Paragraph numbers below are the court’s original numbering, recovered from the source text.
23. Relying upon these provisions, the NRI students and the self-financing medical colleges support the Impugned Judgement to the extent that the GO dated 06.06.2018 was quashed on the premise that the State could not levy any amount without statutory backing permitting such levy. They contend that, at present, there is no provision in the 2017 Act which empowers the State or its machinery to impose any fee or levy of any nature on self-financing medical educational institutions for the purpose of creating a corpus fund.
24. Per contra, the State of Kerala and the intervenor-BPL students contend that the GO dated 06.06.2018 did not offend any provision of the 2017 Act and was issued as a welfare measure by the State; to ensure that meritorious students belonging to weaker sections of society receive the opportunity to pursue quality education. The GO dated 06.06.2018 specifically authorized the Committee to levy an amount towards the creation of a corpus fund for such laudable purpose. There was thus, no need for the insertion of any provision in the Statute.
25. It is well-settled law that a recourse to expropriatory measures cannot be sheltered under a piece of subordinate Legislation, save and except where the power is drawn from the competent Legislation. The power to levy tax or fee cannot be delegated to the Executive unless the principal Statute expressly authorizes to do so. Though the Committee indeed enjoys vast powers and functions under [2025] 5 S.C.R. The State of Kerala Etc. Etc. v. The Principal, KMCT Medical College and Ors. Etc. Etc. Section 8A of the 2017 Act, as reproduced above, such power is exercisable only for the purpose of determining the fee structure of the self-financing medical educational institutions. 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. Similarly, Section 11 of the 2017 Act does not require the Committee to consider the creation of scholarships as a relevant factor to determine and approve the fee proposal submitted by a particular institution. Even assuming that the creation of a corpus fund for scholarships can be protected under the omnibus clause (g) of Section 11, whereunder the Committee can take into account “any other relevant factor” while determining the fee structure, such power cannot be exercised unless the Legislature authorizes the Committee to create a corpus fund or to prescribe its utility.
26. For the reasons aforesaid, the High Court was correct in striking down the GO dated 06.06.2018 as devoid of any authority of law.
27. At this juncture, it is pertinent to clarify that though we appreciate the State’s initiative to implement the welfare measures envisioned in paragraph 131 of P. A. Inamdar (supra), the same cannot be justified when it is implemented without the proper authority of law. Howsoever laudable, pious, or noble the objective behind the GO dated 06.06.2018 may be, it cannot be legitimized unless its genesis is traceable to a legislative action. D.2 Issue No. 2: The NRI students’ entitlement towards a refund or set-off
28. Since we have firmly set forth that the corpus fund could not have been created or maintained by the Committee, we must turn our attention to the next pressing issue, i.e. whether the NRI students are entitled to a refund of the amount so collected or whether it should be set-off against fees charged for later years?
29. The NRI students contend that when the imposition of such an amount has been held to be illegal, there is no reasonable justification for the State or the self-financing medical colleges to retain it. Further, 2614 these students claim that paragraph 67 of P. A. Inamdar (supra) only requires an NRI student to subsidize two other students’ fees. Accordingly, it is their specific contention that when the fees for regular students are set at Rs. 5 lakhs per annum, the NRI students cannot be charged more than Rs. 15 lakhs per annum.
30. Contrarily, the self-financing medical colleges contend that the fees charged under the heading of ‘corpus fund’ should be returned to them to enable their continued functioning. The amounts collected for the corpus fund were unfairly deducted from the proposals submitted, leaving the colleges to function with fees much lower than what was genuinely projected by them. The fees charged from NRI students are utilized not only to subsidize education for students from economically-weaker backgrounds but also for various upkeep and continuous development expenses to improve the quality of education.
31. The State of Kerala, however, contends that though the self-financing medical colleges were required to remit Rs. 5 lakhs received from each NRI student to the corpus fund, they have not been doing so. As a result, the colleges have retained a total of Rs. 182.9 crores from the batches of 2017-2018 to 2022-2023.
32. Two 5-judge Benches of this Court in Islamic Academy (supra) and Modern Dental College (supra) have unequivocally held that the Government cannot fix rigid fee structures for self-financing institutions. Further, each institute must have the freedom to fix its own fee structure by taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. These institutes are permitted to generate surplus, which must be used for the betterment and growth of that educational institution. The fee structure for each institute must be fixed keeping in mind the infrastructure and facilities available, the investments made, salaries paid to the teachers and staff, future plans for expansion and/or betterment of the institution, etc. Though the fees may differ from one institution to another, owing to the quality of education imparted, no institution can be permitted to charge excessive or exploitative fees leading to profiteering or charging of capitation fees.
33. The cited judgements have further explained that the fees collected from NRI students can be utilized for a variety of purposes, including but not limited to subsidizing fees for other students through [2025] 5 S.C.R. The State of Kerala Etc. Etc. v. The Principal, KMCT Medical College and Ors. Etc. Etc. scholarships. Accordingly, the fees for NRI students cannot be determined solely considering the factor of subsidization of education; all the above-stated factors must be taken into account. Resultantly, the NRI students’ contention that their fees should be restricted to only subsidize the education of only two students from economically- weaker sections of society falls flat and cannot be considered a valid reason for a refund.
34. When a self-financing medical educational institution presents its fee proposal for a particular academic year, it has done so keeping in mind its own needs, present and future. It is the responsibility of the Committee to consider all the comprehensive requirements and the principles enunciated in Islamic Academy (supra) and Modern Dental College (supra), when assessing those proposals. The Committee must ascertain that the fees proposed will not exploit the students and lead to profiteering by the management of the medical colleges. This is why such Committees have been set up, not just in Kerala, but in various States across the country.
35. Since the self-financing institutions are the best judge of their own needs and expenses, there appears to be no reason why they cannot retain the amount that was to be transferred to the corpus fund, when those amounts came out of the fee structures already approved by the Committee. By approving the proposals at the relevant time, the Committee has signified that the fees proposed to be charged were reasonable and did not amount to profiteering.
36. In the same vein, self-financing medical educational institutions that were aggrieved by the Committee’s actions and sought reconsideration of their proposals from 2017-2018 onwards by virtue of directions issued by this Court in Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust,5 are also entitled to retain the amount claimed by the State under the heading of ‘corpus fund,’ if any.
37. After allowing the colleges to retain the fees which were to be diverted towards the corpus fund, we are of the considered view that the self- financing medical educational institutions are under the obligation to provide quality education to the BPL students who were admitted to those colleges. No additional fees of any nature, therefore, shall Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust, (2021) 5 SCC 515. 2616 be charged from the BPL students, over and above the subsidized fee that they were required to pay as per the Committee’s approved fee structure. To clarify, a substantial part of the amount which we have allowed the colleges to retain shall have to be utilized by them for subsidizing the education of the BPL students. The Committee or the State Government shall, in this regard, be well within their right to direct the colleges to furnish their accounts and establish that the directions issued hereinabove have been complied with. To this extent, the self-financing medical educational institutions are merely designated as the trustees of the ‘corpus fund’ amount, without permitting it to be utilized by them as per their own free will. Such an arrangement shall continue till an appropriate Legislation is enacted by the State.
38. This batch of appeals and their parallel proceedings have caused confusion and chaos for medical education in the State of Kerala for years. This case seems to be the closing act, which will hopefully provide finality and certainty to all the stakeholders. Conclusion and Directions
39. In light of above discussion, we deem it appropriate to allow the appeal by the self-financing medical colleges in part; dismiss the appeals filed by the State of Kerala and the NRI students; and modify the Impugned Judgment of the High Court dated 23.07.2020, with the following directions and conclusions: i. The High Court was correct in quashing the Government Order (MS) No. 107/2018/H&FWD dated 06.06.2018; ii. 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; iii. 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; [2025] 5 S.C.R. The State of Kerala Etc. Etc. v. The Principal, KMCT Medical College and Ors. Etc. Etc. iv. 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 set-off against the fees to be charged for later years. Such a refund must be made within 3 months; v. The State of Kerala is directed to release the fees collected for the creation of a corpus fund back to the respective colleges within a period of 3 months without prejudice to the right and responsibility assigned in paragraph 37 of this judgement; vi. 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; and vii. 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.
40. Ordered accordingly. Pending applications if any, are to be disposed of in the above terms. Result of the case: Appeals disposed of. †Headnotes prepared by: Harshit Anand, Hony. Associate Editor (Verified by: Liz Mathew, Sr. Adv.)