs Bureau.
(unsecured)
Limit above Rs.7.5 Lac Report from Two Credit
(Both Secured & Bureau.
Unsecured, as the case
may be)
The selection of CIC to obtain Credit Information Report(s) under Education Loans is as under:
Page 25 of 45C/SCA/8453/2018 JUDGMENT Primary Secondary Next CIC# Next CIC# CIBIL CRIF High Mark Experian Equifax
# In case of "NO HIT" in the preferred CICs databse.
However, there is no clarity on checking the CIR of student- borrower / guarantor (if any) & decisions / deviations regarding 'Account Status' other than 'Bank' in the CIR.
3. Modifications:
In order to further facilitate the Operating Units to take better credit decisions under our various Education Loan Scheme, the Competent Authority has approved as under:
For student-borrower • CIBIL Score should be-1 or more than 650 for non-collateralized educational loan.
• CIBIL Score should be-1 more than 600 for collateralized education loan For co-borrower • CIBIL Score should be-1 or more than 650 for non-collateralized educational loan.
• CIBIL Score should be-1 more than 600 for collateralized education loan • If not, change the co-borrower.
The permissible deviations/discretionary powers for CIBIL/CIC under Education Loans is attached as Annexure-I.
4. Please arrange to advise all operating unit under your control accordingly."
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20. It appears from the materials on record, more particularly, the master circular etc. that the policy of the State Bank of India as regards the student loan is that the loan would be sanctioned jointly in the name of the student and his parent/guardian. The parent/guardian would be a co-borrower. However, at the same time, the policy of the Bank is also to ensure that the co- borrower fulfills the necessary requirements as regards the 'CIBIL' and 'CRIF' score.
21. As the co-borrower of the writ-applicant, i.e. the father, is shown to be a willful defaulter with respect to the various payment of credit cards, etc. including the failure to repay the personal loan as well as housing loan and also having regard to the fact that the civil suits have been filed for recovery of the money, this Court inquired with Mr.Meena, the learned counsel appearing for the Bank, whether any other person with good financial condition and record can be a co-borrower along with the writ-applicant or not. In response to this query, Mr.Meena clarified, by way of an additional affidavit filed on behalf of the Bank referred to above, that wherever parents/guardians are not there, then according to the policy of the Bank, the grandparents can be the co-borrower. No other person can be the co-borrower along with the writ-applicant for the purpose of student loan.
22. In this regard, Mr.Meena invited the attention of this Court to one another e-circular dated 31st August 2018, which reads as under :
Page 27 of 45 C/SCA/8453/2018 JUDGMENT
"The Chief General Manager,
State Bank of India,
Local Head Office,
All Circles
Dear Sir/Madam,
PERSONAL BANKING ADVANCES
EDUCATION LOANS
CO-BORROWER REQUIREMENT
In order to ensure that no meritorious student is deprived of education loans in the absence of parent/natural guardian, the Competent Authority has approved as under :
Parameter - Co-Borrower Requirement Extant Instruction Revised Modification The co-obligator should be parent/ In addition to the extant instructions, in natural guardian of the student cases where the parent/ natural borrower. guardian/ spouse/ grandparent are not alive, the Operating Units may Wherever parents/ guardians are consider a 'Major' sibling/ Relative/ not there, the branches may Third-party acceptable to the Bank consider grandparent as co- as a co-obligant to the loan account. borrower to the loan taking into account their net woth.
The co-obligator should not have an adverse credit history.
2. Please arrange accordingly.
Yours faithfully, Sd/-
(Sophy P.Mathew) For Chief General Manager (PB)"
23. It appears from the materials on record that the writ- applicant has a good academic record. He completed his Page 28 of 45 C/SCA/8453/2018 JUDGMENT graduation in the Business Administration from the well renowned Maharaja Sayajirao University of Vadodara in June 2017. Thereafter, he successfully cleared the CAT 2017 examination conducted by the Indian Institute of Management by securing 84.87 percentile. Having regard to his performance in the CAT 2017 examination, the International Management Institute, Kolkata, granted admission to him to the Post Graduate Diploma in the Management Programme (PGDM). The fees for the entire course is to the tune of Rs.14,67,598=00 (Rupees Fourteen Lakh Sixty Seven Thousand Five Hundred Ninety Eight Only). It also appears that the writ-applicant so far of his own has made payment of Rs.2,22,500=00 (Rupees Two Lakh Twenty Two Thousand Five Hundred Only) to the Institute. The second installment towards the fees to be paid is now due. In such circumstances, the writ-applicant is desperately trying to obtain student loan for pursuing higher studies.
24. The moot question for this Court to answer is, whether the writ-applicant can assert, as a matter of right, that the bank should sanction and disburse the student loan in his favour. I am of the view that the writ-applicant, as a student, has no inherent right to educational loan.
25. No inherent right to educational loan :- From the Scheme of Article 21A of the Constitution of India, it is the primary obligation of the State to provide free and compulsory education to all children of the age of 6-14 years and in the case of Society for Un-aided Private Schools of Rajasthan v. Union of India and another, (2012) 6 SCC 1, the Supreme Court upheld the constitutional validity of the right of children to free and Page 29 of 45 C/SCA/8453/2018 JUDGMENT compulsory education under the Right to Education Act, 2009, which provides for free and compulsory education to children between age of 6 and 14 years and mandates the government/aided/non-minority and unaided schools to reserve 25% of the students for these children. There is no such fundamental right to higher education. Of course, under Article 41, the State, shall within its economic capacity and development, make effective provision for securing the right to education. In terms of Article 21A and Article 41, while there is a right to education, there is no inherent right to educational loans.
26. Principles of lending loans :- The essence of banking business is receiving money on current account for deposit from the public, repayable on payment by cheque, draft or otherwise and lending or investing the same. Only from out of the interest that is earned the banks will have to pay the salary to their staff, pay interest to their depositors and transact bank's business, maintain the Bank and meet other expenses.
27. The banks should follow the well-known principles of sound lending : (i) Safety - the foremost principle of sound lending is to ensure the safety of the funds lent. While lending money, the banks must carefully consider the chance of its being repaid by the borrower along with interest; and (ii) Profitability - the commercial banks are profit-earning institutions; and the nationalized banks are no exception to this. They must employ their funds profitably so as to earn sufficient income out of which the banker is to pay interest to the depositors, salaries to Page 30 of 45 C/SCA/8453/2018 JUDGMENT the staff and to meet various other establishment expenses and distribute dividends to the shareholders. The rates of interest charged by the bankers primarily depend on the directives issued by the Reserve Bank of India.
28. Social objectives :- The nationalised banks, while sanctioning loans, should give priority to the national interest and also the economic empowerment to the downtrodden. Of course, it is the responsibility of the banks to ensure that the credit flows to the neglected sections and underprivileged sections of the society. It is with this objective that the Educational Loan Scheme introduced as socially and economically relevant from the Indian Banking Industry. Rightly the Reserve Bank of India has included "Educational Loans" as a part of priority sector lending of Banks.
29. Viability of the Scheme :- While the emphasis is on granting of educational loans as a priority sector lending of banks, the banks cannot ignore its general principles of lending. The banks are dealing with public money entrusted by it. In any lending, the banks should carefully inquire into the reputation and standing of the borrower and his capacity to repay and viability of the scheme, lest, it would become a non-performing asset.
30. As is well-known, while lending loan, the main concern of the bank is safeguarding the amount which was sanctioned and advanced and the chance of getting the money back with interest. If the policy of the State Bank of India is to sanction Page 31 of 45 C/SCA/8453/2018 JUDGMENT student loan along with a co-borrower, and if such co-borrower is found to be in a poor financial condition or a defaulter, then the bank would be justified in rejecting such a co-borrower. The student cannot assert, as a matter of right, that as his future would be at stake and his higher studies would suffer the bank should sanction and disburse the loan without insisting for any collateral security, etc. I am conscious of the fact that the scheme attempts to remove the financial impediments for otherwise meritorious students. The scheme envisages recovery of the loan after the completion of studies and after the student takes up employment. If the student has employment potential, the loan may not become a Non-Performing Asset. However, this action would be a matter of policy for the bank. It would be difficult for the bank to read or predict the future of a student. Howsoever meritorious a student may be and howsoever glorious the academic record of a student, the same by itself is not sufficient to presume that the student would get good employment and he would be in a position to earn and repay the loan amount to the bank. Normally, there cannot be any direction by way of a writ of mandamus to the bank to provide loan to a particular party/borrower, which essentially comes within the realm of contract. The proposal when accepted, is put into shape as an agreement, followed by consequential steps, granting the loan subject to the agreement to have it repaid with interest in the manner specified. Whether a person is eligible to obtain the loan, what should be the extent of the loan, what should be the terms, whether any security is to be collected, and if so, to what extent; what are the parameters to be observed, particularly when such loans are pursuant to a specific scheme formulated by the Government, like the one in the present case Page 32 of 45 C/SCA/8453/2018 JUDGMENT (sought to be implemented as part of the national objective) giving appropriate directions through the Reserve Bank of India etc. are to be considered by the contracting parties, i.e. the borrower and bank. However, the matter may require some judicial scrutiny only if there is a challenge as to any deviation being made by the concerned bank, contrary to the mandate/ directives given by the Reserve Bank of India in the promotion/ implementation of the national objective/policy/scheme. It is not the case of the writ-applicant in the present case that the decision of the State Bank of India in refusing to extend the benefit of educational loan is quite contrary to the scheme and policy. According to the writ-applicant, the policy of the State Bank of India to ask for a solvent co-borrower is unreasonable. This is a very grey area for this Court to enter into in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India. Besides the same, there is no challenge in the present writ-application to the policy of the Bank.
31. Mr.Desai, the learned counsel appearing for the writ- applicant has placed reliance on a decision of the Madras High Court in the case of T.Mohan Vijayakumar and another v. The General Manager, Indian Bank and others (Writ Petition (MD) No.7788 of 2018, decided on 18th April 2018). Much emphasis is laid on the following observations made by the Court :
"Admittedly, the principal borrower insofar as the education loan is concerned is the student, who avails the loan. It is brought to the notice of this Court by the learned counsel for the petitioner that it is the petitioner, who has to repay the loan after the completion of her course of study and the bank Page 33 of 45 C/SCA/8453/2018 JUDGMENT gives moratorium for the repayment of the loan. Therefore, it is contended that the position of the co-obligant/co-borrower is hardly a factor, which could be basis for rejection of an application. Identical issue as in this case came up for consideration before this Court in W.P.No.12432 of 2011 [R.Sahana vs. The manager, Oriental Bank of Commerce and others] and the learned Judge (Justice D.Hariparanthaman), while considering the similar case, where the student's father was a defaulter in respect of a loan availed by him, after analyzing the scheme relating to the education loan, which was produced by the respondent bank therein held as follows :-
"10. According to the Bank, since the petitioner's parents became defaulters and their loan accounts became NPA, the Bank could not disburse the educational loan to the petitioner.
11. In my view, the educational loan could not come within the purview of the loan that is mentioned in the Loan Policy Review and Modification (2009-10) produced by the Respondents Bank. If the petitioner's parents want the disbursal of any loan amount even after they became defaulters, the Bank could refuse to disburse the amount. In this case, it is not the request of the petitioner to disburse the loan to her parents. On the other hand, it is her case that the sanctioned educational loan should be disbursed to her and the same cannot be stopped citing that her parents became defaulters. In my view, the submissions made by the learned counsel for the petitioner is well founded and Page 34 of 45 C/SCA/8453/2018 JUDGMENT the respondents Bank could not stop the educational loan that too for the final year. If the arguments of the Bank is accepted, the same could not advance the object of the scheme providing assistance by way of educational loan. If the Bank refuses to disburse the loan for the 4th year, that would frustrate the very purpose of the scheme and if the petitioner discontinues her studies at the final year, the loan amount so far paid without security could become sticky. Even for the interest of the Bank, they should see that the loanee student completes education so that the Bank could get back the loan advanced. Though the parents are to be made as co-applicants, it is stated in the scheme that irrespective of their means, loan upto Rs.4,00,000/- should be sanctioned without any security. Further, as per the scheme, repayment has to be made by the petitioner student. Repayment clause states that repayment has to be made twelve months after completion of the course or six months after getting job, whichever is earlier. The clause relevant to the repayment is extracted hereunder:
"Repayment In 84 months in Equated
Monthly Installments
Moratorium Period 12 months after completion of
the course or 6 months after
getting the job, whichever is
earlier.
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C/SCA/8453/2018 JUDGMENT
Regional Heads are empowered to permit extension in study period upto a maximum of two years.
Note: In the cases where loan has been sanctioned for the two/dual courses, moratorium period.
12. Therefore, the Bank is not justified in refusing to disburse loan to the petitioner for the final year on the ground that her parents became defaulters. Hence, I am inclined to direct the respondent Bank, to forthwith disburse of the loan to the 3rd respondent college payable for the final year B.Tech Course of the petitioner The writ petition is disposed of in the above terms. No costs...."
5. The above order is self explanatory, restricting the scope for refusal to entertain a student's loan application on flimsy grounds. In the instant case, the respondent bank has raised queries in the form of clarifications, calling upon the student to explain his one year delay in admission and by placing reliance on the CIBIL report of the petitioner's father. As observed by this Court in the aforesaid judgment, the petitioner would be the principal borrower and the status of his parents or family members cannot be a factor for rejection of the petitioner application. It is rather unfortunate that the aforesaid order came to be passed in the year 2011 and various subsequent orders of this Court had also passed, even then the financial institutions have been continuing to reject applications of this nature on similar grounds. In my view, the rejection on the ground that the CIBIL reports of the petitioner's family members cannot be a Page 36 of 45 C/SCA/8453/2018 JUDGMENT ground for rejection of the application and that the bank may not be justified in seeking for an explanation for his delayed admission."
32. Mr.Desai submitted that the respondent Bank is not justified in declining to sanction the student loan on the ground that the father, i.e. the co-borrower, is a defaulter and his 'CIBIL' score is very poor. Mr.Desai would submit that if such stance of the respondent Bank is accepted, the same would frustrate the very object of the scheme. He laid much emphasis on the fact that the object of the scheme is to see that every meritorious student, though poor, is provided with an opportunity to pursue education with the financial support from the bank system with affordable terms and conditions. I am afraid, it is very difficult for this Court to accept such a broad submission canvassed by the learned counsel appearing on behalf of the writ-applicant.
33. As noted above, if the policy of the State Bank of India is to disburse the student loan jointly in the name of the student and his parent/guardian as a co-borrower, and if the co-borrower is not fulfilling the necessary tests, then in my view, the bank would be justified in telling the student that it would not be permissible to sanction the loan having regard to the policy.
34. In the aforesaid context, I may refer to and rely upon the decision of the Madras High Court in the case of A.Deepika v. The Branch Manager, State Bank of India (Writ Petition No.1661 of 2018, decided on 6th June 2018), wherein a learned Single Judge has observed as under :
Page 37 of 45C/SCA/8453/2018 JUDGMENT "Banks/Financial Institutions are giving loan to several persons under various political pressures and ultimately public money is being misappropriated and defaulters flee from the country. Innocent employees, who are forced to sign the loan grant are ultimately taken to task. Whether the loan amount is small or huge, it needs to be recovered from the defaulters. Rather running behind the defaulters, a loan can better be rejected at the threshold by identifying a person's credentials. In this case, the Bank has rightly done so, as the petitioner's father has defaulted in paying several loans."
35. Mr.Desai also placed reliance on one another decision of the Madras High Court in the case of K.Alagarsamy v. The District Collector, Madurai District, Madurai and another (Writ Petition (MD) No.16836 of 2018, decided on 27th August 2018), wherein the following has been observed :
"11. As rightly held by the learned Judge of this Court in the order dated 12.04.2018, passed in W.P.(MD) No.5144 of 2018, default by the parents in discharging of some other loan availed by them cannot be a valid basis for denial of sanction of educational loan for their children. Moreover, the other reasons cited by the second respondent ? Bank that the employability and the accreditation of the College, in which the petitioner's daughter is admitted, are concerned, the same also cannot be a valid basis for denial of sanction of educational loan, since the College was founded only during 2015 and the first batch of graduates is yet to emerge. In any event, admittedly, the College, in which the petitioner's daughter is admitted and pursuing her higher Page 38 of 45 C/SCA/8453/2018 JUDGMENT education, is affiliated to the Tamil Nadu Agricultural University, which is a State University and once the College is affiliated to a recognized University, the question with regard to accreditation of the individual College would not arise at least for the purpose of grant of educational loan. In any event, it is needless to mention that Degrees would be ultimately awarded by the University and not by the College. Therefore, the issue of accreditation, which is held against the petitioner, cannot be countenanced either under law or on facts. Therefore, the same has to be rejected outright.
12. In the overall circumstances, this Court is of the view that the grant of educational loan to the aspiring students cannot be perilously depend on the whimsical approach of the concerned Branch of the Nationalized Banks. The Bank cannot be allowed to find and fish out norms in order to deny educational loan to the aspiring students. On the other hand, in the present context of higher education, being pursued mostly in Private Institutions, it is incumbent on the part of the Nationalized Banks to lend a succor to the meritorious students, who seek to pursue their higher education in order to achieve excellence in furtherance of their dream. This is more particularly so, when the State itself denuded of its fundamental duties to provide free higher education to all its citizens. When the State has abdicated its primary responsibility in providing free education to its citizens and when the State has allowed plethora of private players to run professional and other educational institutions in the State and the mushrooming of such private Institutions has rendered the education a costly Page 39 of 45 C/SCA/8453/2018 JUDGMENT affair. In such scenario, it is imperative on the part of the Nationalized Banks to grant educational loan as far as possible in order to help the students, particularly from the poorer background, to achieve their dream and goal. In the absence of any considered approach by the Banks in alleviating the grievances of the poor people, who find it difficulty to provide good education to their children, the result would be that many deserving students would be denied of pursuing higher education only because of their poverty and non-affordability. Such a situation would not advance the cause of a welfare State. In the said circumstances, the Nationalized Banks have to assume larger social responsibility towards realisation of legitimate ambition of tens and thousands of students belonging to poor social and economic background, who could otherwise ill-afford to pursue their higher education.
13. Although this Court is conscious of the fact that public have invested their monies in the Banks and therefore, the Banks need to subserve the public interest as well, but at the same time, the right to pursue higher education, which is a constitutional right, cannot be denied to the deserving students, who are cursed with poverty and backwardness. Such a denial of educational loan will undermine the very essence of Article 14 of the Constitution of India, as they have equal rights for competing with the other fortunate students in pursuing higher education. Therefore, the essence of equality is rather more than well subserved them to find reasons to deny educational loan to the deserving poor students, who are aspiring to pursue higher education Page 40 of 45 C/SCA/8453/2018 JUDGMENT against all odds, which are loaded against them, in the poverty stricken State as ours. "
36. With profound respect I find it extremely difficult to subscribe to the views expressed by His Lordship of the Madras High Court in the case of K.Alagarsamy (supra). In the case on hand, the facts are totally different. The relevant scheme herein stipulates specifically the eligibility criteria. The eligibility criteria is not being fulfilled by the writ-applicant and, therefore, in such circumstances it would not be permissible or appropriate for this Court to issue a writ of mandamus to the bank.
37. At the cost of repetition, I state that the writ-applicant has not chosen to challenge the scheme, more particularly, the eligibility criteria fixed therein for the sanction of student loan, and on the other hand, he is seeking for issuance of mandamus only.
38. I may refer to and rely upon a Division Bench decision of the Allahabad High Court in the case of Pt.Nawin Sharma v. Branch Manager, Bank of India and others (Public Interest Litigation (PIL) No.54771 of 2015, decided on 24th September 2015). Hon'ble Chief Justice Dr.D.Y.Chandrachud (as His Lordship then was), speaking for the bench, has observed as under :
"Basically, we are of the view that the reliefs which have been sought in the terms as prayed cannot be granted in the exercise of the writ jurisdiction under Article 226 of the Constitution. Clearly, it would not be open to the Court to Page 41 of 45 C/SCA/8453/2018 JUDGMENT issue a mandamus to the Bank, in terms as prayed, to grant housing loans to prospective borrowers 'within the shortest possible time' in each case. Whether a loan should be granted, is a matter for evaluation by the Bank based on the creditworthiness of the borrower, the nature of the security offered and in terms of the priorities for lending. A general mandamus of this nature cannot be granted by the Court in the exercise of the writ jurisdiction under Article 226."
39. The Supreme Court has always emphasized that however intensive the judicial scrutiny of a public authority's decision, it is not open to the courts to take the decision-making function out of the hands in which the Parliament has placed it and assume that function themselves. In a case where a range of rational and proportionate policy option is open to the decision- maker, the decision which provides the best allocation of scarce resources is a question of social and economic evaluation. These are matters of political and administrative judgment, which the law leaves to those who are answerable to the makers of the law. They are not questions for a court of law.
40. Mandamus is one of the prerogative writs issued by the superior courts (High Court or Supreme Court), which is in the shape of command to the State, its instrumentality or its functionaries to compel them to perform their constitutional / statutory/public duty.
41. A writ of mandamus is an extraordinary remedy to be invoked only upon special occasion and in exceptional circumstances. It is intended to supply deficiency in law. It Page 42 of 45 C/SCA/8453/2018 JUDGMENT cannot be granted merely for the asking but has to be obtained where there is no alternative, efficacious and adequate remedy. It cannot be used as an appeal against the decision of a court, tribunal or an authority exercising statutory power. It can only be issued as a last resort where the court is satisfied that without its aid there would be failure of justice.
42. Mandamus is an action or judicial proceeding of a civil nature extraordinary in the sense that it can be maintained only when there is no other adequate remedy, prerogative in its character to the extent that the issue is discretionary, to enforce only clear legal rights, and to compel courts to take jurisdiction or proceed in the exercise of their jurisdiction, or to compel corporations, public and private, and public boards, commissions, or officers, to exercise their jurisdiction or discretion and to perform ministerial duties, which duties result from an office, trust, or station, and are clearly and peremptorily enjoined by law as absolute and official (P.R. Aiyar, Advanced Law Lexicon, (2005), Vol. III P. 2873.).
43. Mandamus is not a writ of right and is not granted as a matter of course (ex debito justitiae). Its grant or refusal is at the discretion of the court. A court may refuse mandamus unless it is shown that there is a clear legal right of the applicant or statutory duty of the respondent and there is no alternative remedy available to the applicant. (Union of India v. S.B. Vohra, (2004) 2 SCC 150)
44. The discretion of the court, however, is not arbitrary and it must be exercised fairly, reasonably and on sound and well- established legal principles.
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45. The court, in the exercise of discretion, must take into account wide variety of circumstances. It must consider the facts of the case, the exigency which calls for the exercise of discretion, the consequences of granting or refusing the writ, the nature and extent of injury likely to ensue by the grant or refusal of the writ, etc. In short, courts discretion must be governed by considerations of public policy, public interest and public good.
46. Before an applicant could get a writ of mandamus or an order in the nature of mandamus, he has to satisfy the court that the following conditions are fulfilled.
(a) The applicant has a legal right;
(b) The opposite party has a legal duty;
(c) The application is made in good faith;
(d) The applicant has no other alternative remedy; and
(e) The opposite party has refused relief, i.e. demand
and refusal.
47. In the overall view of the matter, although I have all the sympathy for the writ-applicant being a student, yet the reliefs granted by the courts must be seen to be logical and tenable within the framework of the law and should not incur and justify the criticism that the jurisdiction of courts tends to degenerate into misplaced sympathy and generosity and private benevolence. It is essential to maintain the integrity of legal reasonings and the legitimacy of the conclusions. They must emanate logically from the legal findings and the judicial results must be seen to be principled and supportable on those findings.
Page 44 of 45C/SCA/8453/2018 JUDGMENT Expansive judicial mode of mistaken and misplaced compassion at the expense of the legitimacy of the process will eventually lead to mutually irreconcilable situations and denude the judicial process of its dignity, authority, predictability and respectability. (see Kerala Solvent Extractions Ltd. v. A.Unnikrishnan and another, (1994)2 LLJ SC 888).
48. For the foregoing reasons, this petition fails and is hereby rejected.
(J.B.PARDIWALA, J.) /MOINUDDIN Page 45 of 45