NRI Students Liable for Entire Approved Tuition Fee Despite Illegal Diversion to BPL Corpus Fund

The petitioners are MBBS students admitted under the Non-Resident Indian (NRI) quota in various self-financing medical colleges in Kerala.

Historically, the Admission and Fee Regulatory Committee ('Fee Committee') fixed NRI tuition fees at ₹15,00,000.

For the academic year 2017-18 onwards, the Committee increased the fee to ₹20,00,000, directing that ₹5,00,000 be diverted to a "Corpus Fund" to provide scholarships for BPL students.

This bifurcation was challenged, and the Kerala High Court in Jubilee Mission (2020) ruled that the Committee lacked statutory authority under the Act of 2017 to divert fees for other purposes.

Subsequently, the Government issued G.O.(MS) No. 107/2018/H&FWD to validate this fund, which was also quashed by a Division Bench in 2023.

The management and students appealed to the Supreme Court.

The Supreme Court in Principal KMCT Medical College (2025) upheld the quashing of the G.O. but allowed colleges to retain the full fee (including the disputed ₹5 lakhs) to subsidize BPL students already admitted.

The current petitioners challenged the colleges' recent demands for the ₹5,00,000 "Corpus Fund" portion, arguing the collection is illegal per the Supreme Court’s judgment.

1. Whether the medical colleges are entitled to collect the ₹5,00,000 component originally labeled as "Corpus Fund" as part of the total tuition fee.

2. Whether the Supreme Court's declaration that NRI students are not entitled to a refund of the corpus fund implies a mandate for students to pay the "entire fee" as originally fixed.

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 Committee's power to fix fees.

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

Most critically, it applied the directions from the Supreme Court in State of Kerala v. Principal KMCT Medical College (2025), which established that while the "Corpus Fund" mechanism was unauthorized without legislation, the underlying fee increase to ₹20,00,000 (or as specifically approved) was reasonable and constituted the "entire fee" payable to the institutions.

The court reasoned that the petitioners' challenge rested on a "mistaken assumption" that the NRI fee was ₹15 lakhs plus an illegal ₹5 lakh surcharge.

Analysis of the Fee Committee's history shows the Committee intentionally enhanced the total fee to ₹20 lakhs per annum, merely attempting to earmark ₹5 lakhs of that total for a state-managed fund.

When the Supreme Court quashed the G.O. and the diversion mechanism, it did not reduce the fee; rather, it directed the State to return any collected funds to the colleges and explicitly ordered NRI students to pay the "entire fees... as approved by the Admission and Fee Regulatory Committee".

The court found that the Supreme Court's refusal to grant a refund to students who had already paid, coupled with the direction to pay the "entire fees," signifies that the ₹5 lakh component remains a liability of the student to the college, though the college must now use it to fulfill its obligation to educate BPL students without extra charge.

The court noted that the current fee of ₹21,65,720 fixed in G.O.(Ms) No.240/2024 remains valid as it has not been specifically challenged.

The Court answered the issues by stating that the Supreme Court's judgment directed students to pay the "entire fee" and prohibited any refund of the corpus component.

Holding that the petitioners were not entitled to relief, the Court dismissed the cases but granted the students six weeks to satisfy the accumulated arrears and directed that bank guarantees should not be encashed until the expiry of this period.