Procedural History:
The case originated when the Kerala government issued Government Order (GO) No. 107/2018/H&FWD on June 6, 2018, directing self-financing medical colleges to contribute Rs. 5 lakhs per NRI student towards a corpus fund for subsidizing BPL students. Several writ petitions were filed before the Kerala High Court challenging this order by medical colleges, NRI students, and other stakeholders. In its judgment dated July 23, 2020, the High Court quashed the GO, holding that neither the Admission and Fee Regulatory Committee nor the state government had the authority to create such a fund without legislative backing.
The matter then reached the Supreme Court through multiple special leave petitions (SLPs) filed by the State of Kerala, medical colleges, and NRI students. The Supreme Court, in its judgment dated May 16, 2025, upheld the High Court’s decision to strike down the GO but modified the relief. While agreeing that the executive order lacked legal validity, the Court directed that the collected funds be retained by colleges and used specifically to subsidize BPL students’ education until proper legislation is enacted. The judgment brought finality to the prolonged litigation while balancing institutional autonomy with social welfare objectives.
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Court Observation:
The Supreme Court made several key observations in its judgment. It firmly held that executive orders cannot impose financial levies without express statutory authorization, emphasizing that welfare measures – however laudable – must be backed by proper legislation. The Court noted that while the Admission and Fee Regulatory Committee had powers to regulate fees under the 2017 Act, this did not extend to creating compulsory contribution mechanisms.
Significantly, the Bench observed that unaided educational institutions retain autonomy in fee fixation, subject only to prevention of profiteering, as established in precedents like P.A. Inamdar and Islamic Academy cases. The Court clarified that while using NRI fees to cross-subsidize economically weaker students is permissible, the method must be legally sanctioned.
The judgment balanced competing interests by allowing colleges to retain collected funds while mandating their use for subsidizing BPL students, effectively creating a trustee-like obligation. This interim arrangement was directed to continue until the state enacts appropriate legislation, preserving both institutional autonomy and equitable access to education. The Court stressed that such policy matters ultimately require legislative resolution rather than judicial or executive improvisation.
Final Decision & Judgement:
The Supreme Court delivered a nuanced final judgment that struck down the Kerala government’s executive order while providing practical directions for implementation. The Bench unanimously held that the Government Order (MS) No. 107/2018/H&FWD dated 06.06.2018 was legally unsustainable as it lacked statutory foundation, violating established constitutional principles governing fee regulation in unaided institutions. However, recognizing the equitable considerations involved, the Court directed that: (1) the amounts already collected from NRI students under the corpus fund scheme shall remain with the respective colleges; (2) these funds must be specifically utilized to subsidize education for BPL students admitted to those institutions; and (3) the state government must release any corpus funds already deposited with it back to the colleges. The judgment clarified that this arrangement would operate as an interim measure until the state legislature enacts appropriate legislation. The Court specifically rejected NRI students’ claims for refunds while protecting BPL students from being charged additional fees. This balanced disposition preserved institutional autonomy under Article 19(1)(g) while ensuring the welfare objectives behind the scheme were not completely defeated, subject to future legislative action.
Case Details:
Case Title: State of Kerala & Ors. vs. The Principal, KMCT Medical College & Ors.
Citation: 2025 INSC 518
Date of Judgment:May 16, 2025
Civil Appeal No.: Arising out of SLP (C) Nos. 9885–9888/2020)with Connnected Matter
Judges/Justice Name:Justice Surya Kant & Justice Nongmeikapam Kotiswar Singh
Download The Judgement Here
