Supreme Court caps medical college subvention at 2002-03, ties it to TMA Pai ruling
A bench of Justices Dipankar Datta and Sheel Nagu held that the subvention scheme died on 31.10.2002 when TMA Pai declared it unconstitutional, barring payments beyond that year.
The Supreme Court has held that a subvention scheme funding private medical colleges ceased to operate on 31 October 2002, the date the 11-Judge Bench in TMA Pai Foundation impliedly declared the scheme unconstitutional. The Court, in Government of India & Anr. v. Sri Devraj Urs Medical College (2026 INSC 799), partly allowed the Government's appeal and set aside directions of the Karnataka High Court that required the Centre to pay subvention for the full 5-year course for students admitted in 2002-03. Justices Dipankar Datta and Sheel Nagu found the High Court wrong in extending payments beyond that academic year. The scheme, floated under an interim order dated 11 August 1995, paid Rs.5,000 per student per annum to eligible colleges. Its purpose was to eliminate capitation fees and keep merit as the basis for admission to professional courses.
How the dispute reached the Court
The subvention scheme originated in the interim order dated 11 August 1995 in TMA Pai Foundation and Ors. v. State of Karnataka. The same order referred the underlying issue to a larger Bench, which became the 11-Judge Bench that delivered its final decision on 31 October 2002.
The Centre issued a communication dated 13 May 2005 denying payment of the subvention amount for the academic year 2002-03 and onwards. Sri Devraj Urs Medical College challenged that communication before the Karnataka High Court.
The Single Bench, by order dated 5 November 2008 in Writ Petition No.15640 of 2005, quashed the communication and issued a writ of mandamus against the Government of India to pay subvention for students admitted latest in 2002-03, for 5 years or until course completion, whichever was earlier. It denied relief for students admitted in 2003-04 and after. The Division Bench upheld that order on 3 July 2009 in Writ Appeal No.1407 of 2009. The Government of India and Government of Karnataka appealed.
What the Court held on the main issue
The Court framed two questions: whether the final TMA Pai decision required interference with the High Court orders, and whether the appellant Governments were entitled to relief.
The Court held that the final decision by the 11-Judge Bench “impliedly declared the subvention scheme to be unconstitutional.” The directions under the scheme had been made subject to the final outcome in TMA Pai, pronounced on 31 October 2002.
On that footing, the Court held that the subvention scheme “died its own death” on 31 October 2002. Payment for the entire 5-year course after academic year 2002-03 was therefore impermissible once the scheme stood declared unconstitutional.
Why the High Court's prospectivity reading failed
The Single Bench had treated the TMA Pai ruling as prospective, reading that into the clarificatory decision dated 1 April 2003 in State of Karnataka v. TMA Pai Foundation and Ors. (2003) 6 SCC 790. The Court found that the clarificatory order did not expressly say the ratio was prospective.
The 2003 order set aside the challenged High Court orders, remitted the matters for fresh consideration, and directed that status quo continue unless modified. It also directed that all statutory enactments, orders, schemes and regulations be brought in conformity with the 31 October 2002 decision.
Relying on P.V. George v. State of Kerala (2007) 3 SCC 557, the Court noted that a decision is retrospective unless stated otherwise: “The law declared by a Court will have a retrospective effect if not otherwise stated.” Reading paragraph 393 of TMA Pai with the 2003 order, the Court held prospective application was intended only for statutory provisions contrary to the ratio, not for the subvention scheme, which was an executive instruction.
The pleading and data gap
The Court asked the college whether it had furnished data on fees charged and expenses incurred for 2002-03. The answer was in the negative. Without such data, the Court could not determine whether the college's revenue from tuition fees and other sources fell short of running costs.
Drawing on Bharat Singh v. State of Haryana (1988) 4 SCC 534, the Court held that a point requiring factual support must be pleaded and proved by evidence in the writ petition or counter-affidavit. Absent such pleading, the Court declined to sustain the direction for payment beyond 2002-03.
The Court also took judicial notice that only two colleges approached it against the stoppage despite the measure affecting many professional colleges. It treated this as insufficient for an adverse inference but of persuasive force.
Annual, not lump-sum, payment
The Court noted the scheme obligated the Central Government to pay the subvention amount annually to each eligible college, not for the entire course in a lump sum. It followed that the Centre was not bound to pay for the full 5-year course in one go, and the High Court erred in directing release for the entire 5 years even after 2002-03.
Order
The Court partly upheld the orders of the Single Bench and Division Bench, to the extent they denied subvention beyond academic year 2002-03. It set aside those orders to the extent they directed payment of subvention for the entire 5-year course for students admitted in 2002-03. The appeal was partly allowed.
In the connected matter arising out of SLP (C) No.9079 of 2011, leave was granted and its disposal was directed to be governed mutatis mutandis by this order. The judgment was pronounced on 4 August 2026.