The U.S. District Court of Maryland has ruled that the Unversity of Maryland cannot bar a campus-based social action group from using the money it receives from student fees to file law-suits. The decision means the group could sue the University with funds the University dispensedto it.

The court struck down a restriction the school's board of regents had placed on the use of the money by the Maryland Public Interest Research Group (MaryPIRG).

Judge Frank Kaufman stated that the ban violated the group's right of free expression and right to sue for redress of grievances.

The ban had been in effect since the university's Student Government Association began funding the fledgling group in 1974. The amount of money must be approved by the board of regents. Last year MaryPIRG received about $30,000, its chairman, Stephen Schrag, said.

The University has appealed the decision, a spokesman for the state attorney general's office, which represented the school, said.

Although MaryPIRG has no present plans to sue the university, Stephen Schrag, chairman of the group, said the right to file lawsuit "is a necessaary part of our organization."

MaryPirg, like its counterparts elsewhere, seeks to promote consumer and environmental protection laws through lobbying and public reports. The 3-year-old group, styled after but independent from Ralph Nader's investigatory lobbies, clashed heatedly with the University's president, Wilson H. Elkins, and the board of regents in 1975 over whether a Chevy Chase bank should be allowed to open a branch on the 35,000-student College Park campus.

According to court documents, the dispute arose when maryPIRG questioned the state bank commissioner's delaying action for 18 months on the application of the Chevy Chase Bank and trust Co., even though such applications are usually approved within a few months. The bank offers free checking services.

A campus branch bank offering free checking would save university students and personnel up to $300,000 a year, provide income for the university through rent payments, and relieve the university of having to operate check-cashing service, MaryPIRG contended.

After the bank commissioner's action, a MaryPIRG investigation revealed the university had deposits of over $100 million in another bank which had a branch near the campus and that Elkins was a director of that bank.

Subsequently, after hearings by the Maryland General assembly and the States Board of Ethics regarding Elkins resigned from the bank's board. In December 1975, the Chevy Chase bank, its new application approved by the state bank commissioner, opened a branch near the College Park campus.

The university's regents argued that their restriction on the MaryPIRG's use of the funds voted it by the school's Student Government Association was based on state laws and an opinion of the state attorney general's office.

However, the court, nothing that MaryPIRG claimed the true propose of the ban was to prevent it from engaging in activities similar to the Chevy Chase bank action, dismissed that argument, describing the regents' assertion as "unsupported."