1. Creation of a corpus fund to subsidize medical education for economically weaker sections using fees from NRI students in self-financing institutions under a regulatory act. (Para 2 , 3 )
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2025 Supreme(SC) 854
SUPREME COURT OF INDIA
SURYA KANT, NONGMEIKAPAM KOTISWAR SINGH, JJ.
The State of Kerala and Ors. – Appellants
Versus
The Principal, KMCT Medical College and Ors. – Respondent
Civil Appeal No. / 2025(Arising out of Special Leave Petition (C) Nos. 9885 – 9888 / 2020)
With
The Principal KMCT Medical College & Anr. – Appellants
versus
The Admission and Fee Regulatory Committee and Anr. – Respondents
Civil Appeal No. / 2025(Arising out of Special Leave Petition (C) No. 12984 / 2020)
With
Altaf Hussain & Ors. – Appellants
versus
The State of Kerala and Ors. - Respondents
Civil Appeal No. / 2025 (Arising out of Special Leave Petition (C) Nos. 4909 – 4910 / 2021)
With
Sanchana Pious & Ors. - Appellants
Versus
The State of Kerala and Ors. – Respondents
Civil Appeal No. / 2025 (Arising out of Special Leave Petition (C) Nos. 12957 – 12958 / 2021)
Decided on : 16-05-2025
Advocates appeared:
For the Petitioner(s): Ms. Pallavi Pratap, AOR Mr. Jayanth Muth Raj, Sr. Adv. Mr. Nishe Rajen Shonker, AOR Mrs. Anu K Joy, Adv. Mr. Santhosh K, Adv. Mr. Wills Mathews, Adv. Mr. Paul John Edision, Adv. Mr. Dhanesh M Nair, Adv. Ms. Anila Tharakan Thomas, Adv. Mr. Rakesh Garg, Adv. Mr. Ashish Gopal Garg, Adv. Ms. Shweta Garg, AOR Mr. Abdulla Naseeh V.t., AOR
For the Respondent(s): Mr. Jayanth Muth Raj, Sr. Adv. Mr. Nishe Rajen Shonker, AOR Mrs. Anu K Joy, Adv. Mr. Santhosh K, Adv. Mr. Haris Beeran, Adv. Mr. Azhar Assees, Adv. Mr. Anand B. Menon, Adv. Mr. Radha Shyam Jena, AOR Mr. Abdulla Naseeh V.t., AOR Ms. Pallavi Pratap, AOR Mr. James P. Thomas, AOR Mr. Sagar Ravi, Adv. Mr. V. Chitambaresh, Sr. Adv. Mr. Lakshmeesh S. Kamath, AOR Mrs. Samriti Ahuja, Adv. Ms. Aditi Prakash, Adv. Mr. Babu Karukapadath, Adv. Mr. Mohammed Sadique T.A., AOR Mr. Gaurav Agrawal, Sr. Adv. Mr. Zulfiker Ali P. S, AOR Ms. Lakshmi Sree P., Adv. Ms. Lebina Baby, Adv. Mr. M. T. George, AOR Mr. Alim Anvar, Adv. Mr. Shaji J Kodankandath, Adv. Ms. Smita Amratlal Vora, AOR
For the Petitioner(s): Ms. Pallavi Pratap, AOR Mr. Jayanth Muth Raj, Sr. Adv. Mr. Nishe Rajen Shonker, AOR Mrs. Anu K Joy, Adv. Mr. Santhosh K, Adv. Mr. Wills Mathews, Adv. Mr. Paul John Edision, Adv. Mr. Dhanesh M Nair, Adv. Ms. Anila Tharakan Thomas, Adv. Mr. Rakesh Garg, Adv. Mr. Ashish Gopal Garg, Adv. Ms. Shweta Garg, AOR Mr. Abdulla Naseeh V.t., AOR
For the Respondent(s): Mr. Jayanth Muth Raj, Sr. Adv. Mr. Nishe Rajen Shonker, AOR Mrs. Anu K Joy, Adv. Mr. Santhosh K, Adv. Mr. Haris Beeran, Adv. Mr. Azhar Assees, Adv. Mr. Anand B. Menon, Adv. Mr. Radha Shyam Jena, AOR Mr. Abdulla Naseeh V.t., AOR Ms. Pallavi Pratap, AOR Mr. James P. Thomas, AOR Mr. Sagar Ravi, Adv. Mr. V. Chitambaresh, Sr. Adv. Mr. Lakshmeesh S. Kamath, AOR Mrs. Samriti Ahuja, Adv. Ms. Aditi Prakash, Adv. Mr. Babu Karukapadath, Adv. Mr. Mohammed Sadique T.A., AOR Mr. Gaurav Agrawal, Sr. Adv. Mr. Zulfiker Ali P. S, AOR Ms. Lakshmi Sree P., Adv. Ms. Lebina Baby, Adv. Mr. M. T. George, AOR Mr. Alim Anvar, Adv. Mr. Shaji J Kodankandath, Adv. Ms. Smita Amratlal Vora, AOR
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.
Headnote:(A) Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017 - Sections 3, 3A, 8A and 11 - Quashing of Government Order dated 06.06.2018 regarding corpus fund for BPL students derived from NRI student fees - High Court found no statutory authority for such a levy. (Paras 3, 10, 39)
(B) Education Policy - Broadening access to education for economically weaker sections - Authority to create a corpus fund lies with the Legislature, not merely by executive order. (Paras 18, 27)
(C) Fees Regulation - Self-financing institutions may charge and retain specific amounts to provide scholarships, but must not exploit or result in capitation fees. (Paras 32, 37)
Facts of the case:
The State of Kerala, by means of the contested Government Order, mandated the establishment of a corpus fund from fees collected from NRI students, intended for scholarships to BPL students. The Kerala High Court quashed the order, emphasizing that such fees must be legislated, thereby rejecting the State's efforts to collect these without proper legal authority.
Findings of Court:
The corpus fund could not be created under the authority of the Executive without legislative backing; medical institutions are empowered to charge fees necessary for providing education sustainably.
Issues: Whether the Committee had the power to direct the creation of a corpus fund and whether NRI students were entitled to a refund of the amount charged improperly.
Ratio Decidendi: The Court ruled that authority to levy such fees lies solely with the legislature and not through executive mandates, and upheld the need for institutions to use funds responsibly for quality education.
Result: Appeals allowed in part; Government Order quashed and the mechanism for managing educational funding requires legislative enactment.
Legal Category Hierarchy
Table of Contents
2. Dispute over the legality of creating a corpus fund via executive order versus statutory authority and the entitlement to refunds of collected amounts. (Para 6 , 7 , 8 , 9 )
3. Executive orders cannot impose levies without legislative backing; regulatory committees lack inherent power to divert approved fees to state-maintained funds absent express statutory authorization. (Para 15 , 16 , 18 , 19 , 20 , 25 )
4. Any levy or diversion of fees for a corpus fund requires express statutory authority and cannot be implemented solely through executive orders or regulatory directions. (Para 25 , 26 , 27 )
5. Government order quashed; funds returned to institutions to be held in trust for subsidizing economically weaker students; NRI students denied refunds. (Para 39 )
6. Can a fee regulatory committee direct the creation of a corpus fund to subsidize education without specific legislative authorization?
No. The power to create such a mechanism resides with the State through appropriate legislation or regulations. A regulatory committee's power is limited to ensuring fees are non-exploitative and not for profiteering; it cannot divert approved fees to a state-maintained fund without statutory backing. (Para 16 , 19 , 20 , 25 )
7. Can a levy or fee be imposed on educational institutions through an executive order in the absence of a principal statute?
No. Recourse to expropriatory measures cannot be sheltered under subordinate legislation unless the power is drawn from competent legislation. The power to levy taxes or fees cannot be delegated to the executive without express authorization in the principal statute. (Para 25 , 26 , 27 )
8. Are students admitted under a higher fee quota entitled to a refund if the diversion of those fees to a corpus fund is held illegal?
Not necessarily. If the overall fee structure was approved as reasonable and non-exploitative for the institution's needs and growth, the illegality of the diversion to a corpus fund does not automatically entitle students to a refund. (Para 32 , 33 , 35 )
9. What is the legal status of funds retained by institutions after a state-mandated corpus fund is quashed?
Institutions may retain such funds but act as trustees, utilizing them substantially to subsidize the education of students from economically weaker sections, subject to state oversight and accounting. (Para 37 )
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 The Committee, on 27.02.2018, approved the fixation of fees for NRI students at Rs. 20 lakhs per annum for all medical colleges whose fee was to be regulated under the 2017 Act. Notedly, it decided to enhance the fees for NRI students from Rs. 15 lakhs per annum in Academic Year 20162017 to Rs. 20 lakhs per annum in Academic Year 2017 2018 and 20182019, with the condition that the extra amount of Rs. 5 lakhs would be kept as a ‘corpus fund’ to provide scholarships to BPL students. The Committee further directed that the corpus fund amount would be remitted to the State Gover
