SC upholds Kerala HC's order quashing govt move on Medical Education Corpus Fund

United News of India

20-05-2025

New Delhi, May 19 (UNI) The Supreme Court on Monday upheld a Kerala High Court's judgment that quashed a government order validating the decision to remit to the State the corpus fund created to subsidise medical education for Below Poverty Line (BPL) students in self-financing medical colleges in Kerala.
The corpus fund had been formed by remitting a portion of the fees collected from Non-Resident Indian (NRI) students to the State Government.
The Supreme Court ruled that such funds should instead be retained by the self-financing institutions themselves, which are entitled to utilize them for subsidising BPL students' education.
A Bench, comprising Justices Surya Kant and Nongmeikapam Kotiswar Singh, affirmed that the Kerala High Court was right in setting aside government order passed on June six, 2018.
'The self-financing medical colleges are entitled to retain the fees transferred to the State for the creation of the 'corpus fund' substantially for the purpose of subsidizing the fees charged to BPL students admitted to those colleges,' the Court stated.
The issue stemmed from a directive issued by the Kerala Admission and Fee Regulatory Committee, mandating that a corpus fund be created from a portion of the NRI student fees to subsidize BPL students' education.
KMCT Medical College had challenged this before the High Court after the Committee, in February 2018, increased NRI fees from Rs 15 lakh to Rs 20 lakh, directing that Rs five lakh be set aside for the corpus fund and remitted to the State.
During the pending litigation, the State issued a government order on June six, 2018, validating this directive.
However, the High Court ruled that while the Committee could fix fees under Section 8 of the Kerala Medical Education Act, 2017, it had no authority to redirect a portion of such fees for any other purpose.
The Court directed that corpus funds already collected be transferred back to the respective colleges, to be held in separate accounts and used solely for aiding economically weaker students.
This led to cross-appeals before the Supreme Court by the State, self-financing colleges and NRI students.
Citing P A Inamdar versus State of Maharashtra (2005) and Islamic Academy of Education vs State of Karnataka (2003), the Court clarified that while the State may design subsidy mechanisms, the Admission and Fee Regulatory Committee lacks statutory authority to create such corpus funds.
'There is nothing discernible in Section 8A of the 2017 Act that permits the Committee to divert or dictate the utilisation of a part of the fees,' the Bench noted.
The Court emphasized that any initiative to support economically weaker students must come through appropriate legislation by the State.
The Supreme Court ordered that the corpus fund amounts be returned to the respective colleges within three months. These institutions must maintain a separate account for the corpus fund and utilize it strictly for subsidizing fees of BPL students. Any BPL student who paid more than the subsidized amount is entitled to a refund or fee adjustment in future years.
However, the Court clarified that NRI students are not entitled to refunds from the corpus fund, and any pending fees as approved by the Committee must be paid in full within three months.
Senior Advocate Jayanth Muth Raj appeared for the Appellants (colleges), while Senior Advocate V Chitambaresh represented the Respondents.
The appeals by the State of Kerala and NRI students were dismissed.
Appeal by the self-financing medical colleges was allowed in part.
The State and Admission Committee may seek account statements from colleges to verify compliance with the judgment.
The Supreme Court has reinforced the autonomy of private medical institutions within the legal framework and reiterated the principle that statutory bodies must function within the bounds of their legislative mandates.
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