AI Structured Summary
Not yet generated for this judgment
Judgment
G.S. Singhvi, J.—These petitions have been filed by the registered Societies and Trust who have established technical institutions in Haryana and the students who have taken admission in different courses run by such institutions. The Societies/Trusts, who have filed nine of these petitions, have prayed for quashing of the decision taken by the Standing Committee constituted under Regulation 7 the All India Council for Technical Education (norms and guidelines for fees and guide-lines for admissions in professional college) Regulations, 1994 (for short, the 1994 Regulations'') in its meeting held on 23.3.1999 vide which the private technical education colleges/institutions have been directed not to charge any amount other than the fee fixed by the competent authority and to refund with interest the amount illegally collected from the students during previous years. They have also prayed that the respondents be directed to allow them to admit students against payment seats only after receipt of the refundable interest-free security of Rs. 1,00,000/- per student. The students who have filed the remaining four petitions, have prayed for restraining the Societies/Trusts from charging refundable interest-free security deposit and not to prevent them from continuing their studies on the ground of non-deposit of such fee.
For the sake of convenience, we may notice the facts of C.W.P. Nos. 5251 and 2805 of 1999 and the grounds raised therein by treating them to be representative petitions of the Societies/Trusts and the students.
The petitioner is a Society registered under the Societies Registration Act, 1860. It claims to be an un-aided self-financed, no profit-no loss educational society having its main object to provide education to the general public irrespective of their castes, sex and creed, to start, establish, run, takeover, manage and maintain educational institutions throughout India, to disseminate knowledge and to provide quality education to all vocational trades, to provide counselling services to the individuals and community on no profit-no loss basis and to undertake activities relating to the spread of knowledge and/or state of Art.
In 1995, the petitioner sought permission of the State Government for setting up a private Engineering College at Gurgaon by the name of Institute of Technology and-Management at Gurgaon (for short, ''the Institute''). Vide letter dated 29.7.1995, the Director, Department of Technical Education, Haryana (respondent No. 2) conveyed the State Government''s clearance to its proposal forthe following 3 Degree Courses:
Nomenclature of the course
Intake of students
1.
4-year degree course in Computer Engineering
120
2.
4-year degree course in Electronics and Computer Engineering.
120
3.
4-year degree course in Mechanical Engineering
60.
This clearance was subject to the various conditions enumerated in the letter Annexure P.2, some of which are reproduced below :
"5. That the tuition fee and other charges shall be charged from the students as per norms laid down by the A.I.C.T.E./Concerned University/State Govt. No capitation fee in any form at any time shall be charged from the students/the parents/guardians from any body on behalf of the students.
That the intake capacity shall be strictly adhered to as approved by A.I.C.T.E./State Govt.
That the infrastructural facilities would be provided as per norms laid down by the A.I.C.T.E. before permission and start of the classes.
That the society must specifically give an undertaking/affidavit for not making admission to any Engineering discipline unless the Institute is approved by State Govt./A.I.C.T.E. and duly affiliated by the University."
The petitioner had also submitted an application to the Ail India Council for Technical Education, New Delhi (for short, ''the Council'') seeking its approval for establishing the Institute at Gurgaon and vide letter dated 18.6.1996, the Council accorded conditional approval subject to the various conditions enumerated in the annexures appended to the said letter. The relevant extract of the letter dated 18.7.1996, Clause 3 of the Specific Conditions and Clauses 3, 6, 10 and 16 of the General Conditions, which are relevant to the decision of the writ petitions read as under :
"Extract of the letter dated 18.7.196
xx xx xx This approval has been accorded subject to fulfilment of specific and general conditions as listed in Annexures I and II respectively along with the necessary instructions given to the various offices listed in this letter to whom the copies of this letter is endorsed. Your are requested kindly to take further action.
xx xx xx Clause 3 of the Specific Conditions.
The infrastructural and other facilities in terms of building, workshops, laboratories, library, etc. should be constructed on the permanent site within a period of 1 year from the date of issue of this approval letter.
Clauses 3, 6, 10 and 16 of the General Conditions
xx xx xx 3. Adequate funds shall be available with the Institution to meet the financial obligations of recurring and non-recurring nature as prescribed by the AICTE, from time to time.
xx xx xx 6. The tuition and other fee shall be charged as prescribed by the State Government within the overall criteria/limits as may be laid down by the AICTE from time to time.
xx xx xx 10. Institution shall maintain records and books of accounts as prescribed by the competent authority.
xx xx xx 16. The institution shall not charge any capitation fee or donation for admission or other higher charges from the students/guardians of the students in any form."
In the meanwhile, the petitioner was allotted land measuring 10 Acres in Sector 23-A, Gurgaon by the Haryana Urban Development Authority on 99 years lease at a premium of Rs. 1,73,60,000/-. After paying Rs. 82,46,000/-, the petitioner obtained possession and constructed the building for housing the Institute. In July 1996, the petitioner vide letters dated 10.7.1996 (Annexure P.4) and 29.7.1996 (Annexure P.6) informed the Registrar, Guru Jambeshwar University, Hissar and the Principal, Regional Engineering College, Kurukshetra (respondent No. 3) that it would be taking refundable interest- free security deposit of Rs. 1,00,000/- each from all payment seat students to finance the cost of infrastructural and other permanent facilities. A similar letter (Annexure P.7 dated 31.7.1996) was written to the Commissioner-cum-Secretary, Technical Education, Haryana. In the meanwhile, the Council wrote letter dated 29.7.1997 to the Commissioner-cum-Secretary, Technical Education, Haryana extending its approval for the year 1997-98 subject to the fulfilment of the conditions with an indication that infringement/contraven-tion/non- compliance of the conditions, guide-lines, norms and regulations prescribed by it may lead to the withdrawal of approval. The Guru Jambeshwar University, Hissar, to whom the Institute was affiliated also extended the provisional affiliation for the year 1997-98. Thereafter, the petitioner asked the students, who were admitted against payment seats to deposit refundable interest-free security deposit of Rs. 1,00,000/- In March, 1998, the Institute vide letter dated 25.3.1998 (Annexure P.16) informed respondent No. 3 that the students admitted against the payment seats would be required to deposit refundable interest-free security deposit of Rs. 1,00,000/- with the Institute. A similar communication was sent to respondent No. 3 on 29.6.1998 (Annexure P. 17). In the Admission Brochure issued by respondent No. 3 for admission of the students in various government and private Engineering Colleges in 1997-98 session, a mention was made about the deposit of refundable interest-free security of Rs. 1,00,000/- by the candidates admitted against payment seats but this was omitted from the Admission Brochure issued for the session 1998-99. Therefore, the Institute issued advertisement Annexure P.22 dated 16.7.1998 in "Indian Express" informing the candidates about the requirement of depositing refundable interest-free security. On having come to know of this, respondent No. 2 vide letter dated 23.7.1998 informed the Institute that it should act as per the prospectus till the final decision of the Fee Revision Committee. Immediately thereafter, the Standing Committee constituted under Regulation 7 of the 1994 Regulations met on 28.7.1998 and took various decisions including the following :
"1. That the fee structure should be revised as per AICTE guidelines and while fixing the tuition fee only the recurring expenditure as per Gazette No-tification should be taken into account.
That the average recurring expenditure excluding very high and very low figures per student comes to less than Rs. 20,000/- per year and the present fee structure for free and paid seats works out to an average of Rs. 26,000/-. Thus, the fee structure revised last year is sufficient to lake care of the likely increase on account of Fifth Pay Commission. Similar is the situation with regard to student fund, development fund, hostel rent etc. and there is no justification for revising it again at this juncture.
That the practice of asking students to deposit advance fee for 4 years or giving Bank Guarantee and/or asking for interest-free deposit of Rs. 1.0 lakh or any other Security Deposit not prescribed by the Standing Committee is irregular and this practice be discontinued forthwith. The AICTE guidelines provide for collection of advance fee of one year/semester and only fee for one year may be collected at the time of admission/start of session in the subsequent years. The Committee further decided that the deposits collected by the Professional Colleges in the previous years be returned to the students within a period of three months. It was decided that no Professional Colleges will ask for any Bank Guarantee/Security of any kind towards the fee for the remaining years of the course."
The decision taken by the Standing Committee was challenged by the petitioner in C.W.P. No. 12174 of 1998, which was disposed of by a Division Bench on 15.1.1999 in view of the statement made by the Advocate General that the decision taken by the Standing Committee may be deemed to have been withdrawn. The relevant portion of that order is extracted below :
"Faced with this situation, Mr. H.S. Hooda, learned Advocate General, appearing for the respondents, has stated that the impugned decision of the Standing Committee which was taken in the meeting of July 28, 1998 may be deemed to have been withdrawn. He further states that the matter shall be considered afresh by the committee and that the petitioners may put forth their respective claims in writing within three weeks from today. Learned Advocate General also undertakes that the Committee shall fix a date for the gram of an opportunity of hearing to the petitioners before taking a final decision. It has also been stated that the committee shall not ask the petitioners to refund any of the amounts that they have already charged from the students till the final decision is taken.
Counsel for the petitioners state that if the respondents constitute the committee according to law and consider the material including the capital costs of land, building and equipment etc., they will not be able to take the kind of decision that had been taken in July, 1998.
In view of the fact that the impugned order has been withdrawn and that their is no embargo on the right of the petitioner-institutions to charge the interest-free security nor are they being asked to refund the amount already charged, these petitions have been rendered infructuous. These are, accordingly, disposed of. Since we have not expressed any opinion on merits of the controversy, it would be open to the petitioners, if it becomes necessary, to approach this Court again and raise all or any of the grounds as have been urged in these petitions. It is further directed that in the event of the Committee taking a decision adverse to the claim made by the petitioners, they would be given a month''s time to seek their remedy before such a decision is implemented. In the circumstances, there will be no order as to costs."
In view of the observations made by the Court, respondent No. 2 called upon all the private unaided self-financed colleges to make representation to the Standing Committee. The petitioner submitted representations (Annexures P.26 and P.28) to justify its decision to require the payment seat students to deposit refundable interest-free security amounting to Rs. 1,00,000/-. The matter was then considered by the Standing Committee in its meeting held on 23.3.1999 and it was decided to direct the private institutions to refrain from collecting the interest-free security deposit of Rs. 1,00,000/- from the student admitted against the payment seats. On the basis of that decision, notice Annexure P30 dated 24.3.1999 was issued to the petitioner by respondent No.2 requiring it to show cause against the action proposed to be taker, under Rue 6.8(c) of the MHRD Gazette Notification No. F.20-43/ 96-DESK(v) dated 18.3.1997. To the same effect, letter dated 16.3.1999 (Annexure P.29/A) was also sent by the Council to the Commissioner and Sec-retary, Technical Education, Haryana. Thereafter, in pursuance of the demand made by it, respondent No. 2 sent letter dated 7/12.4.1999 (Annexure P.34) to the petitioner incorporating therein the extracts of the minutes of the discussion held by the Standing Committee in its meeting held on 23.3.1999.
The petitioner has challenged the decision taken by the Standing Committee on the ground of non-application of mind, arbitrariness and violation of the principles of nature justice. It has averred that despite the direction given by the High Court on 15.1.1999, the Standing Committee did not give effective opportunity of hearing to its representative and the material produced on its behalf to justify the demand of refundable interest-free security deposit from the payment seat students has been completely over-looked. According to it, the collection of refundable interest-free security deposit is consistent with the law laid down by the Supreme Court in Institute of Human Resources Development and Ors. v. T. Rameth Kumar and Ors. 1995(3) SCT 589 (SC) : J. T. 199(5) SC 181 and it is limited till the infrastructure and other permanent facilities are created at the Institute. The petitioner has further averred that even though the State does hot have enough resources to set up professisional technical institutes, it is imposing unreasonable restrictions on the measures adopted by private unaided self-financed institutes to raise funds for infrdstructural facilities which are going to be used by the students.
In the written statement filed on behalf of respondents No. 1 to 3 reliance has been placed on the 1994 Regulations and the MHRD resolution which was published vide notification dated 18.3.1997 to justify the decision taken by the Standing Committee. Ac- cording to them, the decision taken by the Standing Committee is in time with the guide-lines framed by the Council and the instructions issued by MURD. They have averred that the representations received from various private unaided institutions were duly considered by the Standing Committee before taking final decision on the issue of collection of interest-free security deposit for the payment seat students and the final decision taken by the Standing Committee is consistent with Regulation 7(6) of the 1994 Regulations which prohibits collection of any payment or amount by the professional college. They have further averred that the private technical colleges and institutions are being allowed to charge substantially higher tuition fee etc. and, therefore, they cannot collect funds in the name of security deposit. Respondents No. 1 to 3 have then pleaded that in view of the undertaking given by the Chairman of the petitioner that the Institute would comply with the guide-lines issued by the government, the petitioner cannot charge anything over and above fee sanctioned by the Council and the Standing Committee.
In separate written statement filed on behalf of the Council, it has been averted that the action of the petitioner to collect amount in the form of refundable interest-free security deposit is ultra vires to the provisions of the All-India Council for Technical Education Act, 1987 (for short, ''the 1987 Act'') and the regulations framed thereunder. The Council has laid considerable emphasis on the fact that the private technical education institutions are being allowed to charge fee which is 20 times of the free seats and student fund which is more than seven times of the similar fund charged from the students admitted against free seats and therefore, the petitioner cannot compel the students to deposit security of Rs. 1,00,000/-.
The other Societies/Trusts who have filed have established Engineering Colleges/Institutions in different parts of Haryana after seeking clearance from the State Government and approval from the Council subject to the conditions which are identical to those incorporated in the permission and approval granted to Educate India Society. The particulars of the dates of application, dates of inspection and the dates of approval of these institutions are as under :-
CWI No.
Name of petitioner
Date of application submiting
Date of inspection
Date of granting approval
5352/99
Lala NemiChand Edu. Trust, Panipat
13.10. 97
18.6.98
9.7.98
5401/99
M.R. Ldu. Society Faridabad.
15.1.97
25.6.97
28.7.97
5402/09
Dr. Lala Puran Chand Dharmarth
14.10.97
28.6.98
7.7.98 for 98-99.
5403/99
Anguri Devi Charitable
13.10.97
3.7.98
9.7.98 for 98-99
5709/99
M.M. Edu. Trust.
18.3.94
20.12.94
1994-95
5920/99
Mata Sudarshan Tilak Raj Edu. Trust.
Oct. 97
1.7.98
22.7-98 for 98-99
5943/99
Jind Edu. Trust Jind.
Jan. 98
28.6.98
1998-99
5714/99
Lingya Jan Kalyan Shiksha Sansthan.
Jan. 97
20-6.98
1998-99
The grounds on which they have challenged the decision of the Standing Committee and the Council against the charging of interest-free security are similar to those raised by Educate India Society (Regd.).
C.W.P. No. 2805 of 1999
The petitioners arc the students who have been admitted in the degree course conducted by N.C. College of Engineering, Panipat which is a private unaided technical college. Their grievance is that in utter violation of the 1994 Regulations framed by the Council and the decision taken by the Standing Committee constituted under Regulation 7, the management of the college is insisting on deposit of Rs. 1,00,000/- as refundable interest-free security and those, who are not in a position to furnish undertaking for deposit of the security, are being denied admission. The petitioners have referred to the format of undertaking Annexures P.4 and P.6 to show that they are being compelled to deposit the security in clear violation of the provisions of the 1987 Act and the 1994 Regulations.
In the written statement filed on behalf of respondent No. 4, an objection has been raised to the maintainability of the writ petition on the ground that being a private self-financed unaided college, it cannot be treated as a State or other authority within the meaning of Article 12 of the Constitution of India so as to be amenable to the writ jurisdiction of the High Court. Another objection raised on behalf of respondent No. 4 is that after having secured admission by giving undertakings to deposit the interest-free refundable security of Rs. 1,00,000/-, the petitioners are estopped from challenging such deposit. According to respondent No. 4, there can be no bar against the raising of funds by the private self-financed un-aided professional colleges in the form of refundable interest-free security deposit from the students and in view of the decision of the Supreme Court in the case of T. Ramesh Kumar (supra), the official respondents cannot interfere in this matter. In para 4(e) of the written statement, respondent No. 4 has averred that before getting necessary permission, affiliation and sanction from the Government of Haryana, the Council, the Regional Engineering College and the affiliating University for starting the college, it had to spend huge sum of money for providing basic infrastructure including purchase of land, construction of building, provision for laboratories, workshops etc. and thereafter it has to incur recurring expenditure and, therefore, it is entitled to ask the students to deposit security amount.
In other three writ petitions filed by the students, the action of the management of the colleges/institutions to demand/charge interest-free security has been challenged on the grounds similar to those in C.W.P. No. 2805 of 1999.
Contentions :
Shri Raju Ramchandran, Senior Counsel appearing for petitioner-Educate India Society Regd. argued that the decision taken by the Standing Committee is vitiated due to non-application of mind and its failure to consider the material produced by the petitioner to justify the collection of refundable interest-free security deposit. Learned counsel submitted that in view of the observations made by the Court in its order dated 15.1.1999, the Standing Committee was duty-bound to independently examine the entire issue relating to fee including the charge of interest-free security deposit by the private un-aided self-financed institutions but the Committee failed to do so and has surrendered its discretion to the dictates of the Council. He relied on the observations made by the Supreme Court in the cases of T. Ramesh Kumar (supra) and T.M.A. Pai Foundation and others Vs. State of Karnataka and others, and argued that the institutions set up by the registered Societies and Trusts are legally entitled to charge interest-free security deposit from the students seeking admission against 50% payment seats and the decision of the Constitution Bench of the Supreme Court in Unni Krishnan, J.P. and others Vs. State of Andhra Pradesh and others etc. etc., cannot be read as prohibiting the taking of such deposits. Learned counsel submitted that the economic compulsions of establishing and running private unaided technical institutions which include non-recurring and recurring expenditure afford ample justification for grant of permission to the unaided self-financed institutions to raise funds in the form of interest-free security deposit and the 1994 Regulations framed by the Council cannot be interpreted as prohibiting the collection of such deposit for a limited period. He then argued that such deposits should be treated as infrastructural costs/development fee which falls within the ambit of guidelines contained in MHRD Resolution dated 18.3.1997. Shri Ramchandaran invited our attention to the representations submitted by the petitioner and paras 6.1, 6.2, 6.4 and 6.6. of MHRD Resolution and strenuously argued that non-consideration of the points raised by the petitioner in the context of guidelines should be treated as sufficient to vitiate the decision taken by the Standing Committee.
Shri M.L. Sarin, Senior Advocate appearing for Lala Nemi Chand Educational Trust, Panipat adopted the arguments of Shri Ramchandran and further argued that in view of the decision of the Supreme Court in T. Ramesh Kumar case (supra), the action of the management of the privately managed self-financed institutions to take security deposits Cannot be termed as illegal. He also reiterated the preliminary objection that the writ petition is not maintainable against the Trust because it is not an agency or instrumentality of the State. Shri Sarin further argued that after having voluntarily accepted the condition imposed by the management of the private technical colleges regarding deposit of refundable interest-free security and having given undertaking to do so, the students are estopped from challenging the decision of the management. Shri Sarin also stated that his client had even agreed to pay interest to the students at the time of release of the security deposit.
Shri Rajesh Bindal, counsel for the petitioners in C.W.P. Nos. 19386 of 1998, 5352, 5401, 5402, 5403, 5714 and 5943 of 1999 argued that the decision of the Standing Committee should be declared as vitiated due to violation of the principles of natural justice because notice was given to the petitioners for appearing before the Committee on 16.3.1999 bill the matter was actually considered on 23.3.1999 and no notice about that date had been given to the institutions. He then pointed out that the very constitution of the Standing Committee was defective, inasmuch as the experts enumerated in para 6.4(b)(iii) of the MHRD RESOLUtion were not members of the said Committee and argued that the decision taken by such Committee does not have any legal sanction.
Shri J.S. Sidhu, counsel appearing for respon-dents No. 4 and 6 in C.W.P. No. 1987 of 1999 adopted the arguments of Shri Raju Ramchandran and Shri M.L. Sarin and submitted that the demand of interest-free security should be upheld in view of the observations made in Unni Krishnan''s case (supra) and T. Ramesh Kumar''s case (supra).
Shri Jaswant Singh, Deputy Advocate General, Haryana referred to the provisions of the 1987 Act and the 1994 Regulations, the conditions enshrined in the "letters vide which the State Government granted permission and the Council granted approval for setting up of the private technical institutions, the undertaking furnished by the President of Educate India Society Regd., MHRD resolution dated 18.3.1997 and argued that in view of the statutory prohibition contained in Regulation 7(6), the private technical institutions and colleges managed by the Societies and Trusts cannot collect refundable interest-free security deposit from the students. He submitted that the availability of adequate funds to meet recurring and non-recurring expenditures constituted a condition precedent to the grant of approval and after having represented to the State Government and the Council that they have sufficient funds for these purposes, the Societies and Trusts cannot wriggle out of the conditions imposed by the State Government and the Council. He submitted that in view of Section 20(1) of the 1987 Act, directions given by the Central Government arc binding on the Council and, therefore, the Standing Committee had, while deciding the issue of fee, rightly taken into consideration the guide-lines contained in the MHRD resolution. Shri Jaswant Singh laid emphasis on the fact that in terms of para 6.6(d) and (e) of the MHRD resolution, the development fee is required to be determined by the Council and not by the private institutions and submitted that in view of the decision taken by the Council to fix development fee of Rs. 8,000/-payable by the students seeking admission against payment seats, the management of the private institutions cannot charge anything over and above the said amount in the name of refundable interest-free security. In order to substantiate this argument, the learned Deputy Advocate General produced photostat copies of letter No. F.No.N W/FEE-Com/97 dated 24.6.1998 and letter No. F.No.NW/Fee- Com/97 dated 30.11.1999 sent by the Secretary and Adviser of the Council respectively to the Commissioner and Secretary, Technical Education, Haryana.
Shri I.D. Singla, counsel for the Council argued that the prayer made by the Societies and Trusts for being allowed to collect refundable interest-free security deposit should be rejected because it is contrary to the conditions of approval. Learned counsel argued that they cannot take advantage of the approval and at the same time, seek indirect invalidation of the conditions subject to which such approval was granted. He referred to the memo dated 1.10.1997 (Annexure R.4 in C.W.P. No. 5257 of 1999) and the letters dated 24.6.1998 and 30.11.1999 sent by the Council to the Government of Haryana to show that the private professional colleges have already been allowed to charge very high tuition fee and development fund from the student seeking admission against the payment seats in comparison to those admitted against the free seats and argued that the Societies and Trusts cannot collect funds in the name of interest-free security deposit and thereby commercialize the education. To illustrate this, Shri Singla pointed out that Educate India Society Regd. would be able to collect Rs. 3.2 crores by requiring 50% of the 160 students seeking admission each year 10 deposit Rs. 1,00,000/- as interest-free security and after returning Rs. 80,00,000/- in the 5th year to one batch of the students leaving the college and again collecting the same amount from the fresh students, the Society will have a permanent fund of Rs. 2.4 crores. Shri Singla also defended the direction given by the Council and the State Government for refund of the amount deposited by the students by arguing that the Societies and Trusts and the institutions established by them cannot be allowed to retain the money in violation of the provisions of the 1987 Act and the 1994 Regulations and the students are not estopped from claiming such refund. He relied on the decision of the Supreme Court in Collector of Central Excise v. New Tobecco Co. AIR 1998 SC 669 and argued that there cannot be any estoppel against a statute,
Shri Rajiv Atma Ram, counsel appearing for the petitioners in C.W.P. No. 2805 of 1999 argued that the 1994 Regulations framed by the Council in the light of the observations made by the Supreme Court in Unni Krishnan''s case (supra) are binding on the private colleges and the institutions and after having secured approval subject to the condition of abiding by the said Regulations and having given undertaking not to charge any fee other than those prescribed under the 1994 Regulations, the Societies and Trusts cannot be allowed to collect funds in the name of refundable interest-free security deposit. Learned counsel submitted that even if the determination made by the Standing Committee is treated as vitiated by some or other legal infirmity, in view of the express bar contained in Regulation 7(6) of the 1994 Regulations, the Societies and Trusts and the institutions/colleges established by them cannot be allowed to collect any amount in the name of interest-free security deposit. Learned counsel referred to note (vi) of the Admission Brochure issued by the Regional Engineering College. Kurukshetra for admission to the Engineering and Architectural Courses for the year 1998-99 and argued that in view of the specific embargo imposed against the receipt of any other fee or amount in addition to the fee fixed by the Standing Committee, the undertaking taken from the students cannot be treated as binding and they cannot be non- suited by invoking the doctrine of promissory estoppl or waiver.
S/Shri Jaswant Singh, I.D. Singla and Rajiv Atma Ram distinguished the judgment of T. Rameshkumar''s case (supra) by pointing out that the only issue considered in that case was whether the decision of the Constitution Bench in Unni Krishnan''s case (supra) can operate as bar against the charging of interest-free security and the case was decided by the Supreme Court without any reference to the scheme of the 1987 Act and the 1994 Regulations. Learned counsel further pointed out that their Lordships of the Supreme Court did not consider the bar contained in Regulations 7(6) because the matter, out of which the appeal arose, related to a period prior to the coming into force of the 1994 Regulations and the MHRD resolution dated 18.3.1997 and submitted that the said decision cannot be read as laying down a proposition that not-withstanding the statutory bar contained in the 1987 Act and the 1994 Regulations, the private professional colleges can levy fee or collect funds from the students. They also relied on the judgment of a Division Bench of this Court in C.W.P. No. 14249 of 1998 - Malvika Mahajan v. State of Punjab and Ors. decided on 26.4.1999 and argued that in view of that decision, collection of funds by the private professional colleges/institutions in the name Of refundable interest-free security deposit should be declared illegal.
Shri Amar Vivek, counsel for the petitioners in C.W.P. No. 1987 and 2957 of 1999 referred to the averments made in the two petitions to show that the students had not given undertaking voluntarily on the issue of deposit of interest-free security, but they had done so under the threat of cancellation of their admissions and argued that the undertaking furnished under a coercion should not be treated as binding on them and a direction for refund of the amount deposited by them may be issued.
We have thoughtfully considered the respective arguments/submissions. Before dealing with the same, we deem it appropriate to notice the relevant provisions of the 1987 Act and the 1994 Regulations and the decisions taken by the competent authorities and also analyse the same in order to determine whether the Societies and Trusts and/or the colleges/institutions established by them can collect refundable interest-free security deposit from the students admitted against the payment seats. The 1987 Act was enacted by the Parliament to make provision for the establishment of a Council for achieving the object of proper planning and coordinated development of the technical education system throughout the country, the promotion of qualitative improvements of such education in relation to planned quantitative growth and the regulation and proper maintenance of norms and standards in the technical education system and for matters connected therewith. Section 2 of the 1987 Act contains various definitions. Section 3 provides for establishment of Council by the Central Government. Section 10 specifies the functions of the Council. Section 11 contains provision for inspection of technical institutions or a University. Section 20 lays down that while discharging its functions and duties under the 1987 Act, the Council shall be bound by the directions given by the Central Government on questions of policies. Section 22 empowers the Central Government to make rules to carry out the purposes of the 1987 Act. Likewise, Section 23 empowers the Council to frame regulations to carry out the purposes of the said Act. Clauses (j), (k) and (o) of Section 10, Sections 20 and 23(1) of the 1987 Act and Regulations 2, 3(d), (e), (f), (g), 4(4), 7(4), (2), (4) (5), (6) of the 1994 Regulations together with annexure, referred to in Regulation 7(5), which have bearing on the decision of these petitions read as under :
"Clauses (j), (k) and (o) of Section 10
Functions of the Council. - It shall be the duty of the Council to take all such steps as it may think fit for ensuring coordinated and integrated development of technical education and maintenance of standards and for the purposes of performing its functions under this Act, the Council may -
xx xx xx (j) fix norms and guidelines for charging tuition and other fees;
(k) grant approval for starting new technical institutions and for introduction of new courses or programmes in consultation with the agencies concerned.
xx xx xx (o) provide guidelines for admission of students to technical institutions and Universities imparting technical education :
Sections 20 and 23(1) of the 1987 Act
Directions by the Central Government. - (1) The Council shall, in the discharge of its functions and duties under this Act, be bound by such directions on questions of policy as the Central Government may give in writing to it from time to time.
Power to make regulations. - (1) The Council may, by notification in the Official Gazette, make regulations not inconsistent with the provisions of this Act, and the Rules generally to carry out the purposes of this Act.
Regulations 2, 3(d), (e), (f), (g), 4(4), 7(1), (2), (4), (5), (6) of the 1994 Regulations together with the Annexure
Application - These regulations shall apply to a professional college imparting diploma, degree or equivalent courses of engineering, technology, architecture, town planning, management, pharmacy, electronics, computer science, applied arts and crafts and such other programmes or areas as the Central Government may in consultation with the Council, by notification in the Official Gazette, declare; but shall not apply to Universities, University departments or colleges, government colleges, aided colleges or Institutes of Technology, Indian Institutes of Management, Regional Engineering Colleges and such technical institutes which are fully funded by the Central Government, a State Government, the Council, or as the case may be, the University Grants Commission and any full or part-time post graduate courses or programmes in any discipline other than management.
Definitions - In these regulations, unless the context otherwise requires,
xx xx xx (d) "fees" in relation to free seats and payment seats, means all the institutional fees and includes tuition fee;
(e) "free seats" means the seats on which the fees payable is same as prescribed for the Government Institution in the concerned State;.
(f) "payment seats" means the seats on which the fees payable shall be substantially higher than for fee seats;
(g) "professional college" means any private unaided college imparting technical education and includes a private unaided technical institution.
xx xx xx 4(4) No professional college shall be established or a new technical education course or programme started without the approval of the Council.-
xx xx xx 7. Fee:- (1) Tuition and other fees for a professional college shall be determined by a State level Committee,
(2) The Council shall constitute a standing Committee for each State to fix ceiling on the fees chargeable for individual courses by a professional college or class of professional colleges, as the case may be, the Standing Committee shall consist of the following members namely :-
(i) Vice-Chancellor of a University in a State, to be nominated by the State Government;
(ii) Secretaries, Department of Technical Education and Department of Finance of the respective State, ex-officio;
(iii) two economists or experts in costs accountancy with background of Institutional financing, to be nominated by the Council;
(iv) Member-Secretary not below the rank of Joint Secretary or Director of the respective State Government to be nominated by the State Government.
xx xx xx (4) The Committee shall give an opportunity to the professional colleges to place such material, as they think relevant in determining the tuition fee and other fees. The fees shall be fixed once in every three years or at such longer intervals, as the Committee may think appropriate.
(5) The fees chargeable in professional colleges shall be determined on the basis of estimation of expenditure of the professional college for its efficient functioning. The Committee shall take the items specified in the Annexure to these regulations, into account while determining the tuition fee and other fees to be charged by a professional college. The Committee may in its discretion take into consideration a reasonable return on Capital investment with reference to the investment made and determine the fees accordingly. While calculating the fees, the estimates of recurring expenditure shall be based on at least the last two years audited figures of recurring expenditure of the college and projected requirement for next three years.
(6) No professional college shall be entitled to received from the student any other payment or amount, under whatever name it may be called, in addition to the fee fixed by the Committee for a free seat or payment seat.
xx xx xx
ANNEXURE
Items to be taken into account for determining (sic) tuition fee and other fees to be charged by (sic) professional college.
Salaries including dearness allowance and other allowances and benefits of members of staff of teaching, workshops and laboratories, computer centre, library, maintenance of equipment, buildings and facilities, administration, dispensary etc.
Payment to the visiting teaching faculty.
Training cost to include expenditure on such items as raw materials and consumables for workshops and laboratories, expenditure on field trips, educational tours and industrial visits, expenditure on hand-outs to the students for instructional purpose and guest lecture.
Contingent expenditure including cost of office stationery, postage, telegrams, telephone, advertisements, electricity and water, health care, sports and cultural activities, expenditure on vehicles, daily wage labourers, meeting of the Managing and other Committees.
Expenditure on maintenance of buildings, campus, equipments, furniture and vehicles.
Library expenditure for acquisition of books, audio video and print material and subscription to journals.
Replacement, modernisation and addition of instruments and equipments, cars and buses, etc."
Paragraphs 6.1, 6.2(a) and (b), 6.4(a), (b) and (c), 6.5(c) and (f), 6.6(a), (b), (d), (e), (f), and 8 of the MHRD resolution dated 18.3.1997 which contains policy on fee fixation in private unaided educational institutions, which too arc relevant for deciding the issues raised in these petitions read as under :
"6.1 General Principles :
The Policy guide-lines enunciated below seek to en-sure a fair fee structure in the relevant institutions. A fee structure in order to be fair, has to be fair to all concerned, namely, the students and their guardians, the management, faculty members and employees. The bedrock of such a policy has to be avoidance of commercialization and profit-making while simultaneously ensuring maintenance of standards and upkeep of facilities and assets. Keeping these as prime considerations, the following may be identified as the broad general principles which inform the present policy framework.
(i) Prevention of profit making and ensuring, as far as possible, the principle of no profit-no loss which underlines the scheme in Unnikrishanan;
(ii) Without diluting the fundamental concern of avoiding commercialization, to make allowance in the fee so as to provide for replacement and up-gradation of facilities;
(iii) Providing for a transport and intelligible procedure for fee determination;
(iv) Bringing all private unaided institutions within the purview of the scheme not merely confining it to Colleges and;
(v) Involving the State Governments concerned in the process of fee determination.
6.2 Applicability :
These policy guidelines will apply to the following :
(a) Self-financing institutions imparting technical education as defined under the All India Council of Technical Education Act, 1987 (Act 52 of 1987), including institutions imparting Post-Graduate Education in management whether by awarding degrees or otherwise :
(b) Colleges affiliated to the Universities, operating on no grant- in-aid basis; and
xx xx xx 6.4 Determination of Fee: (a) Fee chargeable by various categories of institutions shall be determined by the Committees prescribed below :
(b) Fee in institution imparting technical education will be determined by the State Level Committees consisting of the following
(i) Vice-Chancellor of one of the universities in the State to be nominated by the State Government concerned - Chairperson.;
(ii) Secretaries in-charge of the Technical Education and Finance Departments of the State Government concerned or their nominees - Members;
(iii) Three experts, one each in Economics, Cost Accountancy, and Institutional Finance, to be nominated by the All India Council of Technical Education - Members;
(iv) Director, Technical Education of the State concerned - Member Secretary.
(c) Fee chargeable in affiliated colleges operating on ''No-Grant-in-aid'' basis shall be determined by the State Level Committee consisting of :
(i) Vice-Chancellor of one of the universities in the State nominated by the State Government concerned-Chairperson;
(ii) Secretaries in-charge of the Higher Education and Finance Departments or their nominees - Members;
(iii) Three experts one each in Institutional Finance, Cost Accountancy and Economics to be nominated by the University Grant Commission -. Members.
(iv) Finance Officers of one of the universities to be nominated by the State Government - Member; and
(v) Director in charge of Higher or Collegiate Education of the State concerned - Member Secretary.
xx xx xx 6.5 Procedure to be Adopted by the Committee :
xx xx xx (c) Each Committee will be free to devise its own procedure. The procedure will, however, compulsorily include giving opportunity to the institutions concerned to furnish such material as they consider relevant. The committee will also have power to call for such information and details as it considers relevant. To carry out its functions smoothly, the bodies would lay down time-bound ''action-calendars'' and ''dead-lines'' for compliance of the institutions concerned and for completing the Committees'' own tasks.
xx xx xx (f) While determining the fee chargeable, il will be the duty of the Committee to ensure that fee does not become a source of profit or commercialization for the institutions concerned This approach would be in conformity with the pronouncements of the Court in cases dealing with fee determination.
6.6 Fee Determination : (a) Fee will have two broad categories - Tuition Fee and Development Fee.
Besides, the management of the institutions may realise the actual cost of boarding and messing from the above students subject to the relevant Committee being satisfied about the reasonableness of such costs.
(b) Tuition Fee will seek to recover the actual cost of imparting education. While assessing a fair tuition fee the Committee will take into account the following :
(i) Salary and allowances including bonus, if admissible, to teaching and non-teaching employees;
(ii) Expenditure on administrative services;
(iii) Cost of maintenance of laboratories including consumables;
(iv) Contingent expenditure including statutory requirements like audit fee etc.;
(v) Cost of acquisition of books and journals for libraries; and
(vi) Maintenance of buildings and other assets including rent and tariffs.
xx xx xx (d) As the scheme in Unnikrishnan prohibits commercialization and profit- making, it will not be open to the institutions concerned to claim any return on investments. This should, however, not come in the way of the institutions on mobilizing resources for replacement and upgradation. Further, while earning return on investment would not be permissible the Court had, in the Unnikrishanan judgment left the question of recovering statement (investment ?) on the Central Government and the statutory bodies it is, therefore, considered desirable that the Development Fee could provide for an element of partial capital cost recovery to the Management but not a return on investment and to serve as a resource for upkeep and replacement.
(e) Development Fee may be at flat rates to be determined every three years by the AICTE and UGC, as the case may be. Different rate may be prescribed for Payment, Free/Merit and Foreign/NRI seat holders. These bodies could also classify institutions in different categories for the purpose of prescribing different slabs provided such categorization is based on intelligible and objective criteria,
(f) In the first ten years, it would be open to the managements to appropriate upto half of the proceeds of the development fee or the actual capital cost, whichever be lower. The remaining half will have to be utilised for upgradation and replacements in the first ten years and thereafter the entire proceeds will have to be so utilised.
xx xx xx 8. Resolved further that for the above purposes this resolution be deemed to be instructions issued by the Central Government to the University Grants Commission under Sub-section (1) of section 20 of the UGC Act, 1956 and under Sub-section (1) of Section 20 of the AICTE Act, 1987.
At this stage, we may also reproduce the extracts of the memo dated 1.10.1997, letters dated 24.6.1998 and 30.11.1999 sent by the Council to the Commissioner and Secretary, Technical Education Department, Haryana on the issue of charging the development fee and the minutes of the meeting of the Standing committee held on 23.3.999:
"Extracts of the memo dated 1.10.1997
xx xx xx 2. In pursuance of orders dated 9.8.96 passed by the Hon''ble Supreme Court of India, a committee under the Chairmanship of Commissioner Technical Education was constituted for the fixation of the ceiling on the fees chargeable by professional colleges or class of professional colleges. As per recommendations of the Committee Government have approved your proposal for the fixation of ceiling on the fees chargeable by private professional colleges (except Central College Yamunanagar) for the session 1997-1998 as under :
"Sr No.
Description
Existing scale of fee
Revised scale of fee Session 1997
Remarks recommend ed by the Committee
1
2
3
4
5
(A) UNDER GRADUATE COURSE OF STUDY IN ENGG.DISCIPLINE
Tuition Fee (Annual)
Free seats
1500/-
2000/-
Payment Seals
30,000/-
40,000/-
NRl Seats
5000 U.S. dollars
5000 U.S. dollars
Student Fund (Annual)
Free Seals
600/-
800/-
Payment Seats Development Fund
5000/-
6000/-
(Annual)
Free Seats
600/-
Payment Seats
600/-
Caution Money
1000/-
1200/-
XX
XX
XX
Extracts of the letter dated 24.6.1998
To The Commissioner & Secretary Technical Education Government of Haryana Secretariat Chandigarh- 160001.
Sub: Policy of fee fixation in Private/unaided technical institutions imparting higher and technical education including management education.
Dear Sir,
As per the Supreme Court Judgment in Unnikrishanan v. State of Andhra Pradesh and subsequent resolution of the MHRD dated 18 March, 1997. The Competent Authority has fixed the Development fee as per Clause 6. (e) [6.6(e) ?] of the enclosed resolution.
The Development Fee for Engineering Colleges may be charged as follows :
Engineering Degree Institutions. Free Seats Rs. 3000/- Payment Seats Rs. 8000/- -------------------------------------------------------------------------------- NRI Seats Rs. 1000/- xx xx xx You are requested to kindly take necessary action in this regard.
Thanking you,
Yours faithfully, Sd/- (J.P. Gupta)
XX XX XX XX XX "
Extracts of the letter dated 30. 11. 1999
Shri M.K. Miglani, Commissioner and Secretary Technical Edu. Govt. of Haryana Secretariat, Chandigarh 160001
Sub : Development Fee for Pharmacy, Management and Architecture and Engineering Institutions recommended by the Council.
Dear Sir,
With regard to the policy of Fee Fixation to the Private Unaided Institutions imparting higher technical education, a Gazette notification was issued dated March 18, 1997. Under Clause 6.6(e) of the above notification Development Fee can be charged at a flat rate by the Institution, to be determined every three years by AICTE.
The Council has finalized the Development Fee for Degree and Diploma Programmes in Pharmacy, Management, Architecture and Engineering as per details given in Annexure-1.
You are requested to take necessary steps to adopt the Development Fee for Pharmacy, Management, Architecture and Engineering so that it can be effectively implemented in all Technical Institutions."
Minutes of the meeting of the Standing Committee held on 23.3. /999.
The Committee took note of the communication dated 16.3.1999 received through fax from AICTE. In this communication, AICTE has asked the State Government to direct private institutions not to charge any amount other than the fee fixed by the Competent Authority and also to refrain from forcing the students not to attend the classes, examination and other activities. AICTE has further requested the State Government to investigate the matter and initiate prompt action against the erring institutions. The Committee also took note of the complaint made by the students of Dronacharya College of Engineering, Gurgaon and N.C. College of Engineering, Panipat.
The Committee further took note of the representation dated 19.3.1999 made by the Educate India Society, a copy of which was circulated to all the Members. The Committee noted of the Supreme Court judgment of 1995 in case of two Self-Financing Institutions of Government of Kerala. The Committee also deliberated on the Hon''ble Punjab and Haryana High Court judgment dated 15.1.1999, wherein this matter had been raised by number of Self-Financing Engineering Colleges of Haryana.
The Committee was informed that the most of the Institutions have not supplied the requisite information relating to recurring expenditure, which they were asked to provide by 19.3.1999, during the personal hearing given to them on 16.3.1999.
After detailed deliberations on me matter, the Committee took the following decisions :-
That the tuition fee matter would be considered after receipt of information from the Colleges about details of expenditure as per Clause 6.6(b) of MHRD Resolution dated 18.3.1997.
That the Committee was of the view that charging of interest-free security deposit from the students is totally illegal and in violation of the conditions and guidelines laid down by AICTE which the private institutions have undertaken to abide by The Gazette Notification dated 26.5.1994 of AICTE as well as subsequent Gazette Notification of MHRD dated 18.3.1997 clearly lays down that no private institution shall be entitled to receive from the students any other payment or amount, under whatever name it may be called in addition to the fee fixed by the Committee. The MHRD Resolution dated 18.3.1997 and the recent communication from AICTE dated 16.3.1999 are subsequent to Supreme Court judgment of 1995 and it is presumed that before laying down the norms, the Central Government had taken into account various Court pronouncements. The State Government is bound by the directions issued by the Central Government and AICTE which is a statutory body and cannot go beyond the directions and draw its own interpretation on the basis of the, decision in the case of Kerala Institutions. The Supreme Court judgment and MHRD/AICTE guidelines have All India applicability and in no other State in the country such an interest-free deposit of Rs. 1.0 lac is being charged. The Committee felt that charging of such an interest-free security deposit is clear violation and complete negation of the Hon''ble Supreme Court Judgment in Unnikrishanan case. The Committee, therefore, decided that the private colleges be directed forthwith not to charge any amount other than the fee fixed by the Competent Authority and also to refrain from forcing the students not to attend Classes, examination and other activities.
The Committee further decided that Show Cause Notice be issued to the private institutions why they should not be asked to refund the amount with interest illegally collected by them from the students during the previous years. They may further be asked to provide details about the funds so collected.
The Committee also decided that the Department may initiate action against the erring institutions as per guidelines laid down in Clause 6.8(c) of MHRD Resolution dated 18.3.1997. The Department may also write to the concerned Universities as well as AICTE to take action against these erring institutions as per provisions of Regulations laid down by AICTE,
The Committee decided that in view of the Hon''ble Punjab and Haryana High Court decision dated 15.1.1999, while communicating the decision of the Committee to the private institutions, they may be allowed one month''s time to seek legal remedy before the decision is implemented."
A conjoint reading of Sections 10(j), (k) and (o) and Sections 20 and 23 of the 1987 Act, Regulations 2, 3 and 7 of the 1994 Regulations and paragraphs of the MHRD resolution reproduced above shows that while the Central Government has issued policy instructions (MHRD resolution dated 18.3.1997) u/s 20(1) of the 1987 Act in the matter of fee fixation in private unaided educational institutions imparting higher and technical education, the Council has framed the 1994 Regulations for determination of tuition and other fee which can be charged by professional technical colleges imparting diploma, degree and other courses. The policy guide-lines framed by MHRD and the 1994 Regulations framed by the Council are applicable to the self-financed institutions. The Standing Committee constituted under paragraph 6.4(b) read with Regulation 7 has the jurisdiction to determine the tuition and other fee after giving opportunity to the institutions to furnish the material which may be available in their possession. It is also required to take into account the various factors enumerated in the Annexure appended to the 1994 Regulations which include salaries, allowances and benefits admissible to the teaching staff, workshops and laboratories, computer centre, library, maintenance of equipment, buildings, contingent expenditure, expenditure on maintenance of buildings, campus equipment, furniture, replacement, modernisation and addition of instruments and equipments. The Committee has the discretion to take into account a reasonable return on capital investment with reference to the investment made. While calculating the fees the estimates of recurring expenditure shall be based on at least the two years audited figures of recurring expenditure and projected requirement for next three years are to be taken into consideration. Regulation 7(6), which is couched in negative form, declares that no professional college shall be entitled to receive from a student any other payment or amount under whatever name it may be called, in addition to the fee fixed by the Committee for a free seat or payment seat. The rate of development fee which can be charged by self-financed institutions is to be determined by the Council every 3 years and for the first 10 years, the managements of such institutions can appropriate up to half of the proceeds of development fee or the actual capital cost, whichever is lower. The remaining half is to be utilised for upgradation and replacements in the first 10 years and thereby (thereafter ?) the entire proceeds are required to be so utilised. This is consistent with paragraph 6.6(d) of the MHRD resolution.
In the light of the above, we shall now deal with the questions as to whether the self-financed private unaided technical institutions can collect interest-free security deposit from the students seeking admission against the payment seats and whether the decision taken by the Standing Committee suffered from any legal infirmity. In this context, it would be appropriate to mention that the Societies and Trusts have not challenged the vires of Regulation 7(6), the policy decision contained in the MHRD resolution and the conditions subject to which they were granted approval by the Council and, therefore, we shall proceed on the premise that the said regulation does not suffer from any legal or constitutional infirmity.
The argument of Shri Raju Ramchandran and Shri M.L. Sarin that the managements of the self-financed private educational institutions can recover the cost incurred by them in providing infrastructure in the form of land, buildings, equipments, laboratories, workshops and libraries, which appears to be founded on the observations made by the Supreme Court in T. Ramesh Kumar''s case (supra) is clearly untenable and deserves to be rejected in view of the express prohibition contained in Regulation 6(7) of the 1994 Regulations and the mere fact that the State Government is not in a position to provide sufficient funds for higher education and the private bodies have come forward to fill in the gap is not sufficient to allow them to collect security deposits from the students as a compensation for the costs incurred on the infrastructural facilities. In any case, the petitioners-Societies/Trusts cannot be absolved of their obligation to abide by the conditions laid down by the government at the time of granting clearance and those laid down by the Council while approving the proposal for setting up of the institutions/colleges i.e. they must not charge any amount other than the fee prescribed under the statute. The use of the expression "any other payment or amount under whatever name it may be called" in Regulation 6 leaves no room for doubt that the institutions managed by the Societies and Trusts cannot charge or collect interest-free security deposits from the students seeking admission against the payment seats. Moreover, as the petitioners- Societies/Trusts had sought permission/approval for starting the institutions/colleges by producing evidence about the availability of funds for infrastructure and also for non-recurring and recurring expenditure, they cannot turn around and put forward the plea of financial stringencies to justify the collection of security deposit.
There are two other reasons for rejecting the argument of Shri Ramchandaran and Shri Sarin. Firstly, the tuition fee etc. payable by the students admitted against the payment seats are much higher than those payable by the students who are admitted against the free seats. The students of first category have to pay Rs. 40,000/- as tuition fee per annum, Rs. 6000/- per annum towards students fund and Rs. 9000/- per annum as development fee as against Rs. 2000/-, Rs. 800/- and Rs. 3000/- payable by the students of second category towards tuition fee, student fund and development fee. The students admitted against the N.R.I. seats have to pay far more than the students admitted against the payment seats. This shows that the fee structure approved by the Standing Committee generates sufficient funds for meeting recurring expenditure as well as development expenses. Thus, there is no factual justification for demanding the interest-fee security deposit from the students admitted in the first category. Secondly, by virtue of para 6.6(c) of MHRD Resolution, the power to fix the rate of development fee vests in the Council and not the management of the private institutions. Therefore, the management of the Societies/Trusts cannot be allowed to collect funds in the name of security deposits.
At this stage, we may refer to some judicial precedents about the nature, ambit and scope of the provisions of the 1987 Act and the 1994 Regulations. The source of power to legislate the 1987 Act can be traced in the provisions of Articles 245 and 246 read with Entry 66 of List I (Union List) of the Constitution of India which empower the Parliament to enact law for coordination and determination of standard in institutions for higher education or research and scientific and technical institutions. Scope of Entry 66 of List I and Entry 25 of List III (Concurrent List) has been interpreted in Osmania University Teachers'' Association Vs. State of Andhra Pradesh and Another, ; State of T.N. and Another Vs. Adhiyaman Educational and Research Institute and Others, and Medical Council of India v. State of Karnataka and Ors. 1998(3) SCT 394 (SC) : JT 1998(4) SC 40 and it has been held that the Parliament has the exclusive power to legislate in the matters relating to coordination and determination of standard of higher education.
In Adhiniyam Educational and Research institute and others. (supra), their Lordships of the Supreme Court held that the power to grant permission to start a technical institution vests in the Council and the State Government has no role to play in the matter. Likewise, in the case of Medical Council of India (supra), the Supreme Court has held that the State Legislature does not have the power to enact law for grant of permission to the Medical College and for increasing and decreasing the seats in violation of the provisions of the Indian Medical Council Act, 1956 and the regulations framed thereunder. In C.W.P. No. 11990 of 1997 -Anju Garg and Ors. v. State of ''Punjab and Ors., decided on 10.2.1998 along with four connected petitions, a Division of this Court held that the norms prescribed under the 1994 Regulations framed by the Council u/s 23 of the 1987 Act in the matter of admission of students etc. are binding on the State Government and the Universities established under the State Act and the government and private colleges cannot violate such norms.
In C. W.P. No. 14249 of 1998 - Malvika Mahajan v. State of Punjab and Ors. decided on 26.4.1999, 1989 a Division Bench of this Court considered the issue as to whether the private Dental Institutions are hound to charge fee as per the norms fixed under the regulations framed by the Dental Council or they can charge higher fee. The Division Bench considered the decisions of the Supreme Court in Unnikrishnan''s case (supra) and T. Ramesh Kumar''s case (supra) and then held as under :-
"As a sequel to our conclusion that private Dental Colleges/Institutions are not entitled to charge fee higher than that fixed by the Central Government under Clause 8(b) of the 1994 Regulations, we hold that forfeiture/disability provisions contained in Clauses 8C and 8E cannot be enforced against those candidates who could not avail the admissions offered in the first counselling due to their failure to pay the fee etc. demanded by the private colleges. However, the benefit of this shall not be available to such candidate who declined to accept the offer of admission on the basis of first counselling simply because the college/institution was not of his/her choice."
The observations made in para 170(6)(c) of the Constitution Bench decision of the Supreme Court in Unnikrishnan''s case (supra) (as reported in the All India Reporter) and T. Ramesh Kumar''s case (supra) on which reliance has been placed by Shri Ramchandaran and Shri Sarin do not, in any manner, help the case of the Societies/trusts. For the sake of convenience, para 170(6) of the decision of Unnikrishnan''s case is extracted below :-
"170(6)(a) Every Slate Government shall forthwith constitute a Committee to fix the ceiling on the fees chargeable by a professional college or class of professional colleges, as the case may be. 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 shall, 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.
(b) It would be appropriate if the U.G.C. frames regulations u/s 12A(3) of the U.G.C. Act, regulating the fees which the affiliated colleges, operating on no-grant-in-aid basis, are entitled to charge. The Council for Technical Education may also consider the advisability of issuing directions u/s 10 of the A.I.C.T.E. Act regulating the fees that may be charged in private unaided educational institutions imparting technical education. The Indian Medical Council and the Central Government may also consider the advisability of such regulation as a condition for grant of permission to new medical colleges u/s 10A and to impose such condition on existing colleges u/s 10-C.
(c) The several authorities mentioned in sub-paras (a) and (b) shall decide whether a private educational institution is entitled to charge only that fee as is required to run the college or whether the capital costs involved in establishing a college can also be passed to students and if so, in what manner. Keeping in view the need, the interest of general public and of the nation, a policy decision may be taken. It would be more appropriate if the Central Government and these several authorities (U.G.C., I.M.C. and A.I.C.T.E.) coordinate their efforts and evolve a broadly uniform criteria in this behalf Until the Central Government, U.G.C., I.M.C. and A.I.C.T.E. issue orders/regulations in this behalf, the committee referred to in the sub-para (a) of this para shall be operative. In other words, the working and orders of the committee shall be subject to the orders/regulations, issued by Central Government, U.G.C., I.M.C. or A.I.C.T.E., as the case may be.
(d) We must hasten to add that what we have said in this clause is merely a reiteration of the duty -nay; obligation - placed upon the Governments of Andhra Pradesh, Maharashtra, Karnataka and Tamil Nadu by their respective legislatures - to wit. Section 7 of Andhra Act 6 of 1988, Section 5 of Karnataka Act of 1984 and Section 4 of Tamil Nadu Act 57 of 1992. Other States too may have to have similar provisions, carrying statutory force."
A careful reading of the above extracted portion of the decision shows that the State Governments were directed to constitute Committees for fixing the ceiling of fee chargeable by the professional colleges or class of professional colleges. At the same time, the Council was asked to issue directions u/s 10 of the 1987 Act regulating the fee to be charged in the privately managed institutions imparting technical education. In clause (c) of para 170 of the judgment, their Lordships of the Supreme Court observed that a policy decision could be taken on the issue whether capital cost involved in establishing a college can be passed on to the students. The 1994 Regulations were framed by the Council and directions in the form of Resolution dated 18.3.1997 were issued by the Central Government keeping in view the observations made by the Supreme Court and as the regulations framed by the Council and the guide-lines enshrined in the Resolution of the MHRD contain an express prohibition against the charging of any amount in any form other than the fee fixed by the Standing Committee/Council, the petitioners- Societies/Trusts cannot rely upon the observations made by the Supreme Court to justify the actions taken by them in violation of the statutory provisions.
The facts of T. Ramesh Kumar''s case show that two colleges were set up at Chengannur and Kasargod in Kerala by the government controlled Societies i.e. Institute of Human Resources Development for Electronics and Lal Bahadur Sastri Engineering Research and Consultancy Cenlre. The government granted permission for establishing these colleges on the basis of the reports submitted by the Societies. The status of two Societies was clarified by the government which declared that they are autonomous bodies fully owned by the State Government. The colleges fixed fee higher than the fee chargeable by other similar institutions. The Kerala High Court accepted the plea of the respondents that self-financed college cannot charge higher fee. In the appeal, it was argued that the principle laid down in Unni Krishnan''s case (supra) cannot be applied to the self-financed institutions. Their Lordships of the Supreme Court upheld this plea and observed as under :
"Can such a departure from Unni Krishnan (1993 AIR SCW 863) be permitted ? The basic difference between institutions governed by the scheme in Unni Krishnan and the present institutions is that these institutions are controlled by the State and, therefore, their working and utilisa-tion of funds are under the control of the State. The essence of Unni Krishnan on the other hand can be summed up in one sentence : There should be no commercialisation or profit making by private educational institutions. This Court was very concerned about the high fees charged by private technical educational institutions. They earned large profits which were not utilised in providing adequate infrastructure or teaching facilities in these institutions. Most private colleges provided substandard training, making no improvements in their equipment, teaching staff or teaching aids. They simply pocketed large profits made from heavy fees charged to students. It was to stop this exploitation of students that the scheme was framed. In terms, the Unnikrishnan scheme provides that it will not be applied to Government Institutions. It is true that Unni Krishnan did not contemplate self-financing institutions set up by or sponsored by the Government. But looking to the confidence reposed by Unni Krishnan in the Government in fixing proper fees even for private self- financing educational institutions, it is clear that the scheme of Unni Krishnn, applies only to purely private educational institutions which are self-financing. It is designed to ensure that they do not make undue profits or exploit students. Unni Krishnan, J.P. and others Vs. State of Andhra Pradesh and others etc. etc., however, is not against self-financing educational institutions. On the contrary, it has recognised the need for self-financing educational institutions to augment the efforts made by the State in setting up educational institutions in the field of technical education."
The appellants have provided for an interest-free deposit of rupees one lakh from each student (with exceptions set out earlier) to meet the costs of in-frastructural and other permanent facilities. This kind of a deposit cannot be accepted as a permanent feature of the scheme. One can understand the need for such a deposit in the initial stages when proper infrastructure has to be set up and equipment purchased for technical colleges. The initial capital costs have to be met. But to accept that the students taking education in these institutions should bear forever the burden of the entire cost of long- term capital expenditure would not be fair. It is, therefore, necessary and desirable that other funding should be sought in the form of grants, loans or volountary donations from foundations or organisations that may benefit from the trained personnel produced by these colleges in order to finance the capital outlays in these institutions. Until, however, such finances become available, there may not be any option but to take a deposit from the students as proposed. We direct, however, that the funds which become available as a result of these deposits should be specifically earmarked for ascertained requirements and projects and should be utilised only against those. The quantum of deposit shall be reviewed by the State every year looking to the requirements of the two colleges and it shall be refixed every year, though on no account shall it exceed the proposed amount of rupees one lakh. The State shall also frame a scheme to eliminate the taking of such a deposit over a period of time."
In our opinion, the ratio of the decision of T. Ramesh Kumar (supra) cannot be invoked by the Societies/Trusts to justify collection of funds in the name of interest-free security by the self-financed institutions because the same is violative of Regulation 7(6) of the 1994 Regulations and the policy instructions contained in the MHRD resolution dated 18.3.199, At the cost of repetition, we consider it necessary to observe that in T. Ramesh Kumar''s case (supra), their Lordships of the Supreme Court did not consider the scheme of the 1987 Act and the 1994 Regulations and the contents of the MHRD resolution and, therefore, the observations made in that decision for upholding the collection of interest-free security cannot be read as laying down a proposition of law that self-financed institutions can violate the statutory bar contained in Regulation 7(6).
The next issue which merits consideration is as to whether the decision taken by the Standing Committee is vitiated due to non-application of mind to the relevant factors. Shri Raju Ramchandran was extremely fair in stating that he is not requesting the Court to exercise appellate jurisdiction over the decision taken by the Standing Committee and submitted that his challenge is only directed against the arbitrary manner in which the Standing Committee has decided to reject the plea of the management for permission to collect interest-free security deposit and has abdicated its quasi-satisfaction to the dictates of the Council.
We have minutely examined the entire record and arc of the opinion that the decision of the Standing Committee cannot be held as vitiated due to non- application of mind. In this context, it is necessary to bear in mind that in terms of Regulation 7(4) of the 1994 Regulations and para 6.5(c) of the MHRD Resolution, the Standing Committee was only required to give an opportunity to the professional colleges to produce material which, in their opinion, was relevant in determining the tuition fee etc. However, there is nothing in the scheme of the 1994 Regulations or MHRD Resolution from which it can be inferred that the Committee was required to give opportunity of personal hearing or to pass an order akin to judicial decision. In the meeting held on 28.7.1998, the Committee had taken note of the fee structure revised in the previous year, the guide-lines framed by the Council, the likely impact of Fifth Pay Commission recommendations, recurring/non-recurring costs per student based on the expenditure figures provided by the institutions and observed that the average recurring expenditure excluding very high and low figures per student comes to less than Rs. 20,000/- per year and average fee payable by the student, i.e., Rs. 26,000/- is sufficient to take care of the impact of the recommendations of the Fifth Pay Commission. In the meeting held on 23.3.1999, the Standing Committee took note of the decisions of the Supreme Court in T. Ramesh Kumar''s case (supra), the order dated 15.1.1999 passed by this Court and the representation dated 19.3.1999 made by the petitioner-Educate India Society Regd. and expressed the view that tuition fee matter would be considered after receipt of information from the Colleges about the details of expenditure as per clause 6.6(d) of the MHRD resolution dated 18.3.1997. However, it negatived the plea of the Society for being allowed to collect interest-free security deposit of Rs. 1,00,000/-. In our opinion, the reasons assigned by the Standing Committee are germane to the determination of tuition fee etc. and, therefore, even though the Standing Committee has not recorded detailed reasons to reject the various points raised by the Societies and Trusts in support of their plea for grant of permission to collect interest-free security deposit, its decision cannot be held as vitiated by any error of law or due to non-application of mind or arbitrariness.
We are further of the view that the Standing Committee had no choice but to turn down the request of the Societies and Trusts because as per Regulation 7(6) of the 1994 Regulations, the private self-financed institutions were debarred from charging any fee or collecting any fund in any name whatsoever except the tuition fee, development fee etc. fixed by the Council and the Standing Committee.
We are also of the opinion that in view of the conditions enshrined in the letters of permission/sanction or approval issued by the State Government and the Council, the Societies/Trusts and the self-financed institutions run by them are estopped from charging or collecting refundable interest-free security deposit from the students and as the vires of Regulation 7(6) and the conditions embodied in the letters of sanction have not been challenged, no relief can be given to them.
The objection raised by Shri Sarin to the maintainability of the writ petitions filed by the students deserves to be rejected in view of our conclusion that the private sell-financed institutions cannot collect security deposits from the students admitted against the payment seats. Moreover, as the students have sought enforcement of the mandate of the 1994 Regulations and MHRD Resolution, they cannot be non-suited on the ground that the institutions in which they have been admitted do not fall within the ambit of the expression other authorities used in Article 12 of the Constitution of India.
The argument of Shri M.L. Sarin that the students are estopped from challenging the collection of interest-free security deposit deserves to be rejected because it is a settled proposition of law that there cannot be any estoppel against the statute and in view of the prohibition contained in Regulation 7(6) and the express undertaking given by the managements of the private institutions to abide by the guide-lines laid down by the Council, they cannot compel the students to deposit the interest-free security or deny admission to them on the ground that they have failed to act in accordance with the undertaking furnished in terms of the directions given by the management. In Shri Krishnan Vs. The Kurukshetra University, Kurukshetra, , an argument similar to the one raised by Shri Sarin was considered and rejected in the following words :-
"Any admission made in ignorance of legal rights or under duress cannot bind the maker of (sic) Examination was given permission to appear in that examination on the basis of undertaking that if he would not be able to get requisite permission from his employer to join the law classes he would abide by any order that the University might pass. The candidate was very anxious to appear in Part II Examination and the undertaking was given in terrorem and in complete ignorance of his legal rights. It was held that the undertaking given by him did not put him out of courts if they university cancels him candidature."
In these cases, the undertaking given by the students was clearly contrary to the mandate of Regulation 7(6) of the 1994 Regulations and, therefore, they cannot be estopped from challenging the action taken by the management of the private colleges/institutions.
Shri Bindal''s argument that the decision taken by the Standing Committee should be held as vitiated due to its defective constitution merits summary rejection because no such objection had been raised by the management of the private educational institutions before the Committee.
The plea of violation of the rules of natural justice raised by him also merits rejection because the 1994 Regulations do not envisage grant of opportunity of personal hearing.
The claim of the students for refund of the interest-free security deposit is amply supported by the directions given by the Council and the decision taken by the Standing Committee and we do not see any legal justification to allow the managements of the private colleges and institutions to retain that amount.
For the reasons mentioned above, C.W.P. Nos. 5251, 5352, 5401, 5402, 5403, 5709, 5714, 5920 and 5943 of 1999 are dismissed and C.W.P. Nos. 19386 of 1998, 1987, 2805 and 2957 of 1999 are allowed with the direction that the amount deposited by the students should be refunded to them within 2 months from the date of submission/receipt of certified copy of this order.
Petition dismissed