1. The present Writ Petition filed by the Association of Telangana Medical and Dental Colleges Management as a representative of the Managements of Private Unaided Medical and Dental Colleges situated in State of Telangana seeking directions to respondents to fix uniform fee structure for all the students admitted in first year post graduate medical and dental degree and diploma courses across the categories except NRI students. Further, seeking directions to fix different fee structures for different medical & dental colleges after taking all the relevant factors into consideration as laid down by the Hon'ble Apex Court in TMA Pai Foundation v. State of Karnataka((2002) 8 SCC 481), Islamic Academy of Education v. State of Karnataka ((2003) 6 SCC 697), P.A. Inamdar v. State of Maharashtra ((2005) 6 SCC 537) and as further analyzed by the Division Bench of this Court in Consortium of Engineering Colleges Management Association v Govt. of Andhra Pradesh (2012(3) LT 686).
2. Petitioner contends that it is an Association of Management of all Private Unaided Medical and Dental Colleges in State of Telangana and represents its collective wisdom and decisions. Respondent No.1 had been corresponding to petitioners' Association as representative body of All Unaided Private Medical Dental Colleges Managements in the State of Telangana. Admission into private unaided professional colleges in the country was the subject matter of decision of special bench consisting of eleven judges of Hon'ble Supreme Court in TMA Pai Foundation’s case (supra) and the dicta laid down in the said case was further clarified in Islamic Academy’s Case (supra) and further elaborated in PA Inamdar’s case. Further, a Division Bench of this Hon'ble Court considered the dicta and impact of all the above judgments and decisions taken by the first respondent in batch of writ petitions relating to admissions into private engineering colleges.
2.1. It is further contended that notwithstanding the dicta laid down by the Hon'ble Supreme Court, respondent No. 1 has been categorizing the seats into competent authority quota seats and management quota seats. Further stated that differential fee structure has been fixed for competent authority and management quota seats falls foul of the dicta laid down by the Hon'ble Supreme Court that cross subsidization of education by charging higher fees from one category student to subsidize the education for another category is unconstitutional. However, Respondent No.2 has been recommending differential fee for different category of students and Respondent No.1 has been notifying the same. The member colleges of petitioner Association are forced to agree for the same having regard to the various factors which cannot be enumerated; however, the members have been protesting the same. It is alleged that the modus operandi adopted by Respondent No.1 is to issue relevant notifications or orders on the verge of expiry of time schedules fixed by MCI and DCI as the case may be, effectively stalling any serious challenge to their actions and making whole process a mockery.
2.2. It is stated, after formation of Telangana State, as per the dicta laid down by the Hon’ble Apex Court, Respondent No.1 formed Respondent No.2 Committee by adopting the Telangana Admission and Fee Regulatory Committee (For Professional courses offered in private unaided professional institutions) Rules through G.O.Ms.No. 26, dated 22.07.2015; further, Respondent No.1 constituted admission and fee regulatory committee appointing a retired Judge of this Court and other members as stipulated vide G.O.Rt.No. 160, dated 22.07.2015. As per the statutory rules, Respondent No.2 has to invite private institutions to send proposals for fee structure in prescribed manner by the prescribed date and shall decide whether fee proposed by the institution is justified and does not amount to profiteering; thereafter, Respondent No.2 shall communicate the fee structure as determined by it to Respondent No.1 for notification; the fee so determined by Respondent No.2 shall be valid for block period of three years.
2.3. It is further contended that respondents are fixing the fee structure from 2004 onwards by issuing G.Os. from time to time. Similarly, in 2016, Respondent No.2 invited fee proposals from the member colleges and after evaluation, made recommendations for three year block period 2016-19 and Respondent No.1 without adhering to the principles laid down by the Hon'ble Supreme Court notified the same on 03.05.2016 in contravention of principles laid down by the Hon'ble Supreme Court and Division Bench of this Court. Respondent No.1 without examining accepted the recommendations of AFRC and fixed the differential fee structure for different categories and uniform fee for all colleges vide G.O.Ms.No. 29, dated 02.05.2016, however for only one academic year 2016-17. According to petitioner, the said GO. was issued by Respondent No.1 after commencement of counselling i.e. on 02.05.2016; counselling commended on 22.04.2016, therefore, petitioner did not have the time to challenge the same. Respondent No.1 has to fix the fee structure for academic year 2017-18 onwards, so far, Respondent No.2 did not issue any notification inviting fee proposals from the member colleges. Petitioner Association having read to the past events over the last seven academic years is apprehensive that Respondent No.1 would once again continue to fix the differential fee to different categories of seats contrary to the dicta laid down by the Hon’ble Supreme Court. Petitioner has also submitted a memorandum requesting Respondents 1 and 2 to fix uniform fee structure for all sets in tune with the above said judgments, but there is no response.
2.4. Petitioner argues that fixing of low admission fee would ultimately reflect on the quality of education, both practical and teaching, imparted to students which would have cascading effect on the quality of doctors that come out of these colleges and impact of such documents will be on the society. Therefore, they seek appropriate directions to respondents to follow the dicta laid down by the Hon'ble Supreme Court and more particularly judgment of this Hon'ble Court in categorizing the seats and fixing differential fee structure for different categories of the students.
3. Respondent No. 1 - State has not chosen to file any counter.
4. Respondent No.2 filed counter after taking several adjournments. They have given the detailed account of adoption of AFRC Rules to the State of Telangana and traced out the fee structure from the 2004 onwards through G.O.Ms.No. 36, dated 28.01.2004, G.O.Ms.No. 299, dated 27.07.2006 for the academic years 2006-07 and later for the academic years 2010-11 fee was fixed through G.O.Ms.No.161 dated 20.07.2010 for non-minority medical and dental colleges and GO.Ms.No.116 dated 14.05.2010 for minority medical and dental colleges and the same was continued till 2015. Further, Respondent No.2 reiterated the relevant portions of the judgments in Islamic Academy of Education’s case and P.A. Inamdar’s case (supra) wherein guidelines were issued to fix the fee for medical, dental, nursing and other courses and invited the colleges to submit certified copies of audited financial statements, balance sheets, income and expenditure statements for 2014-15, 2015-16. All the colleges responded to the notification and submitted their proposals along with all the material required including income and expenditure of hospitals run by medical colleges. The same were referred to the Chartered Accountants for scrutiny who prepared statements of each college and submitted them to the Committee.
4.1. Respondent No.2 also traced out the fee fixed at different periods after filing Writ Petition also. As per the averments, Respondent No.2 recommended fee structure to Government for the block period 2016-19 vide proceedings dated 26.04.2016 for issuance of Government Order; thereafter, government issued G.O.Ms.No.29, dated 02.05.2016 for block period 2016-17; subsequently, G.O.Ms.No.41 and it was quashed by this Court in Writ Petition Nos. 13852 of 2020 and 673 of 2022 and batch, directing to pay the fee fixed by AFRC and notified by the Government under G.O.Ms.No.29. It is further stated, fee would be fixed based on the expenditure incurred towards teaching, non-teaching and maintenance of the institute, etcetera, and the expenditure different from institution to institution due to location of the institution and also depending upon intake and faculty ratio.
4.2. It is further stated, though fee was fixed for the block period 2016-19, government issued G.O.Ms.No. 29, dated 02.05.2016 for one year only i.e. for the academic year 2016-17; G.O.Ms.No. 41 dated 09.05.2017 was issued by the government at the request of the Medical College Association without there being any recommendations by AFRC; once the management did not have any grievance against fixation of fee by AFRC as notified in G.O.Ms.No. 29 for the academic year 2016-17 and also re-fixed the fee at G.O.Ms.NO. 41, dated 09.05.2017 for the block period 2017-18 to 2018-19 i.e. middle of the block period which was advantageous to the colleges, petitioner now resorted to question G.O.Ms.No. 29 only after this Court struck down G.O.Ms.No. 41, dated 09.05.2017 with an oblique motive to reopen the settled issue. This Writ Petition is not at all maintainable and the same be dismissed on the ground of laches.
4.3. It is also stated, the fee would be fixed based on the expenditure incurred towards teaching, non-teaching, maintenance of the institution, libraries, laboratory expenditure, etcetera by the respective institutions and the expenditure would be different from institution to institution due to location of institutions i.e. urban and rural and depending upon the intake an faculty ratio. Respondent No.2 further noticed that due to the increased number of seats in some of the colleges, their income is increased from fee collection, apart from the same, the expenditure on the capital assets and interest payable under loans obtained from financial institutions / banks have also come down.
5. Heard Sri P.Venugopal, learned Senior Counsel on behalf of Sri Srinivasa Rao Pachwa, learned counsel for petitioner, Sri G. Chandra Shekar Reddy, learned Standing Counsel for Respondent No.2 and learned Government Pleader for Medical, Health and Family Welfare for Respondents 1 and 3.
6. The contention of petitioner is that the issue of different fee for all the colleges and uniform fee for all the categories (except 15% of NRI category) has already been decided by this Court in CECMA’s case (supra) with regard to the engineering colleges and the same principle shall be implemented with respect to the medical colleges also.
7. The provisions of the Prohibition of Capitation fee Acts of several States and AP Education Act, 1992 fell for consideration of Hon'ble Apex Court apart from the question whether establishment of educational institution is a fundamental right under Article 19 (1)(g) of the Constitution of India or any other provision of the Constitution. Further, the Apex Court also considered the question of grant of permission for establishment of educational institutions and grant of affiliation by university. Apart from these contentions, the Hon'ble Court also considered several issues in the context of higher and professional education in the country and correctness of the decision in Miss Mohini Jain vs State of Karnataka (1992 AIR SCW 2100). As far as issue of capitation fee was concerned, the Hon'ble Supreme Court has evolved a Scheme in the form of guidelines in Unni Krishnan J.P. v. State of Andhra Pradesh (1993 1 SCC 645).
“ 210. It is made clear that only those institutions which seek permission to establish and/or recognition and/or affiliation from the appropriate authority shall alone be made bound by this scheme. This scheme is not applicable to colleges run by Government or to University colleges. In short, the scheme hereinafter mentioned shall be made a condition of permission, recognition or affiliation, as the case may be. For each of them viz., grant of permission, grant of recognition, grant of affiliation, these conditions shall necessarily be imposed, in addition to such other conditions as the appropriate authority may think appropriate. No Private educational institution shall be allowed to send its students to appear for an examination held by any Government or other body constituted by it or under any law or to any examination held by any University unless the concerned institution and the relevant course of study is recognized by the appropriate authority and/or is affiliated to the appropriate University, as the case may be.
(1) A professional college shall be permitted to be established and/or administered only by a Society registered under the Societies Registration Act. 1860 (or the corresponding Act, if any, in force in a given State), or by a Public Trust, religious or charitable, registered under the Trusts Act, Wakfs Act (or the corresponding legislation, if any, e.g. Tamil Nadu Religious and Charitable Endowments Act and A.P. Religious and Charitable Endowments Act). No individual, firm, company or other body of individuals, by whatever appellation called except those mentioned above will be permitted to establish and/or administer a professional college. All the existing professional colleges which do not conform to the above norm shall be directed to take appropriate steps to comply with the same within a period of six months from today. In default whereof, recognition/affiliation accorded shall stand withdrawn. (In this connection reference may be had to Rule 86(2) of Maharashtra Grant-in-aid code (referred to in State of Maharashtra v. Lok Shikshan Sanstha, [1971] Suppl. S.C.R. 879 which provided that schools which are not registered under the Societies Registration Act, shall not be eligible for grant. Grant of recognition and affiliation is no less significance).
(2) At least, 50% of the seats in every professional college shall be filled by the nominees of the Government or University hereinafter referred to as "free seats". These students shall be selected on the basis of merit determined on the basis of a common entrance examination where it is held or in the absence of an entrance examination, by such criteria as may be determined by the competent authority or the appropriate to authority, as the case may be. It is, however, desirable and appropriate have a common entrance exam for regulating admissions to these colleges/institutions, as is done in the State of Andhra Pradesh. The remaining 50% seats (payment seats) shaft be filled by those candidates who are prepared to pay the fee prescribed therefor and who have complied with the instructions regarding deposit and furnishing of cash security/Bank guarantee for the balance of the amount. The allotment of students against payment seats shall also be done on the basis of inter se merit determined on the same basis as in the case of free seats. There shall be no quota reserved for the management or for any family, caste or community which may have established such college. The criteria of eligibility and all other conditions shall be the same in respect of both free seats and payment seats. The only distinction shall be the requirement of higher fee by the 'payment students'. The Management of a professional college shall not be entitled to impose or prescribe any other and further eligibility criteria or condition for admission either to free seats or to payment seats. It shall, however, be open to a professional college to provide for reservation of seats for constitutionally permissible classes with the approval of the affiliating University. Such reservations, if any shall be made and notified to the competent authority and the appropriate authority at least one month prior to the issuance of notification @ for applications for admission to such category of colleges. In such a case, the competent authority shall allot students keeping in view the reservations provided by a college. The rule of merit shall be followed even in such reserved categories
(3) The number of seats available in the professional colleges (to which this scheme is made applicable) shall be fixed by the appropriate authority. No professional college shall be permitted to increase its strength except under the permission or authority granted by the appropriate authority.
(4) No professional college shall call for applications for admission separately or individually. AD the applications for admission to all the seats available in such, colleges shall be called for by the competent authority alone, along with applications for admission to Government/University colleges of nature. For example, there shall be only one notification by the competent authority calling for applications for all the medical colleges in the State and one notification for all the engineering colleges in the State and so on. The application forms for admission shall be issued by the competent authority (from such offices, centres and places as he may direct). The application form shall contain a column or a separate part wherein an applicant can indicate whether he wishes to be admitted against a payment seat and the order of preference, up to three professional colleges.
(5) Each professional college shall intimate the competent authority, the State Government and the concerned University in advance the fees chargeable for the entire course commencing that academic year. The total fees shall be divided into the number of years/semesters of study in that course. In the first instance, fees only for the first year/semester shall be collected. The payment students will be, however, required to furnish either cash security or bank grantee for the fees payable for the remaining years/semesters. The fees chargeable, in each professional college shall be subject to the ceiling prescribed by the appropriate authority or by a competent Court. The competent authority shall issue 'a brochure, on payment of appropriate charges, along with the application form for ad-mission, giving full particulars of the courses and the number of seats available, the names of the colleges their location and also the fees chargeable by each professional college. The brochure wins also specify the minimum eligibility conditions, the method of admission (whether by entrance test or otherwise) and other relevant particulars.
(6)(a) Every State Government shall forthwith constitute a Committee to fix the ceiling on the fees chargeable by a professional college or class of professional colleges. The Committee shall consist of a Vice Chancellor, Secretary for Education (or such Joint Secretary, as he may nominate) and Director, Medical Education/Director Technical Education. The committee shall make such enquiry as it thinks appropriate. It shalt however, give opportunity to the professional colleges (or their association(s), if any) to place such material, as they think fit. It shall, however, not be bound to give any personal hearing to anyone or follow any technical rules of law. The Committee shall fix the fee once every three years or at such longer intervals, as it may think appropriate.
226. For the above reasons the Writ Petitions and Civil Appeals except (W.P. (C) 855/92, C.A. 3573/92 and the Civil Appeals arising from S.L.Ps. 13913 and 13940/92) are disposed of in the following terms:
1. The citizens of this country have a fundamental right to education. The said right flows from Article 21. This right is, however, not an absolute right. Its content and para meters have to be determined in the light of Articles 45 and 41. In other words every child/citizen of this country has a right to free education until he completes the age of fourteen years. Thereafter his right to education is subject to the limits of economic capacity and development of the State.
2. The obligations created by Articles, 41, 45 and 46 of the Constitution can be discharged by the State either by establishing institutions of its own or by aiding, recognising and/or granting affiliation to private educational institutions. Where aid is not granted to private educational institutions and merely recognition or affiliation is granted it may not be insisted that the private education institution shall charge only that fee as is charged for similar courses in governmental institutions. The private educational institutions have to and are entitled to charge a higher fee, not exceeding the ceiling fixed in that behalf. The admission of students and the charging of fee in these private educational institutions shall be governed by the scheme evolved herein set out in Part III of this Judgment.
3. A citizen of this country may have a right to establish an educational institution, but no citizen, person or institution has a right much less a fundamental right, to affiliation or recognition, or to grant-in-aid from the State. The recognition and/or affiliation shall be given by the State subject only to the conditions set out in, and only accordance with the scheme contained in Part III of this Judgment. No Government/University or authority shall be competent to grant recognition or affiliation except in accordance with the said scheme. The said scheme shall constitute a condition of such recognition or affiliation, as the case may be, in addition to such other conditions and terms which such Government, University or other authority may choose to impose. Those receiving aid shall, however, be subject to all such terms and conditions, as the aid giving authority may impose in the interest of public”.
8. The issues considered in Unni Krishnan case was again re-considered by the Hon’ble Apex Court on the ground that the scheme that has been framed in Unni Krishnan case had imposed unreasonable restrictions on the administration of the private educational institutions, and that especially in the case of minority institutions, the right guaranteed to them under Article 30(1) stood infringed. It was also argued that the object that was sought to be achieved by the Scheme was, in fact, not achieved.
9. In TMA PAI Foundation’s case (supra), the Hon’ble Apex Court, after reconsidering Unni Krishnan’s case, held as follows:
“ 32. It has been submitted by the learned counsel for the parties that the implementation of the scheme by the States, which have amended their rules and regulations, has shown a number of anomalies. As already noticed, 50% of the seats are to be given on the basis of merit determined after the conduct of a common entrance test, the rate of fee being minimal. The "payment seats" which represent the balance number, therefore, cross-subsidize the "free seats". The experience of the educational institutions has been that students who come from private schools, and who belong to more affluent families, are able to secure higher positions in the merit list of the common entrance test, and are thus able to seek admission to the "free seats". Paradoxically, it is the students who come from less affluent families, who are normally able to secure, on the basis of the merit list prepared after the common entrance test, only "payment seats".
33. It was contended by the petitioners' counsel that the implementation of Unni Krishnan scheme has in fact (/) helped the privileged from richer urban families, even after they ceased to be comparatively meritorious, and (2) resulted in economic losses for the educational institutions concerned, and made them financially unviable. Data in support of this contention was placed on record in an effort to persuade this Court to hold that the scheme had failed to achieve its object.
35. It appears to us that the scheme framed by this Court and thereafter followed by the governments was one that cannot be called a reasonable restriction under Article 19(6) of the Constitution. Normally, the reason for establishing an educational institution is to impart education. The institution thus needs qualified and experienced teachers and proper facilities and equipment, all of which require capital investment. The teachers are required to be paid properly. As pointed out above, the restrictions imposed by the scheme, in Unni Krishnan's case, made it difficult, if not impossible, for the educational institutions to run efficiently. Thus, such restrictions cannot be said to be reasonable restrictions.
36. The private unaided educational institutions impart education, and that cannot be the reason to take away their choice in matters, inter alia, of selection of students and fixation of fees. Affiliation and recognition have to be available to every institution that fulfils the conditions for grant of such affiliation and recognition. The private institutions are right in submitting that it is not open to the Court to insist that statutory authorities should impose the terms of the scheme as a condition for grant of affiliation or recognition; this completely destroys the institutional autonomy and the very objective of establishment of the institution.
37. The Unni Krishnan judgment has created certain problems and raised thorny issues. In its anxiety to check the commercialization of education, a scheme of "free" and "payment" seats evolved on the assumption that the economic capacity of first 50% of admitted students would be greater than the remaining 50%, whereas the converse has proved to be the reality. In this scheme, the "payment seat" student would not only pay for his own seat but also finance the cost of a "free seat" classmate. When one considers the Constitution Bench's earlier statement that higher education is not a fundamental right, it seems unreasonable to compel a citizen to pay for the education of another, more so in the unrealistic world of competitive examinations which assess the merit for the purpose of admission solely on the basis of the marks obtained, where the urban students always have an edge over the rural students. In practice, it has been the case of the marginally less merited rural or poor student bearing the burden of a rich and well-exposed urban student.
38. The scheme in Unni Krishnan's case has the effect of nationalizing education in respect of important features, viz., the right of a private unaided institution to give admission and to fix the fee. By framing this scheme, which has led to the State Governments legislating in conformity with the scheme the private institutions are undistinguishable from the government institutions, curtailing all the essential features of the right of administration of a private unaided educational institution can neither be called fair or reasonable. Even in the decision in Unni Krishnan's case, it has been observed by Jeevan Reddy, J., at page 749, para 194, as follows:
"The hard reality that emerges is that private educational institutions are a necessity in the present-day context. It is not possible to do without them because the Governments are in no position to meet the demand-particularly in the sector of medical and technical education which call for substantial outlays. While education is one of the most important functions of the Indian State it has no monopoly therein. Private educational institutions - including minority educational institutions - to have a role to play."
39. That private educational instructions are a necessity becomes evident from the fact that the number of government-maintained professional colleges has more or less remained stationary, while more private institutions have been established. For example, in the State of Karnataka there are 19 medical colleges out of which there are only 4 government- maintained medical colleges. Similarly, out of 14 Dental Colleges in Karnataka, only one has been established by the government, while in the same State, out of 51 Engineering Colleges, only 12 have been established by the government. The aforesaid figures clearly indicate the important role played by private unaided educational institutions, both minority and non-minority, which cater to the needs of students seeking professional education.
40. Any system of student selection would be unreasonable if it deprives the private unaided institution of the right of rational selection, which it devised for itself, subject to the minimum qualification that may be prescribed and to some system of computing the equivalence between different kinds of qualifications, like a common entrance test. Such a system of selection can involve both written and oral tests for selection, based on principle of fairness.
41. Surrendering the total process of selection to the state is unreasonable, as was sought to be done in the Unni Krishnan scheme. Apart from the decision in St. Stephen's College v. University of Delhi, which recognized and upheld the right of a minority aided institution to have a rational admission procedure of its own, earlier Constitution Bench decision of this Court have, in effect, upheld such a right of an institution devising a rational manner of selecting and admitting students.
45. In view of the discussion hereinabove, we hold that the decision in Unni Krishnan's case, insofar as it framed the scheme relating to the grant of admission and the fixing of the fee, was not correct, and to that extent the said decision and the consequent direction given to UGC, AICTE, Medical Council of India, Central and State Government, etc., are overruled.
54. The right to establish an educational institution can be regulated; but such regulatory measures must, in general, be to ensure the maintenance of proper academic standards, atmosphere and infrastructure (including qualified staff) and the prevention of maladministration by those in charge of management. The fixing of a rigid fee structure, dictating the formation and composition of a governing body, compulsory nomination of teachers and staff for appointment or nominating students for admissions would be unacceptable restrictions.
55. The Constitution recognizes the right of the individual or religious denomination, or a religious or linguistic minority to establish an educational institution. If aid or financial assistance is not sought, then such institution will be a private unaided institution. Although, in Unni Krishnan case the Court emphasized the important role played by private unaided institutions and the need for private funding, in the scheme that was framed, restrictions were placed on some of the important ingredients relating to the functioning of an educational institution. There can be no doubt that in seeking affiliation or recognition, the Board or the university or the affiliating or recognizing authority can lay down conditions consistent with the requirement to ensure the excellence of education. It can, for instance, indicate the quality of the teachers by prescribing the minimum qualifications that they must possess, and the courses in study and curricula. It can, for the same reasons, also stipulate the existence of infrastructure sufficient for its growth, as a prerequisite. But the essence of a private educational institution is the autonomy that the institution must have in its management and administration. There, necessarily, has to be a difference in the administration of private unaided institutions and government-aided institutions. Whereas in the latter case, the Government will have greater say in the administration, including admissions and fixing of fees, in the case of private unaided institutions, maximum autonomy in the day-to-day administration has to be with the private unaided institutions. Bureaucratic or governmental interference in the administration of such an institution will undermine its independence. While an educational institution is not a business, in order to examine the degree of independence that can be given to a recognized educational institution, like any private entity that does not seek aid or assistance from the Government, and that exists by virtue of the funds generated by it, including its loans or borrowings, it is important to note that the essential ingredients of the management of the private institution include the recruiting students and staff, and the quantum of fee that is to be charged.
56. An educational institution is established for the purpose of imparting education of the type made available by the institution. Different courses of study are usually taught by teachers who have to be recruited as per qualifications that may be prescribed. It is no secret that better working conditions will attract better teachers. More amenities will ensure that better students seek admission to that institution. One cannot lose sight of the fact that providing good amenities to the students in the form of competent teaching faculty and other infrastructure costs money. It has, therefore, to be left to the institution, if it chooses not to seek any aid from the Government, to determine the scale of fee that it can charge from the students. One also cannot lose sight of the fact that we live in a competitive world today, where professional education is in demand. We have been given to understand that a large number of professional and other institutions have been started by private parties who do not seek any governmental aid. In a sense, a prospective student has various options open to him/her where, therefore, normally economic forces have a role to play. The decision on the fee to be charged must necessarily be left to the private educational institution that does not seek or is not dependent upon any funds from the Government.
57. We, however, wish to emphasize one point, and that is that inasmuch as the occupation of education is, in a sense, regarded as charitable, the Government can provide regulations that will ensure excellence in education, while forbidding the charging of capitation fee and profiteering by the institution. Since the object of setting up an educational institution is by definition "charitable", it is clear that for the purpose of fulfilling that object. To put it differently, in the an educational institution cannot charge such a fee as is not required to make a profit, as education is essentially charitablenich may be There can, however, be a reasonable revenue surplus, which may be should not be generated by the educational institution for the purpose of development of education and expansion of the institution.
58. For admission into any professional institution, merit must play an important role. While it may not be normally possible to judge the merit of the applicant who seeks admission into a school, while seeking admission to a professional institution and to become a competent professional, it is necessary that meritorious candidates are not unfairly treated or put at a disadvantage by preferences shown to less meritorious but more influential applicants. Excellence in professional education would require greater emphasis be laid on the merit of a student seeking admission. Appropriate regulations for this purpose may be made keeping in view the other observations made in this judgment in the context of admissions to unaided institutions.”
10. After TMA PAI Foundation Judgment, different stake holders have taken different meanings and effects of the views expressed by the Hon'ble Supreme Court in this judgment. Then the Hon'ble Supreme Court has undertaken to explain the true meaning and trajectory of TMA PAI Foundation Case in Islamic Academy Case. Further laid down certain broad modalities for creation of committees for regulating the admission procedure and fee structure. The relevant paras are extracted herein.
“ 6. In view of the rival submissions the following questions arise for consideration:
(1) whether the educational institutions are entitled to fix their own fee structure.
(2) whether minority and non-minority educational institutions stand on the same footing and have the same rights.
(3) whether private unaided professional colleges are entitled to fill in their seats , to the extent of 100%, and if not, to what extent; and
(4) whether private unaided professional colleges are entitled to admit students by evolving their own method of admission.
Question 1
7. So far as the first question is concerned, in our view the majority judgment is very clear. There can be no fixing of a rigid fee structure by the Government. Each institute must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. They must also be able to generate surplus which must be used for the betterment and growth of that educational institution.
In paragraph 56 of the judgment, it has been categorically laid down that the decision on the fees to be charged must necessarily be left to the private educational institutions that do not seek, and which are not dependent upon any funds from the Government. Each institute will be entitled to have its own fee structure. The fee structure for each institute must be fixed keeping in mind the infrastructure and facilities available, the investments made, salaries paid to the teachers and staff, future plans for expansion and/or betterment of the institution etc. Of course, there can be no profiteering and capitation fees cannot be charged. It thus needs to be emphasized that as per the majority judgment imparting education is essentially charitable in nature. Thus, the surplus/profit that can be generated must be only for the benefit/use of that educational institution. Profits/surplus cannot be diverted for any other use or purpose and cannot be used for personal gain or for any other business or enterprise. As, at present, there are statutes/regulations which govern the fixation of fees and as this Court has not yet considered the validity of those statutes/regulations, we direct that in order to give effect to the judgment in 7.M.A. Pai case! the respective State Governments/concerned authority shall set up, in each State, a committee headed by a retired High Court Judge who shall be nominated by the Chief Justice of that State. The other member, who shall be nominated by the Judge, should be a Chartered Accountant of repute. A representative of the Medical Council of India (in short "MCT") or the All-India Council for Technical Education (in short "AICTE"), depending on the type of institution, shall also be a member. The Secretary of the State Government in charge of Medical Education or Technical Education, as the case may be, shall be a member and Secretary of the Committee. The Committee should be free to nominate/co-opt another independent person of repute, so that the total number of members of the Committee shall not exceed five Each educational institute must place before this Committee, well in advance of the academic year, its proposed fee structure. Along with the proposed fee structure all relevant documents and books of accounts must also be produced before the Committee for their scrutiny. The Committee shall then decide whether the fees proposed by that institute are justified and are not profiteering or charging capitation fee. The Committee will be at liberty to approve the fee structure or to propose some other fee which can be charged by the institute. The fee fixed by the Committee shall be binding for a period of three years, at the end of which period the institute would be at liberty to apply for revision. Once fees are fixed by the Committee, the institute cannot charge either directly or indirectly any other amount over and above the amount fixed as fees. If any other amount is charged, under any other head or guise e.g., donations, the same would amount to charging the capitation fee. The Governments/appropriate authorities should consider framing appropriate regulations, if not already framed, whereunder if it is found that an institution is charging capitation fees or profiteering that institution can be appropriately penalized and also face the prospect of losing recognition/affiliation.
8. It must be mentioned that during arguments it was pointed out to us that some educational institutions are collecting, in advance, the fees for the entire course, i.e., for all the years. It was submitted that this was done because the institute was not sure whether the students would leave the institute midstream. It was submitted that if the student left the course midstream then for the remaining years the seat would lie vacant, and the institute would suffer. In our view an educational institution can only charge prescribed fees for one semester/year. If an institution feels that any particular student may leave in midstream then, at the highest, it may require that student to give a bond/bank guarantee that the balance fees for the whole course would be received by the institute even if the student left in midstream. If any educational institution has collected fees in advance, only the fees of that semester/year can be used by the institution. The balance fees must be kept invested in fixed deposits in a nationalized bank. As and when fees fall due for a semester/year only the fees falling due for that semester/year can be withdrawn by the institution. The rest must continue to remain deposited till such time that they fall due. At the end of the course the interest earned on these deposits must be paid to the student from whom the fees were collected in advance.
149. The expression "capitation fee" does not have any fixed meaning. The legislatures of some of the States, however, have defined capitation fee. We may notice that in the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, capitation fee has been defined as:
"Capitation fee means any amount by whatever name called, paid or collected directly or indirectly in excess of the fee prescribed under Section 4"?
150. Section 4 of the said Act states that any amount collected in excess of the fee so prescribed is prohibited in the following terms: "Regulation of fee etc. (1) Notwithstanding anything contained in any
other law for the time being in force, the Government, may by notification, regulate the tuition fee or any other fee or deposit that may be received or collected by any educational institution or class or classes of such educational institutions in respect of any or all class or classes of students:
Provided that before issuing a notification under this sub-section, the draft of which shall be published, in the Tamil Nadu Government Gazette stating that any objection or suggestion which may be received by the Government, within such period as may be specified therein, shall be considered by them.
(2) No educational institution shall receive or collect any fee or accept deposit in excess of the amount notified under sub-section (1).
(3) Every educational institution shall issue an official receipt for the fee or deposit received or collected by it."
151. Once, however, it is held that such a provision would not constitute a reasonable restriction within the meaning of clause (6) of Article 19, it must also be held that such a provision would not satisfy the test of permissible regulations within the meaning of Article 30 thereof.
152. The ground reality, however, cannot be lost sight of. It is true, as has been contended by the learned counsel appearing on behalf of the applicants, that the Central Government in answer to the question raised in Parliament has stated that the expenses incurred by the State for imparting education to the students is very high. It may vary from three lakhs to five lakhs. Some States, however, in their colleges charge about rupees five thousand per year, whereas the unaided institutions demand anything between rupees two lakhs. to five lakhs.
153. Some State Governments unfortunately followed suit, hiked fees and like many private unaided institutions, the State of Haryana has also demanded the entire amount of fees for the whole course.
154. The fee structure, thus, in relation to each and every college must be determined separately keeping in view several factors, including available, the age of institution, investment made, future plan for expansion and betterment of the educational standard etc. The case of each institution in this behalf is required to be considered by an appropriate Committee. For the said purpose, even the books of accounts maintained by the institution may have to be looked into. Whatever is determined by the Committee by way of a fee structure having regard to relevant factors, some of which are enumerated hereinbefore, the management of the institution would not be entitled to charge anything more.
155. While determining the fee structure, safeguards have to be provided for so that professional institutions do not become auction houses for the purpose of selling seats. Having regard to the statement of law laid down in paragraph 56 of the judgment, it would have been better if sufficient guidelines could have been provided for. Such a task, which is a difficult one, has to be left to the Committee. While fixing the fee structure the Committee shall also take into consideration, inter alia, the salary or remuneration paid to the members of the faculty and other staff, the investment made by them, the infrastructure provided and plan for future development of the institution as also expansion of the educational institution. Future planning or improvement of facilities may be provided for. An institution may want to invest in an expensive device (for medical colleges) or a powerful computer (for technical college). These factors are also required to be taken care of. The State must evolve a detailed procedure for constitution and smooth functioning of the Committee.
156. While this Court has not laid down any fixed guidelines as regards fee structure, in my opinion, reasonable surplus should ordinarily vary from 6% to 15%, as such surplus would be utilized for expansion of the system and development of education.
157. The institutions shall charge fees only for one year in accordance with the rules and shall not charge the fees for the entire course.
158. Profiteering has been defined in Black's Law Dictionary, 5th Edn. as: "Taking advantage of unusual or exceptional circumstances to make excessive profits;”
159. With a view to ensure that an educational institution is kept within its bounds and does not indulge in profiteering or otherwise exploiting its students financially, it will be open to the statutory authorities and in their absence by the State to constitute an appropriate body, till appropriate statutory regulations are made in that behalf.
160. The respective institutions, however, for the aforementioned purpose must file an appropriate application before the Committee and place before it all documents and books of accounts in support of its case.
161. Fees once fixed should not ordinarily be changed for a period of three years, unless there exists an extraordinary reason. The proposed fees, before indication in the prospectus issued for admission, have to be approved by the concerned authority/body set up. For this purpose, the application should not be filed later than April of the preceding year of the relevant education session. The authority/body shall take the decision as regards fees chargeable at the latest by October of the year concerned, so that it can form part of the prospectus. No institution should charge any fee beyond the amount fixed and the fee charged shall be deposited in a nationalized bank. In other words, no employee or any other person employed by the management shall be entitled to take fees in cash from the students concerned directly. The statutory authority may consider the desirability of framing an appropriate regulation inter alia to the effect that in the event it is found that the management of a private unaided professional institution has accepted any amount other than the fees prescribed by the Committee, it may have to pay a penalty ten to fifteen times of the amount so collected and in a suitable case it may also lose its recognition or affiliation.
162. However, there cannot be any doubt that before any such order is passed, the institutions concerned shall be entitled to an opportunity of being heard. For the aforementioned purpose, the State shall set up machinery to detect cases where amounts in excess of the permitted limit are collected as it is the general experience that students pay a huge amount.
163. However, if for some reason, fees have already been collected for a longer period the amount so collected shall be kept in a fixed deposit in a nationalized bank against which no loan or advance may be granted so that the interest accrued thereupon may ensure to the benefit of the students concerned. Ordinarily, however, the management should insist on a bond from the students concerned.
11. It is stated that in Para 4 of PA Inamdar’s case, the events following Islamic Academy Judgment show that some of the main questions have remained unsettled even after exercise undertaken by the constitutional bench in Islamic Academy in clarification of eleven Judge decision in TMA PAI Foundation Case. A few of unsettled questions as also some aspects of the clarification are calling for settlement of those questions before the Hon'ble Supreme Court. The relevant finding of the Hon'ble Supreme Court in P.A. Inamdar’s case is extracted herein.
"139. To set up a reasonable fee structure is also a component of "the right to establish and administer an institution" within the meaning of Article 30(1) of the Constitution, as per the law declared in Pai Foundation! Every institution is free to devise its own fee structure subject to the limitation that there can be no profiteering and no capitation fee can be charged directly or indirectly, or in any form (paras 56 to 58 and 161 [answer to Question 5(c)] of Pai Foundation' are relevant in this regard). Capitation fees
140. Capitation fee cannot be permitted to be charged, and no seat can be permitted to be appropriated by payment of capitation fee. "Profession" has to be distinguished from "business" or a mere "occupation". While in business, and to a certain extent in occupation, there is a profit motive, profession is primarily a service to society wherein earning is secondary or incidental. A student who gets a professional degree by payment of capitation fee, once qualified as a professional, is likely to aim more at earning rather than serving and that becomes a bane to society. The charging of capitation fee by unaided minority and non-minority institutions for professional courses is just not permissible. Similarly, profiteering is also not permissible. Despite the legal position, this Court cannot shut its eyes to the hard realities of commercialization of education and evil practices being adopted by many institutions to earn large amounts for their private or selfish ends. If capitation fee and profiteering is to be checked, the method of admission has to be regulated so that the admissions are based on merit and transparency and the students are not exploited. It is permissible to regulate admission and fee structure for achieving the purpose just stated.
141. Our answer to Question 3 is that every institution is free to devise its own fee structure but the same can be regulated in the interest of preventing profiteering. No capitation fee can be charged.
142. Most vehement attack was laid by all the learned counsel appearing for the petitioner applicants on that part of Islamic Academy? which has directed the constitution of two Committees dealing with admissions and fee structure. Attention of the Court was invited to paras 35, 37, 38, 45 and 161 (answer to Question 9) of Pai Foundation! wherein similar scheme framed in Unni Krishnan? was specifically struck down. Vide para 45, Chief Justice Kirpal has clearly ruled that the decision in Unni Krishnan? insofar as it framed the scheme relating to the grant of admission and the fixing of the fee, was not correct and to that extent the said decision and the consequent directions given to UGC, AICTE, MCI, the Central and the State Governments, etc. are overruled. Vide para 161, Pai Foundation! upheld Unni Krishnan? to the extent to which it holds the right to primary education as a fundamental right, but the scheme was overruled. However, the principle that there should not be capitation fee or profiteering was upheld. Leverage was allowed to educational institutions to generate reasonable surplus to meet cost of expansion and augmentation of facilities which would not amount to profiteering. It was submitted that [islamic Academy? has once again restored such Committees which were done away with by Pai Foundation!".
143. The learned Senior Counsel appearing for different private professional institutions, who have questioned the scheme of permanent Committees set up in the judgment of Islamic Academy? very fairly do not dispute that even unaided minority institutions can be subjected to regulatory measures with a view to curb commercialization of education, profiteering in it and exploitation of students. Policing is permissible but not nationalization or total takeover, submitted Shri Harish Salve, the learned Senior Counsel. Regulatory measures to ensure fairness and transparency in admission procedures to be based on merit have not been opposed as objectionable though a mechanism other than formation of Committees in terms of "Islamic Academy" was insisted on and pressed for. Similarly, it was urged that regulatory measures, to the extent permissible, may form part of conditions of recognition and affiliation by the university concerned and/or MCI and AICTE for maintaining standards of excellence in professional education. Such measures have also not been questioned as violative of the educational rights of either minorities or non-minorities.
12. In CECMA v. Govt. of Andhra Pradesh, the Hon’ble Supreme Court held as under:
“ 10. The Court further held that the State may legitimately regulate the fee that may be charged including by un-aided private educational institutions and prohibit institutions from collecting anything other than the permitted fee, which would constitute 'capitation fee', since private educational institutions merely supplement efforts of the State in education of the people, not an independent activity but supplemental to the principal activity of the State. The Supreme Court evolved a scheme mandating a series of guidelines to be followed by the appropriate Government and recognizing and affiliating authority, in addition to such other conditions and stipulations as they might consider appropriate, as conditions for grant of permission, recognition or affiliation. The Court clarified that the scheme evolved by it is confined for the nonce to professional colleges.
11. A distinction between "free seats" and "payment seats" with a higher fee structure for payment seats was part of the scheme mandated in Unni Krishnan's case (supra). The effect was a cross-subsidisation of free seats by students admitted into "payment seats". Paragraph 2 of the scheme ordained: At least, 50% of the seats in every professional college shall be filled by the nominees of the Government or University, as the case may be, hereinafter referred to as "free seats". These students shall be selected on the basis of merit determined on the basis of a common entrance examination where it is held or in the absence of an entrance examination, by such criteria as may be determined by the competent authority or the appropriate authority, as the case may be. It is, however, desirable and appropriate to have a common entrance exam for regulating admissions to these colleges/institutions, as is done in the State of Andhra Pradesh. The remaining 50% seats (payment seats) shall be filled by those candidates who are prepared to pay the fee prescribed therefor and who have complied with the instructions regarding deposit and furnishing of cash security/Bank guarantee for the balance of the amount the allotment of students against payment seats shall also be done on the basis of inter se merit determined on the same basis as in the case of free seats. There shall be no quota reserved for the management or for any family, caste or Page: 585 community which may have established such college. The criteria of eligibility and all other conditions shall be the same in respect of both free seats and payment seats. The only distinction shall be the requirement of higher fee by the 'payment students. The Management of a professional college shall not be entitled to impose or prescribe any other and further eligibility criteria or condition for admission either to free seats or to payment seats. It shall, however, be open to a professional college to provide for reservation of seats for constitutionally permissible classes with the approval of the affiliating University. Such reservations, if any, shall be made and notified to the competent authority and the appropriate authority at least one month prior to the issuance of notification calling for applications for admission to such category of colleges. In such a case, the competent authority shall allot students keeping in view the reservations provided by a college. The rule of merit shall be followed even in such reserved categories. [Para 172(2)]
12. Jeevan Reddy, J., (for self and Pandian, J) held that the right to establish an educational institution falls outside the contours of trade, business or profession-rights guaranteed under Article 19(1)(g) of the Constitution. The learned Judge declined to express an opinion whether the activity falls within the ambit of 'occupation' but observed that establishing an educational institution may constitute 'occupation' (perhaps it is - Paragraph 197 of SCC Report). Mohan, J., held that there was no fundamental right under Article 19(1)(g) to establish an educational institution, if recognition or affiliation is sought for such institution (Paragraph No. 72 of the SCC Report). Sharma, CJ (for self and Bharucha, J) observed: For the purposes of these cases, it is enough to state that there is no fundamental right to education for a professional degree mat flows from Article 21. (Paragraph 5). The TMA Pai Foundation Revision:
13. Several of the issues considered in Unni Krishnan's case (supra), were revisited in TMA Pai Foundation's case (supra). This is a judgment of a Larger Bench of eleven (11) Judges. Among the several issues framed for consideration in TMA Pai Foundation's case (supra), (we set out issues relevant to this batch of cases) are:
(a) Whether statutory provisions which regulate facets of administration including regulation of fee would interfere with the right of administration of educational institutions by minorities.
(b) Whether the decision in Unni Krishnan's case (supra), (except to the extent of holding that primary education is a fundamental right) and the scheme framed thereunder, require reconsideration/modification; and
(c) Whether non-minorities have the right to establish and administer educational institutions under Articles 19 and 29(1) read with Articles 14 and 15(1), in the same manner and to the same extent as minority institutions.
14. The Larger Bench opinion comprises five (5) separate judgments. Kirpal, CJ recorded the leading opinion (for self, Pattanaik, Rajendra Babu, Balakrishnan, Venkatarama Reddi and Pasayat, JJ); Khare, J., recorded a separate opinion agreeing with the learned Chief Justice; with the judgment of the Chief Justice (on aspects not germane to the Quadri and Ruma Pal, JJ., recorded separate opinions partly dissenting issues arising in this batch of cases), but concurring on aspects relevant to us, Variava, J (for self and Ashok Bhan, J) recorded a separate opinion concurring with the Chief Justice on aspects relevant to the present batch of cases and with the conclusions in the judgment of Khare, J., that Article 29(2) applies to Page: 586
Article 30 but dissenting partly on the final reasoning in the lead judgment, holding that there must be a balance between Articles 29(2) and 30(1). The majority opinion by Kirpal, CJ expounds the binding ratio on aspects relevant to the resolution of issues in the present lis. The operative IMA Pai Foundation's case (supra) ratio, relevant for this case is:
(i) The scheme framed in Unni Krishnan's case (supra), relating to grant of admission and fixing of fee and the consequent direction given to the UGC, the AICTE, the MCI and the Central and State Governments etc., is incorrect and overruled; (is unconstitutional! Para 161 -answer to question No. 9); except where it holds that primary education is a fundamental right.
(ii) The establishment and running of educational institution and the concomitant activity results in imparting of knowledge to students and must necessarily be regarded as an occupation, even if there is no element of profit generation. The right to establish and maintain educational institutions is also comprehended within Article 26(a) which grants in positive terms to every religious denomination or any section thereof the right to establish and maintain institutions for religious and charitable purposes, subject to public order, morality and health; education is a recognized head of charity. Members belonging to any religious denomination, including majority religious communities are entitled to set up educational institutions. The expression "Private educational institutions" is used in contra-distinction to Government institutions.
(iii) The right to establish an educational institution may be regulated, but the regulatory measures must be only to ensure the maintenance of proper academic standards, atmosphere and infrastructure (including qualified staff) and for prevention of mal administration by the managements. Fixing of a rigid fee structure; dictating the forms and composition of a governing body; compulsory nomination of teachers and staff for appointment, or nominating students for admission, are unacceptable restrictions. The essence of a private educational institution is the autonomy that the institution must have in respect of its own management and administration. There must be a difference in the administration of private un-aided institutions and Government aided institutions. Private un-aided institutions are entitled to maximum autonomy in the day-today administration and bureaucratic or Governmental interference in the administration of such institutions would undermine independence. While running of an educational institution is not business; in order to examine the degree of independence that can be given to a recognized educational institution, like in a private entity that does not seek aid or assistance from the Government and exists by virtue of funds generated by it, including loans and borrowings, it is important that the essential ingredients of the management of private institutions include the recruiting of students and staff, and the quantum of fee to be charged must necessarily be left to the private educational institutions that do not seek or are not dependent upon any funds from the Government. However, since the occupation of education is regarded as 'charitable', the Government can make regulation to ensure excellence in education while forbidding the charging of Page: 587 capitation fee and profiteering by the institution. The object of setting up of an educational institution being definitionally 'charitable', an educational institution cannot charge such fee as is not required for the purpose of fulfilling that object thus in the establishment of an educational institution or in its functioning the object should not be to make profit Reasonable revenue surplus may however be generated by the educational institution for development of education and expansion of the institution.
(iv) Conditions laid down for grant of recognition should not be such as may amount to Governmental control of the administration of an educational institution; and
(v) All citizens have the right to establish and administer educational institutions under Articles 19(1)(g) and 26(a). "Education" in the relevant Articles of the Constitution means and includes education at all levels from the primary up to the post-graduation level, including professional education. Minority institutions however have the right to admit students belonging to the relevant minority groups in the manner spelt out in the judgment.
15. The contentions, uniformly addressed on behalf of private unaided educational institutions and by the State, as to the arbitrariness and socially counter-productive consequences of the scheme framed in Unni Krishnan's case (supra) (insofar as directing fixing of different fees towards "free seats" and "payment seats"); and the conclusions of the Court, in Paragraphs 30 to 38 and 45 (to the extent relevant and material) are set out: The contentions before TMA Pai Foundation (extracted):
30. The Counsel for the minority institutions, as well as the Solicitor. General, have contended that the scheme framed by this Court in Unni Krishnan 's case (supral, was not warranted. It was represented to us that the cost incurred on educating a student in an unaided professional college was more than the total fee, which is realized on the basis of formula fixed in the scheme. This had resulted in revenue shortfalls. This Court, by interim orders subsequent to the decision in Unni Krishnan's case (supra), had permitted, within the payment seats, some percentage of seats to be allotted to non-resident Indians, against payment of a higher amount as determined by the authorities. Even thereafter, sufficient funds were not available for the development of those educational institutions. Another infirmity which was pointed out was that experience has shown that most of the "free seats were generally occupied by students from affluent families, while students from less affluent families were required to pay much more to secure admission to "payment seats". This was for the reason that students from affluent families had better school education and the benefits of better professional coaching facilities and were, therefore, able to secure higher merit positions in the common entrance test and thereby secured the free seats. The education of these more affluent students was in a way being cross subsidized by the financially poorer students who, because of their lower position in the merit list, could secure only "payment seats".
31. Counsel for the institutions, as well as the Solicitor-General, submitted that the decision in Unni Krishnan's case (supra), insofar as it had framed the scheme relating to the grant of admission and the fixing of the fee was unreasonable and invalid.
32. It has been submitted by the learned Counsel for the parties that the implementation of the scheme by the States, which have amended their rules and regulations, has shown a number of anomalies. As already noticed, 50% of the seats are to be given on the basis of merit determined after the conduct of a common entrance test, the rate of fee being minimal. The "payment seats" which represent the balance number, therefore, cross-subsidize the "free seats". The experience of the educational institutions has been that students who come from private schools, and who belong to more affluent families, are able to secure higher positions in the merit list of the common entrance test and are thus able to seek admission to the "free seats". Paradoxically, it is the students who come from less affluent families, who are normally able to secure, on the basis of the merit list prepared after the common entrance test, only "payment seats".
33. It was contended by the petitioners' Counsel that the implementation of Unni Krishnan scheme has in fact (1) helped the privileged from richer urban families, even after they ceased to be comparatively meritorious, and (2) resulted in economic losses for the educational institutions concerned and made them financially unviable. Data in support of this contention was placed on record in an effort to persuade this Court to hold that the scheme had failed to achieve its object.
34. Material has also been placed on the record in an effort to show mat the total fee realized from the fee fixed for "free seats" and the "payment seats" is actually less than the amount of expense that is incurred on each student admitted to the professional college. It is because there was a revenue shortfall that this Court had permitted an NRI quota to be carved out of the 50% payment seats for which charging higher fee was permitted. Directions were given to UGC, AICTE, the Medical Council of India and the Central and State Governments to regulate or fix a ceiling on fees, and to enforce the same by imposing conditions of affiliation/permission to establish and run the institutions. Conclusions in TMA Pai Foundation (extracted):
35. It appears to us that the scheme framed by this Court and thereafter followed by the Government was one that cannot be called a reasonable restriction under Article 19(6) of the Constitution. Normally, the reason for establishing an educational institution is to impart education. The institution thus needs qualified and experienced teachers and proper facilities and equipment, all of which require capital investment the teachers are required to be paid properly. As pointed out above, the restrictions imposed by the scheme, in Unni Krishnan's case (supra), made it difficult, if not impossible, for the educational institutions to run efficiently. Thus, such restrictions cannot be said to be reasonable restrictions.
36. The private unaided educational institutions impart education, and that cannot be the reason to take away their choice in matters, inter alia, of selection of students and fixation of fees. Affiliation and recognition have to be available to every institution that fulfils the conditions for grant of such affiliation and recognition. The private institutions are right in submitting that it is not open to the Court to insist that statutory authorities should impose the terms of the scheme as a condition for grant of affiliation or recognition; this completely destroys the institutional autonomy and the very objective of establishment of the institution.
37. Unni Krishnan's case (supra), judgment had created certain problems and raised thorny issues. In its anxiety to check the seats evolved on the assumption that the economic capacity of the first commercialization of education, a scheme for "free" and "payment 50% of admitted students would be greater than the remaining 50%, whereas the converse has proved to be the reality. In this scheme, the payment seat" student would not only pay for his own seat but also Constitution Bench's earlier statement that higher education is not a finance the cost of a "free seat" classmate. When one considers the fundamental right, it seems unreasonable to compel a citizen to pay for the education of another, more so in the unrealistic world of competitive examinations which assess the merit for the purpose of admission solely on the basis of the marks obtained, where the urban students always have an edge over the rural students. In practice, it has been the case of the marginally less merited rural or poor student being the burden of a rich and well-exposed urban student.
38. The scheme in Unni Krishnan's case (supra), has the effect of nationalizing education in respect of important features viz., the right of a private unaided institution to give admission and to fix the fee. By framing this scheme, which has led to the State Governments legislating in conformity with the scheme, the private institutions are indistinguishable from the Government institutions, curtailing all the essential features of the right of administration of a private unaided educational institution can neither be called fair nor reasonable.
45. In view of the discussion hereinabove, we hold that the decision in Unni Krishnan 's case (supra), insofar as it framed the scheme relating to the grant of admission and the fixing of the fee, was not correct, and to that extent, the said decision and the consequent direction given to UGC, AICTE, the Medical Council of India, the Central and State Governments etc., are overruled. The Islamic Academy of Education clarification:
17. As diverse interpretations as to the meaning and effect of TMA Pai Foundation's case (supra), were being ascribed by different stakeholders-the educational institutions, State instrumentalities like the UGC, the AICTE, the MCI etc., Union of India and the various State Governments, explication of the true meaning and trajectory of TMA Pai Foundation was undertaken in Islamic Academy of Education's case (supra). Khare, CJ (for self, Variava, Balakrishnan and Pasayat, JJ.) delivered the leading opinion while Sinha, J. concurred with this opinion, but for distinct reasons (on issues relevant to the present batch of cases), but dissented on aspects (not relevant for the present lis).
18. All parties, including the State and its instrumentalities synoptically contended that the scheme framed in Unni Krishnan's case (supra), was unwarranted, unreasonable and invalid. As a consequence of the incidence of cross-subsidisation inherent in the scheme, students from affluent families with access to better school education and benefit of professional coaching facilities are able to secure higher merit positions in the common entrance test and thereby into free seats while students from socially, economically and locationally disadvantaged backgrounds are having to pay the higher fee in "payment seats"; that the "payment seats" student ends up paying not only for his own seat but was also financing the cost of a "free seat" classmate; and that the scheme had the effect of nationalizing education and of an important feature namely the right of private unaided institutions to grant admissions and to fix fees. To this extent there was a consensus at the Bar as asserted in TMA Pai Foundation's case (supra), that the Unni Krishnan's case (supra), scheme was unreasonable and unsustainable.
19. On the issue: whether educational institutions are entitled to fix their own fee structure and the contours of this freedom, the Islamic Academy of Education's case (supra), majority declared:(A) No rigid fee structure can be fixed by the Government Each institution must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. They must also be able to generate a surplus which must be for the betterment and growth of that institution. The decision on the fee to be charged must necessarily be left to the private educational institutions that do not seek and are not dependent upon any funds from the Government Each institution could have its own fee structure. The fee structure for each institution must be fixed keeping in mind the infrastructure and facilities available, the investments made, salaries paid to the teachers and staff, future plans for expansion and/or betterment of the institution etc.
(B) There can be no profiteering and capitation fee cannot be charged since education is essentially charitable in nature. The surplus/profit that can be generated must be only for the benefit/use of that educational institution. Profit/surplus cannot be diverted for any other use or purpose nor can be used for personal gain or for any other business or enterprise.
(C) In order to give effect to the judgment in TMA Pai Foundation's case (supra), the respective State Governments/concerned authorities shall set up in each State a committee headed by a retired Judge of the High Court who shall be nominated by the Chief Justice of mat State. The other member who shall be nominated by the Judge should be a Chartered Accountant of repute. A representative of the MC or AICTE depending on the type of institution, shall also be a member. The Secretary of the State Government In-charge of Medical or Technical Education, as the case may be, shall be the Member Secretary of the other independent person of repute. The total number of members of Committee and the committee should be free to nominate/co-opt any the committee shall not exceed five. Each educational institute must place before mis committee well in advance of the academic year, its proposed fee structure along with all relevant documents and books of accounts, for scrutiny. The committee shall then decide whether the fee proposed by the institution is justified and does not constitute profiteering or charging of capitation fee. The committee will be at liberty to approve the fee structure or propose some other fee structure which can be charged by the institution. The fee fixed by the committee shall be binding for a period of three years at the end of which period the institution would be at liberty to apply for revision. Once the fee is fixed by the committee, institutions cannot directly or indirectly charge any other amount over the amount fixed. Other amounts charged under any other head or guise such as donation would amount to charging of capitation fees. The Government/appropriate authority must frame appropriate regulation, if not already framed, to penalize including by withdrawal of recognition or affiliation an institution charging capitation fee or indulging in profiteering.
(D) While an institution can charge the prescribed fee for one semester/year, if the institution feels that any particular student may leave midstream, it may require such student to give a bond or bank guarantee ensuring payment of balance fees.
20. The architecture of the operational autonomy of un-aided private educational institutions in the matter of fee structure and the permissible degree of regulation thereupon again came to be considered in Modern School v. Union of India, 2004 (4) ALD 50 (SC): (2004) 5 SCC 583. In Modern School's case (supra), the Supreme Court (a) reiterated the governing principles and contours of academic and managerial autonomy of unaided private educational institutions including as regards the fee structure, as set out in TMA Pai Foundation's case (supra) and Islamic Academy of Education's case (supra).
(b) the Court pointed out that accounts should be maintained on the principles of accounting applicable to non-business organizations/not for profit organizations and every school (the case pertained to a challenge to hiking of fees in various schools in the National Capital Territory of Delhi) should prepare the financial statement comprising balance sheet, profit and loss account and receipts and payments account and shall file a statement of fee every year before the academic session, indicating the estimated amount derived from fees, estimated current operational expenses towards salary and allowances payable to the employees, duly indicating provisions for donation, gratuity, reserve fund and other items and savings, if any.
21. In a subsequent judgment Action Committee, Unaided Private Schools v. Director of Education, Delhi, (2009) 10 SCC 1, the Supreme Court clarified its judgment in Modern School's case (supra), holding that transfer of amounts from the fund of a recognized unaided school to another school under the same management, is permissible. The P.A. Inamdar Re-clarification: permissible. The P.A. Inamdar Re-clarification:
22. As TMA Pai Foundation's case (supra), was being interpreted differently by different stakeholders, notwithstanding the clarificatory exertion in Islamic Academy of Education's case (supra), another Constitution Bench (seven Judges) embarked upon the endeavour to re-clarify the meaning and content of TMA Pai Foundation's case (supra) in P.A. Inamdar's case (supra).
23. On the issue whether regulation of fee structure could be taken over by the Committees (ordered to be constituted by the judgment in Islamic Academy of Education's case (supra)), PA. Inamdar's case (supra), held:... every institution is free to devise its own fee structure which may however be regulated to prevent profiteering, no capitation fee may be charged; a committee for determining fee structure qua the judgment in Islamic Academy of Education's case (supra), is permissible as a regulatory measure aimed at protecting the interests of the students community as a whole and in maintaining the required standards of professional education on non-exploitative terms in the institution. The suggestion on behalf of the institution that the purpose of the committees (for regulating fee structure) could be equally achieved by postulating post-audit or checks after the institutions have formulated their own fee structure, was rejected observing that unless the fixation of fee is regulated and controlled at the threshold stage the unfair practice of granting admissions guided by the paying capacity of the candidate cannot be curbed; further held that the committees constituted cannot be equated with the committees suggested in the scheme framed in Unni Krishnan's case (supra).
24. As in the present case, in PA. Inamdar's case (supra), as well there was a complaint of a ham-handed, insensitive and stereo-typed approach by the committees constituted to oversight fee regulation. Dealing with this criticism, in PA. Inamdar's case (supra), the Court observed (extracted):
149... Certain decisions of some of the Committees were subjected to serious criticism by pointing out that the fee structure approved by them was abysmally low which had rendered the functioning of the institutions almost impossible or made the institutions run into losses. In some of the institutions, the teachers have left their jobs and migrated to other institutions as it was not possible for the management to retain talented and highly qualified teachers against the salary permitted by the Committees. Retired High Court Judges heading the Committees are assisted by experts in accounts and management they also have the benefit of hearing the contending parties. We expect the Committees, so long as they remain functional, to be more sensitive and to act rationally and reasonably with due regard for realities. They should refrain from generalizing fee structures and, where needed, should go into accounts, schemes, plans and budgets of an individual institution for the purpose.
138. In any event, we have earlier herein concluded that Rule 8 does not textually enjoin or authorize the fixation of differential fee for 'A' & 'B' category seats. No such implication of this Rule is legitimate in view of the law declared in TMA Pai Foundation's case (supra) and reiterated in PA Inamdar's case (supra). Conclusions on differential fee:
139. On the aforesaid analyses, we hold that the Notification, dated 27.4.2010, issued by the AFRC; the report of the CA Finn dated 21.7.2010; orders of the AFRC dated 6.8.2010 and 7.8.2010 (containing recommendations on the fee structure); and notifications by the State Government in G.O. Ms. Nos. 76 and 77, both dated 13.8.2010 and G.O. Ms. Nos. 85 and 86, dated 2.8.2011 and 4.8.2011, respectively, insofar as these instruments:
(a) call for submission of proposed fee structure from private unaided professional colleges, separately for 'A' & 'B' category seats, for each course of study.
(b) recommend notification (by the State Government) of a higher tuition fee for 'B' category seats vis-a-vis the fee for 'A' category seats, approving the report of the CA Firm; and
(c) notify tuition fee separately for 'A' & 'B' category seats, with a higher fee for 'B' category seats vis-a-vis 'A' category seats.
(d) are illegal, contrary to the law declared in TMA Pai Foundation's case (supra), Islamic Academy of Education's case (supra) and PA Inamdar's case (supra); are de hors the pale of Rule 8 of the Rules issued in G.O. Ms. Nos. 53 and 59, dated 10. S. 2006 and 26.5.2006, and Rule 9 of G.O. Ms. No. 74, dated 28.7.2011, and are inoperative.
140. We also consider it appropriate to direct the AFRC to clearly and specifically work out and specify the per capita cost of education for each course of study in respect of each institution, duly considering the infrastructure and facilities available; the investments made, the salaries paid/payable to the teachers and staff, and factor a reasonable surplus towards future development, maintenance or expansion and/or betterment of the institution. Once the per capita fee for each course of study, for each private educational institution, is computed as above, that must be the fee recommended by the AFRC and notified by the State Government for all students irrespective of whether they are admitted to the 'A' or 'B' category seats, for that specific institution.
141. The State is however at liberty to formulate a policy of funding the cost of education of any student falling within a rationally classified class, either by way of grant, a loan or otherwise. It is also open to the management of a private educational institution to evolve a policy of waiving the whole or part of a fee to any student or class of students or to grant a scholarship or free ship, which in the opinion of the institution and within its economic capacity, is eligible for such benefit.
146. This judgment also dealt with the criticism as to the ham-handed, insensitive and stereo-typed approach by Committees while dealing with oversight of fee regulation. The observations on this aspect are found in Paras 49 and 150 of PA Inamdar's case (supra), (extracted herein above).
147. In the light of the principles evolving from TMA Pai Foundation's case (supra), to PA Inamdar's case (supra) and to sustain the provisions of Section 7 and Rule 4, we consider it appropriate to read down these provisions; (i) as enabling the AFRC to consider institution-specific fee proposals, course-wise on the bases of the parameters indicated in clauses (a) to (e) and (g) of sub-rule (iv) of Rule 4; (ii) to analyse fee proposals to verify whether they incorporate or camouflage any profiteering or capitation fee; and (iii) to approve, modify or alter the fee structure proposed by each institution, only for the purpose of excising pro tanto any element of profiteering/capitation fee. If fee proposals of an institution, duly substantiated by relevant data, audited accounts and balance-sheets, do not incorporate elements of profiteering or capitation fee (on analyses of the proposals within the contours of the guidelines in Rule 4), the AFRC must accept the same. The AFRC cannot transgress the law declared in TMA Pai Foundation's case (supra), Islamic Academy of Education's case (supra) and PA Inamdar's case (supra), (that every institution enjoys the operational autonomy to devise its own fee structure) by resorting to a misconceived mission, of formulating a common fee structure for private unaided educational institutions.
148. Clause (f) of Rule 4 requires the AFRC to consider the revenue foregone on account of waiver of fee, if any, in respect of students belonging to scheduled castes, scheduled tribes and wherever backward classes and economically weaker sections of the society, to the extent periodically notified by the Government Since the operational autonomy vouchsafed to private unaided educational institutions by TMA Pai Foundation's case (supra), does not accommodate any authority in the State to thrust its affirmative policies of fee subsidy or waiver on private unaided educational institutions, we declare clause (f) of Rule 4 invalid.
149. However, in view of the higher fee that may be charged from NRI students and the conditions subject to which such higher fee may be collected (Para 131 of PA Inamdar's case (supra)), every private unaided educational institution must deposit the excess (higher) fee collected from NRI category of students (fee in excess of the fee approved for the generality of students whether belonging to 'A' or 'B' category) into a separate fund, for being expended on specified class of students rationally entitled to affirmative support by way of fee waiver or subsidy. It is open to the State to formulate an administrative or statutory policy, for extending by way of a grant or loan, to fund the cost of education of any rationally identified class of students, so however that the State shall bear the cost of the fee subsidy or fee waiver, apart from deploying the amounts available from the additional fee collected from NRI category students. The AFRC is not however permitted to recommend nor the State entitled to notify a fee structure that incorporates a cross-subsidy of one category of students by another. Declarations and Directions:
150. On analyses of the relevant facts; statutory provisions; reports, minutes and recommendations of the AFRC; and eventual notifications issued by the State Government, considered in the light of the declared law deducible and expressed in binding precedential authority, this Court: Declares/Directs:
(i) Section 7 of the Capitation Fee Act (insofar as Regulations issued thereunder pertain to private unaided educational institutions whether minority or nonminority), enables issue of Regulation of fee structure proposed by an educational institution, only insofar as modification or alteration of the proposed fee structure is to ensure that the institution does not indulge in profiteering or collection of capitation fee. Section 7 does not enable the State itself to fix and notify a fee structure; that would impermissibly trench upon the operational autonomy of self-financing educational institution/s.
(ii) Section 7 enacts a power coupled with a corresporiding obligation on the State. Therefore, appropriate Regulations must be issued and executed to ensure oversight and excision of profiteering or collection of capitation fee by every private unaided educational institution. Consequently, neither the State nor its instrumentality- the AFRC, may recommend or notify a fee structure or permit collection of fees by any unaided private educational institution that does not submit its fee proposals together with the relevant data (of income and expenditure, developmental needs and audited books of accounts, for verification and scrutiny.
(iii) Since cross-subsidy of the fee payable by one class of students by the other is unconstitutional and thus impermissible, the AFRC while calling for applications for recommending the fee structure, and the State Government while notifying the fee structure shall not call for or notify differential fee structure for different classes of seats, whether called 'A' or 'B' categories or otherwise, which does not represent the per capita cost and therefore incorporates elements of cross subsidy,
(iv) The fee chargeable from every student admitted to a specific course of study in a specific discipline in each private unaided educational institution shall reflect the per capita cost of such education, on the parameters enumerated in Rule (4), clauses (a) to (e) and (g) of the Rules issued in G.O. Ms. No. 6, Higher Education Department, dated 8.1.2007 (The AFRC Rules);
(v) The AFRC may recommend and the State Government notify a higher fee for students admitted to 15% of the sanctioned intake in each course of study in each private unaided educational institution (presently categorized as NRI/NRI sponsored); so however that the higher (over and above the fee fixed for generality of seats whether called 'A' category or 'B' category) fee so collected shall be deposited by the private educational institution in a separate account to be employed for the benefit of students from economically weaker sections of society, whom, on well-defined criteria, the educational institution may admit on subsidized payment of their fee. To regulate proper utilization and audit of the amount in this separate account, the State shall issue specific regulation and till such regulation is issued, the AFRC may formulate guidelines for identifying the class or category of students in whose favour the fee subsidy or waiver may be made, duly specifying the criteria for identifying such student or class of students and the manner in which the funds from mis special account shall be deployed;
(vi) The AFRC while issuing a notification calling for fee proposals shall clearly specify that such proposals should incorporate a uniform fee for all category of students, whether admitted to 'A' or 'B' categories and that the proposals may indicate the higher fee proposed to be charged from NRI/NRI sponsored candidates (and to the limit of 15% of the sanctioned intake) for each course of study in each private unaided educational institution;
(vii) Clause (f) of Rule (4) of the AFRC rules impairs the operational autonomy available to private unaided educational institutions, as delineated in the judgments of the Supreme Court in TMA Pai Foundation's case (supra), Islamic Academy of Education's case (supra) and PA Inamdar's case (supra) and is declared invalid.
(vii) The AFRC shall specify in the notification to be issued (calling for fee proposals from private unaided educational institutions) that an institution which is unresponsive or does not submit statements of income and expenditure, audited balance sheets, and requirements for developmental needs for the immediately preceding year; particulars of expenditure incurred on salaries and infrastructure and other particulars as may be specified (with supporting bills, vouchers or receipts, etc.), shall not be permitted to collect any fee. While notifying a fee structure, exercising power under Section 7 of the Capitation Fee Act, the State shall record a similar stipulation.
(ix) The AFRC is required to recommend, and the State Government notify institution-specific tion-specific fee structure and for the generic variety of institutions offering different courses of study. Therefore, the AFRC shall issue notification(s) calling for fee proposals well in advance of commencement of the academic year (whether for fixing block fee structure, applicable fox three academic years or revising fee structure already notified for any particular academic year), by the first week of December preceding the relevant academic year for which the fee structure notification or revision is to be issued by the State Government;
(x) Where the AFRC considers it appropriate to outsource the administrative function of vetting or verification of fee proposals received from the several private unaided educational institutions (whether to a Chartered Accountant firm or otherwise), the details of the functions entrusted by the AFRC to such agency (ies) shall be placed in the public domain and published in English and local language newspapers having sufficient circulation in the State, to enable public information of particulars of such entrustment;
(xi) The AFRC shall instruct the agency or agencies (to whom it entrusts the function of vetting or verification of fee proposals along with the accompanying records and data) to specifically verify and identify whether there is an element of profiteering or collection of capitation fee and to record observations on this aspect, in respect of each private educational institution which submits fee structure proposals,
(xii) Copies of the report/recommendations prepared and forwarded by such entrusted agency/agencies to the AFRC (which would be the material considered by the AFRC in formulating its recommendations on institution-specific proposals and these would also be the material for the eventual fee structure notifications by the State) shall be furnished to each private unaided educational institution which responds to the AFRC notification (inviting fee proposals) and has duly submitted the relevant data, documents and particulars, requisitioned by the AFRC for submission along with fee proposals;
(xiii) The reports/recommendations prepared by the entrusted agency/agencies and the recommendations by the AFRC submitted to the State Government shall simultaneously be placed in the public domain.
(xiv) The State Government shall issue the fee structure notifications by the 1st week of March, preceding the academic year or block of academic years, as the case may be, for which the fee structure notifications are intended to apply.
(xv) As a consequence of the above analyses, declarations and directions, the fee structure notifications issued in G.O. Ms. No. 76, Higher Education Department, dated 13.82010; G.O. Ms. No. 77, Higher Education Department, dated 13.82010; G.O. Ms. No. 85, Higher Education Department, dated 2.8.2011 and G.O. Ms. No. 86, Higher Education Department, dated 4.8.2011; together with the recommendations of the AFRC contained in Order No. 13/AFRC/FF/2010-11.41, dated 6.82010 and Order No. 14/AFRC/FF/2010-11/SS2, dated 7.82010, are declared invalid and quashed;
(xvi) For the academic years 2010-11, 2011-12 and 2012-13, the AFRC shall now consider afresh the fee structure proposals submitted by those private educational institutions which have responded (to its notification dated 27.42010) and forwarded fee structure proposals together with the particulars spelt out by the AFRC in the annexure to the said notification (either wholly or substantially) and shall verify the same for identifying whether the proposals incorporate elements of profiteering or capitation fee (institution and course wise). If any further particulars, documents, registers or data are required, the AFRC may issue a written notice to the concerned educational institution to furnish the specified particulars, documents, registers or data required by it after scrutiny and verification of the material available, the AFRC shall draw-up a report containing its recommendations on the fee structure for each course of study in respect of each responsive institution; duly incorporating in its report the seat-wise cost in respect of each course of study in specific institutions; recommending a uniform fee for 'A' & 'B' category students. The AFRC may however recommend a higher fee for 15% of the sanctioned intake earmarked for NRI/NRI sponsored category students. This exercise shall be in accordance with the observations and directions in mis judgment
(xvii) The State shall notify fee structure proposals afresh for the academic years 2010-11, 2011-12 and 2012-13 after due consideration of the recommendations of the AFRC and in the light of the principles and directions contained in this judgment, and
(xviii) The relevant exercise by the AFRC and the State, as directed in sub-paras (xvi) and (xvii), shall be expeditiously processed and concluded, including by the issuance of appropriate notifications by the State, in any case within a period of three (3) months from today”.
13. It is also to be noted, the State Government enacted Andhra Pradesh State Education Institutions (Capitation Prohibition of Capitation Fee) Act 1983, with a view to curtail the menace of capitation fee in the Higher Education Institutions. As per the provisions of the said Act, educational institutions situated in the State are prohibited from collecting capitation fees in any form and as per Section 7, Government can regulate tuition fee to be collected by the Education institutions which read as follows: -
“ 1) It shall be competent for the Government by notification, to regulate the tuition fee or any other fee that may be levied and collected by any educational institution in respect of each class of students.
2) No educational institution shall collect any fees in excess of the fee notified under sub-section (1).
3) Every educational institution shall issue an official receipt for the fee collected by it.
14. As per Section 15, the Government can frame the rules and regulations for effective implementation of the provisions of the Act.
15. Pursuant to Islamic Academic Education Case, the State Government constituted a Committee headed by a retired Judge of this Court for fixation of fee for students who are admitted into unaided professional education institutions including minorities and non-minorities. To that effect, the Government framed Rules for establishment ‘Admission and Fee Regulatory Committee' vide G.O.Ms.No.90, dated 22.12.2003. Rule 4 of the said Rules clearly enumerates functions of the Committee including calling fee proposals from each college in advance, with all relevant documents and accounts books for scrutiny. The Committee will determine whether the fees proposed by each college are justified and no profiteering or charging of capitation fee. Thereafter, the Committees shall be at liberty to approve or modify fee to be charged by institution and same is applicable for three consecutive academic years.
16. On scrutiny of the Government Orders issued with respect of fee fixation for Post-Graduate Medical and Dental Courses the State of Telangana and erstwhile Andhra Pradesh, as per the documents filed by petitioner.
a) GO.MS. No.299 dated 27.07.2006 issued by the then State Government fixing the fee structure for post-graduate medical courses for the academic year 2006-07.
b) GO.Ms. 101, dated 02-04-2007, based on the AFRC recommendations, the State Government continued the same fee structure for the block period 2007-10.
c) As per G.O.Ms. 116 dated 14-05-2010, which was issued by the State Government based on the recommendations of AFRC, fee structure was marginally increased for the block period 2010-13.
d) For the academic year 2013-14 and 2014-15, the Government has not fixed any fee structure on the pretext of bifurcation of the State, hence, fee structure fixed through GO.Ms. 116 was continued for academic year 2013-14 and 2014-15 also.
e) For the academic year 2015-16 the government has continued the same fee structure notified under G.O.Ms.No. 116 vide GO.Ms.No. 32 dated 30-04-2015,
f) For the block period 2016-19, AFRC invited fee proposals and made recommendations to the Government by fixing the fee for PG Medical Courses for block period i.e. 2016-19, however, by increasing 10% over fee structure notified under G.O.Ms.No. 116. The AFRC made no recommendations for Dental Courses. However, the Government, based on AFRC recommendations notified the fee structure for the academic year 2016-17 only vide GO.Ms.No. 29 dated 02-05-2016.
g) The Hon'ble Supreme Court ordered to introduce NEET Examination for UG and PG Medical and Dental Courses for the academic year 2017.
h) The Government notified admission rules vide GO.Ms. 41 dated 09-05-2017, in view of introduction of NEET. Further, it appears, Government issued notified fee structure vide G.O.Ms.No.41 dated 09.05.2017 for the block period 2017-20 without any recommendation from AFRC. However, it appears that G.O.Ms.No. 41 was challenged before this Court and cases are pending.
17. It is strange on the part of the Government that, despite the judgment of this Court, they continued fee structure of different categories of courses and uniform fee structure for all colleges equally, but, at the same time, Government implemented directions of this Court in other professional courses such as engineering, pharmacy, architecture, but not implemented for medical and dental colleges.
18. The Division Bench of this Court has already examined the legality of fixing the different fee structure for all categories of students in the same colleges and common fee structure for all colleges in the judgment of CECMA case in the backdrop of judgments of TMA PAI Foundation, Islamic Academy Education and PA Inamdar cases. The Division Bench of this Court has elaborately discussed Paras 103 to 137 of the said judgment and finally, concluded in Paras 138 to 149 as under:
“ 148. Clause (f) of Rule 4 requires the AFRC to consider the revenue foregone on account of waiver of fee, if any, in respect of students belonging to scheduled castes, scheduled tribes and wherever applicable, the socially and educationally backward classes and other economically weaker sections of the society, to the extent periodically notified by the Government Since the operational autonomy vouchsafed to private unaided educational institutions by TMA Pai Foundation's case (supra), does not accommodate any authority in the State to thrust its affirmative policies of fee subsidy or waiver on private unaided educational institutions, we declare clause (f) of Rule 4 invalid.
149. However, in view of the higher fee that may be charged from NRI students and the conditions subject to which such higher fee may be collected (Para 131 of PA Inamdar's case (supra)), every private unaided educational institution must deposit the excess (higher) fee collected from NRI category of students (fee in excess of the fee approved for the generality of students whether belonging to 'A' or 'B' category) into a separate fund, for being expended on specified class of students rationally entitled to affirmative support by way of fee waiver or subsidy. It is open to the State to formulate an administrative or statutory policy, for extending by way of a grant or loan, to fund the cost of education of any rationally identified class of students, so however that the State shall bear the cost of the fee subsidy or fee waiver, apart from deploying the amounts available from the additional fee collected from NRI category students. The AFRC is not however permitted to recommend nor the State entitled to notify a fee structure that incorporates a cross-subsidy of one category of students by another. Declarations and Directions:
150. On analyses of the relevant facts; statutory provisions; reports, minutes and recommendations of the AFRC; and eventual notifications issued by the State Government, considered in the light of the declared law deducible and expressed in binding precedential authority, this Court: Declares/Directs:
(i) Section 7 of the Capitation Fee Act (insofar as Regulations issued thereunder pertain to private unaided educational institutions whether minority or nonminority), enables issue of Regulation of fee structure proposed by an educational institution, only insofar as modification or alteration of the proposed fee structure is to ensure that the institution does not indulge in profiteering or collection of capitation fee. Section 7 does not enable the State itself to fix and notify a fee structure; that would impermissibly trench upon the operational autonomy of self-financing educational institution/s;
(ii) Section 7 enacts a power coupled with a corresponding obligation on the State. Therefore, appropriate Regulations must be issued and executed to ensure oversight and excision of profiteering or collection of capitation fee by every private unaided educational institution. Consequently, neither the State nor its instrumentality - the AFRC, may recommend or notify a fee structure or permit collection of fees by any unaided private educational institution that does not submit its fee proposals together with the relevant data (of income and expenditure, developmental needs and audited books of accounts, for verification and scrutiny.
(iii) Since cross-subsidy of the fee payable by one class of students by the other is unconstitutional and thus impermissible, the AFRC while calling for applications for recommending the fee structure; and the State Government while notifying the fee structure shall not call for or notify differential fee structure for different classes of seats, whether called 'A' or 'B' categories or otherwise, which does not represent the per capita cost and therefore incorporates elements of cross subsidy,
(iv) The fee chargeable from every student admitted to a specific course of study in a specific discipline in each private unaided educational institution shall reflect the per capita cost of such education, on the parameters enumerated in Rule (4), clauses (a) to (e) and (g) of the Rules issued in G.O. Ms. No. 6, Higher Education Department, dated 8.1.2007 (The AFRC Rules);
(v) The AFRC may recommend and the State Government notify a higher fee for students admitted to 15% of the sanctioned intake in each course of study in each private unaided educational institution (presently categorized as NRI/NRI sponsored); so however that the higher (over and above the fee fixed for generality of seats whether called 'A' category or 'B' category) fee so collected shall be deposited by the private educational institution in a separate account to be employed for the benefit of students from economically weaker sections of society, whom, on well-defined criteria, the educational institution may admit on subsidized payment of their fee. To regulate proper utilization and audit of the amount in this separate account, the State shall issue specific regulation and till such regulation is issued, the AFRC may formulate guidelines for identifying the class or category of students in whose favour the fee subsidy or waiver may be made, duly specifying the criteria for identifying such student or class of students and the manner in which the funds from mis special account shall be deployed;
(vi) The AFRC while issuing a notification calling for fee proposals shall clearly specify that such proposals should incorporate a uniform fee for all category of students, whether admitted to 'A' or 'B' categories and that the proposals may indicate the higher fee proposed to be charged from NRI/NRI sponsored candidates (and to the limit of 15% of the sanctioned intake) for each course of study in each private unaided educational institution;
(vii) Clause (f) of Rule (4) of the AFRC rules impairs the operational autonomy available to private unaided educational institutions, as delineated in the judgments of the Supreme Court in TMA Pai Foundation's case (supra), Islamic Academy of Education's case (supra) and PA Inamdar's case (supra) and is declared invalid.
(vii) The AFRC shall specify in the notification to be issued (calling for fee proposals from private unaided educational institutions) that an institution which is unresponsive or does not submit statements of income and expenditure, audited balance sheets, and requirements for developmental needs for the immediately preceding year, particulars of expenditure incurred on salaries and infrastructure and other particulars as may be specified (with supporting bills, vouchers or receipts, etc.), shall not be permitted to collect any fee. While notifying a fee structure, exercising power under Section 7 of the Capitation Fee Act, the State shall record a similar stipulation.
(ix) The AFRC is required to recommend, and the State Government notify institution-specific fee structure and for the generic variety of institutions offering different courses of study. Therefore, the AFRC shall issue notification(s) calling for fee proposals well in advance of commencement of the academic year (whether for fixing block fee structure, applicable fox three academic years or revising fee structure already notified for any particular academic year), by the first week of December preceding the relevant academic year for which the fee structure notification or revision is to be issued by the State Government;
(x) Where the AFRC considers it appropriate to outsource the administrative function of vetting or verification of fee proposals received from the several private unaided educational institutions (whether to a Chartered Accountant firm or otherwise), the details of the functions entrusted by the AFRC to such agency (ies) shall be placed in the public domain and published in English and local language newspapers having sufficient circulation in the State, to enable public information of particulars of such entrustment;
(xi) The AFRC shall instruct the agency or agencies (to whom it entrusts the function of vetting or verification of fee proposals along with the accompanying records and data) to specifically verify and identify whether there is an element of profiteering or collection of capitation fee and to record observations on this aspect, in respect of each private educational institution which submits fee structure proposals;
(xii) Copies of the report/recommendations prepared and forwarded by such entrusted agency/agencies to the AFRC (which would be the material considered by the AFRC in formulating its recommendations on institution-specific proposals and these would also be the material for the eventual fee structure notifications by the State) shall be furnished to each private unaided educational institution which responds to the AFRC notification (inviting fee proposals) and has duly submitted the relevant data, documents and particulars, requisitioned by the AFRC for submission along with fee proposals;
(xiii) The reports/recommendations prepared by the entrusted agency/agencies and the recommendations by the AFRC submitted to the State Government shall simultaneously be placed in the public domain. (xiv) The State Government shall issue the fee structure notifications by the 1st week of March, preceding the academic year or block of academic years, as the case may be, for which the fee structure notifications are intended to apply.
(xv) As a consequence of the above analyses, declarations and directions, the fee structure notifications issued in G.O. Ms. No. 76, Higher Education Department, dated 13.82010; G.O. Ms. No. 77, Higher Education Department, dated 13.82010; G.O. Ms. No. 85, Higher Education Department, dated 2.8.2011 and G.O. Ms. No. 86, Higher Education Department, dated 4.8.2011; together with the recommendations of the AFRC contained in Order No. 13/AFRC/FF/2010-11.41, dated 6.82010 and Order No. 14/AFRC/FF/2010-11/SS2, dated 7.82010, are declared invalid and quashed;
(xvi) From the next block period, the AFRC shall now consider afresh the fee structure proposals submitted by those private unaided medical and dental educational institutions and forwarded fee structure proposals together with the particulars spelt out by the AFRC in the annexure to the said notification (either wholly or substantially) and shall verify the same for identifying whether the proposals incorporate elements of profiteering or capitation fee (institution and course wise). The AFRC shall draw-up a report recommending a uniform fee for 'A' & 'B' category students. The AFRC may however recommend a higher fee for 15% of the sanctioned intake earmarked for NRI/NRI sponsored category students. This exercise shall be in accordance with dicta laid down by the Hon'ble Supreme Court and guidelines given by the division bench of this Hon'ble Court. The State shall notify fee structure proposals afresh for the next block period after due consideration of the recommendations of the AFRC and in the light of the principles and directions contained in this judgment; and
(xviii) The relevant exercise by the AFRC and the State, as directed in sub-paras (xvi) and (xvii), shall be expeditiously processed and concluded, including by the issuance of appropriate notifications by the State, in any case within a period of three (3) months from today.
19. Since cross-subsidy of fee payable by one class of students by the other is unconstitutional and thus impermissible; AFRC while calling for Applications for recommending fee structure and the State Government while notifying fee structure shall not call for or notify differential fee structure for different classes of seats, whether called 'A' or 'B' categories or otherwise, which does not represent the per capita cost and therefore, incorporates elements of cross subsidy,
20. AFRC may recommend and the State Government notify a higher fee for students admitted to 15% of the sanctioned intake in each course of study in each private unaided educational institution (presently categorized as NRI/NRI sponsored); however the higher (over and above the fee fixed for generality of seats whether called 'A' category or 'B' category) fee so collected shall be deposited by the private educational institution in a separate account to be employed for the benefit of students from economically-weaker sections of society, whom, on well-defined criteria, the educational institution may admit on subsidized payment of their fee. To regulate proper utilization and audit of the amount in this separate account, the State shall issue specific regulation and till such regulation is issued, AFRC may formulate guidelines for identifying the class or category of students in whose favour fee subsidy or waiver may be made, duly specifying the criteria for identifying such student or class of students and the manner in which the funds from special account shall be deployed.
21. The AFRC while issuing a notification calling for fee proposals shall clearly specify that such proposals should incorporate a uniform fee for all category of students, whether admitted to 'A' or 'B' categories and that proposals may indicate the higher fee proposed to be charged from NRI/NRI sponsored candidates (and to the limit of 15% of the sanctioned intake) for each course of study in each private unaided educational institution.
22. The other relief prayed by petitioner that recommendation made by Respondent No.2 in communication dated 03.05.2016 to Respondent No.1 suggesting fixation of differential fee for different categories of students and uniform fee for all colleges as illegal, is infructuous. As such no relief can be granted in this regard.
23. In the result, the Writ Petition is allowed directing Respondent No.2, from the next block period in so far as post graduate medical and dental courses in medical and dental colleges, to consider afresh the fee structure proposals submitted by those private unaided medical and dental educational institutions and forward fee structure proposals together with the particulars spelt out by the AFRC in the Annexure to the said Notification (either wholly or substantially) and to verify the same for identifying whether the proposals incorporate elements of profiteering or capitation fee (institution and course wise. The AFRC shall draw-up a report recommending a uniform fee for 'A' & 'B' category students. The AFRC may however recommend a higher fee for 15% of the sanctioned intake earmarked for NRI/NRI sponsored category students. This exercise shall be in accordance with dicta laid down by the Hon'ble Supreme Court and guidelines given by the division bench of this Hon'ble Court. The State shall notify fee structure proposals afresh for the next block period after due consideration of the recommendations of the AFRC and in the light of the principles and directions contained in this judgment.
24. Consequently, Miscellaneous Applications, if any shall stand closed.
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