Madras High Court Sheik Abdulla vs The Chief Director on 2 August, 2018 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 02.08.2018 CORAM THE HONOURABLE MR.JUSTICE M.S.RAMESH W.P.(MD) No.10967 of 2016 Sheik Abdulla ... Petitioner vs. 1.The Chief Director represented for Tamil Nadu Minorities Economic Development Corporation 807, Annasalai (5th Floor) Chennai600002 2.The District Backward Communities and Minorities Welfare Officer District Collectorate Complex Theni Theni District 3.The Sub Registrar Cooperative Societies Sub Registrar Office Periyakulam Theni District 4.The Branch Manager represent for No.975, The Madurai District Central Cooperative Bank Ltd., 187, North Veli Street Madurai625 001 5.The Registrar of Coop. Societies 170, Periyar EVR High Road Chennai10 6.The Chairman cum Managing Director National Minorities Development and Finance Corporation Scope Minar, Core 11st Floor Laxmi Nagar, District Centre New Delhi110 092 ... Respondents [R5 & R6 are impleaded vide Court order dated 13.03.2017 in W.M.P.(MD) No.2347 of 2017] PRAYER: Writ Petition filed under Article 226 of the Constitution of India for issuance of writ of mandamus directing the first and fourth respondents to receive petitioner returned education loan application, dated 01.06.2016 and disbursing education loan Rs.20,00,000/ to the petitioner's son for studying M.B.B.S.Course Qingdao University situated at 308, Ningaxia Road, Qindao, Shandong, Chinna, without insisting the petitioner to pledge property value of more than two times of education loan. !For Petitioner : Mr.K.P.S.Palanivel Rajan For Respondents : Mr.N.Shanmugaselvam Additional Government Pleader for R1 to R3 Mr.D.Shanmugaraja Sethupathi for R4 Mr.N.Shanmugaselvam Central Government Standing Counsel for R5 & R6 :ORDER The grievance of the petitioner is that the fourth respondent is insisting for furnishing of collateral security, which is twice the value of the educational loan amount of Rs.20,00,000/, for his son's M.B.B.S.Course at Qingdao University, China. 2. As per the lending policy of NMDFC, the State Channelising Agency is required to follow the guidelines prescribed therein, while disbursing the loans to the applicants. The relevant portion of the said guidelines reads as follows: "6.SECURITY FOR BENEFICIARIES TO AVAIL LOAN UNDER THE SCHEME i. NMDFC seeks revolving Government Guarantee from the concerned State Govt./UT Administration as security for the loan disbursed to its State channelising Agency. ii. SCAs may also seek security from the beneficiaries for the loans disbursed to them. The type of security to be taken from the beneficiaries is to be decided by the SCAs. The norms of security should be such that the poor beneficiaries are able to meet them while necessary leverage for recovery of loan is also available to the lender. In general following security provisions are advised: a) For loans upto Rs.1,00,000 Self Guarantee & Post Date Cheques b) For loans exceeding Guarantee of one Rs.1,00,000 and upto employee of PSU/Govt,/ Rs.5,00,000 Bank or one income tax payee/Public Representatives & Post Dated Cheques. c) For loans exceeding Guarantee of two Rs.5,00,000 employees of Govt./PSU/ Bank or two income tax payee/Public Representative OR Collateral by way of Mortgage of landed property/Immovable Property of not less than or of the same value as the loan amount. & Post Dated Cheques." 3. It is not in dispute that the petitioner seeks for educational loan to the tune of Rs.20,00,000/ alone. As such, by following the guidelines prescribed, the State Channelising Agency as well as the fourth respondent are required to fixup the norms in accordance with the guidelines of NMDFC. In the case of the petitioner herein, the guidelines prescribed for the loans exceeding Rs.5,00,000/ is either through a guarantee of two Government employees or by way of collateral security of immovable property equal to the value of the loan amount and two postdated cheques. As such, the fourth respondent may not be justified in seeking for collateral security, which is twice the value of the loan amount sought for. 4. In view