On SBI's Appeal, Kerala High Court Stays Single Bench Decision Against Rejection Of Educational Loan Over Student's CIBIL Score

The Kerala High Court on Wednesday stayed the Single Bench decision which held that an application for education loan by a student could not be rejected on the ground of a low CIBIL (Credit Information Bureau (India) Limited) score.

The Division Bench comprising Chief Justice S.V.N. Bhatti and Justice Basant Balaji passed the Order on taking the view that the writ jurisdiction of the Court could not be invoked on matters involving grant of loan. 

The interim stay was granted by the Court in the appeal filed by the State Bank of India (SBI) against the Single Judge decision dated May 30, 2023. Justice P.V. Kunhikrishnan had, in the said decision, cautioned banks to adopt a 'humanitarian approach' while considering applications for education loans. "Students are the nation builders of tomorrow. They have to lead this country in future. Simply because, there is low CIBIL score to a student, who is an applicant for Education loan, I am of the considered opinion that, Education loan application ought not have been rejected by Bank," the Court had observed.

The appellant SBI in this case averred that neither the borrower (the petitioner student) nor the co-borrower (mother of the petitioner student) had the required CIBIL Score fixed as per the Central enactments, the Credit Information Companies Act, 2005, and the Banks. The appellants averred that the enactments were made with definite legislative intent and that the interim order of the Single Judge Bench affected banks and financial institutions generally. 

The appellants further averred that one of the factors that weighed with the Single Judge in issuing the aforementioned interim order was the petitioner's submission that he got employment. However, the appellants averred that the said fact was not supported by any records. 

"Appellants have reliable information that the petitioner has not got any employment as stated by him, and he has misled and misrepresented the Hon'ble Court in getting the interim Order," the appeal states. 

It was further averred that the case of the petitioner that he had submitted the application in August 2022 was also incorrect, and that the application which had actually been submitted on March 14, 2023, was returned on April 4, 2023, with the reasons for the return also being conveyed to him. The appellants also submitted that whether any fee was pending as averred by the petitioner was unclear, since he could not have continued in the institution from the year 2022 till May 2023 without paying the fees. 

"If the interim order which is in the nature of a final order is permitted to continue, and since there is direction to sanction and release the loan forthwith, the appellants will be irreparably prejudiced. The petitioner is not legally entitled to get the loan," the appeal further states. 

The appellants are represented by Senior Advocate K.K. Chandran Pillai and Advocate S. Ambily. Senior Advocate George Poonthottam, and Advocates Nisha George, and Ann Maria Francis represented the respondent student. 

Case Title: State Bank of India & Anr. v. Noel Paul Fredy