• Education Loan NPA. Bank & employer frauded 100 student

Dear Sir,
My case is a bit different from usual education loan NPA cases.

My case is where I am one of 90 students who have been fooled by our employer( lets call them FIRM) and a nationalised bank.

FIRM had promised us job guarantee and a starting salary of 4.5 lacs p.a. We had to undergo an on job sort of training for 1 year. For this FIRM asked us to take a loan from bank of Rs 4lacs. Now corporation bank granted us the loan under the scheme of an Education loan, the amount of which directly went to FIRM.

Even after receipt of loan, the repayment and monthly installments were paid by FIRM and the communication was only between FIRM and the bank only. Its clear that they were working hand in hand and FIRM had relations with the bank which it used to get the loan sanctioned.

On refering the guidelines of the loan document it may be noted that our training was not an eligible course. This is because our training was an in-house training by a private firm and not a recognized course of a education institution. The loan in question was granted on the basis of MOU between the Bank and the firm.

Since the loan was not granted according to general scheme and was granted instead on the basis of MOU, the terms and conditions laid by the MOU must be taken into higher consideration.

In the MOU from bank it is stated that an I quote “AS THE STUDENT HAVE BEEN GIVEN JOB GUARANTEE, THE FIRM WILL BE RESPONSIBLE FOR LOAN REPAYMENT”
 
Furthermore let it be noted that while being employed by the FIRM, the firm has deducted money from my salary on monthly basis towards installments of repayment of loan.

In March 2014 the firm decided to send me and most of the other employees on a mandatory leave without pay. They asked us to go on leave after working for almost 5 months without pay. By this time a few months’ salary (precisely Rs. 2, 58,371.00) was already with the firm, a sum which I perceive was withheld for repayment of loan. After that FIRM never contacted us to rejoining of the firm and after a few months it stopped paying the bank too. We have written a complaint to Registrar Of Companies and Labour dept. A labour inspector had visited comapny premises and asked the firm to pay the salary but nothing happened afterwards.


Now most of our students have received show cause notice from the bank's advocate and they have filed a civil law suit. The bank is asking us to repay the loan amount which we cant and quite honestly we shouldn't.

2 years of our precious starting career years were spoiled by the company and after that we waited a long time for the company to call us to resume office.


We would like to take your opinion since we are clueless and helpless at this moment. How should we ask the bank to get the repayment from FIRM'? Can we ask bank to give a one time settlement for a very small sum? What is the best solution. Please note that we are 90 students overall. The borrower and co-borrower are ourselves and our parents while FIRM is the guarantor.
Asked 7 years ago in Civil Law

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2 Answers

1) the students should jointly visit local police station and file police complaint against firm and its partners for criminal breach of trust and cheating under section 406, 420 of IPC

2) firm induced students to undergo course on basis that employment would be provided at salary of 4.5 lakhs a year

3) the firm has failed to pay you 5 months salary of Rs 2,58 lakhs

4) also file summary suit to recover your salary arrears

5)since you are the borrower you would be liable to pay the bank dues

6) bank will proceed against students as well as the guarantor ie the firm

7)the liability of principal debtor is co extensive with that of guarantor

8) approach bank for OTS , ask for detailed statement of account from bank

Ajay Sethi
Advocate, Mumbai
95168 Answers
7604 Consultations

5.0 on 5.0

This is a master plan for high handed criminal activity and well designed fraudulent activity by the company in connivance with the corrupt bank staff, making you innocent people as victims.

You have to give a reply notice to the bank's legal notice mentioning that the bank had directly sent the loan amount to the firm and it is the firm which is responsible for repayment though the firm has obtained signatures in the loan papers fraudulently

There are lot of ambiguities in this.

The fault on the bank's side is that they have no authority to sanction loan to such courses.

They have not obtained legal opinion to grant such loans.

They have not bothered to insist on loan repayment from the students/borrower from the beginning since they have been receiving the repayments from the firm

Thus there are lot of irregularities and fraudulent acts and it can be termed as neatly planned proper act of cheating and misappropriation of funds by the firm in the name of the employees.

A complaint agaisnt the fraudsters including the corrupt bank staff may be lodged with the District crime branch of the police who will investigate and initiate legal actions as per law.

T Kalaiselvan
Advocate, Vellore
85369 Answers
2231 Consultations

5.0 on 5.0

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