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Service in the interest of Justice

Institutes cannot Charge Advanced Fee for a Year

In cases where students have to pay the whole year fees to the institutes for the course, and in any circumstances, they demand the refund of fees due to non-continuance of course for the unavoidable situation; the institute cannot deny paying the fee due to the pre-mentioned clause of non-refundable fee.

In such cases, the law supports the students who want to leave an institute or course mid-way and are seeking a refund of fees. This means that the education institutes cannot charge fees for the entire course and refuse to refund.The non-refundable fee clause mentioned by the institutes is unconscionable under Section 23 of the Indian Contract Act, 1872 i.e. opposed to public policy.



Section 23 of the Indian Contract Act, 1872 reads as under:

What consideration and objects are lawful, and what not.—The consideration or object of an agreement is lawful, unless—The consideration or object of an agreement is lawful, unless—"it is forbidden by law;  or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. 

Getting Refund from Coaching Institute

You can refer the following case that deals with a similar situation:

In a recent case in Chandigarh, the district consumer disputes redressal forum directed a master of business administration (MBA) coaching institutes to refund the entire fees deposited by a student after deducting some amount as the student could not attend classes for more than 19 days.


The institute has also been directed to pay Rs. 7,000 as compensation for deficiency in service, unfair trade practice, and physical and mental harassment, besides Rs. 5,000 as litigation cost. Keshavdua of Sector 35D had lodged a complaint against Triumphant Institution of Management Education (TIME) Private Limited, Secunderabad for not refunding the fees.

He joined the institute after depositing Rs. 30,000 in advance. He could not continue his coaching beyond 20 days as he had to undergo a six-month-long mandatory internship being part of his degree course at Thapar Institute, Patiala.

He requested the institute to refund his money after deducting the charges for the classes he attended but to no success. The opposite party argued that rules forming part of the application process state that the fee once paid cannot be refunded under any circumstances.

The forum observed that the opposite parties’ act of retaining the tuition fee, which they had arbitrarily charged in advance for the full course, is an unfair trade practice and certainly caused mental and physical harassment to the complainant.


The forum said that the insertion of a non-refundable clause in the admission form itself amounts to indulgence in unfair trade practice, especially in unavoidable circumstances. Hence, this clause cannot debar the complainant from claiming the proportionate fee.

The forum directed the opposite parties to refund the entire deposited fee after deducting a proportionate amount for classes attended.

Also, in another case it was held by the State Commission in 2006, that the clause "fees once paid is not refundable" is "unconscionable and voidable”. It was further held that no educational institute can charge fees for the whole duration of the course in advance by way of lump sum payment.



This post is written by Damini Aggarwal of Punjab University (2020 batch). For more info, please dial 99888-17966.

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