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NATIONALCONSUMERDISPUTESREDRESSALCOMMISSION

NEWDELHI

REVISIONPETITIONNO.3365of2006

(Againstorderdated04.10.2006inAppealNo.A830/2006
oftheStateCommission,Delhi)

FIITJEE
Ltd.........Peoner
Vs.
Dr.(Mrs.)MinathiRath........
Respondent
REVISIONPETITIONNO.1805of2007
(Againstorderdated23.04.2007inAppealNo.18/2007
oftheStateCommission,Delhi)

FIITJEE
Ltd.........Peoner
Vs.
B.B.Popli........
Respondent
REVISIONPETITIONNO.2660of2007
(Againstorderdated09.01.2007inAppealNo.509/2006
oftheStateCommission,Delhi)

Brilliant
Tutorials........Peoner
Vs.
RahulDass........
Respondent
REVISIONPETITIONNO.3496of2006
(Againstorderdated04.10.2006inAppealNo.830/2006
oftheStateCommission,Delhi)

P.T.Educaon&TrainingServices
Ltd.........Peoner
Vs.
Dr.MinathiRath&Ors.........
Respondents

REVISIONPETITIONNO.3497of2006
(Againstorderdated04.10.2006inAppealNo.830/2006
oftheStateCommission,Delhi)

CareerLauncherIndia
Ltd.........Peoner


Vs.

Dr.(Mrs.)MinathiRath&Ors.........
Respondents

BEFORE:

HON'BLEMR.JUSTICEASHOKBHAN,PRESIDENT
HONBLEMRS.VINEETARAI,MEMBER

ForthePeoner:Mr.KailashVasudev,Sr.Advocate
inR.P.3365/06&Mr.V.D.Costa,Mr.AnubhavBhasin,
R.P.1805/07)Advocates

ForthePeoner:Mr.K.K.Rohatgi,Advocate
(inR.P.2660/07)Mr.SarveshSingh,Advocate

ForthePeoner:Mr.S.K.Vashishta,Advocate
(inRPs3496&3497/076)

FortheRespondents:Inperson
(inalltheRPs)

Pronouncedon14thNovember,2011
ORDER

PERVINEETARAI,MEMBER

R.P.Nos.3365/2006and1805/2007havebeenledbyFIITJEELtd.,R.P.No.2660/2007byBrilliantTutorials,
R.P.No.3496/2006byP.T.Educaon&TrainingServicesLtd.andR.P.No.3497/2006byCareerLauncherIndiaLtd.
against the orders of the State Consumer Disputes RedressalCommission, Delhi (hereinaer referred to as the
State Commission) in Appeal Nos.A830/2006, 18/2007, 509/2007, 830/2006 and 830/2006 in which Dr.
(Mrs.)MinathiRath,B.B.Popli,RahulDassandotherswereRespondents.
Although,thepointsinvolvedintheserevisionpeonsaresimilar,therearehoweverdierencesinthe
facts of each case.For example, in R.P.No.3365/2006, the student took admission in the Peoners coaching

courseandpaidanadvancefeeoftwoyearsandlethecourseaeroneyear.InR.P.No.1805/2007,thestudent
aended only for two days and le the course reportedly on medical grounds and in R.P.No.2660/2007, the
studentlethecourseaersixmonthsbecausehewasndingittoostrenuoustopursuethecourses.However,
sinceasmenonedearlier,themainpointsinvolvedintheserevisionpeonsbeingthesame(i.e.paymentof
twoyearsfeesinadvanceandasubsequentrequestbyRespondentsforrefundofthefeesfortheunaended
periodofthecourse),weproposetodisposeoftheserevisionpeonsbyonesingleorderbyessenallytaking
thefactsofR.P.No.3365/2006.
According to the Respondent/complainant, Dr.MinathiRath in this case, got her
daughter, Smita Pa(hereinaer referred to as the student), enrolled in the two year regular
classroomprogrammeof the Peoner for which a full advance fee of Rs.61,020/ was paid on 20.04.2004 for
servicesofcoachingtobecompletedinMarch,2006.ThestudentaendedregularclassesuptoJanuary,2005
but found that she was not beneng from the Peoners teaching paern because of apathy and lack of
communicaon between teachers and students and the generally poor environment and lack of proper
infrastructuralandclassroomfacilies.ThePeoneralsodidnotrespondtoRespondentsqueries/claricaons
regarding the programme and therefore, Respondent decided to withdraw her daughter from the
Peoner/Instuteandrequestedthattheadvancefortheunaendedperiodi.e.fromFebruary,2005toMarch,
2006 amounng to Rs.30,500/ be refunded to her with interest. Peoner, however, refused to return this
amount,aggrievedbywhichRespondentledacomplaintbeforetheDistrictForumongroundsofunfairtrade
pracce and deciency in service and requested that the Peoner/Instute be directed to refund to the
Respondent,theadvancefeepaidfortheunaendedperiodfromFebruary,2005toMarch,2006.
Peonerhowever,deniedthatthecourseprogrammewasnotsasfactoryandcontendedthatthereason
fortheRespondentsdaughterwanngtoleavethecourseprematurelyinJanuary,2005wasnotbecauseofany
lacunaeordeciencyinthecourseprovidedbythePeoner/Instutebutbecauseshewasnotabletocopewith
thestudyandhardworkinvolved.Infact,thePeonerwhichisaregisteredPrivateLimitedCompanyenjoysa
goodreputaonforsuccessfullyrunningprivatecoachingclassesfortrainingeligiblestudentstopreparethemfor
common entrance tests to the Indian Instute of Technology etc. and only a limited number of students are
selectedaerawrientestheldbythePeoner/Instute.Successfulcandidatesareadmiedonthebasisof
terms and condions set out in a wrien contract executed between the Peoner/Instute. All prospecve
candidatesareprovidedfulldetailsregardingtheclassroomprogrammesandonceacandidateisadmiedtothe
course, as per the terms of the contract, he/she has to pay an advance fee of Rs.61,020/ which also includes

Rs.4,520/as service tax for the course period of two years. There is no provision for refunding the
same.Therefore,itwasunreasonablefortheRespondenttoseekarefundoffeesfortheunulizedperiodsince
shehadagreedtoallthetermsandcondionsofherdaughtersadmissionintothePeoner/Instuon.
TheDistrictForumaerhearingbothparesallowedthecomplaintbyobservingasfollows:
Inthecaseinhand,theOPinstuterunscoachingclassesforpreparingthestudentsforIITandother
such entrance examinaons. Admissions to such instutes are not regulated by any law or rules or
regulaons. Such instutes lure the parents to admit their wards to these instutes by giving full page
adversementsinthenewspapersclaimingsuccessoftheircoachingprogrammes.Itiscommonknowledge
thatmorethanonecoachingschoolsclaimthesamerankersintheIITorsuchotherentranceexaminaons
astheirownstudents.Itclearlyamountstounfairtradepracce.These coaching schools provide mostly
printed material which may help and guide the students to some extent in preparing for a parcular
entrance examinaon. However, so far as the classroom teaching is concerned, much is le to be
desired.Onthebasisofmisleadingadversementsthesecoachingschoolsaractandenrolmorestudents
thantheycancaterto.Asaresultofthisnumberofstudentsperclassreachashighas40.Thestudent
teacher rao is too low. As result of this personal aenon is not given and cannot be given to every
student.

TheDistrictForumfurthercitedthejudgmentoftheStateConsumerDisputesRedressalCommission,Delhi
in

Appeal

No.FA569/2005

in

Registrar,

GuruGobindSinghIndraprasthaUniversityVs.Ms.PremDeep Kaur decided on 31.01.2006, wherein the State


Commissionhadalsocommentedadverselyonthepracceoftakingadvanceadmissionfeesandnotproviding
adequate services. The District Forum, therefore, directed the Peoner to retain fees only for one year
(includingservicetax)forwhichtheRespondentsdaughteraendedtheclassesanddirectedthePeonerto
refundRs.28,000/totheRespondentalongwithcompensaonofRs.5,000/andligaoncostofRs.2,000/.
Aggrieved by this order, Peoner preferred an appeal before the State Commission which dismissed the
samebyobservingasfollows:
Respondentsdaughterhadaendedtheclassesforoneyearandhavingbeennotsasedwiththe
quality of the training being imparted parcularly lack of personalized aenon and the schedule of the
coursebeingcompletedinahurriedmanner,shewasentledfortherefundofthefeefortheremaining
periodonthepremisethatrespondenthadatleastavailedtheservicesforoneyear.
Anytermofthecontractwhichisunconscionableorvoidableisnotenforceable.Noserviceprovider
like training instutes or Coaching Centers or educaonal Centers can be allowed to forfeit the fees or
consideraonreceivedinadvanceincasethestudenthasnotavailedtheservice.Thusthetermsthatfees
oncepaidisnotrefundableisunconscionableaswellasvoidableandtherefore,notaconable.Astudent
oratraineemayleaveinthemidstreamifhendstheservicedecientandsubstandardandnonyielding
andtotellhimthatfeesoncepaidisnotrefundableisuncalledforandunfairtradepracceasnoservice
providercantakeorchargetheconsideraonoftheservicewhichithaseithernotgivenorhasnotbeen
availed.

The State Commission also directed the Peoner to deposit Rs.25,000/ in the State Consumer Welfare
LegalAidwithin15daysforlingamisconceivedandmisdirectedappeal.Itfurtherdirectedthatalltraining
imparnginstuteswhichprepareastudentforentranceexaminaonsshould,atthemostchargetuionfeefor
threemonthsinadvanceinacourseortrainingforoneyearandsixmonthsforacourse/trainingforoverone
yearandthatanyviolaonshouldbevisitedwithheavypunivedamagesandsentenceofimprisonmentorne
asprovidedunderSecon27oftheConsumerProteconAct,1986.
Hence,thepresentrevisionpeon.
PareswererepresentedbytheirrespecveCounselswhomadeoralsubmissions.Respondentappearing
inperson reiterated that the Respondents daughter had no opon but to leave the course midway because
of

bonadeand

genuine

reasons

parcularly

the

unsasfactory

services

provided

by

the

Peoner/Instute.UnderthecircumstancesitwasnotfaironthepartofthePeoner/Instutetodeclinethe
request for refund of the advance amount paid for the course. Counsel for Respondent pointed out that the
maer pertaining to advance payment of fees and its consequences have been squarely covered by
theHonbleSupremeCourtinitsjudgmentinIslamicAcademyofEducaonVs.StateofKarnataka(2003)6
SCC696whereintheApexCourtinteraliaobservedasfollows:
It must be menoned that during arguments it was pointed out to us that some educaonal
instuonsarecollecng,inadvance,thefeesfortheenrecoursei.e.foralltheyears.Itwassubmied
that this was done because the instute was not sure whether the student would leave the instute
midstream.Itwassubmiedthatifthestudentlethecourseinmidstreamthenfortheremainingyears
the seat would lie vacant and the instute would suer.In our view an educaonal instuon can only
chargeprescribedfeesforonesemester/year,ifaninstuonfeelsthatanyparcularstudentmayleave
in midstream then, at the highest, it may require that student to give a bond/bank guarantee that the
balancefeesforthewholecoursewouldbereceivedbytheinstuteevenifthestudentleinmidstream.
If any educaonal instuon has collected fees in advance, only the fees of that semester/year can be
used by the instuon. The balance fees must be kept invested in xed deposits in
anaonalisedbank(emphasissupplied).Asandwhenfeesfalldueforasemester/yearonlythefeesfalling
due for that semester/year can be withdrawn by the instuon.The rest must connue to remain
depositedllsuchmethattheyfalldue.Attheendofthecoursetheinterestearnedonthesedeposits
mustbepaidtothestudentfromwhomthefeeswerecollectedinadvance.
This ruling of the Supreme Court is very much relevant in the instant case and, therefore, following the
principleslaiddowninthiscase,thePeonersareobligedtoreturntheadvancefeesfortheperiodwhenthe
studentdidnotaendthecourse.
LearnedSr.CounselforPeoner, Mr.Kailash Vasudev, on the other hand in his detailed oral submissions
contended that the judgment of the Apex Court inIslamic(supra) is not applicable in this case because the
Peoner/Instute is not an educaonal instuon since it imparts only coaching services which services have

been separately dened under Secon 65, Clause (26) and (27) of the Finance Act, 1994 clearly indicang that
theseinstutesarenotregulareducaonalinstuonsandunlikeeducaonalinstuonstheyarenotregulated
by statutes like the All India Council of Technical Educaon(AICTE), Secondary School Board etc. nor do these
instuonsissuecercateofprociency/diplomaetc.Thesecoachingcentresunlikeeducaonalinstuonsalso
do not receive grants or aid of any nature from either the Government or other authories and are privately
funded instuons running strictly on commercial basis. Counsel for Peoner further contended that in the
presentcase,Respondenthadacceptedthetermsandcondionsofadmissionincludingpaymentofadvancefees
and it thus, becomes a contractual agreement between the pares which cannot be violated in a whimsical
manner. In this connecon, Counsel for Peoner cited orders of the Honble Supreme Court inTamil Nadu
HousingBoard&Anr. Vs. Sea Shore Apartment Welfare Associaon AIR 2008 SC 1151wherein it has been
ruledthatitisnotfortheForaundertheActtoenterintothepricexaonortoreopenaconcludedcontract
with a view to geng back a part of the price paid and of which benet was taken. Similarly,
inT.V.SundaramIyengarII(2003)CPJ176(NC),theNaonalCommissionhadheldthattheconsumerforumhave
no jurisdicon to strike down a condion in a contract or to rewrite the same. Counsel for Peoner further
averredthatSupremeCourtinPolymatIndia(P)Ltd.&Ors.Vs.NaonalInsuranceCo.Ltd.&Ors.(2005)9SCC
174hasheldthatitisthedutyofthecourttointerpretthedocumentofcontractaswasunderstoodbetweenthe
paresstrictlywithoutalteringthenatureofthecontract.LearnedSr.CounselforPeoneralsostatedthatthe
StateCommissionwasbothunfairandunjusedinmakingsweepingadversecommentsaboutthetrainingand
coachingimpartedbyallcoachinginstuons.Apartfrombeingunfairtothereputaonanddedicatedworkof
manyoftheseinstuonsintheinstantcase,itdidnottakeintoaccountthefactthatthePeoner/Instuonis
wellreputedforhavingsuccessfullycoachedalargenumberofprospecvestudentsforentranceteststohigher
educaonalinstuonsandalsothatinthepresentsetofrevisionpeons,noallegaonsperseregardingunfair
tradepracceordeciencyinservicehasbeenmadeagainstPeoner/Instutes.LearnedSr.Counselquotedthe
judgment of the Apex Court inS.R.Batra&Anr.Vs.Smt.TarunaBatra (2007) 3 SCC 169wherein it has been
observed that court do not legislate and whatever may be the personal view of a Judge, he cannot create or
amendthelawandmustmaintainjudicialrestraint.Keepinginviewthespiritoftheaboveruling,Counselfor
PeonerrequestedthattheunfairobiterdictumcontainedintheStateCommissionsordermaybesetasideas
alsodamagesofRs.25,000/imposedonaccountoftheappealthatPeonerledbeforethatCommission.
WehavecarefullyheardthesubmissionsmadeatlengthbythelearnedCounselsrepresenngthepares
and have also considered the enre evidence on record. The facts pertaining to the admission of the
RespondentswardstothePeoner/Instutes,theirleavingtheseinstuonsbeforecomplengthecourseson

variousgroundsandtherequestofRespondentsseekingrefundofthepartofthefeeswhichwasnotagreedto
by the Peoner/Instute are not in dispute. The issues for decision before us are whether the
Peoner/Instute in view of the judgment of the Honble Supreme Court in Islamic(supra) were jused in
demanding advance payment of fees for the enre course period and refusing to pay the same by cing
contractualagreementandbecausetheywerenoteducaonalinstuonsand,therefore,theabovejudgmentof
theHonbleSupreme Court was not applicable to them.The other issue raised by the Counsel for Peoner is
whetherthiscasecomeswithintheambitandscopeoftheConsumerProteconAct,1986.
Sofarastherstissueisconcerned,eventhoughinaverynarrowtechnicalsense,forreasonspointedout
bytheCounselforPeonerinhisoralsubmissions,coachinginstuonsmaynotbeconvenonaleducaonal
instuonsbutsincetheyprovidecoachingandtrainingtostudentsofaneducaonalnaturetoequipthemfor
higher studies in specialized educaonal instuons, the same principles that apply to educaonal instuons
wouldalsoapplytotheseinstuonsinrespectofthefeeschargedbythemincludingadvancefees.Inanycase,
Respondents are consumers and the Peoners are the service providers.Peoners are rendering service for
consideraonandfallwithinthepurviewofConsumerProteconAct,1986.ThejudgmentoftheSupremeCourt
would,thus,overrideanybilateralagreementbetweenthepares.Weare,therefore,oftheconsideredview
that respecully following the judgment of theHonbleSupreme Court, the Peoner/Instute could not have
charged full advance fees for two years and could have charged prescribed fees for one semester/year.In the
instantcases,sincePeoner/Instutesdonotfollowthesemestersystem,theycouldonlyhavechargedadvance
feesforoneyear.Inviewofthesefacts,theRespondentsareentledtogetrefundofthefeesaerdeducng
thenonrefundableservicetaxfortheunaendedsecondyearofthecourse.
RegardingthecontenonofthePeonersthatthesecasesdonotfallwithintheambitandscopeofthe
ConsumerProteconAct,1986becausethesecomplaintshavenotbeenmadeongroundsofdeciencyinservice
beforetheDistrictForum,wendthatthiscontenonisnotsustainable.Intherstplace,thecomplaintswere
made on specic grounds of deciency in service before the District Forum and secondly as stated in the
abovepara,asperSecon2(d)(ii) of the Consumer Protecon Act, 1986, the Respondents are consumers who
sought to avail of services for a consideraon and the Peoner/Instute is very much a provider of these
servicesandthusthesecasesareconsumerdisputeswithinthemeaningoftheConsumerProteconAct,1986.
The State Commission, as pointed by the learned senior Counsel for Peoner has made sweeping and
adverse comments against all coaching instutes by terming them as commercial shops and stang that they
indulge in highly unethical, unscrupulous and unfair trade pracce to earn undue prots by exploing students

andhasthusdirectedthatanyviolaonofitsorderwouldbevisitedwithheavypunivedamagesandsentence
of imprisonment or ne as provided under Secon 27 of the Consumer Protecon Act. Further, the State
Commission has imposed damages of Rs.25,000/ on Peoner/Instutes for having led misconceived and
misdirectedappeal.
While some of these instuons may be indulging in unethical, unscrupulous pracces and exploing
students, there are also many others which render very useful service by counseling, training and successfully
equipping students for admission to higher educaonal instuons. It is perhaps because of this reason that
thereissuchalargedemandforadmissionintogoodcoachinginstutes.So far as the present Peoners are
concerned, we note that only in one case has the Respondent made allegaons about the somewhat
unsasfactoryserviceprovidedbythePeoner/Instutebutnoevidencepersewasproducedtocorroborate
this allegaon and the Respondents main request had been conned to refund of advance fees. Therefore,
withoutcredibleevidencetobacktheseallegaons,weareoftheviewthattheStateCommissionshouldhave
desistedfrommakingadversecommentsofsuchageneralandsweepingnatureaboutallcoachinginstuons
and also imposing damages of Rs.25,000/ for ling misconceived and misdirected appeal on the
Peoner/Instute.ThePeonerswereverymuchwithintheirrightstoseeklegalremedyprovidedtothem
under the Consumer Protecon Act, against orders by which they were aggrieved and we are unable to
comprehendhowtheStateCommissionconcludedthattheappealofthePeoner/Instutewasmisconceived
andmisdirected.We,therefore,setasidetheadverseobiterdictumoftheStateCommissionagainstcoaching
instuonsincludingagainstthePeoner/InstutesasalsothepunivedamagesofRs.25,000/.
Tosumup,therevisionpeonsaredismissedandtheordersoftheStateCommissionareupheldwiththe
followingmodicaons:
(i)ThePeoners/Instutesaredirectedtorefundthefees(excludingtheservicetax)fortheunulized
period i.e. the second year to all the Respondents with interest @ 6% per annum, Rs.5,000/ as
compensaontowardsmentalagonyandRs.3,000/asligaoncostsineachcase.
(ii) The State Commissions obiter dictum as well as damages of Rs.25,000/ imposed on the
Peoners/Instutes,issetaside.

Sd/
...
(ASHOKBHANJ.)
PRESIDENT
Sd/
..

/sks/

(VINEETARAI)
MEMBER

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