MP High Court Scrutinizes Legality of ₹10 Lakh Forfeiture Rule in NEET-UG Counselling

Bhopal, MP – The Madhya Pradesh High Court has initiated a judicial review into a contentious rule that permits the forfeiture of a ₹10 lakh deposit from medical aspirants, a practice that has left several students in financial and procedural distress. In a case with significant implications for medical admissions in the state, a Division Bench comprising Chief Justice Sanjeev Sachdeva and Justice Dwarka Dhish Bansal issued a notice to the state government, questioning the constitutional validity and application of a key provision in the state's private medical college admission regulations.

The writ petition, Tejas Ravish Agrawal v State of MP (WP 35132/2025) , brought forth by a group of 2024 NEET-UG aspirants, challenges the vires of Rule 12(7)(ga) of the Madhya Pradesh Private Professional Educational Institutions (Regulation of Admissions and Determination of Fees) Act, 2007, as amended in 2018. The petitioners seek a refund of the ₹10 lakh security deposit each had forfeited after cancelling their allotted seats in a private medical college to pursue admission elsewhere. The matter is scheduled for further hearing on November 4.

The Crux of the Dispute: A Punitive Forfeiture

The case originates from the first round of NEET-UG 2024 counselling. The petitioners, having secured high ranks, were allotted seats in the Unreserved/NRI quota at RKDF Medical College in Bhopal by the Directorate of Medical Education (DME) on September 15, 2024. As per the prevailing rules, they were mandated to deposit ₹10 lakh immediately upon seat allotment to confirm their acceptance and become eligible for subsequent counselling rounds, which they promptly paid.

Subsequently, the petitioners, who hail from Maharashtra, secured admission in a college within their home state. Opting for the more favourable admission, they decided to withdraw their candidatures from RKDF Medical College. Crucially, they provided written notification of their withdrawal to both the DME and the Dean of RKDF Medical College on October 1, 2024. This communication was sent well in advance of the closure of the second round of counselling on October 5, 2024.

Despite this timely intimation, which theoretically allowed the DME to offer the vacated seats to other candidates in the second or subsequent rounds, the authority issued an order on October 30, 2024. This order declared the entire ₹10 lakh deposit from each petitioner as confiscated, citing the contested Rule 12(7)(ga). A subsequent representation made by the students on January 7, 2025, seeking a refund, reportedly went unanswered, compelling them to seek judicial intervention.

Challenging Statutory Interpretation and Vires

The legal challenge mounted by the petitioners, represented by Senior Advocate Aditya Sanghi along with advocates Poonam Sonkar, Prakhar Naveriya, and Alka Singh, operates on two primary fronts: the misinterpretation of Rule 12(7)(ga) and its inherent unconstitutionality.

The petitioners contend that the state's interpretation of the forfeiture clause is both erroneous and punitive. Their plea argues that the rule was intended to penalize candidates who abandon a seat at the very end of the admission process—such as after the mop-up or stray vacancy rounds—thereby causing the seat to remain vacant for the entire academic year. Such a scenario results in a loss for both the institution and other deserving candidates.

However, the plea asserts that under "no stretch of imagination" can the forfeiture rule be applied when a candidate withdraws well before the counselling process concludes. By informing the authorities in writing before the second round ended, the petitioners argue they ensured the seat did not go to waste and could be re-allotted.

The plea claims that Rule 12(7)(ga) of Adhiniyam is being misrepresented and was applicable only if a candidate leaves the seat in the last round of counselling process and the seat remains vacant for those particular counselling sessions.

This argument frames the DME's action not as a legitimate regulatory measure but as an arbitrary and disproportionate penalty. The students maintain that once a seat is accepted in the first round, they become eligible for subsequent rounds (second, mop-up, and stray vacancy) precisely to "change the seats or upgrade" their choices. The forfeiture, in their view, unjustly penalizes the very flexibility the multi-stage counselling process is designed to offer.

Beyond interpretation, the plea fundamentally challenges the vires of the rule itself, suggesting it may violate constitutional principles of fairness, reasonableness, and non-arbitrariness under Article 14 of the Constitution.

Legal and Policy Implications

The High Court's decision to issue a notice signifies the judiciary's willingness to scrutinize the stringent financial conditions imposed on students during the high-stakes medical admission process. This case highlights a critical tension between the state's objective to prevent "seat blocking" and the students' right to choose their preferred institution without facing exorbitant financial penalties.

Legal experts suggest the court's examination will likely focus on several key questions:

• The Principle of Proportionality: Is the forfeiture of the entire ₹10 lakh sum a proportionate response to a student withdrawing from a seat, especially when the seat can be re-allocated? The court may consider whether the amount is a genuine pre-estimate of damages or an impermissible penalty clause.
• Legislative Intent: The court will delve into the original intent behind Rule 12(7)(ga). Was it designed as a blanket rule for any withdrawal post-allotment, or was it specifically targeted at late-stage withdrawals that cause seat wastage?
• Procedural Fairness: Did the DME act in a procedurally fair manner by forfeiting the amount without considering the timing of the withdrawal and its impact on the seat matrix?
• Constitutional Validity: Does the rule impose an unreasonable restriction on students, effectively trapping them in an early-round allocation under threat of a significant financial loss?

The outcome of this case could set a vital precedent for how security deposits are managed in professional course admissions across Madhya Pradesh and potentially influence similar regulations in other states. A ruling in favour of the petitioners could lead to a more nuanced application of forfeiture rules, one that distinguishes between early, manageable withdrawals and late, disruptive ones. Conversely, a decision upholding the DME's action would solidify the state's authority to impose strict financial disincentives to curb seat blocking, reinforcing the high financial risks students undertake during counselling.

As the legal community awaits the state's response and the subsequent hearing on November 4, this case serves as a crucial test of the balance between regulatory control and the fundamental rights of student aspirants.