Soumya Ranjan Panda & Orsv.Subhalaxmi Dash & Ors

Legal Analysis: Soumya Ranjan Panda & Ors. vs. Subhalaxmi Dash & Ors

Citation: 2026 INSC 488 (Reportable)
Court: Supreme Court of India
Bench: Justice Vikram Nath and Justice Sandeep Mehta (Division Bench)
Date of Decision: May 14, 2026
Nature of Judgment: Civil Appeals under Article 136 of the Constitution of India arising out of special leave petitions challenging the orders of the Orissa High Court concerning transfer of medical students from a defunct college.

Synopsis of the Judgment

Two batches of MBBS students admitted in SRMCH (Odisha) faced an uncertain future when the college’s recognition was not renewed due to deficiencies in infrastructure and faculty. The High Court directed relocation of students to other medical colleges. On appeal, the Supreme Court passed interim orders facilitating the transfer of 123 students to three private medical colleges (KIMS, IMS, Hi‑Tech). The students paid fees at Government rates pursuant to interim directions. The transferee colleges sought reimbursement of the difference between their actual fee structure and the Government rates. The defaulting institution (Selvam Trust) had deposited ₹2 crores with the Court and furnished a ₹10 crores bank guarantee with the MCI/NMC. The Court held that the students should not get a windfall; they were liable to pay fees at the rates of the original college (SRMCH), not Government rates. The amounts deposited by the defaulting Trust were directed to be distributed equally among the three transferee colleges. The students were permitted to make representations to the MCI/NMC for settlement of balance dues. The appeal was closed.

1. Basic Information of the Judgment

• Case Title: Soumya Ranjan Panda & Ors. vs. Subhalaxmi Dash & Ors. (with connected matters)

• Civil Appeal Nos.: Arising out of SLP(C) Nos. 35075-35076 of 2015

• Bench: Justice Vikram Nath and Justice Sandeep Mehta (Division Bench)

• Date of Decision: May 14, 2026

• Citation: 2026 INSC 488 (Reportable)

• Appeal From: Judgment and order dated 18.11.2015 and 09.12.2015 of the Orissa High Court

2. Legal Framework

Laws and Provisions Involved

• Constitution of India, 1950: Article 142 (power of Supreme Court to do complete justice) – interim directions were issued under this provision.

• Medical Council of India Act / National Medical Commission Act, 2019: Regulatory framework for recognition of medical colleges.

• Indian Contract Act, 1872: Principles of unjust enrichment, quasi‑contract.

• Maxim invoked: Commodum ex injuria sua nemo habere debet – no one should derive a benefit from their own wrong.

Key Precedents Cited

• Priya Gupta v. State of Chhattisgarh (2012) 7 SCC 433 – Time schedule for medical admissions.

• Hind Charitable Trust & Ors. v. Union of India & Ors. (W.P.(Civil) No. 469 of 2014) – Interim orders dated 18.09.2014 and 24.09.2014 of the Supreme Court (quoted extensively) directing that students admitted pursuant to those orders would pay fees at Government rates.

What the Judgment is About

The judgment resolves the financial liabilities arising from an extraordinary situation where medical students were transferred mid‑course from a defaulting private college to other private colleges. It determines how the fee differential should be apportioned between the defaulting institution, the students, and the transferee colleges. The Court holds that the defaulting institution’s deposits (₹2 crores + ₹10 crores bank guarantee) must be used to compensate the transferee colleges, and that the students are liable to pay fees at the rates of the original college (SRMCH), not at subsidised Government rates, to avoid unjust enrichment.

3. Relevant Facts

• Defaulting college: SRMCH (under Selvam Educational and Charitable Trust) admitted MBBS students for 2013‑14 and 2014‑15. Its recognition was not renewed due to deficiencies in infrastructure, faculty, and regulatory compliances.

• Writ Petition (C) No. 681 of 2014 filed by SRMCH challenging non‑renewal was dismissed in limine by the Supreme Court on 08.08.2014.

• Transfer of students: The High Court and later the Supreme Court directed relocation of 123 students to three private medical colleges: KIMS (41 students), IMS (41 students), and Hi‑Tech Medical College (40 students).

• Interim orders on fees: By orders dated 18.09.2014 and 24.09.2014 in Hind Charitable Trust, the Supreme Court directed that students admitted to private colleges under the interim arrangement shall pay fees at Government rates. These orders applied to the present students as well.

• Payments made: Students paid approximately ₹30,000 per annum (Government rate). The fee structure of SRMCH was about ₹2,12,500 per semester (₹12,75,000 for 6 semesters). The transferee colleges’ fees were higher (₹3,00,000 per semester, total ₹18‑21 lakhs).

• Deposits by defaulting Trust: ₹2 crores deposited with the Supreme Court Registry (now ₹3.58 crores with interest). ₹10 crores bank guarantee furnished with MCI/NMC.

• Undertakings by students: At the time of course completion, students gave undertakings to abide by the final orders of the Court on fee liability.

• Present applications: Transferee colleges filed IAs seeking directions for payment of outstanding fees.

4. Issues

1. Whether the transferred students are liable to pay fees at Government rates (as per interim orders) or at the rates prevailing in the transferee colleges (or at the rates of the original college, SRMCH).

2. How the financial liability for the differential fee should be apportioned between the defaulting institution (Selvam Trust), the students, the State, and the MCI/NMC.

3. Whether the amounts deposited by the defaulting Trust (₹2 crores + ₹10 crores bank guarantee) can be utilised to compensate the transferee colleges.

5. Ratio Decidendi

A. No unjust enrichment for students (Paras 35-36, 48-53):

The Court held that the students had initially taken admission in a private medical college (SRMCH) with a higher fee structure. They had not qualified for Government colleges. The interim direction to pay fees at Government rates was an emergent measure to protect their academic careers, not a permanent concession. Now that they have completed the course without loss of academic year, they cannot be allowed to derive a windfall or bonanza. They are liable to pay fees at the rates that would have been payable to SRMCH (the original college), not at the subsidised Government rates. The Court noted that the students had given undertakings to abide by the final orders.

B. Defaulting institution cannot benefit from its own wrong (Paras 37-38):

Applying the maxim Commodum ex injuria sua nemo habere debet, the Court held that SRMCH/Selvam Trust, having failed to maintain required standards and having its recognition not renewed, cannot be permitted to retain the excess fees collected from students or to avoid liability. The findings of deficiencies were affirmed by the dismissal of W.P.(C) No. 681/2014.

C. Utilisation of deposits (Paras 44-47):

The ₹2 crores deposited with the Supreme Court Registry (with accrued interest) and the ₹10 crores bank guarantee furnished with the MCI/NMC shall be paid to the three transferee colleges in equal proportions. The MCI/NMC was directed to release the bank guarantee amount within three months. The Court rejected the NMC’s contention that it had an exclusive lien over the bank guarantee, stating that no overriding charge was demonstrated.

D. Transferee colleges to be compensated at SRMCH rates (Paras 42, 49):

The transferee colleges fairly conceded that they would be satisfied with reimbursement at the rates charged by SRMCH (₹12.75 lakhs per student for the relevant period), not their own higher rates. The total amount due to the three colleges was approximately ₹16.2 crores. The available deposits (₹14 crores) would partially cover this; the shortfall may be recovered from the students.

E. Students’ residual liability (Paras 53-54):

Since the students have passed out and their present status is not known, the Court permitted the transferee colleges to make representations to the MCI/NMC with details of the exact shortfall due from each student (applying SRMCH rates) for recovery of remaining dues. The Court expressed hope that the NMC would sympathetically consider such representations, keeping in mind the unique circumstances and the fact that the students had completed their courses.

F. Government quota classification not relevant (Para 26):

The Court held that the question of classifying students against Government quota in transferee colleges did not arise because there was no material to show that any of those colleges had vacant Government quota seats. All students were presumed to have been accommodated against management quota seats.

6. New Legal Principles Established / Reiterated

• Interim orders protecting students do not create a permanent right to subsidised fees: Even where the Supreme Court directs students to pay fees at Government rates as an interim measure to protect their careers, such orders do not operate as a final determination. Upon final adjudication, the students may be held liable to pay the fees that would have been payable to the original institution.

• The maxim “Commodum ex injuria sua nemo habere debet” applies to defaulting educational institutions: A medical college that fails to maintain regulatory standards and causes students to be transferred cannot retain excess fees collected or avoid compensating the transferee colleges.

• Bank guarantees furnished to regulatory bodies (MCI/NMC) may be diverted to compensate affected third parties when no overriding statutory charge exists: The Court directed release of a ₹10 crores bank guarantee to the transferee colleges, rejecting the NMC’s claim of exclusive lien.

7. Court’s Analysis and Examination of Concepts

The Court first traced the factual background, noting that SRMCH’s recognition was not renewed due to deficiencies and that its challenge was dismissed. It then examined the interim orders of 18.09.2014 and 24.09.2014 in Hind Charitable Trust, which had directed that students admitted under the interim arrangement would pay fees at Government rates. The Court noted that these orders were emergent measures, not final determinations on fee liability.

The Court analysed the fee charts of the transferee colleges, observing that their fee structure was higher than that of SRMCH. However, the colleges conceded that they would accept reimbursement at SRMCH rates. The Court then computed the total amount due at SRMCH rates (approximately ₹16.2 crores) and the total available deposits (₹14 crores).

The Court applied the principle of unjust enrichment against the students, holding that they had initially contracted to pay higher fees to a private college and should not receive a windfall merely because of the interim orders. It also applied the maxim against the defaulting Trust, holding that it cannot benefit from its own wrong.

The Court directed the release of the bank guarantee, rejecting the NMC’s objection. It noted that the NMC could pursue its own claims against the Trust separately. The Court also permitted the transferee colleges to recover the balance shortfall from the students through representations to the NMC, leaving the actual mode of recovery to be worked out.

8. Critical Analysis

Strengths: The judgment achieves a fair balance between protecting students (who completed their courses without loss of academic year) and compensating the transferee colleges (who absorbed the students under difficult circumstances). It prevents unjust enrichment of students who would otherwise pay only a fraction of what they originally agreed to pay. The invocation of the Latin maxim is apt. The direction to utilise the defaulting Trust’s deposits is equitable.

Potential concerns: The judgment leaves the actual recovery of the balance shortfall from students to the NMC, which may not have the machinery to enforce payment from individual doctors now in practice. The students may not voluntarily pay. The Court also did not fix a timeline for the NMC to decide the representations. The judgment also does not specify how the shortfall (₹2.2 crores approximately) will be covered if the NMC refuses to enforce recovery. However, the Court’s primary aim was to set the legal principles; enforcement is left to the regulatory authority.

Practical impact: This judgment will be cited in similar cases where students are transferred from a defaulting educational institution to another institution under court orders. It clarifies that interim fee concessions do not create permanent rights. It also affirms that defaulting institutions cannot avoid financial liability by merely depositing amounts with the court or regulatory bodies; those amounts can be diverted to compensate the receiving institutions.

9. Final Outcome

• Civil Appeals closed (disposed of).

• I.A. Nos. 73763/2019, 69514/2019, 151684/2022 (applications for direction/clarification by transferee colleges) are disposed of with the following directions:
  The amount of approximately ₹10 crores covered by the bank guarantee furnished by Selvam Trust with the MCI/NMC shall be made available for distribution amongst the three transferee colleges in equal proportions. The MCI/NMC shall release and pay the amount within three months.
  The amount of ₹2 crores deposited by the Trust with the Registry of this Court, along with accrued interest (now ₹3.58 crores), shall also be divided into three equal portions and disbursed to the transferee colleges.
  The students are liable to pay fees at the rates applicable to SRMCH (the original college), not at Government rates. The transferee colleges may make representations to the MCI/NMC for recovery of the remaining shortfall from each student.
  Other pending applications disposed of.

• No order as to costs.

10. Practical Application (Use in Court)

• For transferee colleges (receiving institutions): When you accommodate students transferred from a defaulting institution under court orders, immediately document the fee differential and seek directions from the court for reimbursement. Cite this judgment to argue that the defaulting institution’s deposits and bank guarantees should be released to you, and that students should be held liable for the fees they originally contracted to pay.

• For students (transferred): If you are in a similar situation, do not assume that interim orders directing payment of subsidised fees will be made permanent. Be prepared to pay the fee that would have been payable to the original institution. Set aside funds accordingly. The court will not allow unjust enrichment.

• For defaulting institutions: If you are the defaulting college, you cannot avoid financial liability by merely depositing amounts with the court or regulatory bodies. Those amounts may be diverted to compensate the receiving institutions. The maxim commodum ex injuria sua nemo habere debet will be applied against you.

11.  Court Lines

“The situation at hand is well defined by the latin maxim Commodum ex injuria sua nemo habere debet i.e., no one should derive a benefit from their own wrong.” (Para 38)

“Thus, neither the students can be given undue advantage or bonanza nor can the defaulting institution, i.e., the SRMCH/Selvam Trust, be permitted to take benefit of its own follies.” (Para 36)

“What arises for consideration is whether the students, who had initially taken admission in a private medical college having a higher fee structure, can be permitted to continue to avail the benefit of Government-rate fees on account of the interim directions issued by this Court even though in the first place, they had not qualified for the Government colleges in the admission process conducted for this purpose.” (Para 35)

“In our opinion, this would amount to unjust enrichment of these transferee students while being conscious of the fact that they had to face a chaotic situation of being transferred to different medical colleges mid-session. However, all interests of these students were duly protected by this Court ensuring that they cleared the medical course without losing a single academic year.” (Para 36)

12. Legal Strategy Insight

• For transferee colleges (applicants): In similar situations, immediately after receiving transferred students, file an interlocutory application before the court detailing the fee differential, the financial burden, and the fact that the defaulting institution has assets (bank guarantees, deposits). Request the court to (i) direct the defaulting institution to pay the differential, (ii) direct the students to pay fees at the original institution’s rates, (iii) order release of any bank guarantees or deposits held by the court or regulatory bodies. In your application, include a chart comparing fee structures.

• For students (respondents): If you are a transferred student, proactively negotiate with the transferee college. Offer to pay the original institution’s rate (which is usually lower than the transferee college’s rate) rather than the subsidised Government rate. This judgment holds you liable for SRMCH rates, not Government rates. To avoid collection actions, approach the college and the NMC with a payment plan.

• For defaulting institutions (like Selvam Trust): If you are in a similar position, do not rely on deposits or bank guarantees as a shield. The court will order those amounts to be released to compensate the receiving institutions. Your best strategy is to proactively settle with the transferee colleges and the students to avoid further litigation and adverse orders.