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

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

Historically, the Admission and Fee Regulatory Committee ("Committee") enhanced NRI fees from ₹15 lakhs to ₹20 lakhs (and subsequently higher), directing that ₹5 lakhs of this amount be diverted to a "Corpus Fund" to subsidize education for Below Poverty Line (BPL) students.

A Division Bench of the Kerala High Court previously quashed the Government Order (G.O.(MS) No. 107/2018/H&FWD) establishing this fund, holding that neither the Committee nor the Government had the legislative authority to mandate such a collection.

On appeal, the Supreme Court in State of Kerala v. Principal KMCT Medical College (2025) confirmed the quashing of the G.O. but ruled that colleges could retain the ₹5 lakhs portion as part of the "entire fee" to subsidize BPL students already admitted.

The petitioners approached the High Court seeking to restrain colleges from collecting the ₹5 lakh "Corpus Fund" component, arguing it was declared illegal by the Apex Court.

1. Whether the medical colleges are entitled to collect the ₹5,00,000/- component of the fee originally earmarked for the "Corpus Fund" in light of the Apex Court’s judgment.

2. Whether the NRI students are entitled to a refund or set-off of the ₹5,00,000/- component if it is found to be illegally charged.

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 reasonable fees.

It relied on the precedent P.A. Inamdar v. State of Maharashtra, which permits NRI student fees to be utilized to subsidize students from economically weaker sections, provided it does not amount to profiteering.

Finally, it followed the specific directions in State of Kerala v. Principal KMCT Medical College (2025), which established that while the State cannot maintain a separate corpus without legislation, the "entire fee" approved by the Committee is payable to the colleges.

The Court reasoned that the petitioners were operating under a "mistaken assumption" that the base tuition fee was ₹15 lakhs and the ₹5 lakhs for the Corpus Fund was an additional levy.

The Court clarified that the Committee had actually fixed/approved the entire fee at ₹20 lakhs (or higher in subsequent years), only choosing to bifurcate a portion for the fund.

Although the Supreme Court quashed the specific mechanism of a State-managed "Corpus Fund" due to lack of legislative authority, it explicitly directed NRI students to pay the "entire fees" to their respective colleges as approved by the Committee.

The High Court noted that the Apex Court permitted the colleges to retain these funds substantially to subsidize BPL students, signifying that the total amount was a reasonable fee for the institution and did not constitute illegal profiteering.

Because the total fee amount was approved by the Committee and the Government, and those orders remained unchallenged, the students could not unilaterally withhold the ₹5 lakh component.

The Court directed that NRI students are not entitled to any refund or set-off for these amounts.

However, the Court granted the petitioners six weeks to satisfy the arrears and ordered that bank guarantees should not be encashed until the expiry of this period.