Andhra Pradesh

Chittoor-II at triputi

CC/33/2015

Mogal Gayasali Baig, S/o. M.Hazarath Baig - Complainant(s)

Versus

Chief Manager, Andhra Bank - Opp.Party(s)

G.Ramaiah Pillai

13 May 2016

ORDER

Filing Date: 29.07.2015

Order Date:13.05.2016

 

 

BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II,

CHITTOOR AT TIRUPATI

 

 

      PRESENT: Sri.M.Ramakrishnaiah, President ,

        Smt. T.Anitha, Member

 

 

FRIDAY THE THIRTEENTH DAY OF MAY, TWO THOUSAND AND SIXTEEN

 

 

 

C.C.No.33/2015

 

 

Between

 

1.         Mogal Gayasalli Baig,

            Muslim,

            S/o. M.Hazarath Ali Baig,

            Aged 18 years.

 

2.         M.Hazarath Ali Baig,

            Aged 53 years, Muslim.

 

            Both residing at:

 

            1-2-261, Prakasam Road,

            Tirupati.                                                                                 … Complainants

 

 

 

And

 

1.         Chief Manager,

            Andhra Bank,

            Main Branch,

            Beri Street,

            Tirupati.

 

2.         Deputy General Manager,

            Andhra Bank,

            Zonal Office,

            S.V.University,

            Tirupati.                                                                                 …  Opposite parties.

 

 

 

 

            This complaint coming on before us for final hearing on 04.05.16 and upon perusing the complaint, written version and other relevant material papers on record and on hearing Sri.G.Ramaiah Pillai, counsel for the complainants, and Sri.Gotti Gajendra, counsel for the opposite parties, and having stood over till this day for consideration, this Forum makes the following:-

 

ORDER

DELIVERED BY SRI. M.RAMAKRISHNAIAH, PRESIDENT

ON BEHALF OF THE BENCH

           

            This complaint is filed under Sections-12 and 14 of C.P.Act 1986, by the complainants for the following reliefs 1) to direct the opposite parties 1 and 2 to extend the loan facility of Rs.4,71,600/- as per the guidelines of RBI and as per Credit Guarantee Fund Trust of Union Ministry of Finance, New Delhi, without insisting collateral security, 2) to direct the opposite parties 1 and 2 to pay Rs.10,000/- to the complainants for causing mental agony and 3) to pay Rs.2,000/- towards costs of the litigation. 

            2.  The averments of the complaint in brief are:- that the 1^st complainant is the son of 2^nd complainant. The 1^st complainant passed SSC in the year 2012 with    9.5 grade points. He also passed intermediate held in the month of March 2014 in     A-grade with MPC group. He also qualified EAMCET held in 2014 and obtained rank 45229. He applied for B.Tech 4 years course in Vidya Jyothi Institute of Technology, Himayath Nagar, Hyderabad, which is affiliated to JNTU, Hyderabad, and got admission in management quota. His roll No. is 14911A0529. He is studying 1^st year B.Tech for the year 2014-15, as per the certificate issued by said institution. Fee tariff for the B.Tech course is Rs.1,40,400/- for the 1^st year; Rs.1,10,400/- for the 2^nd year; Rs.1,10,400/- for the 3^rd year, and Rs.1,10,400/- for the 4^th year, totaling a sum of Rs.4,71,600/- to be paid as per the certificate issued by Vidya Jyothi Institute of Technology.

            3.  Complainants 1 and 2, being the customers of the bank of opposite parties, applied for education loan on 14.11.2014 towards education fees for higher studies. Their application was not considered by opposite party No.1 on the ground that applicant has not offered collateral security of 150% to the loan component as demanded by opposite party No.1. Therefore, the 2^nd complainant approached the Banking Ombudsman for A.P. and Telangana, Hyderabad. His complaint was registered as 201415009002851, and it was closed by Ombudsman by its order dt:30.03.2015, with a direction that the complainant can approach any other legal Forum for Redressal.

            4.  That the Union Ministry of Finance Department has finalized a scheme to create Credit Guarantee Fund Trust (CGFT) to offset the risk of banks which are otherwise hesitant to grant education loan to students fearing non-recovery of the loan amount. The high point of the CGFT is that students with annual family income below Rs.4.5 lakhs will be able to avail education loan up to Rs.7,50,000/- without furnishing any security / third party guarantee, as the CGFT will cover the said loan extended by the bank to the extent of 75% of the defaulted by the student. Banks can also approach the CGFT to cover education loans above 7.5 lakhs. The objective behind the grant of education loan is to ensure that a student aspiring higher education should not be put into disadvantageous position for financial incapacity. The CGFT scheme is envisaged by Government of India. Complainants, on 27.06.2015 got issued notice calling upon the opposite parties 1 and 2 to consider their education loan application but the opposite parties 1 and 2 did not respond to the notice. Hence the complaint.

            5.  Opposite party No.1 filed its written version and the same is adopted by opposite party No.2. In their written version, opposite parties denied parawise allegations in the complaint and further contended that the complainants suppressed the part of the order ordered by the Hon’ble Ombudsman that, the complaint is closed under clause-13(A) of the Banking Ombudsman Scheme 2003, as no case of deficiency of service is substantiated against the bank. The 1^st complainant is not a deserving student to grant loan without security. That if any student got seat under management quota, they shall provide security for obtaining loan. The object of the scheme is only for meritorious students, who got the seat under merit basis at free of cost with a nominal fee laid down by the Government but not the person who got the seat under management quota admittedly herein the 1^st complainant alleged to have got seat under management quota. It is true that opposite party No.1 insisted to offer 150% towards collateral security to the loan component because the 1^st complainant got the seat under management quota.

            6.  That opposite party No.1, when the complainants approached the bank for education loan advised them to get the allotment letter from the Engineering College, where he got admitted in B.Tech course, to know the status whether he got the admission in management or in merit quota, so that it enables the bank to suggest the correct status to the complainant, whether he is eligible to get loan from the bank or not with security or without security. The 1^st complainant also suggested that if he get seat under management quota, he should offer 150% collateral security to the loan component. Subsequently, the complainants are silent in offering collateral security. He also suggested that only merit students are eligible for bank loan with exemptions on collateral security norms. Inspite of several requests by the bank, the complainants have failed to submit the admission letter stating under which category the seat was allotted. The opposite parties further contended that as per the bank circular of revised IBA model scheme on Educational Loan (2011) for pursuing higher education in India and abroad and model educational loan scheme for vocational courses. As per the said scheme, the bank has to follow certain norms that, the “admissions through management quota are outside the purview of IBA model scheme on educational loan scheme for higher studies”. However, the bank may consider sanction of loans to students securing admissions under management quota with a suitable collateral security of not less than 150% value of the sanction limit irrespective of quantum of loan whether it is below Rs.4.00 lakhs or above Rs.4.00 lakhs. That there is no deficiency in service on the part of the opposite parties. The complainants are not the consumers. The cause of action invented for the purpose of this case to get wrongful gain and to blackmail the opposite parties. That this Forum has no jurisdiction to entertain this complaint. That the complainants are not entitled to any of the reliefs sought for. The document No.13 referred in the complaint is not an authenticated document, it seems to be a news item, which cannot be relied on. That the banks are custodian of public money and answerable to public. That the complainants are not the consumers and prays the Forum to dismiss the complaint with costs.

            7.  That the complainants and opposite parties have filed their respective evidence affidavits and written arguments as well and got marked Exs.A1 to A13 for the complainants and Exs.B1 to B3 for the opposite parties.

           

 

8.  Now the points for consideration are:-

            (i).  Whether this District Consumer Forum got jurisdiction to entertain the

       complaint?                           

(ii)  Whether the complainants are entitled to the education loan above Rs.4.00

       lakhs without furnishing collateral security?

(iii) Whether there is deficiency in service on the part of the opposite parties?

(iv)  To what relief?

9. Point No.(i):-  on perusal of the complaint, written version, evidence affidavits and written arguments filed on behalf of both parties and upon hearing the counsel for both parties, it is found that admittedly the 1^st complainant got seat in Vidya Jyothi Institute of Technology, Himayath Nagar, Hyderabad, under management quota. Whether the complaint in respect of sanction of loans is within the purview of Consumer Forum, to answer this point, the learned counsel of the complainants relied on a decision reported in III (2004) CPJ 349 (Maharashtra State Consumer Disputes Redressal Commission, Mumbai) – Shobhatai Doulatrao Talekar Vs. Branch Manager, Maharashtra Rajya Sahakari Krishi & Grameen Development Bank – in which their Lordships held that the complainant’s grievance is with regard to sanction and release of loan for which she had applied and that being so, nature of service hired by the complainant pertinent to banking business, which is permissible to the bank to undertake under the provisions of RBI Act and Banking Regulation Act 1949 and as such it would be squarely amenable to the jurisdiction of Consumer Fora as per the definition of service under Section-2(1)(o) of C.P.Act 1986. In another case reported in I (2004) CPJ 1 (SC) – their Lordships clearly held that jurisdiction of Consumer Fora in the dispute of such nature is not ousted in view of provisions as contained in Section-3 of C.P.Act 1986, which provides an additional remedy over and above available in the other statues to the parties. Thus it is clear that the dispute in this complaint is well within the purview of Section-3 and Section-2(1)(o) of C.P.Act 1986 and therefore this Forum has got jurisdiction to entertain the case. Accordingly this point is answered.

10. Point No.(ii):-  to answer this point, we have to follow the guidelines issued by the RBI notification in respect of educational loans in the month of          28^th April 2001 in notification No.RPCD.PLNFS.BC.NO.83/06.12.05/2000-01 in which the educational loan scheme is introduced by the Indian Banks Association (IBA) for adoption by all banks. The scheme aims at providing finance support from the banking system to deserving / meritorious students for pursuing higher education in India and abroad. The scheme was announced in the union budget for 2001-2002 and discussed in the meeting the Finance Minister had with Chief Executives of Banks on 7^th April 2001. The 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)	The condition of minimum qualifying marks in the last examination may be dropped.
(ii)	No margin may be insisted upon for loans up to Rs.4 lakh. However, for loans of higher amounts, the margin requirement may be 5% for inland and 15% for studies abroad.
*(iii)	No security may be insisted upon for loans upto Rs.4 lakh. 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.
(iv)	Loans upto Rs.4 lakh may be advanced at interest rate not exceeding PLR of the bank. Above Rs.4 lakh, the interest may be PLR + 1%

              

            Therefore, it is clear that the scheme is aimed for deserving and meritorious students for pursuing their higher education. Under the objectives of the scheme also it is specified that the education loan scheme outlined below aims at providing financial support from the banking system to deserving / meritorious students for pursuing higher education in India and abroad. The main emphasis is that every meritorious student though poor is provided with an opportunity to pursue education with the financial support from the banking system with affordable terms and conditions. No deserving student is denied an opportunity to pursue higher education for want of financial support. The scheme aims at providing financial assistance on reasonable terms to the poor and needy to undertake basic education and to the meritorious students to pursue higher / professional / technical education. Under eligibility criteria at clause-4.2, the student eligibility specified clearly as under:  

(i)	The student should be an Indian National
*(ii)	Secured admission to professional / technical courses through Entrance Test / Selection process

 

            This aspect is criteria to decide the case. To obtain the loan under this scheme, necessarily the student should secure admission to any professional course / technical course through entrance test / selection process. The 1^st complainant in this case did not get admission in Vidya Jyothi Institute of Technology, Himayath Nagar, Hyderabad, through entrance test / selection process. His admission was not through EAMCET counseling. So his selection is not under the entrance test / selection process. He got admission seat in Vidya Jyothi Institute of Technology under management quota; it implies that the 1^st complainant has purchased the seat from management quota. Clause-5 of the RBI notification referred to above, refers to quantum of finance envisages need based finance subject to repaying capacity of the parents / students with margin and the following ceilings – studies in India – maximum Rs.7.50 lacs;  studies abroad – maximum Rs.15 lacs. Clause-6 – so far as margin is concern up to Rs.2 lacs no margin; above Rs.2 lacs studies in India -15% margin and studies abroad – 25% margin. So far as security is concern Clause-7 deals with as follows – up to Rs.2 lacs – no security; above Rs.2 lacs – collateral security equal to 100% of the loan amount or guarantee of third person known to bank for 100% of the loan amount.

            11.  As per Ex.A5 which is EAMCET – 2014 marks in respect of                    1^st complainant with Hall ticket No.4104175, he got only 57 marks out of 160. The percentage of marks he obtained is 35.6%. Further he is qualified in EAMCET-2014. In order to get seat even under management quota, the student must qualify the exam. Thus the 1^st complainant herein qualified EAMCET-2014 and opted for management seat inspite of not getting seat in B.E. / B.Tech. through EAMCET counseling. The learned counsel for the complainants also filed Credit Guarantee Fund Scheme for Education Loans (CGFSEL) Notification No.18-1/2013-U.5(VOL.III) Dated 16.09.2015, in which the maximum loan limit under the scheme is Rs.7.5 lacs. without any collateral security and third party guarantee. Under Clause-4 it is mentioned up to Rs.4 lacs no margin and above Rs.4 lacs for studies in India 5% margin and for studies abroad 15% margin. In Chapter-II under the head of guarantee by fund Clause-6(i) subject to the other provisions of the scheme, NCGTC undertakes, in relation to education loans up to Rs.7.5 lacs extended to an eligible borrower by a Member Lending Institution (MLI) which has entered into the necessary agreement for this purpose with NCGTC, to provide guarantee against default in repayment of education loans extended by the lending institutions. This should be in between the finance agency (Bank and NCGTC – National Credit Guarantee Trustee Company) set up on March 28, 2014 by Government of India under the Companies Act 1956 to act as the Trustee to operate the Credit Guarantee Funds for Educational Loans, Skill Development Loans and any other funds to be set up by Government of India from time to time. In this scheme under CGFSEL or in the scheme introduced by the RBI dt:28.04.2001 nowhere it is mentioned that students those who got seat under management quota also entitled for the loan facility without furnishing security. The other information furnished by the complainants under the head of “The Tribune” online edition cannot be accepted as it is not an authenticated one, it is just like a paper publication. In both the schemes eligibility criteria place a vital role i.e. deserving or meritorious students shall be sanctioned loan whether below or above Rs.4 lakhs with exemption of collateral security. Since the                 1^st complainant has obtained the seat under management quota and not through entrance test / selection process, under the above circumstances, we are of the opinion that the complainants have to furnish the collateral security in order to get education loan, as demanded by opposite party No.1. Accordingly this point is answered.

            12. Point No.(iii):-  in view of the discussion made under points 1 and 2 and since the 1^st complainant has secured the seat in Vidya Jyothi Institute of Technology under management quota and not through EAMCET entrance test / selection process, demand of opposite party for collateral security does not amounts to deficiency in service. If the complainants still wants to obtain education loan as they intended, they have to furnish collateral security as demanded by opposite party No.1 only on the ground that he has not secured the Engineering seat in Vidya Jyothi Institute of Technology, Hyderabad, through entrance test / selection process. Therefore, we are of the opinion that there is no deficiency in service on the part of opposite parties. Accordingly this point is answered.

            13.  Point No.(iv):-  in view of our discussion on points 1 to 3, we are of the opinion that there is no deficiency in service on the part of opposite parties and since the 1^st complainant got the seat under management quota in Vidya Jyothi Institute of Technology, Hyderabad, and not through entrance test / selection process i.e. under EAMCET counseling, therefore, the 1^st complainant is not entitled to the first relief without furnishing security. The complainants have to furnish the collateral security as demanded by opposite party No.1, in order to obtain the education loan.

            In the result, complaint is disposed-off with an advice to complainants to furnish collateral security as demanded by opposite party No.1 with 150% of the loan component to meet the educational necessities of the 1^st complainant. No costs.                   

            Dictated to the stenographer, transcribed and typed by him, corrected and pronounced by me in the Open Forum this the 13^th day of May, 2016.

 

       Sd/-                                                                                                                      Sd/-                                                                                                                                   

Lady Member                                                                                                      President

 

APPENDIX OF EVIDENCE

 

Witnesses Examined on behalf of Complainant.

 

PW-1:  M. Hazarath Ali Baig (Chief/Evidence Affidavit filed).

 

Witnesses Examined on behalf of Opposite Parties.

 

RW-1:T. Venkateswara Rao (Chief/ Evidence Affidavit filed).

 

EXHIBITS MARKED ON BEHALF OF THE COMPLAINANT

 

Exhibits (Ex.A)	Description of Documents
	Photo copy of pass book joint account of complainants 1 and 2 bearing No.055910100008823 in O.P.No.1 Bank. Andhra  Bank Account opening Dt: 12.09.2009.
	Photo copy of Household card of complainant No.2.
	Photo copy of Secondary school certificate with GPA 9.5 held in March 2012.
	Photo copy of Pass Certificate of Intermediate in A-Grade issued by Board of Intermediate Education, A.P. (March 2014).
	Photo copy of EAMCET 2014 marks in respect of complainant No.1. Hall Ticket No.4104175.
	Photo copy of Aadhaar Card of Complainant No.1.
	Photo copy of Bonafide certificate issued to complainant No.1 by Vidya Jyothi Institute of Technology, Hyderabad. Dt: 07.11.2014.
	Photo copy of Certificate of admission of complainant No.1 into the Institute of Technology of  Vidya Jyothi, Hyderabad noting the annual fee structure for B-Tech course of 4 years. Dt: 07.11.2014.
	Photo copy of Income certificate issued by Tahsildar, Tirupati Urban. Dt: 29.01.2015.
	Photo copy of Report to the Banking Ombudsman by opposite party No.2 on complaint of complainant No.2.  Dt: 12.03.2015.
	Photo copy of Order of Ombudsman Banks Hyderabad. Dt: 30.03.2015.
	Office copy of legal notice to O.P.s No.1 and 2. Dt: 27.06.2015.
	Photo copy of Online edition regarding education loan for poor students by the Central Government. Dt: 17.07.2015.

 

EXHIBITS MARKED ON BEHALF OF THE OPPOSITE PARTIES

 

Exhibits   (Ex.B)	Description of Documents
1.	True copy of Bank circular for revised I.B.A. model scheme on educational loans (2011) for pursuing Higher Education in India and Abroad. Dt: 28.05.2012.
2.	True copy of Letter sent to Banking Ombudsman Hyderabad by the Opposite Party No.2. Dt: 12.03.2015.
3.	Photo copy of Order of the Banking Ombudsman in complaint No.201415009002851. Dt: 30.03.2015.

    

                                                                                                                                    Sd/-

                                                                                                               President

              // TRUE COPY //

// BY ORDER //

 

Head Clerk/Sheristadar,

             Dist. Consumer Forum-II, Tirupati.

           

Copies to:-     1. The complainants.

                       2. The opposite parties.