Can a University’s Defunct Status Nullify Earlier Degrees? Supreme Court Ruling

A recurring controversy in Indian service and education law concerns the legal fate of degrees awarded by universities that later lose recognition or cease to exist. Can a declaration that a university was illegally established retrospectively invalidate degrees already earned by students who studied there in good faith? More importantly, can such invalidation justify termination from public employment years after appointment?

These questions were conclusively answered by the Supreme Court of India in Civil Appeal Nos. 797–799 of 2026, decided on 18 February 2026, in Priyanka Kumari & Ors. v. State of Bihar & Ors. (2026 INSC 167). The Court held that a university’s defunct or invalid status cannot, by itself, nullify degrees obtained prior to such declaration, especially where students were not at fault, and the institution was functioning under a validly enacted law at the relevant time.

Background of the Dispute

The appellants were appointed as librarians under the State of Bihar pursuant to a recruitment process initiated in 2009. Their eligibility was based on Bachelor of Library Science (B.Lib.) degrees obtained in 2004 from the University of Technology and Science, Raipur, which had been established under the Chhattisgarh Niji Kshetra Vishwavidyalaya Act, 2002.

At the time the appellants pursued their studies:

• The 2002 Act was a validly enacted statute of the Chhattisgarh Legislature.
• The concerned university was formally notified and operational.
• The Central Government, through the Ministry of Human Resource Development, had recognised the degrees awarded by the university for higher studies and employment.

However, in Prof. Yash Pal v. State of Chhattisgarh, the Supreme Court struck down Sections 5 and 6 of the 2002 Act as ultra vires, holding that the State legislature lacked competence to permit private universities to be established without adequate regulatory oversight. As a result, all universities created under the Act were declared to have ceased to exist.

Years later, following a PIL alleging appointments based on “unrecognised” degrees, the services of the appellants were terminated in 2015 solely on the ground that their degrees were from a university established under an Act later declared unconstitutional.

Issues Before the Supreme Court

1. Does the striking down of the parent statute retrospectively invalidate degrees awarded earlier by a university established under it?
2. Can public employment be terminated years later solely on the basis of such retrospective invalidation?
3. Does the protection granted in Prof. Yash Pal apply only to students still studying, or also to those who had already graduated?

Arguments of the Parties

Appellants’ Contentions

The appellants argued that:

• They had obtained degrees when the university was legally functioning, recognised by both the State and the Union Government.
• The declaration of unconstitutionality in Prof. Yash Pal could not retrospectively penalise students who had already completed their courses.
• The Supreme Court itself had emphasised the protection of students’ interests in Prof. Yash Pal, reflecting an intent against academic devastation.
• Their appointments in 2010 were made with full knowledge of the State, and they had served for over five years without objection.

Reliance was also placed on the Bombay High Court decision in Anil Bhimraj Purane v. Union of India, where a degree from the same university was protected, and on the doctrine of prospective overruling.

State’s Contentions

The State of Bihar contended that:

• Once the 2002 Act was declared ultra vires, all degrees issued under it stood invalid.
• The protection in Prof. Yash Pal was expressly limited to students still studying, not to those who had already passed out.
• The appellants were aware of the judgment by the time of their appointment and thus could not claim equity.

The Supreme Court’s Reasoning

1. Legality at the Time of Study is Determinative

The Court emphasised that the university was:

• Established under a validly enacted statute.
• Operational and functional at the time the appellants studied.
• Not shown to be a bogus or sham institution.

There was no allegation that education was not imparted or that degrees were fraudulently issued. Consequently, the appellants could not be faulted for choosing to study at the university.

2. Distinction Between Institutional Invalidity and Student Fault

A critical doctrinal point made by the Court was that the State's legislative incompetence does not translate into students' culpability. The invalidation of the 2002 Act was a constitutional finding against the State’s legislative action, not against students who relied upon it.

To retrospectively annul degrees would amount to visiting the State's sins upon innocent students, which the Court found legally and morally untenable.

3. Prof. Yashpal v. State of Chhattisgarh

The Court carefully examined the case of Prof. Yash Pal. While those directions expressly dealt with students who were still studying, the Court clarified that:

• The judgment did not declare earlier degrees void.
• The protective intent underlying the directions indicated that students’ careers were not to be destroyed due to regulatory failure.
• Nothing in Prof. Yash Pal mandated retrospective invalidation of degrees already earned.

Thus, the High Court had erred in adopting an unduly narrow reading of the earlier judgment.

4. State Acquiescence and Delay

An important factual factor was that:

• The appellants were appointed in 2010, five years after Prof. Yash Pal.
• The State did not object to their qualifications at the time of appointment.
• They served for several years before termination.

The Court held that the State could not sleep over the issue and later unsettle settled service rights, especially when no fraud or misrepresentation was alleged.

Findings on Termination of Services

The Court held that the termination of the appellants’ services was legally unsustainable. It took note of the fact that the appellants had been selected through a proper recruitment process and had served the State for more than five years before their termination.

The Court further observed that even the State was fully aware of the background of the University at the time of appointment, as evidenced by the earlier PIL proceedings. Having allowed the appellants to continue in service for several years, the State could not abruptly terminate their services solely on the ground of degree invalidity arising from a subsequent legal interpretation.

Relief Granted

Allowing the appeals, the Supreme Court set aside the impugned judgments of the Patna High Court. The Court declared the termination orders illegal and directed reinstatement of the appellants with continuity of service.

However, adopting a balanced approach, the Court denied back wages for the period during which the appellants remained out of service, observing that the matter involved complex legal questions and could not be attributed entirely to fault on the part of the State.

Conclusion

The judgment in Priyanka Kumari & Ors. v. State of Bihar & Ors. is a significant reaffirmation of the principles of fairness, legal certainty, and protection of innocent stakeholders in constitutional adjudication. It clarifies that students and employees cannot be made collateral damage of legislative incompetence or subsequent judicial invalidation when they acted bona fide under a valid legal regime.

By extending protection to students who had already completed their education, the Supreme Court has filled an important doctrinal gap left by the Yash Pal judgment. The ruling also sends a clear signal to State authorities that retrospective penalisation of employees on technical grounds, especially after long years of service, is incompatible with constitutional values.

The decision will have far-reaching implications for service law, higher education regulation, and the treatment of degrees issued by institutions affected by statutory invalidation.

Important Link

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