Courts Update SC directs Centre to hold meeting with JNU Institute...

SC directs Centre to hold meeting with JNU Institute for Medical Sciences and Research Centre, others on advance fee payment

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New Delhi, Sept 23 (ILNS) The Supreme Court today directed the Union Of India to have a meeting with all the stakeholders, including the National Medical Commission, the Dental Council of India, the state of Rajasthan and petitioner, the JNU Institute for Medical Sciences and Research Centre, regarding accepting of advance fee from students, in addition to the fee for one year, and arrive at a solution.

The Bench of Justice L. Nageswara Rao and Justice Sanjiv Khanna passed the order on a petition filed by JNU Institute for Medical Sciences and Research Centre against the order passed by the Jodhpur Bench of Rajasthan High Court, wherein the court restrained the medical institutions, either private or government, from recovering any amount as an advance fee in addition to the fee for one year from any student admitted to the course.

The Bench directed K.M. Natraj, ASG appearing on behalf of the Union of India, to have a meeting with all the stakeholders and try to find a solution to the problem. 

Senior Advocate Kapil Sibal, appearing for the petitioner, submitted that the institutes charge the bank guarantee from the students to have security from the future loss that might happen in case the student leave the institute in between the Course.

The Court countered Sibal on the point that the probability of leaving students are approx 0.1%, why you ask all the student to give you bank guarantee.

Sibal replied that is because there is no way to find who is leaving and who will not and the loss will be huge even if 2 student leaves. It goes around 2 crores.  

“But this is unjust that you are asking everybody to deposit 4 years fees in advance including bank guarantee which is around Rs 62 crore,” said Justice Rao. 

Sibal argued that the students and their parents have no issue with it and that is the reason they haven’t approached the court as they are not aggrieved.

“But this is not the issue. The question is that for bank guarantee person have to deposit full amount and he has to pay 2 percent or 3 percent as annual charges for that,” Justice Khanna replied.

The Court reminded Sibal that the notice was issued by the Bench on previous hearing, so that the court can come to a solution to this problem. On that, Sibal suggested the Court that this may be changed in the rule that when a student enters in the institution, he may file a bank guarantee only for the following year, not for five years. 

On that suggestion, the Court asked Natraj to arrange a meeting with all stake holders and suggested not to stick on one stand. Court further suggested to find out what would be a reasonable  way forward because that would be followed by all the colleges of all the states in India.

The instant special leave petition has been filed by JNU Institute for Medical Sciences and Research Centre against the judgement of the Rajasthan High Court-Jodhpur Bench in which the Court had allowed a PIL filed by the Respondent herein challenging the conditions imposed by private medical institutions on the student’s seeking admission to MBBS Course, which mandated that they had to submit a bank guarantee against the annual fees for the next 3½ years of course duration in addition to a deposit of annual fee for the first year of the course, at the time of admission.

Private medical institutions in the State of Rajasthan, at the time of admission in the MBBS Course, were insisting upon the students and/or their parents to submit a bank guarantee against the fees for the next3½ years of the course duration.

Eight private medical institutions with an intake capacity of 1290 students were charging Rs.15 lacs per annum as minimum annual tuition fee and thus, the parents were required to submit a minimum bank guarantee of Rs.52.50 lacs for 3½ years. 

The upfront commission charged by banks on the aforesaid amount would be Rs.4,59,375/- (calculated @ 2.5% of the bank guarantee amount). The total amount of bank guarantee would be Rs.6,77,25,00,000 and the upfront commission to be paid by the parents would be Rs.59,25,93,750. 

In the event this amount was not submitted, Parents were forced to deposit an advance fee of 1½ years or at least 1 year in addition to the annual fee deposited for the first year. 

The petitioner and several other private medical institutions raised a preliminary objection that no public interest was involved in the PIL to permit the petitioner to invoke the extraordinary jurisdiction under Article 226. The grievance of the parents had not been raised before the appropriate authorities. Further, the Supreme Court via precedents had mandated that admissions in medical institutions are to be done by the State Authorities and the role of private players should be minimised.

The private colleges have no other recourse except to seek a bank guarantee from the student’s desiring admission. Further, private colleges were unaided by the Government therefore the fees charged by them were covering the provision of infrastructure, employment of faculty, clinical material and other facilities for a span of the whole course. The PIL lacked bonafide intention as it was only filed against the private medical institutions and not the ones run by the State Government which were also demanding bank guarantees. The UG Medical and Dental Admission Counselling Board had also published an information booklet according to which the candidates have to submit a bond/bank guarantee as applicable and had also provided a proforma to be executed in the name of the State Government. Therefore, the activities of the institutions were not mischievous. 

The Respondent submitted that private institutions were not supposed to charge any capitation fee or book profit. The institutions were insisting on a bank guarantee only, which is arbitrary and unfair. 

The State in its reply said that charging of bank guarantee/advance fee was not approved by the State. The Fee Regulatory Committee constituted has taken a decision that no private institution shall demand or take any kind of formal or informal fee from the students except the fee determined by the Committee and if any institution collects any kind of fee other than the one fixed by the Committee then the same will come under the definition of ‘capitation fee’ and accordingly, punitive action shall be taken.

The actions of the medical institutions run privately or by the State Government, in levying an advance fee in addition to the annual fee for one year from the students admitted to the medical courses and insisting upon each student to submit the bank guarantee at the time of admission equivalent to the fee for3½ years of course duration, is declared illegal.

The institutions were restrained from recovering any amount as an advance fee, in addition to the fee for one year from any student admitted to the course.

The advance fee in addition to the fee for one year already recovered by any of the private institutions from the students admitted to the medical courses shall be kept in a fixed deposit in a nationalised bank, against which no loan or advance may be granted. The advance fee deposited as afore said shall carry interest at the rate equivalent to the rate of interest admissible on fixed deposit by the nationalized bank. The interest already accrued and the future interest on the amount of advance fee shall be paid to the students from whom the advance fees were collected at the time of admission. The State Government was directed to ensure the compliance of the directions issued by this Court as aforesaid./ILNS/KR/SNG

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