SC: NRI FEES CAN'T BE SOLELY USED TO SUBSIDISE BPL STUDENTS IN PRIVATE COLLEGES:

The Supreme Court recently ruled that fees collected from Non-Resident Indian (NRI) students can be used for various purposes, and NRI students cannot demand that their fees be used exclusively to subsidize the education of students from the Below Poverty Line (BPL) category.

"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. Accordingly, the fees for NRI students cannot be determined solely considering the factor of subsidization of education...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" observed a bench of Justices Surya Kant and N Kotiswar Singh.

The Court was addressing a challenge to the directives issued by the Fee Regulatory Committee, which was established under the Kerala Medical Education Act, 2017, for determining fees in self-financing institutions offering MBBS courses. The Committee had directed that a portion of the fee collected from the NRI quota be deposited into a corpus fund intended to provide scholarships or financial assistance to students from the Below Poverty Line (BPL) category.

Certain self-financing medical institutions requested that the corpus fund be released in their favor, asserting that the fees collected from NRI students are not solely used to subsidize the education of economically weaker students, but also contribute to ongoing maintenance and development expenses aimed at enhancing the quality of education. In contrast, the NRI students sought a refund of the amount, relying on the precedent set in P.A. Inamdar v. State of Maharashtra, where it was held that they were only obligated to subsidize the fees of two other students.

However, the Court dismissed the argument presented by the NRI students, citing Constitution Bench rulings in Islamic Academy of Education v. State of Karnataka and Modern Dental College & Research Centre v. State of Madhya Pradesh. These rulings clarified that while the government has a role in regulating fees, it cannot impose rigid fee structures on self-financing institutions.

"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 Court said.

It further added, "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." Keeping in mind all the factors, it was concluded that NRI students cannot insist on their fees being utilized only for the purposes of subsidizing fees of BPL/EWS students.