Relocated Private Medical Students Cannot Claim "Windfall" Of Government Fees: Supreme Court Directs Recovery Of Fee Deficit
The Bench released defaulting trust assets to transferee colleges while students were directed to settle fee shortfalls to avoid unjust enrichment.
Justice Vikram Nath, Justice Sandeep Mehta, Supreme Court
The Supreme Court has adjudicated upon the complex financial liabilities arising from the relocation of medical students from a defunct private institution, holding that academic protection does not equate to a permanent fee subsidy. The Court held that students transferred to private transferee colleges after closure of their original institution remain liable to pay fees at the rates prescribed by the defaulting college, and cannot claim subsidised government rates or seek “unjust enrichment” at the expense of the transferee institutions.
To resolve the impasse, the Court framed four key issues: whether students should pay government or private fees; how liability should be apportioned between the students and the Selvam Educational and Charitable Trust; whether the State or regulators must bear the deficit; and whether the Trust alone should remain liable. Holding that the students had consciously joined a private institution and accepted higher fee standards, the Court directed release of the Trust’s bank guarantees and deposits to the transferee colleges, while permitting recovery of the remaining fee deficit from the students.
Justice Vikram Nath and Justice Sandeep Mehta “…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”.
“…these students had consciously contracted to pay at the higher fee standards charged by the private medical college. Possibly, on their own merit, these students may not have got admission into the Government medical colleges”, the Bench further observed.
Senior Advocate Pratap Venugopal appeared for the appellant-students and Senior Advocates V. Giri, Gaurav Sharma appeared for the respondents.
As per the facts, when Sardar Rajas Medical College (SRMCH), managed by the Selvam Trust, was denied recognition renewal for the 2013-14 and 2014-15 batches due to "serious fundamental deficiencies" in infrastructure and faculty became the cause of the dispute.
Initially, the Orissa High Court directed the relocation of affected students to other recognised colleges. However, the High Court’s direction to accommodate management quota students in government colleges was challenged before the Supreme Court, as it threatened the merit-based admission framework of state-run institutions.
Thereafter, the Supreme Court issued various interim orders starting in January 2016 to facilitate the transfer of 122 students to three private transferee colleges: Kalinga Institute of Medical Sciences (KIMS), IMS & SUM Hospital, and Hi-Tech Medical College.
Throughout this period, students paid fees at government rates, approximately Rs. 30,000 per annum, under interim judicial protections. Upon completion of the courses, the transferee colleges filed interlocutory applications seeking reimbursement for the full cost of education and stipends provided.
The Court was anchored in the principle commodum ex injuria sua nemo habere debet, no one should derive a benefit from their own wrong. While the Selvam Trust was found responsible for the tumultuous situation, the Court noted that the students had not qualified for government seats on their own merit. It further held that neither the State nor the regulators were liable to make good the financial deficiency caused by the private institution's failure.
“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”, the Bench noted.
Accordingly, the Court ordered the National Medical Commission (NMC) to release Rs. 10 crores from bank guarantees furnished by the Trust, and the Registry to disburse Rs. 2 crores (plus accrued interest) to the transferee colleges in equal portions.
Regarding the shortfall, the Court permitted the transferee colleges to represent the exact deficit per student to the NMC, based on original SRMCH rates. The NMC is directed to provide redressal for the recovery of these dues, and upon compliance, students shall receive their final academic and course-completion documents.
Cause Title: Soumya Ranjan Panda & Ors. v. Subhalaxmi Dash & Ors. (Neutral Citation: 2026 INSC 488)
Appearances:
Appellant: Pratap Venugopal, Senior Advocate.
Respondent: V. Giri, and Gaurav Sharma, Senior Advocates.