Is it ok to apply for undergraduate admission in some institution while studying in another?

Basically my question is

Is it ok to apply for undergraduate admission in institutions like Oxford, Cambridge, Princeton etc for an already-one-year-senior studying in a separate institution?

Actually I am currently reading in a college but as has been mentioned in a previous question, I think the rules and regulations of the college isn't suitable for me and instead of my trying to adjust, I find it difficult to continue studies in that college and I plan to drop this year.

But the problem is that I have already dropped one year and due to this reason one of my friends told me that I can't apply to renowned colleges. Is it really true for all such institutions?

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Note 1:-

I plan to study in Germany. So I will be glad if someone gives an outline of the of admission policy of German institutions.

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Note 2 :-

Probably the tag "bachelor/undergraduate admission" would be appropriate for this question but unfortunately I haven't found any such tags. So I have added the "bachelor" tag.