NRI Students are Liable to Pay Entire Fixed Fees Sustaining Allotments to BPL Scholarships.

The petitioners, NRI quota MBBS students in self-financing medical colleges in Kerala, challenged the collection of ₹5,00,000 annually towards a "Corpus Fund".

Historically, the Admission and Fee Regulatory Committee (AFRC) increased NRI fees from ₹15 lakhs to ₹20 lakhs per annum from the 2017-18 academic year, stipulating that ₹5 lakhs of this amount be diverted to a State-maintained Corpus Fund to provide scholarships for BPL students.

A Division Bench of the Kerala High Court initially quashed the Government Order (G.O.(MS) No. 107/2018/H&FWD) facilitating this, holding that neither the Committee nor the Government had the authority to levy such amounts without specific legislative conferment.

The Supreme Court in State of Kerala v. Principal KMCT Medical College (2025) confirmed the quashing of the Scholarship Scheme but ruled that the colleges could retain the ₹5 lakh component as part of the total approved tuition fee to subsidize BPL students within their own institutions.

Petitioners approached the High Court again, arguing that in light of the quashed scheme, their annual fee should be limited to the base tuition fee (approx. ₹16.65 lakhs) excluding the ₹5 lakh Corpus Fund component.

1. Whether the ₹5,00,000 amount sought by medical colleges is an illegal levy or a valid component of the total tuition fee approved by the Fee Regulatory Committee.

2. Whether NRI students are entitled to a refund or exclusion of the ₹5 lakh component following the quashing of the State’s Scholarship Scheme.

The Court applied the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, specifically Sections 3 and 11 regarding the fixation of fees by the Admission and Fee Regulatory Committee.

It relied heavily on the precedents set in Director, Jubilee Mission Medical College and Research Institute v. State of Kerala [2020 (3) KLT 615], which held that the Committee could fix NRI fees but could not mandate the diversion of a portion for other purposes.

and the Supreme Court decision in State of Kerala v. Principal KMCT Medical College [2025 KHC OnLine 6505], which clarified that while the State's Corpus Fund mechanism was unauthorized, the colleges were entitled to retain the full fee amounts approved by the Committee to meet their operational needs and subsidize BPL students.

The Court reasoned that the petitioners' claim rested on a "mistaken assumption" that the NRI fee was only ₹15 lakhs and that the ₹5 lakh Corpus Fund was an additional, separate levy.

In reality, the AFRC had validly approved a total fee of ₹20 lakhs (later adjusted with 5% annual increments), only "bifurcating" it for the purpose of the scholarship scheme.

The Court noted that the Supreme Court explicitly directed NRI students to pay the "entire fees" to their respective colleges as approved by the Committee.

Although the specific Scholarship Scheme/Corpus Fund was quashed due to lack of legislative authority, the Supreme Court allowed colleges to retain those funds because they formed part of a fee structure previously deemed "reasonable and not amounting to profiteering".

Therefore, the ₹5 lakh component remains a legally enforceable part of the total tuition fee, provided the colleges utilize it substantially to subsidize BPL students as mandated by the Apex Court.

The Court also dismissed the students' reliance on the "base figure" used by the Committee for increments, holding that the Committee arrived at the total fee of ₹20 lakhs as the fair market rate for NRI seats.

The Court holding clarified that students must satisfy the "entire fee" as approved by the AFRC and the Government.

Consequently, all writ petitions were dismissed.

However, the Court granted the petitioners six weeks to satisfy the arrears of the disputed "Corpus Fund" component and directed that bank guarantees should not be encashed until the expiry of this period.