Private medical colleges charging advance fees during pandemic 'profiteering': Kerala High Court

The Kerala High Court recently held that permitting educational institutions to collect advance annual fees during COVID pandemic for any academic year other than the ongoing one, is unjust and inequitable [Sanju Simon & Ors. v State of Kerala & Ors.].A Division Bench of Justices AK Jayasankaran Nambiar and Mohammad Nias CP observed that since conceptually a fee is a remuneration for services rendered, collecting fees in advance for the next year would amount to profiteering."When the fee permitted to be collected is an annual fee for rendering educational services, the collection of any fee that does not relate to the academic year for which the educational service is rendered but for a future period, would militate against the very concept of a fee for it would be a payment for services yet to be rendered. The educational institutions would then be resorting to ‘profiteering’ which term is defined in the Blacks Law Dictionary (5th Edn.) as the making of profit by taking advantage of an unusual or exceptional circumstance," the Court said. While the Court was sympathetic to the financial crunch experienced by educational institutions due to the COVID pandemic, it observed that the student community and their financier guardians were just as, if not more, affected."The exceptional situation 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 Court said. The Court, therefore, directed the respondent private medical institutions, to refrain from demanding or collecting academic fees from the petitioner students in respect of any academic year other than the one for which instructions are currently being imparted.The Bench clarified that the directions issued in the judgment are to operate only in the peculiar situation thrown up by the Covid pandemic..The judgement was passed on a batch of petitions moved by students who were admitted to the 2019-2020 batch of the MBBS Course offered by various private medical colleges in the State. As a result of the pandemic, there was a break in the studies of the petitioners and the instructions relevant to an academic year could not be completed within the allotted period. Subsequently, while pursuing the second year of their course, the petitioner students were issued with demand notices for the fee of the third year of the course. This prompted them to approach the High Court challenging the said demand notices on ground that 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.This is not permissible going by the dictum laid down by the Supreme Court in Islamic Academy of Education & Anr. v State of Karnataka & Ors., they argued. .On the other hand, the educational institutions justified the demand by arguing that it is the third calendar year since the students were admitted to the institution and, hence, they are entitled to collect the annual fee determined for the third year..Upon considering the facts an circumstances of the case, the Court observed that "there is an inherent incongruity in prescribing the payment of the annual fee determined by the Admission and Fee Regulatory Committee over five years, when the course duration of the MBBS Course itself is only four and a half years."The Court referred to the judgment in Islamic Academy, to observe that it is clearly mandated 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 Court, therefore, allowed the petitions and restrained the educational institutions from demanding fees for any year other than the year of instructions during the pandemic..Senior Advocate Ranjith Thampan, assisted by advocate VM Krishnakumar, appeared for the petitioners in all writ petitions.Senior Advocate S Sreekumar, George Poonthottam and Kurian George Kannanthanam and advocates Haris Beeran, OA Nauriya, Murugan, Arun B Varghese, Nisha George, S Vinod Bhat, Babu Karukapadath, George Jacob Jose, Tony George Kannanthanam, Millu Dandapani, Amal Das and P Sanjay appeared for the respondent educational institutions. Advocate RT Pradeep appeared for the Admission & Fee Regulatory Committee, Advocate P Sreekumar for the Kerala University of Health Sciences and Government Pleader Bijoy Chandran appeared for the official respondents of the State..[Read Judgment]