Collecting annual fees from students for the next year in advance when the previous year's studies have not been completed by an institution would amount to "profiteering", the Kerala High Court has held and restrained private medical colleges in the state from collecting fees for any academic year other than the one which was being taught.
The high court, however, made it clear that its directions were to operate only in the peculiar situation caused due to the COVID-19 pandemic when instructions being imparted for a particular year in medical colleges could not be completed in the specified time due to the virus outbreak.
A bench of Justices A K Jayasankaran Nambiar and Mohammed Nias C P said conceptually fees were a remuneration for a service rendered and if it is collected for a future period, it would be a payment for services yet to be rendered and in such a situation, 'the educational institutions would then be resorting to profiteering".
"The COVID pandemic without doubt brought about an unusual or exceptional situation fraught with financial implications. The exceptional situation, however, affected not only the educational institutions but also the student community and their financier guardians.
"We feel it would be unconscionable on the part of the private medical educational institutions concerned to demand the determined fees, unmindful of the difficulties faced by the students," the bench said.
The court's observations and directions came on several petitions moved by the medical students, admitted to the 2019-2020 batch of MBBS course in various private medical colleges, against the demand notices for fee in respect of the third year of their course when they were still pursuing their second year which could not be completed within the allotted time due to the pandemic.
The students had contended by demanding fees in respect of a year different from that for which instructions are imparted, the educational institutions concerned are effectively collecting the determined fees in advance and this is not permissible.
The educational institutions, on the other hand, justified the demand by arguing that it is the third calendar year since the student was admitted and, hence, they are entitled to collect the annual fee determined for the third year.
The high court noted that as a result of the lockdown imposed by the state government in the wake of the global COVID pandemic, "there was an unavoidable interruption to the course of study and hence, while the months in the calendar year passed by, there was no simultaneous progress in the instruction months that constituted the academic year".
"This led to the situation where the petitioners (student) were called upon to remit the fee payable for the third year of their course when they were effectively pursuing only the second year of their course," it added.
Referring to the various statutory provisions and the Supreme Court decision in the Islamic Academy of Education and Another v. State of Karnataka and Others case, the high court said it was of the view that "it would be wholly inequitable and unjust to permit the educational institutions concerned in these writ petitions to collect the determined annual fees in respect of any academic year save that for which instructions are currently being imparted".
In the Islamic Academy case, the apex court had held that institutions shall charge fees only for one year in accordance with the rules and shall not charge the fees for the entire course, the high court noted.
The apex court had also observed that if for some reason, fees have already been collected for a longer period, the amount so collected shall be kept in a fixed deposit in a nationalised bank against which no loan or advance may be granted so that the interest accrued thereupon may enure to the benefit of the students, the high court said.
"It is clear, therefore, that the educational institutions are not justified in collecting any amount towards fees for a period longer than the academic year in question. In collecting the third year fee, while the student is pursuing the second year of the course, they would be doing just that," the bench said.
It, thereafter, directed -- "We, therefore, allow these writ petitions by directing those among the respondent private medical institutions, where the petitioners in these writ petitions are studying, to refrain from demanding or collecting academic fees from them in respect of any academic year other than the one for which instructions are currently being imparted. We make it clear that the directions issued in this judgment are to operate only in the aforesaid peculiar situation thrown up by the COVID pandemic."