NARAYANA MEDICAL COLLEGE versus THE STATE OF ANDHRA PRADESH & ORS. on 7 November 2022

1. Feeling aggrieved and dissatisfied with the impugned judgmentGand order passed by the High Court of Andhra Pradesh at Amravati inWrit Petition Nos.33656/2018 and 8210/2019 the medical college/institution has preferred the present appeals.

2. Pursuant to the judgment and order passed by this Court in thecase of P.A. Inamdar and Ors. Vs. State of Maharashtra and Ors.;(2005) 6 SCC 537, the State of Andhra Pradesh framed Rules calledH

the Andhra PradeshAdmission and Fee Regulatory Committee (forProfessional Courses offered in Private Un-Aided ProfessionalInstitutions) Rules, 2006 (hereinafter referred to as the Rules, 2006).Rule 4 of the Rules, 2006 is with respect to the fee fixation. Followingthe report of the Admission and Fee Regulatory Committee (hereinafterreferred to as the AFRC), the State Government issued G.O. dated18.06.2011 fixing and enhancing the fee for the academic years 2011-12to 2013-14. However, for the subsequent years, more particularly, forthe block years2017 to 2020 (period in question) without waiting for thereport from the AFRC and on the representations made by the privatemedical colleges, the State Government issued G.O. dated 06.09.2017and enhanced the tuition fee payable by the MBBS students. At thisstage, it is required to be noted that under the said G.O. the StateGovernment enhanced the tuition fee at an exorbitant rate of Rs. 24lakhs per annum i.e., almost seven times the tuition fee notified for theprevious block period. The G.O. dated 06.09.2017 was the subject matterof writ petitions before the High Court. By the impugned commonjudgment and order the High Court has set aside the G.O. dated06.09.2017 by observing and holding that considering the provisions ofthe Rules, 2006 the fee cannot be enhanced/fixed without therecommendations/report of the AFRC. Therefore, the High Court bythe impugned common judgment and order has held that the recovery ofenhanced tuition fee by the respective private medical colleges is bad inlaw. Consequently, the High Court has set aside the G.O. dated06.09.2017 to the extent of enhancement of fee. The High Court hasalso directed that if any fee already fixed by the Government vide G.O.dated 06.09.2017 dehors the G.O. dated 18.06.2011, the same shall berefunded by the colleges to the students after adjusting the amountspayable under G.O. dated 18.06.2011.

2.1 Feeling aggrieved and dissatisfied with the impugned commonjudgment and order passed by the High Court, the respective medicalcollege/institution qua who now is requiredto refund the amount collectedpursuant to G.O. dated 06.09.2017 has preferred the present appeals.

3. Having heard Shri K.V. Viswanathan, learned Senior Advocateappearing on behalf of the appellant, Shri Basava Prabhu S. Patil, learnedSenior Advocate appearing on behalf of the original writ petitioners,learned counsel appearing on behalf of the State of Andhra Pradesh andShri Krishna Dev Jagarlamudi, learned counsel appearing on behalf of AB

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AA.P. Admission and Fee Regulatory Committee and on considering theimpugned common judgment and order passed by the High Court, weare of the opinion that the High Court has not committed any error inquashing and setting aside the G.O. dated 06.09.2017 enhancing the tuitionfee for the block years2017-2020. Even Shri K.V. Viswanathan, learnedSenior Advocate appearing on behalf of the appellant – medical collegeBhas fairly conceded that the tuition fee could not have been enhanced bythe State Government unilaterally and without report/recommendationsby the AFRC under the provisions of the Rules, 2006.

3.1 Even otherwise considering the relevant provisions of the Rules,2006 the fixation could have been only on the recommendations/reportCby the AFRC and under Rule 4 of the Rules, 2006 a duty is cast upon theAFRC to recommend the fee fixation. Under the relevant provisions ofthe Rules, 2006, the AFRC while fixing the fee is required to undertakedetailed enquiry as provided in Rule 4 of the Rules, 2006. Rule 4 of theRules, 2006 reads as under: -D“4. Fee Fixation. - (i) The AFRC shall call for, from eachInstitution, its proposed fee structure well in advance before thedate of issue of notification for admission for the academic yearalong with all the relevant documents and books of accounts forsecurity, E(ii) The AFRC shall decide whether the fees proposed by theInstitution is justified and does not amount to profiteering orcharging of capitation fee.

(iii) The AFRC shall be at liberty to approve or alter the proposedfee for each course to be charged by the Institution. ProvidedFthat it shall give the Institution an Opportunity of being heard beforefixing any fee or fees.

(iv) The AFRC shall take into consideration the following factorswhile prescribing the fee:(a) the location of the professionalinstitution,(b) the nature of the professional course,(c) the cost ofGavailable infrastructure,(d) the expenditure on administration andmaintenance,(e) a reasonable surplus required for growth anddevelopment of the professional Institution,(f) the revenue foregoneon account of waiver of fee, if any, in respect of students belongingto the Schedule Caste, Schedule Tribes and wherever applicableto the Socially and Educationally Backward Classes and otherH

NARAYANA MEDICAL COLLEGE v. THE STATE OF ANDHRAPRADESH & ORS. [M. R. SHAH, J.]

Economically Weaker Sections of the society, to such extent asshall be notified by the Government from time to time.(g) Anyother relevant factor. Provided that, no such fees, as may be fixedby the AFRC, shall amount to profiteering or commercializationof education,

(v) The AFRC shall communicate the fee structure as determinedby it, to the Government, for notification.

(vi) The fee or scale of fee determined by the AFRC shall bevalid for a period of three years.

(vii) The fee so determined shall be applicable to a candidate whois admitted to an institution in that academic year and shall not bealtered till the completion of his course in the Institution in whichhe was originally admitted. No Professional Educational Institutionshall collect at a time a fee which is more than one year’s feefrom a candidate.”

Therefore, the G.O. issued by the State Government enhancingthe tuition fee for the private medical colleges on the representationsmade by the private medical colleges was wholly impermissible and mostarbitrary and only with a view to favour and/or oblige the private medicalcolleges. The same is rightly set aside by the High Court. The Statecould not have issued the G.O. enhancing the tuition fee for private medicalcolleges dehors the recommendations of the AFRC. Any enhancementof the tuition fee without the recommendations of the AFRC shall becontrary to the decision of this Court in the case of P.A. Inamdar(supra) and even the relevant provisions of the Rules, 2006. Therefore,the High Court has rightly quashed and set aside G.O. dated 06.09.2017.

4. Now so far as the directions issued by the High Court to refundthe amount collected under G.O. dated 06.09.2017 after adjusting thefee fixed by the Government vide G.O. dated 18.06.2011 by the collegesto the students is concerned, Shri K.V. Viswanathan, learned SeniorAdvocate appearing on behalf of the appellant – private medical collegehas submitted that it is true that the State Government could not haveenhanced the tuition fee without recommendations/report of the AFRC.It is true that in the present case the tuition fee was lastly fixed in theyear 2011 and thereafter the process for determination/fixation of tuitionfee for the block period 2017 to 2020 was in progress by the AFRC. It issubmitted that between 2011 and 2017 the costs/expenses of the colleges A

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Ahad increased and the requirement of paying stipend to students hasbeen introduced in the year 2016 and therefore, the fee fixed in the year2011 would cause significant loss to the colleges and the tuition fee isbound to be increased andtherefore, the increase which the respectivecollege is entitled to recover (enhanced fee). It is, therefore, prayed thatat this stage the respective colleges may not be directed to refund theBamount i.e., tuition fee collected pursuant to G.O. dated 06.09.2017 afteradjusting the amount of tuition fee to be paid as per G.O. dated 18.06.2011.Shri K.V. Viswanathan, learned Senior Advocate has pointed out that inmany cases students have adjusted the difference in the subsequentfees.C4.1 The prayer on behalf of the medical college not to refund theamount at this stage is vehemently opposed by Shri Basava Prabhu S.Patil, learned Senior Advocate appearing on behalf of the students. It issubmitted that with respect to the similar G.O. issued by the State ofTelangana the same has been set aside by the High Court and the HighDCourt has directed to refund the amount paid in excess, paid pursuant toillegal G.O. issued by the State Government. It is vehemently submittedthat the private medical colleges who are the beneficiaries of illegalG.O. which was issued on the representations made by the private medicalcolleges cannot be permitted to retain the amount which they haverecovered illegally on the basis of the illegal G.O.E

4.2 It is submitted that under G.O. dated 06.09.2017 there was anexorbitant increase of tuition fee of Rs. 24 lakhs i.e., seven times thetuition fixed earlier by the AFRC and many students/their parents wererequired to avail the bank loan to pay the exorbitant tuition fee and wererequired to pay the higher rate of interest. Therefore, it is prayed not toFinterfere with the impugned common judgment and order passed by theHigh Court including the order of refund passed by the High Court.

4.3 Learned counsel appearing on behalf of the AFRC hassubmitted that during the enquiry/proceedings to determine the tuitionfee for the block period 2017-2020, the State Government unilaterallyGand without waiting for the report/recommendations by the AFRCincreased the tuition fee. It is submitted that in fact the AFRC videnotification dated 08.12.2016 proposed to review and determine the fees’structure and call for relevant materials from the medical colleges andthe students and the review and determination of fees was pending, theHassociation of the colleges addressed a letter to the Government seeking NARAYANA MEDICAL COLLEGE v. THE STATE OF ANDHRAPRADESH & ORS. [M. R. SHAH, J.]

revision which the State Government granted/permitted in clandestinemanner.

5. As observed hereinabove no error has been committed by theHigh Court in quashing and setting aside G.O. dated 06.09.2017 enhancingthe tuition fee for the private medical colleges. The Government of AndhraPradesh on the representations made by the private medical collegesenhanced the tuition fee for private medical colleges though the revisionof fees was pending consideration with the AFRC. The State Governmentenhanced the tuition fee exorbitantly to Rs. 24 lakhs per annum whichwas seven times the fee fixed earlier. Once the State Government enactedthe Rules, 2006 which provides determination and fixation and the reviewof the tuition fees by the AFRC, the State Government was bound bythe Rules, 2006 and could not have enhanced the fee during the reviewpending with the AFRC. To enhance the fee unilaterally would becontrary to the objects and purpose of Andhra Pradesh EducationalInstitutions (Regulation of Admissions and Prohibition of Capitation Fee)Act, 1983 as well as the Rules, 2006 and the decision of this Court in thecase of P.A. Inamdar (supra). To enhance the fee to Rs. 24 lakhs perannum i.e., seven times more than the fee fixed earlier was not justifiableat all. The education is not the business to earn profit. The tuition feeshall always be affordable. Determination of fee/review of fee shall bewithin the parameters of the fixation rules and shall have direct nexus onthe factors mentioned in Rule 4 of the Rules, 2006, namely,(a) the locationof the professional institution;(b) the nature of the professional course;(c)the cost of available infrastructure;(d) the expenditure on administrationand maintenance;(e) a reasonable surplus required for growth anddevelopment of the professional Institution;(f) the revenue foregone onaccount of waiver of fee, if any, in respect of students belonging to thereserved category and other Economically Weaker Sections of thesociety. All the aforesaid factors are required to be considered by theAFRC while determining/reviewing the tuition fees. Therefore, the HighCourt is absolutely justified in quashing and setting aside G.O. dated06.09.2017.

6. Now so far as the directions issued by the High Court to refundthe amount of tuition fee collected under G.O. dated 06.09.2017 and torefund the balance amount after adjusting the fee paid pursuant to theearlier determination as per G.O. dated 18.06.2011 is concerned, we areof the opinion that the High Court has not committed any error in issuing AB

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Asuch directions. The management cannot be permitted to retain theamount recovered/collected pursuant to the illegal G.O. dated 06.09.2017.The medical colleges are the beneficiaries of the illegal G.O. dated06.09.2017 which is rightly set aside by the High Court. The respectivemedical colleges have used/utilized the amount recovered under G.O.dated 06.09.2017 for a number years and kept with them for a numberBof years on the other hand students paid the exorbitant tuition fee afterobtaining loan from the financial institutions/banks and paid the higherrate of interest. If at all the AFRC determines/fixes the tuition fee whichis higher than the tuition fee fixed earlier it will be always open for themedical colleges to recover the same from the concerned students,Chowever, the respective medical colleges cannot be permitted to retainthe amount collected illegally pursuant to G.O. dated 06.09.2017.Therefore, even the directions issued by the High Court to refund theamount of tuition fee collected pursuant to G.O. dated 06.09.2017 afteradjusting the amount payable as per the earlier determination is notrequired to be interfered with.D

7. In view of the above and for the reasons stated above both theappeals fail and the same deserve to dismissed and are accordinglydismissed, however, with cost which is quantified at Rs. 5 lakhs to beequally paid by the appellant(s) as well as the State of Andhra Pradesh(i.e., Rs. 2.5 lakh by the appellant(s) and Rs. 2.5 lakh by the State ofEAndhra Pradesh) to be deposited with the Registry of this Court withina period of six weeks from today and on such deposit the same betransferred to National Legal Services Authority (NALSA)and Mediationand Conciliation Project Committee, Supreme Court of India(MCPC)equally.

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Nidhi Jain

Appeals dismissed.

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