Private Medical Colleges Collecting Annual Fees In Advance Before Completion Of Current Academic Year 'Profiteering' : Kerala High Court

While restraining private medical colleges in the State from collecting fees for any academic year other than the one currently being taught, the Kerala High Court has held that collecting annual fees from students for the next year in advance when the previous year's studies have not been completed by an institution would amount to "profiteering".

A Division Bench of Justice A.K. Jayasankaran Nambiar and Justice Mohammed Nias C.P. justified its stand observing that conceptually a fee was remuneration for a service already rendered:

"When the fee permitted to be collected is an annual fee for rendering educational services, the collection of any fee that does not relate to the academic year for which the educational service is rendered but for a future period, would militate against the very concept of a fee for it would be a payment for services yet to be rendered. The educational institutions would then be resorting to 'profiteering'"

However, it was clarified that these directions were to operate only in the peculiar situation caused by the COVID-19 pandemic considering that instructions imparted for a particular academic year in medical colleges could not be completed in the allotted period:

"The COVID pandemic without doubt brought about an unusual or exceptional situation fraught with financial implications. The exceptional situation, however, affected not only the educational institutions but also the student community and their financier guardians...We feel it would be unconscionable on the part of the private medical educational institutions concerned to demand the determined fees, unmindful of the difficulties faced by the students." 

The Court was adjudicating upon a batch of petitions moved by a group of medical students from various private medical colleges challenging the demand notice for fee for the third year of their course while they were still pursuing their second year owing to the pandemic.

The petitioners argued that by demanding fees in respect of a year different from that for which instructions are imparted, the educational institutions concerned were effectively collecting the determined fees in advance which is not permissible in law. 

On the other hand, the respondents justified their stand contending that it is the third calendar year since the students were admitted and, hence, they were entitled to collect the annual fee determined for the third year.

Upon considering the arguments raised by both sides, the Court noted that the lockdown imposed by the State in the wake of the global COVID pandemic, had resulted in an unavoidable interruption to the course of study and hence, while the months in the calendar year passed by, there was no simultaneous progress in the instruction months that constituted the academic year:

This led to the situation where the petitioners were called upon to remit the fee payable for the third year of their course when they were effectively pursuing only the second year of their course.

It was also observed that in the Supreme Court in Islamic Academy of Education & Anr v. State of Karnataka & Ors had held that institutions shall charge fees only for one year in accordance with the rules and shall not charge the fees for the entire course

Placing reliance on several provisions of the Regulations on Graduate Medical Education, 1997 and the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, the Court took the following view:

"...it would be wholly inequitable and unjust to permit the educational institutions concerned in these writ petitions to collect the determined annual fees in respect of any academic year save that for which instructions are currently being imparted."

In the Islamia Academia (supra) ruling, the Apex Court had also observed that if fees have already been collected for a longer period, such amount shall be kept in a fixed deposit in a nationalised bank against which no loan or advance may be granted so that the interest accrued thereupon may enure to the benefit of the students. 

The Bench noted that this was also a statutory mandate under Section 8 (3) of the 2017 Act. 

"It is clear, therefore, that the educational institutions are not justified in collecting any amount towards fees for a period longer than the academic year in question. In collecting the third year fee, while the student is pursuing the second year of the course, they would be doing just that." 

As such, allowing the batch of petitions, the Court directed the respondent private medical institutions, where the petitioners are studying, to refrain from demanding or collecting academic fees from them in respect of any academic year other than the one for which instructions are currently being imparted.

Senior Advocate Renjith Thampan assisted by Advocate V.M.Krishnakumar appeared on behalf of the petitioners.

The respondent educational institutions were represented by Advocate Haris Beeran assisted by Advocates O.A.Nuriya and Murugan, Senior Advocate S.Sreekumar assisted by Advocate Arun B. Varghese, Senior Advocate George Poonthottam assisted by Advocates Nisha George, S.Vinod Bhat, Babu Karukapadath and George Jacob Jose, Senior Advocate Kurian George Kannanthanam assisted by Advocate Tony George Kannanthanam, Advocates Millu Dandapani, Amal Das and P.Sanjay.

Advocate R.T.Pradeep appeared for Admission & Fee Regulatory Committee, Standing Counsel P. Sreekumar for the Kerala University of Health Sciences and Government Pleader Bijoy Chandran for the official respondents of the State.  

Case Title: Sanju Simon & Ors v. State of Kerala & Ors and connected matters

Citation: 2022 LiveLaw (Ker) 13

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