Safiya Malik 

On December 19, 2024, the Delhi State Consumer Disputes Redressal Commission dismissed an appeal filed by FIITJEE Ltd. against the order of the District Consumer Disputes Redressal Commission, which had directed the coaching institute to refund a portion of the fees collected from a student who had discontinued its two-year classroom program. The appeal was adjudicated by a bench comprising Justice Sangita Dhingra Sehgal (President), Ms. Pinki (Judicial Member), and Mr. J.P. Agrawal (General Member).

The dispute arose when the respondent, Mr. Rajeev Luthra, sought a refund of ₹1,34,015, which he had paid for his daughter’s enrollment in FIITJEE's program aimed at CAT preparation. The respondent’s daughter withdrew from the course after two months due to difficulties in managing the demanding schedule and her schoolwork. FIITJEE denied the refund, citing its enrollment terms, which explicitly stated that fees once paid were non-refundable under any circumstances.

The District Commission, in its order dated February 3, 2014, found FIITJEE’s practice of collecting fees for the entire two-year course in advance to be an unfair trade practice and directed the institute to refund ₹60,750 (50% of the fees, adjusted for service tax) along with interest at 6% per annum from the date of the complaint. Additionally, ₹20,000 was awarded as compensation for inconvenience caused to the respondent.

In its appeal, FIITJEE contended that the respondent had agreed to the enrollment terms, including the non-refundability clause, and that the refund policy was necessary to cover the costs incurred due to the student’s withdrawal, such as the vacant seat. The appellant relied on the arbitration clause in its enrollment form and cited multiple judicial precedents to assert that its actions did not constitute a deficiency in service.

The State Commission, however, upheld the findings of the District Commission, relying heavily on the Supreme Court’s order in Islamic Academy of Education v. State of Karnataka (2003) 6 SCC 697. The judgment in that case held that educational institutions cannot collect fees for the entire course in advance but may charge fees only for a semester or a year at a time. The Supreme Court had also mandated that any fees collected in advance beyond the current semester or year must be kept in a fixed deposit and refunded if not utilized.

The bench observed: “From the abovementioned precedent, it is clear that if the educational institution had collected the fees for the entire course in advance from the students, the educational institute can use the fees of the particular semester/year for its administration, and the balance fees should be kept deposited in the nationalized bank until that fee falls due for the particular semester/year.”

The Commission noted that FIITJEE failed to produce evidence demonstrating compliance with the Supreme Court’s directives regarding the utilization and safeguarding of advance fees. It concluded that FIITJEE had charged and retained fees for services it neither provided nor was entitled to under law.

Rejecting the appellant’s defense, the Commission held: “No service provider like training institutes or coaching centers can be allowed to forfeit the fees or consideration for the service which it neither provided nor availed. Thus, the term that ‘fees once paid is not refundable’ is unconscionable as well as voidable and therefore not actionable.”

The Commission further observed that such practices amount to unjust enrichment at the expense of consumers. It held that FIITJEE’s insistence on retaining the fees for non-availed services was not only contrary to established legal principles but also violated the rights of the consumer under the Consumer Protection Act, 1986.

Accordingly, the State Commission dismissed FIITJEE’s appeal and directed that the order of the District Commission be upheld. No costs were imposed, and any pending applications were disposed of in terms of the judgment. The bench also directed that the judgment be uploaded on the Commission’s website for reference by the parties.

Case Title: FIITJEE Ltd. v. Rajeev Luthra
Case Number: First Appeal-249/2014
Bench: Justice Sangita Dhingra Sehgal (President), Ms. Pinki (Judicial Member), and Mr. J.P. Agrawal (General Member)

[View/Download order]