Medical Colleges must not be profit-driven: Bombay HC upholds NMC's earlier Non-profit rule
Bombay High Court
Mumbai: Observing that medical colleges should not be built for profit-making motives and must remain aligned with public interest, the Bombay High Court upheld previous Rule 6(g) of the 2023 Regulations framed by the National Medical Commission (NMC), which restricted the establishment of medical colleges only to Section 8 (not-for-profit) companies.
However, even as the Court delivered its verdict recently, the apex regulatory commission had previously announced significant regulatory change. The NMC Chairperson had declared that the apex medical regulator removed the earlier restriction allowing only non-profit (Section 8) entities to set up medical colleges and allowed for-profit companies to set up medical colleges. This means that now both non-profit and for-profit companies can establish medical colleges, including under the Public Private Partnership (PPP) model.
Meanwhile, in a recent court order on January 28, 2026, the Division Bench of Justices Sandipkumar C. More and Abasaheb D. Shinde held that Regulation 6(g) of the 2023 Regulations is a valid exercise of regulatory power and is consistent with the National Medical Commission Act, 2019 while dismissing the plea that sought to strike down the regulation and grant permission to establish a medical college.
The Bench observed,
"The intent behind restricting the proposed applicants for starting a Medical College and Hospital, only to the Section 8 Companies, is to see that it remains aligned with the broader public interest and should not be driven by commercial or profit-making objectives. At the cost of repetition, we would like to mention again that if the private companies, which are meant for making profit only, are allowed to start Medical Colleges, then they will definitely use such colleges as their commercial activities and then the object of imparting valuable knowledge to the aspirants will definitely be frustrated."
Background of the case
The observation was made while hearing a petition filed by a Private Limited and a doctor against the Union of India, the National Medical Commission (NMC), the Medical Assessment and Rating Board (UG-MARB), the State of Maharashtra, and the Maharashtra University of Health Sciences (MUHS)
Also read- NMC allows for-profit companies to set up medical colleges under PPP model
The petitioners challenged Regulation 6 of the 2023 Regulations and asked the court to declare it invalid, claiming that it goes against the provisions of the NMC Act. They argued that the National Medical Commission (NMC) made this regulation beyond the powers given to it under the NMC Act. They said that it also violates Articles 14 (right to equality) and 19(1)(g) (freedom to carry on business) of the Constitution of India.
According to the chronological sequence of events presented in the court, the company in March 2021 decided to establish a hospital and medical college named a Medical College and Hospital under the then regulatory framework of the Establishment of Medical College Regulations, 1999, which allowed Private Limited Companies to open medical colleges. The hospital was registered, approvals were renewed, and around Rs 355 crore was invested in land, infrastructure, and equipment.
In October 2024, the company received an Essentiality Certificate and Consent of Affiliation from the State. In January 2025, it applied to the NMC to start a medical college with 150 MBBS seats for 2025–26.
In May 2025, UG-MARB issued a show cause notice stating that under the 2023 Regulations, only Section 8 (not-for-profit) companies can apply. Since the company was not a Section 8 company, its application was rejected in July 2025.
The company argued that it had started the project under the old 1999 rules and had already made heavy investments before the 2023 rules came into force. However, its appeal before the NMC was dismissed in September 2025, and a further appeal before the Union of India was also rejected in November 2025 on the same ground — that the company was not registered as a Section 8 company at the time of application.
The counsel appearing for the petitioners argued that the NMC Act does not exclude private companies from applying. By limiting eligibility only to Section 8 companies, the NMC narrowed the meaning of "person" given in the main law and acted beyond its authority. They also said the rule is arbitrary, causes huge financial loss to the petitioners, and that new deficiencies were raised later without proper notice.
On the other hand, the NMC and MARB argued that Regulation 6 is valid and framed within the powers given under Sections 26, 28, 29, and 57 of the NMC Act. They said the regulation ensures medical colleges are run in the public interest and not for profit. They also pointed out that the petition was filed nearly two years after the 2023 Regulations were notified and that the petitioners admittedly were not a Section 8 company.
Court's verdict
Meanwhile, the Court observed that when statutory bodies are empowered to frame rules and regulations in line with the legislative intent, they are free to adopt practical measures to achieve the object of the statute.
In the present case, the petitioners’ application was rejected solely because they were not registered as a Section 8 (not-for-profit) company. After considering the judgments relied upon by the respondents, the Court held that restricting eligibility to Section 8 companies is intended to ensure that medical colleges function in the larger public interest and are not driven by profit-making motives.
"Regulation 6 (g) has been incorporated to see that the medical education should not be monopoly of wealthy persons, who can afford the high fees of such colleges being run by profit making companies. Considering all these aspects, we sincerely feel that Regulation 6 (g) is not the deviation from language of Section 28 of the N.M.C. Act, but it has been framed by body of experts with holy intent to impart the knowledge to the needies without making profits. Therefore, Regulation 6(g) cannot be said to be ultra vires, keeping in mind the legislative intent and object of the main Act," observed the bench.
Accordingly, the Court held that Regulation 6(g) is not contrary to Section 28 of the NMC Act and cannot be termed ultra vires. Since the main relief of declaring the regulation invalid was rejected, the consequential reliefs sought by the petitioners were also denied. As a result, the court dismissed the petition.
NMC allows for-profit companies to set up medical colleges
While addressing at a press conference at Dr NTR University of Health Sciences in Vijayawada, NMC Chairman Abhijat Chandrakant Sheth, said that the regulation of allowing only non-profit companies to set up medical colleges was shelved to enable both non-profit as well as for profit companies to run them, as per an earlier PTI report.
Chairman Dr Abhijat Chandrakant said, "Earlier only non-profit Section 8 companies were allowed to set up medical colleges but a recent board meeting has removed this regulation, paving the way for both non-profit, and for-profit companies to set up medical colleges under Public Private Partnership."
According to the chairman, NMC is of the belief that public and private entities teaming up together will enable the efficient utilisation of available resources for medical education.
Observing that PPP model implementation is currently the prerogative of state governments, Sheth asserted that such an arrangement is running successfully in Gujarat.
As hospitals run under PPP mechanism will be under state governments’ purview, he said patients will receive treatment on either free or subsidised basis.
To view the official court order, click on the link below:
