Patna High Court
Raj Kumar MishraversusThe State of Bihar
- Decided
- Disposal
- DISMISSED
Holding
The court held that the appellant failed to establish any right to the scheme's nominal interest rate or State reimbursement and upheld the dismissal of his appeal.
Summary
The appellant, Raj Kumar Mishra, obtained a student loan of Rs.3,34,000 from Bank of India under Bihar's student credit scheme, which promises a nominal interest rate of 2%‑4% and a three‑year moratorium. After completing his education and securing employment, the bank demanded repayment at an interest rate of about 11.7% as per the loan agreement the appellant had signed. The appellant contended that the State of Bihar should reimburse up to Rs.4,00,000 and that the interest should be limited to the scheme's nominal rate. The bank argued that the appellant knowingly signed the agreement and is bound by its terms, and that the scheme merely facilitates loan access, not a fixed low rate. The High Court found that the appellant had not demonstrated any breach by the bank and that the original judgment dismissing his claim was correct, directing him to continue regular instalment payments. Consequently, the letters‑patent appeal was dismissed.
Issues considered
- Whether the appellant can claim the nominal interest rate and reimbursement under the Bihar student credit scheme despite having signed a loan agreement with a higher rate.
- Whether the State's guarantee of up to Rs.4,00,000 applies when the loan terms differ from the scheme's advertised terms.
- Whether the bank's charging of interest at 11.7% (or variable rate) violates the scheme or any statutory provision.
Subjects
- student loan
- interest rate
- loan agreement
- state scheme
- government guarantee
- letters patent appeal
- contractual obligation
- banking law
Judgment
IN THE HIGH COURT OF JUDICATURE AT PATNA
Letters Patent Appeal No.648 of 2024
In
Civil Writ Jurisdiction Case No.12233 of 2022
======================================================
Raj Kumar Mishra son of Sri Subedar Mishra, Resident of Arpana Bank
Colony, Phase-II, Near Ganga Colony, Ramjaipal Road, Bailey Road, Patna,
P.O.-Danapur Cantt., P.S. Rupaspur, District-Patna.
... ... Appellant/s
Versus
1. The State of Bihar through the Chief Secretary, Govt. of Bihar, Patna.
2. The Principal Secretary, Education Department, Govt. of Bihar, Patna.
3. The Additional Secretary, Education Department, Govt. of Bihar, Patna.
4. The Director (Higher Education), Education Department, Govt. of Bihar,
Patna.
5. The Zonal Manager, Bank of India, R. Block, Birchand Patel Path, Patna-
800001.
6. The Branch Manager, Bank of India, Branch Bailey Road, Jagdev Path,
Patna-800014.
... ... Respondent/s
======================================================
Appearance :
For the Appellant/s : Mr. Amit Shrivastava, Sr. Advocate
Mr. Girish Pandey, Advocate
Mr. Subodh Kumar Barnwal, Advocate
For the State : Mr. Sarvesh Kumar Singh, AAG 13
For the Bank (BOI) : Mr. Ajit Kumar Sinha, Advocate
Ms. Dilkash Khan, Advocate
Ms. Zeba Akhtar, Advocate
Mr. Pravin Kumar, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
and
HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE RAJESH KUMAR VERMA)
Date : 09-02-2026
Heard Mr. Amit Shrivastava, learned senior counsel
for the appellant, Mr. Ajit Kumar Sinha, learned counsel for the
respondent-Bank and Mr. Sarvesh Kumar Singh, learned AAG-13
for the State.
Patna High Court L.P.A No.648 of 2024 dt. 09-02-2026
2/6
2. The present letters patent appeal is directed
against the judgment dated 23.04.2024 passed in C.W.J.C No.
12233 of 2022 by the Hon'ble Single Judge, whereby the writ
petition was dismissed on the ground that the petitioner, having
knowingly signed the loan agreement is bound by the terms and
condition and cannot claim benefit contrary to the agreement under
the student credit scheme. The brief fact of the case is that on the
basis of the scheme formulated by the State of Bihar, the son of the
appellant had applied for a loan from the respondent-Bank. Under
the said scheme which is formulated by the Government of Bihar
the student would be entitled to a student loan for pursuing higher
education at nominal rate of interest and also eligible for
moratorium for a period of three years for repaying the loan.
3. Learned counsel for the appellant submits that as
per the scheme, the students will be given a loan covering the
tuition fees and they are obliged to repay the said loan only after a
moratorium period of three years and in case they are still
unemployed even after completion of the course, a further
moratorium period of one year is granted at the interest chargeable
at the nominal rate of 2% to 4%. The bank authority has issued a
letter to the appellant stating that the appellant is due with an
amount of Rs. 4,60,319/- as on 25.04.2022 and charging interest at
Patna High Court L.P.A No.648 of 2024 dt. 09-02-2026
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the rate of approximately 11.7%. He further submits that as per the
scheme, in case the student is unable to repay the loan amount, the
State Government will reimburse the loan amount to the maximum
of Rs. 4,00,000/- to the Bank and the interest payable is between
2% to 4% only.
4. The appellant had secured a loan after obtaining
Student Credit Card and after completing his education, has
obtained an employment as well. The dispute arose when he had to
return the bank loan. As per the agreement with the respondent-
Bank of India, which had granted a loan of Rs. 3,34,000/- to the
appellant, the Bank would have charged interest on the said amount
after a moratorium period of three years at the rate of 11.7% and if
the moratorium period was extended for another year, the interest
would get compounded. The agreement for repayment of the loan
amount was signed by the appellant and the Bank of India. It
appears from the pleadings that the appellant has been making a
payment of the installments regularly, but he has questioned the
correctness of the loan amount including the interest thereupon
which is being charged by the respondent-Bank. It also appears
from the pleadings of the writ petition that the issues were different
before the learned Single Judge. The appellant had sought complete
reimbursement of the loan amount as for a student who is unable to
Patna High Court L.P.A No.648 of 2024 dt. 09-02-2026
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pay back, the State comes in aid as the guarantor to the extent of
Rs. 4,00,000/- of the loan amount. The other contention raised
before the learned Single Judge was that the rate of interest on such
loan amount is not fixed one, but has to be commensurated with the
rate prescribed for student loan.
5. Learned counsel for the Bank submits that the
appellant while applying, signing the loan agreement with open eye
was fully aware of the terms and condition of the agreement and
they cannot now brickle out of the same on the basis of the scheme
followed by the State of Bihar for facilitating the grant of loan to
poor and needy students.
6. The application for sanction of loan is Annexure-
E of the writ petition. The appellant along with his son has signed
an undertaking which reads as following:-
"I/We hereby apply for a loan from BOI (Name of the
Bank) to the extant indicated in the Loan Request
Section of this application form. I/We declare that the
foregoing particulars and information furnished in
this application form are true, accurate and complete
and that they shall form the basis of any loan BOI
(Name of the Bank) may decide to sanction to me/us.
I/We confirm that I/We have/had no insolvency
proceeding against me/us. Nor have, I/We been
adjudicated insolvent. I/We further conform that I/We
have read the terms and conditions and understood
the contents therein. I/We am/are aware that I/We opt
for loan at floating rate of interest, the equated
Monthly installment will comprise Principal and
interest based on BOI (Name of the Bank) Advance
Rate which is subject to change from time to time".
Patna High Court L.P.A No.648 of 2024 dt. 09-02-2026
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7. Plain reading of the above clearly reveals that the
appellant as well as his son who is the main applicant of the loan
were fully aware of the terms and conditions of the loan and
voluntarily signed the agreement. Learned counsel for the Bank
further submits that the above scheme is only to facilitate the
student in getting easy loans but not granting loans at the nominal
interest rate to the student as claimed by the appellant. He further
submits that on the last occasion i.e., 17.04.2025 when the matter
was taken up, the only question was what rate of interest was being
charged from the appellant is not clear, however, the contention of
the Bank was that he has charged only 11.7% rate of interest and
the Court has directed to the Bank to come out with a specific
affidavit as to the rate of interest which is being charged from the
appellant. He further submits that pursuant to the aforesaid
direction, the Bank has filed an affidavit on 12.05.2025 of which
paragraph nos. 3 and 4 are quoted hereinbelow:-
"3) That the loan was sanctioned to the appellant with
agreed rate of interest i.e. 1.70% above the yearly
BOI MCLR. p.a. as may be reset by BOI on actual
basis with monthly rest presently 10% p.a (floating)
interest.
4) That the respondent bank is filing the chart
indicating the rate of interest being charged in the
account from time to time till date @1.7% p.a above
BOI MCLR p.a which is between 7.25% p.a and 9%
p.a. The interest charged is thus maximum 10.7% p.a
during the said period."
8. From perusal of the aforesaid it appears that the
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Bank had charged the rate as mentioned in the agreement.
9. We have heard the learned counsel for the parties
and perused the materials available on record. We are of the
considered opinion that the appellant has failed to make out a case
for the reliefs sought in the present appeal. The writ court has
rightly rejected the appellant’s claim and we find no merit in the
present appeal.
10. Accordingly, the present letters patent appeal
stands dismissed.
11. The appellant is directed to continue the payment
of installments regularly without any fail.
12. Pending application(s), if any, shall stands
disposed of.
(Sudhir Singh, J)
I agree
( Rajesh Kumar Verma, J)
Vanisha/-
AFR/NAFR NAFR
CAV DATE 02.02.2026
Uploading Date 09.02.2026
Transmission Date NA
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