NRI Students are Liable to Pay Entire Approved Fees Inclusive of Corpus Fund Components

The petitioners, NRI quota MBBS students in self-financing medical colleges, challenged the demand for ₹5,00,000/- per annum towards a "Corpus Fund".

Historically, the Admission and Fee Regulatory Committee (AFRC) increased NRI fees from ₹15 lakhs to ₹20 lakhs in 2017, directing that ₹5 lakhs be set aside for a Corpus Fund to subsidize BPL students.

A Division Bench of the Kerala High Court initially found this bifurcation unauthorized under the Kerala Medical Education Act, 2017.

The State subsequently issued G.O.(MS) No. 107/2018 to validate the fund, which was also quashed by the High Court for lack of legislative authority.

On appeal, the Supreme Court in State of Kerala v. Principal KMCT Medical College upheld the quashing of the G.O. but clarified that NRI students must pay the "entire fees" as approved by the AFRC and are not entitled to refunds, while colleges may retain these funds to subsidize BPL education.

Following this, colleges issued notices demanding the outstanding ₹5 lakhs, which students challenged herein.

The court applied the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, specifically Section 11 regarding fee determination.

It relied on the precedent set in P.A. Inamdar v. State of Maharashtra, which allows NRI fees to be used to subsidize students from economically weaker sections.

Crucially, it followed the Apex Court’s recent directions in State of Kerala v. Principal KMCT Medical College (2025), which held that while the State cannot create a Corpus Fund without legislation, NRI students are bound to pay the "entire fees" approved by the Committee to their respective colleges.

The Court reasoned that the petitioners were operating under a "mistaken assumption" that the NRI fee was only ₹15 lakhs and the ₹5 lakhs was an additional, illegal levy.

The Court clarified that the AFRC had actually enhanced the total NRI fee to ₹20 lakhs (and subsequently higher) based on the colleges' proposals, which the Committee found reasonable and non-profiteering.

The illegality previously identified by the courts pertained only to the diversion of a portion of that fee to a State-managed Corpus Fund, not to the quantum of the fee itself.

Applying the Supreme Court's mandate, the Court found that the ₹5 lakhs is an integral part of the "entire fee" prescribed by the Committee.

Since the Supreme Court categorically directed NRI students to pay the entire approved fee and denied any refund claims, the colleges' demands were deemed a legitimate pursuit of approved tuition fees rather than an unauthorized collection of a separate fund.

The Court answered that while students aren't paying a "Corpus Fund" per se, they must satisfy the total approved fee quantum.

All challenges to the demand notices were rejected.

The Court granted the petitioners six weeks to satisfy the arrears, and further directed that bank guarantees shall not be encashed until the expiry of this period.