Legal Question in Immigration Law in India

Yes, you can apply for F1 visa. Whether your visa applications will be denied or approved, I can't speculate here on the public forum.

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You should apply for F-1 visa; the visa counsellor may consider your case as very genuine and may cancell your H-1B at the time of granting you F-1. On the other hand, if your job is still surviving and you are willing to work there, you may go on H-1B, and continue your studies on part time basis.