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Delhi State Consumer Commission Slams FIITJEE for Unfair 'No-Refund' Clause — A Big Win for Students & Parents

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Delhi Consumer Commission Slams FIITJEE for Unfair 'No-Refund' Clause — A Big Win for Students & Parents


By Advocate Amarjeet Singh. 22 Nov. 2025

At PRAN, we welcome and appreciate the Delhi State Consumer Disputes Redressal Commission’s strong and progressive stance in holding FIITJEE Ltd. accountable for imposing an unfair and arbitrary “No-Refund” clause. This judgment reinforces a clear principle: coaching institutes cannot profit from one-sided contracts that exploit students and parents.

🧑‍⚖️ Case Details & Citation

Case:

FIITJEE Ltd. vs. Keshav Sharma & Anr.
First Appeal No. FA/129/2023
Before: Delhi State Consumer Disputes Redressal Commission (DSCDRC)
Decision Date: November 2024
Coram: Justice Sangita Dhingra Sehgal (President) & Member Pinki

District Forum Origin:

Consumer Complaint No. 964/2019, New Delhi District Commission
Order upheld by the State Commission.

Key Directions of the Order:

  • Refund approximately ₹3,20,000 (balance after deducting utilised fee)
  • Interest @ 6% p.a. from the date of withdrawal request
  • ₹25,000 compensation for harassment & litigation cost
  • FIITJEE’s no-refund clause declared arbitrary, unconscionable and unenforceable

📘 What Happened?

  • The student enrolled in FIITJEE’s Two-Year JEE (Advanced) Weekend Programme on 29.10.2018 by paying ₹4,01,493.
  • After attending just two classes, the student found the teaching unsatisfactory.
  • On 21.05.2019, he requested withdrawal and refund of the unutilised fee from 25.05.2019 onwards.
  • FIITJEE refused, citing a blanket “No-Refund Clause” and refunded merely ₹24,780, without justification.
  • Commissions at both levels held FIITJEE guilty of:
    • Deficiency in service
    • Unfair trade practice
    • Enforcing a one-sided, exploitative contract

📜 Key Legal Reasoning (with Citations)

1️⃣ Coaching institutes are “Service Providers” under Consumer Law

The Commission reaffirmed that educational/coaching services fall squarely within the definition of “service” under Section 2(42) of the Consumer Protection Act, 2019.

Cited Precedent:

  • FIITJEE Ltd. v. Minathi Rath, (2022) — NCDRC
  • P.T. Koshy & Anr. v. Ellen Charitable Trust, (2012) — re educational services

2️⃣ No-Refund Clause = Unfair Trade Practice

The Commission held FIITJEE’s clause to be arbitrary, unreasonable, and unconscionable, failing the test of equality of bargaining power.

Relevant Provision:
Section 2(47) – Unfair Trade Practice, Consumer Protection Act, 2019.

3️⃣ Advance Fee Collection Is Regulated by Supreme Court

The Commission relied on the landmark Supreme Court ruling:

📌 Islamic Academy of Education & Anr. v. State of Karnataka & Ors., (2003) 6 SCC 697
— which mandates that institutes collecting advance fees must:

  • Only charge fees on an annual/semester basis
  • Deposit unutilised fees in a separate fixed deposit account

FIITJEE failed to demonstrate such segregation or utilisation.

4️⃣ No Proof of Loss = No Forfeiture

FIITJEE claimed that withdrawal caused loss because the batch was ongoing.
But it failed to show:

  • That the seat remained unfilled, or
  • That the institute suffered any actual financial detriment.

Relevant Principle:
A party cannot enrich itself without corresponding service — Doctrine of Unjust Enrichment.

💡 Why This Judgment Matters

✔ Recognizes students as consumers

✔ Curtails arbitrary, one-sided contracts

✔ Sets a binding precedent for coaching industry practices

✔ Strengthens the rights of parents & students across India

✔ Reinforces accountability in the ₹30,000-crore coaching sector

🌐 Larger Consumer-Protection Context

The ruling exposes widespread issues in the coaching industry:

  • Full-fee collection for multi-year courses
  • Aggressive enrolment tactics
  • No refunds irrespective of service quality
  • Lack of teaching-quality standards

For parents investing life savings, and students under immense academic pressure, such practices are deeply exploitative.

🛡 At PRAN, we believe that education must empower, not exploit.

This judgment is a welcome step in re-balancing power between institutions and consumers.

We call for:

  • Model refund guidelines for coaching centres
  • Mandatory disclosure of teaching quality, performance metrics, and grievance redress mechanisms
  • Strict regulation of advance fee collection
  • Enforcement of Supreme Court norms across the coaching ecosystem
  • References (Clickable Links)
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