Case at a Glance
When Sardar Rajas Medical College (SRMCH) in Odisha lost its recognition, 124 MBBS students of the 2013-14 and 2014-15 batches were relocated to three other private medical colleges and, under interim orders, studied there paying roughly Government-college fees. A decade later, the Supreme Court decided who pays the gap. It held that the students cannot keep the benefit of subsidised fees as a “windfall or a bonanza”, but placed “the primary brunt of liability” on SRMCH and its Selvam Trust, directing its Rs. 10 crore bank guarantee and Rs. 2 crore court deposit (with interest) to be paid to the three transferee colleges. Any residual shortfall, computed at SRMCH rates, is to be resolved through the MCI/NMC.
Students admitted to SRMCH, run by the Selvam Educational and Charitable Trust, in the 2013-14 and 2014-15 MBBS batches were left stranded when the Medical Council of India denied renewal of recognition owing to deficiencies. A writ petition by the college (W.P.(C) No. 681 of 2014) had been dismissed in limine on 8 August 2014. The Orissa High Court, by orders of 18 November 2015 and 9 December 2015, directed relocation of the students to other colleges, and the Supreme Court passed interim orders in January 2016. The students were accommodated at KIMS, IMS & SUM Hospital and Hi-Tech Medical College, paying roughly Rs. 30,000 a year at Government rates — which the Court noted was about one-eighth of SRMCH’s own fee.
On 19 April 2016 the Trust deposited Rs. 2 crore in the Supreme Court Registry (about Rs. 3.59 crore with interest), and it had furnished bank guarantees of about Rs. 10 crore with the MCI/NMC. A 2015 letter of the Odisha DMET recorded that SRMCH had collected Rs. 4,25,000 per student and was directed to refund Rs. 3,95,000 per student. The three transferee colleges applied for recovery of fee dues, with a combined claim of about Rs. 16.2 crore against available security of about Rs. 14 crore. The students had signed undertakings acknowledging that the fee issue was pending and agreeing to abide by the final directions.
The Key Question Before the Court
When students of a derecognised private medical college are relocated to other colleges under court orders, who must bear the difference between the subsidised Government-rate fee they paid and the fee due — the students, the defaulting college, or the State/regulator?
Unjust Enrichment and ‘Commodum ex Injuria’: How the Court Split the Burden
The Court held that the students were not entitled to continue at Government rates: they had not qualified for Government seats and had contracted for the higher private fee. Continuing the subsidy “would amount to unjust enrichment of these transferee students”, and “the passed-out students cannot be allowed the benefit of a windfall or a bonanza merely by dint of the interim orders.” At the same time, relying on the maxim Commodum ex injuria sua nemo habere debet (no one should profit from his own wrong), the Court held that the defaulting institution could not escape: “the primary brunt of liability must be fastened upon SRMCH/Selvam Trust.” It referred to Priya Gupta v. State of Chhattisgarh, (2011) 08 CHH CK 0014, (2012) 7 SCC 433, and also referred to Article 142 of the Constitution.
The Court found no overriding lien of the MCI/NMC over the bank guarantee, and directed the roughly Rs. 10 crore guarantee to be released to the three transferee colleges in equal shares within three months, with the Registry deposit and interest split equally among them. The shortfall was to be measured at SRMCH rates, not at the transferee colleges’ own (higher) rates — a basis the colleges’ counsel accepted — working out to about Rs. 5.4 crore per college. For each student’s residual deficit, the colleges may approach the MCI/NMC, which must provide due redressal, account for fees already paid to SRMCH, and use any excess recovered from students to recoup the guarantee. The judgment does not fasten liability for the shortfall on the State of Odisha or the MCI/NMC.
What the Court Actually Held
- Transferred students cannot retain subsidised Government-rate fees obtained under interim orders; that would be unjust enrichment.
- SRMCH/Selvam Trust bears the primary liability; its approx. Rs. 10 crore bank guarantee and Rs. 2 crore deposit with interest go to the three transferee colleges in equal shares.
- The shortfall is computed at SRMCH rates; residual student-wise dues are to be resolved by the MCI/NMC on the colleges’ representations.
- Students who comply with the fee liability determined under the judgment are entitled to course-completion certificates and academic records.
Why This Judgment Matters
- It gives a framework for the recurring problem of students stranded by derecognised private medical colleges.
- It balances fairness: students do not get a free ride, but the defaulting institution pays first.
- It confirms that bank guarantees furnished to the regulator can be used to compensate institutions that absorbed the displaced students.
What Should Advocates Take Away From the Judgment?
For Students and Parents
- Interim orders allowing study at Government-rate fees do not settle the final fee liability; undertakings given at that time will be enforced.
- Release of degree and course-completion documents depends on clearing the fee liability determined under the judgment.
For Counsel
- In derecognition cases, target the defaulting trust’s guarantees and deposits first, citing the commodum ex injuria principle applied here.
- The benchmark for differential fees was the original college’s fee, not the transferee college’s fee — frame claims accordingly.
Key Takeaways
- Subsidised fees under interim orders are not a permanent entitlement.
- The derecognised college’s trust bears the primary liability.
- Shortfall is calculated at the original college’s rates.
- Documents follow compliance with determined fee liability.
Frequently Asked Questions
Do students shifted from a derecognised medical college have to pay higher fees?
In this case, yes in principle: the Court held they could not keep the Government-rate fees as a windfall, but the Trust’s guarantee and deposit were applied first, and any residual shortfall was to be computed at the original college’s rates through the MCI/NMC.
Was the State or NMC made liable for the shortfall?
The judgment does not hold the State of Odisha or the MCI/NMC liable; NMC’s role is to release the guarantee and provide redressal for recovery.
What happens to the students’ degrees?
Students who comply with the fee liability determined under the judgment are entitled to course-completion certificates and academic records as per the rules.
Conclusion
Soumya Ranjan Panda v. Subhalaxmi Dash closes a decade-old dispute born of a medical college’s failure to maintain standards. The Supreme Court refused to let either the defaulting trust or the students profit from interim arrangements, while ensuring that the colleges which absorbed the students are paid largely from the trust’s own security.
Practical takeaway: Students relocated under court orders should treat subsidised fees as provisional; institutions should press first against the defaulting college’s guarantees.
Read the full judgment on CourtKutchehry: View judgment →
For more judgments, legal opinions and case analysis, visit courtkutchehry.com