Supreme Court Upholds Quashing Of Kerala Govt. Order On BPL Corpus Fund For Medical Education

The Apex Court also held that the self­ financing medical colleges are entitled to retain the fees transferred to the State for the creation of the ‘corpus fund’.

The issue that arose for consideration emanated from a direction given by the State of Kerala’s Admission and Fee Regulatory Committee that a corpus fund be created to subsidize medical education for Below Poverty Line (BPL) students admitted to self ­financing medical educational institutions in the State. This corpus fund was to be created by remitting to the State Government a part of the fees collected from Non­-Resident Indian (NRI) students admitted to those colleges.

The Division Bench of Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh held, "The High Court was correct in quashing the Government Order (MS) No. 107/2018/H&FWD dated 06.06.2018."

“The self­ financing medical colleges are 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…”, it added.

Senior Advocate Jayanth Muth Raj represented the Appellants while Senior Advocate V. Chitambaresh represented the Respondents.

Factual Background

The Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, was introduced to regulate the admission and fixation of fees in private medical educational institutions in the State of Kerala. The KMCT Medical College submitted an application and the prospectus for Academic Year 2017-­2018 before the Committee requesting it to fix the fees for NRI students at Rs. 20 lakhs per annum. The Committee, on February 27, 2018, decided to enhance the fees for NRI students from Rs 15 lakhs per annum in Academic Year 2016­-2017 to Rs. 20 lakhs per annum in Academic Year 2017-2018 and 2018­-2019, with the condition that the extra amount of Rs 5 lakhs would be kept as a ‘corpus fund’ to provide scholarships to BPL students and the corpus fund amount would be remitted to the State Government.

KMCT Medical College, being aggrieved, laid a challenge to the Committee’s decision before the High Court. During the pendency of the writ proceedings, the Government of Kerala issued the GO dated June 6, 2018, to validate and support the Committee’s decision. The Committee, meanwhile, continued to assess the fee proposals submitted by various colleges. Viewing this as an overstep of the Committee’s powers and a violation of the institutions’ autonomy, several medical colleges filed writ petitions before the High Court. Remanding the matter, the High Court observed that though the Committee had the power to fix the fee to be collected from NRI students, there was no power vested in it under Section 8 to direct that a portion of the fee amount be utilized for any other purpose.

The aggrieved State approached the Court, and it was held that the fee, as proposed by the colleges, should be considered by the Committee. Meanwhile, various self­ financing medical colleges and their NRI students initiated a second round of litigation before the High Court. The Government order was quashed, and a direction was passed that the amounts collected from each NRI student to create a corpus fund be transferred to the respective institutions and maintained as a separate account to be utilized only for the benefit of students belonging to the economically weaker sections. It was in such circumstances that the cross appeals came to be filed before the Apex Court by the State, the self ­financing medical colleges & the NRI students.

Reasoning

Referring to the judgments in PA Inamdar and Ors. v State of Maharashtra (2005) and Islamic Academy of Education v. State of Karnataka (2003), the Bench stated that the Committee’s power is not limitless. “In light of the above, it is evident that paragraph 131 of P. A. Inamdar (supra) does not clothe the Committee with the power to create a corpus fund for the benefit of economically ­weaker 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 said.

“To put it in simpler terms, there is nothing discernible in Section 8A of the 2017 Act, based on which the Committee can assert its power to divert a part of the fee determined by it or issue a direction regarding how such diverted fee is to be utilized. We also find that Section 8A of the 2017 Act does not permit the levy of any amount which will ultimately be retained by the State, regardless of its purpose”, the Bench observed while also holding that the High Court was correct in striking down the Government Order as devoid of any authority of law.

The Bench made it clear that if the State seeks to establish a corpus fund or any other such mechanism to subsidize education for students from weaker backgrounds, in line with the vision enshrined in P. A. Inamdar (supra), it may do so by enacting suitable Legislation to that effect.“The self­ financing medical colleges are 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 contained in paragraph 37 of this judgement”, it held while also adding, “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.”

The Apex Court also directed the State of Kerala to release the fees collected for the creation of a corpus fund back to the respective colleges within a period of 3 months. “The NRI students are not entitled to a refund of the amount transferred to the State for the creation of the ‘corpus fund.’ They are directed 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”, ordered.

The Bench thus allowed the appeal by the self­ financing medical colleges in part and dismissed the appeals filed by the State of Kerala and the NRI students. “The State of Kerala or the Admission and Fee Regulatory Committee is at liberty to direct the colleges to furnish their accounts to establish that the directions given herein have been complied with”, it concluded.

Cause Title: The State of Kerala and Ors. v. The Principal, KMCT Medical College and Ors. (Neutral Citation: 2025 INSC 518)

Appearance:

Appellants: Senior Advocate Jayanth Muth Raj, AOR Pallavi Pratap, AOR Nishe Rajen Shonker, Advocates Anu K Joy, Santhosh K, Wills Mathews, Paul John Edision, Dhanesh M Nair, Anila Tharakan Thomas, Rakesh Garg, Ashish Gopal Garg, AOR Shweta Garg, AOR Abdulla Naseeh V.T.

Respondents: Senior Advocates V. Chitambaresh, Jayanth Muth Raj,Gaurav Agrawal, AOR Nishe Rajen Shonker, Advocates Anu K Joy, Santhosh K, Haris Beeran, Azhar Assees, Anand B. Menon, AOR Radha Shyam Jena, AOR Abdulla Naseeh V.T., AOR Pallavi Pratap, AOR James P. Thomas, Advocates Sagar Ravi, AOR Lakshmeesh S. Kamath, Advocates Samriti Ahuja, Aditi Prakash, Babu Karukapadath, AOR Mohammed Sadique T.A.,AOR Zulfiker Ali P. S, Advocates Lakshmi Sree P., Lebina Baby, AOR M. T. George, Advocates Alim Anvar, Shaji J Kodankandath,AOR Smita Amratlal Vora

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