Admission & Fee Regulatory Committee Has To Ensure That Fee Charged By Private Medical Colleges Are Neither Excessive Nor Exploitative: Supreme Court

The Supreme Court observed that the regulation of fee for MBBS students in private self-financing medical colleges is within the domain of the Admission and Fee Regulatory Committee which has to ensure that the fee is non-exploitative and reasonable.

It can direct the managements to furnish any information that is required for the purpose of arriving at a decision that the fee proposed by the managements is neither excessive nor exploitative in nature, the bench comprising Justices L. Nageswara Rao and S. Ravindra Bhat observed.

The Court observed that the High Court committed an error in directing the Committee to take into account only audited balance sheets, and provisional profit and loss accounts in the absence of audited balance sheets, to fix the fee. "Though we are in agreement with the submission made on behalf of the managements that the fee as proposed by them should be considered by the Committee, it is no more res integra that the right conferred on the institutions to fix fee for professional courses is subject to regulation.", the bench said.

The State had approached the Apex Court aggrieved with the Kerala High Court direction to the Committee to examine the audited balance sheets only for the purpose of considering whether the expenditure that is shown by the managements should be excluded or not. It contended that the directions given by the High Court are contrary to Section 11 of the 2017 Act, which refers to factors that have to be taken into account by the Committee for fee fixation. The bench observed thus:

"We find force in the submission of Mr. Jaideep Gupta, learned Senior Counsel appearing on behalf of the State, that no fetter can be placed on the exercise of power for fee fixation by the Committee, which shall be in accordance with the factors that are mentioned in Section 11 of the 2017 Act. The High Court committed an error in directing the Committee to take into account only audited balance sheets, and provisional profit and loss accounts in the absence of audited balance sheets, to fix the fee. Though we are in agreement with the submission made on behalf of the managements that the fee as proposed by them should be considered by the Committee, it is no more res integra that the right conferred on the institutions to fix fee for professional courses is subject to regulation. It need not be reiterated that unaided professional institutions have the autonomy to decide on the fee to be charged, subject to the fee not resulting in profiteering or collection of capitation fee. Regulation of fee is within the domain of the Committee which shall ensure that the fee is non-exploitative and reasonable. There is no need to repeat the judgments of this Court, especially P.A. Inamdar & Ors. (supra), which have been copiously referred to by the High Court in the 3 rounds of litigation to indicate the principles to be followed for fixation of fee in private medical colleges. Suffice it to mention that the Committee shall reconsider the proposals of the managements for fee fixation 2017-18 onwards by taking into account the factors mentioned in Section 11 of the 2017 Act and the law laid 15 | P a g e down by this Court in Modern Dental College & Research Centre (supra). "

The court observed that the delay that is caused in finalizing the fee in medical colleges is beneficial neither to the institutions nor the students.  The bench therefore issued the following directions:

"Therefore, we direct the Committee to expeditiously reconsider the proposals of the private self-financing colleges for fee fixation from 2017-18 onwards. Needless to mention that fee for earlier years also needs to be finalized in case it has not been done in respect of any college. It can direct the managements to furnish any information that is required for the purpose of arriving at a decision that the fee proposed by the managements is neither excessive nor exploitative in nature. A reasonable opportunity should be given to the managements of private self-financing colleges in respect of their proposals for fee fixation. The entire exercise shall be completed within a period of three months from today."

CASE: Najiya Neermunda vs. Kunhitharuvai Memorial Charitable Trust [Civil Appeal Nos . 606 - 616 of 2021]

CORAM: Justices L. Nageswara Rao and S. Ravindra Bhat

CITATION: LL 2021 SC 115

COUNSEL: Mr. Jaideep Gupta and Mr. Paramjit Singh Patwalia, Senior Counsel appearing on behalf of the State of Kerala, Mr. P.S. Narasimha, Senior Counsel, Mr. Raghenth Basant and Mr. Wills Mathew, counsel appearing on behalf of the students, Mr. Dushyant Dave and Mr. Shyam Divan, Senior Counsel appearing on behalf of the managements of private self financing colleges

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