Medical colleges must not collect advance fee from students: HC

JODHPUR: The Rajasthan high court on Monday declared “illegal” levying of advance fee in addition to annual fee for one year from students by private medical institutions and medical or dental institutions run by the state government.

Insisting upon each and every student to submit the bank guarantee at the time of admission equivalent to the fee for a period of three and a half years of course duration is also illegal, the court ruled.

While allowing the PIL filed by Deepesh Singh Beniwal, the division bench of Justice Sangeet Lodha and Justice Rameshwar Vyas said: “The private institutions and the institutions run by the State Government are restrained from recovering any amount as advance fee in addition to the fee for one year from any student admitted to the course.”

The PIL has been filed by the petitioner, challenging the condition imposed by the private medical institutions that the students seeking admission to MBBS Course to submit bank guarantee against the annual fees for next three and a half years of course duration in addition to deposit of annual fee for the first year of the course, at the time of admission.

Beniwal told the court that generally, no bank guarantee is provided by the banks unless the adequate amount is deposited with the banks and thus, the students belonging to middle class families/low income groups are facing grave hardship at the hands of private medical institutions.

According to the petitioner, since the banks require cash margin for issuance of bank guarantee, the parents are required to manage the cash amount of the fees for entire period of MBBS Course in one go.that apart, the banks are charging upfront commission/ fee which ranges between 2.5% to 3% per annum.

“Eight private medical institutions in Rajasthan with an intake capacity of 1,290 students are charging ₹15 lakh per annum as minimum annual tuition fee and thus, the parents are required to submit a minimum bank guarantee ₹52.50 lakh for a period of three and a half years.the upfront commission which the bank would be charging on the said amount would come to ₹4,59,375 Beniwal said.

The bench directed the private institutions and the State Government not to insist upon furnishing of bank guarantee towards the fee for the entire duration of the course from each and every student.

The private medical institutions shall be at liberty to ask for the bond/bank guarantee from a particular student in conformity with the directions issued by the Supreme Court in Islamic Academy’s case.

“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 nationalized bank against which no loan or advance may be granted. The advance fee deposited 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 bench ordered.