• Waiver of education Loan and limitation act

Date:21.08.2018
Sir, 
My son had taken an education loan in the year 2004 and 2005 totalling of Rs.3,33,000/-from a nationalized bank. For the purpose of the said loan my son had pleadged 6 numbers of L.I.C policies standing in his name as well as in the name of his brother and cousin. Thereafter my son had deposited some amount on installments from time to time. In April 1, 2009 , the Govt Of India had declared that interest shall be waived for all educational loan taken before march 31, 2009 up to 01.12.2013. My son had repaid Rs.2,93,000/-.Thereafter the bank had recovered Rs.1,17,847/- from L.I.C,out of that 6 number of LIC policies pleadged before him, without any notice to the loanee my son. In total bank has already taken Rs.4,10,847/-( Rs.2,93,000/- paid by my son+ Rs.1,17,847/-recovered by bank ) from my son. Thereafter the bank was remained silent since july 2018. My son was with an impression that his loan has already been cleared due to waiver of interest by the Government. But now in the year July 2018 my son came to know that the bank is going to filed a suit against him claiming about Rs.4,10, 987/-. In this matter I want to take your opinion on the following points:
1.	Whether for recovery of an education loan, the limitation act for 3 year is applicable? 
2.	The bank had recovered the money from LIC on 31.12.2013. Thereafter the bank has not filed any case within 3 years. If bank will file a suit, can we take plea of limitation? 
3.	The bank had not adjusted the interest component from the principal which was waived by the Government? 

with regards
Rajendra Prasad shah
Asked 4 years ago in Civil Law

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7 Answers

Dear Client,

For every recovery, Limitation act will apply i.e. 3 years.

Kind of surprise already 4 lacs paid than which recovery due, well recovery barred by limitation.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

1) claim of bank is barred by limitation

2) you can take defense of limitation

Ajay Sethi
Advocate, Mumbai
87947 Answers
6207 Consultations

5.0 on 5.0

1. It is to be seen whether you had acknowledged this loan by writing in the last 3 years or not. If yes then the loan can be recovered by a money suit. Otherwise the debt is time barred.

2. same s above.

3. The waiver issued by the government is binding upon the bank unless it is withdrawn by the government soon thereafter.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

Dear Mr Shah,

I think you are not properly informed regarding the waiver of interest. It was waived for certain category and income groups but not to all.

The bank need not to inform you before claim of LIC policies in case of default in payment and there is no such limitation act in this regard you need to speak to the bank and try to make to settlement of balance loan.

Vimlesh Prasad Mishra
Advocate, Lucknow
6848 Answers
23 Consultations

4.9 on 5.0

Hi

1) For recovery of education loan by a financial institution , the limitation act is 3 years from the date of last recovery / date of payment of interest. So you need to compute the limitation period from date of last payment of interest. So in your case since the recovery happened on [deleted], the limitation clause will be applicable in your case and as such banks cannot file case on you in the year 2018 which is 13 years from the date of sanction of loan an 5 years from the date of last recovery. You will win the case on grounds of limitation

2) There was an interest waiver announced in finance budget 2014-2015, by the then congress government for loans up to the year 2009. But the interest waiver scheme was not automatic and it came up with conditions and to claim interest waiver, people with education loans had to fulfill certain criteria to claim interest waiver.

3) In the event of you having applied for interest subsidy, in all probability, you would have got the interest adjusted. If no application for interest subsidy was made, i am afraid, you might not be eligible to claim interest waiver now.

Hope this information is useful.

Rajgopalan Sripathi
Advocate, Hyderabad
2169 Answers
394 Consultations

5.0 on 5.0

1. The three years limitation period will begin from the date of last repayment or adjustment of amount towards loan.

2. yes you can file a petition to reject the plaint under order VII Rule 11 CPC citing that the sit is barred by limitation.

3. You should confirm if the blanket orders passed by government to waive loan interest will be applicable to your case or not.

T Kalaiselvan
Advocate, Vellore
78104 Answers
1543 Consultations

5.0 on 5.0

If you are already in correspondence with the bank and they are not listening to you then immediately file an application in Consumer Court of the area because this comes under deficiency in service. Please take immediate steps.

Koshal Kumar Vatsa
Advocate, Gurgaon
2283 Answers
3 Consultations

5.0 on 5.0

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