P.A. !NAMDAR AND ORS. v. STATE OF MAHARASHTRA AND ORS.

The Judgment of the Court was delivered by D R.C. LAHOTI, CJ. :

Preliminary

Leave granted in all SLPs.

A Coram of I I Judges, not a common feature in the Supreme Court of E India, sat to hear and decide T.MA.Pai Foundation v. State of Karnataka, [2002] 8 SCC 481 (hereinafter 'Pai Foundation', for short). It was expected that the authoritative pronouncement by a Bench of such strength on the issues arising before it would draw a final curtain on those controversies. The subsequent events tell a different story. A learned academician observes that the I I -Judge Bench decision in Pai Foundation is a partial response to some of the challenges posed by the impact of Liberalisation, Privatisation and Globalisation (LPG); but the question whether that is a satisfactory response, is indeed debatable. It was further pointed out that 'the decision raises more questions than it has answered' (see : Annual Survey of Indian Law, 2002 at p.251, 254). The Survey goes on to observe "the principles laid down by the majority in Pai Foundation are so broadly formulated that they provide sufficient leeway to subsequent courts in applying those principles whife the lack of clarity in the judgment allows judicial creativity " (ibid at p.256).

The prophecy has come true and while the ink on the opinions in Pai H

p. 620 Copy page pinpoint

A Foundation was yet to dry, the High Courts were flooded with writ petitions, calling for settlements of several issues which were not yet resolved or which cropped on floor, post Pai Foundation. A number of Special Leave Petitions against interim orders passed by High Courts and a few writ petitions came to be filed directly in this Court. A Constitution Bench sat to interpret the B 11-Judge Bench decision in Pai Foundation which it did vide its judgment dated 14.8.2003 (repo1ted as - Islamic Academy of Education & Anr. v. State of Karnataka & Ors., (2003) 6 SCC 697; "Islamic Academy" for short). The 11 learned Judges constituting the Bench in Pai Foundation delivered five opinions. The majority opinion on behalf of 6 Judges was delivered by B.N. Kirpal,; CJ. Khare, J (as His Lordship then was) delivered a separate but c concurring opinion, supporting the majority. Quadri, J, Ruma Pal, J and Variava, J (for himself and Bhan, J) delivered three separate opinions partly dissenting from the majority. Islamic Academy too handed over two opinions. The majority opinion for 4 learned Judges has been delivered by V.N. Khare, CJ. S.B. Sinha, -J, has delivered a separate opinion. The events following D Islamic Academy judgment show that some of the main questions have remained unsettled even after the exercise undertaken by the Constitution Bench in Islamic Academy in clarification of the I I-Judge Bench decision in Pai Foundation. A few of those unsettled questions as also some aspects of clarification are before us calling for settlement by this Bench of 7 Judges which we hopefully propose to do. E Pai Foundation and Islamic Academy have set out the factual backdrop of the issues leading to the constitution of 11-Judge and 5-Judge Benches respectively. For details thereof a reference may be made to the reported decisions. A brief summary of the past events, highlighting the issues as they F have travelled in search of resolution would be apposite.

BACKDROP

Education used to be charity or philanthropy in good old times. G Gradually it became an 'occupation'. Some of the Judicial dicta go on to hold it as an 'industry'. Whether, to receive education, is a fundamental right or not has been debated for quite some time. But it is settled that establishing and administering of an educational institution for imparting knowledge to the students is an occupation, protected by Article 19( l )(g) and additionally by Article 26(a), if there is no element of profit generation. As of now,

P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 621

imparting education has come to be a means of livelihood for some prt.fessionals and a mission in life for some altruists.

Education has since long been a matter of litigation. Law reports are replete with rulings touching and centering around education in its several aspects. Until Pai Foundation, there were four oft quoted leading cases holding the field of education. They were Unni Krishnan v. State of Andhra Pradesh, (1993] l SCC 645, St. Stephen's College v. University of Delhi, [1992] l SCC 558, Ahmedabad St. Xavier's College Society v. State of Gujarat, (1974] 1 SCC 717 and In Re: Kera/a Education Bill, 1957, (1958] SCR 995. For convenience sake, these cases will be referred to as Unni Krishnan, St. Stephen's, St. Xavier's and Kera/a Education Bill respectively. c All these cases amongst others came up for the consideration of this Court in Pai Foundation.

Correctness of the decision in St. Stephen's was doubted during the course of hearing of Writ Petition No. 350of1993 filed by Islamic Academy. D As St. Stephen's is a pronouncement of 5-Judge Bench, the matter was directed to be placed before 7-Judge Bench.

An event of constitutional significance which had already happened, was taken note of by the Constitution Bench. "Education" was a State Subject .in view of the following Entry 11 placed in List II - State List:· E

"11. Education including universities, subject to the provisions of entries 63, 64, 65 and 66 of list I and entry 25 of list Ill."

By the Constitution (42nd Amendment) Act 1976, the abovesaid Entry F was directed to be deleted and instead Entry 25 in List III Concurrent List, was directed to be suitably amended so as to read as under:·

"25. Education, including technical education, medical education and universities, subject to the provisio(is of entries 63, 64, 65 and - 66 of List I; vocational and technical !training of labour. " ' G The i-Judge Bench felt that the matter called for hearing by a I I-Judge Bench. The II -Judge Bench felt that it was not bound by the ratio propounded in Kera/a Education Bill and St. Xavier ·s and was free to hear the case in wider perspective so as to discern the true scope and interpretation H

p. 622 Copy page pinpoint

A of Article 30( I) of the Constitution and make an authoritative pronouncement.

Eleven Questions and Five Heads of Issues in Pai Foundation

In Pai Foundation, l l questions were framed for being answered. Detailed submissions were made centering around the 11 questions. The B Court dealt with the questions by classifying the discussion under the following five heads:

I. Is there a fundamental right to set up educational institutions and if so, under which provision? c

2Copy pinpoint2. Does Unni Krishnan require reconsideration?

3Copy pinpoint3. In case of private institutions, can there be government regulations and, if so, to what extent?

4Copy pinpoint4. In order to determine the existence of a religious or linguistic minority in relation to Article 30, what is to be the unit - the State or the country as a whole?

5Copy pinpoint5. To what extent can the rights of aided private minority institutions ! to administer be regulated? E Having dealt with each of the abovesaid heads, the Court through the majority. opinion expressed by B.N. Kirpal, CJ, recorded answers to the 11 questions as they were framed and posed for resolution. The questions and the answers as given by the majority are set out hereunder: F "Q. I. What is the meaning and content of the expression "minorities" in Article 30 of the Constitution of India?

A. Linguistic and religious minorities are covered by the expression "minority" under Article 30 of the Constitution. Since reorganization of the States in G India has been on linguistic lines, therefore, for the purpose of determining the minority, the unit will be the State and not the whole of India. Thus, religious and linguistic minorities, who have been put on a par in Article 30, have to be considered Statewise.

H Q.2. What is meant by the expression "religion" in Article 30(1)? Can the

P.A. !NAMDAR v. STA TE [LAHOTI, CJ.] 623

followers of a sect or denomination of a particular religion claim protection A under Article 30(1) on the basis that they constitute a minority in the State, even though the followers cf that religion are in majority in that State?

A. This question need not be answered by this Bench; it will be dealt with by a regular Bench. B Q.3 (a) What are the indicia for treating an educational institution as a minority educational institution? Would an institution be regarded as a minority edu.;ational institution because it was established by a person(s) belonging to a religious or linguistic minority or its being administered by a person(s) belonging to a religious or linguistic minority? C

A. This question need not be answered by this Benoh; it will be dealt with by a regular Bench.

Q..3(b) To what extent can professional education be treated as a matter D coining under minorities' rights under Article 30?

A. Article 30( l) gives religious and linguistic minorities the right to establish and administer educational institutions of their choice. The use of the words "of their choice" indicates that even professional educational institutions would be covered by Article 30. E Q.. 4. Whether the admission of students to minority educational institution, whether aided or unaided, can be regulated by the State Government or by the university to which the institution is affiliated? F A. Admission of students to unaided minority educational institutions viz. schools and undergraduate colleges where the scope for merit-based selection is practically nil, cannot be regulated by the State or university concerned, except for providing the qualifications and minimum conditions of eligibility in the interest of academic standards. [emphasis by us] G The right to admit students being an essential facet of the right to administer educational institutions of their choice, as contemplated under Article 30 of the Constitution, the State Government or the university may not be entitled to interfere with that right, so long as the admission to the unaided educational institutions is on a transparent basis and the merit is H

p. 624 Copy page pinpoint

A adequately taken care of. The right to administer, not being absolute, there could be regulatory measures for ensuring educational standards and maintaining excellence thereof, and it is more so in the matter of admissions to professional institutions. [emphasis by us]

A minority institution does not cease to be so, the moment gr~nt-in-aid B is received by the institution. An aided. minority educational institution, therefore, would be entitled to have the right of admission of students belonging to the minority group and at the same time, would be required to admit a reasonable extent of non-minority students, so that the rights under Article 30(1) are not substantially impaired and further the citizens' rights ·c under Article 29(2) are not infringed. What would be a reasonable extent, would vary from the types of institution, the courses of education for which admission is being sought and other factors like educational needs. The State Government concerned has to notify the percentage of the non-minority students to be admitted in the light of the above observations. Observance D of inter se merit amongst the applicants belonging to the minority group could be ensured. In the case of aided professional institutions, it can also be stipulated that passing of the common entrance test held by the State agency is necessary to seek admission. As regards non-minority students who are eligible to seek admission for the remaining seats, <>dmission should nonnally be on the basis of the common entrance test h~ld by the State agencyrollowed E by counselling wherever it exists.

Q.5(a) Whether the minorities' rights to establish and administer educational institutions of their choice will include the procedure and method of admission and selection of students? F A. A minority institution may have its own procedure and method of admission as well as selection of students, but such a procedure must be fair and transparent, and the selection of students in professional and higher education colleges should be on the basis of merit. The procedure adopted or selection made should not be tantamount to mat-administration. Even an unaided minority institution ought not to ignore the merit of the students for admission, while exercising its right to admit students to the colleges aforesaid, as in that event, the institution will fail to achieve excellence.

Q.5(b) Whether the minority institutions' right of admission of students and to lay ~own procedure and method of admission, if any, would be affected

P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 625

in any way by the receipt of State aid? A

A. While giving aid to professional institutions, it would be permissible for the authority giving aid to prescribe bye - rules or regulations, the conditions on the basis of which admission will be granted to different aided colleges by virtue of merit, coupled with the reservation policy of the State B - qua non-minority students. The merit may be determined either through a common entrance test conducted by the university or the Government concerned followed by counselling, or on the basis of an entrance test conducted by the individual institutions-the method to be followed is for the university or the Government to decide. The authority may also devise other means to ensure that admission is granted to an aided professional institution on the basis of merit. In the case of such institutions, it will be permissible for the Government or the university to provide that consideration should be shown to the weaker sections of the society.

Q.5(c) Whether the statutory provisions which regulate the facets of administration like control over educational agencies, control over governing bodies, conditions of affiliation including recognition/withdrawal thereof, and appointment of staff, employees, teachers and principals including their service conditions and regulation of fees, etc. would interfere with the right of administration of minorities? E A. So far as the statutory provisions regulating the facets of administration are concerned, in case of an unaided minority educational institution, the regulatory measure of control should be minimal and the conditions of recognition as well as the conditions of affiliation to a university or board have to be complied with, but in the matter of day-to-day management, like F the appointment of staff, teaching and non-teaching, and administrative control over them, the management should have the freedom and there should not be any external controlling agency. However, a rational procedure for the selection of teaching staff and for taking disciplinary action has to be evolved by the management itself. G For redressing the grievances of employees of aided and unaided institutions who are subjected to punishment or termination from service, a mechanism will !Jave to be evolved, and in our opinion, appropriate tribunals could be constituted, and till then, such tribunals could be presided over hy a judicial officer of the rank of District Judge. H

p. 626 Copy page pinpoint

.A The State or other controlling authorities, however, can always prescribe • the minimum qualification, experience and other conditions bearing on the merit of an individual for being appointed as a teacher or a principal of any educational institution. . ' Regulations can be framed governing service conditions for teaching B and other staff for whom aid is provided by the State, without interfering with the overall administrative control of the management over the staff.

Fees to be charged by unaided institutions cannot be regulated but no institution should charge capitation fee. c Q.6(a) Where can a minority institution be operationally located? Where a religious or linguistic minority in State A establishes an educational institution in the said State, can such educational institution grant preferential admission/ reservations and other benefits to members of the religious/linguistic group from other States where they are non-minorities? D A. This question need not be answered by this Bench; it will be dealt with by a regular Bench.

Q. 6. (b) Whether it would be correct to say that only the members of that minority residing in State A will be treated as the members of the minority vis-a-vis such institution?

A. This question need not be answered by this Bench; it will be dealt with by a regular Bench.

Q. 7. Whether the member of a linguistic non-minority in one State can establish a trust/society in another State and claim minority status in that State?

A. This question need not be answered by this Bench; it will be dealt with by a regular Bench.

G Q.8. Whether the ratio laid down by this Court in St. Stephen's case (St. Stephen's College v. University of Delhi, [1992] I SCC 558) is correct? If no, what order?

A. The basic ratio laid down by this Court in St. Stephen's College case ·.~ H (supra) is correct, as indicated in this judgment. However, rigid percentage

P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 627

cannot be stipulated. It has to be left to authorities to prescribe a reasonable A percentage having regard to the type of institution, population and educa- tional needs of minorities.

Q. 9. Whether the decision of this Court in Unni Krishnan, J.P. v. State of A.P., (1993) I sec 645 (except where it holds that primary education is a B fundamental right) and the scheme framed thereunder require reconsideration/ modification and if yes, what?

A. The scheme framed by this Court in Unni Krishnan case (supra) and the direction to impose the same, except where it holds that primary education is a fundamental right, is unconstitutional. However, the principle that there should not be capitation fee or profiteering is correct. Reasonable surplus to meet cost of expansion and augmentation of facilities does not, however, amount to profiteering.

Q. I 0. Whether the non-minorities have the right to establish and administer educational institution under Articles 21 and 29(1) read with Articles I 4 and 15( I), in the same manner and to the same extent as minority institutions?

and

Q. 11. What is the meaning of the expressions "education" and "educational institutions" in various provisions of the Constitution? Is the right to establish and administer educational institutions guaranteed under the Constitution?

A. The expression "education" in the articles of the Constitution means and includes education at all levels from the primary school level up to the postgraduate level. It includes professional education. The expression F "educational institutions" means institutions that impart education, where "education" is as understood hereinabove.

The right to establish and administer educational institutions is guaranteed under the Constitution to all citizens under Articles 19(l)(g) and 26, and to minorities specifically under Article 30. G

All citizens have a right to establish and administer educational institutions under Articles 19(l)(g) and 26, but this right is subject to the provisions of Articles 19(6) and 26(a). However, minority institutions will have a right to admit students belonging to the minority group, in the manner H

p. 628 Copy page pinpoint

A as discussed in this judgment."

The majority led by Kirpal, CJ, in Pai Foundation did say that the expression "minorities" in Article 30 of the Constitution of India, whether linguistic or religious, has to be determined by treating the State and not the B whole of India as unit. Questions such as: (i) what is religion, (ii) what is the indicia for determining jf an educational institution is a minority institution, (iii) whether a minority institution can operate extra-territorially extending its activities into such states where the minority establishing and administering the institution does not enjoy minority status, (iv) the content and contour of minority by reference to territories, were not a11swered in Pai c Foundation and were left to be determined by the regular Benches in individual cases to be heard after the decision in Pai Foundation. We also do not propose to involve ourselves by dealing with these questions except to the extent it.may become necessary to do so for the purpose of answering · the questions posed before us. D Pai Foundation explained in Islamic Academy

Pai Foundation Judgment was delivered on 31.10.2002. The Union of India, various State Governments and the Educational Institutions, each understood the majority judgment in its 0wn way. The State Governments E embarked upon enacting laws and framing the regulations, governing the educational institutions in consonance with their own understanding of Pai Foundation. This led to litigation in several Courts. Interim orders passed therein by High Courts came to be challenged before this Court. At the hearing, again the parties through their learned counsel tried to interpret the F majority decision in Pai Foundation in different ways as it suited them. The parties agreed that there were certain anomalies and doubts, calling for clarification. The persons seeking such clarifications were unaided professional educational institutions, both minority and non-minority. The Court formulated four questions as arising for c0nsideration in view of the riva! submissions made before the Court in Islamic Academy: G "(l) 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;

P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 629

(3) whether private unaided professional colleges are entitled to till in their seats, to the extent of I 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." B We could attempt at formulating the gist of the answers given by the Constitution Bench of the Court as under:

(I) Each minority institution is entitled to have its own fee structure subject to the condition that there can be no profiteering and capitation fees cannot be charged. A provision for reasonable surplus can be made to enable future expansion. The relevant factors which would go into determining the reasonability of a fee structure, in the opinion of majority, are: (i) the infrastructure and facilities available, (ii) the investments made, (iii) salaries paid to the teachers and staff, (iv) future plans for expansion and betterment of the institution etc.

S.B. Sinha, J, defined what is 'capitation' and 'profiteering' and also said that rea_sonable surplus should ordinarily vary fron: 6 per cent to 15 per cent for utilization in expansion of the system and development of education. E (2) In the opinion of the majority, minority institutions stand on a better footing than non-minority institutions. Minority educational institutions have a guarantee or assurance to establish and administer educational institutions of their choice. State Legislation, primary or delegated, cannot favour non- minority institution over minority institution. The difference arises because F of Article 30, the protection whereunder is available to minority educational institutions only. The majority opinion called it a "special right" given under Article 30.

Jn the opinion of S.B. Sinha, J, minority educational institutions do not have a higher right in tems of Article 30(1); the rights of minorities and non- G minorities are equal. What is conferred by Article 30(1) of the Constitution is "certain additional protection" with the object of bringing the minorities on the same platform as that of non-minorities, so that the minorities are protected by establishing and administering educational institutions for the benefit of their own community, whether based on religion or language. H

p. 630 Copy page pinpoint

A It is clear that as between minority and. non-minority educational institutions, the distinction made by Article 30(1) in the fundamental rights conferred by Article 19(1)(g) has been termed by the majority as "special right" while in the opinion of S.B.Sinha, J, it is not a right but an "additional protection". What difference it makes, we shall see a littie later. B '(3)&(4). Questions 3 and 4 have been taken up for consideration together. A reading of the opinion recorded in Islamic Academy shows that paras 58, 59 and 68 of Pai Foundation were considered and sought to be explained. It was not very clear as to what types of institutions were being dealt with in the above referred to paragraphs by the majority in Pai Foundation. c Certainly, distinction was being sought to be drawn between professional colleges and other educational institutions (both minority and unaided). Reference is also found to have been made to minority and non-minority · institutions. At some places, observations have been made regarding institutions divided into groups only by reference to aid, that is whether they are aided or unaided educational institutions without regard to the fact whether they D were minority or non-minority institutions. It appears that there are a few passages/sentences wherein it is not clear which type of institutions the majority opinion in Pai Foundation was referring to thereat. However, the majority opinion in Islamic Academy has by explaining Pai Foundation held· as under: E (I) In professional institutions, as they are unaided, there will be full autonomy in their administration, but the principle of merit cannot be sacrificed, as excellence in profession is in national interest.

(2) Without interfering with the autonomy of unaided institutions, the object of merit based admissions can be secured by insisting on it as a condition to the grant of recognition and subject to the recognition of merit, the management can be given certain discretion in admitting students.

(3) The management can have quota for admitting students at its discretion but subject to satisfying the test of merit based admissions, which can be achieved by allowing management to pick up students of their own choice from out of those who have passed the common entrance test conducted by a centralized mechanism. Such common entrance test can be coqducted by the State or by an association of similarly placed institutions in the State.

- (4) P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 631

The State can provide for reservation in favour of financially or socially backward sections of the society. A

(5) The prescription for percentage of seats, that is allotment of different quotas such as management seats, State's quota, appropriated by the State for allotment to reserved categories etc., has to be done by the B State in accordance with the "local needs" and the interests/needs of that minority community in the State, both deserving paramount consideration. The exact concept of "local needs" is not clarified. The plea that each minority unaided educational institution can hold its own admission test was expressly overruled. The principal consideration which prevailed with the majority in Islamic Academy for holding in favour of common c entrance test was to avoid great hardship and incurring of huge cost by the hapless students in appearing for individual tests of various colleges.

The majority opinion carved out an exception in favour of those minority educational professional institutions which were established and D were having their own admission procedure for at least 25 years from the requirement of joining any common entrance test, and such institutions were permitted to have their own admission procedure. The State Governments

- were directed to appoint a permanent Committee to er.sure that the tests conducted by the association of colleges is fair and transparent.

S.B. Sinha, J, in his separate opinion, agreed with the majority that the merit and merit alone should be the basis of selection for the candidates. He E

, also agreed that one single standard for all the institutions was necessary to achieve the object of selection being made on merit by maintaining uniformity of standard, which could not be left to any individual institution in the matter of professional courses of study. However, the merit criterion in the opinion of Sinha, J, was required to be associated with the level of education. To quote his words: "the merit criterion would have to be judged like a pyramid. At the kindergarten, primary, secondary levels, minorities may have 100% quota. At this level the merit may not have much relevance at all but at the level of higher educatior. and in particular, professional education and postgraduate-level education, merit indisputably should be a relevant crite- rion. At the postgraduation level, where there may be a few seats, the minority institutions -may not have much say in the matter. Services of doctors,

• engineers and other professionals coming out from the institutions of professional excellence must be made available to the entire country and not H

p. 632 Copy page pinpoint

A to any particular class or group of people. All citizens including the minorities have also a fundamental duty in this behalf."

Before we part with the task of summing up the answers given to the four questions in Islamic Academy, we would like to make a few observations of ours in this regard. First, the majority opinion spread over 30 printed pages, B and the minority opinion spread over 60 printed pages, both though illuminating and instructive, have nonetheless not summed up or pointedly answered the questions. We have endeavoured to cull out and summarize the answers, noted above, as best and as briefly as we could from the two opinions. We would, therefore, hasten to add that in order to fully appreciate c the ratio of the two opinions, they have to be read in detail and our attempt at finding out and placing in a few chosen words the ratio decidendi of the two separately recorded opinions, is subject to this limitation. However, we shall make a reference to relevant passages from the two opinions as and when it becomes necessary. A point of significance which we would like to briefly note here itself, a detailed discussion being relegated to a later part D of this judgment, is that the opinion of S.B. Sinha, J, has examined in detail, the scope of protection conferred on minority institutions by reference to their right to seek recognition or affiliation, an aspect of wider significance which

E does not seem to have received consideration with that emphasis either in Pai Foundation or in the majority opinion in Islamic Academy. We shall revert to this aspect a little later. .. III

Issues herein

A Few Preliminary observations F Before we embark upon dealing with the issues posed before us for resolution, we would like to make a few preliminary observations as a preface to our judgment inasmuch as that would outline the scope of the controversy with which we are actually dealing here. At the very outset, we may state that our task is not to pronounce our own independent opinion on the several G issues which arose for consideration in Pai Foundation. Even if we are inclined to disagree with any of the findings amounting to declaration of law by the majority in Pai Foundation, we cannot; that being a pronouncement by 11-Judge Bench, we are bound by it. We cannot express a dissent or disagreement howsoever we may be inclined to do so on any of the issues. H The real task before us is to cull out the ratio decidendi of Pai Foundation

P.A. !NAMDAR v. STATE [LAHOTI, CJ.) 633

and to examine if the explanation or clarification given in Islamic Academy A runs counter to Pai Foundation and if so, to what extent. If we find anything said or held in Islamic Academy in conflict with Pai Foundation, we shall say so as being a departure from the law laid down by Pai Foundation and on the principle of binding efficacy of precedents, over-rule to that extent the opinion of the Constitution Bench in Islamic Academy. B It is pertinent to note, vide paras 2, 3 and 35 of Islamic Academy, that most of the petitioners/applicants therein were unaided professional educational institutions (both minority and non-minority). The purpose of constituting the Constitution Bench, as noted at the end of para I, was "so that doubts/ anomalies, if any, could be clarified." Having answered the questions, the c Constitution Bench treated all interlocutory applications as regards interim matters as disposed of (see para 23). All the main matters (writ petitions, transfer petitions and special leave petitions) were directed to be placed before the regular Benches for disposal on merits. D Islamic Academy in addition to giving clarifications on Interlocutory Applications, directed setting up of two committees in each State: one committee "to give effect to the judgment in Pai Foundation" and to approve the fee structure or to propose some other fee which can be charged by m_inority institutions (vide para 7), and the other committee- to oversee the tests to be conducted by the association of institutions (vide para 19). E

Since the direction made in Islamic Academy for appointment of the Committees has been vehemently assailed during the course of hearing before us, we would extract from the judgment in Islamic Academy the following two passages wherein, in the words of Khare, CJ, the purpose and the F constitution of the Committees, the powers conferred on and the functions enjoined upon them are given:

" ... we direct that in order to give effect to the judgment in T.MA. Pai case the respective State Governments/concerned authority shall set up, in each State, a committee headed by a retired High Court G Judge who shall be nominated by the Chief Justice of that State. The other member, who shall be nominated by the Judge, should be a Chartered Accountant of repute. A representative of the Medical Council of India (in short "MCI") or the All India Council for Technical Education (in short "AICTE"), depending on the type of H

p. 634 Copy page pinpoint

A institution, shall also be a member. The Secretary of the State Government in charge ofMedical Education or Technical Education, as the case may be, shall be a member and Secretary of the Committee. The Committee should be free to nominate/co-opt another independent person of repute, so that the total number of B members of the Committee shall not exceed five. Each educational institute must place before this Committee, well in advance of the academic year, its proposed fee structure. Along with the proposed fee structure all relevant documents and books of accounts must also be produced before the Committee for their scrutiny. The Committee shall then decide whether the fees proposed by that institute are c justified and are not profiteering or charging capitation fee. The Committee will be at liberty to approve the fee structure or to propose some other fee which can be charged by the institute. The fee fixed by the Committee shall be binding for a period of three years, at the end of which period the institute would be at liberty__ D to apply for revision. Once fees are fixed by the Committee, the institute cannot charge either directly or indirectly any other amount over and above the amount fixed as fees. If any other amount is charged, under any other head or guise e.g. donations, the same would amount to charging of capitation fee. The Governments/ appropriate authorities should consider framing appropriate E 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. (para 7)

F We now direct that the respective State Governments do appoint a 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 is to be nominated by the Chief Justice of that State. The other G member, to be nominated by the Judge, would be a 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 the Secretary of the Committee. The Committee will be free to nominate/co-opt an independent person H

p. 635 Copy page pinpoint

of repute in the field of education as well as one of the Vice- A Chancellors of the 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 B leaked. The Committee shall supervise and ensure that the test is conducted in a fair and transparent manner. The Committee shall have the powers to permit an institution, which has been established and which has been permitted to adopt its own admission procedure for the last, at least, 25 years, to adopt its own admission procedure c and if the 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 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 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. (para 19)"

Sinha, J. has not specifically spoken of the Committees. Nevertheless F he made a reference to these Committees in his opinion and thus impliedly recorded his concurrence with the constitution of these Committees.

Vide para 20, the Constitution Bench has made it clear that the setting up of two sets of Committees in the States has been directed in exercise of G the power conferred on this Court by Article 142 of the Constitution and such Committees "shall remain in force till appropriate legislation is enacted by Parliament". Although the term 'permanent' has been used, but it appears to us that these Committees are intended to be transitory in nature.

Reference for constituting a Bench ofa coram higher than Constitution Bench H

p. 636 Copy page pinpoint

A These matters have been directed to be placed for hearing before a Bench of seven Judges under Orders of the Chief Justice of India pursuant to Order dated July 15, 2004 in P.A. Inamdar and Ors. v. State of Maharashtra and Ors., [2004) 8 SCC 139 and Order dated July 29, 2004 in Pushpagiri Medical Society v. State of Kera/a and Ors., [2004) 8 SCC 135. B The aggrieved persons before us are again classifiable in one class, that is, unaided minority and non-minority institutions imparting professional education. The issues arising for decision before us are only three:

(i) the fixation of 'quota' of admissions/students in respect of unaided professional institutions; c (ii) the holding of examinations for admissions to such colleges, that is, who will hold the entrance tests; and

(iii) the fee structure. D The questions spelled out by Orders of Reference

In the light of the two orders of reference, referred to hereinabove, we propose to confine our discussion to the questions set out hereunder which, according to us, arise for decision:- E (I) To what extent the State can regulate the admissions made by unaided (minority or non-minority) educational institutions? Can the State enforce its policy of reservation and/or appropriate to itself any quota in admissions to such institutions? F (2) Whether unaided (minority and non-minority) educational institutions are free to devise their own admission procedure or whether direction made in Islamic Academy for compulsorily holding entrance test by the State or association of institutions and to choose therefrom the students entitled to admission in such institutions, can be sustained in light of the law laid down in Pai Foundation?

(3) Whether Islamic Academy could have issued guidelines in the matter of regulating the fee payable by the students to the educational institutions?

P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 637

(4) Can the admission procedure and fee structure be regulated or taken over by the Committees ordered to be constituted by Islamic Academy?

Submissions made c A number of learned counsel addressed the Court at the time of hearing raising very many issues and canvassing different view-points of law referable to those issues. We propose to place on record, as briefly as we can, the principal submissions made ccnfined to the issues arising for decision before us. D The arguments on behalf of the petitioners were led by senior counsel Shri Harish Salve. Extensively reading various relevant paragraphs and observations in different opinions in Pai Foundation, learned counsel contends that the directions for setting up permanent committees for regulating admissions and fixing fee structure in unaided minority and non-minority E institutions issued in the case of Islamic Academy are contrary to the ratio of judgment in Pai Foundation. According to learned counsel, the directions clearly run counter to all earlier Constitution Bench decisions of this Court in St. Stephen's, St. Xavier's and Kera/a Education Bill. F It is argued that in the judgment of the eleven judges in Pai Foundation which deals with several diverse issues of considerable complexity, every observation has to be understcod in its context. Paragraph 68 in Pai Foundation has wrongly been read as the ratio of the judgment by the Bench of five judges in the case of Islamic Academy. It is submitted that paragraph 68 in the majority opinion in Pai Foundation has to be read and understood G in the context of the constitutional interpretation placed on Articles 29 & 30 of the Constitution. Reading thus, the directions for setting up permanent cGmmittee~, fm fixing quota and fee structure seriously impinge on the constitutional guarantee of autonomy to minority institutions under Article 30 and to unaided non-minority institutions under Article 19( I )(g). It is H

p. 638 Copy page pinpoint

A submitted that taking over the right to regulate admission and fee structure of unaided professional institutions is not a 'reasonable restriction' withir;t the meaning of Article 19(6) of the Constitution. Such restriction is virtual negation of the constitutional protection of autonomy to minorities in running educational institutions 'of their choice' as provided in Article 30 of the B Constitution.

Elaborating his legal propositions, learned senior counsel Shri Salve argued that establishing and running an educational institution is a guaranteed fundamental right of' occupation' under Article 19( 1)(g) of the Constitution. Article 19(6) permits State to make regulations and place reasonable c restrictions in public interest upon the rights enjoyed by citizens under Article 19(1 )(g) of the Constitution. Any imposition of a system of selection of students for admission would be unreasonable if it deprives the private unaided institutions of the right of rational selection which it has devised for itself. Subject to the minimum qualifications that may be prescribed and to some system of computing the equivalence between different kinds of qualifications like a common entrance test, it can evolve a system of selection involving both written and oral tests based on principle of fairness. Reference ··is made to paragraph 40 of the judgment in Pai Foundation.

It is submitted that the State can prescribe minimum qualifications and may prescribe systems of computing equivalence in ascertaining merit; however, the right of rational selection, which would necessarily involve the right to decide upon the method by which a particular institution computes such equivalence, is protected by Article 19 and infringement of this right constitutes an unreasonable encroachment upon the constitutionally guaranteed autonomy of such institutions.

It is further argued that where States take o~er the right of the institution to grant admission and/or to fix the fees, it constitutes nationalization of educational institutions. Such nationalization of education is an unreasonable restrictio~ on the right conferred under Article 19. Reliance is placed on paragraph 38 of the judgment in Pai Foundation.

Learned counsel further argues that schemes framed relating to grant of admission and fixing of fees in Unni Krishnan has been held to be unconstitutional by the I I-Judge Bench in Pai Foundation. [Reference is made to paragraph 45 of the judgment in Pai Foundation] It is submitted that

P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 639

the directions to set up committees for regulation of admission and fee structure in Islamic Academy virtually do the same exercise as was done in Unni Krishnan and disapproved in the larger Bench decision in Pai Foundation. The submission in substance made is that Unni Krishnan was disapproved in Pai Foundation and has wrongly been re-introduced in Islamic Academy. B It is argued that State necessity cannot be a ground to curtail the right of a citizen conferred under Article 19(l)(g) of the Constitution. The Constitution casts a duty upon the States to provide educational facilities. The State is obliged to carry out this duty from revenue raised by the State. The shortfall in the efforts of the State is met by the private enterprise, that however, does not entitle the State to nationalize, whether in the whole or in part, such private enterprise. This, it is submitted, is the true ratio of the Pai Foundation in so far as Article 19 of the Constitution is concerned.

It is next argued that as held in St. Xavier's and re-affirmed in Pai Foundation the right to establish and administer educational institutions by minorities under Article 30 of the Constitution is not an absolute right meaning thereby that it is subject to such regulations that satisfy a dual test that is : the test of 'reasonableness' and 'any regulation regulating the educational character of the institutions so that it is conducive to making the institution an effective vehicle of education for the minority community and for the others who resort to it'. Any regulation which impinges upon the minority character of the institutions is constitutionally impermissible. It is submitted that between the right of minorities to establish and administenhe educational institutions and the right of the State to regulate educational activities for maintaining standard of education, a balance has to be struck. The regulation in relation to recognition/affiliation operates in the area of standard of excellence and are unquestionable if they do not seriously curtail or destroy the right of minorities to administer their educational institutions. Only in maintaining standards of education, State can insist by framing regulations that they be followed but in all other areas the rights of minority must be protected. It is conceded that mal-administration is not protected by Article 30 of the Constitution. Similarly, secular laws with secular object that do not directly impinge upon the right of minority institutions and operate generally upon all citizens do not impinge upon Article 30 of the Constitution. This has been the constitutional interpretation of Article 30 not because Article 30 admits no exception like Article 19(6) but because the right conferred under Article 30 does not extend to these areas. The laws that serve H

p. 640 Copy page pinpoint

A national interest do not impinge upon Article 30.

Learned counsel in elaborating his argument tried to make a distinction between the rights of aided institutions and unaided institutions. Article 29(2) places a limitation on the right of an aided institution by providing that if B State aid is obtained, 'no citizen shall be denied admission on grounds only of religion, race, caste, language or any of them'. It is submitted that as a necessary corollary, no such limitation can be placed while regulating admission in an unaided minority institution which may prefer to admit students of minority community. So far as unaided minority educational institutions are concerned, the submission made is that government has no c right or power, much less duty, to decide as to which method of selection of students is to be adopted by minority institutions. The role of the government is confined to ensuring that there is no mat-administration in the name of selection of students or in the fixation of fees. No doubt, the State is under a duty to prevent mal-administration, that is to control charging of capitation fees for the seats regardless of merit and commercializing education resulting in exploitation of students, but to prevent mal-administration of the above nature or on the ground that there is likelihood of such mal- administration, the State cannot take over the administration of the institutions themselves into its own hands. The likelihood of an abuse of a constitutional right cannot ever furnish justification for a denial of that right. An apprehension that a citizen may abuse his liberty does not provide justification for imposing restraints on the liberty of citizens. Similarly, the apprehension that the minorities may abuse their educational rights under Article 30 of the Constitution cannot constitute a valid basis for the State to take over those rights. F Learned senior counsel Shri Ashok Desai appearing on behalf of unaided Karnataka Private Medical Colleges (through its Association) of both categories of minority and non-minority has questioned the correctness of the directions in the case of Islamic Academy for setting up permanem committees for fixation of quota and determination of fees. According to him, as held G in Pai Foundation, in the name of controlling capitation, there cannot be indirect nationalization and complete State control of unaided professional institutes. In the case of Islamic Academy, the ratio of Pai Foundation that autonomy of unaided non-minority institutions is an important facet of their ~ right under Article 19(1 )(g) and in case of minority under Article 19( l )(g) H read with Article 30 of the Constitution has been ignored.

. P.A. !NAMDAR v. STATE [LAHOTI, CJ.]

On behalf of unaided private professional colleges, learned counsel further submitted that there are many private educational institutes which 641

have been set up by people belonging to a region or a community or a class in order to promote their own groups. As long as these groups form an unaided mir,ority institution, they are entitled to have transparent criteria to admit students belonging to their group. For instance, scheduled castes and B scheduled tribes have started Ambedkar Medical College; Lingayaths have started KLE Medical College in Belgaun and people belonging to Vokalliga community have started Kempegowda Medical College. Similarly, E<lava community in Kerala has started its own colleges. Sugar cooperatives in Maharashtra have started their own colleges. Learned counsel also highlighted an instance of a college opened in Tamil Nadu by State Transport Workers c for the education of their children on the engineering side. He submitted that if the State is allowed,to interfere in the admission procedure in these private institutions set up with the object of providing educational facilities to their own group, community or poorer sections, the very purpose and object of setting up a p,Avate medical college by a group or community for their own people would be defeated.

. According to learned counsel, the State control in unaided private professional colleges can only be to the extent of monitoring or overseeing its working so that they do not indulge in profiteering by charging capitation fees and sacrifice merit. According to the learned counsel, in the directions contained in Islamic Academy, the main ratio of Pai Foundation that the unaided institutions should have autonomy in the matter of admission and fees structure has been totally forgotten. The learned counsel raised very serious objections to the manner in which the various permanent committees set up in several States on the directions of Islamic Academy are conducting themselves and forcing their decisions on private insti!uiions. The proposed fee structure is required to be placed before the Committee in advance of the academic year by the institute. It is the Committee which has to decide whether the fees proposed by the institute are justified and do not amount to profiteering or charging of capitation fees. The Committee has been given liberty to approve the fee structure of the institute or to propose a different fee structure. The fee fixed by the Committee is binding for a period of three years and at the end of the said period the institute would be at liberty to apply for revision. Learned counsel gave in writing certain illustraiions of decisions of the Fee Committee in few unaided colleges in the State of Kamataka and pointed out that without proper financial expertise and without H

p. 642 Copy page pinpoint

studying the relevant documents and accounts, the Committee determined the .. fee structure by only taking into account the affordability of the parents of the students with no regard whatsoever to the viability of the institute on the basis of finances so generated. It is argued as to why private professional institutes should not be allowed to modernize its facilities and provide better B professional education than government institutes. It is pointed out that in the case of non-minority unaided M.S. Ramaiaya Medical College, Bangalore, the Fee Committee initially fixed annual fee at Rs.2.55 lacs for MBBS course as against the justification shown by the institute for demanding Rs. 3.90 lacs. The decision of the Fee Committee led to the filing of writ petition by the institute in the High Court of Karnataka and agitation and demonstrations by c the students' union. The CommittP-e under the pressure of the student community reduced the annual fee to Rs.1.6 lacs which was re-affirmed after the High Court directed that the management o.(,~he unaided college should be heard before reducing the annual fee. ·

D Thus the learned counsel on behalf of the Karn~ka Private Medical College Association questioned the correctness of the directions of the Bench in Islamic Academy. It is submitted that as decided in Pai Foundation by a larger Bench, the essence of private educational institutions is the autonomy that the institution must have in its management and administration. The 'right to establish and administer' particularly comprises the right a) to admit students and b) to set up reasonable fee structure. The autonomy of the institution, therefore, predicates that all seats would be filled by the management and there can be no reservations or quotas in favour of the State. In Pai Foundation, the only observations made were that some colleges may be required to admit a small percentage of students belonging to weaker sections of the society by granting them freeships or scholarships. It is conceded that autonomy of a p~ivate educational institution to admit students of its choice does not mean that· there can be no insistence on transparency in the admission procedure ~add on merit being the criterion for admission. It is submitted that autonomy of a private educational institution could mean that they can, according to the objects and purposes of their institutions, give preference to a particular class or group of students like SC/~T in Ambedkar Medical College, students from backward area in Bijapur college and transport employees' children in Madras State Corporation Employees' College or the children of employees of Larson & Turbo Company in a college established by that company. The right to charge fees so as to run the college and to generate sufficient funds for its betterment and growth

- P.A. !NAMDAR v. STATE [LAHOTI, CJ.]

cannot be controlled by the State. That would seriously encroach upon the autonomy of the private unaided institution. It is submitted, by quoting Dr. S. Radhakrishnan, the then Chairman of the University Education Commission, 643

- that interests of democracy lie with the resistance of the trend towards governmental domination of the educational process. In conclusion, learned counsel representing Association of private unaided colleges in Karnataka B submits that the decision in Islamic Academy and the directions made therein go far beyond the law laid down by the larger Bench in Pai Foundation. The Bench in Islamic Academy virtually reviewed the larger Bench decision in Pai Foundation in guise of implementation of the said decision and on the basis of later developments. In Islamic Academy, the Bench accepted that there could be no rigid fee structure fixed by the government for private c institutions. An institute should have the freedom to fix its own fee structure for day-to-day running of the institute and to generate funds for its further growth. Only capitation and diversion of profits and surplus of the institute to any other business or enterprise was prohibited. It is submitted that Islamic Academy contrary to the legal position explained in Pai Foundation, could not set up in each State permanent committees headed by retired High Court Judges with the power to decide on the justification of the fee proposed by the institute and propose any other fees. It could also not make the fee fixed by the Committee binding for a period of three years. Learned counsel submits that once the college infrastructure and hospital facilities attached to the medical college have been approved by the Medical Counsel of India in accordance with its regulations, the total expenses of college and hospital could be taken into account by the institute to decide upon its own fee structure. Learned counsel, in criticizing the directions in Islamic Acade1ny, submitted that although the scheme formulated in Unni Krishnan has been expressly overruled in Pai Foundation on the ground that it virtually nationalized education and resulted in surrendering total process of selection to the State, the Bench in Islamic Academy's case, in an attempt to take up preventive measures to ensure merit and check profiteering in private unaided professional institutions, cannot re-introduce quota system for the management and the State and thus infringe upon the autonomy of the institute. Such an attempt, learned counsel contends, would be unconstitutional and violative of Article 19(1 )(g) of the Constitution in the case of non-minority unaided institutions and also violative of Article 30 in the case of minority unaided professional institutions. Learned counsel argued that constitutionally, as held in Pai Foundation, it is not permissible for the State to impose a Government quota, its own reservation policy, a lower scale of fees etc. on a private H

p. 644 Copy page pinpoint