Education loan of over Rs 4 lakh cannot be demanded as right: HC

The Madras High Court has said an education loan of more than Rs 4 lakh cannot be demanded as a right, without any security, and that its sanction is covered by bank guidelines.

Justice S Vaidyanathan passed the order recently, while disposing of a plea filed by R Sanskrit, seeking a direction to the Pallikaranai branch of the Indian Bank here, for sanctioning an education loan of Rs 63.90 lakh towards the revised tuition fee for her MBBS course in a private medical college.

According to the petitioner, she had applied for the loan in 2016, but it was not processed by the bank.

She had received Rs 6 lakh as scholarship for pursuing the medical course.

According to the counsel for the Shri Sathya Sai Medical College & Research Institute, the petitioner was admitted to the institute in the 2016-2017 academic year.

She had given a joint declaration, along with her father, to pay the Rs 18,90,000 tuition fee as well as the annual hostel and application fees, the counsel said.

However, she had failed to honour the commitment and stated that the educational loan was under process, the counsel submitted.

"That apart, the petitioner did not have sufficient attendance in the first year and she cannot be permitted to enter the second year, unless the first-year course is redone by her, after paying the balance fee due to the college," the counsel said.

On its part, the bank submitted that under the guidelines for sanctioning educational loans, for an amount of up to Rs 4 lakh, no security was required, but beyond that, the conditions stipulated for sanctioning the loan would have to be followed.

In his order, the judge said it was stated that the petitioner hailed from a poor family and that her loan application was still pending.

The college might allow her to attend classes for the first year as she would have to redo the course again by giving an undertaking with regard to the payment of the balance fee and it should be paid on receipt of the loan from the bank, the judge said.

If the petitioner was unable to get the entire amount as loan, she might have to pay the balance from her personal funds, the judge said.

"The loan application may be processed by the concerned branch of Indian Bank with respect to each academic year and the eligible amount may be sanctioned to the petitioner in order to enable her to pay the fees to the college," the judge said.

The bank would have to process the application form as per the guidelines fixed and sanction the loan as per the scheme, he added.

"The petitioner, as a matter of right, cannot demand a higher amount as loan without any security and the sanction of the loan is covered by the guidelines issued by the bank for availing education loans.

"If the fee is not paid, the petitioner will not be permitted to sit for the examination," the judge said.