Students Transferred To Other Private Colleges After Original Institution Lost Recognition Can't Claim Govt Fees : Supreme Court

The Supreme Court has held that students shifted from the defunct Sardar Rajas Medical College and Hospital (SRMCH), Odisha, to other private medical colleges after the original institution lost recognition cannot claim a “windfall” by paying only subsidised government medical college fees, and permitted recovery of outstanding dues from them at the fee rates applicable at SRMCH.

A bench of Justice Vikram Nath and Justice Sandeep Mehta directed that approximately ₹14 crore secured from the Selvam Educational and Charitable Trust, which managed SRMCH, be released to the three private medical colleges that accommodated the transferred students. This includes the ₹10 crore bank guarantee furnished to the Medical Council of India/National Medical Commission and ₹2 crore deposited before the Supreme Court, along with accrued interest.

The case arose from the collapse of SRMCH's recognition after inspections by the Medical Council of India found serious deficiencies in infrastructure, faculty, and regulatory compliance, jeopardising the academic future of MBBS students admitted in the 2013-14 and 2014-15 batches. To prevent students from losing an academic year, the Supreme Court had earlier facilitated their transfer through a State-supervised counselling process to Kalinga Institute of Medical Sciences, IMS & SUM Hospital, and Hi-Tech Medical College in Odisha.

A total of 124 students were affected, with 122 ultimately relocated to the three transferee colleges. These institutions later approached the Court claiming they had provided education and stipends to the students for years while receiving only nominal government-rate fees under interim court orders, far below the actual private college fee structure.

Students Paying Fees at the Government College Fees Rate Would Amount To Unjust Enrichment

Rejecting the argument that students should continue to benefit from the subsidised arrangement indefinitely, the Court said such an outcome would amount to unjust enrichment.

The Court held that although the students faced difficult circumstances and were not at fault, they could not continue receiving the benefit of government-rate fees permanently.

According to the court, the students had originally taken admission in a private medical institution with a substantially higher fee structure; therefore, they are not entitled to the benefit of government college fees, as it would amount to unjust enrichment.

“This, in our opinion, would amount to unjust enrichment of these transferee students while being conscious of the fact that they had to face a chaotic situation of being transferred to different medical colleges mid-session.”, the court observed.

The Court clarified that students would be liable to pay fees at the rates applicable to SRMCH, the original institution, and not at the significantly higher rates charged by the transferee colleges.

The bench noted that the students had originally taken admission in a private medical college with a higher fee structure and could not legitimately claim the benefit of government medical college fees merely because of interim judicial arrangements.

“At the same time,” the Court said, “the defaulting institution cannot be permitted to take benefit of its own follies.”

The Court invoked the legal maxim commodum ex injuria sua nemo habere debet (no one should derive benefit from their own wrong) to hold that the Selvam Trust must bear the primary financial burden arising from the situation.

It found that SRMCH had failed to maintain mandatory standards for medical education and noted that the Trust had even failed to refund excess fees collected from students despite earlier directions.

On the issue of payments, the Court recorded that the three transferee colleges were willing to accept reimbursement calculated not at their own higher rates, but at the fee structure that prevailed at SRMCH. Even on that basis, the total dues came to approximately ₹16.2 crore, leaving a shortfall despite the ₹14 crore being released.

Accordingly, the Court permitted the colleges to approach the National Medical Commission with details of the outstanding dues recoverable from individual students. It directed the NMC to provide redressal for recovery of deficit amounts after accounting for sums already paid by students at the time of admission to SRMCH.

The Court also clarified that students who comply with the fee liability determined under the judgment would be entitled to receive their academic certificates and course-completion documents without delay.

The appeals were accordingly disposed of.

Cause Title: SOUMYA RANJAN PANDA & ORS. VERSUS SUBHALAXMI DASH & ORS.

Citation : 2026 LiveLaw (SC) 498

Click here to download judgment

Appearance:

For Petitioner(s) : Mr. Kedar Nath Tripathy, AOR

For Respondent(s) : Mr. Pratap Venugopal, Sr. Adv. Mr. Amarjit Singh Bedi, Adv. Ms. Surekha Raman, Adv. Mr. Shreyash Kumar, Adv. M/S. K J John And Co, AOR Mr. Merusagar Samantaray, AOR Mr. Kanishk, Adv. Mr. Anurag Yadav, Adv. Mr. V. Giri, Sr. Adv. Mr. M. Gireesh Kumar, Adv. 1 Mr. Ankur S. Kulkarni, AOR Mr. Sanjay Singh, Adv. Mr. Ashok Kumar, Adv. Mr. Milind Kumar, AOR Mr. Kedar Nath Tripathy, AOR Ms. Aswathi M.k., AOR Mr. Anand Chandra Swain, Adv. Ms. Sunshine Anand Swain, Adv. Ms. Vaishnavi Sahoo, Adv. Mr. Janmejay Verma, Adv. Mr. Manish Chaurasia, Adv. Ms. Khushi Chhetri, Adv. Mr. Piyush Garg, Adv. Mr. S. K. Verma, AOR Mr. Siddhartha Chowdhury, AOR Mr. Anand Chandra Swain, Adv. Ms. Sunshine Anand Swain, Adv. Ms. Vaishnavi Sahoo, Adv. Ms. Akanksha Verma Chandok, Adv. Mr. Gauravh Sharma, Sr. Adv. Mr. Dhawal Mohan, Adv. Mr. Praeek Bhatia, AOR(NMC) Mr. Ashok Kr Parija, Sr. Adv. Mr. Gaurav Khanna, Adv. Mr. Avnish Kumar Sharma, Adv. Mr. Abhisek Dash, Adv. Mr. Ramendra Mohan Patnaik, AOR