Holding

The Committee lacks statutory authority to create or divert a corpus fund; the collected amounts must be retained by the colleges for subsidising BPL students, and NRI students are not entitled to a refund.

Summary

The Kerala Medical Education Act, 2017 created an Admission and Fee Regulatory Committee to fix fees for private medical colleges. The Committee approved a fee of Rs. 20 lakhs for NRI students, directing that Rs. 5 lakhs of each fee be placed in a corpus fund for BPL scholarships, a decision later challenged by the State, the colleges, and the NRI students. The Supreme Court held that the Committee’s statutory powers under Sections 8A and 11 are limited to determining non‑exploitative fees and do not extend to creating or diverting a corpus fund, which can only be done by legislation. Consequently, the High Court’s order quashing the 2018 Government Order was affirmed, the colleges were allowed to retain the amounts collected, and they must use them to subsidise BPL students, while NRI students are not entitled to a refund. The Court directed the State to release the corpus‑fund amounts back to the colleges and to ensure BPL students receive subsidised fees, with refunds where excess fees have been paid.

Issues considered

Whether the Admission and Fee Regulatory Committee has the authority under the 2017 Act and the Inamdar judgment to direct that a portion of NRI fees be kept in a corpus fund maintained by the State.
Whether NRI students are entitled to a refund or set‑off of the amount collected for the corpus fund.

Legislation cited

Kerala Medical Education (Regulation of Admission in Private Medical Educational Institutions) Act, 2017s. 11, s. 8A

Headnote

Issue for Consideration (a) Whether the Admission and Fee Regulatory Committee had the power to determine and direct that a particular amount of the fees charged to NRI students be kept in a corpus fund maintained by the State? (b) Whether the are entitled to retain the fees collected for the corpus fund which were to be transferred to the State? Headnotes† Medical Education – Admission and Fee Regulatory Committee – Creation of a corpus fund for scholarships from fees of NRI students – Whether the Committee

Subjects

Admission and Fee Regulatory CommitteeFee fixationUnaided professional collegesManagement quota seatsCorpus fundRefundNRI students

Judgment

[2025] 5 S.C.R. 2593 : 2025 INSC 518

The State of Kerala Etc. Etc.
v.
The Principal, KMCT Medical College and Ors. Etc. Etc.
(Civil Appeal No(s). 6908-6911 of 2025)
16 May 2025
[Surya Kant* and Nongmeikapam Kotiswar Singh, JJ.]

Issue for Consideration
(a) Whether the Admission and Fee Regulatory Committee had
the power to determine and direct that a particular amount of the
fees charged to NRI students be kept in a corpus fund maintained
by the State?
(b) Whether the self-financing medical colleges are entitled to
retain the fees collected for the corpus fund which were to be
transferred to the State?

Headnotes†
Medical Education – Admission and Fee Regulatory
Committee – Creation of a corpus fund for scholarships
from fees of NRI students – Whether the Committee has the
authority to create such a fund:
Held: Reliance is placed upon the judgement of P.A. Inamdar and
Ors. v. State of Maharashtra and Islamic Academy of Education v.
State of Karnataka to establish that the Committee can only decide
whether the fees proposed by the institution are exploitative or
not — The Committee has no discretionary power to divert a part
of the approved fees for any purpose — As such, the Committee
cannot create a corpus fund for the benefit of economically weaker
students — It can only direct the State to come up with a suitable
plan to subsidize their education through the fees charged from
NRI students — Recourse to expropriatory measures cannot be
sheltered under a piece of subordinate legislation, unless where
the power is drawn from the plenary legislation — There is nothing
discernible in Sections 8A and 11 of the 2017 Act, based on which
the Committee can assert its power to divert a part of the fee

* Author
2594 [2025] 5 S.C.R.

Supreme Court Reports

determined by it or issue a direction how such diverted fee is to
be utilised — The provisions also do not permit the levy of any
amount which will ultimately be retained by the State, regardless
of its purpose — The High Court was correct in striking down
the GO dated 06.06.2018 since its objective is not traceable to a
legislative action. [Paras 13-16, 18-21, 25-27]

Medical Education – Fees for NRI students – Entitlement to
refund of amounts paid to a corpus fund – Whether the NRI
students are entitled to a refund of the amount transferred:
Held: Reliance is placed upon the judgements of Islamic Academy
of Education v. State of Karnataka and Modern Dental College &
Research Centre and Ors. v. State of Madhya Pradesh and Ors. to
establish that the NRI students are not entitled to a refund of the
amount transferred for the creation of the corpus fund, as their fees
are not determined solely by the factor of subsidization — The fees
for NRI students are utilized for various purposes, including but not
limited to subsidizing other students, and for upkeep and continuous
development expenses to improve the quality of education — Self-
financing institutions are the best judge of their own expenses and
can retain the amount that was to be transferred to the corpus
fund, when those amounts came out of the fee structures already
approved by the Committee. [Paras 33-36]

Medical Education – Self-financing colleges – Entitlement to
retain fees collected for a corpus fund – Obligation to utilize
for BPL students:
Held: Colleges are obligated to provide quality education and
utilize a substantial part of these retained funds for subsidizing the
education of the BPL students, admitted to their institutions — The
colleges will act as trustees of the corpus fund amount and will
have to furnish their accounts to the State or the Committee to
establish compliance with this direction — Such an arrangement
shall continue till an appropriate legislation is enacted by the
State. [Para 37]

Case Law Cited
P.A. Inamdar and Ors. v. State of Maharashtra [2005] Supp. 2
SCR 603 : (2005) 6 SCC 537 – explained.
[2025] 5 S.C.R. 2595

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

Modern Dental College & Research Centre and Ors. v. State of
Madhya Pradesh and Ors. [2016] 3 SCR 579 : (2016) 7 SCC 353;
Islamic Academy of Education v. State of Karnataka [2003] Supp.
2 SCR 474 : (2003) 6 SCC 697 – relied on.
Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust
(2021) 5 SCC 515 – referred to.

List of Acts
The Kerala Medical Education (Regulation of Admission in Private
Medical Educational Institutions) Act, 2017.

List of Keywords
Admission and Fee Regulatory Committee; Fee fixation; Unaided
professional colleges; Management quota seats; Corpus fund;
Refund; NRI students.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 6908-6911
of 2025
From the Judgment and Order dated 23.07.2020 of the High
Court of Kerala at Ernakulam in WP(C) No. 7771, 10792, 11313
and 33160 of 2018
With
Civil Appeal No(s). 6912, 6913-6914 and 6915-6916 of 2025

Appearances for Parties
Advs. for the Appellants:
Jayanth Muth Raj, Kapil Sibal, Nikhil Goel, Shoeb Alam, Sr. Advs.,
Nishe Rajen Shonker, Mrs. Anu K Joy, Santhosh K, Haris Beeran,
Azhar Assees, Anand B. Menon, Ms. Pallavi Pratap, Abdulla Naseeh
V.T., Ms. Rachel Sara James, Ms. Abreeda Banu, Wills Mathews,
Dhanesh M Nair, Paul John Edison, Ms. Anila T Thomas, Rakesh
Garg, Ashish Gopal Garg, Ms. Shweta Garg.
Advs. for the Respondents:
Shoeb Alam, Kapil Sibal, Nikhil Goel, V. Chitambaresh, Jayanth
Muth Raj, Gaurav Aggarwal, Sr. Advs., Abdulla Naseeh V.T., Haris
Beeran, Azhar Assees, Anand B.menon, Ms. Pallavi Pratap, James
P. Thomas, Ravi Sagar, Bibin John, Lakshmeesh S. Kamath,
2596 [2025] 5 S.C.R.

Supreme Court Reports

Mrs. Samriti Ahuja, Ms. Aditi Prakash, Babu Karukapadath,
Mohammed Sadique T.A., Nishe Rajen Shonker, Mrs. Anu K Joy,
Santhosh K, Radha Shyam Jena, M. T. George, Mrs. Susy Abraham,
Johns George, Zulfiker Ali P. S, Ms. Lakshmi Sree P., Ms. Lebina
Baby, Alim Anvar, Shaji J Kodankandath, Ms. Smita Amratlal Vora.

Judgment / Order of the Supreme Court

Judgment

Surya Kant, J.

Leave granted.
2. The issue that arises for consideration has emanated from a direction
given by the State of Kerala’s Admission and Fee Regulatory
Committee that a corpus fund be created to subsidize medical
education for Below Poverty Line (BPL) students admitted to self-
financing medical educational institutions in the State. This corpus
fund was to be created by remitting to the State Government a
part of the fees collected from Non-Resident Indian (NRI) students
admitted to those colleges.
3. The Kerala High Court, at Ernakulam (High Court) vide the common
Impugned Judgement dated 23.07.2020 has: (i) quashed Government
Order (MS) No. 107/2018/H&FWD dated 06.06.2018 (GO dated
06.06.2018); (ii) directed that the amounts collected from each NRI
student to create a corpus fund be transferred to the respective
institutions and maintained as a separate account to be utilized only
for the benefit of students belonging to the economically weaker
sections, who may be admitted to such institutions on the basis of
allotment; (iii) directed such account to be operated only jointly by a
nominee of the self-financing institution and a nominee of the State
Government; (iv) kept it open to the State to promulgate suitable
legislative measures to achieve the object of providing scholarships
to students belonging to economically weaker sections of society
as observed by this Court in P. A. Inamdar and Ors. v. State of
Maharashtra1; and has further directed that (v) till suitable legislative
measures are adopted by the State, no further amounts would be
levied or collected from NRI students, already admitted to or to be

1 P. A. Inamdar and Ors. v. State of Maharashtra, (2005) 6 SCC 537.
[2025] 5 S.C.R. 2597

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

admitted to NRI quota seats in that academic year, towards the
creation or maintenance of the corpus fund.
4. These directions of the High Court have given rise to three sets of
cross-appeals preferred by: (i) The State of Kerala, who is aggrieved
by the quashing of its GO dated 06.06.2018; (ii) The self-financing
medical colleges, who are challenging the direction that the corpus
fund amount be utilized only to subsidize education for students from
economically-weaker sections of society admitted to the respective
institutions; and finally, (iii) The NRI students, who are dissatisfied
that the corpus fund amounts have not been refunded to them.

A. Facts
5. Owing to a parallel set of proceedings before the Courts concerning
the Committee’s overall functioning, it is vital to understand the
detailed facts before analyzing the legal issues.
5.1 The Kerala Medical Education (Regulation and Control of
Admission to Private Medical Educational Institutions) Act,
2017 (the 2017 Act) came into force on 01.06.2017. It was
introduced to, among other things, regulate the admission
and fixation of fees in private medical educational institutions
in the State of Kerala. Sections 3 and 3A of the 2017 Act
contemplate the constitution of a Committee, described as
the Admission and Fee Regulatory Committee (Committee).
The Committee was tasked to determine the fees charged to
students admitted to private medical educational institutions
in Kerala based on the annual information and proposals
submitted by those colleges.
5.2 KMCT Medical College moved an application and submitted
the prospectus for Academic Year 2017-2018 before the
Committee on 01.08.2017, requesting it to fix the fees for NRI
students at Rs. 20 lakhs per annum.
5.3 The Committee, on 27.02.2018, approved the fixation of fees
for NRI students at Rs. 20 lakhs per annum for all medical
colleges whose fee was to be regulated under the 2017 Act.
Notedly, it decided to enhance the fees for NRI students
from Rs. 15 lakhs per annum in Academic Year 2016-2017
to Rs. 20 lakhs per annum in Academic Year 2017-2018 and
2598 [2025] 5 S.C.R.

Supreme Court Reports

2018-2019, with the condition that the extra amount of Rs. 5
lakhs would be kept as a ‘corpus fund’ to provide scholarships
to BPL students. The Committee further directed that the corpus
fund amount would be remitted to the State Government, as
and when so directed by the State, the Committee, or a Court
of Law. This decision was substantiated by quoting paragraph
131 of P. A. Inamdar (supra), where it was held that the
fees collected from NRI students should be utilized to benefit
students from economically-weaker sections of society.
5.4 KMCT Medical College, being aggrieved, laid challenge to the
Committee’s decision before the High Court.
5.5 During the pendency of the writ proceedings before the
High Court, the Government of Kerala issued the GO dated
06.06.2018, seemingly to validate and support the Committee’s
decision dated 27.02.2018. It emphasized that the mainstay
of the corpus fund would be the amounts earmarked and
collected from NRI students who were admitted to self-financing
medical educational institutions in the State. Much like the
Committee’s decision, the GO dated 06.06.2018 was statedly
issued in pursuance of the directions contained in paragraph
131 of P. A. Inamdar (supra). Compelled by the GO dated
06.06.2018, the self-financing medical colleges consequently
began collecting Rs. 20 lakhs per annum as fees from the
newly-admitted NRI students, while remitting Rs. 5 lakhs to
the corpus fund.
5.6 The Committee, meanwhile, continued to assess the fee
proposals submitted by various colleges. In some instances,
it rejected the proposals and determined the fees to be
charged on its own initiative. Viewing this as an overstep of
the Committee’s powers and a violation of the institutions’
autonomy, several medical colleges filed writ petitions before
the High Court. This resulted in a parallel set of proceedings
concerning the Committee’s overall powers.
5.7 These proceedings culminated in a common judgment dated
19.05.2020, whereby the High Court remanded the matter
to the Committee to re-examine the proposals afresh and to
pass suitable orders. The High Court observed that though the
Committee had the power to fix the fee to be collected from
[2025] 5 S.C.R. 2599

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

NRI students, there was no power vested in it under Section
8 of the 2017 Act to direct that a portion of the fee amount
be utilized for any other purpose.
5.8 The aggrieved State approached this Court in Civil Appeal
No. 606-616/2021, which came to be decided on 25.02.2021,2
holding that the fee, as proposed by the colleges, should be
considered by the Committee. This Court noted that it was no
longer res integra that the right conferred on the institutions
to fix fees for professional courses was subject to regulation.
It was reiterated that unaided professional institutions had the
autonomy to decide on the fees to be charged, subject to the
condition that such fees do not result in profiteering or collection
of capitation fees. The Committee was only required to ensure
that the fee charged was non-exploitative and reasonable. This
Court thus directed the Committee to reconsider the proposals
submitted by the colleges, by taking into account the factors
mentioned in Section 11 of the 2017 Act and the law laid down
in Modern Dental College & Research Centre and Ors. v.
State of Madhya Pradesh and Ors.3
5.9 While this Court was seized of the above-mentioned matter,
various self-financing medical colleges and their NRI students
initiated a second round of litigation before the High Court, this
time, challenging the amounts collected from NRI students to
create the corpus fund to benefit BPL students enrolled in the
same institutes. The High Court clubbed these writ petitions
with the earlier petition filed by KMCT Medical College, and
has decided all these writ petitions through the common
Impugned Judgment.
5.10 The High Court, being conscious of the fact that the Committee
was considering the fee proposals afresh, as was directed by it
vide the judgement dated 19.05.2020, restricted its assessment
only qua the ‘validity of the creation of the corpus fund.’
5.11 The question that was formulated by the High Court for its
consideration was whether the creation of the corpus fund

2 Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust, (2021) 5 SCC 515.
3 Modern Dental College & Research Centre and Ors. v. State of Madhya Pradesh and Ors., (2016) 7 SCC
353.
2600 [2025] 5 S.C.R.

Supreme Court Reports

through the GO dated 06.06.2018 could be sustained in the
absence of law in the form of plenary legislation or subordinate
legislation. The High Court opined that, regardless of the
nature of the levy, such a fee could be imposed only under
the authority of law and not merely by an executive order.
Since there was no provision in the 2017 Act authorizing
the Committee or the State Government to levy an amount
to be credited to a corpus fund, the GO dated 06.06.2018
could not be sustained. Accordingly, the GO was quashed
and the directions, as specified in paragraph 3 above, have
been issued.
5.12 This is how these cross-appeals have arisen for our
consideration.

B. Contentions of the Parties
6. Mr. Kapil Sibal and Mr. Nikhil Goel, Learned Senior Counsel, appearing
on behalf of KMCT Medical College and other self-financing medical
colleges in the State, contended that the High Court has partly erred
and the Impugned Judgement deserves to be suitably modified in
light of the following submissions:
(a) This Court has time and again permitted institutions to charge
a higher amount of fees from NRI students as the fees paid
by them enable such institutions to strengthen their level of
education and enlarge their educational activities. KMCT Medical
College has always followed this dictum and has been using
the enhanced fees levied on NRI students to grant scholarships
to students from economically-weaker sections of society. For
instance, in 2014 and 2015, KMCT Medical College awarded
scholarships worth Rs. 1.28 crores and Rs. 1.55 crores,
respectively, to enable its students from economically-weaker
sections of society to pursue their education.
(b) The fee proposed to be charged from the NRI students was
only Rs. 20 lakhs per annum, which is one of the lowest fees
in the entire country. KMCT Medical College charges only
Rs. 5.5 lakhs per annum as fees for general category students.
Thus, if the tuition fee for NRI students was further reduced
from Rs. 20 lakhs to Rs. 15 lakhs, by virtue of the corpus fund,
the college would be unable to continue financing its day-to-day
activities. Consequently, the failure of the High Court to direct
[2025] 5 S.C.R. 2601

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

a refund, of the amount charged from NRI students towards
the corpus fund, to the institutions is violative of Article 19 (1)
(g) and Article 30 of the Constitution.
(c) The State or the Executive cannot impose any levy, whatever
may be the nature of it, through an executive order, except under
the authority of law. At present, there is no provision in the 2017
Act which empowers the State or its machinery to impose any
tax or levy of any nature on self-financing medical colleges.
The only power granted to the Committee is to satisfy itself
that the fees charged by the self-financing medical educational
institutions do not lead to profiteering or payment of capitation
fees. If the Committee finds the fees charged to be exploitative,
it can propose a different fee structure.
(d) Once the High Court quashed the GO dated 06.06.2018 on
the ground that the Committee was not authorized under
law to create a corpus fund, it could not have permitted such
unauthorized action to continue by directing that the amounts
collected for the corpus fund be utilized only to subsidize
education for other students. The denial of a refund of the
illegally-collected fees has put the self-financing medical colleges
under financial strain.
(e) KMCT Medical College, like other self-financing medical
colleges, specifically requested the Committee to approve its
fixation of fees at Rs. 20 lakhs per annum for NRI students,
under the expectation that if approved, it would be able to
utilize the entire amount of Rs. 20 lakhs for educational
purposes and for running the institution. It was improper and
imprudent of the Committee to approve the fees of Rs. 20
lakhs per annum, only to retain Rs. 5 lakhs for the creation
of the corpus fund.
7. Mr. Shoeb Alam, Learned Senior Counsel, appearing on behalf of the
NRI students, supported the quashing of the GO dated 06.06.2018
but contended that the High Court erred in disallowing a refund to
them. In furtherance of this, he adduced the following submissions:
(a) NRI students are admitted to colleges on a higher fee scale
to subsidize the fees of students from economically-weaker
sections of society. When an NRI student is admitted to a
2602 [2025] 5 S.C.R.

Supreme Court Reports

particular college, the higher fees paid are utilized to subsidize
the fees of a BPL student in that particular college, alone. It is
unfair and unjust that a higher fee charged from NRI students
of a particular college be utilized to subsidize the fees charged
in another college or multiple other colleges in the State.
(b) Paragraph 67 of P. A. Inamdar (supra) states that “each NRI
student would subsidize two other students belonging to the
economically and socially weaker sections.” Thus, if the fee fixed
for a general category student for a particular year is only Rs. 5
lakhs, there is no reason to fix the fees for NRI students above
Rs. 15 lakhs as the NRI student would be subsidizing the fees
of two other students from economically-weaker backgrounds.
As a result, any amount levied as a corpus fund, without the
authority of law, is over and above the amount contemplated
for an NRI student to bear.
(c) In addition to this, some colleges have forced the NRI students
to give post-dated cheques of Rs. 5 lakhs, in advance, to create
the corpus fund. The NRI students are thus either liable to be
refunded the amounts collected under the guise of setting up
the corpus fund or the amounts so collected must be set off
against their future fees.
8. Per contra, Mr. Jayant Muth Raj, Learned Senior Counsel, appearing
on behalf of the State of Kerala, put forth the following submissions:
(a) The GO dated 06.06.2018 was issued in pursuance of paragraph
131 of P. A. Inamdar (supra). The last line of paragraph 131
specifically permitted the Committee to create a mechanism
to subsidize education through the fees collected from NRI
students, in the absence of State Legislation on the subject. The
authority to create the corpus fund thus, came primarily from
the Constitution Bench judgement of this Court, which, being
the law of the land, need not be supplemented or supplanted
by any State Legislation or Regulations.
(b) The conduct of the self-financing medical colleges is questionable
as they have collected the corpus fund amount of Rs. 5 lakhs
in advance from the NRI students who were admitted in the
2017-2018 batch, even in respect of their second, third, fourth,
[2025] 5 S.C.R. 2603

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

and fifth years. They collected Rs. 43.6 crores in total but
remitted only Rs. 4.15 crores to the State for the purpose of
the corpus fund. The college management did the same for the
next 5 successive batches of NRI students, i.e. the batches of
2018-2019, 2019-2020, 2020-2021, 2021-2022, and 2022-2023.
Rs. 145.45 crores were collected from these batches for the
corpus fund, but only Rs. 2 crores have been remitted to the
corpus fund maintained by the Commissioner for Entrance
Examinations. Thus, the colleges have retained a total of
Rs. 182.9 crores from the batches of 2017-2018 to 2022-
2023. As a direct corollary to such action, the State of Kerala’s
larger objective, of subsidizing education for students from
economically-weaker sections of society, has been frustrated.
9. Mr. Gaurav Aggarwal, Learned Senior Counsel, appearing on behalf
of the intervenors, i.e. certain BPL students admitted to various self-
financing medical colleges across Kerala, supported the GO dated
06.06.2018 and put forth the following submissions:
(a) The GO dated 06.06.2018 was adopted as a welfare measure
by the State of Kerala. The object of the GO dated 06.06.2018
was laudable and the observations of this Court in P. A.
Inamdar (supra) clearly compel the State to adopt such a
course of action. The GO dated 06.06.2018 should not have
been quashed merely due to the absence of legislative support.
The Courts should ordinarily not interfere with a policy decision
of the Executive unless the same is mala fide, unreasonable,
arbitrary, or unfair.
(b) After the High Court directed that no further amount should be
credited towards the corpus fund, many BPL students have
been finding it difficult to continue their studies due to financial
hardships. Not only this, the self-financing medical institutions
are exerting pressure on BPL students to remit the regular
tuition fees. These students chose to take admission to the
respective colleges, with the understanding that they would
only have to pay subsidized fees. Since they no longer receive
BPL scholarships, they have been unable to pay their tuition
and hostel fees and many of them will be forced to discontinue
their studies.
2604 [2025] 5 S.C.R.

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C. Issues
10. Having given our thoughtful consideration to the submissions at
length, we find that the following issues arise for our consideration:
i. Whether the Committee had the power to determine and direct
that a particular amount of the fees charged to NRI students
be kept in a corpus fund maintained by the State?
ii. Whether the NRI students are entitled to a refund of the amount
so charged or whether it can be set off against fees to be
charged for later years?

D. Analysis

D.1 Issue No. 1: Power of the Committee to direct the creation
of a corpus fund for scholarships
11. To understand and deduce the powers of the Committee, we must
conduct a detailed examination of the two sources from where it
is stated to have derived its powers: (i) The Constitution Bench
Judgement of this Court in P. A. Inamdar (supra); and (ii) Section
8A and Section 11 of the 2017 Act.

D.1.1 The Constitution Bench Judgement of this Court in P. A.
Inamdar (supra)
12. Before we delve into the analysis, it will be useful to reproduce the
text of paragraph 131 of P. A. Inamdar (supra) to appreciate the
rival submissions raised by the parties. It elucidates that:
“131. Here itself we are inclined to deal with the question
as to seats allocated for Non-Resident Indians (“NRI” for
short) or NRI seats. It is common knowledge that some
of the institutions grant admissions to a certain number of
students under such quota by charging a higher amount
of fee. In fact, the term “NRI” in relation to admissions is
a misnomer. By and large, we have noticed in cases after
cases coming to this Court, neither the students who get
admissions under this category nor their parents are NRIs.
In effect and reality, under this category, less meritorious
students, but who can afford to bring more money, get
[2025] 5 S.C.R. 2605

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

admission. During the course of hearing, it was pointed
out that a limited number of such seats should be made
available as the money brought by such students admitted
against NRI quota enables the educational institutions to
strengthen their level of education and also to enlarge
their educational activities. It was also pointed out that
people of Indian origin, who have migrated to other
countries, have a desire to bring back their children to their
own country as they not only get education but also get
reunited with the Indian cultural ethos by virtue of being
here. They also wish the money which they would be
spending elsewhere on education of their children should
rather reach their own motherland. A limited reservation
of such seats, not exceeding 15%, in our opinion, may
be made available to NRIs depending on the discretion
of the management subject to two conditions. First, such
seats should be utilised bona fide by NRIs only and for
their children or wards. Secondly, within this quota, merit
should not be given a complete go-by. The amount of
money, in whatever form collected from such NRIs,
should be utilised for benefiting students such as from
economically weaker sections of the society, whom,
on well-defined criteria, the educational institution
may admit on subsidised payment of their fee. To
prevent misutilisation of such quota or any malpractice
referable to NRI quota seats, suitable legislation or
regulation needs to be framed. So long as the State
does not do it, it will be for the Committees constituted
pursuant to the direction in Islamic Academy [(2003)
6 SCC 697] to regulate.”
[Emphasis supplied]

13. In this regard, the State of Kerala and the intervenor-BPL students
have vehemently asserted that this Court, in the above-reproduced
paragraph, has unequivocally obligated each institution to subsidize
the fees charged to students from economically-weaker sections of
society through fees paid by NRI students. Until suitable legislation
is made by the State, the Committee is obliged to regulate such
2606 [2025] 5 S.C.R.

Supreme Court Reports

subsidization. The Committee, therefore, was justified in creating
the corpus fund.
14. Per contra, KMCT Medical College, other self-financing medical
colleges, and some NRI students contend that P. A. Inamdar (supra)
does not grant the Committee the power to create a corpus fund; the
power to do so resides only with the State. The relevant paragraph
only grants the Committee the ability to regulate admissions to the
NRI quota to prevent its misutilization.
15. It is clear that paragraph 131 of P. A. Inamdar (supra) validates
and encourages the idea of charging higher fees to NRI students
in order to subsidize education for students from economically-
weaker or backward sections of society, who are admitted to those
colleges. This aligns with the ideals of a welfare State. It cannot
possibly be contested that the Committee, in the instant case, has
not been constituted in line with the directives given by the 5-judge
Bench of this Court in Islamic Academy of Education v. State of
Karnataka.4
16. On a thorough reading of the paragraph, it further appears that the
powers granted to the Committee only concern the rules of allotment
of seats in the NRI quota, with particular emphasis on preventing
misutilization of the allotted quota and seats. The Committee is also
permitted to frame such rules only till the time the State fails to do
so. From the phrase, “To prevent misutilisation of such quota or any
malpractice referable to NRI quota seats,” which precedes the State’s
mandate to enact a suitable Legislation or frame Regulations, it is
clear that the Committee constituted in Islamic Academy (supra) has
been authorized to regulate NRI admissions. The power conferred
on the Committee, in this regard, is necessarily meant to prevent
misutilization of the NRI quota or any malpractice referable to that
quota. Conversely, the above-reproduced paragraph is silent on the
creation of any mechanism to subsidize fees for other students and
does not confer any power on the Committee in this regard. It is
difficult to accept that the Committee can create a corpus fund on
the strength of the transitional powers given to it in P. A. Inamdar
(supra). The power to formulate creative solutions, such as a corpus

4 Islamic Academy of Education v. State of Karnataka, (2003) 6 SCC 697, para 7.
[2025] 5 S.C.R. 2607

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

fund, to benefit students from economically-weaker sections of society
resides only with the State, which should be introduced through
appropriate Legislation or Regulations.
17. The last line of paragraph 131, which mentions that the Committee
will act as per the directions issued in Islamic Academy (supra),
leaves no room to doubt that the powers of the Committee to regulate
NRI seats are not boundless. For better appreciation, it will be useful,
at this stage, to refer to paragraph 7 of Islamic Academy (supra),
which pertains to the constitution and the powers of the Committee.
It reads as follows:
“7. So far as the first question is concerned, in our view
the majority judgment is very clear. There can be no
fixing of a rigid fee structure by the Government. Each
institute must have the freedom to fix its own fee structure
taking into consideration the need to generate funds to
run the institution and to provide facilities necessary for
the benefit of the students. They must also be able to
generate surplus which must be used for the betterment
and growth of that educational institution. In paragraph 56
of the judgment it has been categorically laid down that
the decision on the fees to be charged must necessarily
be left to the private educational institutions that do not
seek and which are not dependent upon any funds from
the Government. Each institute will be entitled to have
its own fee structure. The fee structure for each institute
must be fixed keeping in mind the infrastructure and
facilities available, the investments made, salaries paid to
the teachers and staff, future plans for expansion and/or
betterment of the institution etc. Of course there can be no
profiteering and capitation fees cannot be charged. It thus
needs to be emphasized that as per the majority judgment
imparting of education is essentially charitable in nature.
Thus the surplus/profit that can be generated must be only
for the benefit/use of that educational institution. Profits/
surplus cannot be diverted for any other use or purpose
and cannot be used for personal gain or for any other
business or enterprise. As, at present, there are statutes/
regulations which govern the fixation of fees and as this
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Court has not yet considered the validity of those statutes/
regulations, we direct that in order to give effect to the
judgment in T.M.A. Pai case [(2002) 8 SCC 481] the
respective State Governments/concerned authority
shall set up, in each State, a committee headed by a
retired High Court Judge who shall be nominated by
the Chief Justice of that State. The other member, who
shall be nominated by the Judge, should be a Chartered
Accountant of repute. A representative of the Medical
Council of India (in short “MCI”) or the All India Council for
Technical Education (in short “AICTE”), depending on the
type of institution, shall also be a member. The Secretary
of the State Government in charge of Medical Education
or Technical Education, as the case may be, shall be a
member and Secretary of the Committee. The Committee
should be free to nominate/co-opt another independent
person of repute, so that the total number of members of
the Committee shall not exceed five. Each educational
institute must place before this Committee, well in advance
of the academic year, its proposed fee structure. Along
with the proposed fee structure all relevant documents
and books of accounts must also be produced before the
Committee for their scrutiny. The Committee shall then
decide whether the fees proposed by that institute are
justified and are not profiteering or charging capitation
fee. The Committee will be at liberty to approve the
fee structure or to propose some other fee which
can be charged by the institute. The fee fixed by the
Committee shall be binding for a period of three years, at
the end of which period the institute would be at liberty to
apply for revision. Once fees are fixed by the Committee,
the institute cannot charge either directly or indirectly any
other amount over and above the amount fixed as fees.
If any other amount is charged, under any other head or
guise e.g. donations, the same would amount to charging
of capitation fee. The Governments/appropriate authorities
should consider framing appropriate regulations, if not
already framed, whereunder if it is found that an institution
is charging capitation fees or profiteering that institution
[2025] 5 S.C.R. 2609

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

can be appropriately penalised and also face the prospect
of losing its recognition/affiliation.”
[Emphasis supplied]

18. It becomes evident from the above extract that the Committee
may only decide whether the fees proposed by the institution are
exploitative or not. Islamic Academy (supra) makes no mention of
the Committee’s discretionary power to divert a part of the approved
fees for any purpose, howsoever noble it may be, including for
the purpose of creating a corpus fund. Once the colleges submit
their proposals to it, the Committee must examine all the heads to
determine whether such proposed fee is reasonable. The Committee
is also empowered to propose an alternative fee structure in the
event of profiteering or charging of capitation fee by the college.
19. A conjoint reading of paragraph 131 of P. A. Inamdar (supra) and
paragraph 7 of Islamic Academy (supra) amplifies the idea that
the Committee’s power is not limitless. Such a combined reading
leads us to the conclusion that: (i) the Committee is competent to
prescribe fees in respect of the NRI quota in self-financing medical
educational institutions until the State enacts appropriate Legislation
or Regulations; and (ii) the Committee cannot draw unlimited powers
under the guise of ‘regulation of NRI quota/seats.’ In other words, the
Committee can only make rules for admission to such seats and can
review the fees charged to NRI students to ensure that they are not
exploitative. This is the cumulative power granted to the Committee
within which it must act. The Committee cannot perforate these
bounds unless and until its power is expanded through a suitable
Legislation or upon a direction by this Court.
20. In light of the above, it is evident that paragraph 131 of P. A. Inamdar
(supra) does not clothe the Committee with the power to create
a corpus fund for the benefit of economically-weaker students. It
only directs the State to come up with a suitable plan to subsidize
their education through the fees charged from NRI students. The
Committee cannot usurp the powers vested in the State in this regard.

D.1.2 Section 8A and Section 11 of the 2017 Act
21. Given that we have established the confines of the directions in P. A.
Inamdar (supra), it is also necessary to ascertain whether the State
2610 [2025] 5 S.C.R.

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has accounted for the proposed scholarship scheme/corpus fund
through the aegis of the 2017 Act, which constitutes the Committee
and regulates its functions.
22. Before we proceed further, we must take a glance at Section 8A
and Section 11 of the 2017 Act. These provisions read as follow:
“8A. Powers and functions of the Fee Regulatory
Committee: (1) The Committee shall exercise the following
powers and perform the following functions, namely: (a)
require a private medical educational institution to furnish,
within a specified date, information, documents or records
as may be necessary for enabling the Fee Regulatory
Committee to determine the fee that may be charged by
the institution in respect of each medical course;
[***]
hear complaints with regard to admission in contravention
of the provisions of this Act or the rules made thereunder
either on receipt of a complaint or suo motu and shall:
[***]
(2) The [Fee Regulatory Committee] shall, for the purpose
of making any enquiry under this Act, have all the powers
of a civil court under the Code of Civil Procedure, 1908
(Central Act 5 of 1908) while trying a suit in respect of the
following matters, namely: (a) summoning and enforcing
the attendance of any witness and examining him on
oath; (b) requiring the discovery and production of any
document; (c) receiving evidence on affidavit.
(3) The fee determined by the Fee Regulatory Committee
shall be applicable to a student who is admitted to a private
medical educational institution in that academic year and
shall not be revised till the completion of his course in the
said institution or University. No private medical educational
institution shall collect a fee amounting to more than one
year’s fee from a student in an academic year. Collection
of more than one year’s fee in an academic year shall be
construed as collecting of capitation fee and shall be liable
to be proceeded against.
[2025] 5 S.C.R. 2611

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

(4) The Fee Regulatory Committee may, if it is satisfied
that there has been any violation by such institution of
the provisions of this Act or the rules made thereunder
regarding [***] fees, it may recommend to the Government
to take the following actions against such institution,
namely:
(a) impose a monetary fine up to ten lakh rupees on
the institution together with interest thereon at the
rate of twelve per cent per annum which shall be
recovered as if it were an arrear of public revenue
due on land;
(b) order the institution to refund to the student within
such time as specified in the order, any amount
received by the institution in excess of the fees fixed
by the Fee Regulatory Committee or any amount
received by way of capitation fee or any amount
received for profiteering:
Provided that if the institution fails to refund the
amount within the specified time to the student, the
same shall be recoverable along with interest thereon
at the rate of twelve per cent per annum as if it were
an arrear of public revenue due on land and paid to
the student;
(c) recommend to the University or the appropriate
authority to withdraw the recognition of the institution;
(d) any other course of action, as it deems fit.
(5) Before recommending to the Government to initiate
actions under subsection (4) the institutions shall be given
a reasonable opportunity of being heard.
11. Factors for determination of fee: (1) the Fee
Regulatory Committee shall determine the fee considering
the following factors, namely:
(a) the location of the private medical educational
institution;
(b) the nature of the medical course;
(c) the cost of land and building;
2612 [2025] 5 S.C.R.

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(d) the available infrastructure, teaching and non-
teaching staff and other equipments;
(e) the expenditure on administration and maintenance
of the medical educational institution;
(f) a reasonable surplus required for growth and
development of the medical educational institution;
(g) any other relevant factor.
(2) The Fee Regulatory Committee shall, before fixing
any fee, give the institution a reasonable opportunity of
being heard:
Provided that no such fee as may be fixed by the Committee
shall amount to profiteering or commercialization of
education.”
23. Relying upon these provisions, the NRI students and the self-financing
medical colleges support the Impugned Judgement to the extent that
the GO dated 06.06.2018 was quashed on the premise that the State
could not levy any amount without statutory backing permitting such
levy. They contend that, at present, there is no provision in the 2017
Act which empowers the State or its machinery to impose any fee or
levy of any nature on self-financing medical educational institutions
for the purpose of creating a corpus fund.
24. Per contra, the State of Kerala and the intervenor-BPL students
contend that the GO dated 06.06.2018 did not offend any provision
of the 2017 Act and was issued as a welfare measure by the State;
to ensure that meritorious students belonging to weaker sections
of society receive the opportunity to pursue quality education. The
GO dated 06.06.2018 specifically authorized the Committee to levy
an amount towards the creation of a corpus fund for such laudable
purpose. There was thus, no need for the insertion of any provision
in the Statute.
25. It is well-settled law that a recourse to expropriatory measures cannot
be sheltered under a piece of subordinate Legislation, save and
except where the power is drawn from the competent Legislation.
The power to levy tax or fee cannot be delegated to the Executive
unless the principal Statute expressly authorizes to do so. Though
the Committee indeed enjoys vast powers and functions under
[2025] 5 S.C.R. 2613

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

Section 8A of the 2017 Act, as reproduced above, such power is
exercisable only for the purpose of determining the fee structure of
the self-financing medical educational institutions. To put it in simpler
terms, there is nothing discernible in Section 8A of the 2017 Act,
based on which the Committee can assert its power to divert a part
of the fee determined by it or issue a direction regarding how such
diverted fee is to be utilized. We also find that Section 8A of the 2017
Act does not permit the levy of any amount which will ultimately be
retained by the State, regardless of its purpose. Similarly, Section
11 of the 2017 Act does not require the Committee to consider
the creation of scholarships as a relevant factor to determine and
approve the fee proposal submitted by a particular institution. Even
assuming that the creation of a corpus fund for scholarships can be
protected under the omnibus clause (g) of Section 11, whereunder
the Committee can take into account “any other relevant factor”
while determining the fee structure, such power cannot be exercised
unless the Legislature authorizes the Committee to create a corpus
fund or to prescribe its utility.
26. For the reasons aforesaid, the High Court was correct in striking
down the GO dated 06.06.2018 as devoid of any authority of law.
27. At this juncture, it is pertinent to clarify that though we appreciate
the State’s initiative to implement the welfare measures envisioned
in paragraph 131 of P. A. Inamdar (supra), the same cannot be
justified when it is implemented without the proper authority of law.
Howsoever laudable, pious, or noble the objective behind the GO
dated 06.06.2018 may be, it cannot be legitimized unless its genesis
is traceable to a legislative action.

D.2 Issue No. 2: The NRI students’ entitlement towards a refund or
set-off
28. Since we have firmly set forth that the corpus fund could not have
been created or maintained by the Committee, we must turn our
attention to the next pressing issue, i.e. whether the NRI students are
entitled to a refund of the amount so collected or whether it should
be set-off against fees charged for later years?
29. The NRI students contend that when the imposition of such an amount
has been held to be illegal, there is no reasonable justification for
the State or the self-financing medical colleges to retain it. Further,
2614 [2025] 5 S.C.R.

Supreme Court Reports

these students claim that paragraph 67 of P. A. Inamdar (supra)
only requires an NRI student to subsidize two other students’ fees.
Accordingly, it is their specific contention that when the fees for
regular students are set at Rs. 5 lakhs per annum, the NRI students
cannot be charged more than Rs. 15 lakhs per annum.
30. Contrarily, the self-financing medical colleges contend that the fees
charged under the heading of ‘corpus fund’ should be returned to
them to enable their continued functioning. The amounts collected
for the corpus fund were unfairly deducted from the proposals
submitted, leaving the colleges to function with fees much lower than
what was genuinely projected by them. The fees charged from NRI
students are utilized not only to subsidize education for students from
economically-weaker backgrounds but also for various upkeep and
continuous development expenses to improve the quality of education.
31. The State of Kerala, however, contends that though the self-financing
medical colleges were required to remit Rs. 5 lakhs received from
each NRI student to the corpus fund, they have not been doing so.
As a result, the colleges have retained a total of Rs. 182.9 crores
from the batches of 2017-2018 to 2022-2023.
32. Two 5-judge Benches of this Court in Islamic Academy (supra)
and Modern Dental College (supra) have unequivocally held that
the Government cannot fix rigid fee structures for self-financing
institutions. Further, each institute must have the freedom to fix its
own fee structure by taking into consideration the need to generate
funds to run the institution and to provide facilities necessary for the
benefit of the students. These institutes are permitted to generate
surplus, which must be used for the betterment and growth of that
educational institution. The fee structure for each institute must be
fixed keeping in mind the infrastructure and facilities available, the
investments made, salaries paid to the teachers and staff, future plans
for expansion and/or betterment of the institution, etc. Though the
fees may differ from one institution to another, owing to the quality
of education imparted, no institution can be permitted to charge
excessive or exploitative fees leading to profiteering or charging of
capitation fees.
33. The cited judgements have further explained that 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
[2025] 5 S.C.R. 2615

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

scholarships. Accordingly, the fees for NRI students cannot be
determined solely considering the factor of subsidization of education;
all the above-stated factors must be taken into account. Resultantly,
the NRI students’ contention that their fees should be restricted to
only subsidize the education of only two students from economically-
weaker sections of society falls flat and cannot be considered a valid
reason for a refund.
34. When a self-financing medical educational institution presents its
fee proposal for a particular academic year, it has done so keeping
in mind its own needs, present and future. It is the responsibility of
the Committee to consider all the comprehensive requirements and
the principles enunciated in Islamic Academy (supra) and Modern
Dental College (supra), when assessing those proposals. The
Committee must ascertain that the fees proposed will not exploit the
students and lead to profiteering by the management of the medical
colleges. This is why such Committees have been set up, not just
in Kerala, but in various States across the country.
35. Since the self-financing institutions are the best judge of their own
needs and expenses, there appears to be no reason why they cannot
retain the amount that was to be transferred to the corpus fund, when
those amounts came out of the fee structures already approved by
the Committee. By approving the proposals at the relevant time, the
Committee has signified that the fees proposed to be charged were
reasonable and did not amount to profiteering.
36. In the same vein, self-financing medical educational institutions that
were aggrieved by the Committee’s actions and sought reconsideration
of their proposals from 2017-2018 onwards by virtue of directions
issued by this Court in Najiya Neermunda v. Kunhitharuvai
Memorial Charitable Trust,5 are also entitled to retain the amount
claimed by the State under the heading of ‘corpus fund,’ if any.
37. After allowing the colleges to retain the fees which were to be diverted
towards the corpus fund, we are of the considered view that the self-
financing medical educational institutions are under the obligation
to provide quality education to the BPL students who were admitted
to those colleges. No additional fees of any nature, therefore, shall

5 Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust, (2021) 5 SCC 515.
2616 [2025] 5 S.C.R.

Supreme Court Reports

be charged from the BPL students, over and above the subsidized
fee that they were required to pay as per the Committee’s approved
fee structure. To clarify, a substantial part of the amount which we
have allowed the colleges to retain shall have to be utilized by them
for subsidizing the education of the BPL students. The Committee
or the State Government shall, in this regard, be well within their
right to direct the colleges to furnish their accounts and establish
that the directions issued hereinabove have been complied with.
To this extent, the self-financing medical educational institutions
are merely designated as the trustees of the ‘corpus fund’ amount,
without permitting it to be utilized by them as per their own free will.
Such an arrangement shall continue till an appropriate Legislation
is enacted by the State.
38. This batch of appeals and their parallel proceedings have caused
confusion and chaos for medical education in the State of Kerala for
years. This case seems to be the closing act, which will hopefully
provide finality and certainty to all the stakeholders.

E. Conclusion and Directions
39. In light of above discussion, we deem it appropriate to allow the
appeal by the self-financing medical colleges in part; dismiss the
appeals filed by the State of Kerala and the NRI students; and modify
the Impugned Judgment of the High Court dated 23.07.2020, with
the following directions and conclusions:
i. The High Court was correct in quashing the Government Order
(MS) No. 107/2018/H&FWD dated 06.06.2018;
ii. If the State seeks to establish a corpus fund or any other such
mechanism to subsidize education for students from weaker
backgrounds, in line with the vision enshrined in P. A. Inamdar
(supra), it may do so by enacting suitable Legislation to that
effect;
iii. 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, as per the directions
contained in paragraph 37 of this judgement;
[2025] 5 S.C.R. 2617

The State of Kerala Etc. Etc. v.
The Principal, KMCT Medical College and Ors. Etc. Etc.

iv. The BPL students, who were admitted on the basis of scholarship
schemes or who are to be admitted in future, shall not be
required to pay the full, regular fees. They will continue to pay
fees at the subsidized rate fixed by the State or the Committee.
If they have paid any fees, over and above the subsidized
amount promised, they are entitled to a refund of the amounts
so paid. Alternatively, those amounts may be set-off against
the fees to be charged for later years. Such a refund must be
made within 3 months;
v. The State of Kerala is directed to release the fees collected for
the creation of a corpus fund back to the respective colleges
within a period of 3 months without prejudice to the right and
responsibility assigned in paragraph 37 of this judgement;
vi. The NRI students are not entitled to a refund of the amount
transferred to the State for the creation of the ‘corpus fund.’ They
are directed to pay the entire fees to their respective colleges,
as approved by the Admission and Fee Regulatory Committee,
if not already done, within 3 months; and
vii. The State of Kerala or the Admission and Fee Regulatory
Committee is at liberty to direct the colleges to furnish their
accounts to establish that the directions given herein have
been complied with.
40. Ordered accordingly. Pending applications if any, are to be disposed
of in the above terms.

Result of the case: Appeals disposed of.

†
Headnotes prepared by: Harshit Anand, Hony. Associate Editor
(Verified by: Liz Mathew, Sr. Adv.)