'Candidates Acted With Full Knowledge of Consequences': Kerala High Court Reverses Order for Refund of 10% Exit Fee in Medical PG Mop-Up Admissions

"It was with full knowledge of the consequences of surrendering the seats for the purpose of participating in the Mop-Up allotment that they surrendered the seats and hence are liable to forfeit 10% of the annual fee of the seats surrendered by them," observed the High Court of Kerala while setting aside a Single Judge's order that had directed the State to refund the 'Exit Fee' paid by several doctors. The Division Bench, comprising Justice Anil K. Narendran and Justice Muralee Krishna S., emphasized that the forfeiture clause in the Prospectus serves a vital regulatory purpose in the centralized allotment process for post-graduate medical courses.

The Ratio Decidendi of this judgment establishes that when a candidate voluntarily surrenders a seat allotted in the initial rounds of counselling to participate in a Mop-Up round, they are bound by the specific forfeiture conditions stipulated in the governing Prospectus. The Court held that Clause 10-1.18 of the Prospectus, which mandates the forfeiture of 10% of the annual tuition fee upon such exit, is a valid deterrent against unnecessary seat vacancies and remains enforceable if not specifically challenged. The Bench clarified that candidates who take a calculated risk by surrendering secured seats in pursuit of better options cannot later seek a refund of the mandatory exit fee, as such payments are made in compliance with the established guidelines of the admission process.

The dispute arose from the NEET PG 2021 admission cycle, where four respondent-doctors had secured seats in various medical colleges during the first or second phases of allotment. However, desiring better options, they invoked the 'free exit' provision and subsequently registered for the State Mop-Up counselling. To participate in the Mop-Up round, they were required to pay an 'Exit Fee' equivalent to 10% of the annual tuition fee, amounting to Rs. 1,57,500/- each. While some secured new admissions and others did not, they collectively sought a refund of this amount, claiming it was merely a participation deposit. The Single Judge had previously allowed their writ petition, quashing the government communication that refused the refund and directing either a refund or an adjustment of the fee.

The State of Kerala and the Commissioner for Entrance Examinations challenged this, arguing that the refund was prohibited by the express terms of the admission guidelines. The State contended that the forfeiture clause mentioned in Clause 10-1.18 of the Prospectus was specifically designed to prevent candidates from blocking seats and then exiting, which often leads to seats remaining vacant due to the non-availability of candidates in the final rounds. The Senior Government Pleader emphasized that the respondents had participated in the Mop-Up round after paying the fee without any protest or challenge to the legality of the prospectus clause itself.

In its reasoning, the Division Bench noted that the respondents had secured admissions in the 2nd phase or retained seats until its completion before opting for the Mop-Up round. The Court observed that "as per Clause 10-1.18 of Ext.P1 prospectus, the candidate already holding a PG seat can participate in the Mop-Up counselling only after surrendering the seat held by him/her... the candidate who was allotted a seat for PG course in State Quota, on exit after being allotted to the seats in the second round, will have to forfeit 10% of the annual fee." The Bench found that the Single Judge had failed to appreciate that the validity of the prospectus and its forfeiture conditions were not under challenge.

Furthermore, the Court highlighted the potential for systemic harm when candidates exit secured seats late in the process. The Bench remarked that "by such exiting from the seats already secured in the second round of counselling, there are chances of at least some of such seats will remain vacant, due to non-availability of candidates even in the mop-up round." By setting aside the earlier judgment, the Court reaffirmed that the contractual nature of the Prospectus binds the candidates once they elect to participate in the process under its terms. Consequently, the State is not liable to repay the 10% annual tuition fee paid by the doctors as they had surrendered their earlier seats and participated in the Mop-Up round with full knowledge of the financial implications of their choice.

Date: February 11, 2026