# Km. Shivani Singh v. State of U.P. & Ors

- **Citation:** (2022) 9 ILRA 548
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-09-09
- **Case number:** Writ-C No. 25442 of 2020
- **Bench:** Pankaj Bhatia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/km-shivani-singh-v-state-of-u-p-ors-49085
- **Pages:** 13

## Headnote

A. Civil Law - Petitioner appeared in NEET
exam and secured for the course of MBBSpetitioner deposited a total sum of Rs.
13,30,000/-
and
allotted
collegesubsequently the petitioner was allotted a
seat in Madhya Pradesh, which the
petitioner found to be better option, as
such she applied for refund of fees and
security
money
deposited
by
the
petitioner-the same has been refused
stating that Clause 8 of the Government
Order dated 12.06.2018 there is a bar
from withdrawal or resignation, after the
start of second round of counseling also
Clause 9 and 10 provides for confiscating
the security money and fees-It is settled
provision
of law that the executive
instructions cannot partake 'law' under
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
549
Article 300-A-As such, confiscation of fees
deposited
by
the
student
by
the
respondent no. 4 is without sanction of
law and thus violates Article 300 A of
Constitution of India-Even if the issuance
of brochure and the application of the
petitioner is accepted to be a contract, the
retention of entire fees is clearly barred by
Section 74 of the Contract Act as no loss
has been shown to be caused to the
respondent by way of resignation coupled
with the fact that the seat of the State has
not gone vacant, the DGME cannot even
claim
reasonable
compensation-There
appears to be no logic in confiscating the
entire fees on the ground of Article 14 -
The State cannot take a different stand for
different years as is evident from the
prescription for two different years of
NEET Examination-Hence, Respondent no.
4 is directed to refund the entire amount
of Rs. 13,30,000/- at the rate of 6% per
annum-The
Government
Order
dated
12.06.2018 is quashed.(Para 1 to 36)

The writ petition is allowed. (E-6)

List of Cases cited:

## Text

_Characters 0–39,623 of 42,608. This is a partial read: ask again with offset=39623 for what follows._

548 INDIAN LAW REPORTS ALLAHABAD SERIES
to file the present petition for and on behalf
of
the
Samajwadi
Party.
Thus,
the
petitioner has no right to maintain the
present writ petition under Article 226 of
the Constitution of India for and on behalf
of
the
Samajwadi
Party.
Even
the
judgments quoted by the petitioner in his
written submission do not come to his
rescue.

12. This Court is also conscious of the
law that "ordinarily" a person who seeks to
file a writ petition under Article 226 of the
Constitution of India should be one who has a
personal or individual right in the subject
matter of the petition and a personal right
need not be in respect of proprietary interest,
as it can also relate to an interest of a trustee.
It is thing to say that a person has an
individual right to maintain a petition and its
other thing to say that the petition has been
filed for and on behalf of some other
aggrieved persons. The present case is not a
case filed by the petitioner in his individual
capacity, but it has been filed for and on
behalf of Samajwadi Party. This Court is of
the view that there is no valid authorization in
favour of the petitioner to prosecute this case
for and on behalf of Samajwadi Party. There
is no pleadings in the writ petition that the
petition has been filed for and on behalf of
Samajwadi Party, rather the petition is sought
to be filed by the petitioner in his individual
capacity, since lease deed stands in the name
of Samajwadi Party. This Court finds rather
absurd as to how the petitioner can be an
aggrieved party or as to how his individual
right has been adversely affected. Thus, the
present writ petition fails. The petitioner
under Article 226 of the Constitution of India
at the instance of petitioner is, therefore, not
maintainable.

13. Since, the petition is held to be
not maintainable on behalf of the petitioner,
this Court does not wish to express any
opinion on the merits or otherwise of the
present writ petition, least it would
prejudice to the rights and contention of the
parties.

14. Leaving all questions of fact and
law open, the present writ petition is
dismissed.
----------
(2022) 9 ILRA 548
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 09.09.2022

BEFORE

THE HON'BLE PANKAJ BHATIA, J.

Writ-C No. 25442 of 2020

Km. Shivani Singh ...Petitioner
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Surya Prakash Singh, Anupama Bhadauria,
Nitish Shekhar

Counsel for the Respondents:
C.S.C., Gyanendra Kumar Srivastava, Kshitij
Mishra

A. Civil Law - Petitioner appeared in NEET
exam and secured for the course of MBBSpetitioner deposited a total sum of Rs.
13,30,000/-
and
allotted
collegesubsequently the petitioner was allotted a
seat in Madhya Pradesh, which the
petitioner found to be better option, as
such she applied for refund of fees and
security
money
deposited
by
the
petitioner-the same has been refused
stating that Clause 8 of the Government
Order dated 12.06.2018 there is a bar
from withdrawal or resignation, after the
start of second round of counseling also
Clause 9 and 10 provides for confiscating
the security money and fees-It is settled
provision
of law that the executive
instructions cannot partake 'law' under
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
549
Article 300-A-As such, confiscation of fees
deposited
by
the
student
by
the
respondent no. 4 is without sanction of
law and thus violates Article 300 A of
Constitution of India-Even if the issuance
of brochure and the application of the
petitioner is accepted to be a contract, the
retention of entire fees is clearly barred by
Section 74 of the Contract Act as no loss
has been shown to be caused to the
respondent by way of resignation coupled
with the fact that the seat of the State has
not gone vacant, the DGME cannot even
claim
reasonable
compensation-There
appears to be no logic in confiscating the
entire fees on the ground of Article 14 -
The State cannot take a different stand for
different years as is evident from the
prescription for two different years of
NEET Examination-Hence, Respondent no.
4 is directed to refund the entire amount
of Rs. 13,30,000/- at the rate of 6% per
annum-The
Government
Order
dated
12.06.2018 is quashed.(Para 1 to 36)

The writ petition is allowed. (E-6)

List of Cases cited:
1. Darul-Us-Slam Educational Trust & ors. Vs
Medical Council of India & ors. WP No.267 of
2017

2. Bombay Dyeing & Manufacturing Co. Ltd. Vs
St. of Bombay & ors. (1958) AIR SC 328

3. Bishambhar Dayal Chandra Mohan & ors. Vs
St. of U.P. & ors. (1982) 1 SCC 39

4. Hindustan Times & ors. Vs St. of U.P. &
anr. (2003) 1 SCC 591

5. Khem Chand Vs U.O.I. & ors. (1963) AIR SC
687

6. Fateh Chand Vs Balkishan Das (1963) AIR SC
1405

7. MTNL Vs TATA Communication Ltd. (2019) 5
SCC 341

8. Kailash Nath Associates Vs D.D.A (2015) 4
SCC 136
(Delivered by Hon'ble Pankaj Bhatia, J.)

1. Heard Ms. Anupama Bhadauria,
learned counsel for the petitioner, Mr.
Sanjay Bhasin, assisted by Mr. Kshitiz
Mishra, learned counsel appearing on
behalf of respondent no.4, Mr. Piyush
Kumar,
learned
Standing
Counsel
appearing on behalf of the State and Mr.
Gyanendra Kumar Srivastava,
learned
counsel for the respondent no.3 and Mr.
Amrendra Singh Yadav holding brief of Mr.
Amit Jaiswal, learned counsel appearing on
behalf of the respondent no.6/College.

2. The present petition has been filed
seeking
refund
of
the
deposit
of
Rs.13,30,000/- along with interest paid by
the petitioner to the respondent no.4
towards fees and security deposit.

3. The contention of learned counsel
for the petitioner, in brief, is that the
petitioner appeared in National Eligibility
Entrance Test (NEET) of the year 2018 and
secured the rank 333095 for the course of
M.B.B.S. It is stated that after the first
round
of
counseling
the
petitioner
deposited Rs.2,00,000/- by means of a
demand draft in favour of the opposite
party no.4 on 22.06.2018 as security
deposit. It is also stated that the petitioner
was informed that she has been allotted
respondent no.6/College for pursuing the
M.B.B.S. Course for Academic Session
2018-19.

4. It is stated that after allocation of
seat the petitioner was called upon by the
respondent no.4 to deposit the fee, which
was deposited by the petitioner amounting
to Rs.11,30,000/- on 7.7.2018. Thus the
petitioner
deposited
a
total
sum
of
Rs.13,30,000/-
and
was
allotted
the
respondent no.6/College. It is claimed that
550 INDIAN LAW REPORTS ALLAHABAD SERIES
subsequently the petitioner was allotted a
seat in Madhya Pradesh, which the
petitioner found to be better option, as such
she applied for refund of fees and security
money deposited by the petitioner, which
has been refused by means of order dated
6.1.2020 (Annexure No.1).

5. A perusal of the order impugned
reveals that the same has been refused on
the ground that the resignation of the
petitioner has been accepted on the
condition that in the event the applicant
resigns
after
the
second
round
of
counseling the amount deposited by the
student towards the fees as well as the
security shall not be refunded. It is also
stated therein that in Clause 8 of the
Government Order dated 12.06.2018 there
is a bar from withdrawal or resignation,
after the start of second round of
counseling. It was also recorded that in the
brochure issued for the NEET, 2018 in
Clause 9 and 10 there is a provision for
confiscating the security money and the
''fee' deposited by the students thus, on this
ground the request of the applicant was
rejected for refund of Rs.13,30,000/-.

6. Learned counsel for the petitioner
argues that the provision of security and
deposit were introduced subsequent to the
judgment of the Hon'ble Supreme Court in
the case of Darul-Us-Slam Educational
Trust and ors. Vs. Medical Council of
India and Ors; Writ Petition (s) (Civil)
No.(s).267/2017 she specifically makes a
mention of paras 3, 4 and 6 of the said
judgment which are quoted hereunder:

"3. As per the judgment of this Hon'ble
Court in the case of Ashish Ranjan vs. Union
of India & Ors. [(2016) 11 SCC 225], there
shall be only two rounds of common
counselling
each
conducted
by
the
DGHS/State
Government
or
authority
designated by the State Government for All
India Quota (including Deemed University)
and State Quota seats respectively.

4. After the second round of counselling
for All India Quota seats, the students who
take admission in All India Quota seats
should not be allowed/permitted to vacate the
seats. This would ensure that very few seats
are reverted to the State Quota and also All
India Quota seats are filed by students from
the all India merit list only. The students who
take admission and secure admission in
Deemed Universities pursuant to the second
round of counselling conducted by the DGHS
shall not be eligible to participate in any
other counselling.
6. The students who secure admission in
MBBS course pursuant to the Common
Counselling
conducted
by
the
State
Government, at the time of common
counselling itself, should be made to deposit
with the admission/cousnelling committee the
Demand Draft towards the fees payable to
the institution College/ University. The
admission/counselling
committee
shall
forthwith forward the Demand Draft to the
respective
Institution/Colleges/University.
The necessity for including the abovementioned requirement has arisen as it has
been time and again noticed that when
students report to the college after the
counselling they are refused admission by the
colleges on some pretext or the other and it is
shown by the college as if the student never
reported to the college for admission. If the
Demand
Draft
is
deposited
by
the
admission/counselling committee then there
would be no scope for colleges to refuse
admission to any student."

7. Learned counsel for the petitioner
argues that it appears that in pursuance to
the said judgment the State Government
issued
a
Government
Order
dated
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
551
12.06.2018 which provides for forfeiture of
the ''security only' and there is no provision
in the said Government Order for forfeiture
of the fee deposited by the students. With
regard to the other grounds, she argues that
the students being in a vulnerable position
do not have any choice but to sign on the
dotted lines and thus the acceptance of
resignation with the condition that the
security money and the fees would be
forfeited is beyond the control of the
petitioner.

8. Learned counsel for the petitioner
further argues that the petitioner had
tendered her resignation without accepting
any condition, the acceptance of the said
resignation with the condition was neither
in the control of the petitioner nor justified
and cannot bind the petitioner.

9. She further argues that the third
basis being the provision as contained in
brochure issued by the respondents is
wholly arbitrary, illegal and has no nexus to
the object sought to be achieved. She
further argues that the Director General
Medical Education/respondent no.4 is only
authorized to oversee the counseling
process and the amount retained by them is
not only contrary to the government order,
but the same are without any authority of
law by the respondent no.4.

10. She argues that the petitioner has
been deprived of her property without any
authority of law and thus her rights
guaranteed under Article 300-A of the
Constitution of India have been violated.
She further argues that in any event the
provision for confiscating the fees as well
as the entire security deposit is violative of
Article 14 of the Constitution of India,
insofar, as there is no rational nexus sought
to be achieved and there is no criteria for
either fixing the quantum of security
deposit or its confiscation. She argues that
the State which is expected to promote the
education
is
acting
as
shylock
in
confiscating the fees and security money in
a country like India which is very poor. She
thus claims that the writ petition is liable to
be allowed and the amount of fees and
security money be directed to be refunded
along with interest as claimed by the
petitioner.

11. Mr. Sanjay Bhasin, learned
counsel appearing for the respondent no.4
seeks to defend the confiscation of the
security money as well as the fees. In
support of his submission, he draws source
of
of
confiscation
power
from
the
regulations framed by the Medical Council
of India being the Graduate Medical
Education Regulations, 1997 as amended
up to May, 2018. He argues that in terms of
the said Regulations, 5-A (4) provides as
under:

"5A (4)-In order to prevent seat
blocking
in
common
couseling
for
admission
to
MBBS
course
and
permissiblity to exercise fresh choice
during counseling, forfeiture of fee shall be
in accordance with the Matrix contained in
"Appendix-F."

S.
No
.
Round Free
Exit
Exit
with
forfe
iture
of
fees
Ineligible
for
further
counselin
g
Amo
unt
of
regis
trati
on
fee
1.
AIQ
I/Dee
med
552 INDIAN LAW REPORTS ALLAHABAD SERIES
2.
AIQ
II/Dee
med

If
not
joine
d
If joined
Gov
ernm
ent
Rs.1
0,00
0
(half
for
SC/S
T/O
BC
Dee
medRs.2,
00,0
00
3.
State
Quota
I

4.
State
Quota
II

If
not
joine
d
If joined
Gov
ernm
ent -
Rs.1
0,00
0
(half
for
SC/S
T/O
BC)
Priv
ate-
Rs.1,
00,0
00
5.
State
Quota
Mopup

If joined
6.
Deem
ed
Mop-

If joined
Up

12. It is argued that the matrix as
contained in Annexure No.F to the said
Regulation, would be the source of power
for retaining the amount of security deposit
fees by the respondent no.4. He defends the
Government Order dated 12.06.2018 by
arguing that the same is in pursuance to the
guidelines issued by the Supreme Court in
the case of Darul-Us-Slam Educational
Trust (supra). He thus argues that the
retention of the money deposited by the
petitioner does not violate the right of the
petitioner under Article 300-A of the
Constitution of India. He further argues that
for the students who are selected to the
government colleges, the security money to
be deposited is Rs.30,000/-, whereas for the
private medical colleges the security money
to be deposited is Rs.2,00,000/-, which is
reasonable and acts as deterrent to the
students who flip their seats and thus
deprive the meritorious students of their
rights of participating in counseling.

13. He further argues that even in
terms of the brochure/guidelines issued in
pursuance to which the petitioner had
applied, there was a clear stipulation that
the security deposit shall be forfeited in
respect of candidates who do not join after
the first round of counseling or resign after
joining and the said brochure/guidelines
were in nature of an offer which was
accepted by the student and thus there was
a contract created in between the parties by
which the petitioner is bound. Shri Bhasin
places reliance on Section 74 of Indian
Contract Act.

14.

Learned
Standing
Counsel
appearing on behalf of the State, on the
other hand, argues and justifies the
Government Order on the ground that the
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
553
same was inline of the prescriptions as
contained in the judgment of Apex Court in
the case of Darul-Us-Slam Educational
Trust (supra) and thus prays that the writ
petition is liable to be dismissed.

15. Learned counsel for the petitioner
has placed the Government Order dated
29.10.2020 for the subsequent year NEET
Examination, wherein the refund of fee
deposited is prescribed and only 10 % of
the total fees deposited is to be confiscated.
She further says that in the case of private
medical colleges even the security has to be
refunded. She thus argues that the State
Government has taken different stand for
different years which is wholly arbitrary
and illegal and is violative of Articles 14,
19 and 21 of the Constitution of India. She
further argues that the retention of the
money
by
the
D.G.M.E.
is
unjust
enrichment which is neither authorized nor
favored by law. In reply to the argument of
Shri Bhasing on the strength of Section 74
of the Contract Act she argues that unless
damages are ascertained and established no
amounts can be awarded.

16. In the light of the submissions
made by parties' counsel at the bar, this
court is to test the power of D.G.M.E. to
confiscate the money deposited by the
students who are pursuing the NEET
Examination as well as the legality of the
retention of the security deposited by the
students.

17. To test the first argument raised
by learned counsel for the petitioner and
tried to be repelled by learned counsel for
the
respondents,
as
to
whether
the
D.G.M.E. can confiscate the security
deposit in pursuance to the Government
Order dated 12.06.2018. To test the said
argument as being violative of Article 300A as inserted in the Constitution.It is clear
Article 300-A of Constitution of India
provides that no person shall be deprived of
his property save by authority of law.

18. The money deposited by the
petitioner as a security deposit would be a
property as held by the Hon'ble Supreme
Court in the case of Bombay Dyeing &
Manufacturing Co. Ltd. Vs. State of
Bombay and others; AIR 1958 SC 328 to
the effect that the money would also
amount to property and thus to deprive a
person of property, there has to be an
authority of law.

19. The word ''law' as used in the
context of Article 300-A of the Constitution
has to mean the law framed by legislature
and not the executive directions as given
under Article 162 of the Constitution. This
view is fortified by the decision of Hon'ble
Apex Court in the case of Bishambhar
Dayal Chandra Mohan and others Vs.
State of U.P. and others; (1982) 1 SCC
39, wherein the Hon'ble Supreme Court in
para 41 has observed as under:

"There still remains the question
whether the seizure of wheat amounts to
deprivation
of
property
without
the
authority of law. Article 300-A provides
that no person shall be deprived of his
property save by authority of law. The State
Government cannot while taking recourse
to the executive power of the State under
Article 162, deprive a person of his
property. Such power can be exercised only
by authority of law and not by a mere
executive fiat or order. Article 162, as is
clear from the opening words, is subject to
other provisions of the Constitution. It is,
therefore, necessarily subject to Article
300-A The word 'law' in the context of
Article 300-A must mean an Act of
554 INDIAN LAW REPORTS ALLAHABAD SERIES
Parliament or of a State Legislature, a rule,
or a statutory order; having the force of
law, that is positive or State made law. The
decisions in Wazir Chand v. State of
Himachal Pradesh and Bishan Das and
others v. The State of Punjab and others are
an authority for the proposition that an
illegal seizure amounts to deprivation of
property without the authority of law. In
Wazir Chand's case (supra), the police in
India seized goods in possession of the
petitioner in India at the instance of the
police of the State of Jammu and Kashmir.
The seizure was admittedly not under the
authority of law, inasmuch as it was not
under the orders of any Magistrate; nor
was it under Sections 51, 96, 98 and 165 of
the Code of Criminal Procedure, 1898,
since no report of any offence committed by
the petitioner was made to the police in
India, and the Indian police were not
authorised to make any investigation. In
those circumstances, the Court held that the
seizure was not with the authority of law
and amounted to an infringement of the
fundamental right under Article 31 (1).
This view was reaffirmed in Bishan Das's
case (supra)."

20. Relying on the said judgment the
Hon'ble Supreme Court in the case of
Hindustan Times and others Vs. State of
U.P. and another; (2003) 1 SCC 591 has
reaffirmed
the
same.
The
relevant
paragraphs nos.23, 24 and 25 are as under:

"23. The expression 'law', within the
meaning Article 300-A, would mean a
Parliamentary Act or an Act of the State
Legislature or a statutory order having the
force of law.

24. In Bishambhar Dayal Chandra
Mohan & Ors. etc. v. State of Uttar
Pradesh & Ors. etc. [(1982) 1 SCC 39],
this Court held as under :-

"41. There still remains the question
whether the seizure of wheat amounts to
deprivation
of
property
without
the
authority of law. Article 300-A provides
that no person shall be deprived of his
property save by authority of law. The State
Government cannot while taking recourse
to the executive power of the State under
Article 162, deprive a person of his
property. Such power can be exercised only
by authority of law and not by a mere
executive fiat or order. Article 162, as is
clear from the opening words, is subject to
other provisions of the Constitution. It is,
therefore, necessarily subject to Article
300-A. The word "law" in the context of
Article 300-A must mean an Act of
Parliament or of a State legislature, a rule,
or a statutory order, having the force of
law, that is positive or State- made law."

25. It is not the contention of the
respondents that any service is rendered to
the petitioners herein. It is also not the
contention of the respondents that the
petitioners are bound to pay the amount in
question by reason of their statutory
obligation to pay retiral benefits to the
working journalists. It is also not the case
of the respondents that the petitioners
herein have not been discharging their
statutory obligations in the matter of
payment of retiral benefits to the working
journalists
working
in
their
own
establishment in terms of the provision of
the Central Acts as well as in terms of the
Bachawat Award."

21. Further, the Hon'ble Supreme
Court in the case of Khem Chand Vs.
Union of India and others; AIR 1963 SC
687 has held as follows:

"Equally untenable is the appellant's
next contention that the impugned rule
contravenes the provisions of Article 19 (1)
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
555
(f) of the Constitution. The argument is that
as a result of this Court's decree the
appellant had a right to his arrears of pay
and allowances. This right constituted his
property; and as the effect of the impugned
Rule is that he would not, for some time at
least, get those arrears it restricts his right.
It may be conceded that the right to arrears
of pay and allowances constituted property
within the meaning of Article 19 (1) (f) of the
Constitution and further, that the effect of r.
12(4) is a substantial restriction of his right
in respect of that property under Article 19
(1) (f). The question remains whether this
restriction is a reasonable restriction in the
interests of the general public. No body can
seriously
doubt
the
importance
and
necessity of proper disciplinary action being
taken against government servants for
inefficiency, dishonesty or other suitable
reasons. Such action is certainly against the
immediate interests of the Government
servant
concerned;
but
is
absolutely
necessary in the interests. of the general
public for serving whose interests the
government machinery exists and functions.
Suspension of a government servant pending
an enquiry is a necessary part of the
procedure for taking disciplinary action
against him. It follows, therefore, that when
the penalty of dismissal has been set aside
but the disciplinary authority decides to hold
a further enquiry on the same facts against
him a fresh order of suspension till the
enquiry can be completed, in accordance
with law, is a reasonable step of the,
procedure. We have no hesitation in holding,
therefore, that in so far as r.12(4) restricts
the appellant's right under Article 19 (1) (f)
of the Constitution, it is a reasonable
restriction in the interests of the general
public. Rule 12(4) is therefore within the
saving provisions of Article 19 (1) (f), so that
there
is
no
contravention
of
the
constitutional provisions."

22. In view of the settled proposition
of law that the executive instructions
cannot partake 'law' as referred to under
Article 300-A, I have no hesitation in
holding that the petitioner could not be
deprived of refund of security deposit only
on the basis of provisions made in the
Government Order as relied upon by Mr.
Bhasin to justify the confiscation of
security deposit.

23. Now coming to the issue as to
whether the fees could be confiscated. Fees
is also a property at the hand of a student
and to deprive the same, there is a need for
sanction by law as framed by the
legislature. There being no law as framed,
clearly the confiscation of the fees
deposited by the student by the respondent
no.4 is without sanction of law and thus
violates Article 300 A of Constitution of
India.

24. Submission of Mr. Bhasin that
there is a provision of confiscation of fees
as provided in the Regulation of 1997 and
the Appendix-F referred therein and quoted
hereinabove, I do not see any prescription
prescribed under Appendix-F permitting
the confiscation of fees and to that extent
the argument of Mr. Bhasin is repelled.

Whether the Fee and security
deposit can be confiscated under Section
74 of Contract Act

25. The issue with regard to refund of
fees is also to be tested on the anvil of the
arguments of Mr. Bhasin raised on account
of the conditions specified in the brochure.
Even if the brochure is treated as an offer,
the application of student in pursuance to
the brochure be treated as an acceptance
and for the purposes of arguments, the
same is treated to be in the nature of
556 INDIAN LAW REPORTS ALLAHABAD SERIES
contract, the retention of fees and security
would be hit by Section 74 of the Contract
Act. Section 74 of the Contract Act is
quoted herein under:

"74. Compensation for breach of
contract where penalty stipulated for:- 34
[When a contract has been broken, if a sum
is named in the contract as the amount to
be paid in case of such breach, or if the
contract contains any other stipulation by
way of penalty, the party complaining of
the breach is entitled, whether or not actual
damage or loss is proved to have been
caused thereby, to receive from the party
who has broken the contract reasonable
compensation not exceeding the amount so
named or, as the case may be, the penalty
stipulated for.

Explanation.--
A
stipulation
for
increased interest from the date of default
may be a stipulation by way of penalty.]

(Exception) -- When any person enters
into any bail-bond, recognizance or other
instrument of the same nature or, under the
provisions of any law, or under the orders
of the 35 [Central Government] or of any
36 [State Government], gives any bond for
the performance of any public duty or act
in which the public are interested, he shall
be liable, upon breach of the condition of
any such instrument, to pay the whole sum
mentioned therein. Explanation.-- A person
who
enters
into
a
contract
with
Government does not necessarily thereby
undertake any public duty, or promise to do
an act in which the public are interested.
Illustrations

(a) A contracts with B to pay B Rs.
1,000 if he fails to pay B Rs. 500 on a given
day. A fails to pay B Rs. 500 on that day. B
is entitled to recover from A such
compensation, not exceeding Rs. 1,000, as
the Court considers reasonable.

(b) A contracts with B that, if A
practices as a surgeon within Calcutta, he
will pay B Rs. 5,000. A practices as a
surgeon in Calcutta. B is entitled to such
compensation; not exceeding Rs. 5,000 as
the court considers reasonable.

(c) A gives a recognizance binding him
in a penalty of Rs. 500 to appear in Court
on
a
certain
day.
He
forfeits
his
recognizance. He is liable to pay the whole
penalty.

37 [(d) A gives B a bond for the
repayment of Rs. 1,000 with interest at 12
per cent. at the end of six months, with a
stipulation that, in case of default, interest
shall be payable at the rate of 75 per cent.
from the date of default. This is a
stipulation by way of penalty, and B is only
entitled
to
recover
from
A
such
compensation as the Court considers
reasonable.

(e) A, who owes money to B, a moneylender, undertakes to repay him by
delivering to him 10 maunds of grain on a
certain date, and stipulates that, in the
event of his not delivering the stipulated
amount by the stipulated date, he shall be
liable to deliver 20 maunds. This is a
stipulation by way of penalty, and B is only
entitled to reasonable consideration in case
of breach.

(f) A undertakes to repay B a loan of
Rs. 1,000 by five equal monthly instalments,
with a stipulation that, in default, of payment
of any instalment, the whole shall become
due. This stipulation is not by way of
penalty, and the contract may be enforced
according to its terms.

(g) A borrows Rs. 100 from B and gives
him a bond for Rs. 200 payable by five
yearly instalments of Rs. 40, with a
stipulation that, in default of payment of any
instalment, the whole shall become due. This
is a stipulation by way of penalty.]"
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
557

26. The stipulation of confiscation of
fees can clearly be qualified as penalty
under Section 74 as quoted hereinabove.

27. Scope of Section 74 of the Indian
Contract Act was considered and explained
by the Hon'ble Supreme Court in the case
of Fateh Chand v. Balkishan Dass - AIR
1963 SC 1405 wherein the Hon'ble
Supreme Court has held as under:

"10. Section 74 of the Indian Contract
Act deals with the measure of damages in
two classes of cases (i) where the contract
names a sum to be paid in case of breach
and (ii) where the contract contains any
other stipulation by way of penalty. We are
in the present case not concerned to decide
whether a contract containing a covenant
of forfeiture of deposit for due performance
of a contract falls within the first class. The
measure of damages in the case of breach
of a stipulation by way of penalty is by
Section 74 reasonable compensation not
exceeding the penalty stipulated for. In
assessing damages the Court has, subject
to the limit of the penalty stipulated,
jurisdiction to award such compensation as
it deems reasonable having regard to all
the circumstances of the case. Jurisdiction
of the Court to award compensation in case
of breach of contract is unqualified except
as
to
the
maximum
stipulated;
but
compensation has to be reasonable, and
that imposes upon the Court duty to award
compensation
according
to
settled
principles. The section undoubtedly says
that the aggrieved party is entitled to
receive compensation from the party who
has broken the contract, whether or not
actual damage or loss is proved to have
been caused by the breach. Thereby it
merely dispenses with proof of "actual loss
or damage"; it does not justify the award of
compensation when in consequence of the
breach no legal injury at all has resulted,
because compensation for breach of
contract can be awarded to make good loss
or damage which naturally arose in the
usual course of things, or which the parties
knew when they made the contract, to be
likely to result from the breach.

11. Before turning to the question
about the compensation which may be
awarded to the plaintiff, it is necessary to
consider whether Section 74 applies to
stipulations for forfeiture of amounts
deposited or paid under the contract. It was
urged that the section deals in terms with
the right to receive from the party who has
broken
the
contract
reasonable
compensation and not the right to forfeit
what has already been received by the
party aggrieved. There is however, no
warrant for the assumption made by some
of the High Courts in India, that Section
74 applies only to cases where the,
aggrieved party is seeking to receive some
amount on breach of contract and not to
cases where upon breach of contract an
amount received under the contract is
sought to be forfeited. In our judgment the
expression "the contract contains any
other stipulation by way of penalty"
comprehensively applies to every covenant
involving a penalty whether it is for
payment on breach of contract of money
or delivery of property in future, or for
forfeiture of right to money or other
property already delivered. Duty not to
enforce the penalty clause but only to
award
reasonable
compensation
is
statutorily imposed upon courts by Section
74. In all cases, therefore, where there is a
stipulation in the nature of penalty for
forfeiture
of
an
amount
deposited
pursuant to the terms of contract which
expressly provides for forfeiture, the court
has jurisdiction to award such sum only as
it considers reasonable, but not exceeding
558 INDIAN LAW REPORTS ALLAHABAD SERIES
the amount specified in the contract as
liable to forfeiture. We may briefly refer to
certain illustrative cases decided by the
High Courts in India which have expressed
a different view."

28. The scope of Section 74 came up
for consideration before the Hon'ble
Supreme Court yet again in the case of
MTNL V. TATA Communication Ltd.;
(2019) 5 SCC 341 wherein the Hon'ble
Supreme Court placing reliance on the
earlier judgment of the Hon'ble Supreme
Court in the case of Kailash Nath
Associates v. D.D.A.; (2015) 4 SCC 136
approved the position of law as clarified by
the Hon'ble Supreme Court in the case of
Kailash Nath Associates (supra) in the
following para:

"11. In Kailash Nath Associates v.
DDA [Kailash Nath Associates v. DDA,
(2015) 4 SCC 136 : (2015) 2 SCC (Civ)
502], after considering the case law on
Section 74, this Court held: (SCC p. 162,
para 43)

"43. On a conspectus of the above
authorities, the law on compensation for
breach of contract under Section 74 can be
stated to be as follows:

43.1. Where a sum is named in a
contract as a liquidated amount payable by
way of damages, the party complaining of a
breach
can
receive
as
reasonable
compensation such liquidated amount only
if it is a genuine pre-estimate of damages
fixed by both parties and found to be such
by the court. In other cases, where a sum is
named in a contract as a liquidated amount
payable
by
way
of
damages,
only
reasonable compensation can be awarded
not exceeding the amount so stated.
Similarly, in cases where the amount fixed
is in the nature of penalty, only reasonable
compensation
can
be
awarded
not
exceeding the penalty so stated. In both
cases, the liquidated amount or penalty is
the upper limit beyond which the court
cannot grant reasonable compensation.

43.2. Reasonable compensation will
be fixed on well-known principles that are
applicable to the law of contract, which are
to be found inter alia in Section 73 of the
Contract Act.

43.3.
Since
Section
74
awards
reasonable compensation for damage or
loss caused by a breach of contract,
damage or loss caused is a sine qua non for
the applicability of the section.

43.4. The section applies whether a
person is a plaintiff or a defendant in a
suit.

43.5. The sum spoken of may already
be paid or be payable in future.

43.6. The expression "whether or not
actual damage or loss is proved to have
been caused thereby" means that where it is
possible to prove actual damage or loss,
such proof is not dispensed with. It is only
in cases where damage or loss is difficult
or impossible to prove that the liquidated
amount named in the contract, if a genuine
pre-estimate of damage or loss, can be
awarded."

29. Thus, even if the issuance of
brochure and the application of the
petitioner is accepted to be a contract, the
retention of entire fees is clearly barred by
Section 74 the stand taken by the
respondent cannot be accepted and the
respondents
can
at
best
can
claim
reasonable compensation for the loss
suffered on account of breach of contract.
As no loss has been shown to be caused to
the respondent by way of resignation
coupled with the fact that the seat of the
State has not gone vacant, the DGME
cannot
even
claim
reasonable
compensation and thus to that extent I have
9 All. Km. Shivani Singh Vs. State of U.P. & Ors.
559
no
hesitation
in
holding
that
the
confiscation of fees by the respondent no.4
cannot be justified by virtue of Section 74
of The Contract Act as argued by Shri
Bhasin.

30. There is another aspect to be
considered
in
the
matter
that
the
Government Order dated 12.06.2018 also
stipulates a candidate to submit the
registration fees of Rs.2,000/- for two
rounds of counseling and Rs.1,000/- for
mop up round of counseling which as
prescribed is non-refundable which is just
and reasonable expenditure incurred by
DGME for counselling. In addition to the
registration fees, the students were directed
to deposit the security money and the fees.

31. To test the argument further in the
light of the prescriptions of the Hon'ble
Supreme Court in the case of Darul-UsSlam Educational Trust (supra) was of
the view that flows from paragraph no 6
that the students should be compelled to
deposit the demand draft towards the fees
payable
to
the
institution/
college/
university which is to be transmitted
forthwith to the respective institution/
college/ university. The Hon'ble Supreme
Court itself has explained in the same very
paragraph that the purpose of directing the
students to deposit the demand draft is to
ensure that there would be no scope for the
colleges to refuse admission to any student.
The judgment of Hon'ble Supreme Court
never prescribed for confiscation that too
without any authority of law and thus the
submission of Mr. Bhasin is liable to be
rejected on that count also.

32. There is further anomaly in the
stand taken by the respondents inasmuch as
for the subsequent years, it prescribes lesser
amounts to be confiscated for security as
well as fees. The State cannot take a
different stand for different years as is
evident from the prescription for two
different years of NEET Examination. The
stand of the respondent no.4 as the State,
do not appear to achieve any objective for
which the deposits are made. Irrespective
of the intent to provide for a deterrent, the
same can be prescribed only in accordance
with law as prescribed under Article 300-A
of the Constitution of India and as laid
down by the Hon'ble Supreme Court in the
judgments referred above.

33. Even testing the said arguments
on the ground of Article 14 there appears to
be no logic in confiscating the entire fees
by the respondent no.4 and not even
transmitting
the
same
to
the
institution/university where the admission
is granted, is a clear case of retention of
money by the State without any authority
of law which is clear violation of the rights
of the students enshrined under Article 300A of the Constitution of India. This
observation is being made in view of the
statement by the institution concerned that
no seats were left vacant subsequently in
respect of the seat for which the petitioner
had tendered her resignation.

34. In view of the findings as
recorded above, irresistible conclusion is
that the writ petition is bound to be
allowed.

35. The writ petition is accordingly
allowed. The respondent no.4 is directed to
refund the entire amount of Rs.13,30,000/-
deposited by the petitioner along with
interest payable at the rate of 6 % per
annum from the date of application for
refund till actual payment/realization. The
amount of 6 % interest is what is prescribed
under the Interest Act as there is no
560 INDIAN LAW REPORTS ALLAHABAD SERIES
contract to the contrary in between the
parties.

36.