Summary
Cross-appeals concerning a Kerala Government Order and Fee Regulatory Committee decision requiring self-financing medical colleges to remit Rs. 5 lakhs of each NRI student's fee to a State-held corpus fund for BPL scholarships. The Supreme Court held that neither paragraph 131 of P.A. Inamdar nor Sections 8A and 11 of the Kerala 2017 Act empower the Committee or the State to divert approved fees into a corpus fund without legislation, upheld the quashing of the GO, allowed the colleges to retain the amounts as trustees for subsidising BPL students, and refused refunds to NRI students.
Issues
- Whether the Admission and Fee Regulatory Committee had the power to direct that a part of the fees charged to NRI students be kept in a corpus fund maintained by the State, either under paragraph 131 of P.A. Inamdar or under Sections 8A and 11 of the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017.
- Whether the NRI students are entitled to a refund of the corpus fund amount or a set-off against future fees.
- Whether the self-financing colleges are entitled to retain the amounts collected for the corpus fund and on what conditions.
Provisions considered
- Section 8A, Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017Section 8A sets out the Committee's powers to call for information, hear complaints, determine fees applicable for the whole course and recommend penal action for excess collection. The Court held these powers are exercisable only to determine the fee structure; nothing in Section 8A permits the Committee to divert part of the fee it fixes, direct how the diverted amount is used, or levy any amount to be retained by the State. (¶¶ 21, 22, 25)
- Section 11, Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017Section 11 lists the factors for fee determination (location, course, cost of land and building, infrastructure, administration expenses, reasonable surplus, any other relevant factor). The Court held that it does not require the Committee to consider creating scholarships, and even if the omnibus clause (g) could cover a corpus fund, that power cannot be exercised unless the legislature authorises the Committee to create one or prescribe its use. (¶¶ 22, 25)
- Articles 19(1)(g) and 30, Constitution of IndiaThe colleges contended that the refusal to refund the corpus amounts to the institutions violated Articles 19(1)(g) and 30. The Court, relying on Islamic Academy and Modern Dental College, affirmed the institutions' autonomy to fix non-exploitative fees and allowed them to retain the amounts. (¶¶ 6, 32, 35)
Held
- Paragraph 131 of P.A. Inamdar validates charging higher fees from NRI students to subsidise economically weaker students, but the transitional power it gives the Islamic Academy committees concerns only regulation of admissions to the NRI quota to prevent its misuse; it is silent on creating any mechanism to subsidise fees and confers no power on the Committee to create a corpus fund. The power to formulate such solutions resides with the State, through legislation or regulations. (¶¶ 15, 16, 17, 20)
- Read with paragraph 7 of Islamic Academy, the Committee may only decide whether proposed fees are exploitative and may propose an alternative fee structure; it has no discretionary power to divert part of the approved fees for any purpose, however noble. The Committee's powers are not boundless and cannot be expanded under the guise of regulating the NRI quota, except by legislation or a direction of the Supreme Court. (¶¶ 18, 19)
- An expropriatory measure cannot be sheltered under subordinate legislation unless the power is drawn from competent legislation, and the power to levy a tax or fee cannot be delegated to the executive unless the parent statute expressly so authorises. Since neither Section 8A nor Section 11 of the 2017 Act authorises diversion of fees or a State-retained levy, the GO dated 06.06.2018 was devoid of authority of law; however laudable its object, it cannot be legitimised unless traceable to legislative action. (¶¶ 25, 26, 27)
- NRI fees may be used for a variety of purposes, not only to subsidise other students, so the contention that an NRI student's fee must be limited to subsidising two other students is not a valid ground for refund; the Committee, having approved the colleges' fee proposals, signified that the fees were reasonable and not profiteering, so the colleges may retain the amounts earmarked for the corpus fund. (¶¶ 32, 33, 34, 35, 36)
- Colleges retaining the corpus amounts hold them as trustees, not for use at their free will: a substantial part must be used to subsidise BPL students, who may not be charged anything above the subsidised fee approved by the Committee, and the Committee or State may call for accounts to verify compliance. This arrangement continues until the State enacts appropriate legislation. (¶¶ 37, 39)
Result
Colleges' appeals allowed in part; appeals by the State and the NRI students dismissed; High Court judgment modified. Quashing of GO dated 06.06.2018 upheld; State may legislate to create a corpus fund. State to release the corpus amounts to the colleges within three months, to be used substantially for subsidising BPL students; BPL students to pay only the subsidised fee, with any excess refunded or set off within three months; NRI students denied refund and to pay the full approved fees within three months; State or Committee may call for the colleges' accounts.