Court affirms that educational certificates can be withheld if fees are sourced from illicit funds, urging the appellant to pursue legal remedy for seized funds.
In a significant ruling, the Madras High Court has confirmed the right of educational institutions to retain academic certificates if fees are linked to illicit activities, particularly terrorism. The Division Bench, comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan, delivered the judgment on June 17, 2026, in the case of Puja Kumari v. Union of India and others. The case revolved around the withholding of educational certificates by the fifth respondent college, where the appellant, Puja Kumari, had completed her MBBS degree.
The appellant had sought the release of her certificates without repaying the fees, which were seized by the National Investigation Agency (NIA) due to their connection with the Communist Party of India (Maoist), a banned terrorist organization. The court emphasized that educational certificates are not typically subject to lien unless the fees were paid through proceeds of crime. The judgment underscores the institution's right to withhold certificates until fees are paid by legitimate means.
The appellant argued against the withholding of her certificates, citing previous judgments that educational certificates are not marketable commodities and should not be held as security. However, the court found that the unique circumstances involving national security and criminal asset seizure justified the institution's actions. The judges noted that although the appellant is not directly accused, she cannot benefit from funds derived from criminal activities.
The court advised the appellant to seek the release of the seized funds through the Special Court rather than compel the educational institution to pursue litigation against the NIA. The judgment reaffirms the college's policy of requiring full settlement of dues before issuing certificates and highlights the potential financial impact on the institution if forced to absorb the loss.
The Madras High Court's decision aligns with prior legal standards but adds a critical dimension regarding funds tied to terrorism, marking a precedent for similar future cases. The court's ruling protects the institution's financial interests while providing a pathway for the appellant to resolve the issue legally.
Bottom line:-
Educational certificates cannot be withheld on the ground of non-payment of fees unless the fees were paid through illicit means traceable to criminal activity. Institutions are not obligated to release certificates until their rightful dues are reimbursed by clean, untainted means.
Statutory provision(s): Contract Act, 1872 Section 171, Unlawful Activities (Prevention) Act, 1967
Puja Kumari v. Union of India, (Madras)(DB) : Law Finder Doc id # 2925798
