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Narayana Medical College vs The State of Andhra Pradesh & Ors.

SLP (C) · 2022 INSC 1183Decided 7 Nov 2022
SLP (C) Nos. 2969-2970 of 2021
M.R. Shah · Sudhanshu Dhulia

Background

Under Andhra Pradesh's 2006 fee-regulation Rules (framed pursuant to the Supreme Court's P.A. Inamdar judgment), tuition fees for private medical colleges must be fixed only on the recommendation of an Admission and Fee Regulatory Committee (AFRC). For the 2017-2020 block period, without waiting for the AFRC's report, the State Government issued a 2017 order unilaterally hiking tuition fees to about Rs. 24 lakhs per year: nearly seven times the earlier rate. The High Court struck down this hike and ordered the colleges to refund the excess collected from students.

Decision Breakdown

The Supreme Court upheld the High Court's ruling in full. It held that the State could not bypass the AFRC's statutory role by unilaterally raising fees on the colleges' representations, and that doing so violated both the 2006 Rules and the Inamdar principle that education is not a profit-making business. The Court rejected the college's plea to be spared from refunding the excess fee already collected, holding that a beneficiary of an illegal government order cannot be allowed to retain money wrongfully recovered from students who, in many cases, had taken bank loans to pay it. The appeals were dismissed, and, notably, costs of Rs. 5 lakhs were imposed jointly on the college and the State, to be paid to NALSA and the Supreme Court's Mediation and Conciliation Project Committee.

Lesson Learnt

Statutory fee-regulation mechanisms exist precisely to prevent unilateral fee hikes by private educational institutions and governments acting in concert; students who are overcharged under an illegal order are entitled to a refund, and the institutions that benefited cannot simply retain the money.

Official source (sci.gov.in)View Judgment (PDF)

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