(2012) 235 KLR 280 IN THE HIGH COURT OF KERALA AT ERNAKULAM
Antony Dominic, J. W.P. (C) No. 270 of 2012 Dated this the 31st Day of January, 2012 Head Note:- Constitution of India, 1950 - Article 226 - Education loan – The Bank could not make the parents liable in any manner if the loan amount was less than Rs. 4 lakhs. Constitution of India, 1950 - Article 226 - Education loan – If the student has not completed the course within the duration specified, that does not absolve the student from the liability to make repayment of the amount due to the Bank. Kerala Revenue Recovery Act, 1968 - Education loan – Property of the parent who is not a party to the loan agreement cannot be subjected to revenue recovery action for realizing the liability that is due to the Bank. For Petitioners:
For Respondents:
J U D G M E N T 1. Challenge in this writ petition is against Exts. P2 and P3 revenue recovery notices issued at the instance of the respondent Bank. According to the petitioners, who are the parents of Smt. Jwala, an education loan of Rs.3,32,000/- was availed of by their daughter in 2004. The loan was for the purpose of completing her studies in B.Sc Nursing at the Vivekananda College of Nursing, Bangalore, it is stated that after completing 3 years of her study, since the institute did not have recognition of the authorities, students including their daughter was debarred from appearing for the public examination. As a result, the student had to join another college in September, 2007 where she is now undergoing her course in the final year. Meantime full amount of financial assistance from the Bank was availed of. On the allegation that default was committed in the matter of repayment, revenue recovery proceedings are now initiated. Petitioners challenge the revenue recovery proceedings on various grounds. First contention is that in terms of the scheme, the repayment is to start after one year of completion of studies or after 6 months of getting employment. It is stated that the student is only in the final year of the course and therefore, at present she cannot be accused of having committed default in the matter of repayment. The second contention raised by the petitioners is that they are in no way connected with the loan availed of to render them liable for revenue recovery action. Thirdly it is alleged that the revenue recovery authorities are proceeding to attach the property and the residential house where the petitioners are residing and according to the petitioners, the property exclusively belongs to the first petitioner who is neither the loanee nor even a guarantor. 2. However, the case of the Bank is that the duration of the course is 4 years and that the loan was availed of in 2004 and the moratorium period of one year has also expired. It is contended that even after the expiry of the said period no repayment was made and therefore the Bank was entitled to proceed to recover its dues 3. In so far as the liability of the petitioners is concerned, it is contended that the loan was granted to the student as well as guardian. It is stated that the 2nd petitioner has also signed the loan agreement and the other documents as guardian of his daughter and therefore the Bank was entitled to proceed against the 2nd petitioner also for recovering the dues. 4. I have considered the contentions. As already noticed, one of the contentions is that the property which is proceeded against exclusively belongs to the first petitioner, the mother of the student and that she is in no way concerned of the loan availed of. Therefore, according to the petitioners, her property is not liable to be proceeded against. Although the Bank has produced the application for loan, the loan agreement and the revival letters, none of these documents show that the first petitioner has either applied for the loan or signed the loan agreement or the other documents. In such a situation if the immovable property that is proceeded against is exclusively that of the first petitioner, such property cannot be subjected to revenue recovery action for realizing the liability that is due to the Bank. 5. Insofar as the contention of the petitioners that repayment of the loan is to commence only one year after completion of the study or after 6 months of getting employment is concerned, admittedly duration of the course in question is 4 years. The loan was availed of in 2004. By now more than 7 years have elapsed. In such a situation, for whatever be the reasons, if the student has not completed the course within the duration specified, that does not absolve the student from the liability to make repayment of the amount due to the Bank. In other words the student cannot contend that till he completes the course as he pleases the Bank should wait. Therefore I am not prepared to accept the contention of the petitioners that the student having not completed the course, is not liable to repay the amount due. Insofar as the contention that the petitioners are not liable for the loan in question is concerned, I have already found that the first petitioner is not liable. In so far as the 2nd petitioner is concerned, it is true that the 2nd petitioner has signed the loan agreement and other documents. However, the education loan in question is covered by Ext. R1(c) Model Education Loan Scheme. This Scheme provided that for loans above 2 lakhs, collateral security equal to 100% of the loan amount or guarantee of third person known to bank for 100% of the loan amount should be furnished and that an agreement should be executed by both student and parent - guardian. However, in the letter dated 28th April, 2001 issued by the Reserve Bank of India in paragraph 2 it has been stated thus: “2. Government of India, Ministry of Finance Department of Economic Affairs (Banking Division) has considered and decided to accept the Model Scheme prepared by IBA for implementation, subject to the following modifications; (i) xxxx xxxx xxxx (ii) xxxx xxxx xxxx (iii) No security may be insisted upon for loans upto Rs.4 lakhs. However, for loans above this amount, collateral security of suitable value or co - obligation of parents / guardians / third party along with the assignment of future income of the student for payment of installments may be obtained.” 6. Therefore the model loan scheme has been approved by the Reserve Bank of India with the aforesaid modification and surety cannot be insisted for loans up to Rs.4 lakhs. It is also clear that collateral security or co - obligation of parents / guardian need be furnished only for loans above 4 lakhs. Bank admittedly is bound by the Reserve Bank of India directions. Therefore, the Bank could not make the parents liable in any manner if the loan amount was less than Rs.4 lakhs. In this case admittedly the loan was only Rs.3,32,000/-. Therefore the loan should have been granted to the student on her own application and that too without surety of the parent. In such a situation the Bank could not have made the 2nd petitioner sign loan agreement and any agreement obtained from him is illegal. Therefore he is liable to be excluded from the liability for the loan availed of by his daughter. Thus in sum and substance, the petitioners who are parents of the loanee Smt. Jwala, cannot be made liable for the loan availed of by their daughter. Therefore this writ petition is disposed of quashing the revenue recovery proceedings initiated against the petitioners for recovery of the amount due to the Bank from Smt. Jwala, daughter of the petitioners. However, this shall not be to the prejudice of the Bank to continue recovery proceedings against Smt. Jwala. |
