High Court directs Bank of India to pay costs for denying education loan
Monday, March 15, 2010
Bank directed to pay Rs.5000 as costs to student for denying loan
Special Correspondent
CHENNAI: The Madras High Court has directed a nationalised bank, which refused to sanction educational loan to an engineering student, Rs.5000 as costs to him. It directed the bank to sanction the loan within two weeks.
Petitioner R. Dinesh stated that he was doing first year aircraft maintenance engineering at the Park School of Aeronautical Science in Coimbatore. He had applied in September last year to the Bank of India (BOI), Mallikarai branch in Salem district, for an educational loan of Rs.6.43 lakh. His father was a co-applicant.
The bank informed his father that the application was rejected as the course opted for by the petitioner had not been approved by the bank. The petitioner contended that the course had been approved by the Directorate-General of Civil Aviation. More than 10 students studying the same course in the same class had received loans from nationalised banks. Two had received loans from BOI's other branches. Therefore, the action of the bank was discriminatory.
Justice N. Paul Vasanthakumar said the bank's action was whimsical and discriminatory. If the bank branch to which the petitioner had submitted the loan application was not aware of the notification of the scheme, it could have sought guidance from the head office.
As held by a Division Bench, the bank being a nationalised one was bound by the scheme framed by the Centre and RBI. No other reason had been stated in the counter affidavit to deny the loan. As the petitioner was forced to file this petition, the bank branch was bound to pay costs to the petitioner.
