Education loan beyond INR 4 lakh can’t be demanded as right, observes Madras HC

In a significant development, the Madras High Court on Monday said that an education loan of more than INR 4 lakh cannot be demanded as a right without any security, and the sanction of the loan is covered by the bank guidelines.

Justice S Vaidyanathan made the remark while hearing a plea filed by R Sanskrit, a first-year MBBS student of Shri Sathya Sai Medical College and Research Institute, Tiruporur, seeking a direction to the Pallikaranai branch of the Indian Bank for sanctioning an education loan of INR 63.90 lakh towards the revised tuition fee for her MBBS course.

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

The petitioner had in 2016 applied for the loan, but it was not processed by the bank. Later, she had received INR 6 lakh as a scholarship to pursue her medical course.

The counsel for the Shri Sathya Sai Medical College & Research Institute, on the other hand, said that 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 INR 18,90,000 tuition fee as well as the annual hostel and application fees,” the counsel said, adding, “But she had failed to honour the commitment and stated that the educational loan was under process.”

The counsel further said that 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.”

On the other hand, the bank made it clear that under the guidelines for sanctioning educational loans for an amount of up to INR 4 lakh, no security was required, but beyond that, the conditions stipulated for sanctioning the loan would have to be followed.

While hearing the petition, the judge said that the petitioner hailed from a poor family and that her loan application was still pending from the bank.

“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, adding, “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 further said that 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 bank would have to process the application form as per the guidelines fixed and should sanction the loan as per the scheme,” the judge added.

The court made it further clear that if the fee is not paid, the petitioner will not be permitted to sit for the examination.