Fix reasonable MBBS fee for Kerala Private Medical Colleges: SC to Fee Regulatory Committee

Opining that "a reasonable opportunity should be given to the management of private self-financing colleges in respect of their proposals for fee fixation," the Apex Court bench comprising Justice L. Nageswara Rao and S. Ravindra Bhat have further instructed on Thursday to complete the entire exercise within a period of three months from the date of the verdict, i.e. 25.02.2021.

The present case in the Supreme Court is related to the fee fixation by the Admission and Fee Regulatory Committee for MBBS students in private self-financing medical colleges in the State of Kerala.

Medical Dialogues team had earlier reported that the Kerala Government moved the apex court demanding to put a stay on the interim order pronounced by the high court, where it stated that in the absence of the National Medical Commission (NMC) Act that came into effect in 2019, the private medical colleges should accept a fee stipulated by a State Fee Committee on the basis of an SC order that had stated that the fees should be fixed on the basis of the financial capacity of the students.

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After examining the law laid down by the Supreme Court with respect to fixation of fee for professional courses in unaided medical colleges, the High Court of Kerala held that the institutions shall propose the fee structure and the scrutiny by the Committee should only be for the purpose of ensuring that such fee had not been exploitative and that the institutions had not been indulging in profiteering or collecting capitation fee.

The High Court had further opined that the Committee could formulate a policy of directing the colleges to submit audited accounts of previous years for the purpose of ascertaining that there had been no profiteering by the institutions in fixing the fee. The High Court had made it clear that the Committee couldn't go into the desirability or appropriateness of the expenses incurred by the institution as per its own notions and standards.

Based on the order pronounced by the High Court, the Fee Regulatory Committee (FRC), led by a retired HC judge, had fixed the fee ranging from Rs 6.32 lakh to Rs 7.65 lakh for MBBS courses in various self-financing colleges for the academic year. However, some of the self-financing medical colleges had been demanding fees of more than Rs 20 lakh and filed a case in the High Court. 

The principal contentions of the managements before the High Court were that the Committee acted in excess of its jurisdiction in fixing fee for the years 2017-18 and 2018-19 and that all the members of the Committee were not parties to the order of fee fixation.

The HC opined that the Committee was empowered to ensure that the fee fixed by the institutions was reasonable. The contention of the managements that the proposal made by them in respect of the fee to be collected from the students had to be accepted by the Committee which didn't have the power to disallow any expenditure had not been accepted by the High Court. The HC further rejected the contention that the Committee lacked the power to fix a fee different from the one proposed by the managements.

Kerala HC in its judgment dated 28.02.2019 observed that the Committee had the power to examine whether the fee proposed by the managements of private self-financing medical colleges was not excessive and non-exploitative apart from considering that the surplus proposed was reasonable and was being ploughed back into the institution. The management of private self-financing medical colleges were directed to cooperate with the Committee by furnishing all the accounting details as directed by the Committee.

As all members of the Committee had not been present during the decision-making process of fixation of fee, the High Court set aside the order passed by the Committee and directed to pass fresh orders for fixing the fee in accordance with law at the earliest. The Committee hadn't re-examined the proposals made by the managements earlier as the orders passed by the HC had set aside the earlier Committee decision regarding the fee as it had lacked a quorum. Further, the Committee reiterated the fee that was fixed for the medical colleges in its earlier orders.

The managements' of private self-financing colleges approached the High Court of Kerala challenging the orders passed by the Committee by which the fee fixed for the years 2017-18 and 2018-19 had been repeated again.

The HC then directed the managements of private self-financing colleges to provide a statement, accompanied by an affidavit and a particular list of required documents. Prima facie, the High Court was convinced that the Committee did not reconsider the matter after the judgment of the High Court.

Meanwhile, the HC order January 2020 had been a matter of challenge in the SLPs filed in the Apex Court that had been disposed of on 06.03.2020 with a request to the High Court to decide the Writ Petitions. The High Court had also been given the liberty to decide whether it could itself decide the fee.

Disposing of the writ petitions in May 2020, the HC had opined that there had been no fresh consideration for fixation of fee in spite of directions issued by the Division Bench of the High Court in its judgment dated 28.02.2019. The failure on the part of the Committee in not reconsidering the matter of fee fixation had been found fault with by the High Court.

Finding the consideration of fixing the fee by itself as inappropriate, HC had remanded the matter back to the Committee to re-examine the proposals of the managements of private self-financing colleges and to pass suitable orders. The High Court gave a specific direction to the Committee to examine whether the estimate of the expenditure provided by the institutions had been in accordance with the audited balance sheets and in the absence of audited balance sheets, in accordance with the provisional profit and loss accounts to be furnished by the managements. The High Court had further directed the Committee to examine the audited balance sheets only for the purpose of considering whether the expenditure that had been shown by the management should be excluded or not. The Committee had been directed to arrive at a decision regarding the fixation of fees without being influenced by its earlier orders. A fair opportunity was directed to be given to the managements of private self-financing medical colleges.

The State of Kerala and the students of private self-financing medical colleges had challenged this judgment filing appeal before the Apex Court.

The main contention of the State of Kerala had been that the earlier orders of fee fixation for the years 2017-18 and 2018-19 had been upheld by the High Court in its judgment dated 28.02.2019. The matter had been remanded back by the High Court only because the orders had been passed without a quorum.

Meanwhile, the counsel for the students had submitted before the Apex Court bench that the fee fixed by the Committee had been appropriate and should not be interfered with. The students via their counsel had pleaded before the Supreme Court that any revision of fee would impose a financial burden on the students and their families. The students had also stated before the Court that the fee charged by the Private self-financing colleges should be reasonable.

On the other hand, the counsel appearing for the managements of self-financing medical colleges had stressed the fact that they had a right guaranteed under Article 19 (1)(g) of the Constitution of India which could be curtailed only by reasonable restrictions. Stating that they had a right to establish and administer an institution without any undue interference, the counsel for the Colleges had contended that the power of The committee should be restricted to scrutinize the proposals made by the colleges for charging the fee.

The counsel for the colleges had added that no doubt, the managements should not be permitted to charge an excessive fee but the reasonable surplus has been permitted under Section 11 of the 2017 Act. The expenditure involved in running an institution along with reasonable profit has been permitted by the statute, added the counsel for the Colleges.

Stating that there had been no error committed by the High Court in directing the audited accounts to be considered for fee fixation, the counsel for the Private Colleges had further referred to higher a fee fixed for a Deemed University in Kerala and by other States to argue that the fee for the years 2017-18 and 2018-19 should be fixed at par with those institutions.

Finally, the counsel appearing for the Private Medical Colleges had added that the fixation of fees for students pursuing medical courses from 2017-18 onwards should not be delayed any further.

After listening to all the arguments made by all the parties, the Apex Court had mentioned on Thursday that the fixation of fee payable by students pursuing their medical courses in the State of Kerala since 2017-18 has not been finalized yet. As a result, the students are continuing their education after remitting a provisional fee.

The Apex Court had referred to the contention made by the State that the remand of the HC order was for a limited purpose as the fee fixation by the Committee was set aside only because it lacked a quorum and not otherwise. The SC bench had mentioned that if the remand was only on a technical ground of lack of quorum, the High Court would have mentioned it in its judgment dated 28.02.2019. "A close scrutiny of the judgment dated 28.02.2019 would not indicate that the remand was only for the purpose of curing the defect of lack of quorum," added the SC bench.

Observing that the Fee fixed by the Regulatory Committee hadn't been approved by the HC order dated 28.02.2019, the SC bench had observed, "The Committee shall re-examine the proposals of the Managements of Medical Colleges for the fixation of fee 2017-18 onwards."

Regarding the issue of the restrictions placed by the HC in the matter of fee fixation by the Committee, the SC had found merit in the submissions made by the counsel for the State, who had contended that that "no fetter can be placed on the exercise of power for fee fixation by the Committee, which shall be in accordance with the factors that are mentioned in Section 11 of the 2017 Act."

While addressing this issue, the SC had observed that "High Court committed an error in directing the Committee to take into the account only audited balance sheets, and provisional profit and loss accounts in the absence of audited balance sheets, to fix the fee."

Although the Apex Court bench had agreed with the submission made on behalf of the managements that the fee as proposed by them should be considered by the Committee, it had been no more res Integra that the right conferred on the institutions to fix fee for professional courses should be subject to regulation.

The SC bench had agreed that "unaided professional institutions have the autonomy to decide on the fee to be charged, subject to the fee not resulting in profiteering or collection of capitation fee." It also added, "Regulation of fee is within the domain of the Committee which shall ensure that the fee is non-exploitative and reasonable."

Mentioning that the delay in finalizing the fee in medical colleges could be beneficial neither to the institutions nor the students, the SC bench has directed the Committee to expeditiously reconsider the proposals of the private self-financing colleges for fee fixation from 2017-18 onwards. It also mentioned that fee for earlier years also need to be finalized in case it has not been done with respect of any college.

"We direct the Committee to expeditiously reconsider the proposals of the private selffinancing colleges for fee fixation from 2017-18 onwards. Needless to mention that fee for earlier years also needs to be finalized in case it has not been done in respect of any college. It can direct the managements to furnish any information that is required for the purpose of arriving at a decision that the fee proposed by the managements is neither excessive nor exploitative in nature. A reasonable opportunity should be given to the managements of private self-financing colleges in respect of their proposals for fee fixation."

Finally, disposing of the petition, the SC bench had further directed to complete the entire process within a period of three months and added, "A reasonable opportunity should be given to the managements of private self-financing colleges in respect of their proposals for fee fixation."

To view the original court order, click on the link below.

https://medicaldialogues.in/pdf_upload/sc-to-kerala-148720.pdf

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