Kerala High Court upholds forfeiture clause; sets aside direction to refund 10% exit fee for PG Mop‑Up counselling

A Division Bench of Justice Anil K. Narendran and Justice Muralee Krishna S. heard an appeal by the State of Kerala and the Commissioner for Entrance Examinations challenging a Single Judge order that had directed refund or adjustment of a 10% “exit fee” collected from candidates who surrendered PG seats to participate in State Mop‑Up counselling for NEET‑PG 2021.

The Bench allowed the writ appeal, set aside the Single Judge’s judgment dated 30.01.2024 in W.P.(C) No.16607 of 2023 and dismissed the writ petition. The Court held that the levy and collection of the 10% of the annual tuition fee were made in terms of the prospectus clause and the impugned communication purporting to deny forfeiture was not sustainable. The Court observed that the candidates had “taken a calculated risk” by surrendering allotted seats and that Clause 10‑1.18 of the prospectus governed exit and forfeiture. The Court, in its reasoning, observed: “Clause 10-1.18 of Ext.P1 prospectus is not under challenge in the writ petition. There is no reason for directing the appellants to repay the 10% of the annual tuition fees paid by respondents 1 to 4, in compliance with the condition in Ext.P1 prospectus. The learned Single Judge failed to consider these aspects in their proper perspective while allowing the writ petition. Therefore, the impugned judgment is liable to be set aside.”

Background The dispute arose after four doctors who had secured PG seats in the Kerala State quota under NEET‑PG 2021 exited allotted seats to participate in the State Mop‑Up counselling. The Commissioner of Entrance Examinations required such candidates to pay an “exit fee” equal to 10% of the annual tuition fee (Rs.1,57,500 each in the case of the petitioners) at the time of registering for Mop‑Up. The candidates were informed that the amount would be refunded if they did not obtain admission in the Mop‑Up counselling or would be adjusted against fees if they secured admission. After requests for refund were refused by the authorities by reference to a forfeiture clause in the prospectus (Clause 10‑1.18) and a Government notification (Ext.P6), the candidates filed W.P.(C) No.16607 of 2023 seeking refund, a declaration that Clause 10‑1.18 was inapplicable to them, and quashing of the communication denying refund (Exhibit P14).

The Single Judge allowed the writ petition, quashed Exhibit P14 and directed the State and the Commissioner to refund Rs.1,57,500 each to the petitioners or to adjust the amount against fees payable to the colleges; the direction was to be complied with within four months. The State and the Commissioner appealed under Section 5(i) of the Kerala High Court Act, 1958.

On appeal, the State contended that Clause 10‑1.18 of the approved prospectus expressly provided that a candidate allotted a State quota PG seat who exited after the second round would forfeit 10% of the annual fee, and that the candidates had full knowledge of the consequences when they surrendered seats to participate in Mop‑Up. The petitioners contended that Ext.P6 notification and Clause 5 thereof were not consistent with the prospectus and that the 10% collected by the Commissioner was only a registration requirement for Mop‑Up and not subject to forfeiture.

The Division Bench examined the prospectus clauses and the notifications, noted that Clause 10‑1.18 governed exit and forfeiture and was not challenged in the writ petition, and found that the Single Judge had not given proper weight to these aspects. The Bench held that there was no justification to direct repayment of the 10% exit fee and accordingly allowed the appeal, set aside the Single Judge’s order and dismissed the writ petition. No interim directions granted in the Single Judge’s order remained operative as the appellate order vacated the reliefs previously accorded.

Case Details: Case No.: WA No. 791 of 2024 (against judgment dated 30.01.2024 in W.P.(C) No.16607 of 2023) Case Title: State of Kerala & Commissioner of Entrance Examinations v. Dr. Anju Mariya Varghese & Ors. Appearances: For the Petitioner(s): Smt. Nisha Bose, Senior Government Pleader For the Respondent(s): Shri Amal Parthasaradhy; Sri Arun B. Vargheese; Sri P.M. Saneer; Smt. Rakhi Raj; Sri Gibi C. George; Adv. Tony George Kannanthanam