When Learning Becomes a Liability: National Commission Slams Coaching Institute’s No-Refund Clause as Unfair Trade Practice.


18 September 2025 Consumer Protection Act >> Consumer Rights   |   Education >> Miscellaneous  

Very recently, the National Consumer Disputes Redressal Commission has upheld the orders passed against FIITJEE Ltd. in the case of FIITJEE Ltd. & Ors. v. Shlok Agarwal Shlok Vijay Agarwal by dismissing its challenge to refund course fees to a student who discontinued classes after ten days. The case accentuates how consumer law acts as a shield against exploitative fee structures and one-sided contractual conditions of private coaching institutions.


The dispute originated when Shlok Agarwal enrolled in the two-year integrated coaching programme conducted by FIITJEE for preparation for IIT-JEE. Lured by promotional promises of concessions and early-bird discounts, his parents paid the total two-year fee-more than Rs. 3.4 lakh-prior to the commencement of the course. However, within days of joining, the student faced prolonged class hours, alleged harassment by faculty, and an overwhelming schedule, due to which he withdrew within ten days. His request for refund was flatly refused, citing a clause in the enrolment form that stated once paid, the fee was non-refundable.


Decisions of the District and State Forums:

In June 2020, the Hyderabad District Consumer Forum ruled in favour of the student, observing that total forfeiture of fees by FIITJEE was unjust enrichment and unfair trade practice. The Forum ordered refund of Rs. 3.37 lakh, noting that a declaration executed by the parents cannot deprive statutory consumer rights, more so when there was no evidence to show that the vacated seat remained unfilled.

In October 2024, the Telangana State Commission upheld the complaint partly by allowing FIITJEE to retain only the proportionate fee of the first semester, amounting to Rs. 86,791.50, and ordered the refund of the remaining amount with 6% annual interest, apart from costs and compensation for mental agony.
Findings Before the National Commission

In its revision petition, FIITJEE had contended that the student had left midstream of her own volition, that an enrolment contract precluded refunds, and that coaching services being educational in nature ought to fall outside the Consumer Protection Act. The NCDRC refused to accept these contentions and concurred with the reasoning of the State Commission that private coaching institutes, unlike formal educational institutions, are service providers liable to fall within consumer jurisdiction.

Based on precedents such as FIITJEE v. Minathi Rath and Brilliant Tutorials Pvt. Ltd. v. Ashwani Verma, the Commission maintained that demanding two years' fees in advance and not giving a refund on minimal service delivery amounted to unfair trade practice. The no-refund clause was held to be unconscionable, voidable, and against public policy.

The Commission's Observations:

The NCDRC held that an institution like a coaching centre cannot claim money for services not provided, particularly where the withdrawal happens at the beginning of the course. Consumer protection, the Commission noticed, would become meaningless if big institutions are allowed to use standard form contracts against young aspirants.

Referring to the limited scope of revisional jurisdiction under Section 21(b) of the Consumer Protection Act, the Commission refused to reopen the concurrent findings of lower fora, since no jurisdictional error or illegality was pointed out in the orders challenged. It directed FIITJEE to refund Rs. 2,60,375 along with accrued interest at 6%, failing which further interest at 9% would apply for delayed compliance.

Key Takeaways: 

This decision reinforces an important boundary between education and commerce. Coaching entities, while educational in purpose, are paid service providers subject to principles of consumer fairness. Non-refundable, blanket fee clauses—particularly those for advance payments—have been consistently held abusive and unenforceable. More broadly, the judgment fortifies the jurisprudence that contractual disclaimers cannot override the statutory protections available under consumer law. It also emphasizes that forfeiture without proof of an actual loss is unjustified. 

The consumer courts will not allow reputable coaching institutions to disguise commercial gains in the cloak of educational discipline. In this era of competitive examinations, when parents invest so much in the hope for success, the line between legitimate business and exploitation must be clearly drawn.


Section 21, Consumer Protection Act - 1986  

Consumer Protection Act, 1986