Judges: R.C.Lahoti,C.J.I, Y.K.Sabharwal, D.M.Dharmadhikari, Arun Kumar, G.P.Mathur, Tarun Chatterjee and P.K.Balasubramanyam,JJ.

Facts:

After the 11 judges Constitution Bench decision in T.M.A. Pai Foundation v. State of Karnataka MANU/SC/0905/2002: AIR 2003 SC 355, (hereinafter referred to as 'Pai Foundation'), it was thought that the controversies regarding minority educational institution was finally settled. But the subsequent events show a different story.

The principles laid down by the Court in Pai Foundation case were so broadly formulated that it gave enough scope to apply those principles in different ways by various High Courts.

The result was that the High Courts were flooded with writ petitions seeking for settlement of several issues which remained unsolved.

In Islamic Academy of Education and Anr. v.State of Karnataka and Ors., MANU/SC/0580/2003 : AIR 2003 SC 3724 ; ("Islamic Academy" for short) Supreme Court heard these petitions and tried to solve some of issues.

Islamic Academy 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 minority institutions, and the other committee - to oversee the tests to be conducted by the association of institutions.

But majority decisions in this case added certain conditions by way of clarification which were not found in the Pai's judgment. This again raised controversies.

Hence, the present petition is before the Supreme Court.

Issues:

(i) To what extent the State can regulate the admissions made by unaided (minority or non-minority) educational institutions? Whether the State can enforce its policy of reservation and/or appropriate to itself any quota in admissions to such institutions?

(ii) Whether unaided (minority and non-minority) educational institutions are free to devise their own admission procedure?

(iii) Whether the educational institutions are entitled to fix their own fee structure?

(iv) Whether the setting up of the two Committees for regulating admissions and determining fee structure by the judgment in Islamic Academy go beyond the law laid down in Pai Foundation?

Law:

Constitution of India - Article 19(1)(g) - Allows citizens "to practise any profession, or to carry on any occupation, trade or business."

Constitution of India - Article 19(6) - Provides that the fundamental right under Article 19(1)(g) can be restricted by imposing reasonable restrictions in the interest of the general public.

Constitution of India - Article 30 - States the right of minorities to establish and administer educational institutions

Contentions:

Petitioners

(i) The directions for setting up permanent committees, for 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(1)(g).

(ii) Taking over the right to regulate admission and fee structure of unaided professional institutions is not a 'reasonable restriction' within 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 Constitution.

(iii) State necessity cannot be a ground to curtail the right of a citizen conferred under Article 19(1)(g) of the Constitution.

(iv) The decision in Islamic Academy, is contrary to the decision by the larger Bench in Pai Foundation.

Respondent

(i) Article 19(6) permits State to make regulations and place reasonable restrictions in public interest upon the rights enjoyed by citizens under Article 19(1)(g) of the Constitution.

(ii) The decision in Islamic Academy's case, is not contrary to the decision by the larger Bench in Pai Foundation.

(iii) There is no violation of Article 19 (1)(g) and Article 30 of the Indian Constitution.

Analysis:

State can't enforce its policy of reservation and/or appropriate to itself any quota in admissions to unaided (minority or non- minority) educational institutions

(i) Neither in the judgment of Pai Foundation nor in the Constitution Bench decision in Kerala Education Bill, which was approved by Pai Foundation, there is anything which would allow the State to regulate or control admissions in the unaided professional educational institutions so as to compel them to give up a share of the available seats to the candidates chosen by the State, as if it was filling the seats available to be filled up at its discretion in such private institutions. This would amount to nationalization of seats which has been specifically disapproved in Pai Foundation. Such imposition of quota of State seats or enforcing reservation policy of the State on available seats in unaided professional institutions are acts constituting serious encroachment on the right and autonomy of private professional educational institutions. Such appropriation of seats can also not be held to be a regulatory measure in the interest of minority within the meaning of Article 30(1) or a reasonable restriction within the meaning of Article 19(6) of the Constitution. Merely because the resources of the State in providing professional education are limited, private educational institutions, which intend to provide better professional education, cannot be forced by the State to make admissions available on the basis of reservation policy to less meritorious candidate. Unaided institutions, as they are not deriving any aid from State funds, can have their own admissions if fair, transparent, non-exploitative and based on merit.

Unaided (minority and non-minority) educational institutions are free to devise their own admission procedure

(i) So far as the minority unaided institutions are concerned to admit students being one of the components of "right to establish and administer an institution", the State cannot interfere therewith. Upto the level of undergraduate education, the minority unaided educational institutions enjoy total freedom.

(ii) Pai Foundation has held that minority unaided institutions can legitimately claim unfettered fundamental right to choose the students to be allowed admissions and the procedure therefore subject to its being the triple test: fair, transparent and non-exploitative. The same principle applies to non-minority unaided institutions. There may be a single institution imparting a particular type of education which is not being imparted by any other institution and having its own admission procedure fulfilling the test of being fair, transparent and non-exploitative. All institutions imparting same or similar professional education can join together for holding a common entrance test satisfying the abovesaid triple tests. The State can also provide a procedure of holding a common entrance test in the interest of securing fair and merit-based admissions and preventing mal-administration.

(iii) The admission procedure so adopted by private institution or group of institutions, if it fails to satisfy all or any of the triple tests, indicated hereinabove, can be taken over by the State substituting its own procedure.

Educational institutions are entitled to fix their own fee structure but can't charge capitation fee

(i) To set up a reasonable fee structure is also a component of "the right to establish and administer an institution" within the meaning of Article 30(1) of the Constitution, as per the law declared in Pai Foundation. Every institution is free to devise its own fee structure subject to the limitation that there can be no profiteering and no capitation fee can be charged directly or indirectly, or in any form.

(ii) Capitation fee cannot be permitted to be charged and no seat can be permitted to be appropriated by payment of capitation fee. 'Profession' has to be distinguished from 'business' or a mere 'occupation'. While in business, and to a certain extent in occupation, there is a profit motive, profession is primarily a service to society wherein earning is secondary or incidental.

(iii) The charging of capitation fee by unaided minority and non-minority institutions for professional courses is just not permissible. Similarly, profiteering is also not permissible. Despite the legal position, the Court cannot shut its eyes to the hard realities of commercialization of education and evil practices being adopted by many institutions to earn large amounts for their private or selfish ends. If capitation fee and profiteering is to be checked, the method of admission has to be regulated so that the admissions are based on merit and transparency and the students are not exploited. It is permissible to regulate admission and fee structure for achieving the purpose just stated.

(iv) Hence, every institution is free to devise its own fee structure but the same can be regulated in the interest of preventing profiteering. No capitation fee can be charged.

Setting up of the two Committees for regulating admissions and determining fee structure by the judgment in Islamic Academy does not go beyond the law laid down in Pai Foundation

(i) The two committees for monitoring admission procedure and determining fee structure in the judgment of Islamic Academy, are permissible as regulatory measures aimed at protecting the interest of the student community as a whole as also the minorities themselves, in maintaining required standards of professional education on non-exploitative terms in their institutions. Legal provisions made by the State Legislatures or the scheme evolved by the Court for monitoring admission procedure and fee fixation do not violate the right of minorities under Article 30(1)or the right of minorities and non-minorities under Article 19(1)(g). They are reasonable restrictions in the interest of minority institutions permissible under Article 30(1) and in the interest of general public under Article 19(6) of the Constitution.

(ii) On the basis of judgment in Pai Foundation and various previous judgments of this Court which have been taken into consideration in that case, the scheme evolved of setting up the two Committees for regulating admissions and determining fee structure by the judgment in Islamic Academy cannot be faulted either on the ground of alleged infringement of Article 19(1)(g) in case of unaided professional educational institutions of both categories and Article 19(1)(g) read with Article 30 in case of unaided professional institutions of minorities.

(iii) The judgment in Islamic Academy, in so far as it evolves the scheme of two Committees, one each for admission and fee structure, does not go beyond the law laid down in Pai Foundation and earlier decisions of this Court, which have been approved in that case. The challenge to setting up of two Committees in accordance with the decision in Islamic Academy, therefore, fails.

Conclusion:

(i) In unaided private professional institution (both minority and majority), the scheme for reservation of seats, is violative of Article 30 and Article 19 (1) (g).

(ii) The unaided (minority and non-minority) educational institutions are free to devise their own admission procedure.

(iii) There is nothing wrong in having centralized entrance test being held for one group of institutions imparting same or similar education. Admission to be made from list of successful candidates without altering inter se merit. It would benefit twin objects, first, serving students free from exploitation and secondly, ensuring merit based admission.

(iv) Every institution is free to devise its own fee structure subject to the limitation that there can be no profiteering and no capitation fee can be charged directly or indirectly, or in any form.

(v) The scheme evolved of setting up the two Committees for regulating admissions and determining fee structure by the judgment in Islamic Academy cannot be faulted either on the ground of alleged infringement of Article 19(1)(g) in case of unaided professional educational institutions of both categories and Article 19(1)(g) read with Article 30 in case of unaided professional institutions of minorities.

Important Precedents:

(i) T.M.A. Pai Foundation v. State of Karnataka MANU/SC/0905/2002

(ii) Islamic Academy of Education and Anr. v. State of Karnataka and Ors. MANU/SC/0580/2003

(iii) Unni Krishnan v. State of Andhra Pradesh MANU/SC/0333/1993

(iv) St. Stephen's College v. University of Delhi MANU/SC/0319/1992

(v) In Re: Kerala Education Bill, 1957 (1958) SCR 995

(vi) Ahmedabad St. Xavier's College Society v. State of Gujarat MANU/SC/0088/1974