Supreme Court Directs Measures to Curb Capitation Fees in Private Medical Colleges: Rashtreeya Sikshana Samithi Trust Etc. vs. Committee For Fixation of Fee Structure Of Private Professional Colleges & Ors. Etc. (19 May 2022)

Date of the Judgment: 19 May 2022
Citation: Not Available
Judges: L. Nageswara Rao J. and B.R. Gavai J.
Can the practice of charging capitation fees by private medical colleges be effectively curbed? The Supreme Court of India addressed this critical issue, taking note of the continued prevalence of this practice despite existing regulations. The Court issued a series of directions aimed at ensuring transparency and preventing the exploitation of students seeking admission to medical courses. This judgment emphasizes the need for strict adherence to the fee structures determined by the Fee Fixation Committees and introduces measures to enhance accountability in the admission process. The bench consisted of Justices L. Nageswara Rao and B.R. Gavai.

Case Background

The case originated from challenges to the orders passed by the Fee Fixation Committee for undergraduate medical courses for the academic years 2004-2005, 2005-2006, and 2006-2007. Both students and private medical colleges contested these orders in the High Court. The High Court sided with the students, allowing their petitions and dismissing those of the private medical colleges. Subsequently, the Supreme Court issued a notice on 09.07.2010 and stayed the High Court’s judgment on 16.08.2010, with the condition that private medical colleges would refund fees as per the High Court’s order, provided students furnished bank guarantees. The Supreme Court also noted the continued practice of levying capitation fees despite previous directions to curb it.

Timeline

Course of Proceedings

The High Court had allowed the writ petitions filed by the students, which challenged the fee structure determined by the Fee Fixation Committee, and dismissed the petitions filed by the management of private medical colleges. The Supreme Court, upon hearing the matter, stayed the High Court’s decision, requiring colleges to refund fees as per the High Court’s order, provided the students furnished bank guarantees. The Court also took cognizance of the persistent issue of capitation fees and appointed an Amicus Curiae to suggest measures to curb this practice. The Court also sought responses from various stakeholders, including State Governments, and the Medical Council of India.

Legal Framework

The Supreme Court referred to previous judgments and legal provisions related to the regulation of fees and admissions in private professional colleges. The Court emphasized the need to prevent the charging of capitation fees and profiteering by educational institutions. The Court referred to the definition of capitation fee in the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, which defines capitation fee as:

“Capitation fee means any amount by whatever name called, paid or collected directly or indirectly in excess of the fee prescribed under Section 4;”

The Court also noted that several states, including Tamil Nadu, Maharashtra, Karnataka, and Andhra Pradesh, have enacted statutes prohibiting the collection of capitation fees and regulating the admission process in professional colleges.

Arguments

The arguments presented before the Supreme Court focused on the measures needed to effectively stop the practice of charging capitation fees by private medical colleges. The Amicus Curiae, Shri Salman Khurshid, was appointed to analyze the problem and suggest an appropriate mechanism. The Court also considered suggestions from various parties, including State Governments and private medical colleges. The arguments and suggestions can be summarized as follows:

• Amicus Curiae’s Submissions:
  • The legal structure put in place as a result of the judgments of the Supreme Court continues to suffer some unregulated areas such as the admissions made by self-financing colleges and Deemed universities.
  • There is a feeling of lack of adequate transparency in the matter of entrance examinations conducted by groups of institutions that form associations for the purpose of conducting entrance examinations.
  • A web portal should be set up under the aegis of the Supreme Court for students to report on capitation fee demands.
  • All candidates taking the NEET exam should be informed about the web portal.
  • All rounds of counseling, including the stray vacancies round, should be completed at least two weeks before the last date for completion of the admission process.
  • The names of students recommended for stray round vacancies should be made public along with their NEET rank.
• State Governments’ Submissions:
  • State Governments have enacted legislations prohibiting the practice of charging capitation fee and making it an offence.
  • The State Governments provided information regarding complaints received, action taken reports, and other data available on the aspect of levying capitation fee.
• Private Medical Colleges’ Submissions:
  • Fee Fixation Committees should fix a price band for different expenses and colleges should not charge any additional amount.
  • Fee should not be received through cash payment.
  • Private medical colleges should not insist on payment of fee for the entire course in advance.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issues addressed by the Court can be summarized as:

1. How to effectively curb the practice of charging capitation fees by private medical colleges.
2. What measures should be taken to ensure transparency in the admission process for medical courses.
3. How to ensure that Fee Fixation Committees fix fees without leaving scope for additional charges.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court relied on the following authorities:

• TMA Pai Foundation & Ors. v. State of Karnataka [(2002) 8 SCC 481] – The Court referred to this case to emphasize that a rational model should be adopted by the management, which would not be entitled to charge a capitation fee. It also highlighted that appropriate machinery can be devised by the State or university to ensure that no capitation fee is charged and there is no profiteering.
• Islamic Academy of Education and Anr. v. State of Karnataka and Ors. [(2003) 6 SCC 697] – The Court referred to this case to clarify that once a fee is fixed by the Committee, the institute cannot charge any other amount over and above the fixed fee, either directly or indirectly. Any additional amount charged under any guise would amount to charging capitation fee.
• P.A. Inamdar v. State of Maharashtra [(2005) 6 SCC 537] – The Court referred to this case to reiterate that capitation fees cannot be permitted and no seat can be appropriated by payment of capitation fee. The Court observed that the method of admission has to be regulated so that the admissions are based on merit and transparency.
• Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992 – The Court referred to the definition of “capitation fee” in this Act, which means any amount collected in excess of the prescribed fee.

Judgment

The Supreme Court accepted the suggestions made by the Amicus Curiae and the learned Counsel for the States and National Medical Council. The Court issued several directions to prevent the practice of charging capitation fees by private medical colleges.

The court considered the following authorities:

• TMA Pai Foundation & Ors. v. State of Karnataka [(2002) 8 SCC 481]*: The court used this case to highlight the principle that educational institutions should not charge capitation fees, and that a reasonable surplus for the furtherance of education is permissible.
• Islamic Academy of Education and Anr. v. State of Karnataka and Ors. [(2003) 6 SCC 697]*: The court relied on this case to emphasize that once a fee is fixed by the committee, institutions cannot charge any amount beyond that fixed fee.
• P.A. Inamdar v. State of Maharashtra [(2005) 6 SCC 537]*: The court reiterated the principle that capitation fees are not permitted and that admissions should be based on merit and transparency.

What weighed in the mind of the Court?

The Supreme Court’s decision was driven by a strong concern for curbing the prevalent practice of charging capitation fees in private medical colleges. The Court emphasized the need for transparency, merit-based admissions, and strict adherence to fee structures determined by the Fee Fixation Committees. The Court’s reasoning was influenced by the following key points:

• The persistent practice of charging capitation fees despite existing regulations.
• The need to ensure merit-based admissions and prevent exploitation of students.
• The importance of transparency in the admission process.
• The necessity for Fee Fixation Committees to fix fees comprehensively, leaving no scope for additional charges.

The Court’s reasoning was based on the need to ensure that the admission process is fair, transparent, and not exploitative. The Court emphasized that “a rational model should be adopted by the management, which would not be entitled to charge a capitation fee.” The Court also noted that “once fee is fixed by the Committee, the institute cannot charge either directly or indirectly any other amount over and above the amount fixed as fee.” Additionally, the Court reiterated that “capitation fee cannot be permitted to be charged and no seat can be permitted to be appropriated by payment of capitation fee.”

The Court did not discuss any alternative interpretations. The final decision was reached by accepting the suggestions of the Amicus Curiae and issuing directions to the concerned authorities to implement the measures suggested.

Key Takeaways

• A web portal will be set up under the aegis of the Supreme Court for students to report any demands for capitation fees.
• Details of the web portal will be published in English and vernacular newspapers.
• Pamphlets will be distributed to students and parents during counseling sessions.
• All counseling rounds, including stray vacancy rounds, must be completed at least two weeks before the last date of admission.
• Names of students recommended for stray round vacancies must be made public along with their NEET rank.
• Admissions must be made strictly on merit.
• Fee Fixation Committees must consider all components of fees, leaving no scope for additional charges.
• Private medical colleges are prohibited from accepting cash payments.

Directions

The Supreme Court gave the following directions:

1. A web-portal under the aegis of Supreme Court has to be set-up wherein any information about the private medical colleges charging capitation fees can be furnished by the students. The web-portal has to be maintained and regulated by the National Informatics Centre (NIC) under the Ministry of Electronics and Information Technology.
2. The Chief Secretaries of the States and Union Territories are directed to publish the details about the web-portal in the English as well as vernacular newspapers at the time of admission. In addition, a pamphlet should be compulsorily given to the students and their parents at the time of counselling informing them about the availability of the web-portal.
3. While fixing the schedule for the admission process, the National Medical Commission and the Dental Council of India have to make sure that the counselling for all the rounds, including the stray vacancy round, is completed at least two weeks before the last date of admission.
4. The names of students who are recommended by the authority for admission in the stray round vacancy have to be made public along with rank allotted to them in the NEET exam. The admissions should be made strictly on the basis of merit and in the event of any admission to the contrary, suitable action shall be taken against the private medical colleges.
5. While fixing fee, the Fee Fixation Committees of the States should take into account all the components of fee, leaving no scope for managements to charge any additional amounts apart from what has been prescribed by the fee fixation committee from time to time. In the event that the management intends to charge additional amounts over and above the price band fixed by the Fee Fixation Committee, or for any component not included in the structure fixed by the Fee Fixation Committee, the same can only be done with the concurrence of the Fee Fixation Committee.
6. The management of private medical colleges are strictly prohibited from accepting payment of fees in cash, in order to avoid charging of capitation fee. The students or any other aggrieved persons are at liberty to report on the web-portal regarding collection of fees in cash by any medical colleges.
7. The Director General of Health Services and other concerned authorities to the State Governments should ensure that the All-India Quota and State Quota rounds of counselling are completed strictly in accordance with the time schedule that is fixed.

Development of Law

The ratio decidendi of this case is that private medical colleges cannot charge capitation fees and must adhere to the fee structure fixed by the Fee Fixation Committees. The judgment reinforces the existing legal position on capitation fees and provides a mechanism for better enforcement of these rules. There is no change in the previous position of the law, rather the court has given new directions for better implementation of the law.

Conclusion

The Supreme Court’s judgment in this case is a significant step towards curbing the practice of charging capitation fees in private medical colleges. By directing the establishment of a web portal for complaints, mandating transparency in admissions, and prohibiting cash payments, the Court has provided a framework for ensuring that admissions to medical courses are based on merit and not on the ability to pay exorbitant fees. The Court’s directions aim to protect students from exploitation and ensure a fair and transparent admission process.