O R D E R

By  Sri.C.T.Sabu, President

          A brief description of the case:  1^st complainant is the daughter and a B.Pharm student.  2^nd complainant is her father.  1^st complainant had taken an education loan for completing her B.Pharm course from 2008 to 2011 from the 1^st opposite party.  Complainants were made to believe that this loan carries no  interest and repayment will be effected only after three years and this loan is sanctioned strictly  according to the guidelines of the Central and State governments beside the direction of RBI.  1^st opposite party also collected so many blank documents duly signed by the complainants.  Father was also made a party as a necessary applicant.  She was allowed more than two lakh, she took only two lakh.  A subsidy sanctioned to such education loan was also transferred to the bank – 1^st opposite party for which necessary papers were got signed from the complainant by the bank.  In the year 2011 first complainant completed the course in first class but she could not get any job soon after.  In the meantime complainant got a demand notice from the 1^st opposite party on 17/12/2012 for repayment of Rs.2,75,000/- with 14.65% interest from 5/12/2012.  A reply was sent through an advocate informing that monthly Rs.3,000/- will be deposited on the terms and conditions made to believe by the complainant.  A banker cheque for Rs.3,000/- was also sent along with a request to provide  copies of all documents  including the agreement.  Monthly payments were regularly made.  Despite opposite party was not prepared to provide the documents requested for.  Instead a reply notice was only sent to the complainant.  Complainant alleges that her father was added as a security unnecessarily against their existing guidelines which amounts to an illegal act, deficiency in service as well as unfair trade practice.  In the year 2013 she got a job in the Neethi Medical store managed by Irinjalakuda Service Co-operative Bank as Pharmacist with a monthly remuneration of Rs.6,000/- only.  Bank payment was managed from this income and she got married also.  The bone of contention advanced by the complainant is that opposite party has no legal right to charge interest as well to proceed against the complainant under Revenue Recovery Act.  Being an educational loan no interest can be charged and a liberal approach may be pursued for repayment of the loan.  In the instant case the act of opposite party are totally against all such guidelines and result financial sufferings and mental agony.  Therefore, this Forum may be pleased to order that no interest can be charged and no revenue recovery proceedings can be initiated being a deficiency in service as well as unfair trade practice.  Besides Rs.50,000/- may be granted towards compensation and also costs.

          Admitted the case.  Notice was ordered.  Opposite parties appeared through counsels.  Government Pleader (Additional) appeared for 2^nd, 3^rd and 4^th opposite parties Separate versions were filed.  1^st opposite party objects as follows:  Not maintainable either in law or on facts.  Allegations are denied except those admitted.  Educational loan is sanctioned strictly in accordance with guidelines by the competent authorities.  All allegations contrary to the above are incorrect, false and misleading and hence denied.  Complainants are fully aware and this opposite party had clearly conveyed every terms and conditions of the loan and duly consented and liable to be followed by the complainants.  Complainants are in receipt of all the documents that are executed and duly acknowledged by the complainant on 5/5/2008.  Repayment was delayed by the complainant and in the compelling circumstance only recovery proceedings were initiated.  Complainants are liable to repay the loan amount with interest as per the demand.  Complainants are financially sound and have required capacity to discharge their liability.  Complainants are not entitled to claim any relief as there is no deficiency in service, or unfair trade practice.  Complaint may therefore be dismissed with costs to the opposite party.

          More or less same contentions are taken by other opposite parties also.

          Then the case posted for evidence.  The points for consideration are the following:

1)Whether there is any deficiency in service on the part of opposite parties?

2)If yes,  what are the reliefs and costs?

          Both parties filed proof affidavits and documents.  Documents filed by the complainant are marked as Exts.P1 to P12.  Ext.P1 – lawyer notice by bank dtd. 17/12/12, Ext.P2 – Reply notice dtd. 4/1/13, Ext.P3 – Bankers cheque for Rs.3,000/-, Ext.P4 – Postal A/D card, Ext.P5 Lawyer notice dtd. 15/2/13 by bank, Ext.P6 – Lr. dtd. 22/2/13 enclosing cheque for Rs.3,000/-, Ext.P7 – Lr. dtd. 16/3/13 enclosing cheque for Rs.3,000/-, Exts.P8, P9,P10 – Pay in slips for Rs.3,000/- counterfoil, Ext.P11 – Certificate of passing B-Pharm in first class, Ext.P12 – Demand notice u/s 7. Documents of opposite party are marked as Exts.R1 to R13.  Ext.R1 – Lawyer notice dt. 17/12/12, Ext.R2 – Reply notice dtd. 4/1/13, Ext.R3 – Reply notice dt. 15/2/13, Ext.R4 – Statement of Account from 5/5/2008 to 25/8/2015, Ext.R5 – Application for the loan, Ext.R6 – Agreement, Ext.R7 – Acknowledgement, Ext.R8 – Copy of the Government scheme for interest subsidy, Ext.R9- Letter of undertaking dtd. 15/1/11, Ext.R10 – Order of the Planning Dept. dt.13/2/15, Ext.R11 – Educational loan scheme, Ext.R12 – Guidelines, Ext.R13 – Guidance Notes on Model Education Loan Scheme.

          In the case an interim order has been passed in IA.676/2003 restraining the respondents from initiating any coercive action against the petitioner until further orders. 

          No oral evidence was tendered.  Argument Notes filed.  The matter was heard in detail.

          Appreciation of Evidence: We have examined all the documents, proof affidavits and argument notes filed by both parties.  We are convinced that there are short coming on the part of opposite parties. This Commission has no hesitation to observe that the opposite parties have failed to appreciate the pith and substance of the Educational Loan devised especially in the case of meritorious girl students.  While keeping the commercial interests of the bank they are bound and be committed to   subscribe the interests of economically poor students who are meritorious.  Under no circumstances those beneficiaries strictly coming under the above scheme can be viewed or treated on par with other borrowers.

          The bone of contention is with regard to the rate of interest.  The complainant strongly pleads that neither there is any mention of any interest nor any expression of intention of charging interest in both the agreement as well as sanction letter.  Complainant also alleges that opposite parties have not yet handed over any copy of the documents.  It is evident that the opposite parties could not produce the sanction letter which is viewed very seriously by this Commission.

          Opposite parties objects in taking a pleading at the last moment by the complainant to the effect that the agreement as well as the sanction letter give no mention of any rate of interest.  This Commission finds no wrong based on the dictum in Sugandhi’s  case (2020 KHC 6637) where it is almost settled that a point which is  necessary to the just and right disposal of the case can be pleaded and proved in the Commission before its final disposal.  The only defense in such cases is that the opposite party should get an opportunity to counter the same.

          In the instant case the opposite parties have pleaded that the non-mentioning of rate of interest is only an inadvertent mistake.  As held in LICI Vs.  Balaiah Chodari (1(2004) CPJ  67 NC) liability can be fastened on the opposite parties for such mistakes, inadvertence or oversight. 

          As settled law, the broad principle underlying the doctrine of utmost good faith is that no one will be allowed to take advantage of his own wrong especially while entering into an agreement.  (LIC Vs. Consumer Education and Research Society).  On a detailed description we find that opposite parties have failed to act strictly in accordance with the banking law and practice, guidelines and government orders in its true spirit.  Exts.R4, R8, R9, R10 and R11 are some of the documents which throws light on the defense taken by the opposite party.  As shown by the opposite party referring to Ext.R4, we have noticed to the effect that necessary adjustments are made by the opposite party in the case of eligible interest subsidy as received from the government protecting the interests of the complainant. 

          Ext.R8 is a letter showing eligibility conditions issued on 7/1/11.  Based on Ext.R8 only Ext.R9 was executed on 15/1/11.  It is evident that the interest payable during the period of moratorium on loan amount on or after 1/4/2009 will be borne by the government as observed above.  Here moratorium period is the course period plus one year or six months after getting the job. 

          Complainant availed loan on 5/5/2008.  Duration of the course was 3 years.  Date of completion comes on 5/5/2011.  Period of moratorium ends on 5/5/2012 ie, one year after the completion of the course.  As rightly put it by the opposite party complainants are liable to repay the loan amount from June 2012 onwards.  Opposite party had to take necessary proceedings against the complainant to recover the loan amount.  Recovery of the loan amount with the procedure established by law cannot be termed as deficiency in service but the recovery of the loan amount with higher interest rate is definitely a shortcoming tantamounting to deficiency in service in the instant case.  Since the educational loan scheme was introduced to help and encourage poor and meritorious students to pursue higher studies especially with specific advantages to girl students, opposite parties have a social commitment over and above their commercial interests.

          Ext.R10 is the circular of the Kerala Government where it is mentioned that ‘ബാങ്കുകൾ പഠനകാലത്തെ പലിശ  ഇന്ത്യൻ ബാങ്കേഴ്സ് അസോസിയേഷന്റെ  മാർഗനിർദേശങ്ങളിൽ  പറയുംപോലെ  സാധാരണ  പലിശ നിരക്കിലാണ് കണക്കാക്കിയിരിക്കുന്നതെന്നു   ജില്ലാ കളക്ടർ ഉറപ്പു വരുത്തേണ്ടതാണ്’ 

          Ext.R11 under item No.3 provides that the scheme provided broad guidelines to the banks for operationalizing the educational loan scheme and the implementing banks will have the discretion to make changes suiting to the convenience of the students/parents to make more customer friendly.  And under item 8 provides the rate of interest up to 2 lakh as PLR.  Since the PLR rate varies bank to bank and the opposite party had charged at the rate of 14.65 in the instant case this Commission express our concern fixing the above rate more on the basic consideration of the mandate of the Banker’s Association in Ext.R13 item (VIII) where is expected that banks will charge relatively lower rates for educational loans up to 4 lakh and continue concessions hitherto being given to girl students (emphasized).

          In the above circumstances of not mentioning the rate of interest in the agreement, non-production of sanction letter to show any contra evidence of their right to charge higher interest and non-collation of any progress report of the girl student this Commission   has no other alternative but to express serious concern against the approach of the opposite party denying the legitimate rights of the girl child which amounts to a clear cut deficiency in service.

          Relief and cost: We direct the opposite party to realize the loan with maximum 4% interest only and also direct to allow instalments based on the repaying capacity of the complainant.  Father is exempted.  No order as to compensation and cost.  Complaint allowed partly.

          Dictated to the Confidential Assistant, transcribed by her, corrected by me and pronounced in the open Commission this the 15^th day of February 2022.

Sd/-                                                             Sd/-

Sreeja.S                                                       C.T.Sabu

Member                                                      President

                                      Appendix

Complainant’s Exhibits

Ext.P1 – lawyer notice by bank dtd. 17/12/12, Ext.P2 – Reply notice dtd. 4/1/13, Ext.P3 – Bankers cheque for Rs.3,000/-, Ext.P4 – Postal A/D card, Ext.P5 Lawyer notice dtd. 15/2/13 by bank, Ext.P6 – Lr. dtd. 22/2/13 enclosing cheque for Rs.3,000/-, Ext.P7 – Lr. dtd. 16/3/13 enclosing cheque for Rs.3,000/-, Exts.P8, P9,P10 – Pay in slips for Rs.3,000/- counterfoil, Ext.P11 – Certificate of passing B-Pharm in first class, Ext.P12 – Demand notice u/s 7

Opposite Parties Exhibits

Ext.R1 – Lawyer notice dt. 17/12/12, Ext.R2 – Reply notice dtd. 4/1/13, Ext.R3 – Reply notice dt. 15/2/13, Ext.R4 – Statement of Account from 5/5/2008 to 25/8/2015, Ext.R5 – Application for the loan, Ext.R6 – Agreement, Ext.R7 – Acknowledgement, Ext.R8 – Copy of the Government scheme for interest subsidy, Ext.R9- Letter of undertaking dtd. 15/1/11, Ext.R10 – Order of the Planning Dept. dt.13/2/15, Ext.R11 – Educational loan scheme, Ext.R12 – Guidelines, Ext.R13 – Guidance Notes on Model Education Loan Scheme

                                                                                           Id/-

                                                                                       President