Subject Matter: Resolution of outstanding educational fee liabilities and financial apportionment arising from the mid-session relocation of MBBS students from a defaulting medical college to three transferee private medical institutions.
Final Outcome: Appeals closed. The Supreme Court directed the complete disbursal of ₹12 crores (plus accrued interest) deposited by the defaulting trust to the transferee colleges. It further permitted the colleges to recover the remaining fee deficits from the passed-out students based on the original college’s fee rates via a regulatory framework managed by the National Medical Commission (NMC).
1. Introduction and Crystallization of the Dispute
The matter originally commenced as a challenge to an Orissa High Court directive concerning the relocation of MBBS students from the defunct Sardar Rajas Medical College, Hospital and Research Centre (SRMCH). SRMCH was managed by the Selvam Educational and Charitable Trust. Over time, the core controversy shifted.
Through a series of interim orders, the Supreme Court successfully protected the students’ academic careers by overseeing their relocation to three recognized private institutions (“transferee colleges”): Kalinga Institute of Medical Sciences (KIMS), Institute of Medical Sciences & SUM Hospital, and Hi-Tech Medical College & Hospital. Consequently, the final dispute shrank exclusively to the equitable resolution of financial liabilities and the recovery of outstanding educational fees claimed by these transferee colleges.
2. Background and the Institutional Default
SRMCH admitted two batches of MBBS students during the 2013–2014 and 2014–2015 academic sessions. Subsequent regulatory inspections by the Medical Council of India (MCI/NMC) exposed severe infrastructure deficiencies and a shortage of teaching faculty, leading to a denial of its recognition renewal.
SRMCH’s legal challenge against this de-recognition was dismissed by the Supreme Court in 2014. To prevent the loss of an academic year, a total of 124 affected students were subjected to a State-supervised online counseling mechanism. This resulted in 122 students being provisionally distributed across the three transferee private medical colleges.
3. Fee Discrepancies and Contentions of the Parties
A sharp financial mismatch arose due to varying fee structures and interim judicial mandates:
- The Transferee Colleges: They argued that they absorbed the sudden influx of students and provided full medical training and stipends. However, under the Court’s interim orders, the students paid only heavily subsidized, government-rate fees (approx. ₹30,000 per annum), leaving a massive deficit relative to the actual costs incurred by these private institutions. They agreed to settle for reimbursement calculated at SRMCH’s original rates (ranging between ₹12.75 lakhs to ₹14.87 lakhs per student in aggregate) rather than their own higher standard fees.
- The Students: Represented by senior counsel, the students contended that they were victims of institutional failure. They argued that having completed their courses under stressful conditions, they should not be saddled with retroactive financial burdens.
- The Selvam Trust: The defaulting management claimed its regulatory disputes with the MCI were ongoing and argued that it should not bear the entire financial burden since the students received equivalent or superior education at the transferee colleges.
4. Findings and Allocation of Financial Liability
The Supreme Court evaluated the situation using the legal maxim Commodum ex injuria sua nemo habere debet (no one should derive a benefit from their own wrong). It held that while the students faced chaos, allowing them to complete a private medical course at government rates would constitute “unjust enrichment,” especially since they originally contracted to pay higher private fees and might not have qualified for highly competitive government seats on merit. Concurrently, the Selvam Trust could not evade liability for its operational failures.
The Court determined that the aggregate amount due to the three colleges—even when calculated at the lower SRMCH fee baseline—stood at approximately ₹16.2 crores. To satisfy this, the Court targeted the security pools established by the defaulting Trust.
5. Directives on Disbursal and Recovery Mechanisms
To equitably close the shortfall, the Court issued the following operational orders:
- Release of Funds: The Court directed that the ₹10 crore bank guarantee furnished by the Selvam Trust to the MCI/NMC, alongside the ₹2 crores (which grew to over ₹3.58 crores with accrued interest) deposited with the Supreme Court Registry, be released immediately. These accumulated funds (approx. ₹13.58 crores) must be divided and disbursed in equal proportions among the three transferee colleges within three months.
- Recovery from Passed-out Students: Recognizing a remaining deficit of roughly ₹2.2 crores, the Court permitted the transferee colleges to submit formal representations to the NMC mapping out the exact student-wise shortfalls. The NMC is mandated to recover these residual deficits from the passed-out students, factoring in any initial fees the students paid to SRMCH at the time of admission.
- Release of Certificates: The Court clarified that all students who fulfill their designated outstanding fee obligations shall be immediately entitled to receive their degree certificates, migration records, and other course-completion documentation.
2026 INSC 488
Soumya Ranjan Panda &Ors. V. Subhalaxmi Dash &Ors. (D.O.J. 14.05.2026)
