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From Unnikrishnan to Inamdar – The story of how the Supreme Court first strangled and then liberated private higher education

From Unnikrishnan to Inamdar – The story of how the Supreme Court first strangled and then liberated private higher education

RohitBhat_SupremeCourtAdvocateA powerful and activist court, the Supreme Court of India has not confined itself to the enforcement or scrutiny of government policies in the area of higher education. More often than not, it has made policy. While outlining the role of the Supreme Court in shaping policy, I will only discuss the general rights of ‘private, unaided, non-minority institutions’. The principles applicable in these judgments apply with some additions to ‘private, unaided, minority institutions’ because they are more autonomous.

The terms ‘aided’ and ‘unaided’ refer to the government aid given to private educational institutions. Inevitably, there is greater government control of institutions that receive such aid but this essay will not discuss them.

The growth, development, and quality of a nation’s institutions of higher education are key indicators of its modernisation and development. Even though India’s higher education system is one of the world’s largest (after U.S.A. and China), there is a vast demand-supply gap. By 2020, to serve the needs of a young and more prosperous population, India needs to nearly double the number of seats it has now. The government is not optimally suited to build and run educational facilities on such a large scale.

Today, private institutions account for nearly 59 per cent of all enrolment. The judgments of the Supreme Court since TMA Pai Foundation in 2001 have protected their autonomy in administration and in respect of fees, which has contributed to the increase in this number.

Prior to TMA Pai however, the Court’s priority was to ensure that education was accessible to all. The autonomy of private institutions was a lesser concern and the Court even held that there was no fundamental right to set up educational institutions. In practice, this approach severely affected the growth of private institutions and also ran contrary to the policy of the government, which under Article 41 of the Constitution of India, has a duty, subject to economic capacity, to make effective provision for securing the right to education.

The Indian state’s policy on private higher education

The approach of the independent Indian state to higher education differed significantly from the British approach. In 1857, universities were established at Bombay, Madras, and Calcutta to answer Thomas Babington Macaulay’s call to impart English-language education to Indians who could then serve as intermediaries between the British and other Indians.

SarveppalliRadhakrishnan_SocialSciencesEducation
Dr. S. Radhakrishnan, as Vice-President of India, inaugurating the Round-Table Conference on the Teaching of the Social Sciences in South Asia at Delhi University, on February 15, 1954. Image above is from photodivision.gov.in.

The first real transformation in approach came in 1948 when, one year after Independence, the University Education Commission was set up under the leadership of the philosopher and educationist Sarvepalli Radhakrishnan. The commission’s report emphasised ideas such as university autonomy, the spirit of free inquiry, and the liberalisation of education. It especially underscored the distinction between state recognition and state control, pointing out that universities in Great Britain were held in high regard because of their freedom from governmental interference.

But it was not until the New Education Policy of 1986 that the role of private institutions was officially recognised, paving the way for private and voluntary initiatives in higher education. This policy recognised that state funds were not enough to promote higher education and the need for the private sector to assist in providing universal higher education.

So while the state never discouraged private education, it has, since 1986, actively supported the creation of private educational institutions. In doing so, however, it needed to devise a framework to ensure that its key objectives were met; that is, (a) a high quality of education and (b) access to education for all classes of society so as to prevent its monopolisation by the elite.

These objectives, however, conflicted with one of the core concepts of ‘private’ education, that is, autonomy. Private institutions strive to have as much control as they can in their establishment, their structure and organisation, in the manner in which they admit students and, most importantly, in the fees they charge. There was, therefore, a need to balance the interests of private participants in higher education with the need to secure good-quality and accessible education. This is where the Supreme Court stepped in and delivered a series of judgments dealing with the rights of private educational institutions to set up, to admit students of their choice, and to charge fees.

Not all these judgments have, as we have noted, supported the policy of the state and initially, the Supreme Court was reluctant to deliver judgments that furthered the cause of private educational institutions. The first of these judgments came from a division bench of the Court in Mohini Jain v. State of Karnataka, (1992) 3 SCC 666.

Mohini Jain’s deathblow to private education

Mohini Jain had approached the Court stating that she had gained admission into an MBBS course at a private institution in Karnataka. A student from outside the state, she was asked to pay a tuition fee of Rs. 60,000 for the first year and offer a bank guarantee for the remaining years of the course. Her allegation that there was a demand for a further “capitation fee” of Rs. 4.5 lakhs was denied. She also argued that the charging of Rs. 60,000 itself amounted to a “capitation fee” as students admitted against government seats in the same college were charged only Rs. 2000 and other students from Karnataka were charged only Rs. 25,000.

JusticesKuldipSingh_RMSahai_MohiniJainCase
Justices Kuldip Singh (left) and R.M. Sahai constituted the bench in the Mohini Jain case.

The Court faced two questions – first, whether there is a right to education and if so, whether charging a capitation fee violated that right, and second, whether charging a capitation fee violated Article 14 of the Constitution.

In answering the first question, the Court held, in a sweeping constitutional interpretation, that there is a fundamental right to education at all levels (primary, secondary and higher) and that the state was under a constitutional mandate to provide educational institutions at all those levels. Extending that finding, the Court held that when the state government grants recognition to any educational institution, it creates an agency to fulfill its obligation under the Constitution. The charging of a capitation fee was consequently, a denial of a citizens’ right to education.

The final blow to private institutions came on the issue of fixation of the tuition fee. The Court held that if government seats are filled by charging Rs. 2,000, it is the state’s responsibility to ensure that all other institutions that are set up with government permission and have obtained recognition from the government, also charge the same amount as fees.

Mohini Jain was a harsh decision. It failed to balance the viability of running private institutions with the provision of quality, widely accessible education. The judgment viewed the imparting of education in India as a duty and a charitable activity. Perhaps influenced by the idea that the commercialisation of education was not desirable and ought to be curbed, the Court failed to examine government policies that allowed private institutions to flourish and even removed the incentives for setting up these institutions. The Court therefore did not consider the fact that private educational institutions, unlike government institutions, had to sustain themselves through fees charged from students and through donations.

Moreover, there was no discussion on the nature and extent of the fundamental right to occupation guaranteed under Article 19(1)(g) of the Constitution and whether this right would include the right to establish and run educational institutions. Through this judgment, education was effectively nationalised. However, it did not hold the field for very long.

Unni Krishnan’s feeble attempt

In Unni Krishnan J.P. v. State of Andhra Pradesh, (1993) 1 SCC 645, a five-judge bench was constituted for the specific purpose of reconsidering Mohini Jain. Private educational institutions argued that if the principles in Mohini Jain were followed, all private educational institutions would have to close down.

(From left to right) Chief Justice L.M. Sharma and Justices S.P. Bharucha, Jeevan Reddy, Pandian, and S. Mohan formed the bench in the Unnikrishnan Case.
(From left to right) Chief Justice L.M. Sharma and Justices S.P. Bharucha, Jeevan Reddy, Pandian, and S. Mohan formed the bench in the Unnikrishnan Case.

Before going into the questions raised about the rights of private educational institutions, it is important to note that the first question decided in this judgment was whether there is a fundamental right to education. (Mohini Jain had held that this right exists across all levels of education.) The Court in Unni Krishnan found that this right only extends to children up to the age of 14 years. This finding had a significant impact on private educational institutions as the absence of a fundamental right automatically disentitles the state from enforcing such a right through private educational institutions.

Private institutions, it was argued, had a right under Article 19(1)(g) that entitled them to complete autonomy. Moreover, market forces should be allowed to determine fees because only in allowing profits would private individuals be willing to set up institutions.

The Medical Council of India and the All India Council for Technical Education opposed these arguments on the grounds that the commercialisation of education was prohibited.

The Court rejected the argument grounded in Article 19(1)(g). This finding arose from the Court’s understanding of the terms ‘business’, ‘trade’, ‘profession’ and ‘occupation’ in that constitutional provision. A profit motive, the Court said, was essential to fall within these categories. Establishing a college would fall within the ambit of the term ‘occupation’ only if the institution did not seek affiliation from the state. Therefore, although there was technically a right under Article 19(1)(g), effectively, no private institution could claim the right, as the power to award degrees vested with universities that were largely set up by government. A private institution could award its own degrees, but, without any recognition, little value could be attached to such a degree.

Despite the fact that this judgment rejected the plea of private institutions, the decision assumes importance because, for the first time, the Court emphasised that it would be unrealistic and unwise to discourage private initiative in providing educational facilities, particularly in higher education. The Court held that the “private sector should be involved and indeed encouraged to augment the much-needed resources in the field of education, thereby making as much progress as possible in achieving the constitutional goals in this respect.”

The next step was to balance this need with the prohibition of commercialisation. The Court appeared to be in a dilemma over the extent of interference by the government. The Court stated that (a) regulatory controls have to be continued and strengthened in order to lay down minimum standards; (b) the commercialisation of education and racketeering must be prevented – there can be an adequate fee to ensure that institutions are self-financing, but there can be no capitation fee; (c) admission within all groups and categories should be based only on merit; and (d) reservation of seats in favour of the weaker sections of society and other groups which deserve special treatment is permitted.

In order to balance interests, the Court framed a scheme aimed at eliminating management discretion. The salient features of the scheme were:

a.  All private colleges must be affiliated to and award degrees granted by recognised universities.

b.  The establishment of a private college could only be through a society or a trust to ensure that profit-making is not a relevant consideration.

c.  The reservation of 50 per cent seats for government in all private professional colleges would be referred to as ‘free seats’ and admissions to these seats would be based on a common entrance test.  The remaining seats would be filled by the management on payment of the prescribed fees, on the basis of inter se merit, on the same basis as admissions to the free seats.

d. Prior intimation of the fees to be charged by the college and a stipulation that the maximum fees chargeable would be subject to a ceiling prescribed by a fee fixation committee constituted by state governments.

In its quest to balance interests and prevent the commercialisation of education, the Court imposed stringent conditions on private institutions, especially in relation to the fees chargeable. It made fees subject to the decisions of an ad hoc fee fixation committee with absolute authority over these institutions. Moreover, 50 per cent of the seats were to be reserved for “government students”. This seriously affected the autonomy of private colleges to admit students of their choice. Fees obtained from the 50 per cent “payment seats” were often not sufficient to recover the cost of running the institution. In many cases, the free seats went to students from affluent families because they had better access to preparatory training for the common entrance tests.

1993-2001 – The dark years of private education 

The scheme framed by the Supreme Court of India in Unni Krishnan was to be applicable from the academic year 1993-94. Problems with its resulted in a number of petitions being filed year after year challenging the fixation of fees by ad hoc bodies. Throughout the remaining decade, the Supreme Court, every year, fixed the relevant conditions for admissions to professional courses in the country. These conditions included the fees to be charged and the seat-sharing ratio between the government and private institutions. Thus, the nationalisation of education was substituted by the court control of education.

The Kasturba Medical College (above), located in Manipal in Udupi district in Karnataka, was established in 1953 by T.M.A. Pai and is among the premier medical colleges in India today.
The Kasturba Medical College (above), located in Manipal in Udupi district in Karnataka, was established in 1953 by T.M.A. Pai and is among the premier medical colleges in India today.

During this period, the issue of commercial viability of institutions, which was the main argument against the fixation of fees, gave rise to a new concept in private education: NRI seats. The under-recovery of the cost of education led to the creation by the Supreme Court of an NRI quota to be carved out of the 50 per cent payment seats, allowing institutions to charge a higher fee for them.

The fresh start in TMA Pai Foundation

The situation after Unni Krishnan led to the formation of an eleven-judge bench of the Supreme Court (TMA Pai Foundation v. State of Karnataka, (2002) 8 SCC 481) to decide eleven questions which included (a) the validity of the scheme framed by Unni Krishnan and (b) the rights of non-minorities to establish and administer educational institutions under Articles 19(1)(g) and 21.

The first step was to ascertain whether the establishment of an educational institution could be considered a fundamental right under Article 19(1)(g). In answering this question in the affirmative, there was importantly, consensus among counsel representing all sides that Article 19(1) (g) would cover the establishment of an educational institution and that the setting up of an educational institution would be an “occupation” under Article 19(1)(g). The answer to this question led to the conclusion that the scheme framed by Unni Krishnan was illegal and unconstitutional.

The crucial question then was to define the contours of this particular right, keeping in mind that (a) private educational institutions cannot be denied their choice in matters of selection of students and fixation of fees; (b) affiliation and recognition had to be available to every institution that fulfilled the required conditions; and (c) private institutions had to be given the right to constitute their own governing body, appoint their teaching and non-teaching staff, and take action if there was dereliction of duty by their employees.

(From left to right) Chief Justice B.N. Kirpal and Justices S.S. Quadri, G.B. Pattanaik, V.N. Khare, Arijit Pasayat, Rajendra Babu, Ashok Bhan, K.G. Balakrishnan, P.V. Reddy, S.N. Variava, and Ruma Pal were the eleven judges who decided the T.M.A. Pai Foundation case.
(From left to right) Chief Justice B.N. Kirpal and Justices S.S. Quadri, G.B. Pattanaik, V.N. Khare, Arijit Pasayat, Rajendra Babu, Ashok Bhan, K.G. Balakrishnan, P.V. Reddy, S.N. Variava, and Ruma Pal were the eleven judges who decided the T.M.A. Pai Foundation case.

Restrictions on the right were confined to the maintenance of proper academic standards, atmosphere, and infrastructure, and the prevention of maladministration. The Court held that that autonomy in admissions was subject to the condition that a small percentage of students belonging to weaker sections would have to be admitted against freeships or scholarships and that it was possible to reserve a certain percentage of seats for students who have passed the common entrance test of the state (the prescription of the percentage was left to the government).

Profiteering was not acceptable to the Court, although the fee structure could take into account the future expansion of the institution and the generation of a reasonable revenue surplus. The Court permitted the state or the university to devise an appropriate machinery to ensure that no capitation fee was charged.

The attempt to explain in Islamic Academy

Although TMA Pai sought to put to rest all questions surrounding higher education and its regulation, there were still some ambiguities that arose from the judgment, especially in relation to the fixation of fees, the eligibility of institutions to fill all the seats according to their choice, and the admission procedure.

(From left to right) Chief Justice V.N. Khare and Justices Arijit Pasayat, S.N. Variava, K.G. Balakrishnan, and S.B Sinha constituted the bench in the Islamic Academy Case.
(From left to right) Chief Justice V.N. Khare and Justices Arijit Pasayat, S.N. Variava, K.G. Balakrishnan, and S.B Sinha constituted the bench in the Islamic Academy Case.

A 5-judge bench in Islamic Academy v. State of Karnataka, 2003 6 SCC 687, sought to iron out these creases. In answering these questions, the Court found that (a) fee structure can be fixed subject to the condition that there is no profiteering or capitation, (b) private institutions have full autonomy in administration so long as admissions are merit-based and merit can be satisfied through a common entrance test run by the state or by an association, and (c) the state can provide reservation in favour of financially or socially backward sections of society. In order to ensure transparency in admission and fee structure, the Court resorted to the setting up of two committees, one to give effect to the judgment in TMA Pai and to approve the fee structure and the other to oversee the tests conducted by associations of institutions.

This judgment in its implementation resulted in the violation of the rights of private institutions. For instance, holding that the reservation policy of the state could be implemented through private institutions meant that virtually, the management of these institutions had been completely taken over by the state. Not only was this reservation policy implemented through the government seats, the management seats were also subjected to various quotas.

Clarity in PA Inamdar

The setting up of the committees in Islamic Academy, the extent of quotas and state reservation in private institutions, and the regulation of fees was once again challenged before the Supreme Court and a larger bench of seven judges was set up in PA Inamdar v. State of Maharashtra, (2005) 6 SCC 537, in order to clarify the ratio of the judgment in TMA Pai. Ten years after this judgment was delivered, one can conclusively state that this was the last in a long line of judgments that settled the questions surrounding private education and the rights of institutions. The Court in Inamdar held:

a. The policy of reservation cannot be enforced by the state nor can a quota or percentage of admissions be carved out to be appropriated by the state.

b. A common entrance test can be held by a group of similarly placed institutions provided that it is fair, transparent, and non-exploitative. The state may itself or through an agency, arrange for holding such tests and students can be admitted on the basis of merit out of these common entrance tests. However, the state may only take over if the three criteria mentioned above are not satisfied.

c. 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. NRI seats are permissible to the extent of 15 per cent in all institutions.

d.  The two committees for monitoring admission procedure and determining fee structure under the judgment of Islamic Academy are permissible as regulatory measures.

e. In the absence of any central legislation, it is for the central and state governments to come out with a detailed, well-thought-out legislation on the subject.

It took the Supreme Court over two decades to come to terms with the policy of the government recognising the need for private institutions. PA Inamdar has now held the field for ten years now. The concepts of autonomy and liberalisation that were first stated in 1948 in the University Education Committee report appear to have finally been incorporated into law through this judgment.

(From left to right) Chief Justice R.C. Lahoti and Justices Y.K. Sabharwal, C.S. Dharmadhikari, Tarun Chatterjee, Arun Kumar, G.P. Mathur, and R. Balasubramnian constituted the bench in the P.A. Inamdar case.
(From left to right) Chief Justice R.C. Lahoti and Justices Y.K. Sabharwal, C.S. Dharmadhikari, Tarun Chatterjee, Arun Kumar, G.P. Mathur, and R. Balasubramnian constituted the bench in the P.A. Inamdar case.

Many states have implemented the judgment in Inamdar by enacting suitable legislation. For instance, in Karnataka, consensual agreements are entered into under the Karnataka Professional Educational Institutions (Regulation of Admissions and Fixation of Fee) (Special Provisions) Act, 2006, which provide for seat sharing and fee fixation in medical and engineering colleges in the state.

In my view, the law laid down by TMA Pai and PA Inamdar has balanced the interests of private institutions with those of students and also filled gaps in policy. However, there are widespread and increasingly entrenched problems in the implementation of these judgments. Ineffectual regulation, official corruption, and inadequate state capacity to oversee the functioning of private institutions has led to the proliferation of colleges that have been set up solely to earn a profit and exploit the demand-supply gap by charging exorbitant capitation fees. This is particularly so in medical education where thousands of students compete for a very limited number of seats.

The Court should also be careful that broadly stated rights do not become dogma and prevent any regulation in the interest of students. For instance, the Medical Council of India’s attempt at conducting a National Eligibility cum Entrance Test for admission to MBBS and BDS Courses and also PG medical courses, which was aimed at streamlining and providing a single window entrance procedure for all medical courses, was struck down by the Supreme Court in Christian Medical College v. Union of India, (2014) 2 SCC 305 on the ground that holding such a test violates the rights of private institutions under Article 19(1)(g) and under Article 30 of the Constitution.

I do not think that the judgment in PA Inamdar intended to prohibit regulations for the benefit of thousands of students. Such an interpretation of the judgment is contrary to the spirit of PA Inamdar. In fact, private institutions’ objection to a single window test on the ground that their right to admit is violated reflects perverse motivations and the abuse of the wide rights conferred on them. Regulations aimed at greater transparency and merit in admissions would make it harder for institutions to exercise discretion in ways designed primarily to augment profits. This case is also proof that Indian educational institutions and the legal framework they are governed by must evolve further before a culture of self-regulation, practiced in some developed nations, can be adopted.

Rohit Bhat is an advocate practicing in Delhi.

7 comments

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  • Very well written to be read like a novel. Like study of history one cann’t avoid relevant date or period similarly we cann’t ignore relevant Articles of the Constitution whose readings and wordings form the basis of a judgment. The basis of TMPai case was the interpretation and interplay of Articles 26, 29 and 30 besides Article 19(1)(g)

  • Well summarized essay on the subject of right to set up an autonomous educational institution for professional courses. Perhaps you could include a paragraph on the St Stephen’s case. Also the article can include a addendum on the views of the Supreme Court on the topic of the National Eligibility Entrance Test for medical colleges. Please update the article with the latest verdicts of the apex court.

  • The Christian Medical College case was thereafter reviewed by the SC at the instance of the MCI and then the review petitions were heard the decision in Christian Medical College 2014 2 SCC 305 dated 18th July 2013 was recalled on 11th April 2016 reported in 2016 4 SCC 342.

    Thereafter in Sankalp Charitable Trust v Union of India 2016 7 SCC 487 order dated 6th May 2016 it was made clear that no examination shall be permitted to be held for admission for MBBS studies by any private college or association or any private/deemed university. An order was also passed making it clear that those candidates who could appear in NEET -1 and had an apprehension they had not prepared well were permitted to re- appear in NEET 2 subject to an option that they would give up their candidature to NEET-1. It was clarified that only NEET would enable students to get admitted to MBBS courses. The notification of MCI dated 21st December 2010 stood resurrected.

  • You have absolutely done a fab. The article is full of useful informations on right to education..Thanks a lot..hope to see some more articles from u n ur comments on Niit test…

    • Good summing up. very helpful.
      The hitherto neglected issue of the service conditions, especially pension/cpf for the teaching staff needs to be brought in the realm of regulations suitably adjudicated by the apex court. The teachers, quite large in number, though, have no chances of taking risk of loosing their jobs for moving the court. The requirements of qualifications and nature of work being similar to the teachers working in government and aided institutions denying them the retirement benefits at similar rates amounts to infringement of the right to equality. Let us hope some public spirited organisation takes up the issue for adjudication by the apex court.

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