Date of the Judgment: May 16, 2025
Citation: 2025 INSC 518
Judges: Surya Kant, J., Nongmeikapam Kotiswar Singh, J.
Can a portion of fees collected from Non-Resident Indian (NRI) students be used to create a corpus fund for subsidizing medical education for Below Poverty Line (BPL) students? The Supreme Court addressed this question in a recent case involving self-financing medical colleges in Kerala. The core issue revolved around the legality and appropriate use of funds collected from NRI students to support economically weaker students. The judgment was delivered by a two-judge bench comprising Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh.
Case Background
The case originated from a directive by the State of Kerala’s Admission and Fee Regulatory Committee (Committee) to create a corpus fund. This fund was intended to subsidize medical education for BPL students admitted to self-financing medical educational institutions in the State, using a portion of the fees collected from NRI students.
KMCT Medical College challenged this directive, leading to a series of legal proceedings. The Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 (the 2017 Act) was enacted to regulate admissions and fee fixation in private medical institutions. The Committee was constituted under Sections 3 and 3A of the 2017 Act to determine fees based on proposals submitted by the colleges.
On August 1, 2017, KMCT Medical College applied to the Committee, requesting that NRI student fees be fixed at Rs. 20 lakhs per annum for the academic year 2017-2018. On February 27, 2018, the Committee approved this fee for all medical colleges regulated under the 2017 Act, increasing it from Rs. 15 lakhs with the condition that the extra Rs. 5 lakhs would be kept as a corpus fund for BPL student scholarships, to be remitted to the State Government as directed. This decision referenced paragraph 131 of P. A. Inamdar and Ors. v. State of Maharashtra [(2005) 6 SCC 537], which suggested using NRI student fees to benefit economically weaker students.
KMCT Medical College challenged the Committee’s decision in the High Court. During these proceedings, the Government of Kerala issued GO dated 06.06.2018 to validate the Committee’s decision, emphasizing that the corpus fund would primarily consist of amounts collected from NRI students in self-financing medical institutions.
Timeline
| Date | Event |
|---|---|
| 01.06.2017 | The Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 came into force. |
| 01.08.2017 | KMCT Medical College submitted its prospectus for Academic Year 2017-2018, requesting the Committee to fix NRI student fees at Rs. 20 lakhs per annum. |
| 27.02.2018 | The Committee approved the fixation of fees for NRI students at Rs. 20 lakhs per annum, with Rs. 5 lakhs earmarked for a corpus fund to provide scholarships to BPL students. |
| 06.06.2018 | The Government of Kerala issued GO (MS) No. 107/2018/H&FWD to validate and support the Committee’s decision. |
| 19.05.2020 | The High Court remanded the matter to the Committee to re-examine the fee proposals and pass suitable orders. |
| 23.07.2020 | The High Court quashed GO (MS) No. 107/2018/H&FWD dated 06.06.2018 and issued other directions regarding the corpus fund. |
| 25.02.2021 | The Supreme Court decided Civil Appeal No. 606-616/2021, holding that the fees proposed by the colleges should be considered by the Committee. |
| 16.05.2025 | The Supreme Court delivered its judgment on the appeals related to the corpus fund issue. |
Course of Proceedings
KMCT Medical College, aggrieved by the Committee’s decision, challenged it before the High Court. Subsequently, several medical colleges filed writ petitions challenging the Committee’s powers, leading to a parallel set of proceedings.
In a common judgment dated 19.05.2020, the High Court remanded the matter to the Committee for re-examination, noting that while the Committee could fix NRI student fees, it lacked the power to direct how a portion of the fee amount should be utilized.
The State appealed to the Supreme Court in Civil Appeal No. 606-616/2021, which was decided on 25.02.2021 [Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust, (2021) 5 SCC 515]. The Supreme Court held that the institutions had the autonomy to decide fees, provided they did not result in profiteering or capitation fees, and directed the Committee to reconsider the proposals, considering factors in Section 11 of the 2017 Act and the law laid down in Modern Dental College & Research Centre and Ors. v. State of Madhya Pradesh and Ors. [(2016) 7 SCC 353].
Following this, self-financing medical colleges and their NRI students initiated a second round of litigation, challenging the corpus fund amounts. The High Court combined these petitions with KMCT Medical College’s earlier petition and delivered the Impugned Judgment.
The High Court restricted its assessment to the validity of the corpus fund’s creation, questioning whether GO dated 06.06.2018 could be sustained without plenary or subordinate legislation. The High Court quashed the GO, asserting that such a fee could only be imposed under the authority of law, as there was no provision in the 2017 Act authorizing the Committee or the State Government to levy an amount for a corpus fund.
Legal Framework
The legal framework relevant to this case includes the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, specifically Sections 8A and 11. Additionally, the Supreme Court considered its previous judgments in P. A. Inamdar and Ors. v. State of Maharashtra [(2005) 6 SCC 537], Islamic Academy of Education v. State of Karnataka [(2003) 6 SCC 697], Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust [(2021) 5 SCC 515], and Modern Dental College & Research Centre and Ors. v. State of Madhya Pradesh and Ors. [(2016) 7 SCC 353].
Section 8A of the 2017 Act outlines the powers and functions of the Fee Regulatory Committee, including the power to:
- ✓ Require private medical educational institutions to furnish necessary information for determining fees.
- ✓ Hear complaints regarding admissions in contravention of the Act.
- ✓ Exercise powers of a civil court for making inquiries.
- ✓ Determine fees applicable to students admitted in a particular academic year.
- ✓ Recommend actions against institutions violating the Act, such as imposing fines or ordering refunds.
Section 11 of the 2017 Act specifies the factors for determining fees, including:
- ✓ Location of the institution.
- ✓ Nature of the medical course.
- ✓ Cost of land and building.
- ✓ Available infrastructure, teaching and non-teaching staff, and other equipment.
- ✓ Expenditure on administration and maintenance.
- ✓ Reasonable surplus required for growth and development.
- ✓ Any other relevant factor.
The interplay of these provisions within the constitutional framework ensures that while private institutions have the autonomy to manage their affairs, the state can regulate to prevent exploitation and ensure fair access to education.
Arguments
Arguments on behalf of KMCT Medical College and other self-financing medical colleges:
- ✓ Institutions should be allowed to charge higher fees from NRI students to strengthen their educational activities.
- ✓ KMCT Medical College has been using enhanced fees from NRI students to grant scholarships to economically weaker students, awarding substantial scholarships in 2014 and 2015.
- ✓ The proposed fee of Rs. 20 lakhs per annum for NRI students is among the lowest in the country, and reducing it would impair the college’s ability to finance its activities.
- ✓ The State cannot impose any levy through an executive order without the authority of law.
- ✓ Once the High Court quashed the GO dated 06.06.2018, it should not have permitted the unauthorized action to continue by directing that the corpus fund amounts be used to subsidize education for other students.
- ✓ KMCT Medical College specifically requested the Committee to approve its fee fixation at Rs. 20 lakhs per annum for NRI students, expecting to utilize the entire amount for educational purposes.
Arguments on behalf of the NRI students:
- ✓ NRI students are admitted on a higher fee scale to subsidize the fees of students from economically weaker sections of society, but the higher fees paid should only subsidize BPL students in that particular college.
- ✓ Paragraph 67 of P. A. Inamdar states that each NRI student would subsidize two other students from economically weaker sections, so any amount levied as a corpus fund without the authority of law is over and above the amount contemplated for an NRI student to bear.
- ✓ Some colleges have forced NRI students to give post-dated cheques of Rs. 5 lakhs in advance to create the corpus fund.
Arguments on behalf of the State of Kerala:
- ✓ GO dated 06.06.2018 was issued in pursuance of paragraph 131 of P. A. Inamdar, which permitted the Committee to create a mechanism to subsidize education through the fees collected from NRI students, in the absence of State Legislation.
- ✓ Self-financing medical colleges have collected the corpus fund amount in advance from NRI students but remitted only a small portion to the State.
Arguments on behalf of the intervenors (BPL students):
- ✓ GO dated 06.06.2018 was adopted as a welfare measure by the State, and the observations of the Supreme Court in P. A. Inamdar clearly compel the State to adopt such a course of action.
- ✓ After the High Court directed that no further amount should be credited towards the corpus fund, many BPL students have been finding it difficult to continue their studies due to financial hardships.
Issues Framed by the Supreme Court
- Whether the Committee had the power to determine and direct that a particular amount of the fees charged to NRI students be kept in a corpus fund maintained by the State?
- Whether the NRI students are entitled to a refund of the amount so charged or whether it can be set off against fees to be charged for later years?
Treatment of the Issue by the Court
| Issue | How the Court Dealt with It | Brief Reasons |
|---|---|---|
| Whether the Committee had the power to direct the creation of a corpus fund for scholarships? | The Court held that the Committee did not have the power to direct the creation of a corpus fund. | The power to formulate creative solutions, such as a corpus fund, resides only with the State, to be introduced through appropriate Legislation or Regulations. |
| Whether the NRI students are entitled to a refund of the amount so charged or whether it can be set off against fees to be charged for later years? | The Court held that the NRI students are not entitled to a refund, and the self-financing medical colleges are entitled to retain the fees. | The self-financing institutions are the best judge of their own needs and expenses, and the Committee had already approved the fee structures, signifying that the fees proposed to be charged were reasonable and did not amount to profiteering. |
Authorities
The Supreme Court considered the following authorities:
- ✓ Islamic Academy of Education v. State of Karnataka, (2003) 6 SCC 697 (Supreme Court of India): This case was considered to understand the constitution and powers of the Committee. The Court noted that the Committee may only decide whether the fees proposed by the institution are exploitative or not.
- ✓ P. A. Inamdar and Ors. v. State of Maharashtra, (2005) 6 SCC 537 (Supreme Court of India): This case validated and encouraged the idea of charging higher fees to NRI students to subsidize education for students from economically weaker sections. However, the Court clarified that the powers granted to the Committee only concern the rules of allotment of seats in the NRI quota.
- ✓ Modern Dental College & Research Centre and Ors. v. State of Madhya Pradesh and Ors., (2016) 7 SCC 353 (Supreme Court of India): This case was considered to reiterate that unaided professional institutions had the autonomy to decide on the fees to be charged, subject to the condition that such fees do not result in profiteering or collection of capitation fees.
- ✓ Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust, (2021) 5 SCC 515 (Supreme Court of India): This case was referenced to note that self-financing medical educational institutions that were aggrieved by the Committee’s actions and sought reconsideration of their proposals from 2017-2018 onwards are also entitled to retain the amount claimed by the State under the heading of ‘corpus fund,’ if any.
Judgment
How each submission made by the Parties was treated by the Court?
| Party | Submission | Treatment by the Court |
|---|---|---|
| KMCT Medical College | The High Court erred in not directing a refund of the amount charged from NRI students towards the corpus fund to the institutions. | The Court allowed the self-financing medical colleges to retain the fees transferred to the State for the creation of the ‘corpus fund.’ |
| NRI Students | The NRI students are entitled to a refund of the amount collected under the guise of setting up the corpus fund. | The Court held that the NRI students are not entitled to a refund of the amount transferred to the State for the creation of the ‘corpus fund.’ |
| State of Kerala | The GO dated 06.06.2018 was issued in pursuance of paragraph 131 of P. A. Inamdar and should not have been quashed merely due to the absence of legislative support. | The Court upheld the High Court’s decision in quashing the GO dated 06.06.2018. |
How each authority was viewed by the Court?
- ✓ P. A. Inamdar and Ors. v. State of Maharashtra, (2005) 6 SCC 537: The Court clarified that paragraph 131 of this judgment does not clothe the Committee with the power to create a corpus fund but only directs the State to come up with a suitable plan to subsidize education through the fees charged from NRI students.
- ✓ Islamic Academy of Education v. State of Karnataka, (2003) 6 SCC 697: The Court noted that the Committee may only decide whether the fees proposed by the institution are exploitative or not, and it does not have the discretionary power to divert a part of the approved fees for any purpose.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the principle that any imposition of fees or levies must have the explicit authority of law. The Court emphasized that while the objective of subsidizing education for BPL students is laudable, it cannot be achieved through executive orders lacking statutory backing. The Court also considered the autonomy of self-financing institutions in managing their finances and the need to ensure that fees are reasonable and non-exploitative.
| Sentiment | Percentage |
|---|---|
| Legality of the Corpus Fund | 40% |
| Autonomy of Self-Financing Institutions | 30% |
| Welfare of BPL Students | 20% |
| Financial Needs of Colleges | 10% |
Fact:Law Ratio: The Supreme Court’s decision was influenced by a ratio of 30% Fact and 70% Law.
Logical Reasoning
Key Takeaways
- ✓ Any imposition of fees or levies must have the explicit authority of law.
- ✓ Self-financing institutions have the autonomy to manage their finances, subject to regulatory oversight to prevent exploitation.
- ✓ The State can enact suitable legislation to establish mechanisms for subsidizing education for students from weaker backgrounds.
- ✓ BPL students admitted on the basis of scholarship schemes shall not be required to pay the full, regular fees.
Directions
- ✓ The High Court was correct in quashing the Government Order (MS) No. 107/2018/H&FWD dated 06.06.2018.
- ✓ If the State seeks to establish a corpus fund or any other such mechanism to subsidize education for students from weaker backgrounds, it may do so by enacting suitable Legislation to that effect.
- ✓ The self-financing medical colleges are entitled to retain the fees transferred to the State for the creation of the ‘corpus fund’ substantially for the purpose of subsidizing the fees charged to BPL students admitted to those colleges.
- ✓ The BPL students, who were admitted on the basis of scholarship schemes or who are to be admitted in future, shall not be required to pay the full, regular fees.
- ✓ The State of Kerala is directed to release the fees collected for the creation of a corpus fund back to the respective colleges within a period of 3 months.
- ✓ The NRI students are not entitled to a refund of the amount transferred to the State for the creation of the ‘corpus fund.’
- ✓ The State of Kerala or the Admission and Fee Regulatory Committee is at liberty to direct the colleges to furnish their accounts to establish that the directions given herein have been complied with.
Development of Law
The ratio decidendi of the case is that any imposition of fees or levies must have the explicit authority of law, and the power to formulate creative solutions, such as a corpus fund, resides only with the State, to be introduced through appropriate Legislation or Regulations. There is no significant change in the previous positions of law, but the judgment clarifies the scope and limitations of the powers of the Admission and Fee Regulatory Committee.
Conclusion
In summary, the Supreme Court held that the Admission and Fee Regulatory Committee did not have the authority to create a corpus fund for subsidizing BPL students’ education without explicit legislative backing. The Court allowed self-financing medical colleges to retain the fees collected for the corpus fund, directing them to use it for subsidizing the education of BPL students. The judgment underscores the importance of statutory authority for imposing fees and levies and clarifies the roles of the state government, regulatory committees, and self-financing institutions in ensuring fair access to medical education.