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INTRODUCTION

Sehgal School of Competition Vs. Dalbir Singh [III (2009) CPJ 33 (NC)

In this case, the appellants, Sehgal school of competition appeals before National Consumer Disputes Redressal Commission, New Delhi because they are not satisfied with the decision of State Commission. Dalbir singh was the respondent, who earlier filed a case against the appellants before District Forum. In this case, the appeal was again dismissed by National Consumer Disputes Redressal Commission and the decision remain the same.

It is the case of consumer protection act and the judgement was clearly based on principle of equity and natural justice. It is a case related to all kinds of educational institutes like universities, collages, coaching institutes, etc. All these educational bodies take a lump sum amount of fees in very advance and in case of any reimbursement, they are not ready to give even fifty percent of total amount which is completely unreasonable and not a fair-trade practice.

At the time of admission, they imposed a condition that ‘Refundability of fees is not possible under any circumstance’. This condition was against the principle of equity and natural justice which says mere fact that a decision affects rights or interests is enough to subject the decision to the procedures required by natural justice.

This judgement is considered as a landmark judgement in cases related to educational services. Consumer protection act, 1986 talks about the protection of the interests of consumers. Any kind of deficiency in service or unfair trade practice is not acceptable under this consumer protection act, 1986.

In the judgement, the judges mentioned some previous decided cases which was quite similar to this case. They mentioned the case of Homoeopathic Medical College & Hospital, Chandigarh v. Miss Gunita Virk, I (1996) CPJ 37 (NC) and Nipun Nagar v. Symbiosis Institute of International Business, I (2009) CPJ 3 (NC). So, we can say that this case was based on the precedents.

This specific case has been decided on 30 April 2009 by honorable judge B.N.P. Singh [presiding member] and Dr. P.D. Shenoy, member. 

FACTS OF THE CASE:

  1. The respondent Dalbir singh who was a complainant at that time took admission in the Sehgal School of Competition of the petitioner to get coaching for Medical Entrance Examination, which was for duration of two years.
  2. Though the fee for two years was deposited, the complainant discontinued the studies after a year on the ground that coaching was not up to the mark.
  3.  Further the complainant stated that though he had taken admission for coaching in the medical entrance test, the institute faculty members were mostly teaching Engineering subjects and giving preference to Engineering students. With a view not to waste one more year, he withdrew from the institute and asked for refund of the balance fee, which was declined[1].
  4. Therefore, he filed a complaint before the District Forum. The District Forum directed the petitioner to refund part of the fees to the tune of Rs. 18,734 without any further compensation for mental agony, etc.
  5. After that the petitioner appealed in state commission and the State Commission did not find any merit in the appeal and dismissed the same.
  6.  Aggrieved by the order of the State Commission, the petitioner has filed this Revision Petition before National Consumer Disputes Redressal Commission.
  7.  They have heard the learned Counsel for the petitioner. He submitted that the student had withdrawn voluntarily and, therefore, there was no deficiency of service. The petitioner’s school has shown excellent results. Hence it is wrong to observe that their coaching was not up to the mark.
  8.  He also submitted that one of the conditions imposed by their school which accepting lump sum fees for two years is that ‘refundability/transferability of seat/fee is not possible under any circumstances’.
  9. Here the National Consumer Disputes Redressal Commission stated that the above condition is one sided and biased totally in favor of the petitioner and against the principle of equity.
  10.  They do not see any material irregularity or jurisdictional error in the order passed by the State Commission. Accordingly, this Revision Petition is dismissed. There shall be no order as to cost and natural justice and it is not a fair-trade practice.

PROCEDURAL HISTORY

  1. Firstly, the complainant filed a case in district forum to refund his money from defendant. And the district forum gave the decision in favor of complainant and ordered the defendant to refund the amount of Rs. 18374 to complainant.[2]
  2. But the defendant was not ready to give the money back to complainant. Then the defendant appealed in state commission, but the state commission dismissed his appeal saying that it was an unfair trade practice.
  3. Now the defendant still felt unsatisfied with the decision of state commission, so he appealed before National Consumer disputes redressal commission. But again, his appealed was dismissed by national commission by saying that they do not see any fault in decision of state commission, so the decision remained the same.
  4. In the end the appellants had to refund the amount of Rs. 18374 to the respondent Dalbir Singh.

QUESTION OF LAW

  1. Whether taking of lump sum money by the educational institutes in advance is reasonable or not?
  2. Whether the defense taken by the appellant in this case is acceptable or not?

ANSWERS TO THE QUESTIONS OF LAW

  1. Taking lump sum money in advance or before the starting of classes is completely reasonable because they take the money to ensure the admission of an individual and for the confirmation that seat has been filled. But in case of cancelation of admission due to any reason, not refunding the money is unreasonable. Taking money in advance is also reasonable because in some cases after taking the coaching for some time, student left that particular institute and join some another. In that case it is difficult for that institute to take their fees from that student for those days he/she took coaching. So that’s why institutes took their fees in advance. But when a student filled all the fees in advance and he felt any kind of deficiency in services, he was legally allowed to leave that particular institute at any time and can claim for refunding his fees. So, the institute is legally bound to refund his/her money despite of having the condition that refundability is not possible in any circumstance. Because having this kind of conditions is an unfair trade practice.
  2. The defense taken by the appellant that there was no deficiency in their services and their previous record of result was completely satisfactory was not acceptable in this case because it does not matter that there was any kind of deficiency in service or not because if someone wants to leave your institute without any reason still you are bound to refund the money. Because under consumer protection act it is completely depended on consumer that he wants to take any service or not, or from where he wants to take that service. If he/she is not taking any services, then institutes are bound to refund their money irrespective of the fact that you are having best services. He also took the second defense that one of the conditions imposed by their school which accepting lump sum fees for two years is that ‘refundability/transferability of seat/fee is not possible under any circumstances’. As mentioned in above question that having this kind of condition is itself an unfair trade policy. That’s why defenses taken by appellant were not acceptable.

RATIO DECIDENDI                              

Reasoning given by State Commission: –

“We have already taken a view which has been upheld by the National Commission and the same view was also taken by the Supreme Court that no institute or coaching center shall charge lump sum fees for the whole duration or should refund the fees if there is deficiency in service in the quality or coaching, etc. or for which period the student does not attend coaching as any clause saying that fees once paid shall not be refunded are unconscionable and unfair and therefore not enforceable[3].”

Reasoning given by National Commission: –

If a student leaves before attending a single day of the college or school, he is entitled for total refund except for a small registration fee, say Rs. 1,000. Even the University Grants Commission had issued a public notice directing all the institutions to refund the money of the students for the period, they have not attended the college/institution.

OBITER DICTA

Opinion of National Commission: –

“It has come to the notice of the University Grants Commission (UGC) that institutions and Universities including institutions deemed to be Universities are admitting students to various programmes of studies long before the actual starting of academic session, collecting full fee from the admitted students, and retaining their schools/institutions leaving certificate in original. The institutions and Universities are also reportedly confiscating the fee paid if a student fails to join by such date. The Commission is of the view that the Institutions/ Universities, by way of retaining the certificate in original, force retention of admitted students, which limits the opportunities for the candidates from exercising other options of joining other institutions of their choice. However, it would not be permissible for institutions and Universities to retain the school/institution leaving certificate, mark sheets, caste certificate and other documents in original.”

CONCLUSION

After studying this case law, we can conclude that all kind of educational institutes are bound to give your money back in case you are not wishing to continue with them. We can claim our fees which should be refunded to us. In other words, we can also say that any consumer who wishes to leave any service at any time are entitled to get his money back. After this judgement the Ministry of Human Resource Development and University Grants Commission have considered the issue and decided that the institutions and Universities, in the public interest, shall maintain a waiting list of students/candidates.

In the event of a student/candidate withdrawing before the starting of the course, the wait-listed candidate should be given admission against the vacant seat. The entire fee collected from the student, after a deduction of the processing fee of not more than Rs. 1,000 (one thousand only) shall be refunded and returned by the institution/University to the student/candidate withdrawing from the programme. Should a student leave after joining the course and if the seat consequently falling vacant has been filled by another candidate by the last date of admission, the institution must return the fee collected with proportionate deductions of monthly fee and proportionate hostel rent, where applicable.


[1] Sehgal school of competition vs Dalbir Singh, available at:  https://indiankanoon.org/doc/189591432/ (visited on October 01, 2018).

[2] Sehgal school of competition vs. Dalbir Singh available at: http://www.lawyerservices.in/Sehgal-school-of-competitio-versus-dalbir-singh-2009-04-30 (visited on October 2, 2018)

[3]Sehgal school of competition vs. Dalbir Singh available at: www.manupatra.com (visited on October 3, 2018)

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