NRI Students Liable for Entire Fixed Fee Despite Illegal Delegation to Corpus Fund

The petitioners are NRI medical students who challenged the collection of ₹5,000,000/- as a "Corpus Fund" by self-financing medical colleges.

Originally, the Fee Regulatory Committee (FRC) enhanced NRI fees from ₹15 lakhs to ₹20 lakhs for the 2017-18 academic year, directing ₹5 lakhs of that amount be set aside for a scholarship fund for BPL students.

A state government order (G.O.(MS) No. 107/2018) later validated this fund.

The High Court previously quashed the G.O. and the FRC's power to divert fees to a corpus fund in the absence of legislation.

The Supreme Court, in State of Kerala v. Principal KMCT Medical College, confirmed that the FRC lacked the power to create such a fund but held that colleges are entitled to retain the "entire fees" approved by the FRC, as the fee itself (₹20 lakhs) was deemed reasonable and the corpus component was part of that approved total.

Petitioners approached the High Court again, arguing that since the corpus fund was declared illegal, the total fee should revert to ₹15 lakhs (or its inflation-adjusted equivalent).

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 permits cross-subsidization but requires it to be reviewed for exploitation.

Most critically, the court followed the Supreme Court’s recent ruling in State of Kerala v. Principal KMCT Medical College [2025 KHC OnLine 6505], which established that while the creation of a corpus fund without specific legislation is ultra vires, the total fee approved by the Committee (including the disputed ₹5 lakhs) remains valid and payable to the institutions.

The court determined that the petitioners operated under a "mistaken assumption" that the NRI fee was only ₹15 lakhs and the ₹5 lakhs was a separate surcharge.

The High Court clarified that the FRC had actually decided to approve the NRI fee at ₹20 lakhs, and it was only the diversion of a portion of that fee to a government-managed fund that was illegal.

By applying the Supreme Court’s finding that self-financing institutions are the "best judge of their own needs," the court reasoned that the colleges have the right to reclaim the ₹5 lakhs originally diverted to the State.

The court noted that the Supreme Court had specifically directed NRI students to pay the "entire fees" to their colleges as approved by the FRC and categorically denied refund requests.

Therefore, the administrative bifurcation of the fee did not reduce the student’s total liability toward the institution.

The NRI students are not entitled to a refund or an exemption from paying this amount.

The writ petitions were dismissed.

The court granted the petitioners a six-week grace period to satisfy the arrears, during which time colleges are prohibited from encashing bank guarantees.