Any Institution cannot collect more than what they are permitted: HC directs University to refund Rs 10.5 lakh to MBBS student who left course

Madurai: Taking note of the fact that medical institutes are not permitted to collect excess fees apart from the tuition fees and other institutional expenses, the Madras High Court has recently directed Annamalai University for refunding Rs 10.5 lakh to a candidate who had discontinued her MBBS course after paying the fees.

This direction was issued by the HC bench after observing that after the concerned student left the course, the seat got filled later and as a result, the medical college did not suffer any loss.

Taking note of the fact that the institute had withheld the entire fee for the first year, the court opined that it could only retain the fee for the months during which the student had actually studied in the college along with the processing fee.

"Further, in the present case on hand, the Institution had admitted another student in the vacancy that had arisen due to the petitioner's daughter leaving the Institution. There is no loss that is caused to the institution. What the institution now seeks to achieve, in my view, is an unjust enrichment amounting to profiteering, which it has been heavily come down by the Hon'ble Apex Court," noted the bench comprising of Justice K Kumaresh Babu.

The plea had been filed by the mother of the concerned student. Back in August 2016, the student got herself enrolled for the MBBS course at Annamalai University.

However, later she got admitted to Velammal Medical College in Madurai district and thereafter a request was made to the former Institute to relieve her.

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When the petitioner approached the University for relieving her daughter, she was told to pay the remaining fee of Rs 22.52 lakh. After paying the fees, the University issued the transfer certificate to the concerned student, who had been forced to sign a bond.

On the basis of the request, the University refunded Rs 17.5 lakh to the student. However, the tuition fees for the first year amounting Rs 5.5 lakh and another Rs 5 lakh as bond breakage fees was not given back to the student.

Approaching the High Court bench, the petitioner argued that the act of the University not giving back the money was contrary to the UGC Regulations. Reliance was placed upon a Circular issued by UGC in 2007 where it had been stated that if a student leaves after joining the course and the seat gets filled by another candidate later, the institute must give back the fees collected with proportionate deductions of monthly fees and proportionate hostel rent where applicable. Issuing another circular back in 2011, the UGC reiterated these guidelines.

On the other hand, it was argued on the behalf of the University that the Prospectus issued for 2016-2017 was applicable to the concerned candidate and the same cannot be violated. As per the concerned prospectus, the student was bound to issue a bond and comply with the same.  Further, the University argued that since the candidate had left the course midway, it was entitled for retaining the fee for the academic year.

After considering the submissions, the bench noted that the University had a bond clause in its prospectus on the basis of which if a candidate discontinued the course after July 2016, they would be liable to pay a penalty of Rs five lakh along with the forfeited tuition and other fees as per the prospectus.

It was observed by the court that this clause was fundamentally in violation of the principles laid down by the Apex Court in TMA Pai Foundation case where the top court bench had categorically stated that an institute cannot collect fee more than what they are permitted i.e. tuition fee and other institutional expenses.

Further, the bench also referred to the UGC Circulars, which are binding on the institute. As per these circulars, the university cannot retain the first year fee collected from the student. Only the fees for the two months when the student was enrolled at the university could be collected.

"A reading of the public notice issued by the UGC, it is clear that if the students leave the Institution after joining the Course and if the seat consequently falling vacant has been filled by another candidate, before the last date of admission, the Institution should return the fees collected with proportionate deductions of monthly fees and proportionate hostel rent, where applicable," noted the bench.

"The UGC guidelines, it is binding on the Institution and they cannot claim that they are not bound by the norms fixed by the UGC," it added.

"Hence, what the respondent Institution can retain from the first year fees collected from the petitioner's daughter could be the fees for the period of two months viz., August 2016 to September 2016 which shall be deducted proportionately from the fees collected for the first year namely, Rs.5,54,000/- (Rupees Five Lakhs and Fifty Four Thousand only)," the bench ordered.

Further referring to the prospectus of the institute, the court pointed out that the rules specify that when the student discontinues the programme on or after the date of commencement of classes and another student gets admitted to the concerned vacant seat, caution deposit and 75% of tuition fees gets refunded. As per the clause in the prospectus, the college cannot hold back the entire tuition fees for the first academic year.

"The said clause is also in violation of the public notice issued by the UGC," noted the HC bench.

The bench also referred to the Prospectus, which states that the student needs to pay Rs 5 lakh as penalty for leaving a seat. Relying upon the top court order in the case of T.M.A Pai Foundation, the HC bench observed,

"...any Institution cannot collect more than what they are permitted, namely, tuition fees and other institutional expenditure. Further, in the present case on hand, the Institution had admitted another student in the vacancy that had arisen due to the petitioner's daughter leaving the Institution. There is no loss that is caused to the institution."

"What the institution now seeks to achieve, in my view, is an unjust enrichment amounting to profiteering, which it has been heavily come down by the Hon'ble Apex Court, in the judgment referred to supra. In view of that, I hold that clause 7.15 is illegal and therefore, will not be binding on the petitioner in this case," the bench opined.

Therefore the Court ordered, "Hence, this Writ Petition is allowed and there shall be a direction to the respondent Institution to refund the balance of Rs.10,54,000/- (Rupees Ten Lakhs and Fifty-Four Thousand only) held by them after deducting proportionate tuition fee for the period, August 2016 to September 2016 within a period of twelve (12) weeks from the date receipt of a copy of this order. There shall be no order as to costs."

To read the HC order, click on the link below:

https://medicaldialogues.in/pdf_upload/madras-hc-order-203885.pdf

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