No Free Ride: Supreme Court Orders Transferred Med Students to Pay Up, Releases ₹14 Crore from Defunct College's Trust

In a landmark ruling balancing student hardships against institutional accountability, the Supreme Court of India has held that MBBS students transferred from the now-defunct Sardar Rajas Medical College, Hospital and Research Centre (SRMCH) in Odisha to other private colleges cannot claim a permanent subsidy of government-rate fees. A bench comprising Justice Vikram Nath and Justice Sandeep Mehta directed the release of approximately ₹14 crore—from bank guarantees and court deposits furnished by SRMCH's managing Selvam Educational and Charitable Trust —to the three host colleges: Kalinga Institute of Medical Sciences (KIMS), Institute of Medical Sciences & SUM Hospital, and Hi-Tech Medical College & Hospital. Any remaining shortfalls must be recovered from the students at SRMCH's original fee rates, as reported by LiveLaw (2026 LiveLaw (SC) 498).

From Classroom Chaos to Fee Face-Off

The saga began in 2013-14 and 2014-15 when SRMCH admitted two batches of MBBS students under Odisha's state counselling, blending government and management quotas. Fees at SRMCH hovered around ₹2.12 lakh per semester—far above government rates of ₹30,000 annually. But inspections by the Medical Council of India (MCI, now NMC) uncovered glaring deficiencies in infrastructure, faculty, and compliance, leading to denial of recognition renewal. SRMCH's plea against this was dismissed by the Supreme Court in 2014 (Writ Petition (C) No. 681/2014).

The Orissa High Court stepped in, ordering student relocations—government quota to public colleges, management quota to private ones—sparking appeals. The Supreme Court intervened with interim orders (January 2016 onwards), enabling state-supervised counselling that shifted 122 students to the three private "transferee colleges" without losing an academic year. Students paid only nominal government fees under court directions, while colleges bore the brunt of full education and stipends.

Years later, the focus sharpened on finances: Transferee colleges sought reimbursement for the gap between government subsidies and their entitled private fees.

Students' Plea: 'We Suffered Enough'; Colleges' Cry: 'Pay for Quality'

Students (original respondents, represented by senior counsel Pratap Venugopal) argued they joined SRMCH legitimately, endured mid-course upheaval through no fault of theirs, and completed MBBS amid uncertainty—paying government fees as ordered. Imposing extra liability now, post-graduation, would be unfair.

The Selvam Trust (via V. Giri) contested deficiency findings as unresolved, insisting students benefited from equivalent or better institutions, so the Trust shouldn't shoulder full blame without final adjudication.

Transferee colleges countered they complied without protest, provided top facilities despite overload, but received a fraction of dues—e.g., KIMS charts showed SRMCH-equivalent fees alone would total ₹5.4 crore for its 41 students. They rejected government rates as untenable for private seats, demanding compensation plus interest.

MCI/NMC (Gaurav Sharma) advocated quota-based fees but noted no government vacancies existed; Odisha stressed valid initial admissions but deferred to quota resolution.

Unpacking the Verdict: No Windfall from Wrongs

The Court sidestepped quota debates, presuming placements in private/management seats absent vacancies. It invoked the maxim Commodum ex injuria sua nemo habere debet —no benefit from one's own wrong—noting SRMCH's confirmed deficiencies (affirmed by 2014 dismissal) and failure to refund excess collections (₹3.95 lakh per 2014-15 student).

Interim orders, including those in Hind Charitable Trust v. UoI (2014), mandated government fees temporarily to avert vacancies and physician shortages. But these weren't perpetual: Students chose private SRMCH initially, ineligible for government seats on merit. Permanent subsidies would unjustly enrich them, while absolving SRMCH was untenable.

Citing Priya Gupta v. State of Chhattisgarh (2012) indirectly via timelines, the bench clarified interim reliefs don't override contractual fee obligations. Transferee colleges, accommodating under duress, deserved SRMCH-rate reimbursements (accepted as fair, though their own rates were higher). Total dues: ~₹16.2 crore across colleges.

Key Observations from the Bench

"This, in our opinion, would amount to unjust enrichment of these transferee students while being conscious of the fact that they had to face a chaotic situation of being transferred to different medical colleges mid-session." (Para 36)

"Manifestly, the decision not to continue the recognition had a cascading effect... the institution was not compliant with the prescribed standards." (Para 28)

"The students had initially taken admission in a private medical college having a higher fee structure... they had consciously contracted to pay at the higher fee standards." (Para 33)

"Owing to the deficiencies in SRMCH, its recognition was not renewed, resulting in the students being subjected to a very tumultuous and volatile situation." (Para 38)

Primary Liability on Trust, Balance from Students

The Court fastened "primary brunt" on the Trust: ₹10 crore bank guarantees to MCI/NMC and ₹2 crore court deposit (now ~₹3.59 crore with interest), split equally among transferee colleges within timelines. MCI/NMC must release without lien claims.

Students face no immediate burden but must cover shortfalls (~₹2 crore aggregate) via NMC representations, crediting SRMCH payments and government fees paid. Compliant students get certificates promptly; undertakings they signed bind them.

Appeals disposed; no prejudice to Trust's separate proceedings. This ruling safeguards medical continuity while enforcing accountability—future de-recognitions may see similar fee apportionments, deterring lapses without penalizing innocents unduly.