THE STATE OF KERALA AND ORS. V. THE PRINCIPAL, KMCT MEDICAL COLLEGE AND ORS 2025 INSC 518:

DATE: 16/05/2025

COURT: Supreme Court of India

BENCH: Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh

FACTS:

The Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, was enacted to regulate admissions and determine fee structures in private medical colleges across the State of Kerala. Under this framework, KMCT Medical College submitted an application along with its prospectus for the Academic Year 2017–2018 to the Fee Regulatory Committee, seeking approval to fix the annual fee for NRI students at ₹20 lakhs. On February 27, 2018, the Committee approved an increase in the NRI fee from ₹15 lakhs (as applicable in 2016–2017) to ₹20 lakhs per annum for the academic years 2017–2018 and 2018–2019. However, it imposed a condition that the additional ₹5 lakhs would be treated as a ‘corpus fund’ to provide scholarships for students from Below Poverty Line (BPL) families, and this corpus amount was to be remitted to the State Government.

Feeling aggrieved by this directive, KMCT Medical College challenged the Committee’s decision before the Kerala High Court. While the writ petition was still pending, the State Government issued a Government Order dated June 6, 2018, effectively endorsing and validating the Committee’s decision. Meanwhile, the Committee continued to examine and rule on fee proposals submitted by other private medical institutions. Several of these colleges viewed the Committee’s actions—particularly the imposition of fund allocation conditions—as exceeding its statutory powers and infringing upon institutional autonomy. Consequently, multiple medical colleges approached the High Court through writ petitions. In its judgment remanding the matter, the High Court clarified that although the Committee was empowered under the Act to determine the fees payable by NRI students, it had no authority under Section 8 to mandate the diversion of any portion of that fee for alternative uses such as scholarship funds.

ISSUES:

The key issues presented in this case revolved around the legality of the Government of Kerala’s direction to private self-financing medical colleges to allocate a portion of the NRI student fees toward a ‘corpus fund’ meant to subsidize education for students from Below Poverty Line (BPL) backgrounds. The case examined whether the Admission and Fee Regulatory Committee had the authority under the Kerala Medical Education Act, 2017, to impose such a financial obligation, and whether the subsequent Government Order dated June 6, 2018, validating this requirement was lawful. Additional issues included the entitlement of medical colleges to retain the fees previously transferred to the State, the refund or adjustment of excess fees paid by BPL students, and the responsibilities of the State and colleges in implementing scholarship mechanisms within the bounds of existing law.

JUDGEMENT WITH REASONING:

The Supreme Court, while allowing the appeals filed by self-financing medical colleges in part, dismissed the appeals filed by the State of Kerala and NRI students. It upheld the Kerala High Court’s decision to quash the Government Order dated June 6, 2018, and ruled that the Admission and Fee Regulatory Committee lacked the statutory authority to mandate the creation of a corpus fund from NRI student fees. The Court directed that the fees previously transferred for the corpus fund be returned to the respective colleges within three months and clarified that BPL students should continue receiving subsidized education. NRI students were ordered to pay the full approved fees to the colleges, with no entitlement to refunds.

The Court’s reasoning was rooted in constitutional and statutory interpretation, primarily focusing on the limits of the powers conferred upon the Fee Regulatory Committee under Section 8A of the Kerala Medical Education Act, 2017. Referring to the landmark judgments in P.A. Inamdar v. State of Maharashtra and Islamic Academy of Education v. State of Karnataka, the Bench clarified that while the State has the discretion to devise schemes for aiding economically weaker sections, the Committee itself cannot assume legislative powers or divert fee funds for objectives beyond its mandate. The Court found that the Committee's directive to allocate a portion of NRI fees toward a corpus fund for BPL scholarships was an overreach and lacked a legal foundation, as there was no express provision in the Act empowering the Committee to enforce such financial diversions or to retain such amounts for the State.

Furthermore, the Court underscored the principle that the autonomy of private self-financing institutions must be preserved unless limited by clear statutory authority. While supporting the broader goal of equitable access to education for economically disadvantaged students, the Court emphasized that such objectives must be pursued through legitimate legislative mechanisms rather than administrative overreach. The Bench acknowledged the importance of subsidizing education for BPL students and permitted the colleges to use previously diverted funds for this purpose under its own direction. However, it made clear that future implementation of such schemes must follow legislative processes. It also upheld the High Court's finding that the Government Order lacked legal backing and reiterated that any financial contributions from students must be transparently regulated under the law, ensuring accountability without infringing on institutional autonomy.

ANALYSIS:

This case is a significant reaffirmation of the legal boundaries placed on regulatory bodies like the Admission and Fee Regulatory Committee, particularly in the context of private medical education. The Supreme Court meticulously analyzed the statutory framework under the Kerala Medical Education Act, 2017, and emphasized that the Committee's role is limited to regulating admissions and determining reasonable fees. It cannot extend its authority to create or enforce financial obligations such as a corpus fund, especially without any express legislative sanction. The Court’s reliance on precedents like P.A. Inamdar and Islamic Academy of Education reinforces the constitutional protection of institutional autonomy in private education, while also distinguishing the responsibilities of the State and statutory committees. The ruling thus draws a clear line between regulatory oversight and administrative overreach.

At the same time, the Court acknowledged the legitimacy and necessity of subsidizing education for economically weaker students, but clarified that such welfare objectives must be pursued through valid legislative action, not by executive orders or committee mandates lacking statutory basis. The decision strikes a balance between protecting the autonomy of self-financing institutions and preserving the State’s role in advancing social equity in education. By permitting colleges to retain previously collected corpus funds for scholarship purposes under judicial guidance, the Court ensured that BPL students are not left disadvantaged, while also curbing unauthorized imposition on institutions. This case therefore serves as a constitutional checkpoint, ensuring that well-intentioned policies are executed within the framework of law, respecting both institutional rights and public interest.