ISLAMIC ACADEMY OF EDUCATION AND ANOTHER v. STATE OF KARNATAKA AND OTHERS

The Judgment of the Court were delivered by

V. N. KHARE, CJl. For himself and for Variava, Balakrishnan and Pasayat, JJ. On 31st October, 2002 eleven Judge Bench of this Court delivered the D Judgment in the case oft.MA. Pai Foundation and Ors. v. State ofKarnataka · and Ors., [2002] 8 SCC 481. A brief history as to how a eleven Judge Bench of this Court came to decide this case is set out in para 3 of the judgment, which reads as under:

"3. The hearing of these cases has had a chequered history. Writ E Petition No.- 350 of 1993 filed by the Islamic Academy of Education and connected petitions were placed before a Bench of five Judges. As the Bench was prima facie of the opinion that Article 30 did not clothe a minority educational institution with the power to aoopt its own method of selection and the correctness of the decision of this Court in St Stephens College versus University of Delhi was doubted, F it was directed that the questions that arose should be authoritatively answered by a larger Bench. These cases were then placed before a bench of seven Judges. The questions framed were recast and on 6- 2-1997, the Court directed that the matter be placed before a Bench of at least eleven Judges, as it was felt that in view of the Forty- G second Amendment to the Constitution, whereby "education" had . been included in Entry 25 of List III of Seventh Schedule, the question of who would be regarded as a "minority" was required to be considered because the earlier case-law reiated to the pre-amendment era, when education was only in the State List... ... "

H After the Judgment was delivered, on 3 lst October 2002, the Union of India,

ISLAMIC ACADEMY OF EDUCATION. v. STA TE [V.N. KHARE, CJ.) 489 various State Governments and the educational institutions understood the majority judgment in different perspectives. Different statutes/regulations were enacted/framed by different State Governments. These led to litigations in several Courts. Interim orders passed therein have been assailed before this .., Court. When these matters came up before a Bench of this Court, the parties to the writ petitions and special leave petitions attempted to interpret the majority decision in their own way as suited to them and therefore at their request all these matters were placed before a Bench of five Judges. It is under these circumstances that this Bench has be~n constituted so that doubts/anomalies, if any, could be clarified.

Most of the petitioners/applicants before us are unaided professional educational institutions (both minority and non-minority). On behalf of the petitioners/applicants it was submitted that the answers given to the questions, as set out at the end of the majority Judgment, lay down the true ratio of the Judgment. It was submitted that any observation made in the body of the judgment had to be read in the context of the answers given. We are unable to accept this submission. The answers to the questions, in the majority D Judgment in Pai' s case, are merely a brief summation of the ratio laid down in the Judgment. The ratio decidendi of a Judgment has to be found out only on reading the entire Judgment. In fact, the ratio of the judgment is what is set out in the judgment itself. The answer to the question would necessarily have to be read in the context of what is set out in the judgment and not in E isolation. In case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked into. By reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. We, therefore, while giving our clarifications, are deposed to look into other parts cf the Judgment other than those portions which may be relied upon. F

... Very briefly stated the other submissions were as follows:

On behalf of the petitioners/applicants it was also submitted that fixation of percentages of seats that could be filled in the unaided professional colleges both minority and non minority by the management, as done by G various State Governments, was impermissible. It is further submitted that the private unaided professional educational institutions, had been given complete autonomy not only as regards the admission of students but also as regards the determination of their own fee structure. It was submitted that these institutions could fix their own fee structure, which could include a reasonable H

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A revenue surplus for purposes of development of education and expansion of the institution, and that so long as there was no profiteering or charging of capitation fees, there could be no interference by the Government. It was submitted that the right to admit students is an essential facet of the right to administer, and so long as admission to the unaided educational institutions B is on a fair and transparent basis and on the basis of merit, government cannot interfere. It was submitted that these institutions are entitled to fill up all their seats by adopting/evolving a rational and transparent method of admission which ensures that merit is adequately taken care of. It was submitted that in any event the institutions should be given a choice and be allowed to admit students on basis of the ICSC or SSC or other such examination. It C was also suggested that educational institutions of a particular type may be permitted to associate themselves for the purposes of holding a common entrance test in each State. On behalf of minority institutions, it was submitted that they are entitled to fill up all the seats with students of their own community/language. On behalf of non-minority institutions, it was submitted that they also had a fundamental right to establish and administer educational institutions and that the majority Judgment puts them on a par with the minority institutes.

As against this, on behalf of the Union of India, various State Governments and some students, who sought to intervene, it was submitted that the right to set up and administer ari educational institution was not an absolute right, and this right is subject to reasonable restrictions and that this right is subject (even in respect of minority institutions) to national interest. It was submitted that imparting education was a State function but, due to resources crunch, the States were not in a position to establish sufficient number of educational institutions. It was submitted that, because of such resources crunch, the States were permitting private educational institutions to perform State functions. It was submitted that the Union of India, the States, Universities had statutory rights to fix the fees and to regulate admission .4- of students in order to ensure (a) that there was no profiteering; (b) capitation fees were not charged; (c) admission based on principles of merit and (d) to ensure that persons from the backward classes and poorer sections of society also had an opportunity to receive education, particularly, professional education. It was submitted that if these educational institutions were permitted to have their own tests for admission, the students would be put to undue harassment and hardship inasmuch as they would have to pay for application forms in various colleges and appear for tests in various colleges. It was pointed out that even if each institution charged Rs. 500 to Rs. 1000 a student

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would ultimately have to pay a large amount by way of application fees as, in the absence of a common entrance test and admission procedure the students would have to apply to a number of colleges. It is submitted that the students would also have to spend for transport from and to each college and may find it difficult, if not impossible to travel, from one college to another, to appear in all the tests. It was submitted that unless it was ensured that colleges admit students strictly on the basis of merit at a common entrance test, .it would be impossible to ensure that capitation fees were not charged and that there was no profiteering. It was pointed out that some colleges do not even issue admission forms unless and until the student agrees to pay a hefty sum. It was submitted that the majority Judgment clarified that Article 30 had been enacted not for the purposes of giving any special right or privileges to the minority educational institutions, but to ensure that the minorities had equal rights with the majority. It was submitted that minority educational institutions cannot claim any higher or better rights than those enjoyed by the non-minority educational institutions . ... Both sides relied upon various passages from the majority judgment in support of the respective submissions. These passages are reproduced hereinafter.

In view of the rival submissions the following questions arise for consideration: (I) whether the educational institutions are entitled to fix their own fee structure;

(2) whether minority and non minority educational institutions stand on the same footing and have the same rights;

(3) whether private unaided professional colleges are entitled to fill in their seats, to the extent of l 00%, and if not to what extent; and

(4) whether private unaided professional colleges are entitled to admit students by evolving their own method of admission;

Question No. 1. G So far as the first question is concerned, in our view the maJonty judgment is very clear. There can be no fixing of a rigid fee structure by the government. Each institute must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. They must also H

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A be able to generate surplus which must be used for the betterment and growth of that educational institution. In paragraph 56 of the judgment it has been categorically laid down that the decision on the fees to be charged must necessarily be l~ft to the private educational institutions that do not seek and which ar~ not dependent upon any funds from the Government. Each institute will be entitled to have its own fee structure. The fee structure for each institute must be fixed keeping in mind the infrastructure and facilities available, the investments made, sahlries paid to the teachers aod staff, future plans for expansion and/or b~tterment of the institution etc. Of course there can be no profiteering and capitation fees cannot be charged. It thus needs to be emphasized that as per the majority judgment imparting of education is essentially ch~ritable in nature. Thus the surplus/profit that can be generated must be only for the benefit/use of that educational institution-. Profits/ surplus cannot be diverted for any other use or purpose and cannot be used for personal gain or for any other business or enterprise. As, at present, there are statutes/regulations which _govern the fixation cf fees and as this Court has not yet considered the validity of those statutes/regulations, we direct that in order to give effect to the judgment in TMA PA.l's case th!! respective State Governments concerned authority shall set up, in each State, !l committee headed by a retired High Court judge who shall be nominated by the Chief Justice of that State. The other member, who shall be nominated by the Judge, should be a Chartered Accountant of repute. A representative of the Medical E Council of India (in short 'MCI') or the All India ~oun~il for Technical Education (in short 'AICTE'), depending on the type of instituti~n, shall also be a member. The Secretary of the St<cite Government in charge of Medical Education or Technical Education, as the cas~ may be, shall be a member and Secretary of the Committee. The Committee should be free to nominate/co-opt another ind~pendent person of repute, so th_at ·total number ofm~mbers of the F Committee shall not exceed 5. Each education.al lnstit1.:1te must place before this Committee, well in advance of the academic year, its proposed fee structure. Along with the proposed fee structure all relevant documents and books of • accounts must also be produced before the committee for their scrutiny. The Committee shall then decide whether the fees proposed by that insti_tute are justified and are not profiteering or charging capitation fee .. The Committee will -be at liberty to approve th~ fee stru~ture or to propose some other fee which _can be charged by the institute. The fe~ -fix~d -by _the s;ommitt~e shall be binding for a period of thr,ee years, !lt the end of whi~h perio~ the institute would be at liberty to apply for r~vision. Once (ees Ar~ fix~d by the Co_mmittee, the institute cannot charge either .directly or indirectly any other amount over and above the amount fixed as fees. If any other amount is charged, under

ISLAMIC ACADEMY OF EDUCATION. v. STATE [S B. SINHA, J.) 493 any other head or guise e.g. donations the same would amount to charging of capitation fee. The Governments/appropriate authorities should consider framing appropriate regulations, if not already framed, whereunder if it is found that an institution is charging capitation fees or profiteering that ,., institution can be appropriately penalised and also face the prospect of losing its recognition/affiliation. B It must be mentioned that during arguments it was pointed out to us I that some educational institutions are collecting, in advance, the fees for the entire course i.e. for all the years. It was submitted that this was done because the institute was not sure whether the student would leave the institute midstream. It was submitted that if the student left the course in midstream then for the remaining years the seat would lie vacant and the institute would c suffer. In our view an educational institution can only charge prescribed fees for one semester/year. If an institution feels that any particular student may leave in midstream then, at the highest, it may require that student to give a bond/bank guarantee that the balance fees for !he whole course would be received by the institute even ifthe student left in midstream. If any educational institution has collected fees in advance, only the fees of that semester/year can be used by the institution. The balance fees must be kept invested in fixed deposits in a nationalised bank. As and when fees fall due for a semester/ year only the fees falling due for that semester/year can be withdrawn by the institution. The rest must continue to remain deposited till such time that they fall due. At the end of the course the interest earned on these deposits must be paid to the student from whom the fees were collected in advance.

Question No. 2

The next question for consideration is whether minority and non minority educational institutions stand on the same footing and have the same rights under the Judgment. In support of the contention that the minority and non minority educational institutions had the same rights reliance was placed upon paragraphs 138 and 139 of the Judgment. These read as follows:

"138. As we look at it, Article 30(1). is a sort of guarantee or assurance to the linguistic and religious minority institutions of their right to establish and administer educational institutions of their choice. Secularism and equality being two of the basic features of the Constitution, Article 30(1) ensures protection to the linguistic and religious minorities; thereby preserving the secularism of the country. Furthermore, the principles of equality must necessarily apply to the H

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A enjoyment of such rights. No law can be framed that will discriminate against such minorities with regard to the establishment and administration of educational institutions vis-a-vis other educational institutions. Any law or rule or regulation that would put the educational institutions run by the minorities at a disadvantage when compared to the institutions run by the others will have to be struck B down. At the same time, there also cannot ~e any reverse discrimination. It was observed in St. Xaviers College case, at page 192, that "the whole object of conferring the right on minorities under \ Article 30 is to ensure that there will be equality between the majority and the minority. If the minorities do not have such special protection, c they will be denied equality." In other words, the essence of Article 30(1) is to ensure equal treatment between the majority and the minority institutions. No one type or category of institution should be disfavoured or, for that matter receive more favournble treatment than another. Laws of the land, including rules and regulations, must apply equally to the majority institutions as well as to the minority institutions. ,,· D The minority institutions must be allowed to do what the non-minority institutions are permitted to do."

"139 Like any other private unaided institutions, similar unaided educational institutions administered by linguistic or religious minorities are assured maximum autonomy in relation thereto; e.g., method of recruitment of teachers, charging of fees and admission of students. They will have to comply with the condition of recognition, which cannot be such as to whittle down the right under Article 30." Undoubtedly at first blush it does appear that these paragraphs equate both types of educational institutions. However on a careful reading of these paragraphs it is evident that the essence of what has been laid down is that the minority educational institutions have a guarantee or assurance to establish and administer educational institutions of their choice. These paragraphs merely provide that laws, rules and regulations cannot be such that they favour majority institutions over minority institutions. We do not read these paragraphs to mean that non minority educational institutions would have the same rights as those conferred on minority eciucational institutions by Article 30 of the Constitution of India. Non minority educational institutions do not have the protection of Article 30. Thus, in certain matters they cannot and do not stand on similar footing as minority educational institutions. Even though the principle behind Article 30 is to ensure that the minorities are protected and are given an equal treatment yet the special right given under

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Article 30 does give them certain advantages. Just to take a few examples, the A Government may decide to nationalise education. In that case it may be enacted that private educational institutions will not be pennitted. Non minority educational institutions may become bound by such an enactment. However, the right given under Article 30 to minorities cannot be done away with and the minorities will still have a fundamental right to establish and administer educational institutions of their choice. Similarly even though the government may have a right to take over management of a non minority educational institution the management of a minority educational institution cannot be taken over because of the protection given under Article 30. Of COl!rse we must not be understood to mean that even in national interest a minority institute cannot be closed down. Further minority educational institutions have preferential right to admit students of their own community/language. No such rights exist so far as non minority educational institutions are concerned.

Questions Nos. 3 and 4 D Questions 3 and 4 pertain to private unaided professional colleges. _, Thus all observations in answer to questions 3 and 4 are therefore confined to such educational institutions.

In order to answer the third and fourth questions it is necessary to see the manner in which the majority judgment is framed and to consider certain E paragraphs of the judgment. The majority judgment considered various aspects under different heads. The 3rd head is "In case of private institutions, can there be government regulations and, if so, to what extent?". This is further divided into four subheadings viz. "Private unaided non minority educational institutions"; "Private unaided professional colleges"; "Private aided professional institutions (non minority)" and "Other aided institutions". The F paragraph which has been strongly relied upon is paragraph 68 which is under the sub-heading "Private unaided professional colleges". The said paragraph reads as under:

"68. It would be unfair to apply the same rules and regulations G regulating admission to both aided and unaided professional institutions. It must be borne in mind that unaided professional institutions are entitled to autonomy in their administration while, at the same time, they do not forgo or discard the principle of merit. It would, therefore, be pennissible for the university or the government, at the time of granting recognition, to require a private unaided H

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A institution to provide for merit-based selection while, at the same time, giving the Management sufficient discretion in admitting students. This can be done through various methods. For instance, a certain percentage of the seats can be reserved for admission by the Management out of those students who have passed the common entrance test held by itself for by the State/University and have B applied to the college concerned for admission, while the rest of the seats may be filled up on the basis of counseling by the state agency. This will incidentally take care of poorer and backward sections of the society. The prescription of percentage for this purpose has to be done by the government according to the local needs and different c percentages can be fixed for minority unaided and non-minority unaided and professional colleges. The same principles may be applied to other non-professional but unaided educational institutions viz., graduation and post ·graduation non-professional colleges or institutes."

D Reliance was also placed on paragraphs 58 and 59 which read as follows:

"58.For admission into any professional institution, merit must play an important role. While it may be normally possible to judge the merit of the applicant who seeks admission into a school, while seeking admission to a professional institution and to become a competent professional, it is necessary that meritorious candidates are not unfairly treated or put at a disadvantage by preferences shown to less meritorious but more influential applicants. Excellence in professional education would require that greater emphasis be laid on the merit of a student seeking admission. Appropriate regulations for this purpose may be made keeping in view the other observations made in this judgment in the context of admissions to unaided institutions."

"59.Merit is usually determined for admission to professional and higher education colleges, by either the marks that the student obtains at the qualifying examination or school leaving certificate stage followed by the interview, or by a common entrance test conducted by the institution, or in the case of professional colleges, by government agencies."

Based on the above paragraphs it had been submitted, on behalf of the Union H of India, various State Governments and students that the majority Judgment

ISLAMIC ACADEMY OF EDUCATION. 11. STATE [V.N. KHARE, CJ.] 497 makes a clear distinction between professional educational institutions (both minority and non minority) and other educational institutions i.e. schools and undergraduate colleges. The submission was that in professional institutions merit had to play an important role and that excellence in professional education required that for purposes of admission merit is determined by Government agencies. It is submitted that paragraph 68 provides that in unaided professional colleges only a "certain" percentage of seats can be reserved for admission by the management. It is submitted that the said paragraph provides that it is permissible for the University or the Government to require a private unaided professional institute to provide for a merit based selection. It was submitted that paragraph 68, read with paragraph 59, lays down that in unaided professional colleges merit is to be determined by a common entrance test conducted by Government agencies.

Paragraph 68 of the majority judgment in Pai's case can be split into seven parts :-

Firstly, it deals with the unaided minority or non-minority professional colleges. Secondly, it will be unfair to apply the rule and regulations framed by the State Government as regards the government aided professional colleges to the unaided professional colleges.

Thirdly, the unaided professional institutions are entitled to autonomy in their administration; while at the same time they should not forego or discard the principles of merit.

Fourthly, it is permissible for the university or the Government at the time of granting recognition to require an unaided institution to provide for merit based admission while at the same time giving the management sufficient discretion in admitting students.

Fifthly, for unaided non-minority professional colleges certain percentage of seats can be reserved for admission by the management out of those students who have passed the common test held by itself or by the State/ University and for applying to the college/university for admission, while the rest of the seat may be filled up on the basis of counseling by the State agency.

Sixthly, the provisions for poorer and backward sections of the society in unaided professional colleges are also to be provided for. H

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A Seventhly; the prescription for percentage of seats in unaided professional colleges has to be done by the government according to the local needs. A different percentage of seats for admission can be fixed for minority unaided and non-minority unaided professional colleges ....

Undoubtedly the majority judgment makes a distinction between private unaided professional colleges and other educational institutions i.e. schools and undergraduate colleges. The subheading "Private unaided professional colleges" includes both minority as well as non minority professional colleges. This is also clear from a reading of paragraph 68. It appears to us that this distinction has been made (between private unaided professional. colleges and other educational institutions) as the Judgment recognises that it is in national interest to have good and efficient professionals. The Judgment provides that national interest would prevail, even over minority rights. It .is r, for this reason that in professional colleges, both minority and non-minority, \.. merit has been made the criteria for admission. However a proper reading, of paragraph 68, indicates that a further distinction has been made between minority and non minority professional colleges. It is provided that in cases of non minority professional colleges "a certain percentage of seats" can be reserved for admission by the management. The rest have to be filled up on ,... bases of counseling by State agencies. The prescription of percentage has to be done by the Government according to local needs: Keeping this in mind provisions have to be made for the poorer. and backward sections of the society. It must be remembered that, so far as medical colleges are concerned, an essentiality certificate has to be obtained before the college can be set up. It cannot be denied that whilst issuing the essentiality certificate the respective State Governments take into consideration the local needs. These aspects have been highlighted in a recent decision of this Court in State ofMaharashtra F V. Medical Association and Ors., [2002] 1 sec 589. Whilst granting the essentiality certificate the State Government undertakes to take over the obligations of the private educational institution in the event of that institution becoming incapable of setting of the institution or imparting education therein. A reading of paragraphs 59 and 68 shows that in non minority professional G colleges admission of students, other than the percentage given to the management, can only be on the basis of merit as per the common entrance tests conducted by government agencies. The manner in which the percentage given to the. management can be filled in is set out hereinafter.

Paragraph 68 provides that a different percentage can be prescribed for· H unaided minority institutions. That the same yardstick cannot be applied to

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both minority and non minority professional colleges is also clear from the fact that paragraph 68 also falls under main heading "In case of private institutions, can there be government regulations and, if so, to what extent?". Paragraph 47, which is one of the first paragraph under this heading, inter- alia provides as follows:

"It is appropriate to first deal with the case of private unaided institutions and private aided institutions that are not administer by linguistic or religious minorities. Regulations that can be framed relating to minority institutions will be considered while examining the merit an effect of Article 30 of the Constitution."

Whilst discussing Article 30 under heading "To what extent the rights of aided private minority institutions to administer can be regulated" reliance has been placed, in the majority Judgment, on previous judgments in the cases of Re Kera/a Education Bill, AIR (I 958) Supreme Court page 956; Rev Sidhajbhai v. State of Bombay, [l 963] 3 SCR page 837; Rev Father Proost v. State of Bihar, AIR (1969) Supreme Court page 465; State of Kera/av. Very D Rev Mother Provincial, [ l 970] 2 SCC page 417; Ahmedabad St Xaviers College Society v. State of Gujarat, [1974] l SCC page 717. All the~e cases have recognised and upheld the rights of minorities under Article 30. These cases have held that in the guise of regulations, rights under Article 30 cannot be abrogated. It has been held, even in respect of aided minority institutions that they must have full autonomy in administration of that institution. It has been held that the right to administer includes the right to admit students of their own community/language. Thus an unaided minority professional college cannot be in a worse position than an aided minority professional college. It is for this reason that paragraph 68 provides that a different percentage can be fixed for unaided minority professional colleges. The expression "different percentage for minority professional institutions" carries different meaning than the expression "certain percentage for unaided professional colleges." In fixing percentage for unaided minority professional colleges the State must keep in mind, apart ~rom local needs, the interest/need of that community in the State. The need of that community, in the State, would be paramount vis- a-vis the local needs. G It must be clarified that a minority professional college can admit, in their management quota, a student of their own community/language in preference to a student of another community even though that other student is more meritorious. However, whilst selecting/admitting students of their H

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A community/language the inter-se merit of those students cannot be ignored. In other words whilst selecting/admitting students of their own community/ language they cannot ignore the inter-se merit amongst students of their community/language. Admission, even of members of their community/ language, must strictly be on the basis of merit except that in case of their own students it has to be merit inter-se those students only. Further if the seats cannot be filled up from members of their community/language, then the other students can be admitted only on the basis of merit based on a common entrance test conducted by government agencies.

That brings us the question as to how the management of both minority and non minority professional colleges can admit students in the quota allotted to them. Undoubtedly the majority Judgment has kept in mind the sad reality that there are a large number of professional colleges which indulge in profiteering and/or charging of capitation fees. It is for this reason that the majority Judgment provides that in professional colleges admission must be on the basis of mer1t. As has been rightly submitted it is impossible to control profiteering/charging of capitation fees unless it is ensured that admission is on the basis of merit. Also as has been rightly pointed out if a student is required to appear at more than one entrance test it would lead to great hardship. The application fees charged by each institute, even though they may be only Rs. 500 to Rs. 1000 for each institute, would impose a heavy burden on the students who will necessarily have to apply to a number of colleges. Further as has been rightly pointed out, students would have to arrange for transport from and to and stay at various places if they have to appear for individual tests conducted by each College. If a student has to go for test to each institute it is possible that he/she may not be able to reach, in time, the venue of a test of a particular institute. In our view what is necessary is a practical approach keeping in mind the need for a merit based selection. Paragraph 68 provides that admission by the management can be by a common entrance test held by "itself or by State/University". The words "common entrance test" clearly indicate that each institute cannot hold a separate test. We thus hold that the management could select students, of their quota, either on the basis of the common entrance tests conducted by the State or on the basis of a common entrance test to be conducted by an association of all colleges of a particular type in that State e.g. medical, engineering or technical etc. The common entrance test, held by the association, must be for admission to all colleges of that type in the State. The option of choosing, between either of these tests, must be exercised before issuing of prospectus and after intimation to the concerned authority

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and the Committee set up hereinafter. If any professional college chooses not to admit from the common entrance test conducted by the association then that college must necessarily admit from the common entrance test conducted by the State. After holding the common entrance test and declaration of results the merit list will immediately be placed on the notice board of all colleges which have chosen to admit as per this test. A copy of the merit list will also be forthwith sent to the concerned authority and the Committee. Selection of students must then be strictly on basis of merit as per that merit list. Of course, as indicated earlier, minority colleges will be entitled to fill up their quota with their own students on basis of inter-se merit amongst those students. The list of students admitted, along with the rank number obtained by the student, the fees collected and all such particulars and details as may be required by the concerned authority or the Committee must be submitted to them forthwith. The question paper and the answer papers must be preserved for such period as the concerned authority or Committee may indicate. If it is found that any student has been admitted de-hors merit penalty can be imposed on that institute and in appropriate cases recognition/affiliation may also be withdrawn. D At this juncture it is brought to our notice that several institutions, have since long, had their own admission procedure and that even though they have been admitting only students of their own community no finger has ever been raised against them and no complaints have been made regarding E fairness or transparency of the admission procedure adopted by them. These institutions submit that they have special features and that they stand on a different footing from other minority non-aided professional institutions. It is submitted that their cases are not based only on the right flowing from Article 30(1) but in addition they have some special features which requires that they be permitted to admit in the manner they have been doing for all these years. F A reference is made to few such institutions i.e. Christian Medical College, Vellore, St. Johns Hospital, Islamic Academy of Education etc . The claim of these institutions was disputed. However we do not think it necessary to go into those questions. We leave it open to institutions which have been established and who have had their own admission procedure for, at least, the G last 25 years to apply to the Committee set out hereinafter.

Lastly, it must be mentioned that it was urged by learned counsel for the appellant that paragraph 68 of the majority judgment only permits University/State to provide for merit based selection at the time of granting recognition/affiliation. It was also submitted that once recognition/affiliation H

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A is granted to unaided professional colleges, such a stipulation cannot be provided subsequently. We are unable to accept this submission. Such a provision can be made at the time of granting recognition/affiliation as well as subsequently after the grant of such recognition/affiliation:

We now direct that the respective State Government do appoint a B permanent Committee which will ensure that the tests conducted by the association of colleges is fair and transparent. For each State a separate Committee shall be formed. The Committee would be headed by a retired Judge of the High Court. The Judge to be nominated by the Chief Justice of that State. The other member, to be nominated by the Judge, would be a C doctor or an engineer of eminence (depending on whether the institution is medical or engineering/technical). The Secretary of the State in charge of Medical or Technical Education, as the case may be, shall also be a member and act as Secretary of the Committee. The Committee will be free to nominate/ co-opt an independent person of repute in the field of education as well as one of the Vice Chancellors of University in that State so that the total number of persons on the Committee do not exceed five. The Committee shall have powers to oversee the tests to be conducted by the association. This would include the power to call for the proposed question paper/s, to know the names of the paper setters and examiners and to check the method adopted to ensure papers are not leaked. The Committee shall supervise and ensure that the test is conducted in a fair and transparent manner. The Committee shall have power to permit an institution, which has been established and · which has been permitted to adopt its own admission procedure for the last, at lellst, 25 years, to adopt its own admission procedure and ifthe Committee feels that the needs of such an. institute are genuine, to admit, students of their community, in excess of the quota allotted to them by the State F Government. Before exempting any institute or varying in percentage of quota fixed by the State, the State Government must be heard before the Committee. It is clarified that different percentage of quota for students to be admitted by the management in each minority or non-minority unaided professional college/s shall be separately fixed on the basis of their need by the respective G State Governments and in case of any dispute as regards fixation of percentage of quota, it will be open to the management to approach the Committee. It is also clarified that no institute, which has not been established and which has not followed its own admission procedure for the last, at least, 25 years, shall be permitted to apply for or be granted exemption from admitting students in the manner set out hereinabove. H

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Our direction for setting up two sets of Committees in the States has been passed under Article 142 of the Constitution of India which shall remain in force till appropriate legislation.is enacted by the Parliament. The expenses incurred on the setting up of such Committees shall be borne by each State. The infrastructural needs and provision for allowance and remuneration of the Chairman and other members of the Committee shall also be borne by the respective State Government. So far as the year 2003-2004 is concerned, time is running out as the outer time limit for admission is fast approaching or nas gone. To meet the urgent situation without going into the issues involved in the various petitions/ applications, we direct that the seats be filled up by the· institution and the State Governments in the ratio 50:50. However, if by any interim order, this C Court has permitted any institution to fill up a higher percentage of seats and the seats have been filled up accordingly, the same shall not be disturbed. It is made clear that due to the time constraint this arrangement has been made, without deciding the contentious issue involved in various pending • cases. D With these clarifications we now direct that all the matters be placed before the regular benches for disposal on merits. All Interlocutory applications as regard interim matters stand disposed of. E S.B. SINHA, J.

INTRODUCTORY REMARKS :

Imparting of education is a State function. The State, however, having regard to its financial and other constraints is not always in a position to perform its duties. The function of imparting education has been, to a large extent, taken over by the citizens themselves. Some do it as pure charity; some do it for protection of their minority rights whether based on religion or language; and some do it by way of their "occupation". Some such institutions are aided by the State and some are unaided.

Privately managed educational institutions imparting professional education in the fields of medicine, dentistry and engineering have spurted in the last few decades. The right of the minorities to establish an institution of their own choice in terms of clause (I) of Article 30 of the Constitution of India is recognized; so is the right of a citizen who intends. to establish an institution under Article 19(1 )(g) thereof. However, the fundamental right of H

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A a citizen to establish an educational institution and in particular a professional institution is not absolute. These rights are subject to regulations and laws imposing reasonable restrictions. Such reasonable restrictions in public interest can be imposed under clause (6) of Article 19 and regulations under Article 30 of the Constitution of India. The right to establish an educational institution, • although guaranteed under the Constitution, recognition or affiliation is not. B Recognition or affiliation of professional institutions must be in terms of the statute.

Entry 66 of List I and Entry 25 of List III of the Seventh Schedule of the Constitution of India provide for legislative field in this behalf. Various C States have enacted laws for regulating admission and prohibiting charging of capitation fee. The said legislations also provide for employment of teachers, their conditions :of service, discipiine in institution and several other matters. Such regulatory measures have been the subject matter of various decisions of this Court.

D BACKGROUND: ... This Court in Unni Krishnan JP.and Ors. v. State of Andhra Pradesh and Ors., (1993] 1 SCC 645 laid down a Scheme. In terms of the said Scheme the self-financed institutions were entitled to admit 50% of students of their choice, whereas rest of the seats were to be filled in by the State. For E admission of students, a common entrance test was to be held. Provisions for free seats and payment seats were made therein. The State and various statutory authorities including the Medical Council of India, University Grants Commission and All India Council for. Technical Education made and/or amended regulations so as to bring them at par with the said Scheme.

F The Islamic Academy of Education filed a writ petition in the year 1993 questioning the validity thereof. The said writ petition along with connected matters were placed before a Bench of five Judges, which was prima facie of the view that Article 30 of the Constitution of India did not clothe minority educational institutions with the power to adopt its own method of selecting students. G This Court in T.M.A. Pai Foundation and Ors. v. State of Karnataka and Ors., [2002] 8 SCC 489 noticed the same stating :

"The hearing of these cases has had a chequered history. Writ Petition No. 350 of 1993 filed by the Islamic Academy of Education and H connected petitions were placed before a Bench of 5 Judges. As the

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Bench was prima facie of the opinion that Article 30 did not clothe A a minority educational institution with the power to adopt its own method of selection and the correctness of the decision of this Court ... in St. Stephen's College v. University of Delhi, [1992] I SCC 558 was doubted, it was directed that the questions that arose should be authoritatively answered by a larger Bench. These cases were then placed before a Bench of 7 Judges. The questions framed were recast and on 6th February, 1997, the Court directed that the matter be placed a Bench of at least 11 Judges, as it was felt that in view of the Forty- Second Amendment to the Constitution, whereby "education" had been included in Entry 25 of List Ill of the Seventh Schedule, the question of who would be regarded as a "minority" was required to be considered because the earlier. case laws related to the pre- amendment era, when education was only in the State List. When the cases came up for hearing before an eleven Judge Bench, during the course of hearing on 19th March, 1997, the following order was passed:- D "Since a doubt has arisen during the course of our arguments as to whether this Bench would feel itself bound by the ratio propounded in - In Re Kerala Education Bill, 1957 (1959 SCR 955) and the Ahmedabad St. Xavier's College Society v. State o/Gujarat, [1975] 1 SCR 173, it is clarified that this E sized Bench would not feel itself inhibited by the view£ expressed in those cases since the present endeavour is to discern the true scope and interpretation of Article 30( l) of the Constitution, which being the dominant question would require examination in its pristine purity. The factum is recorded." F The eleven Judge Bench answered various questions raised therein.

The petitioners/applicants before us are private unaided institutions. Most of them have been established by a Society, Trust or persons belonging to the minority community based on religion or language. G By reason of the impugned legislations/ Government orders, the State Governments, inter alia, while seeking to lay down the government quota in relation to such unaided institutions, directed that while filling up the same, the self-financed institutions must follow the merit list prepared by the State on the basis ofExtemal Common Entrance Test (CET). The State Governments H

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A also fixed/regulated fees to be charged from the students by such institutions. Validity or otherwise of the said rules/regulations/ Governmental Orders came up for consideration before several High Courts. Different High Courts in their Orders while granting interim reliefs, construed the judgment of this Court in T.MA. Pai Foundation (supra) differently. The perceptions of the B States as also the High Courts in reading the judgment are widely varied. In the aforementioned situation, several applications have been filed in the matters which were disposed of by the I I-Judge Bench of this Court. Some institutions as also the State of Kerala had also filed Special Leave Petitions against the interim orders passed by the High Courts. Some writ petitions under Article 32 of the Constitution of India have also been filed. Keeping in view the importance of the question, this Court issued notices to all the State Governments.

In the Special Leave Petitions and the Writ Petitions several other questions have also been raised but as at present advised this Bench intends to confine itself to the interpretation of judgment of this Court in T.MA. Pai Foundation (supra) leaving other questions open for consideration by the appropriate benches.

In these matters this Court is not at all concerned with the rights of the aided minority and non-minority institutions and restrictions imposed by the E States .upon them but we are concerned only with the rights and obligations of private unaided institutions run by the minorities and non-minorities.

SUBMISSIONS MADE 01'! BEHALF OF WRIT PETITIONERS -APPLICANTS:

It was urged that while interpreting the judgment, this Court should bear in mind the salient aspects of the findings in T.M.A. Pai (supra) that is to say :

ON THE FUNDAMENTAL RIGHTS OF EDUCATION AL INSTITUTIONS:

(i) Citizens have a fundamental right to establish and administer educational instituti.ons under Article 19( 1)(g), 21, 26 and 30 of the Constitution (Paras 2:5 & 26) and, thus, the said rights cannot be taken away/ restricted.

(ii) Such a fundamental right extends to education at all levels including professional education. (Para 161)

ISLAMIC ACADEMY OF EDUCATION. v. STATE [S.B. SINHA, J.J 507

(iii) The right to establish and administer educational institutions comprises of the right to

(a) admit students . (b) set up a reasonable fee structure

(c) constitute a governing body B (d) appoint staff and take disciplinary action (Para 50)

(iv) Although such rights are subject to reasonable restrictions, but the same must be for the betterment of the institution and as such the right under Article 19(1 )(g) and Article 30 cannot be c undermined. (Paras 135-138) (v) Restrictions can be imposed only at the time of grant of recognition or affiliation of the institutions and not thereafter. (vi) The right of the citizens vis-a-vis the ~inority communities must be judged keeping in view the distinction between D (a) unaided and aided institutions

(b) minority and non-minority institutions (Paras 46-73);

II. ON THE DEGREE OF CONTROL E It was contended that although some amount of regulation/ control is permissible but the validity thereof is required to be considered:

(i) In the light of the decision of this Court that the Scheme framed iri Unnikrishnan has been abolished and consequent directions issued on the basis thereof by the UGC, AICTE, MCI, Central and State Governments etc. have been held to be invalid. (Para 45) '· (ii) While exercising the power of control, it is impermissible to nationalize education particularly with regard to the right of minorities to admit members of their own community as also fixing the fee. (Para 38) Minority institutions are not to subsidize the State nor any principle of cross-subsidy can be deciphered therefrom.

(fu) In the case of unaided institutions, maximum autonomy has to be conceded as contradistinguished from the power of the State to H

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A exercise more control over unaided institutions but even in relation thereto, aided institutions should not be treated to be wholly owned or controlled by the State cir their Departments. (Paras 55, 61, 62 & 72) . (iv) Such a right of control over the aided institutions inheres for the B purpose of oversight and restraints so as to

(a) ensure proper utilization of funds (Para 143)

(b) pennit the Government to have some seats to the extent of its reservation policy (Paras 42-44).

c (v) Although the aided institutions are subject to clause (2) of Article 29 and clause (3) of Article 28 of the Constitution, but the unaided minority institutions being not so subject would not be bound by the restraints emanating therefrom so long they exercise their right to admit and select students in a transparent and non- arbitrary manner; . D Ill. ON ADMISSION OF STUDENTS BY UNAIDED INSTITUTIONS

(i) Unaided institutions have an unbridled right on admission of students, comprising of devising a test for selecting students of their choice (Para 36, 40-41, 50). Such a right emanates from the principle that every private and public owner of an institution has the power to admit qualified students of their own choice (Para 42-44). . (ii) As such a right also emanates with a view to maintain the atmosphere and traditions of the private educational institutions, the general principles for unaided institutions would also apply to unaided professional institutions. The right of option either to select their candidates from the Government CET test or its own test is absolute and the ultimate decision in this behalf rests with the institutions whereas aided institutions can be compelled to follow the CET test devised by the Government or the University. G (iii) Whereas such a test and devising a system on the part of the unaided institutions cannot be based on fancy and whims but once "some identifiable or reasonable methodology" usually ori merit is adopted, the right to select qualified students on a fair and' discernable basis cannot be interfered with (Para 65). H

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IV. ON THE NATURE AND EXTENT OF THE GOVERNMENT QUOTA FOR A UNAIDED INSTITUTIONS

(i) It is contended that the Government cannot have a quota in this ..,. regard as the institutions are unaided. Having regard to the fact that if such government quota is allowed, the same would destroy not only the concept of unaided institutions but right to exercise B maximum autonomy especially in the matter of selection of students and fees would be impaired. (ii) Such a right must be construed having regard to the extent of control over the aided institution. (iit) Admission to a small percentage for weaker sections which the c unaided institutions are required to follow by way of implication rules out enforcement of any reservation policy of the State as the same would run counter to the decision of this Court in The Ahmedabad St. Xavier's College Society and Anr. v. State of GujaratandAnr., (1974] l SCC717. D (iv) In any event, the direction to determine a small percentage of persons drawn from the weaker sections of the society should be left with the management, which would include the weaker sections of the minority community for which such institution has been established. E (v) It is for an unaided institution to volunteer to provide scholarship or freeship to the students of weaker sections so long they are meritorious students (Para 37, 53, 61 & 68) (vi) Since weaker sections form a special category, they cannot be selected either on the basis of : F ~· (a) reservation policy of the State .i,. (b) regional affiliation or residence within the State

(c) religion. G (vii) For the said purpose also, the social and educational backwardness of the area or the regions entitling such inclusion on the touchstone of compelling necessities of the State will have to be taken into consideration.

(viii) In any event, reservation for weaker sections cannot be greater H

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A than 50% of the total in any batch after taking into account the reservation for SC, ST and OBC. (ix) The unaided institutions cannot be subject to onerous financial impositions nor can they be asked to perfonn the functions of the State. (Para 61) B (x) In· any event, the quota policy cannot be imposed on unaided institutions to the extent of laying down standards of a reasonable nature that do not cut down its operational autonomy and financial independence. (Paras 36, 40, 43, 53, 59, 65).

c v. FEE FIXATION FOR UNAIDED INSTITUTIONS

As unaided institutions are to be given maximum autonomy in the matter of fixation of fee, there cannot be :

(a) a rigid fee structure (para 54)

D (b) Such fees are to be fixed by the unaided institutions (Para 56, 57). (c) The only impediment in this behalf is that no capitation fee can be charged nor the institutions can take recourse to profiteering since education is charitable in nature. Therefore a reasonable revenue surplus for the purpose of development of education and expansion of education would be pennissible (Para 57). While E restricting charging the capitation fee and profiteering, this Court had merely directed· that such institutions make no undue, .excessive or illegal profits and thereby a reasonable profit is pennitted. (d) Only because fee is to be charged on a reasonable development F profit basis, the same would not result in decline in standard or amount to capitation. (Para 61 ). (e) Students of weaker sections when admitted may be granted freeships and scholarships (Para 53). G (f) For the purpose of finding out as to who would be the students belonging to the weaker sections of the community, local needs and other needs must be taken into consideration.

The judgment of this Court in T.M.A. Pai Foundation (supra) is to be construed having regard to the following principles: H

ISLAMIC ACADEMY OF EDUCATION.1•. STATE (S.B. SINHA, J.] 51 \ (a) Its ratio must be found in the answers ultimately given. A (b) A judgment has to be read as a whole and in such a manner so that all parts of a judgment dealing with a particular point are provided with a meaning. The regulations imposing restrictions must be read in such a fashion so that maximum autonomy of the unaided institutions are preserved and respected. B SUBMISSIONS MADE ON BEHALF OF STATES/CENTRAL GOVERNMENT/ STATUTORY AUTHORITIES

(i) The right of citizens including the minority communities whether based on any religion or language contained in Article 19(1 )(g) C and Article 30(1) is not absolute but is subject to reasonable restrictions. (ii) Regulations restricting the right of minority to admission of students are necessary for maintenance of proper academic standards, atmosphere and infrastructure (including qualified staff) D and for prevention of mal-administration (Para 54). (iii) Since education in a sense is regarded as charitable, unaided institutions cannot charge a hefty fee which would not be required for the purpose of fulfilling the object for which the institutions are established nor by reason thereof they can take recourse to profiteering (Para 57.) E (iv) As merit is usually detennined by either the marks of the students obtained at the qualifying examination or school leaving certificate stage followed by the interview or by a common entrance test conducted by the institution, the State while framing regulation has the requisite jurisdiction to issue necessary directions in this F behalf so that merit is not sacrificed (Para 58-59). (v) The plea of the minority institutions to the effect that their right to admit or reject students is absolute would not be in consonance with the direction issued in para 68 whieh provides for G (a) a system to provide merit based selection while granting sufficient discretion to the management

(b) As certain percentage of seats have to be reserved for the management, the rest can be filled up on the basis of counseling by' the State agencies which would take care of H

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A poorer and backward sections of the society. The prescription of the percentage for the said purpose must be left with the State (Para 68).

(vi) Professional institutions must apply a more rigorous test, which would be subject to greater regulation by the State or by the B University. (Answer to Question No. 4).

(vii) As the State whil~ granting essentiality certificate is to consider the local needs and further guarantee smooth functioning of such institutions failing which the State has to adjust the students of the institutions to their own institution·s, it has a great stake in the matter. Choice and selection of students in professional courses are directly linked with maintaining the standards of medical education. ·

(viii) If a free hand is given to all the private medical, dental, engineering and other professional colleges to hold their own test, having D regard to the time schedule framed by this Court for holding examinations in the 15% All India quota as also the All India test held by AIIMS, CBSE, JIPMER, AFMC etc. the students would be deprived from appearing at the examinations if tests are held throughout the country and they will have to incur huge expenditure for purchasing application fonns which are priced at E Rs. 500 to Rs. 1000/- as also by way of travelling, boarding and lodging so as to enable them to appear at various ex;iminations. More than one examination may be held on the same day or in such near proximity that traveling from one place to another would become virtually impossible. The methodology, thus, must be adopted so as to minimize the inconvenience caused to a F majority of the students so. that they can appear at many examinations by incurring a reasonable expenditure. (ix) It is a common knowledge that although not tenned as capitation fee a large number of unaid~d institutions are selling their seats, which mu~t not be allowed to continue, and must be curbed with G heavy hands. (x) In pursuit of its objective of State Policy having regard to Articles 38, 41 & 46 which are in terms of Article 37 thereof, which are fundamental in governance of the country it is necessary to provide for a common examination so that the rights of the inter H