In a judgment that can benefit a large number of students who change educational institutes during competitive exams such as Common Admission Test (CAT), the Monopolies and Restrictive Trade Practices Commission has told Mumbai-based S P Jain Institute of Management and Research to return Rs 1.4 lakh (Rs 140,000) to an applicant who later took admission in IIM-Lucknow.
"We find that the respondent (SPJIMR) has indulged in unfair trade practices and also brought about additional cost on the applicant by forfeiting the entire amount," MRTPC acting-chairman M M Sardana said. He asked the institute to refund Rs 1.4 lakh to one Varun Gupta within six weeks.
The commission held that the scheme of changing from an institution to the other by a student was "inherent to the entire system" and slammed the premier management institute for making "undue gains." "It (the institute) is not expected to make undue gains particularly in a situation where the system allows the candidate to change their institution before the commencement of the course," Sardana said.
Gupta, a resident of New Delhi, had appeared in Common Admission Test for management institutes in 2002. On the basis of his score, SPJIMR sent an admission letter in April 2002. The institute had mentioned that Gupta would have to deposit a sum of Rs 1.4 lakh, which was non-refundable. As per instructions, Gupta took admission by submitting Rs 1.4 lakh.
Later, he got a confirmed call from IIM Lucknow and took admission there. He also informed SPJIMR and sought refund. But, SPJIMR refused to return the fees paid as per the terms of admission, forcing the candidate to approach MRTPC against the institute for indulging in unfair trade practices. Gupta argued that this forfeiture clause was to apply only when the seat vacated by him remained unfilled.
"There was sufficient time to fill-up the seat vacated by candidates of waiting list since the course was to begin on June 11," he contended.
In his petition, Gupta said, SPJIMR's action amounted to restricting the competition, leaving no scope for candidates to exercise options with their CAT score and would burden them with additional cost. SPJIMR countered Gupta's contention and said the institution suffers loss if an admission is cancelled.
"We have to plan the budgets and expenses accordingly. If every student seeks cancellation after the admission process is over and asks for refund of fees, it would be difficult for the institute to run," SPJIMR argued. However, the commission rejected this contention and observed that Gupta had informed SPJIMR within a week. At that time a waiting list of candidates was available and the institute could have filled the seat.
MRTPC compared the admission cancellation process of other institutes such as Indian Institutes of Management and MDI, Gurgaon, and found that in most cases only a part of tuition fee is deducted and substantial fee is returned. The commission felt that the institute's action amounted to "restricting the choice of candidates."
"It (the institute) would naturally be making financial gains at the cost of students while it is not making any financial loss correspondingly," the commission observed and directed the institute to return Rs 1.4 lakh to Gupta within six weeks.
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