V.N.KHARE, CJI., - (1.) ON 31st October, 2002 eleven judge bench of this Court delivered the judgment in the case of T.M.A. Pai Foundation and Ors. v. State of Karnataka and Ors. A brief history as to how a eleven judge bench of this Court came to decide this case is set out in para 3 of the judgment, which reads as under: "3. The hearing of these cases has had a chequered history/Writ petition no. 350 of 1993 filed by the Islamic Academy of Education and connected petitions were placed before a bench of five judges. As the bench was prima facie of the opinion that Article 30 did not clothe a minority educational institution with the power to adopt its own method of selection and the correctness of the decision of this Court in St. Stephens College v. University of Delhi was doubted, it was directed that the questions that arose should be authoritatively answered by a larger Bench. These cases were then placed before a bench of seven judges. The questions framed were recast and on 6-2-1997, the Court directed that the matter be placed before a bench of at least eleven judges, as it was felt that in view of the Forty-second Amendment to the Constitution, whereby "education" had been included in Entry 25 of List III of Seventh Schedule, the question of who would be regarded as a "minority" was required to be considered because the earlier case-law related to the pre-amendment era, when education was only in the State List...." After the judgment was delivered, on 31st October 2002, the Union of India, various State governments and the educational institutions understood the majority judgment in different perspectives. Different statutes/regulations were enacted/framed by different State governments. These led to litigations in several courts. Interim orders passed therein have been assailed before this Court. When these matters came up before a bench of this Court, the parties to the writ petitions and special leave petitions attempted to interpret the majority decision in their own way as suited to them and therefore at their request all these matters were placed before a bench of five judges. It is under these circumstances that this bench has been constituted so that doubts/anomalies, if any, could be clarified.
(2.) MOST of the petitioners/applicants before us are unaided professional educational institutions (both minority and non- minority). On behalf of the petitioners/applicants it was submitted that the answers given to the questions, as set out at the end of the majority judgment, lay down the true ratio of the judgment. It was submitted that any observation made in the body of the judgment had to be read in the context of the answers given. We are unable to accept this submission. The answers to the questions, in the majority judgment in Pai's case, are merely a brief summation of the ratio laid down in the judgment. The ratio decidendi of a judgment has to be found out only on reading the entire judgment. In fact, the ratio of the judgment is what is set out in the judgment itself. The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. We, therefore, while giving our clarifications, are deposed to look into other parts of the judgment other than those portions which may be relied upon. Very briefly stated the other submissions were as follows: 3.1. On behalf of the petitioners/applicants it was also submitted that fixation of percentages of seats that could be filled in the unaided professional colleges both minority and non minority by the management, as done by various State governments, was impermissible. It is further submitted that the private unaided professional educational institutions, had been given complete autonomy not only as regards the admission of students but also as regards the determination of their own fee structure. It was submitted that these institutions could fix their own fee structure, which could include a reasonable revenue surplus for purposes of development of education and expansion of the institution, and that so long as there was no profiteering or charging of capitation fees, there could be no interference by the government. It was submitted that the right to admit students is an essential facet of the right to administer, and so long as admission to the unaided educational institutions is on a fair and transparent basis and on the basis of merit, government cannot interfere. It was submitted that these institutions are entitled to fill up all their seats by adopting/evolving a rational and transparent method of admission which ensures that merit is adequately taken care of. It was submitted that in any event the institutions should be given a choice and be allowed to admit students on basis of the ICSC or SSC or other such examination. It was also suggested that educational institutions of a particular type may be permitted to associate themselves for the purposes of holding a common entrance test in each State. On behalf of minority institutions, it was submitted that they are entitled to fill up all the seats with students of their own community/language. On behalf of non-minority institutions, it was submitted that they also had a fundamental right to establish and administer educational institutions and that the majority judgment puts them on a par with the minority institutes. 3.2. As against this, on behalf of the Union of India, various State governments and some students, who sought to intervene, it was submitted that the right to set up and administer an educational institution was not an absolute right, and this right is subject to reasonable restrictions and that this right is subject (even in respect of minority institutions) to national interest. It was submitted that imparting education was a State function but, due to resources crunch, the States were not in a position to establish sufficient number of educational institutions. It was submitted that, because of such resources crunch, the States were permitting private educational institutions to perform State functions. It was submitted that the Union of India, the States, Universities had statutory rights to fix the fees and to regulate admission of students in order to ensure (a) that there was no profiteering; (b) capitation fees were not charged; (c) admissions were based on principles of merit and (d) to ensure that persons from the backward classes and poorer sections of society also had an opportunity to receive education, particularly, professional education. It was submitted that if these educational institutions were permitted to have their own tests for admission, the students would be put to undue harassment and hardship inasmuch as they would have to pay for application forms in various colleges and appear for tests in various colleges. It was pointed out that even if each institution charged Rs. 500 to Rs. 1000 a student would ultimately have to pay a large amount by way of application fees as, in the absence of a common entrance test and admission procedure the students would have to apply to a number of colleges. It is submitted that the students would also have to spend for transport from and to each college and may find it difficult, if not impossible to travel, from one college to another, to appear in all the tests. It was submitted that unless it was ensured that colleges admit students strictly on the basis of merit at a common entrance test, it would be impossible to ensure that capitation fees were not charged and that there was no profiteering. It was pointed out that some colleges do not even issue admission forms unless and until the student agrees to pay a hefty sum. It was submitted that the majority judgment clarified that Article 30 had been enacted not for the purposes of giving any special right or privileges to the minority educational institutions, but to ensure that the minorities had equal rights with the majority. It was submitted that minority educational institutions cannot claim any higher or better rights than those enjoyed by the non-minority educational institutions. Both sides relied upon various passages from the majority judgment in support of the respective submissions. These passages are reproduced hereinafter. 4.1 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 No. 1.
(3.) 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 of 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 TMA PAI's 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 'MCI') 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 total number of members of the Committee shall not exceed 5. 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 of 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 penalised and also face the prospect of losing its recognition/affiliation. 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 student would leave the institute midstream. It was submitted that if the student left the course in 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 nationalised 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. Question No. 2;