The Supreme Court in a judgment on Monday held that education is not a business to earn profit as it set aside an Andhra Pradesh government order of 2017 prescribing a seven-fold increase in MBBS fees that made it ₹24 lakh per annum.
Directing the private colleges to refund the amount collected in excess of the fees last fixed by the state government in 2011, a bench of justices MR Shah and Sudhanshu Dhulia said, “Education is not the business to earn profit. The tuition fee shall always be affordable.”
The order came on a petition filed by the Narayana Medical College challenging a September 2019 decision of the Andhra Pradesh high court striking down the fee increase and ordering refund to students admitted in the college since the academic year 2017-18. The apex court dismissed the petition with cost of ₹5 lakh to be borne equally by the petitioner college and state government and deposited in court within six weeks. The amount was directed for use in legal services by the Supreme Court Mediation and Conciliation Committee and the National Legal Services Authority.
The top court agreed with the conclusion made by the high court and said, “To enhance the fee to ₹24 lakh per annum, I.e., seven times more than the fee fixed earlier was not justifiable at all.” The aggrieved medical students who had to pay through their nose had said that the government order raising the fees issued on September 6, 2017 was done without awaiting the recommendation of the Admission and Fee Regulatory Committee (AFRC).
The bench held the order passed by the state government to be “wholly impermissible and most arbitrary”. The court even went to the extent of saying that the hike was done “only with a view to favour or oblige the private medical colleges.”
“Any enhancement of the tuition fee without the recommendation of the AFRC shall be contrary to the decision of this court in case of P.A Inamdar in 2005 and the relevant provisions of the 2006 AFRC Rules (prevailing in the state). The high court has rightly quashed and set aside the GO dated September 6, 2017.”
The students pointed out that in 2011, the tuition fee hike was introduced by the state after consulting AFRC. However, in 2019, the state acted solely on representations received from private medical colleges. Rule 4 of the Admission and Fee Regulatory Committee (for Professional Courses offered in Private, Unaided Professional Institutions) Rules, 2006 mandated the state to seek a prior report from AFRC before altering the fee.
This rule required AFRC to factor in the location of the institution, nature of professional course, cost of available infrastructure, expenditure on administration and maintenance, reasonable surplus required for growth and development of the institution, revenue foregone on account of waiver of fee in respect of students from reserved category or economically weaker sections (EWS) of the society.
The top court said, “Determination of fee/review of fee shall be within the parameters of the fixation rules and shall have the direct nexus on the factors mentioned in Rule 4 of the 2006 Rules…the state government enhanced the tuition fee at an exorbitant rate of ₹24 lakh per annum, almost seven times the tuition fee notified for the previous block period.”
The next question arose regarding refund as ordered by the high court in its order of September 24, 2019. The high court said that the colleges cannot take benefit of the unjust enrichment in fees that was wrongly increased. Accordingly, it asked the colleges to refund the students after adjusting the amounts payable under the earlier fee structure recommended by AFRC and issued in June 2011.
The bench upheld this part of the high court order and said, “The medical colleges are the beneficiaries of the illegal GO which is rightly set aside by the high court.” The bench was conscious of the hardships faced by students who arranged to pay the amount by obtaining loan from banks and financial institutions at high rate of interest. “The management cannot be permitted to retain the amount recovered or collected pursuant to the illegal GO,” it held.
The college told the Supreme Court that between 2011 and 2017, they incurred added expenses due to the requirement introduced in 2016 to pay stipend to students even as the fee remained unchanged since 2011. The bench told the college that this component would be compensated as and when the higher tuition fee is fixed by AFRC. However, the court did not permit the college to retain the illegally collected amount.