Chhattisgarh High Court quashes fee committee cut in hostel, mess charges at two Raipur medical colleges

Justice Amitendra Kishore Prasad held that eleven hearing dates do not amount to natural justice if the expenditure material the colleges filed was never actually examined, set aside the refund directions and sent the matter back to the Admission and Fee Regulatory Committee with a three-month timeline.

The Chhattisgarh High Court has quashed a recommendation of the State's Admission and Fee Regulatory Committee that cut the hostel, mess and transport charges at two private medical colleges in Raipur to a fraction of what they were collecting, along with the two government orders that followed it and the directions to refund students. Justice Amitendra Kishore Prasad, sitting as a single judge, held on 27 October 2026 that the Committee had before it the colleges' figures on actual expenditure and hostel occupancy and nowhere showed that it had examined them. A hearing is not the same as a decision, he said; the matter goes back to the Committee for a reasoned, head-wise exercise, preferably within three months.

From Rs 5.5 lakh a year to under Rs 1 lakh

The two petitions were heard together. In WPC No. 253 of 2026 the Raipur Institute of Medical Sciences challenged the Committee's recommendation dated 3 April 2025, the State order of 18 September 2025 that followed it and an order of 23 September 2025 by the Commissioner, Medical Education. The college had submitted its charges to the Directorate of Medical Education by letters of 14 October 2022, 25 July 2023 and 31 July 2024 for the academic sessions 2022-23, 2023-24 and 2024-25, covering mess and canteen, transport, electricity, hostel building and staff overheads, and asked the court to uphold them.

In WPC No. 284 of 2026, Shri Balaji Institute of Medical Science at Mowa and the society that runs it, Shri Balaji Medical Foundation, put numbers on the dispute. The college had claimed Rs 3,00,000 per student per year for hostel and mess and Rs 2,50,000 for transport. The Committee's recommendation of 3 April 2025 brought those down to Rs 78,059 and Rs 13,719. The State order of 18 September 2025, served on the college on 16 December 2025, and the order of 23 September 2025 then directed that the charges be determined on that basis and the amounts collected above it be refunded.

The Committee is a creature of the Chhattisgarh Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2008, the State law regulating admissions and fees in private professional institutions. Section 9 of the Act governs fee fixation and Section 9(2) requires that an institution be heard before any fee is fixed. Section 4(9) separately empowers the Committee to enquire into complaints that an institution has collected fees in excess of what was determined, or has profiteered, and to recommend return of the excess and a fine. Which of the two provisions the proceedings fell under became the central dispute.

What the colleges said was missing

Mr Jitendra Singh Bhasin, with Mr Nishant Shokeen, Ms Shalini Kashyap, Ms Rashmipriya and Mr Anant Amrit Raj for RIMS, argued that the Committee's power is regulatory, aimed at profiteering and capitation fees, and did not permit it to substitute its own assessment for the charges proposed by an unaided institution without any finding that those charges contained profit. The college had filed expenditure statements and supporting documents; the determination rested on assumptions and incomplete data. The Committee had assumed full hostel occupancy, when the actual figures were 506 residents out of 664 students in 2022-23, 652 out of 867 in 2023-24 and 732 out of 889 in 2024-25, and had worked on a hypothetical strength of 600 MBBS and 60 MD/MS students. On its own showing, the recommendation of 3 April 2025 recorded that complete data for an accurate cost assessment was not available and asked for a detailed cost sheet, yet the Directorate ordered refunds without that exercise ever being done. Chartered accountant certificates showing the institution's losses had been ignored, year-on-year cost escalation had not been considered, and the recommendation bore the signatures of only four of the Committee's five members.

Counsel relied on the High Court's own judgments of 24 August 2023 in WPC Nos. 3415 and 3488 of 2023 and of 7 September 2023 in WPC No. 3782 of 2023, which had set aside an earlier fee fixation by the same Committee and the State for non-compliance with Section 9(2), and on P.A. Inamdar v. State of Maharashtra, (2005) 6 SCC 537, Najiya Neermunda v. Kunhitharuvai Memorial Charitable Trust, (2021) 5 SCC 515, and Icon Education Society v. State of Madhya Pradesh for the autonomy of unaided institutions in setting fees. In the alternative, they asked for a remand with an effective hearing.

Mr Manoj Paranjpe, Senior Advocate, with Mr Ujjawal Kumar Gouraha and Mr Kabeer Kalwani for the Balaji college, said the Committee had reduced the charges without any finding of profiteering, unreasonableness or commercialisation and without reasons for disagreeing with the institution's accounts, income and expenditure statements and budget. It had, in effect, fixed the charges itself, when its role was confined to policing profiteering; hostel, mess and transport costs had to be assessed on each institution's own circumstances; the decision had come at the fag end of the academic session; and one Committee member had not signed it. Among the authorities cited were Automotive Tyre Manufacturers Association v. Designated Authority, (2011) 2 SCC 258, Kranti Associates Pvt Ltd v. Masood Ahmed Khan, (2010) 9 SCC 496, Saral Wire Craft Pvt Ltd v. Commissioner of Customs, (2015) 14 SCC 523, Babu Verghese v. Bar Council of Kerala, (1999) 3 SCC 422, and Chhattisgarh Dental College and Research Institute v. Shweta Kabra, 2025 SCC OnLine SC 1169.

The State: a complaint enquiry, eleven hearings and Rs 4.53 lakh excess per student

Mr Sabhyasachi Choubey, Government Advocate, said the petitioners had the wrong provision. The proceedings were not a fee-fixation exercise under Section 9 but a complaint enquiry under Section 4(9), triggered by students' complaints of excess collection and profiteering in hostel, mess and transport charges. The refund direction was therefore not a freestanding act but the statutory consequence of a finding under that provision, and the judgments on the Committee's limited role in fee fixation had no application.

On natural justice, he listed the dates. Notices had been issued and hearings held on 15 January 2024, 7 February 2024, 7 January 2025, 3 February 2025, 19 February 2025, 24 February 2025, 25 February 2025, 27 February 2025, 3 March 2025, 10 March 2025 and 17 March 2025. The college's representatives had appeared and been repeatedly asked for point-wise information: sanctioned layout plans, room details, bills and vouchers, electricity bills, staff particulars, ledgers, construction expenditure, loan documents, chartered accountant certificates, mess contracts, transport agreements, vehicle papers, log books, fuel and maintenance bills and driver particulars. The college itself admitted receiving and replying to the notices. It had never produced the head-wise, student-wise cost justification sought, so the Committee had proceeded on what was on record. A party that withholds the primary material for its own claim, he said, cannot then complain that the authority decided on the material available.

The finding, he added, came from the college's own financial material. Justifiable expenditure on a no-profit, no-loss basis worked out to Rs 96,407 per student per annum against Rs 5,50,000 recovered, an excess of Rs 4,53,593 per student per year. Certificates showing the institution's overall losses did not answer the specific question of what hostel, mess and transport actually cost. The facilities were required to be optional, yet a consolidated Rs 5,50,000 had been collected without showing students could decline any of them. The regulations under Section 13 of the Act fix a quorum of three; four members had signed, and the Act does not demand unanimity. Section 4(9) carries no limitation period, so the complaints were not confined to one session. He also took a preliminary objection that the students to whom refunds had been ordered were necessary parties and had not been impleaded, and relied on the High Court's decision in Disha Education Society v. State of Chhattisgarh, WPC No. 2112 of 2010. Mr Rajkumar Gupta, for the Committee, adopted the same position: the recommendation was made under Section 4(9) after repeated opportunities, on the material available, with the quorum satisfied.

An opportunity to file documents is not consideration of them

Justice Prasad put the issue as whether the recommendation and the consequential orders could stand when the charges had been determined without a proper consideration of the expenditure actually incurred and without the statutory exercise under Section 9 being undertaken in its proper perspective. The record, he found, showed that the colleges had filed material on infrastructure, salaries, electricity, maintenance, fuel, hygiene, transport, staff and other operating costs, together with the actual numbers of hostel residents for each session. The Committee's determination did not demonstrate that any of it had been examined before the permissible charges were fixed.

The regulator, he accepted, is entitled to scrutinise an institution's claimed expenditure and to prevent profiteering and capitation fees; P.A. Inamdar and Modern Dental College and Research Centre v. State of Madhya Pradesh, (2016) 7 SCC 353, leave every institution free to set its own fee subject to that limit. But the regulatory power does not dispense with the duty to consider the material the institution produces, and an authority cannot replace actual expenditure with an assumed figure without recording cogent reasons for rejecting what was filed.

The State's list of hearing dates did not change that. The existence of an opportunity of hearing, the judge wrote, “is distinct from proper consideration of the material furnished” under it. Natural justice requires meaningful consideration of relevant material before an adverse decision, not merely a chance to file documents. He drew on the Supreme Court's exposition of audi alteram partem in Automotive Tyre Manufacturers Association, including the passage from Swadeshi Cotton Mills that a hearing must be a genuine hearing and not a public relations exercise, and on Najiya Neermunda, where the Supreme Court directed a fee committee to reconsider the proposals of self-financing medical colleges after giving their managements a reasonable opportunity, within three months.

The State's attempt to take the proceedings out of Section 9 and into Section 4(9) did not help it. There was no dispute that Section 4(9) lets the Committee enquire into complaints of excess collection. But to decide whether a collection is excessive, the authority must first determine what could lawfully be charged, on the statutory framework and the material before it. Labelling the proceedings a complaint enquiry could not authorise the Committee to disregard the safeguards that govern fee determination; the power to find excess collection carries the obligation to work out the lawful amount correctly, and that cannot rest on assumptions that exclude legitimate expenditure.

Rs 96,407 against Rs 5,50,000 needed a head-by-head explanation

The gap between the Committee's permissible figure of Rs 96,407 and the Rs 5,50,000 said to have been recovered was, the judge said, substantial enough that the authority had to examine actual expenditure under each head and record reasons for accepting or rejecting the particulars filed. A finding of excess collection coupled with a refund direction must show a rational nexus between the material on record and the conclusion. He quoted the summary of the law on reasons in Kranti Associates: reasons restrain arbitrary power, show that relevant grounds were considered, and make judicial review possible, and rubber-stamp reasons are no substitute.

Occupancy mattered. The colleges had filed year-wise figures showing fewer residents than students. If the Committee meant to proceed on a different basis, it had to say why those figures were rejected; expenditure cannot be divorced from the number of students using a facility, particularly where costs have fixed and variable components. Salaries, electricity, maintenance, fuel, infrastructure, hygiene and transport could not be excluded simply because the total looked high; each head had to be tested against the material, the nature of the facility, the number of users and the statutory parameters, with reasons where a claim was rejected. On the chartered accountant certificates, the judge agreed that an overall loss does not justify every individual charge, but held that such material cannot be disregarded where it is relied on to show the actual cost of the regulated facilities. The right question was whether the particular expenditure claimed was genuine and supported, and that exercise had not been satisfactorily undertaken.

Two of the colleges' objections were left undecided because the substantive defect was enough. The argument that only four of five members signed did not need separate examination, though the judge added that satisfying a quorum does not cure a failure to consider relevant financial material. Whether the complaints could range beyond one academic session was also left open, with the observation that a general conclusion about excess collection cannot replace year-wise and head-wise consideration when expenditure and occupancy vary from session to session. The court recorded its awareness of the limited scope of judicial review over expert regulators and said it would not ordinarily substitute its own fee assessment; but review extends to whether the authority acted within the statute, considered relevant material and followed the procedure, and where the foundational exercise fails on that score, remand is necessary. Citing Saral Wire Craft and Babu Verghese, he recalled the rule that an act prescribed by statute to be done in a particular manner must be done that way or not at all.

Order

The recommendation of 3 April 2025, the State order of 18 September 2025 and the Commissioner's order of 23 September 2025 were quashed and set aside insofar as they relate to the two petitioner colleges. The matters were remitted to the Committee for fresh consideration. The colleges are to be given an effective hearing and allowed to place all financial and supporting material on record, after which the authority must pass a fresh, reasoned and speaking order under the Act of 2008, the regulations and the court's observations, considering actual student strength and hostel occupancy for each session, expenditure under every relevant head with its supporting documents, and the distinction between fixed and variable costs. “Such reconsideration shall not be an empty formality,” the judge wrote. The refund directions founded on the quashed determination stand set aside; any question of excess collection will abide by the fresh order. The court expressed no view on what charges will ultimately be permissible and said the Committee's power to prevent profiteering remains fully intact. The exercise is to be completed preferably within three months of receipt of the order, subject to the colleges cooperating and furnishing the material within the time the authority allows. Both petitions were allowed. No costs. The order was reserved on 21 August 2026 and is marked not approved for reporting.