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Jammu and Kashmir High Court refuses to direct bank to release education loan instalment

The Division Bench of Justice Sanjay Dhar and Justice Puneet Gupta has observed that the Writ Court has limited jurisdiction in contractual matters.

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The Jammu and Kashmir High Court has refused to direct a bank to release loan instalment to pay the fee of a medical aspirant stating courts cannot interfere in matters of contractual obligations of parties. 

It was the case of a student that she had secured admission in the Community Based Medical College, Bangladesh but due to delay in the first instalment from the bank, she couldn’t secure a seat. But the bank transferred that loan instalment later into the same college. The petitioner herself transferred that amount from the college into another college where she got MBBS admission later. When the second instalment was due, the bank refused to pay it which become the subject matter of the writ petition. 

The division bench of Justice Sanjay Dhar and Justice Puneet Gupta observed that the writ court has a limited jurisdiction in contractual matters. Ordinarily, the remedy available for a party complaining of breach of contract lies for seeking damages or for enforcing specific performance of terms of the contract in a civil court. It is only in cases where a Public Authority has acted arbitrarily or unreasonably or with malafide intention that the Writ Court would step in.

The petitioner has made an allegation that the respondents have delayed sanctioning the first instalment of her education loan so the college authorities, for which the loan has to be sanctioned, refused to admit her. As a consequence whereof, the petitioner approached Khwaja Younus Ali Medical College, Bangladesh through her consultancy service and secured her admission in the said college.

Thus, the first installment of fee, that had been transferred by the respondent-Corporation to the Community Based Medical College, Bangladesh was, in turn, transferred to Khwaja Younus Ali Medical College, Bangladesh.

The petitioner has submitted in the petition that the information regarding the change in College was conveyed by her to the respondent-Corporation, but without going into reasons therefore, the Corporation issued her a letter directing the petitioner to repay the amount of loan which had been released in her favour. 

Against the contentions of petitioners, the respondent-Corporation has submitted that, the first instalment of loan, that was released by the Corporation in favour of Community Based Medical College, Bangladesh, has been transferred to Khwaja Younus Ali Medical College, Bangladesh as the petitioner could not secure a seat for herself in the Community Based Medical College. The transfer of amount was made without information to it and, as such, the request of the petitioner could not be accepted.

Further, the loan was sanctioned by the Corporation in favour of petitioner for her admission to five-year MBBS course at Community Based Medical College, Bangladesh and not for her admission to Khwaja Younus Ali Medical College, as such, the Corporation cannot release the loan in favour of petitioner, the same being against the terms and conditions of the sanction.

The Court after going through the facts and arguments made has held that,

“The sanction and release of loan amount by a Financial Institution in favour of a borrower is purely a contractual matter governed by the terms and conditions of the loan agreement. Thus in the instant case transaction pertaining to release of loan amount by the Corporation in favour of petitioner is governed by the terms and conditions of the sanction letter and the Mortgage Deed executed by the father of petitioner in favour of the Corporation. Therefore, this Court has to approach the matter by keeping in mind the principles governing the scope of writ jurisdiction in contractual matters.”

The Court has held that, the Mortgage Deed executed by the father of the petitioner in favour of respondent-Corporation provides that the loan of Rs 30 lakh has been sanctioned for completion of five years MBBS course at the Community Based Medical College, Bangladesh. The loan was sanctioned by the respondent-Corporation on the condition that the petitioner had got admission in the Community Based Medical College, Bangladesh, and not in the Khwaja Younus Ali Medical College, Bangladesh.

Thus, the action of the respondent-Corporation in not releasing the second installment of loan in favour of the petitioner appears to be justified and the same cannot be termed either arbitrary or malafide. In fact, there are no allegations of malafides in the writ petitions against the respondent-Corporation. 

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The Court has further held that the action of the respondent-Corporation directing the petitioner to refund the first instalment of loan amount also appears to be justified because the petitioner admittedly had, on her own, transferred the first instalment of loan from the Community Based Medical College, Bangladesh to Khwaja Younus Ali Medical College, Bangladesh without informing the respondent-Corporation, which is a breach of terms and conditions of the sanction letter.

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