Madras High Court Directs Annamalai University To Refund ₹10.5 Lakh To Student Who Discontinued MBBS, Says University Tried To Profit Itself

Observing that the vacant seat was subsequently filled and that the university did not suffer any loss, Justice K Kumaresh Babu of the Madurai bench noted that the institution could only retain the fee for the months during which the student had actually studied in the institution along with the processing fee. In the present case, however, the institution had withheld the entire fee for the first year.

Further, in the present case on hand, the Institution had admitted another student in the vacancy that had arisen due to the petitioner's daughter leaving the Institution. There is no loss that is caused to the institution. What the institution now seeks to achieve, in my view, is an unjust enrichment amounting to profiteering, which it has been heavily come down by the Hon'ble Apex Court.

In the present case, the candidate joined Annamalai university in August 2016 for the MBBS Course. Thereafter, she obtained admission to another college in Madurai and made a request to relieve from the institution. The candidates’s mother, the petitioner, was directed to pay the remaining fee of 22,52,000 after which the candidate was issued a transfer certificate.

In December 2016, the university refunded a sum of 17,50,000 rupees but retained the tuition fee for the entire year amounting to 5,54,370 rupees and a bond breakage fee of 5,00,000 rupees. 

The petitioner argued that the said act of the respondent was contrary to the UGC Regulations. They relied upon a Circular issued by UGC un 2007 wherein it was stated that if a student leaves after joining the course and the seat os subsequently filled by another candidate, the Institution must return the fee collected with proportionate deductions of the monthly fee and proportionate hostel rent where applicable. Through another circular in 2011, the UGC reiterated these guidelines.

The University however contended that the Prospectus issued for 2016-17 was applicable to the candidate and that they cannot violate the same. According to the prospectus, she was bound to issue a bond and to comply with the same. It was also contended that since the candidate left the course midstream, they were entitled to hold the fee for the academic year.

The court noted that the university had a bond clause in its prospectus based on which if a candidate discontinued the course after July 2016, they would have to pay a penalty of five lakh rupees in addition to forfeiture of tuition and other fees as per the prospectus. The court observed that this clause went fundamentally against the principles laid down by the Apex Court in TMA Pai foundation case where the court had categorically held that an institution cannot collect more than what they are permitted ie., the tuition fee and other institutional expenditure.

Further, even as per the circulars issued by the UGC, which are binding on the institution, it could not retain the first year fee collected from the candidate and could only retain the fee for the two months when she was in the institution. This fee could be deducted from the fee collected fo the entire first year.

Thus, the court observed that the bond clause in the Prospectus of the Institution was illegal and therefore not binding on the candidate. The court further directed the institution to refund the balance of 10,54,000 rupees after deducting the proportionate tuition fee within a period of 12 weeks.

Case Title: Dr. R Hemamalini v. The Registrar, Annamalai University

Citation: 2023 LiveLaw (Mad) 73