Institute of Legal and Management Studies

The Supreme Court recently held that fees collected from NRI (Non-Resident Indian) students can be utilized for diverse purposes and such students cannot insist on utilization of their fees only for subsidizing fees of students belonging to Below Poverty Line (BPL) category.

"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 scholarships. Accordingly, the fees for NRI students cannot be determined solely considering the factor of subsidization of education...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" observed a bench of Justices Surya Kant and N Kotiswar Singh.

The Court was dealing with a challenge to directions regarding fixation of fee by the Fee Regulatory Committee, constituted in terms of the Kerala Medical Education Act, 2017, in respect of self-financing institutions offering MBBS course. This Committee issued a direction for remitting a portion of the fee fixed for NRI quota to a corpus of funds meant for providing scholarship/financial assistance to students from BPL category.

Certain self-financing medical institutions sought release of the corpus fund in their favor, contending that 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. The NRI students, on the other hand, sought refund of the amount. Relying on the judgment in PA Inamdar v. State of Maharashtra, they argued that they were required to subsidize fees of only two other students.

Citing the Constitution Bench decisions in Islamic Academy of Education v. State of Karnataka and Modern Dental College & Research Centre v. State of Madhya Pradesh, the Court rejected the NRI students' contention. These decisions laid down that government cannot fix rigid fee structures for self-financing institutions.

"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 Court said.

It further added, "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."

Keeping in mind all the factors, it was concluded that NRI students cannot insist on their fees being utilized only for the purposes of subsidizing fees of BPL/EWS students.

Also Read - Fee Regulatory Committee Can't Transfer NRI Quota Fee To State Corpus Fund; Self-Financing Colleges Can Retain It : Supreme Court

Case Title: THE STATE OF KERALA Versus THE PRINCIPAL KMCT MEDICAL COLLEGE AND ORS., SLP(C) Nos. 9885-9888/2020 (and connected cases)

Citation : 2025 LiveLaw (SC) 566

Click here to read the judgment