ICON EDUCATION SOCIETY versus STATE OF MADHYA PRADESH & OTHERS on 17 March 2023

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SUPREME COURT REPORTS

[2023] 2 S.C.R.

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ICON EDUCATION SOCIETY

v.

STATE OF MADHYA PRADESH & OTHERS

(Civil Appeal No. 1760 of 2023)

BMARCH 17, 2023

[DINESH MAHESHWARI AND SANJAY KUMAR, JJ.]

Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (PraveshKa Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 – s.9 –Fee-fixation – Power of Admission and Fee Regulatory CommitteeC(AFRC) – Held: AFRC constituted under the 2007 Act exercisesonly the power of ‘regulation’ in respect of the fees proposed by theinstitution, conditioned by the parameters in s.9(1) of the 2007 Act– Liberty given to unaided institutions to propose the fees that theywish to charge, keeping in mind the factors set out in s.9(1) of theD2007 Act stands protected – It is only by way of regulating the feesso proposed that the AFRC would exercise the power of reviewingthe proposed fees, after giving due opportunity of hearing to theeducational institution concerned – Thus, in the present case, it isnot open to the AFRC to unilaterally fix the fees to be charged bythe appellant-society for the professional courses offered throughEits educational institutions – At the same time, the appellant cannotclaim complete immunity in undertaking this exercise and seekexemption from any interference by the AFRC – Appellant mustnecessarily submit the fees proposed by it in respect of theprofessional courses offered through its institutions to the AFRCFfor the purpose of review and regulation, as per the provisions ofs.9 of the 2007 Act and the principles laid down by Supreme Courtin the decisions referred to herein – Constitution of India – Articles19(1)(g), (6), 30(1) – National Commission for Minority EducationalInstitutions Act, 2004 – s.2(g).

GT.M.A. Pai Foundation and others Vs. State ofKarnataka and others (2002) 8 SCC 481 : [2002] 3Suppl. SCR 587; P.A. Inamdar and others Vs. State ofMaharashtra and others (2005) 6 SCC 537 : [2005] 2Suppl. SCR 603; Modern Dental College and ResearchCentre and others Vs. State of Madhya Pradesh and H

ICON EDUCATION SOCIETY v. STATE OF MADHYAPRADESH & OTHERS

others (2016) 7 SCC 353 : [2016] 3 SCR 579 –followed.

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Sk. Md. Rafique Vs. Managing Committee, ContaiRahamania High Madrasah and others (2020) 1 SCT627(SC); Ahmedabad Saint Xaviers College Society andanother Vs. State of Gujarat and another (1974) 1 SCC717 : [1975] 1 SCR 173; Association of Private Dentaland Medical Colleges Vs. State of MP (2009) SCCOnline MP 760 – referred to.

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Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1760of 2023.

From the Judgment and Order dated 19.11.2020 of the High Courtof Madhya Pradesh at Indore in WP No. 9690 of 2020.

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Dama Seshadri Naidu, Sr. Adv., Pai Amit, Rohit R. Saboo, Ms.Pankhuri Bhardwaj, Abhiyudaya Vats, Advs. for the Appellant.

P. V. Yogeswaran, A.A.G., Ms. Rukhmini Bobde, Pashupathi NathRazdan, Ms. Soumya Priyadarshinee, Ankit Ambasta, Amit KumarSrivastava, Amlaan Kumar, Advs. for the Respondents.

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The Judgment of the Court was delivered by SANJAY KUMAR, J.

Leave granted.

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2. The short question that arises for consideration in this case iswhether a minority educational institution in the State of Madhya Pradeshis required to get the fees charged by it fixed by the Admission and FeeRegulatory Committee under the provisions of the Madhya Pradesh NijiVyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk KaNirdharan) Adhiniyam, 2007 (for short, ‘the Act of 2007’)?

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A3. This issue is no longer res integra as the contours and importof the Act of 2007, including the question aforestated, were dealt withand decided by a Constitution Bench in Modern Dental College andResearch Centre and others Vs. State of Madhya Pradesh andothers[(2016) 7 SCC 353]. However, failure of the parties in properlyunderstanding the ratio decidendi of the above decision led to the presentBlitigation.

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4. Icon Education Society, the appellant herein, maintains andmanages two unaided educational institutions at Indore, viz., IndoreInstitute of Law and Indore Nursing College. Both these institutionsqualify as ‘minority educational institutions’ under Section 2(g) of theCNational Commission for Minority Educational Institutions Act, 2004.While so, by letter dated 08.07.2019, the Admission and Fee RegulatoryCommittee (for short, ‘the AFRC’), constituted under Section 4 of theAct of 2007, called upon the Indore Institute of Law to submit its proposalfor regulation of the fees pertaining to law courses offered by it. ThisDwas followed up by a reminder on 24.07.2019, which was addressed toall private law colleges in the State of Madhya Pradesh. The appellantsociety addressed reply dated 31.07.2019, stating that the AFRC wasnot empowered to regulate the fees charged by minority educationalinstitutions and requesting that the notices issued may be withdrawn orcancelled. The AFRC responded, vide letter dated 14.11.2019, statingEthat a decision had been taken in the meeting held on 08.11.2019 that thefees of minority institutions should be fixed by the AFRC. The appellantsociety was accordingly informed that its request for relaxation fromgetting the fees fixed by the AFRC was rejected.

5. Aggrieved thereby, the appellant society preferred an appealFunder Section 10 of the Act of 2007 before the designated authority. Theappeal was dismissed by the appellate authority, by order dated10.01.2020, holding that the procedure of regulating/fixing of fee wascommon to both minority and non-minority institutions. The review/recallpetition preferred by the appellant society was dismissed with costs byGthe appellate authority on 06.03.2020.

6. Thereupon, the appellant society filed WP No. 9690 of 2020before the Indore Bench of the Madhya Pradesh High Court. Its prayertherein was to declare Sections 4 and 9 of the Act of 2007 ultra vires asthese provisions did not distinguish between minority educationalHinstitutions and other educational institutions and, in consequence, did not exempt minority educational institutions from fee-fixation. A furtherdirection was sought to exempt the appellant society, being a minorityeducational institution, from the application of Section 9 of the Act of2007, thereby permitting it to fix its own fees.

7. By order dated 19.11.2020, a Division Bench of the MadhyaPradesh High Court at Indore dismissed the writ petition. The DivisionBench noted that the validity of the Act of 2007 had already been upheldin Modern Dental College and Research Centre (supra). The HighCourt then relied upon Sk. Md. Rafique Vs. Managing Committee,Contai Rahamania High Madrasah and others [(2020) 1 SCT627(SC)], wherein this Court referred to its earlier edict in AhmedabadSaint Xaviers College Society and another Vs. State of Gujarat andanother [(1974) 1 SCC 717] that the right under Article 30(1) of theConstitution is not absolute or above other provisions of law and theessence of Article 30(1) was to ensure equal treatment between majorityand minority institutions. It was further held that the laws of the land,including rules and regulations, must apply equally to majority institutionsas well as minority institutions. In his concurring opinion, H.R.Khanna Jhad held that a balance must be kept between the two objectives – one,to ensure the standard of excellence of the institution and the other,preserving the right of minorities to establish and administer educationalinstitutions. In the light of Modern Dental College and Research Centre(supra) and Sk. Md. Rafique (supra), the High Court concluded thatno grounds were made out to interfere with the orders passed by theAFRC.

8. Heard Mr.Dama Seshadri Naidu, learned senior counsel,appearing for the appellant society; and Mr.P.V.Yogeshwaran, learnedAAG, appearing for the State of Madhya Pradesh.

9. Section 4 in Chapter 2 of the Act of 2007 deals with theconstitution and establishment of the AFRC. Section 4(1) provides thatthe State Government shall, by notification in the official gazette,constitute a committee to be called the ‘Admission and Fee RegulatoryCommittee’, for the supervision and guidance of the admission processand for the fixation of fees to be charged from candidates seekingadmission in a private professional educational institution. Section 4(8)provides that the AFRC may require a private aided or unaidedprofessional educational institution or a deemed university to furnish, A

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Aby the prescribed date, information as may be necessary for enablingthe AFRC to determine the fees that may be charged by the institutionin respect of each professional course and the fees so determinedshall be valid for such period as may be notified by the StateGovernment.

B10. Chapter 4 of the Act of 2007 deals with fixation of fees.Section 9(1) therein provides that, having regard to the location of theprivate unaided professional educational institution; the nature of theprofessional course; the cost of the land and building; the availableinfrastructure, teaching, non-teaching staff and equipment; theexpenditure on administration and maintenance; the reasonable surplusCrequired for growth and development of the professional institution;and any other relevant factor, the AFRC shall determine, in the mannerprescribed, the fees to be charged by the private unaided professionaleducational institution. Section 9(2) provides that the AFRC shall givethe institution an opportunity of being heard before fixing any fees.DThe proviso thereunder states that no such fees, as may be fixed bythe AFRC, shall amount to profiteering or commercialization ofeducation.

11. Significantly, in the 11-Judges Bench decision of this Courtin T.M.A. Pai Foundation and others Vs. State of Karnataka andEothers [(2002) 8 SCC 481], the majority opinion voiced by B.N.KirpalCJ, speaking for himself and five other learned Judges, answered thequestion as to whether statutory provisions regulating facets ofadministration of educational agencies, including regulation of fees,would interfere with the right of administration by minorities in thenegative, but held that such regulatory measures should be minimal inFthe case of unaided minority educational institutions. As regards thefees to be charged by unaided institutions, it was held that the samecould not be regulated but no institution should charge capitation fee.It was emphasized that, inasmuch as the occupation of education is, ina sense, regarded as charitable, the Government can provide regulationsGthat will ensure excellence in education, while forbidding the chargingof capitation fee and profiteering by the institution. Since the object ofsetting up an educational institution is by definition “charitable”, it washeld to be clear that an educational institution cannot charge such afee as is not required for the purpose of fulfilling that object. To put itdifferently, per the majority, in the establishment of an educationalH

institution, the object should not be to make a profit inasmuch aseducation is essentially charitable in nature, but there could, however,be a reasonable revenue surplus, which may be generated by theeducational institution for the purpose of development of educationand expansion of the institution. The partly-concurring opinion ofS.N.Variava J, speaking for himself and Ashok Bhan J, was to theeffect that there could be an appropriate mechanism to ensure that nocapitation fee is charged and profiteering is not resorted to, but theextent of regulation would not be the same for aided and unaidedinstitutions.

12. Thereafter, in the 7-Judges Bench decision of this Court inP.A. Inamdar and others Vs. State of Maharashtra and others[(2005) 6 SCC 537], this Court unanimously held that, as per the lawdeclared in T.M.A. Pai Foundation (supra), setting up a reasonablefee structure is also a component of the right to establish and administeran institution, within the meaning of Article 30(1) of the Constitution,and every institution is free to devise its own fee structure subject tothe limitation that there can be no profiteering and no capitation feecan be charged directly or indirectly or in any form. It was further heldthat it is permissible to regulate admission and fee structure forachieving that purpose. The question whether guidelines could havebeen issued in the matter of regulating the fee payable by students toeducational institutions was, therefore, answered in the affirmative byholding that every institution is free to devise its own fee structure butthe same can be regulated in the interest of preventing profiteeringand capitation fees.

13. As stated hereinbefore, the Act of 2007 fell for considerationbefore a Constitution Bench in Modern Dental College and ResearchCentre (supra) in the context of regulation of unaided educationalinstitutions in the State of Madhya Pradesh. Significantly, the validity/vires of various provisions of the Act of 2007, including provisionspertaining to fixation of fees, was also under attack. The issue was as towhether provisions relating to fixation of fees were violative of Article19(1)(g) or whether they were regulatory in nature and were permissibleunder Article 19(6) of the Constitution. Keeping in mind the fact that theState has the power to regulate fixation of fees in the interest of preventingprofiteering and such fixation of fees has to be regulated and controlledat the initial stage itself, this Court observed that the parameters laid AB

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Adown in Section 9(1) of the Act of 2007, which have to be kept in mindwhile fixing the fees were, in fact, the ones enunciated in earlierjudgments of this Court. This Court, therefore, held that analysis of theprovisions of the Act of 2007 by the Madhya Pradesh High Court inAssociation of Private Dental and Medical Colleges Vs. State ofBMP[(2009) SCC Online MP 760], from which the appeal arose, wasperfectly in order. Reference was made to the observations containedtherein to the effect that each professional educational institution canfurnish information with regard to the fees that it proposes to chargefrom the candidates, taking into account the cost of components, the reasonable surplus required for growth and development and other factorsCrelevant to impart professional education as mentioned in Section 9(1)of the Act of 2007, and that the function of the AFRC is only to find out,after giving due opportunity of hearing to the institution, whether thefees proposed by the institution is based on the factors mentioned inSection 9(1) of the Act of 2007 and did not amount to profiteering andDcommercialization of education. The High Court had further observedthat the AFRC, while determining the fees, only gives final approval tothe proposed fees to be charged, after being satisfied that it was basedon the factors mentioned in Section 9(1), and that there was noprofiteering or commercialization of education. The High Courtaccordingly concluded that the provisions of Sections 4(1), 4(8) and 9 ofEthe Act of 2007, in substance, empowered the AFRC to be only satisfiedthat the fee proposed by private professional educational institutions didnot amount to profiteering or commercialization of education and wasbased on the factors mentioned in Section 9(1) of the Act of 2007 andheld that the Act of 2007, therefore, did not violate the right of the privateFprofessional educational institution to charge its own fee. Accepting thesaid interpretation, this Court observed that the AFRC which is set upfor that purpose is discharging only a regulatory function, as the feewhich a particular educational institution seeks to charge from its studentshas to be suggested by the said educational institution itself and the AFRCGis empowered to satisfy itself that the fee proposed by the educationalinstitution did not amount to profiteering or commercialization of educationand was based on the intelligible factors mentioned in Section 9(1) of theAct of 2007. This Court, therefore, concluded that it was only a regulatorymeasure and did not take away the power of the educational institutionsto fix their own fees.H

14. The supplementing opinion of R. Banumathi J noted that, thoughSection 9 of the Act of 2007 empowered the AFRC to determine thefees, the High Court had read down Sections 4(1), 4(8) and 9 of Act of2007, by holding that those provisions “in substance empower thecommittee to be only satisfied that the fee proposed by a privateprofessional educational institution did not amount to profiteeringor commercialization of education and was based on the factorsmentioned in Section 9(1) of the Act 2007...”. The learned Judgeaccordingly held that the State had the legislative competence to enactthe Act of 2007 and regulation of fixation of the fees was to protect theright of the students in having access to higher education without beingsubjected to exploitation in the form of profiteering. The learned Judgeconcurred with the majority view in upholding the validity of the impugnedlegislation and affirmed the decision of the High Court.

15. It is, therefore, too late in the day for the appellant society toagain seek to challenge the validity of the Act of 2007, as the provisionsof this enactment have already been read down by this Court to meanthat the AFRC would have the power only to regulate the fee once thesame is proposed by the educational institution itself, keeping in mind theparameters encapsulated in Section 9(1) thereof.

16. Therefore, as matters stand, the Act of 2007 has beeninterpreted to mean that the AFRC, constituted thereunder, exercisesonly the power of ‘regulation’ in respect of the fees proposed by theinstitution, conditioned by the parameters in Section 9(1) of the Act of2007. In effect, the liberty given to unaided institutions to propose thefees that they wish to charge, keeping in mind the factors set out inSection 9(1) of the Act of 2007, stands protected and it is only by wayof regulating the fees so proposed that the AFRC would exercise thepower of reviewing the proposed fees, after giving due opportunity ofhearing to the educational institution concerned. The contrary standtaken by the AFRC, as is evident from its communications to theappellant society, therefore cannot be countenanced. It is not open tothe AFRC to seek to unilaterally fix the fees to be charged by theappellant society for the professional courses offered through itseducational institutions. At the same time, it is not open to the appellantsociety to claim complete immunity in undertaking this exercise andseek exemption from any interference by the AFRC. The appellantsociety must necessarily submit the fees proposed by it in respect of A

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[2023] 2 S.C.R.

Athe professional courses offered through its institutions to the AFRCfor the purpose of review and regulation, as per the provisions of Section9 of the Act of 2007 and the principles laid down by this Court in thedecisions referred to hereinabove. Making this position clear, the appealis disposed of accordingly.

BParties shall bear their own costs.

Divya Pandey

(Assisted by : Shivani Pundir and Shashwat Jain, LCRAs)

Appeal disposed of.

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