Medical Colleges Have A Statutory Duty To Pay Stipend To PG Students, Cannot Deny Same On Ground Of Equitable Set-Off: Madras High Court

“The payment of stipend being a statutory liability of the College, it would not be open for the College to deny the payment of the same to the students. On the contrary, they are duty-bound and have legal obligation to pay the said amount to the students and cannot deny the same on the ground of equitable set-off, even when the amount that is sought to be claimed by the Colleges is not yet ascertained,” the court observed.

The bench of Chief Justice SV Gangapurwala and Justice PD Audikesavalu were hearing an appeal preferred by Mahatma Gandhi Medical College and Aarupadai Veedu Medical College & Hospital against a single judge order directing the colleges to make a payment towards the stipend in terms of Regulation 13.3 of the Medical Council of India (MCI), Post-Graduate Medical Education Regulations, 2000.

The colleges had challenged the order of the single judge on the ground that another litigation was pending regarding the non-payment of fees by the students. It was argued that the Post Graduate students, after getting admission, had disputed payment of fees and as such the litigations were instituted wherein the High Court in two writs had directed the students to pay Rs.20,34,000/- for the academic year 2018-19 and Rs.13,00,000/- for the academic year 2019-20. They further informed the court that another division bench had directed the students to submit an undertaking that they would pay the balance tuition fee as fixed by the Fee Committee.

The colleges further submitted that the issue with regard to payment of fee was pending consideration before the Supreme Court. It was contended that once any Medical college has certain financial claims against a Post-Graduate student, the student cannot make claims for payment of stipend. It was submitted that the student is also under a mandate to pay the fee due to the Medical college and if a Post-Graduate student claims payment of stipend, then he must be alive to the fact that the fee towards the education received is also due.

Thus, it was argued that since the students have left the college, if the stand taken by the college is accepted by the Apex Court, it will be difficult for the college to otherwise recover fees from the students and as such, on the principle of set-off, they may not be directed to pay the stipend, and the colleges can adjust the stipend amount payable in the fees recoverable from the students.

The students, however, argued that the payment of fees by the students and payment of statutory stipends by the Colleges are two distinct transactions and could not be called the same transaction. They submitted that for completion of the Post-Graduate course, the students had to mandatorily work as full-time resident doctors and the remuneration paid as a stipend was the remuneration for the work extracted and could not be construed as part of other tuition fees.

The court agreed with this view and noted that the payment of stipend for the work done by the Post-Graduate students is a statutory obligation of the Medical College and to receive the same is a right of the student.

The court noted that for allowing a claim of equitable set-off, both the claims must arise out of the same transaction and it would be inequitable to drive the defendant to a separate suit. In the present case, the court noted that the claims between the college and the students did not arise out of a commercial transaction.

The court added that the liability to pay the stipend on the part of the college arose out of a statutory regulation and no dispute arose with regard to payment of stipend. On the other hand, the court noted that with regard to payment of fees, the issue still subsists.

The court noted that the students had complied with the orders of the court and paid the amount as directed by the court along with an undertaking that they would pay the higher amount or the difference amount if the court so decides.

“The question of equitable set-off while deciding the matter would arise if there is some ascertained sum of money, recoverable by the Colleges from the petitioners. At present, there is no ascertained sum of money directed to be paid by the students to the Colleges towards the fees,” the court observed.

The court also noted that the pendency of the issue with respect to payment of fees would not be sufficient for the college to deny the payment of stipend to the students, who have already paid the fee amount as per the directions of the court.

“The dispute whether the Colleges would be bound by the fees prescribed by the Fee Regulatory Authority, being Deemed Universities, and/or will have an independent right to determine its own fees is pending consideration before the Apex Court. However, that in itself would not be sufficient for the Colleges to deny the payment of stipend to the students, who have already paid the fees as directed by this Court from time to time,” the court observed.

Thus, finding no error in the judgment of the single judge, the court dismissed the appeals and directed the colleges to pay the stipend amount to the students within a period of six weeks.

Case Title: The Registrar, Mahatma Gandhi Medical College and others v. D Rajasree and others

Citation: 2023 LiveLaw (Mad) 209

Counsel for the Appellants: Mr.Vijay Narayanan Senior Counsel for Mr.L.Swaminathan, Mr.P.S.Raman Senior Counsel for Mr.L.Swaminathan

Counsel for the Respondents: Mr.V.B.R.Menon, Mrs.Shubharanjani Ananth, Mr.Rabu Manohar, Mrs.V.Sudha, Mr.Ali Hasan Khan