MBBS students transferred after medical college derecognition cannot claim govt fee rates in private institutes: SC

New Delhi: Denying relief to the students shifted from the defunct Sardar Rajas Medical College, Odisha, the Supreme Court recently observed that students transferred to private medical colleges, after the original institution lost recognition, cannot claim the benefit of paying only subsidised government medical college fees.

Accordingly, the Apex Court bench comprising Justices Vikram Nath and Sandeep Mehta allowed the private medical institutes to recover the outstanding dues from the students at the fee rates applicable at Sardar Rajas Medical College and hospital (SRMCH).

"It is also borne out from the record that the transferee colleges had obtained undertakings from the transferred students at the time of issuance of course-completion documents/certificates, wherein the students acknowledged that the issue relating to fee liability was pending consideration before this Court and undertook to abide by the final directions passed herein. Thus, the passed-out students cannot be allowed the benefit of a windfall or a bonanza merely by dint of the interim orders passed by this Court, which was in form of an emergent measure in order to tide over the situation where the students faced imminent risk of losing their entire careers. Now that, by virtue of the orders passed by this Court, the students have completed the medical courses, it is the right time when they should be asked to make good their outstanding fee obligations," the bench ordered.

Further, it directed that approximately Rs 14 crore that was secured from the Selvam Educational and Charitable Trust, which managed SRMCH, be released to the three private medical colleges that accommodated the transferred students. This amount includes the bank guarantee of Rs 10 crore furnished to the erstwhile Medical Council of India (MCI), now National Medical Commission (NMC), and Rs 2 crore deposited before the Supreme Court, along with accrued interest.

"It is accordingly ordered that the amount of approximately Rs.10 crores covered by the bank guarantee furnished by the Trust with the MCI/NMC, shall be made available for distribution amongst the three transferee colleges in equal proportions. The MCI/NMC shall ensure that the said amount is released and paid to the three colleges in their respective bank accounts within a period of three months from today...The amount of Rs.2 crores deposited by the Trust with the Registry of this Court, along with accrued interest thereupon, shall also be divided into three equal portions and disbursed to the transferee colleges," ordered the top court bench.

Case Details:

The case stemmed from the collapse of the Sardar Rajas Medical College. Medical Dialogues had earlier reported that back in 2015, the erstwhile MCI had withdrawn the recognition and affiliation of the medical college after finding serious deficiencies in infrastructure, faculty etc. Following this, the future of the students at the medical college, who were admitted in 2013-2014 and 2014-2015 academic year, was pushed into darkness.

Earlier, to prevent the students from losing an academic year, the Apex Court had ordered their transfer through a State-supervised counselling process. The affected students had been transferred to Kalinga Institute of Medical Sciences, IMS & SUM Hospital, and Hi-Tech Medical College in Odisha. Among the total of 124 students, who were affected due to the MCI's withdrawal of recognition, a total of 122 students were ultimately relocated to these three private medical institutes.

However, later, approaching the Supreme Court, these medical institutes claimed that despite providing education and stipends to these students for years, they only received nominal government-rate fees under the interim orders passed by the Court. According to the colleges, the government-rate fees were far below the actual fee structure of the private medical colleges.

The colleges also submitted that at the initial stage, they could not raise any protest regarding the shortfall of fees, as the students were transferred to their institutions based on the directions of the Apex Court.

The Court noted that based on the court's order dated 19.04.2016, the Selvam Trust, which used to run the SRMCH, had deposited Rs 2 crore to the Court's registry, which, along with accrued interest, now stands at Rs.3,58,69,331. Further, the Trust had also furnished a sum of approximately Rs 10 crore, with the MCI/NMC by way of bank guarantees as security in connection with regulatory requirements relating to the establishment and functioning of the institution.

Meanwhile, the students submitted that they were admitted to SRMCH through a valid admission process and were subsequently compelled to shift to private medical institutes for no fault of theirs. They submitted that they had already paid fees at Government rates in compliance with the Supreme Court's interim orders and have since completed their medical courses after facing great hardship and uncertainty. Therefore, they urged the Court not to burden them with any additional financial liability at such a belated stage.

The Selvam Trust submitted that the findings regarding the deficiencies in SRMCH were still under challenge before the competent forums. The Trust's counsel also submitted that the Trust was contesting the said findings by raising issues with the MCI/NMC and that the question of its liability could not be conclusively determined in these proceedings without due adjudication of such disputes.

Further, the counsel for the trust urged that the affected students have already derived the benefits of continued education in other recognised medical institutions, which would be either equivalent to or even better than the institution in which they were originally admitted i.e. SRMCH, and therefore, the entire financial burden ought not to be saddled upon the Trust.

Accordingly, the trust argued that no additional liability should be fastened on the Trust without determining its defaults, vis-à-vis the regulatory mechanism.

Meanwhile, the counsel for MCI, now NMC, argued that the fee structure is required to be determined in accordance with the applicable statutory and regulatory framework. It was submitted that the admission categories ought to be classified on a quota-based system, whereby students admitted under the Government quota would be liable to pay fees at Government rates, whereas those admitted under the management quota would be liable to pay higher fees as applicable to such category.

Supreme Court's Observations:

The Apex Court rejected the argument that the students should continue to benefit from the subsidised arrangement indefinitely.

"This, in our opinion, would amount to unjust enrichment of these transferee students while being conscious of the fact that they had to face a chaotic situation of being transferred to different medical colleges mid-session. However, all interests of these students were duly protected by this Court ensuring that they cleared the medical course without losing a single academic year. Thus, neither the students can be given undue advantage or bonanza nor can the defaulting institution, i.e., the SRMCH/Selvam Trust, be permitted to take benefit of its own follies," it observed.

Even though the Court held that the students definitely faced difficult circumstances without any fault of their own, it also observed that they could not continue receiving the benefit of government-rate fees permanently.

"The situation at hand is well defined by the latin maxim Commodum ex injuria sua nemo habere debet i.e., no one should derive a benefit from their own wrong. While the admitted students had undertaken to pay the prescribed fees to SRMCH, it is equally true that, upon payment of such fees, they were entitled to complete their course without any hitch or difficulty. However, what transpired subsequently, as noted in the preceding paragraphs, presents an entirely different picture. Owing to the deficiencies in SRMCH, its recognition was not renewed, resulting in the students being subjected to a very tumultuous and volatile situation, putting their future in grave risk," the bench observed.

While deciding the core question regarding the manner in which the resultant financial liability is to be apportioned between the parties while balancing the equities, the bench noted that since the students were transferred and admitted to these private colleges based on the Court's directions in exceptional circumstances, the primary brunt of liability must be fastened upon the Trust.

Accordingly, it ordered, "We, therefore, direct that the amount of approximately Rs.10 crores furnished by the Selvam Trust by way of bank guarantees with the MCI/NMC, along with the amount of Rs.2 crores deposited before this Court, together with accrued interest thereupon, shall be payable to the three transferee colleges."

Regarding the liability of the students, the bench observed that the students were transferred to the applicant colleges, where they continued their studies and completed the courses, albeit without loss of an academic year save for exceptions. Additionally, these students were paid stipends by transferee colleges as and where applicable.

After perusing the fee structure of the medical colleges, the bench noted, "The fee structure of the transferee colleges is slightly higher but the learned counsel representing the colleges fairly conceded on instructions that they would be satisfied by reimbursement of due fees at the rates being charged by SRMCH. Thus, in aggregate, the total amount payable to the three colleges would work out to approximately Rs.16.2 crores. This amount is significantly lower than the fee ordinarily chargeable by the transferee colleges from their own students at private rates and does not account for the interest which would have accrued in the intervening period. The total amount secured by way of bank guarantees furnished by the Trust, together with the amount deposited before this Court along with accrued interest, would aggregate to approximately Rs.14 crores. Even upon applying the fee standards of SRMCH, the transferee colleges would still face a shortfall in the recovery of their lawful dues."

The court noted that the students who passed out from the transferee colleges have virtually undertaken the full MBBS course by paying the fees at the Government rates, which would be only a pittance of what they would have paid to the SRMCH under normal circumstances.

It also observed that the facts were not clear on the aspect as to the number of students originally admitted in SRMCH under the government quota and those admitted under the private/management quota.

From the record, the court also observed that the transferee colleges had obtained undertakings from the transferred students at the time of issuance of course-completion documents/certificates, wherein the students acknowledged that the issue relating to fee liability was pending consideration before the Supreme Court and undertook to abide by the final directions passed by the court.

Accordingly, it held that the passed-out students cannot be allowed the benefit of a windfall or a bonanza merely by dint of the interim orders passed by the court.

Accordingly, it ordered,

"The present status of these passed out students is not available to the Court. Thus, looking to the piquant situation, we permit the transferee colleges to make representations to the MCI/NMC with details of the exact shortfall of the fee due from each student (applying SRMCH rates) for recovery of their remaining dues, if any. It is expected that, upon such representations being made, the NMC shall provide due redressal to the colleges for recovery of the deficit amount, if any, from these passed out students. Excess amount, if any, received from the students may be utilized to recoup the amount of bank guarantee (Rs. 10 Crores) which we have directed MCI/NMC to pay to the applicant colleges. Furthermore, at the time of evaluation, the MCI/NMC shall take into account and adjust the amount initially paid by these students at the time of admission to SRMCH. We further provide that observations made in this order shall not prejudice the claims/defences, if any, of the Selvam Trust or SRCMH in appropriate proceedings, if any."

"For the sake of clarification and in view of the directions issued hereinabove, it is provided that the students who comply with the fee liability determined in terms of the present judgment shall be entitled to forthwith receive such academic and coursecompletion documents, certificates and other consequential records, which are ordinarily issued upon completion of the course and are required by the students, in accordance with the applicable rules/regulations," it added.

To view the order, click on the link below:

https://medicaldialogues.in/pdf_upload/2026/05/16/supreme-court-srmch-347988.pdf

Also Read: All SRMCH students to be relocated to private medical colleges