/2022 INSC 0963/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.                             OF 2022
(@ Special Leave Petition (Civil) Nos. 2969­2970 of 2021)
Narayana Medical College               ...Appellant(s)
Versus
The State of Andhra Pradesh & Ors.         …Respondent(s)
J U D G M E N T
M.R. SHAH, J.
Leave granted. 
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment   and   order   passed   by   the   High   Court   of   Andhra
Pradesh at Amravati in Writ 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   the   case   of   P.A.   Inamdar   and   Ors.   Vs.   State   of
Maharashtra   and   Ors.;   (2005)   6   SCC   537 ,   the   State   of
Andhra   Pradesh   framed   Rules   called   the   Andhra   Pradesh
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Admission and Fee Regulatory Committee (for Professional
Courses   offered   in   Private   Un­Aided   Professional
Institutions)   Rules,   2006   (hereinafter   referred   to   as   the
Rules, 2006). Rule 4 of the Rules, 2006 is with respect to
the fee fixation. Following the report of the Admission and
Fee   Regulatory   Committee   (hereinafter   referred   to   as   the
AFRC),   the   State   Government   issued   G.O.   dated
18.06.2011 fixing   and enhancing   the fee for  the academic
years   2011­12   to   2013­14.   However,   for   the   subsequent
years, more particularly, for the block years 2017 to 2020
(period in question) without waiting for the report from the
AFRC   and   on   the   representations   made   by   the   private
medical  colleges, the  State Government issued G.O. dated
06.09.2017   and   enhanced   the   tuition   fee   payable   by   the
MBBS   students.   At   this   stage,   it   is   required   to   be   noted
that   under   the  said   G.O.   the  State  Government   enhanced
the   tuition   fee   at   an   exorbitant   rate   of   Rs.   24   lakhs   per
annum  i.e.,  almost   seven   times  the   tuition   fee   notified  for
the previous block period. The G.O. dated 06.09.2017 was
the subject matter of writ petitions before the High Court.
By   the   impugned   common   judgment   and   order   the   High
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Court   has   set   aside   the   G.O.   dated   06.09.2017   by
observing   and   holding   that   considering   the   provisions   of
the Rules, 2006 the fee cannot be enhanced/fixed without
the   recommendations/report   of   the   AFRC.   Therefore,   the
High Court by the impugned common judgment and order
has   held   that   the   recovery   of   enhanced   tuition   fee   by   the
respective   private   medical   colleges   is   bad   in   law.
Consequently, the High Court has set aside the G.O. dated
06.09.2017 to the extent of enhancement of fee. The High
Court has also 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   be   refunded   by   the
colleges   to   the   students   after   adjusting   the   amounts
payable under G.O. dated 18.06.2011.
2.1 Feeling   aggrieved   and   dissatisfied   with   the   impugned
common   judgment   and   order   passed   by   the   High   Court,
the   respective   medical   college/institution   qua   who   now   is
required  to  refund  the amount  collected  pursuant  to  G.O.
dated 06.09.2017 has preferred the present appeals.
3. Having   heard   Shri   K.V.   Viswanathan,   learned   Senior
Advocate appearing on behalf of the appellant, Shri Basava
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Prabhu   S.   Patil,   learned   Senior   Advocate   appearing   on
behalf   of   the   original   writ   petitioners,   learned   counsel
appearing   on   behalf   of   the   State   of   Andhra   Pradesh   and
Shri Krishna Dev Jagarlamudi, learned counsel appearing
on behalf of A.P. Admission and Fee Regulatory Committee
and   on   considering   the   impugned   common   judgment   and
order passed by the High Court, we are of the opinion that
the   High   Court   has   not   committed   any   error   in   quashing
and   setting   aside   the   G.O.   dated   06.09.2017   enhancing
the   tuition   fee   for   the   block   years   2017­2020.   Even   Shri
K.V.   Viswanathan,   learned   Senior   Advocate   appearing   on
behalf   of   the   appellant   –   medical   college   has   fairly
conceded   that   the   tuition   fee   could   not   have   been
enhanced   by   the   State   Government   unilaterally   and
without   report/recommendations   by   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/report by the AFRC and under Rule 4 of
the   Rules,   2006   a   duty   is   cast   upon   the   AFRC   to
recommend the fee fixation. Under the relevant provisions
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of   the   Rules,   2006,   the   AFRC   while   fixing   the   fee   is
required to undertake detailed enquiry as provided in Rule
4   of   the   Rules,   2006.   Rule   4   of   the   Rules,   2006   reads   as
under: ­  
“4.   Fee   Fixation.   ­   (i)   The   AFRC   shall   call   for,   from
each   Institution,   its   proposed   fee   structure   well   in
advance   before   the   date   of   issue   of   notification   for
admission   for   the   academic   year   along   with   all   the
relevant   documents   and   books   of   accounts   for
security,
(ii)   The   AFRC   shall   decide   whether   the   fees   proposed
by   the   Institution   is   justified   and   does   not   amount   to
profiteering or charging of capitation fee.
(iii) The AFRC shall be at liberty to approve or alter the
proposed   fee   for   each   course   to   be   charged   by   the
Institution.   Provided   that   it   shall   give   the   Institution
an Opportunity of being heard before fixing any fee or
fees.
(iv)   The   AFRC   shall   take   into   consideration   the
following   factors   while   prescribing   the   fee:   (a)   the
location   of   the   professional   institution,   (b)   the   nature
of   the   professional   course,   (c)   the   cost   of   available
infrastructure,   (d)   the   expenditure   on   administration
and maintenance, (e) a reasonable surplus required for
growth   and   development   of   the   professional
Institution,   (f)   the   revenue   foregone   on   account   of
waiver of fee, if any, in respect of students belonging to
the   Schedule   Caste,   Schedule   Tribes   and   wherever
applicable to the Socially and Educationally Backward
Classes   and   other   Economically   Weaker   Sections   of
the   society,   to   such   extent   as   shall   be   notified   by   the
Government   from   time   to   time.   (g)   Any   other   relevant
factor. Provided that, no such fees, as may be fixed by
the   AFRC,   shall   amount   to   profiteering   or
commercialization of education, 
(v)   The   AFRC   shall   communicate   the   fee   structure   as
determined by it, to the Government, for notification.
(vi) The fee or scale of fee determined by the AFRC 
shall be valid for a period of three years. 
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(vii)   The   fee   so   determined   shall   be   applicable   to   a
candidate   who   is   admitted   to   an   institution   in   that
academic   year   and   shall   not   be   altered   till   the
completion of his course in the Institution in which he
was   originally   admitted.   No   Professional   Educational
Institution   shall   collect   at   a   time   a   fee   which   is   more
than one year's fee from a candidate.”
Therefore,   the   G.O.   issued   by   the   State   Government
enhancing   the   tuition   fee   for   the   private   medical   colleges
on   the   representations   made   by   the   private   medical
colleges was  wholly  impermissible and most arbitrary  and
only   with   a   view   to   favour   and/or   oblige   the   private
medical colleges. The same is rightly set aside by the High
Court. The State could not have issued the G.O. enhancing
the   tuition   fee   for   private   medical   colleges   dehors   the
recommendations   of   the   AFRC.   Any   enhancement   of   the
tuition fee without the recommendations of the AFRC shall
be contrary 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
refund the amount collected under G.O. dated 06.09.2017
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after   adjusting   the   fee   fixed   by   the   Government   vide   G.O.
dated   18.06.2011   by   the   colleges   to   the   students   is
concerned,   Shri   K.V.   Viswanathan,   learned   Senior
Advocate   appearing   on   behalf   of   the   appellant   –   private
medical college has submitted that it is true that the State
Government   could   not   have   enhanced   the   tuition   fee
without   recommendations/report   of   the   AFRC.   It   is   true
that   in  the   present   case  the   tuition   fee  was   lastly   fixed  in
the   year   2011   and   thereafter   the   process   for
determination/fixation   of   tuition   fee   for   the   block   period
2017 to 2020 was in progress by the AFRC. It is submitted
that   between   2011   and   2017   the   costs/expenses   of   the
colleges   had   increased   and   the   requirement   of   paying
stipend to students has been introduced in the year  2016
and   therefore,   the   fee   fixed   in   the   year   2011   would   cause
significant loss to the colleges and the tuition fee is bound
to   be   increased   and   therefore,   the   increase   which   the
respective college is entitled to recover (enhanced fee).     It
is,   therefore,   prayed   that   at   this   stage   the   respective
colleges   may   not   be   directed   to   refund   the   amount   i.e.,
tuition   fee   collected   pursuant   to   G.O.   dated   06.09.2017
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after adjusting 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   in   many   cases
students   have   adjusted   the   difference   in   the   subsequent
fees.   
4.1 The   prayer   on   behalf   of   the   medical   college   not   to   refund
the   amount   at   this   stage   is   vehemently   opposed   by   Shri
Basava Prabhu S. Patil, learned Senior Advocate appearing
on behalf of the students. It is submitted that with respect
to   the   similar   G.O.   issued   by   the   State   of   Telangana   the
same   has   been   set   aside   by   the   High   Court   and   the   High
Court   has   directed   to   refund   the   amount   paid   in   excess,
paid   pursuant   to   illegal   G.O.   issued   by   the   State
Government.   It   is   vehemently   submitted   that   the   private
medical   colleges   who   are   the   beneficiaries   of   illegal   G.O.
which   was   issued   on   the   representations   made   by   the
private   medical   colleges   cannot   be   permitted   to   retain   the
amount which they have recovered illegally on the basis of
the illegal G.O. 
4.2 It   is   submitted   that   under   G.O.   dated   06.09.2017   there
was   an   exorbitant   increase   of   tuition   fee   of   Rs.   24   lakhs
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i.e., seven  times  the  tuition  fixed earlier   by   the AFRC   and
many   students/their   parents   were   required   to   avail   the
bank   loan   to   pay   the   exorbitant   tuition   fee   and   were
required  to   pay  the  higher  rate of   interest.  Therefore,  it  is
prayed   not   to   interfere   with   the   impugned   common
judgment   and   order   passed   by   the   High   Court   including
the order of refund passed by the High Court.  
4.3 Learned   counsel   appearing   on   behalf   of   the   AFRC   has
submitted   that   during   the   enquiry/proceedings   to
determine   the   tuition   fee   for   the   block   period   2017­2020,
the State Government unilaterally  and without waiting  for
the   report/recommendations   by   the   AFRC   increased   the
tuition   fee.   It   is   submitted   that   in   fact   the   AFRC   vide
notification   dated   08.12.2016   proposed   to   review   and
determine   the   fees’   structure   and   call   for   relevant
materials   from   the   medical   colleges   and   the   students   and
the   review   and   determination   of   fees   was   pending,   the
association   of   the   colleges   addressed   a   letter   to   the
Government seeking  revision which  the State  Government
granted/permitted in clandestine manner.   
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5. As   observed   hereinabove   no   error   has   been   committed   by
the   High   Court   in   quashing   and   setting   aside   G.O.   dated
06.09.2017   enhancing   the   tuition   fee   for   the   private
medical   colleges.   The   Government   of   Andhra   Pradesh   on
the   representations   made   by   the   private   medical   colleges
enhanced   the   tuition   fee   for   private   medical   colleges
though the revision of fees was pending consideration with
the AFRC. The State Government enhanced the tuition fee
exorbitantly   to   Rs.   24   lakhs   per   annum   which   was   seven
times   the   fee   fixed   earlier.   Once   the   State   Government
enacted the Rules, 2006 which provides determination and
fixation and the review of the tuition fees by the AFRC, the
State   Government   was   bound   by   the   Rules,   2006   and
could not have enhanced the fee during the review pending
with   the   AFRC.   To   enhance   the   fee   unilaterally   would   be
contrary   to   the   objects   and   purpose   of   Andhra   Pradesh
Educational   Institutions   (Regulation   of   Admissions   and
Prohibition   of   Capitation   Fee)   Act,   1983   as   well   as   the
Rules,   2006   and   the   decision   of   this   Court   in   the   case   of
P.A.  Inamdar   (supra). To enhance the fee to  Rs. 24 lakhs
per annum i.e., seven times more than the fee fixed earlier
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was not justifiable at all. The education is not the business
to   earn   profit.   The   tuition   fee   shall   always   be   affordable.
Determination   of   fee/review   of   fee   shall   be   within   the
parameters   of   the   fixation   rules   and   shall   have   direct
nexus   on   the   factors   mentioned   in   Rule   4   of   the   Rules,
2006,   namely,   (a)   the   location   of   the   professional
institution; (b) the nature of the professional course; (c) the
cost   of   available   infrastructure;   (d)   the   expenditure   on
administration and  maintenance; (e) a  reasonable surplus
required   for   growth   and   development   of   the   professional
Institution; (f) the revenue foregone on account of waiver of
fee, if any, in respect of students belonging to the reserved
category   and   other   Economically   Weaker   Sections   of   the
society.   All   the   aforesaid   factors   are   required   to   be
considered   by   the   AFRC   while   determining/reviewing   the
tuition   fees.   Therefore,   the   High   Court   is   absolutely
justified   in   quashing   and   setting   aside   G.O.   dated
06.09.2017. 
6. Now   so   far   as   the   directions   issued   by   the   High   Court   to
refund   the   amount   of   tuition   fee   collected   under   G.O.
dated 06.09.2017 and to refund the balance amount after
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adjusting   the   fee   paid   pursuant   to   the   earlier
determination as per G.O. dated 18.06.2011 is concerned,
we   are   of   the   opinion   that   the   High   Court   has   not
committed   any   error   in   issuing   such   directions.   The
management   cannot   be   permitted   to   retain   the   amount
recovered/collected   pursuant   to   the   illegal   G.O.   dated
06.09.2017.   The   medical   colleges   are   the   beneficiaries   of
the illegal G.O. dated 06.09.2017 which is rightly set aside
by   the   High   Court.   The   respective   medical   colleges   have
used/utilized   the   amount   recovered   under   G.O.   dated
06.09.2017   for   a   number   years   and   kept   with   them   for   a
number   of   years   on   the   other   hand   students   paid   the
exorbitant   tuition   fee   after   obtaining   loan   from   the
financial   institutions/banks   and   paid   the   higher   rate   of
interest. If at all the AFRC determines/fixes the tuition fee
which   is   higher   than   the   tuition   fee   fixed   earlier   it   will   be
always   open   for   the   medical   colleges   to   recover   the   same
from   the   concerned   students,   however,   the   respective
medical colleges cannot be permitted to retain the amount
collected   illegally   pursuant   to   G.O.   dated   06.09.2017.
Therefore, even the directions issued by the High Court to
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refund the amount of tuition fee collected pursuant to G.O.
dated   06.09.2017   after   adjusting   the   amount   payable   as
per   the   earlier   determination   is   not   required   to   be
interfered with. 
7. In view of the above and for the reasons stated above both
the appeals fail and the same deserve to dismissed and are
accordingly   dismissed,   however,   with   cost   which   is
quantified   at   Rs.   5   lakhs   to   be   equally   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 of Andhra Pradesh) to be deposited with the Registry
of   this   Court   within  a   period   of  six   weeks   from  today   and
on such deposit the same be transferred to   National Legal
Services Authority (NALSA)  and Mediation and Conciliation
Project   Committee,   Supreme   Court   of   India   (MCPC)
equally.  
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
NOVEMBER 07, 2022 [SUDHANSHU DHULIA]
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