The court affirmed that without legislative authority, a state cannot impose a fee structure or create a corpus fund for educational funding, emphasizing the need for statutory backing for financial decisions in education.

JUDGMENT :

SURYA KANT, J.

Leave granted.

2. The issue that arises for consideration has 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 self­financing 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 Non­Resident Indian (NRI) students admitted to those colleges.

3. The Kerala High Court, at Ernakulam (High Court) vide the common Impugned Judgment dated 23.07.2020 has: (i) quashed Government Order (MS) No. 107/2018/H&FWD dated 06.06.2018 (GO dated 06.06.2018); (ii) directed 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, who may be admitted to such institutions on the basis of allotment; (iii) directed such account to be operated only jointly by a nominee of the self­financing institution and a nominee of the State Government; (iv) kept it open to the State to promulgate suitable legislative measures to achieve the object of providing scholarships to students belonging to economically weaker sections of society as observed by this Court in P. A. Inamdar and Ors. v. State of Maharashtra , (2005) 6 SCC 537; and has further directed that (v) till suitable legislative measures are adopted by the State, no further amounts would be levied or collected from NRI students, already admitted to or to be admitted to NRI quota seats in that academic year, towards the creation or maintenance of the corpus fund.

4. These directions of the High Court have given rise to three sets of cross­ appeals preferred by: (i) The State of Kerala, who is aggrieved by the quashing of its GO dated 06.06.2018; (ii) The self­financing medical colleges, who are challenging the direction that the corpus fund amount be utilized only to subsidize education for students from economically­weaker sections of society admitted to the respective institutions; and finally, (iii) The NRI students, who are dissatisfied that the corpus fund amounts have not been refunded to them.

A. FACTS

5. Owing to a parallel set of proceedings before the Courts concerning the Committee’s overall functioning, it is vital to understand the detailed facts before analyzing the legal issues.

5.1 The Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 (the 2017 Act) came into force on 01.06.2017. It was introduced to, among other things, regulate the admission and fixation of fees in private medical educational institutions in the State of Kerala. Sections 3 and 3A of the 2017 Act contemplate the constitution of a Committee, described as the Admission and Fee Regulatory Committee (Committee). The Committee was tasked to determine the fees charged to students admitted to private medical educational institutions in Kerala based on the annual information and proposals submitted by those colleges.

5.2 KMCT Medical College moved an application and submitted the prospectus for Academic Year 2017­2018 before the Committee on 01.08.2017, requesting it to fix the fees for NRI students at Rs. 20 lakhs per annum.

5.3