Lt Governor Kiran Bedi hailed the step taken by the MCI to annul the admission of the students as "a breakthrough."
The managements had admitted the students even though they had not undergone counselling by the CENTAC which has been made compulsory by the Supreme Court, she said.
The MCI had acted tough "by cancelling admission."
"We have received a letter from the MCI on the cancellation of irregular admission," she added.
Bedi said many of the students who were given provisional allotment by CENTAC in the PG stream recently were refused admission in the colleges.
The aggrieved students had met her and submitted oral and written complaints.
The student alleged that private medical colleges allegedly denied them admission even after they paid the fee fixed by the fee committee.
Deemed universities had also refused them admission and allegedly demanded "exorbitant fee to the tune of Rs 40 to Rs 50 lakhs per year".
The Director of Health and Family Services in Puducherry, who is the nodal officer of the Union territory, was asked to furnish the list of students admitted in each of the seven private medical colleges here to the MCI.
The MCI was also apprised through a separate list of the "discrepancies made by medical colleges in admitting students to the PG courses," the statement said.
Bedi stated that she had also written to the MCI chief forwarding the list of "discrepancies" detected in the admission by the colleges. The Monitoring Committee of the MCI carefully examined the list of students admitted by private colleges with that of students who were allotted seats through CENTAC under common counselling.
The students who did not find a place in the list of those allotted seats through CENTAC have been directed "to be discharged by the concerned colleges".
The Council has also directed the colleges to send a compliance report within two weeks.
It has also sent copies of the directions to Pondicherry University, the affiliating university for private medical colleges, for appropriate action.
"It is the bounden duty and responsibility of Puducherry government to ensure that the meritorious students who were allotted the PG seats through CENTAC are admitted against the vacant seats now arising out of cancellation of admission of 95 students by MCI in the private colleges," Lt Governor Kiran Bedi said in the release.