Karnataka High Court
Mr. Sanket S/O Rayappa Kamate vs The Regional Manager on 22 July, 2026
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WP No. 109488 of 2025
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IN THE HIGH COURT OF KARNATAKA AT DHARWAD
DATED THIS THE 22ND DAY OF JULY, 2026
BEFORE
THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO. 109488 OF 2025 (GM-RES)
BETWEEN:
1. MR. SANKET S/O. RAYAPPA KAMATE
AGE: ABOUT 19 YEARS, OCC: STUDENT,
R/O. GANDHI NAGAR, KALLOLI,
TQ: CHIKODI, DIST: BELAGAVI-591244.
2. SHRI RAYAPPA S/O. BHIMU KAMATE
AGE: ABOUT 52 YEARS, OCC: AGRICULTURE,
R/O. GANDHI NAGAR, KALLOLI,
TQ: CHIKODI, DIST: BELAGAVI-591244.
... PETITIONERS
(BY SRI DEEPAK S. KULKARNI, ADVOCATE)
AND:
1. THE REGIONAL MANAGER
KARNATAKA VIKAS GRAMEEN BANK
NOW NAMED AS KARNATAKA GRAMEEN BANK,
Digitally signed REGIONAL OFFICE, CHIKODI,
by TQ: CHIKODI, DIST: BELAGAVI-591201.
MOHANKUMAR
B SHELAR 2. THE MANAGER
KARNATAKA VIKAS GRAMEEN BANK
Location: HIGH NOW NAMED AS KARNATAKA GRAMEEN BANK,
COURT OF KALLOLI BRANCH, TQ: CHIKODI,
KARNATAKA DIST: BELAGAVI-591244.
... RESPONDENTS
(BY SRI GIRISH S. HULMANI, ADVOCATE FOR R1 AND R2)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227
OF THE CONSTITUTION OF INDIA, PRAYING TO QUASH THE
REJECTION LETTER/COMMUNICATTION BEARING NO.REF.KAGB
/KALLOL/2025-26 DATED 08.10.2025 ISSUED BY RESPONDENT NO.2
PRODUCED AT ANNEXURE-A AND ETC.,
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THIS PETITION, COMING ON FOR PRELIMINARY HEARING,
THIS DAY, ORDER WAS MADE THEREIN AS UNDER:
ORAL ORDER
(PER: HON’BLE MR. JUSTICE SACHIN SHANKAR MAGADUM)
The caption petition is filed seeking following reliefs.
a) Issue a writ of certiorari or any other appropriate writ,
order, or direction, quashing the rejection
letter/communication bearing No.Ref:
KaGB/Kallol/2025-26 dated 08.10.2025 issued by
respondent No.2 produced at Annexure-A.
b) Issue a writ of mandamus or any other appropriate writ,
order, or direction, directing the respondent Nos.1 and
2 to forthwith sanction and disburse the education loan
of Rs.12,56,090/- to the petitioner No.1 for B.E. AI
studying at Dayananda Sagar Academy of Technology
and Management Institution, Bengaluru for the
academic year 2024-25 to 2027-28, subject to the
petitioners satisfying all other non-discriminatory
eligibility criteria.
2. The petitioners have presented the instant writ
petition calling in question the endorsement issued by
respondent No.1-Bank, whereby the application submitted by
petitioner No.1 seeking an educational loan for pursuing the
higher education of petitioner No.2 has been rejected. The sole
reason assigned in the impugned endorsement is that petitioner
No.2’s father has been classified as a defaulter and that his
CIBIL score is low, rendering the loan proposal ineligible for
consideration.
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3. Learned counsel appearing for the petitioners would
vehemently contend that the impugned endorsement is
arbitrary, irrational and contrary to the very object underlying
educational loan schemes formulated by the banking
institutions pursuant to the policy of the Government of India.
Placing reliance on the judgment of the High Court of Kerala in
W.P.(C) No.17222/2023, disposed of on 21.08.2023, he would
submit that educational loans stand on an entirely different
footing from commercial loans and, therefore, cannot be
rejected solely on the basis of the CIBIL score or the credit
history of the student’s parent. He would contend that the
Kerala High Court has rightly held that educational loan
schemes are intended to facilitate access to higher education
and not to perpetuate the financial disabilities of a family. It is
therefore argued that the respondent-Bank has failed to adopt
the humanitarian and welfare-oriented approach which is
expected while considering applications seeking educational
assistance.
4. Having heard the learned counsel appearing for the
parties and having bestowed anxious consideration to the
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material placed on record, this Court finds considerable merit in
the submissions canvassed by the learned counsel for the
petitioners. The impugned endorsement indicates that the
respondent-Bank has mechanically rejected the application
solely by placing reliance on the poor CIBIL score of petitioner
No.2’s father. Such an approach, in the considered opinion of
this Court, defeats the very object and purpose for which
educational loan schemes have been evolved.
5. Educational loans cannot be equated with ordinary
commercial or consumer loans. Unlike commercial lending, an
educational loan is an instrument intended to facilitate access
to education, promote human capital and secure the
constitutional promise of equal opportunity. The borrower in
substance is the student, whose future earning capacity
constitutes the real security for repayment. The educational
loan scheme is therefore an investment in the student’s future
and not merely a commercial transaction based on the existing
financial status of the family.
6. If the financial defaults or adverse credit history of
the parent are permitted to operate as an absolute
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disqualification, the inevitable consequence would be that
students belonging to economically weaker families would be
denied access to higher education merely because they were
born into financially distressed households. Such an
interpretation would perpetuate economic inequality across
generations and would virtually penalize a student for
circumstances over which he has absolutely no control. The
creditworthiness of a parent cannot eclipse the educational
aspirations and constitutional rights of the student.
7. The CIBIL score undoubtedly serves an important
purpose in commercial banking. It enables banks to assess the
repayment behaviour and credit discipline of borrowers while
sanctioning commercial loans. However, its application cannot
be divorced from the nature and object of the loan sought.
While the CIBIL score may constitute a relevant consideration
in respect of commercial advances, housing loans or personal
loans, the same cannot be applied with equal rigidity in the
case of educational loans, which are founded on an altogether
different public policy consideration. To mechanically transplant
commercial lending principles into educational financing would
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amount to ignoring the distinct purpose underlying such
schemes.
8. A CIBIL score is merely one indicator of past credit
behaviour. It is not a statutory disqualification nor can it
become the sole determinative factor while considering an
educational loan. A rigid insistence upon a parent’s credit score
would render the educational loan scheme illusory for the very
class of students for whose benefit such schemes are
predominantly intended. If banks are permitted to reject every
educational loan application on the basis of the parent’s
adverse credit history, students belonging to financially
distressed families would stand excluded from higher
education, thereby frustrating the constitutional vision of social
justice and equality of opportunity.
9. The respondent-Bank, being an instrumentality
falling within the meaning of Article 12 of the Constitution, is
expected to act fairly, reasonably and in a non-arbitrary
manner. Every administrative decision taken by such an
authority must satisfy the constitutional mandate contained in
Article 14. The doctrine of non-arbitrariness, which is now an
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integral facet of Article 14, obligates public authorities to take
decisions which bear a rational nexus with the object sought to
be achieved. The rejection of an educational loan solely
because of the adverse CIBIL score of the student’s father
bears no rational nexus with the object of promoting access to
education.
10. Education has consistently been recognised by the
Constitutional Courts as an indispensable facet of the right to
life guaranteed under Article 21 of the Constitution. Although
higher education may not be a fundamental right in the strict
sense, access to higher education cannot be rendered illusory
by arbitrary State action. Educational loan schemes constitute
one of the principal means through which meritorious students
from modest economic backgrounds are enabled to pursue
higher studies. Therefore, every authority dealing with such
applications is required to adopt an interpretation which
advances educational opportunities rather than one which
stifles them.
11. Equally, the Directive Principles embodied in
Articles 38, 39(b), 41 and 46 cast a constitutional obligation
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upon the State and its instrumentalities to promote social
justice, reduce inequalities and protect the educational interests
of weaker sections. Though the Directive Principles may not be
enforceable by themselves, they nevertheless provide valuable
guidance while interpreting welfare schemes and administrative
decisions. Banks implementing educational loan schemes are
therefore expected to adopt an interpretation consistent with
these constitutional objectives.
12. The doctrine of proportionality also assumes
significance. Even assuming that the parent’s adverse credit
history could be regarded as a relevant consideration, it cannot
become the sole or overriding factor resulting in outright
rejection of the application. The respondent-Bank is required to
examine the academic credentials of the student, the
recognised educational institution, the employability prospects
of the course pursued, the repayment mechanism available
under the educational loan scheme and other relevant
parameters. An absolute rejection solely founded upon the
parent’s CIBIL score is disproportionate to the object sought to
be achieved and therefore cannot withstand judicial scrutiny.
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13. This Court is of the considered view that the
impugned endorsement cannot withstand judicial scrutiny. The
respondent-Bank, being an instrumentality of the State within
the meaning of Article 12 of the Constitution of India, is
constitutionally obligated to act fairly, reasonably and in a
manner that advances the object sought to be achieved by the
educational loan scheme. The rejection of the petitioners’
application solely on the ground of the adverse CIBIL score of
the student’s father is manifestly arbitrary and offends the
guarantee of equality enshrined under Article 14 of the
Constitution. Educational loan schemes are conceived as
welfare measures intended to democratize access to higher
education and cannot be administered by mechanically
importing the parameters applicable to commercial lending.
Such an approach would render the scheme inaccessible to
students belonging to financially distressed families, thereby
frustrating the constitutional vision embodied in Articles 21, 38,
41 and 46, which collectively mandate the obligation of the
State to promote educational advancement, reduce social and
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economic inequalities and secure meaningful equality of
opportunity.
14. The doctrine of non-arbitrariness, as expounded by
the Hon’ble Supreme Court in E.P. Royappa and Maneka
Gandhi, mandates that every decision of a State
instrumentality must bear a rational nexus to the object sought
to be achieved. Equally, the doctrine of proportionality
demands that while the credit history of a parent may
constitute one of the relevant considerations, it cannot be
elevated to the status of an absolute or determinative ground
for rejecting an educational loan application. Such an inflexible
application of the CIBIL score would visit the student with
adverse civil consequences for no fault of his own and
perpetuate inter-generational economic disadvantage, thereby
defeating the constitutional goal of substantive equality and
equal opportunity. Educational loans are fundamentally
distinguishable from commercial advances, for they are not
merely financial transactions but constitute investments in the
nation’s human capital. The future earning potential, academic
merit and employability of the student are the principal
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considerations which ought to guide the decision-making
process. Therefore, the respondent-Bank’s action in rejecting
the petitioners’ application exclusively on account of the
father’s adverse CIBIL score is legally unsustainable, contrary
to the constitutional ethos and inconsistent with the very object
and purpose of educational loan schemes.
15. This Court is therefore of the considered opinion
that the impugned endorsement suffers from arbitrariness and
is liable to be interfered with. However, during the course of
hearing, learned counsel appearing for the respondent-Bank,
on instructions, fairly submitted that the Bank is willing to
reconsider the petitioners’ request in respect of the current
academic year. Learned counsel for the petitioners, however,
submits that unless the educational loan also covers the tuition
fee already paid for the first academic year, the very purpose of
seeking financial assistance would stand defeated.
16. Since the controversy lies in a narrow compass, this
Court is of the opinion that the ends of justice would be
adequately met by directing the respondent-Bank to reconsider
the petitioners’ application afresh without treating the adverse
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CIBIL score of petitioner No.2's father as the sole or
determinative ground for rejection and by evaluating the
application in the light of the object of the educational loan
scheme, the constitutional principles noticed above.
ORDER
i) The writ petition is allowed in part.
ii) The endorsement issued by respondent No.1
rejecting the petitioners’ application for educational
loan is quashed.
iii) Respondent Nos.1 and 2 are directed to reconsider
the petitioners’ application afresh, keeping in view
the observations made hereinabove.
iv) While reconsidering the application, the respondent-
Bank shall not reject the educational loan solely on
the ground of the adverse CIBIL score or credit
history of petitioner No.2’s father. The Bank shall
independently evaluate the eligibility of the student
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in accordance with the applicable educational loan
scheme and other relevant parameters.
v) The Respondent-Bank shall also examine the
petitioners’ request for extending the educational
loan so as to cover the expenditure incurred
towards the first academic year, if permissible
under the applicable educational loan scheme and
banking guidelines, besides processing the loan for
the current and subsequent academic years.
vi) The entire exercise shall be completed and a
reasoned decision shall be communicated to the
petitioners within a period of two weeks from the
date of receipt of a certified copy of this order.
Sd/-
(SACHIN SHANKAR MAGADUM)
JUDGE
MBS
CT:GSM
List No.: 1 Sl No.: 8
