Without enacting law, state can't create corpus fund from NRI medical students' fees to subsidise BPL candidates: SC

New Delhi: The Supreme Court has said that the State can't create a corpus fund from fees of the NRI students of self-financing medical colleges colleges to subsidise education for students from economically weaker sections of society without enacting a law.

A bench of Justices Surya Kant upheld the Kerala High Court's 2020 judgment which set aside the Kerala government's 2018 order.

"Though we appreciate the State’s initiative to implement the welfare measures envisioned in P A Inamdar case (2005), 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 (government order) may be, it cannot be legitimised unless its genesis is traceable to a legislative action," the court said.

The court pointed out under the Kerala Medical Education (Regulation and Control of Admission to Private Medical Educational Institutions) Act, 2017, such power cannot be exercised unless the Legislature authorises the Admission and Fee Regulatory Committee to create a corpus fund or to prescribe its utility.

The court highlighted 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 and the power to levy tax or fee cannot be delegated to the executive unless the principal statute expressly authorises to do so.

"If the State seeks to establish a corpus fund or any other such mechanism to subsidise education for students from weaker backgrounds, in line with the vision enshrined in P A Inamdar Vs State of Maharashtra (2005), it may do so by enacting suitable legislation to that effect," the bench said.

The court held that the High Court was correct in striking down the GO as devoid of any authority of law.

The court felt 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," it said.

In the 32-page judgment on May 16, 2025 on part of the bench, Justice Surya Kant dealt with cross appeals filed by the Kerala government, self-financing medical colleges and the NRI students.

The court allowed the colleges to retain the fees which were to be diverted towards the corpus fund.

It, however, clarified 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.

The bench directed that no additional fees of any nature, therefore, would be charged from the BPL students, over and above the subsidised fee that they were required to pay as per approved fee structure.

It also rejected a plea by the NRI students, holding that they are not entitled to a refund of the amount transferred to the State for the creation of the ‘corpus fund. The court also directed the state government to release the fees collected for the creation of the corpus fund back to the respective colleges within a period of three months.

"The self-financing medical educational institutions are merely designated as the trustees of the ‘corpus fund’ amount, without permitting it to be utilised by them as per their own free will. Such an arrangement shall continue till an appropriate Legislation is enacted by the State," the bench said.