Supreme Court Directs Rs 12 Crore Fund Release to Colleges That Absorbed SRMCH Students

A bench of Justices Vikram Nath and Sandeep Mehta holds that students who completed MBBS at private rates cannot retain a fee windfall from interim court orders.

Over a decade after students at Sardar Rajas Medical College, Hospital and Research Centre, Jaring, Kalahandi, Odisha found their academic futures in jeopardy, the Supreme Court has finally resolved the financial fallout. 

On 14 May 2026, a division bench of Justice Vikram Nath and Justice Sandeep Mehta directed that approximately Rs 10 crores held by way of bank guarantees with the Medical Council of India (now the National Medical Commission) and Rs 2 crores deposited with the Court's Registry together with accrued interest  be distributed equally among the three private medical colleges that absorbed the displaced students. 

The Court held that the students, having completed their MBBS courses without losing a single academic year, could not be permitted to retain the benefit of heavily subsidised Government-rate fees when they had originally contracted to pay private-college rates.

How the Dispute Reached the Court

SRMCH was run by the Selvam Educational and Charitable Trust. Two batches of MBBS students were admitted for the academic sessions 2013–2014 and 2014–2015. During inspections, the Medical Council of India found serious deficiencies in infrastructure, teaching faculty, and other regulatory requirements, and recommended that renewal of permission for the 2014–2015 batch be denied. 

The Central Government accepted that recommendation. SRMCH challenged the denial before the Supreme Court in Writ Petition (C) No. 681 of 2014, but the petition was dismissed in limine on 8 August 2014, firmly affirming the MCI's findings.

With recognition denied, the academic future of students in both batches was placed in grave jeopardy. The High Court of Orissa stepped in first, directing that students be relocated to recognised medical colleges within the State. The High Court drew a distinction between Government-quota students, who could go to Government colleges, and management-quota students, who would go to private institutions. 

That quota-based approach itself generated fresh controversy, as it threatened to disturb existing admission frameworks in Government colleges and disadvantage higher-merit aspirants.

The High Court's orders of 18 November 2015 and 9 December 2015 were challenged before the Supreme Court by way of special leave petitions. While those petitions were pending, the Court issued a series of interim orders that reshaped the entire relocation exercise.

The Interim Architecture That Governed the Students' Courses

By order dated 8 January 2016, the Supreme Court expressed reservations about the High Court's quota-based relocation approach. A further order dated 12 January 2016 permitted students to continue in recognised private institutions and enabled State authorities to carry out relocation in a manner that preserved academic continuity.

Separately, in Hind Charitable Trust & Ors. v. Union of India & Ors. (W.P.(Civil) No. 469 of 2014), the Supreme Court had, by an interim order dated 18 September 2014, permitted admissions to MBBS courses in private colleges whose renewal was pending or denied, subject to conditions. 

A clarification order dated 24 September 2014 directed that fees chargeable from such students “shall be at the same rates as applicable to the students in Government medical colleges” and that this subsidised rate would continue until the students passed out. That direction applied directly to admissions made at SRMCH for both the 2013–2014 and 2014–2015 sessions.

Pursuant to the Supreme Court's directions, the State Government conducted online counselling through the Director of Medical Education and Training, Odisha. Of 124 affected students, one withdrew before counselling and one more did not take admission after allocation, resulting in 122 provisional admissions. Forty-one students each were relocated to Kalinga Institute of Medical Sciences (KIMS), Bhubaneswar, and Institute of Medical Sciences & SUM Hospital, Bhubaneswar, and 40 students to Hi-Tech Medical College & Hospital, Bhubaneswar.

Throughout their courses at these transferee colleges, the students paid fees only at the Government rate — approximately Rs 30,000 per annum — pursuant to the Court's interim directions. The transferee colleges, having received students under Court orders, could not protest the shortfall at that stage.

The Fee Gap and the Funds Available

The transferee colleges filed interlocutory applications — I.A. Nos. 73763 of 2019, 69514 of 2019, and 151684 of 2022, seeking directions for payment or reimbursement of fees for the education they had imparted. Their charts showed that the fee structure at each transferee college was substantially higher than that at SRMCH, which was itself higher than the Government rate.

By way of illustration, KIMS charged Rs 3,00,000 per semester for the relevant semesters, against Rs 2,12,500 per semester at SRMCH. For the 33 students of the 2013–2014 batch transferred to KIMS, the total fee at SRMCH rates would have been Rs 4,20,75,000. For the 8 students of the 2014–2015 batch, it would have been Rs 1,19,00,000. Across all three colleges, the Court calculated that the students would have paid approximately Rs 16.2 crores in aggregate had SRMCH's own fee structure been applied — a figure the transferee colleges' counsel accepted as sufficient reimbursement, conceding that they would not press for their own higher private rates.

Against this, two pools of money were available. The Selvam Trust had deposited Rs 2 crores with the Registry of the Supreme Court pursuant to an order dated 19 April 2016; with accrued interest, this had grown to Rs 3,58,69,331. 

The Trust had also furnished bank guarantees of approximately Rs 10 crores with the MCI/NMC as security in connection with regulatory requirements. Together, these amounts aggregated to approximately Rs 14 crores, still short of the Rs 16.2 crore liability at SRMCH rates, and far short of what the transferee colleges would ordinarily charge their own students.

The NMC argued that the Rs 10 crore bank guarantee was subject to regulatory disposition and might be transferred to the State Government. The Court rejected that position, finding that no overriding charge or exclusive lien of the MCI/NMC over the bank guarantee amount had been demonstrated. The Court added that the NMC, as a statutory regulatory authority, remained free to take appropriate steps in accordance with law to recover any applicable levies from the defaulting institution through separate proceedings.

Why the Court Rejected a Quota-Based Fee Analysis

The State of Odisha and the NMC had urged that fee liability should be determined by classifying students according to their original admission quota — Government-quota students paying Government rates, management-quota students paying higher rates. The Court declined to adopt this framework.

The reason was straightforward: there was no material on record to show that any of the three transferee colleges had vacant seats under the Government quota at the time of relocation. The Court held that the question of admitting students against Government-quota seats could only arise if such vacancies existed. In their absence, all transferred students had to be treated as having been accommodated against private or management-quota seats, and the fee structure applicable to those seats would govern the liability analysis.

The Court's Reasoning on Equitable Apportionment

The Court framed the central question as one of equitable apportionment among three sets of interests: the students, the Selvam Trust, and the transferee colleges.

On the students, the Court was direct. These students had originally taken admission in SRMCH, a private medical institution, and had consciously contracted to pay at private-college fee rates. The Court observed that, on their own merit, they may not have secured admission to Government medical colleges. 

The interim direction to pay Government-rate fees was an emergency measure to tide over the crisis, not a permanent entitlement. The students had given undertakings to the transferee colleges at the time of receiving course-completion documents, acknowledging that fee liability remained pending before the Court and that they would abide by its final directions.

The Court invoked the Latin maxim commodum ex injuria sua nemo habere debet — no one should derive a benefit from their own wrong and applied it primarily to the Selvam Trust. SRMCH had charged students fees substantially higher than Government rates, collected Rs 4,25,000 per student for the 2014–2015 batch, and then failed to maintain the requisite standards. Despite directions to refund the excess fee of Rs 3,95,000 per student over the permissible Government rate, the Trust had not paid that amount and continued to retain it. The Court held that the defaulting institution could not be permitted to take benefit of its own failings.

At the same time, the Court was careful not to impose an unbounded burden on the students. It noted that verifying at this belated stage whether all students had paid even the Government-rate tranches in full would be impractical. The Court's solution was to direct the primary financial liability onto the Selvam Trust's deposited funds, while giving the transferee colleges a mechanism to pursue any remaining shortfall from individual students through the NMC.

Order

The Court directed that the approximately Rs 10 crores covered by the bank guarantees furnished by the Selvam Trust with the MCI/NMC be released and paid to the three transferee colleges in equal proportions within three months. The MCI/NMC was directed to ensure this disbursement into the colleges' respective bank accounts.

The Rs 2 crores deposited by the Trust with the Registry of the Supreme Court, along with accrued interest, was also directed to be divided into three equal portions and disbursed to the transferee colleges. The colleges' Advocates-on-Record were directed to furnish bank details to the Registry within two weeks, upon which the Registry would take steps for disbursement.

On the students' residual liability, the Court permitted the transferee colleges to make representations to the NMC with details of the exact shortfall of fees due from each student, calculated at SRMCH rates. The NMC was directed to provide redressal for recovery of the deficit, if any, from the passed-out students. 

Any excess amount recovered from students may be used to recoup the Rs 10 crore bank guarantee amount directed to be paid by the NMC. The NMC was also directed to take into account and adjust the amount initially paid by students at the time of admission to SRMCH when evaluating individual liabilities.

Students who comply with the fee liability determined under the judgment are entitled to receive their academic and course-completion documents, certificates, and other consequential records forthwith.

The Court clarified that its observations would not prejudice the claims or defences of the Selvam Trust or SRMCH in any appropriate proceedings. I.A. Nos. 73763 of 2019, 69514 of 2019, and 151684 of 2022 were disposed of accordingly. The appeals were closed and consigned to the record.