The Supreme Court has partly allowed appeals filed by the Government of India and the Government of Karnataka, ruling that a private medical college cannot claim government subvention payments beyond the 2002-03 academic year under an interim scheme that ceased after the Constitution Bench judgment in the T.M.A. Pai Foundation case. The Court held that the Karnataka High Court erred in directing payment for the entire five-year duration of students admitted in 2002-03 once the underlying scheme had effectively come to an end.
Background of the Case
The dispute arose after the Central Government refused to release subvention amounts from the academic year 2002-03 onwards to Sri Devraj Urs Medical College. The college challenged the decision before the Karnataka High Court.
A Single Judge quashed the government's communication denying payment and directed the Union Government to continue paying the subvention for students admitted up to the academic year 2002-03 until they completed the course or for five years, whichever was earlier. The Division Bench upheld that view, leading the Government of India and the State of Karnataka to approach the Supreme Court.
Court's Observations
A Bench of Justice Dipankar Datta and Justice Sheel Nagu examined the origin of the subvention scheme, noting that it had been introduced through the Supreme Court's interim order dated August 11, 1995, during the pendency of the T.M.A. Pai Foundation litigation. The arrangement was intended to discourage capitation fees and promote merit-based admissions.
The Court observed that the respondent college had not placed any material before it showing whether the fees collected from students and other sources were insufficient to meet the institution's expenses.
“In the absence of any data provided by the respondent-college, we are unable to adjudicate upon the said aspect,” the Bench observed while noting the absence of factual pleadings on the institution's financial position.
The Bench further held that once the Constitution Bench delivered its final judgment in T.M.A. Pai Foundation on October 31, 2002, the interim subvention scheme could no longer survive.
Rejecting the High Court's reasoning that the benefit should continue for the full duration of the students' course, the Supreme Court said:
“The scheme of subvention... died its own death on 31.10.2002 when the scheme was declared unconstitutional by the final decision in T.M.A. Pai Foundation.”
The Court also clarified that the Constitution Bench judgment was not expressly prospective in operation. Therefore, the interim executive scheme could not continue merely because students had already been admitted under it.
Supreme Court's Decision
Allowing the appeal in part, the Supreme Court set aside the Karnataka High Court's directions requiring payment of subvention for the entire five-year course to students admitted in the academic year 2002-03.
The Bench held that while the High Court was correct in refusing subvention for admissions made after 2002-03, it was incorrect in extending the benefit for the complete duration of the course after the interim scheme had ceased to exist.
Accordingly, the Court modified the High Court's orders and held that the Government was not liable to continue the subvention beyond the academic year 2002-03.
The connected appeal arising from SLP (C) No. 9079 of 2011 was also disposed of on the same terms.
Case Details
Case Title: Government of India & Anr. v. Sri Devraj Urs Medical College
Case Number: Civil Appeal No. 10669 of 2010
Judge: Justice Dipankar Datta and Justice Sheel Nagu
Decision Date: August 4, 2026
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