Supreme Court slams Fee Regulatory Committee, allows Private Medical Colleges to Retain NRI Quota Fees

New Delhi: The Supreme Court has recently observed that the Admission and Fee Regulatory Committee in a State lacked the authority to direct that the fee collected from the NRI medical students be kept in a corpus fund maintained by the State to subsidise the education of Below Poverty Line (BPL) students. With this, the bench allowed the private medical colleges to retain the amount and slammed the committee stating, "Committee cannot usurp the powers"

While considering the plea challenging the fixing of fee by the Fee Panel in Kerala in respect of self-financing institutes offering MBBS course, the top court bench clarified that the fees collected from NRI (Non-Resident Indian) students can be utilized for diverse purposes and NRI quota students cannot insist on utilizing their fees only for subsidizing fees of BPL category students.

In this regard, the top court bench comprising Justices Surya Kant and N Kotiswar Singh observed, "...the fees collected from NRI students can be utilized for a variety of purposes, including but not limited to subsidizing fees for other students through scholarships. Accordingly, the fees for NRI students cannot be determined solely considering the factor of subsidization of education...Resultantly, the NRI students’ contention that their fees should be restricted to only subsidize the education of only two students from economically­ weaker sections of society falls flat and cannot be considered a valid reason for a refund."

With this observation, the Supreme Court bench directed the State of Kerala to return the amounts collected from self-financing medical colleges for creating the corpus fund, while further specifying that the self-financing medical colleges were entitled to retain the amounts.

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Referring to the top court's orders in P. A. Inamdar and Ors. v. State of Maharashtra (2005) 6 SCC 537 and Islamic Academy of Education v. State of Karnataka, the Ape Court bench held that the directions issued by the Admission and Fee Regulatory Committee to transfer the NRI fees to the State Corpus Fund was beyond the role assigned to it.

"A conjoint reading of paragraph 131 of P. A. Inamdar (supra) and paragraph 7 of Islamic Academy amplifies the idea that the Committee's power is not limitless. Such a combined reading leads us to the conclusion that: (i) the Committee is competent to prescribe fees in respect of the NRI quota in self­financing medical educational institutions until the State enacts appropriate Legislation or Regulations; and (ii) the Committee cannot draw unlimited powers under the guise of 'regulation of NRI quota/seats.' In other words, the Committee can only make rules for admission to such seats and can review the fees charged to NRI students to ensure that they are not exploitative. This is the cumulative power granted to the Committee within which it must act. The Committee cannot perforate these bounds unless and until its power is expanded through a suitable Legislation or upon a direction by this Court," noted the Court.

"In light of the above, it is evident that paragraph 131 of P. A. Inamdar does not clothe the Committee with the power to create a corpus fund for the benefit of economically­weaker students. It only directs the State to come up with a suitable plan to subsidize their education through the fees charged from NRI students. The Committee cannot usurp the powers vested in the State in this regard," it further observed.

At this outset, the bench also clarified that self-financing medical colleges can retain the NRI fees, especially when the fee panel had approved the fee structure. 

"Since the self­financing institutions are the best judge of their own needs and expenses, there appears to be no reason why they cannot retain the amount that was to be transferred to the corpus fund, when those amounts came out of the fee structures already approved by the Committee. By approving the proposals at the relevant time, the Committee has signified that the fees proposed to be charged were reasonable and did not amount to profiteering," observed the Court.

However, the Apex Court bench also said that the students belonging to the Below Poverty Line (BPL) category are entitled to subsidised fee in self-financing medical and educational colleges of Kerala and ordered to refund excess payment made by such students within 3 months. On the other hand, the Court held NRI students liable to pay full fee and clarified that they were not entitled to get a refund of the amount transferred to the State for the purpose of a corpus fund from which, BPL category students were offered scholarship/financial assistance.

The plea before the Apex Court challenged the orders related to fixing of fee by the Admission and Fee Regulatory Committee constituted in terms of the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 in respect of self-financing institutes offering MBBS course.

It had been directed by the Fee Committee to remit a portion of the fee fixed for NRI quota students to a corpus fund meant to provide a scholarship to BPL category students. While certain self-financing institutes claimed that the corpus amount be released in their favor, the students claimed for a refund of the amounts.

Back in 2018, the Kerala Government had ordered to provide scholarship for BPL category students. However, the High Court had struck down this order and now the Supreme Court upheld the views expressed by the High Court bench. The Apex Court bench held that the fee committee could not have created the corpus fund.

However, the bench designated the private medical institutes as trustees of the corpus fund. It noted,

"After allowing the colleges to retain the fees which were to be diverted towards the corpus fund, we are of the considered view that the selffinancing medical educational institutions are under the obligation to provide quality education to the BPL students who were admitted to those colleges. No additional fees of any nature, therefore, shall be charged from the BPL students, over and above the subsidized fee that they were required to pay as per the Committee’s approved fee structure. To clarify, a substantial part of the amount which we have allowed the colleges to retain shall have to be utilized by them for subsidizing the education of the BPL students. The Committee or the State Government shall, in this regard, be well within their right to direct the colleges to furnish their accounts and establish that the directions issued hereinabove have been complied with. To this extent, the self­financing medical educational institutions are merely designated as the trustees of the ‘corpus fund’ amount, without permitting it to be utilized by them as per their own free will. Such an arrangement shall continue till an appropriate Legislation is enacted by the State."

Therefore, the Apex Court bench ordered the following:

(1) The bench upheld the HC order that quashed the Government Order dated 06.06.2018

(2) It held that if the State sought to establish a corpus fund or any other such mechanism to subsidize education for students from weaker backgrounds, in line with the vision enshrines in P.A. Inamdar, it could do so by enacting suitable Legislation to that effect.

(3) The bench also held that the self-financing medical colleges were 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, as per the directions issued by the Court.

(4) It held that "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. They will continue to pay fees at the subsidized rate fixed by the State or the Committee. If they have paid any fees, over and above the subsidized amount promised, they are entitled to a refund of the amounts so paid. Alternatively, those amounts may be set­off against the fees to be charged for later years. Such a refund must be made within 3 months."

(5) The Court directed Kerala Government to release the fees collected for the creation of a corpus fund back to the respective colleges within a period of 3 months without prejudice to the right and responsibility assigned in the judgment.

(6) Further, the top court bench held that the NRI students were not entitled for a refund of the amount transferred to the State for the creation of the "Corpus Fund'. It directed them to pay the entire fees to their respective colleges, as approved by the Admission and Fee Regulatory Committee,, if not already done, within 3 months.

(7) Finally, the bench gave liberty to Kerala Govt or Admission and Fee Regulatory Committee to direct the colleges to furnish their accounts to establish that the directions given by the Court have been complied with.

To view the order, click on the link below:

https://medicaldialogues.in/pdf_upload/state-of-kerala-v-principal-kmct-medical-college-600285-287331.pdf

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