The Supreme Court has clarified that fees collected from Non-Resident Indian (NRI) students in self-financing educational institutions can be utilized for various purposes. The Court stated that these funds are not restricted to subsidizing the education of students from Below Poverty Line (BPL) backgrounds.
"The fees collected from NRI students can be utilized for a variety of purposes, including but not limited to subsidizing fees for other students through scholarships," the Court emphasized, rejecting the claim that such fees should only support BPL students.
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This decision came while the Court reviewed a challenge against the directions of the Fee Regulatory Committee formed under the Kerala Medical Education Act, 2017. This Committee had instructed that a portion of the fees from NRI students should be allocated to a fund meant for scholarships or financial aid to BPL students.
Certain self-financing medical institutions had requested the release of the funds collected from NRI students, arguing that these funds are also used for maintaining educational quality, infrastructure improvement, and other operational expenses.
On the other side, NRI students demanded a refund of a portion of their fees, arguing that the funds should only subsidize the education of two students from economically weaker sections, relying on the Supreme Court’s earlier judgment in PA Inamdar v. State of Maharashtra.
Rejecting the NRI students' claims, the Supreme Court referred to two critical judgments — Islamic Academy of Education v. State of Karnataka and Modern Dental College & Research Centre v. State of Madhya Pradesh. Both were decisions of five-judge benches that clearly stated that the government cannot impose rigid fee structures on self-financing institutions.
"Two 5-judge Benches of this Court... have unequivocally held that the Government cannot fix rigid fee structures for self-financing institutions... Each institute must have the freedom to fix its own fee structure," the Supreme Court highlighted.
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The Court further explained that each institution is free to determine its fee structure based on factors such as infrastructure, salaries of staff, maintenance costs, and future expansion plans. These institutions are also allowed to generate surplus funds for their growth and development.
Case Title: THE STATE OF KERALA Versus THE PRINCIPAL KMCT MEDICAL COLLEGE AND ORS., SLP(C) Nos. 9885-9888/2020 (and connected cases)
