Well actually its common practice if there is a dispute.
You cannot have duplicate licences as I understand it. You can have replacement ones. At a cost.
Sometimes the sympathy lies with the school and sometimes the student - I care not to comment in this case and have no knowledge.
My advice would be dialogue. Resorting to letter writing campaigns and lawyers is usually far more painful for the person than the FTO.
Call them, ask to meet, badger them. By all means use PPRuNe to publicise your predicament as long as you are willing to make your real ID available and post nothing but the truth to avoid any legal issues which we would pass onto your shoulders.
Talk, compromise, rationalise. These would be my watch words. The CAA won't actually give a damn about you. Its a contractural issue and they are far too busy coping with the current unprecedented aviation crisis.
Good luck,
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