Court says prima facie issue affects public at large as student alleges loan was arranged through OTP-based online consent, later marked in default after cancellation dispute
The Allahabad High Court has taken note of a petition raising concerns over online education consultancy and loan facilitation practices, observing that the issue appears to have wider public impact and deserves examination on merits.
A Division Bench of Justices Prakash Padia and Vivek Saran was hearing a writ petition filed by Vallabhi Yadav and another against Nirdeshak/Prabhandhak Leverage Edu and others. The petitioners alleged that while the first petitioner was searching online for overseas education opportunities, representatives of Leverage Education contacted her and promised assistance in securing admission to an overseas institution as well as arranging funds for tuition and related expenses.
According to the petition, the petitioner accepted the service and was connected with officials linked to loan facilitation entities, including Techfino Capital Private Limited. The loan was allegedly availed through web links and OTP-based consent. However, when the petitioner could not secure a suitable institution for the academic session, she requested cancellation of the loan. It was claimed that the service providers assured cancellation after deducting consultancy charges, but the loan was not withdrawn in time.
The petition further stated that when repayment instalments were to be deducted from the bank account of the petitioner’s father, he instructed his bank to stop payment. The loan was later cancelled, but the account was allegedly treated as a default, causing the father’s CIBIL score to fall sharply from 900 to 681. The petitioners contended that this has now made it difficult to obtain another educational loan for the petitioner’s further studies.
The Court noted that notices had already been issued and, while counsel appeared for respondent no. 1, the remaining respondents were unrepresented despite service. Observing that such online service-provider conduct—especially where calls and messages are made based on internet searches and consent is obtained through OTPs or web links—may affect the public at large, the Bench said the matter requires consideration on merits.
To ensure proper service, the Court directed the Registrar (Compliance) to have notice served upon respondent no. 2 through the Chief Judicial Magistrate, Gautam Budh Nagar, and upon respondents no. 3 and 4 through the Registrars General of the High Courts of Karnataka and Bombay respectively. The Court also permitted the Amicus to serve notice on the counsel who generally appears for the Reserve Bank of India, seeking instructions in the matter.
All respondents, including the State of Uttar Pradesh, have been granted two weeks to file their responses or counter affidavits. The matter has been listed for further hearing on 13 October 2026.
Bottom Line :
Education consultancy and loan facilitation through online platforms - Prima facie concern of Court regarding public impact of online service providers obtaining consent through OTP/web links and facilitating loans - Matter directed to be examined on merits with notice to private respondents and Reserve Bank of India.
Statutory provision(s): Article 226 of the Constitution of India, 1950
Vallabhi Yadav v. Nirdeshak/Prabhandhak Leverage Edu, (Allahabad)(DB) : Law Finder Doc id # 2982719
