Icon Education Society vs The State Of Madhya Pradesh

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1760 OF 2023 (@ SPECIAL LEAVE PETITION (C) NO. 4006 OF 2021)

ICON EDUCATION SOCIETY ..... Appellant

Vs.

STATE OF MADHYA PRADESH & OTHERS ..... Respondents

J U D G M E N T

SANJAY KUMAR, J.

Leave granted.

2. The short question that arises for consideration in this case

is whether a minority educational institution in the State of

Madhya Pradesh is required to get the fees charged by it fixed by

the Admission and Fee Regulatory Committee under the provisions of

the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka

Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 (for short, Signature Not Verified 'the Act of 2007')? Digitally signed by ARJUN BISHT Date: 2023.03.17 15:28:10 IST Reason: 1

3. This issue is no longer res integra as the contours and import

of the Act of 2007, including the question aforestated, were dealt

with and decided by a Constitution Bench in Modern Dental College

and Research Centre and others Vs. State of Madhya Pradesh and

others [(2016) 7 SCC 353]. However, failure of the parties in

properly understanding the ratio decidendi of the above decision

led to the present litigation.

4. Icon Education Society, the appellant herein, maintains and

manages two unaided educational institutions at Indore, viz.,

Indore Institute of Law and Indore Nursing College. Both these

institutions qualify as ‘minority educational institutions’ under

Section 2(g) of the National Commission for Minority Educational

Institutions Act, 2004. While so, by letter dated 08.07.2019, the

Admission and Fee Regulatory Committee (for short, ‘the AFRC’),

constituted under Section 4 of the Act of 2007, called upon the

Indore Institute of Law to submit its proposal for regulation of

the fees pertaining to law courses offered by it. This was

followed up by a reminder on 24.07.2019, which was addressed to

all private law colleges in the State of Madhya Pradesh. The

appellant society addressed reply dated 31.07.2019, stating that

the AFRC was not empowered to regulate the fees charged by

minority educational institutions and requesting that the notices

issued may be withdrawn or cancelled. The AFRC responded, vide

letter dated 14.11.2019, stating that a decision had been taken in

the meeting held on 08.11.2019 that the fees of minority

2 institutions should be fixed by the AFRC. The appellant society

was accordingly informed that its request for relaxation from

getting the fees fixed by the AFRC was rejected.

5. Aggrieved thereby, the appellant society preferred an appeal

under Section 10 of the Act of 2007 before the designated

authority. The appeal was dismissed by the appellate authority, by

order dated 10.01.2020, holding that the procedure of

regulating/fixing of fee was common to both minority and non-

minority institutions. The review/recall petition preferred by the

appellant society was dismissed with costs by the appellate

authority on 06.03.2020.

6. Thereupon, the appellant society filed WP No. 9690 of 2020

before the Indore Bench of the Madhya Pradesh High Court. Its

prayer therein was to declare Sections 4 and 9 of the Act of 2007

ultra vires as these provisions did not distinguish between

minority educational institutions and other educational

institutions and, in consequence, did not exempt minority

educational institutions from fee-fixation. A further direction

was sought to exempt the appellant society, being a minority

educational institution, from the application of Section 9 of the

Act of 2007, thereby permitting it to fix its own fees.

7. By order dated 19.11.2020, a Division Bench of the Madhya

Pradesh High Court at Indore dismissed the writ petition. The

3 Division Bench noted that the validity of the Act of 2007 had

already been upheld in Modern Dental College and Research Centre

(supra). The High Court then relied upon Sk. Md. Rafique Vs.

Managing Committee, Contai Rahamania High Madrasah and others

[(2020) 1 SCT 627(SC)], wherein this Court referred to its earlier

edict in Ahmedabad Saint Xaviers College Society and another Vs.

State of Gujarat and another [(1974) 1 SCC 717] that the right

under Article 30(1) of the Constitution is not absolute or above

other provisions of law and the essence of Article 30(1) was to

ensure equal treatment between majority and minority institutions.

It was further held that the laws of the land, including rules and

regulations, must apply equally to majority institutions as well

as minority institutions. In his concurring opinion, H.R.Khanna J

had held that a balance must be kept between the two objectives –

one, to ensure the standard of excellence of the institution and

the other, preserving the right of minorities to establish and

administer educational institutions. In the light of Modern Dental

College and Research Centre (supra) and Sk. Md. Rafique (supra),

the High Court concluded that no grounds were made out to

interfere with the orders passed by the AFRC.

8. Heard Mr.Dama Seshadri Naidu, learned senior counsel,

appearing for the appellant society; and Mr.P.V.Yogeshwaran,

learned AAG, appearing for the State of Madhya Pradesh.

4

9. Section 4 in Chapter 2 of the Act of 2007 deals with the

constitution and establishment of the AFRC. Section 4(1) provides

that the State Government shall, by notification in the official

gazette, constitute a committee to be called the ‘Admission and

Fee Regulatory Committee’, for the supervision and guidance of the

admission process and for the fixation of fees to be charged from

candidates seeking admission in a private professional educational

institution. Section 4(8) provides that the AFRC may require a

private aided or unaided professional educational institution or a

deemed university to furnish, by the prescribed date, information

as may be necessary for enabling the AFRC to determine the fees

that may be charged by the institution in respect of each

professional course and the fees so determined shall be valid for

such period as may be notified by the State Government.

10. Chapter 4 of the Act of 2007 deals with fixation of fees.

Section 9(1) therein provides that, having regard to the location

of the private unaided professional educational institution; the

nature of the professional course; the cost of the land and

building; the available infrastructure, teaching, non-teaching

staff and equipment; the expenditure on administration and

maintenance; the reasonable surplus required for growth and

development of the professional institution; and any other

relevant factor, the AFRC shall determine, in the manner

prescribed, the fees to be charged by the private unaided

professional educational institution. Section 9(2) provides that

5 the AFRC shall give the institution an opportunity of being heard

before fixing any fees. The proviso thereunder states that no such

fees, as may be fixed by the AFRC, shall amount to profiteering or

commercialization of education.

11. Significantly, in the 11-Judges Bench decision of this Court

in T.M.A. Pai Foundation and others Vs. State of Karnataka and

others [(2002) 8 SCC 481], the majority opinion voiced by

B.N.Kirpal CJ, speaking for himself and five other learned Judges,

answered the question as to whether statutory provisions

regulating facets of administration of educational agencies,

including regulation of fees, would interfere with the right of

administration by minorities in the negative, but held that such

regulatory measures should be minimal in the case of unaided

minority educational institutions. As regards the fees to be

charged by unaided institutions, it was held that the same could

not be regulated but no institution should charge capitation fee.

It was emphasized 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 was held to be clear

that an educational institution cannot charge such a fee as is not

required for the purpose of fulfilling that object. To put it

differently, per the majority, in the establishment of an

6 educational institution, the object should not be to make a profit

inasmuch as education is essentially charitable in nature, but

there could, however, be a reasonable revenue surplus, which may

be generated by the educational institution for the purpose of

development of education and expansion of the institution. The

partly-concurring opinion of S.N.Variava J, speaking for himself

and Ashok Bhan J, was to the effect that there could be an

appropriate mechanism to ensure that no capitation fee is charged

and profiteering is not resorted to, but the extent of regulation

would not be the same for aided and unaided institutions.

12. Thereafter, in the 7-Judges Bench decision of this Court in

P.A. Inamdar and others Vs. State of Maharashtra and others

[(2005) 6 SCC 537], this Court unanimously held that, as per the

law declared in T.M.A. Pai Foundation (supra), setting 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, and 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. It was further held that it

is permissible to regulate admission and fee structure for

achieving that purpose. The question whether guidelines could have

been issued in the matter of regulating the fee payable by

students to educational institutions was, therefore, answered in

the affirmative by holding that every institution is free to

7 devise its own fee structure but the same can be regulated in the

interest of preventing profiteering and capitation fees.

13. As stated hereinbefore, the Act of 2007 fell for consideration

before a Constitution Bench in Modern Dental College and Research

Centre (supra) in the context of regulation of unaided educational

institutions in the State of Madhya Pradesh. Significantly, the

validity/vires of various provisions of the Act of 2007, including

provisions pertaining to fixation of fees, was also under attack.

The issue was as to whether provisions relating to fixation of

fees were violative of Article 19(1)(g) or whether they were

regulatory in nature and were permissible under Article 19(6) of

the Constitution. Keeping in mind the fact that the State has the

power to regulate fixation of fees in the interest of preventing

profiteering and such fixation of fees has to be regulated and

controlled at the initial stage itself, this Court observed that

the parameters laid down in Section 9(1) of the Act of 2007, which

have to be kept in mind while fixing the fees were, in fact, the

ones enunciated in earlier judgments of this Court. This Court,

therefore, held that analysis of the provisions of the Act of 2007

by the Madhya Pradesh High Court in Association of Private Dental

and Medical Colleges Vs. State of MP [(2009) SCC Online MP 760],

from which the appeal arose, was perfectly in order. Reference was

made to the observations contained therein to the effect that each

professional educational institution can furnish information with

regard to the fees that it proposes to charge from the candidates,

8 taking into account the cost of components, the reasonable surplus

required for growth and development and other factors relevant to

impart professional education as mentioned in Section 9(1) of the

Act of 2007, and that the function of the AFRC is only to find

out, after giving due opportunity of hearing to the institution,

whether the fees proposed by the institution is based on the

factors mentioned in Section 9(1) of the Act of 2007 and did not

amount to profiteering and commercialization of education. The

High Court had further observed that the AFRC, while determining

the fees, only gives final approval to the proposed fees to be

charged, after being satisfied that it was based on the factors

mentioned in Section 9(1), and that there was no profiteering or

commercialization of education. The High Court accordingly

concluded that the provisions of Sections 4(1), 4(8) and 9 of the

Act of 2007, in substance, empowered the AFRC to be only satisfied

that the fee proposed by private professional educational

institutions did not amount to profiteering or commercialization

of education and was based on the factors mentioned in Section

9(1) of the Act of 2007 and held that the Act of 2007, therefore,

did not violate the right of the private professional educational

institution to charge its own fee. Accepting the said

interpretation, this Court observed that the AFRC which is set up

for that purpose is discharging only a regulatory function, as the

fee which a particular educational institution seeks to charge

from its students has to be suggested by the said educational

institution itself and the AFRC is empowered to satisfy itself

9 that the fee proposed by the educational institution did not

amount to profiteering or commercialization of education and was

based on the intelligible factors mentioned in Section 9(1) of the

Act of 2007. This Court, therefore, concluded that it was only a

regulatory measure and did not take away the power of the

educational institutions to fix their own fees.

14. The supplementing opinion of R. Banumathi J noted that, though

Section 9 of the Act of 2007 empowered the AFRC to determine the

fees, the High Court had read down Sections 4(1), 4(8) and 9 of

Act of 2007, by holding that those provisions "in substance

empower the committee to be only satisfied that the fee proposed

by a private professional educational institution did not amount

to profiteering or commercialization of education and was based on

the factors mentioned in Section 9(1) of the Act 2007...". The

learned Judge accordingly held that the State had the legislative

competence to enact the Act of 2007 and regulation of fixation of

the fees was to protect the right of the students in having access

to higher education without being subjected to exploitation in the

form of profiteering. The learned Judge concurred with the

majority view in upholding the validity of the impugned

legislation and affirmed the decision of the High Court.

15. It is, therefore, too late in the day for the appellant

society to again seek to challenge the validity of the Act of

2007, as the provisions of this enactment have already been read

10 down by this Court to mean that the AFRC would have the power only

to regulate the fee once the same is proposed by the educational

institution itself, keeping in mind the parameters encapsulated in

Section 9(1) thereof.

16. Therefore, as matters stand, the Act of 2007 has been

interpreted to mean that the AFRC, constituted

thereunder, exercises only the power of ‘regulation’ in respect of

the fees proposed by the institution, conditioned by the

parameters in Section 9(1) of the Act of 2007. In effect, the

liberty given to unaided institutions to propose the fees that

they wish to charge, keeping in mind the factors set out in

Section 9(1) of the Act of 2007, stands protected and it is only

by way of regulating the fees so proposed that the AFRC would

exercise the power of reviewing the proposed fees, after giving

due opportunity of hearing to the educational institution

concerned. The contrary stand taken by the AFRC, as is evident

from its communications to the appellant society, therefore cannot

be countenanced. It is not open to the AFRC to seek to

unilaterally fix the fees to be charged by the appellant society

for the professional courses offered through its educational

institutions. At the same time, it is not open to the appellant

society to claim complete immunity in undertaking this exercise

and seek exemption from any interference by the AFRC. The

appellant society must necessarily submit the fees proposed by it

in respect of the professional courses offered through its

11 institutions to the AFRC for the purpose of review and regulation,

as per the provisions of Section 9 of the Act of 2007 and the

principles laid down by this Court in the decisions referred to

hereinabove. Making this position clear, the appeal is disposed of

accordingly.

Parties shall bear their own costs.

………………………………………...J [DINESH MAHESHWARI]

………………………………………...J [SANJAY KUMAR]

NEW DELHI;

March 17, 2023.

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