Judges: Anil R. Dave, A.K. Sikri, R.K. Agrawal, Adarsh Kumar Goel and R. Banumathi, JJ.

Facts:

Appellants filed writ petitions before High Court of Madhya Pradesh challenging the vires of 'Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007' (hereinafter, 'Act, 2007').

Appellants also challenged vires of Admissions Rules, 2008 (hereinafter, 'Rules, 2008') and the Madhya Pradesh Private Medical and Dental Post Graduate Courses Entrance Examination Rules, 2009 (hereinafter, 'Rules, 2009') which have been framed by the State Government in exercise of the power under Section 12 of Act, 2007.

Challenge was laid by Appellants to provisions of the Act and Rules on four grounds, namely, provisions relating to admission; provisions relating to fixation of fee, provisions for reservation; and provisions relating to eligibility for admission.

The High Court repelled the challenge on first three counts holding that the judgment in T.M.A. Pai Foundation and Ors. vs. State of Karnataka and Ors. MANU/SC/0905/2002, as explained in P.A. Inamdar and Ors. vs. State of Maharashtra and Ors. MANU/SC/2621/2005, permits the Government to regulate the admissions as well as fee, even of the private unaided educational institutions. The Court also held that the impugned provisions are saved by Article 19(6) of the Constitution as they amount to 'reasonable restrictions' imposed on the right of admission and fixation of fee, which otherwise vests with the Appellants.

Issues:

(i) Whether Act, 2007 and Rules framed there under are beyond the legislative competence of the State of Madhya Pradesh?

(ii) Whether Common Entrance Test (CET) wltich regulates admission to unaided private professional educational institutions cause any dent in the fundamental rights of those institutions?

(iii) Whether provisions in the Act, 2007 and Rules framed there under relating to fixation of fee are unconstitutional being violative of Article 19(1)(g) of the Constitution?

(iv) Whether reservation of seats for Scheduled Castes, Scheduled Tribes and Other Backward Classes is unconstitutional?

(v) Whether there was any need for regulatory mechanism as put in place by the Act, 2007 and Rules framed there under?

(vi) Whether 'restrictions' on the right of the appellants to carry on their 'occupation', are 'reasonable' and satisfy the test of proportionality?

Laws:

Constitution of India, 1950 - Article 19(1)(g) - Right to practise any profession, or to carry on any occupation, trade or business.

Constitution of India, 1950 - Article 19(6) - Reasonable restrictions on right to practise any profession, or to carry on any occupation, trade or business.

Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 - An Act to provide for Regulation of admission and fixation of fee in private professional educational institutions in the State of Madhya Pradesh and to provide for reservation of seats to persons belonging to the Scheduled Castes, Scheduled Tribes and Other Backward Classes in professional educational institutions.

Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 - Section 9(1) - Fixation of fees.

Contentions:

Appellants

(i) By the impugned legislation the State seeks to wipe out the choice available with the Appellants institutions to devise their own admission procedure.

(ii) Rights available to the Appellants institutions is to devise their own admission procedure, subject to the condition that the procedure so devised ought to be 'fair', 'transparent' and 'non-exploitative'.

(iii) Rights available to the institutions under Article 19(1)(g) of Constitution includes a right to admit students on a fair basis.

(iv) Matter of admission in higher educational institutional falls in Entry 66 of List I to the Seventh Schedule of the Constitution (Union List) and is not covered by Entry 25 of List III of Seventh Schedule (Concurrent List).

Respondents

(i) Whenever it comes to the higher education, particularly in the field of professional education, private unaided institutions imparting professional education would not be extended the principle of maximum autonomy.

(ii) Maximum Regulations could be framed with regard to these institutions since the principle of maintaining merit was inviolable and primary.

(iii) T.M.A. Pai Foundation and P.A. Inamdar empowers the State to regulate the admission to ensure that the triple test ensured in T.M.A. Pai Foundation is adhered to and such Regulation would encompass within its power of the State to hold CET coupled with counselling of the students to be admitted in the professional institutions.

(iv) In P.A. Inamdar, the seven Judge Bench rather exhorted the States to come out with legislations regulating admissions and fee in private unaided/aided professional or technical institutions.

(v) Mechanism which was provided in Act, 2007 did not take away the power of the educational institutions to fix the fee. This was only a regulatory mechanism.

(vi) Issue whether provisions of Article 15(5) of the Constitution apply or not to the private unaided institutions was no longer res integra since the same has already been upheld in the Constitution Bench judgment rendered in Pramati Educational and Cultural Trust (Registered) and Ors. v. Union of India and Ors. MANU/SC/0419/2014.

Analysis:

Fixation of fee - Whether provisions of the Act, 2007 constitutional

(i) Parameters laid down in Section 9 of Act, 2007 has to be kept in mind while fixing the fee. Committee which is set up for this purpose, namely, Admission and Fee Regulatory Committee, is discharging only regulatory function. The fee which a particular educational institution seeks to charge from its students has to be suggested by the said educational institution itself.

(ii) The Committee is empowered with a purpose to satisfy itself that the fee proposed by the educational institution did not amount to profiteering or commercialisation of education and was based on intelligible factors mentioned in Section 9(1) of the Act, 2007. Therefore, it is only a regulatory measure and does not take away the powers of the educational institution to fix their own fee.

(iii) The provision of the Act and the Rules are, therefore, in tune with the sentiments and directions contained in P.A. Inamdar. The enactment in question does not run afoul of any of the existing central laws.

(iv) The right to admission or right to fix the fee guaranteed to these appellants is not taken away completely, as feared. T.M.A. Pai Foundation gives autonomy to such institutions which remain intact.

Power of State to conduct CET - Whether legal

(i) CET is in larger interest and welfare of the students to promote merit, add excellence and curb malpractices. Holding of CET umder the control of the State does not impinge this autonomy. Admission is still in the hands of these institutions.

(ii) Sole purpose of holding CET is to ensure that admissions done by the educational institutions are strictly on merit.

Regulations under Act, 2007 - Need for

(i) Mechanism of regulations under the impugned laws is legal, constitutional, fair, transparent and upholds the primary criteria of merit.

(ii) Purpose of education is to bring about social transformation and thereby a better society, as it aims at creating better human resource which would contribute to the socio-economic and political upliftment of the nation. The concept of welfare of the society would apply more vigorously in the field of education.

(iii) The occupation of education cannot be treated at par with other economic activities. In this field, State cannot remain a mute spectator and has to necessarily step in from time to time, in order to prevent exploitation, privatization and commercialisation by the private sector.

(iv) All these considerations make out a case for setting up of a stable Regulatory mechanism.

Right of private unaided professional institutions to establish and manage educational institutions - Article 19(1)(g) of Constitution

(i) Right of professional institutions to establish and manage educational institutions is regarded as an 'occupation' befitting the recognition of this right as a fundamental right under Article 19(1)(g) of Constitution.

(ii) Four specific rights which encompass right to occupation are, 'right to admit students', 'right to set up a reasonable fee structure', 'right to appoint staff (teaching and non-teaching)' and 'right to take action if there is dereliction of duty on the part of any employees'.

(iii) Since education is treated as a noble 'occupation' on 'no profit no loss' basis, those who establish and are managing the educational institutions are not expected to indulge in profiteering or commercialisation of this noble activity.

(iv) Thus, complete freedom is not given to the educational institutions in respect of 'right to admit the students' and 'fixation of fee'. It is subject to certain restrictions. These are regulatory measures which can be adopted by the State in respect of such institutions.

(v) While treating the managing of educational institution as an 'occupation', this activity could not be treated as 'business' or 'profession'. This right to carry on the occupation, that the 'education' is, cannot be put at par with other occupations or business activities or even other professions. It is a category apart which was carved out by this Court in T.M.A. Pai Foundation.

(vi) Keeping these objectives in mind, the Court did not give complete freedom to the educational institutions in respect of right to admit the students and also with regard to fixation of fee.

(vii) Right under Article 19(1)(g) of Constitution is not absolute in terms but is subject to reasonable restrictions under clause (6). Reasonableness has to be determined having regard to the nature of right alleged to be infringed, purpose of the restriction, extent of restriction and other relevant factors. In applying these factors, one cannot lose sight of the Directive Principles of State Policy. The Court has to try to strike a just balance between the fundamental rights and the larger interest of the society.

(viii) For larger interest and welfare of student community and to promote merit, achieve excellence and curb malpractices, 'fee' and 'admissions' can certainly be regulated.

Reservation of seats for Scheduled Castes, Scheduled Tribes and Other Backward Classes - Whether within parameters of law

(i) High Court successfully dealt with the argument by appropriately demonstrating, by means of charges, that not only it was possible to work out extent of reservation provided for different categories, sufficient number of seats were available for general categories as well.

(ii) Thus, there is no merit in the challenge to the reservation of seats for SC/ST and OBC etc., which is in consonance with Article 15(5) of Constitution.

Act, 2007 - Whether legislative competence with the State to enact

(i) Entry 66 in List I is a specific Entry having a very specific and limited scope. It deals with co-ordination and determination of standards in institution of higher education or research as well as scientific and technical institutions. The words ' co-ordination and determination of standards' would mean laying down the said standards.

(ii) Thus, when it comes to prescribing the standards for such institutions of higher learning, exclusive domain is given to the Union. However, that would not include conducting of examination etc., and admission of students to such institutions or prescribing the fee in these institutions of higher education, etc.,

(iii) When it comes to regulating 'education' as such, that is prescribed in Entry 25 of List Ill, thereby giving concurrent powers to both Union as well as States. It is significant to note that earlier education, including universities, was the subject matter of Entry 11 in List II. Thus, power to this extent was given to the State Legislatures. However, this Entry was omitted by the Constitution (Forty-Second Amendment) Act, 1976 with effect from July 03, 1977 and at the same time Entry 25 in List II was amended.

(iv) Education, including university education, was thus transferred to Concurrent List and in the process technical and medical education was also added.

(v) When two Entries relating to education, one in the Union List and the other in the Concurrent List, co-exist, they have to be read harmoniously. Reading in this manner, it would become manifest that when it comes to coordination and laying down of standards in the higher education or research and scientific and technical institutions, power rests with the Union/Parliament to the exclusion of the State Legislatures. However, other facets of education, including technical and medical education, as well as governance of universities is concerned, even State Legislatures are given power by virtue of Entry 25.

(vi) The field covered by Entry 25 of List III is wide enough and as circumscribed to the limited extent of it being subject to Entries 63, 64, 65 and 66 of List I.

(vii) There was no violation of right of autonomy of the educational institutions in the CET being conducted by the State or an agency nominated by the State or in fixing fee. The right of a State to do so is subject to a central law. Once the notifications under the Central statutes for conducting the CET called 'NEET' become operative, it would be a matter between the States and the Union, to be sorted out on the touchstone of Article 254 of the Constitution.

Doctrine of proportionality - Nature and application of

(i) While examining whether the impugned provisions of the statute and Rules amount to reasonable restrictions and are in the interest of general public, 'doctrine of proportionality' is applied. It is the balancing of fundamental right to carry on occupation on the one hand and the restrictions imposed on the other hand.

(ii) State is empowered to make any law relating to the professional or technical qualifications necessary for practicing any profession or carrying on any occupation or trade or business. Thus, while examining as to whether the impugned provisions of the Statute and Rules amount to reasonable restrictions and are brought out in the interest of the general public, the exercise that is required to be undertaken is the balancing of fundamental right to carry on occupation on the one hand and the restrictions imposed on the other hand.

(iii) Impugned provisions which may amount to 'restrictions' on the right of the appellants to carry on their 'occupation', are clearly 'reasonable' and satisfy the test of proportionality.

R. Banumathi, J. (Supplementing)

(i) By holding common entrance test and identifying meritorious candidates, the State is merely providing the merit list of the candidates prepared on the basis of a fair common entrance test. If the screening test is conducted on merit basis, no loss will be caused to the private educational institutions.

(ii) There is neither restriction on the entry of the students in the sanctioned intake of the institutions nor on their right to collect fees from the students .

(iii) Prima facie materials to indicate that the private unaided professional educational institutions have not passed triple test as laid down in P.A. lnamdar. It does not seem inappropriate on the part of the State to come up with the 2007 Act which lays down a mechanism for conducting common entrance test in order to ensure merit based admission in the private institutions.

(iv) State has the legislative competence to enact the 2007 Act to hold common entrance test for admission to professional educational institutions and to determine the fee. High Court has rightly upheld the validity of the impugned legislation.

(v) Regulations sought to be imposed by the impugned legislation on admission by common entrance test conducted by the State and determination of fee is in compliance of the directions and observations in T.M.A. Pai, Islamic Academy of Education and P.A. Inamdar.

(vi) Regulations on admission process are necessary in the larger public interest and welfare of the student community to ensure fairness and transparency in the admission and to promote merit and excellence. Regulation on fixation of fee is to protect the rights of the students in having access to higher education without being subjected to exploitation in the form of profiteering.

Conclusions:

(i) Act, 2007 does not give unbridled power to the authority to determine the fee. Determination of fee has to be based on the factors stipulated in Section 9 of the Act.

(ii) State has the legislative competence to enact Act, 2007 to hold common entrance test for admission to professional educational institutions and to determine the fee.

(iii) High Court has rightly upheld the validity of the impugned legislation.

(iv) Regulations sought to be imposed by the impugned legislation on admission by common entrance test conducted by the State and determination of fee is in compliance of the directions and observations in T.M.A. Pai, Islamic Academy of Education and P.A. Inamdar.

(v) Regulations on admission process are necessary in the larger public interest and welfare of the student community to ensure fairness and transparency in the admission and to promote merit and excellence.

(vi) Regulation on fixation of fee is to protect the rights of the students in having access to higher education without being subjected to exploitation in the form of profiteering.

Important Precedents:

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

(ii) P.A. Inamdar and Ors. v. State of Maharashtra and Ors. MANU/SC/2621/2005