NRI students must pay the entire approved tuition fee, including portions previously diverted to illegal corpus funds.

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

For the academic year 2017-18, the Admission and Fee Regulatory Committee (AFRC) enhanced NRI fees from ₹15 lakhs to ₹20 lakhs, directing that ₹5 lakhs of this amount be diverted to a "Corpus Fund" to provide scholarships for BPL category students.

This diversion was challenged, and the High Court in Director, Jubilee Mission Medical College v. State of Kerala (2020) held that the Committee lacks statutory power under the Kerala Medical Education Act, 2017 to bifurcate fees for other purposes.

Subsequently, the Government issued G.O.(MS) No. 107/2018/H&FWD to formalize the Corpus Fund, which the High Court also quashed.

On appeal, the Supreme Court in State of Kerala v. Principal KMCT Medical College (2025) confirmed the quashing of the G.O. but held that NRI students were not entitled to a refund and must pay the "entire fees" as approved by the Committee, which the colleges were permitted to retain for subsidizing BPL students.

The petitioners filed these writ petitions challenging demand notices for the ₹5 lakh component, arguing it remains illegal.

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 AFRC's power to determine reasonable fees based on college proposals.

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

Furthermore, it strictly adhered to the Apex Court's recent ruling in State of Kerala v. Principal KMCT Medical College (2025), which established that while the "Corpus Fund" mechanism via executive order was invalid, the colleges are entitled to the full fee amount approved by the Committee to fulfill their obligation to BPL students.

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

In reality, the AFRC had formally approved an increase in the NRI fee to ₹20 lakhs (and subsequently adjusted with 5% annual increases).

The Court reasoned that although the method of earmarking the amount for a State-managed Corpus Fund was declared illegal for lack of legislative sanction, the amount itself was part of the "entire fees" found reasonable and approved by the Committee.

The Apex Court had explicitly directed NRI students to pay the "entire fees" to their respective colleges within three months and denied any refund of previously paid amounts.

Therefore, the students' liability stems not from an illegal G.O. but from the approved fee structure which the colleges are now permitted to retain directly to subsidize BPL education.

The Court answered that the NRI students were directed by the Apex Court to pay the "entire fees" and are not entitled to a refund or exemption from the disputed ₹5 lakh component.

Consequently, the demand notices issued by the colleges were sustained.

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