DRAT Allows appeal against Central Bank of India , Orders Refund of Rs. 30.82 Lakhs Outstanding amount to Borrowers in Educational Loan Dispute [Read Order]
Central Bank of India was directed to refund Rs. 30,82,227 to the borrowers, along with simple interest at 6% per annum from the date of adjustment of the FDR amount until full realization.
![DRAT Allows appeal against Central Bank of India , Orders Refund of Rs. 30.82 Lakhs Outstanding amount to Borrowers in Educational Loan Dispute [Read Order]](https://images.taxscan.in/h-upload/2025/11/12/2104634-drat-appeal-central-bank-of-india-refund-educational-loan-dispute-taxscan.webp "DRAT Allows appeal against Central Bank of India , Orders Refund of Rs. 30.82 Lakhs Outstanding amount to Borrowers in Educational Loan Dispute [Read Order]")
The Debt Recovery Appellate Tribunal (DRAT), Chennai, has allowed an appeal filed by borrowers against Central Bank of India, setting aside a DRT order and directing the bank to refund a significant sum concerning an educational loan.
The dispute originated from an educational loan of Rs. 15 lakhs sanctioned by Central Bank of India for Apoorva Jain's studies. The bank released only Rs. 11.25 lakhs, and subsequently filed a recovery application when the loan was not repaid. Following a series of litigations, the Delhi High Court had remanded the matter back to the DRT with specific directions, primarily for the bank to produce a complete account statement from the loan's sanction date in 2002 and to adjust a sum of Rs. 35.11 lakhs, which the bank had realized from the borrowers' Fixed Deposits.
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The core issue before the DRAT was the bank's failure to produce the complete account statement from 2002 to 2006, despite the High Court's directive. The bank claimed the records were inaccessible due to a system change. The borrowers contended that this non-compliance prevented a fair determination of the actual dues and that the DRT's final order, which was passed without giving them an opportunity to scrutinize the records, was erroneous.
Justice G. Chandrasekharan, Chairperson of the Tribunal, observed that while the pre-2006 records were unavailable, the principles of natural justice and equity demanded a fair calculation. The Tribunal exercised its discretionary power, citing Supreme Court precedents, to reduce the pendente lite and future interest rate to 6% per annum. It was noted that the bank's failure to disburse the full loan amount had caused hardship to the student-borrower, warranting a just and equitable adjustment.
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Consequently, the DRAT allowed the borrowers' appeal and dismissed the bank's. After a detailed calculation of the principal and interest as per the loan terms and principles of equity, the Tribunal held that the bank was liable to refund the surplus amount. Central Bank of India was directed to refund Rs. 30,82,227 to the borrowers, along with simple interest at 6% per annum from the date of adjustment of the FDR amount until full realization. The parties were directed to bear their own costs.
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