A.N. PARASURAMAN ETC.versusSTATE OF TAMIL NADU

                      A.N. PARASURAMAN ETC.
                                       v.
                        STATE OF TAMIL NADU

                             OCTOBER 5,1989

            [L.M. SHARMA AND T.K .. THOMMEN, JJ.]                                 B

      Constitution of India, 1950: Article 14--Tamil Nadu Private
 Educational Institutions (Regulation) Act, 1966-Whether violative of

       Tamil Nadu Private Educational Institutions (Regulation) Act,
 1966: Sections 2(c), 3(a), 3(b), 6, 7, 15, 22 and 28-Whether invalid
 and ultra vires.
                                                                                  c

       Administrative Law: Delegation of power-Determining legisla-
 tive policy and rule of conduct=-E:ssential functions of Legis/ature-
 Whether could be delegatei
                                                                                  D
         The appellants are interested in running educational institutions
  which are covered by the expression "private edncational institution"
  within the meaning of Section_ 2(1) of the Tamil Nadn Private Educa-
  tional Institutions (Regulation) Act, 1966. The vires of the Act espe-
  cially sections 2(c), 3(a), 3(b), 6, 7, read with sections 15, 22 and 28, was
. challenged before the High Court, by way of a writ petition.                    E

       The High Court struck down section 28 and upheld the other
 sections. This appeal by certificate is against the High Court's judgment
 upholding the validity of the said sections. As regards the striking down
 of section 28, it has not been impugned by the respondent-State.
                                                                                  F
       The appellants contended that the Act does not lay down any
 guideline for the exercise of power by the delegated authority and so the
 decision of the competent authority is hound to be discriminatory and
 arbitrary. It was also contended that the Act imposed unreasonable
 restrictions on the appellants in the running of tutorial institutions, and
 such regulations were violative of Artilce 29( 1)(g) of the Constitution of      G
 India.

       On behalf of the respondent, it was stated that sufficient
 guidance is available to the authority concerned, by vlrtne of sub-
 section (2)(c) of Section 4 an_d hence the appellants' contentions were
 not justified.                                                                   H
                                      371
    372         SUPREME COURT REPORTS                 [1989] Supp. I S.C.R.

          Allowing the appeal,
A
           HELD: 1.1. 1t is well established that determination of legislative
    policy and formulation of rule of conduct are essential legislative func-
    tions which cannot be delegated. What is permissible is to leave to the
    delegated authority the task of implementing the object of the Act after
B   the legislature lays down adequate guidlines for the exercise of power.
    Examined in this light, the impugned provisions of the Tamil Nadu
    Private Educational Institutions (Regulation) Act, 1966 miserably fail
    to come to the required standard. These sections are held to be invalid.
    They are inextricably bound up with the other parts of the Act so as to
    form part of a single scheme, and it is not possible to sever the other
    parts of the Act and save them. Hence, the entire Act is declared ultra
c   vires. [3760-E; 379G)

           l.2. There is no indication, whatsoever, about the legislative
    policy or the accepted rule of conduct on the vital issue about the
    maintenance of academic standard of the institution and the other
D   requirements relating to the building, library and necessary amenities
    for the stndents, as the Act is absolutely silent about the criteria to be
    adopted by the prescribed authority for granting or refusing permis-
    sion. Even the rules which were made under Section 27 in 1968 and
    called the Tamil Nadu Private Educational Institutions (Regulation)
    Rules, 1968, are not called upon to lay down any norm on these issues
E   and naturally do not make any reference to these aspects. The result is
    that the power to grant or refuse permission is to be exercised according
    to the whims of the authority and it may differ from person to person
    holding the office. The danger of arbitrariness is enhanced by the unre-
    stricted and unguided discretion vested in the State Government under
    Section 2(c) of the Act in the choice of competent authority. [377E-G]
F
          2.l. Section 6 which empowers the competent authority to grant
    or refuse to grant permission for establishing and ruqning an institution
    does not give any idea as to the conditions which it has to fulfil before it
    can apply for permission under the Act, nor are the tests indicated for
    refusing permission or cancelling under Section 7 of an already granted
G   permission. [376H; 377 A)

          2.2. The only safeguard given to the applicant institution is to be
    found in the first proviso to Section 6 which says that the permission
    shall not be refused unless the applicant has been given an opportunity
    of making his representation, but that does not by itself protect the
H   applicant from discriminatory treatment. So far as Section 7 dealing with
    A.N. PARASURAMAN v. STATE OF TAMIL NADU ISHARMA,J.) 373

power to cancel the permission granted earlier is concerned, no ob- A
jection can be taken to the first part of the section, whereunder the
permission may be cancelled in case of fruad, misrepresentation,
suppression of -material particulars or rontravention of any provision
of the Act or the Rules. But the other ground on which the authority
can exercise its power being contravention "of any direction issued
by the competent authority under this Act" again suffers from the B
vice of arbitrariness. [378B-D]

      2.3 Section 15 is too wide in terms and does not indicate the
nature of the direction or the extent within which the authority should
confine itself while exercising the power. Similarly under Section 22,
the State Government has been vested with unrestricted discretion in C
picking and chooSing the institutions for exemption from the Act. [3781J..E]

     State of West Bengal v. Anwar Ali Sarkar, [1952] SCR 284; Kun-
nathat Thathunni Moopil Nair v. The State of Kera/a and Anr., [1961] 3
SCR 77; Harakchand Ratanchand Banthia and Ors. v. Union of India
& Ors., [1970] 1SCR479, relied on.                                     D

    CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
1821to1826of 1971etc. etc.

     From the Judgment and Order dated 11.8 ..i.971 of the Madras
High Court in Writ Petition Nos. 3818, 4019, 4020, 4254, 4566 of 1968        E
and 82 of 1969.

      S. Padmanabhan, K.R. Nambiar, A.T.M. Sampath for the
: Appellants and Appellant-in-person in C.A. No. 2062 of 1971.

    K. Rajendra Chowdhary and V. Krishnamurthy .for the                      F
Respondent.

      The Judgment of the Court was delivered by

      SHARMA, J. The question involved in these appeals relates to
the vires of the Tamil Nadu Private Educational Institutions (Regula-        G
tion) Act, 1966, hereinafter referred to as the Act. The appellants are
interested in running educational institutions, which are covered by
the expression "private educational institution" within the meaning of
s. 2(f) of the Act. The main challenge is directed against ss. 2(c), 3(a),
3(b), 6, 7 read with ss. 15,_ 22 and 28. The High Court struck downs. 28
and uplield the other sections. That part of the judgment where s. 28        H
    374         SUPREME COURT REPORTS                 [1989] Supp. 1 S.C.R.

A has been declared to be invalid has not been impugned by the
  respondent-State.

         2. The provisions of the Act which are relevant for appreciating
  the ground urged by the appellants are as follows. Section 3 mandato-
  rily requires a private educational institution to obtain the permission
B of the competent authority for the purpose of running it. The Manager
  of such an institution has to, as required by s. 4, make an application
  for permission in the prescribed form accompanied by a fee. Section 6
  lays down the power of the competent authority to deal with such an
  application in the following terms:

                       "6. Grant of permission.-On receipt of an applica-
c               tion under Section 4 the competent authority may grant or
                refuse to grant the permission after taking into considera-
                tion, the particulars contained in such application:

                     Provided that the permission shall not be refused
D               under this Section unless the applicant has been given an
                opportunity of making his representation:

                     Provided further that in case of refusal of permission
                the applicant shall be entitled to refund to one-half of the
                amount.of the fee accompanying the application."
E
    The competent authority is empowered under s. 7 to cancel the
    permission in certain circumstances. One of the conditions for exercise
    of power is contravention of any direction issued by the competent
    authority under s. 15. The power to exempt any institution from the
    provisions of the Act is vested in the State Government under s. 22,
F   which is quoted below:

                      ''22. Power to exempt.-Notwithstanding anything
                contained in this Act, the Government may, subject to
                which conditions as they deem fit, by notification exempt
                any private educational institution or class of private
G               educational institutions from all or any of the provisions of
                this Act or from any rule made undr this Act."

  Section 28, which has been declared invalid by the High Court, states
  that if any difficulty arises in giving effect to the provisions of this Act,
  the Government may "do anything which appears to them to be neces-
H sary for the purposes of removing the difficulty."
         A.N. PARASURAMAN v. STATE OF TAMIL NADU [SHARMA.I.] 375

J         3. The Act is impugned on the ground that it does not lay down           A.
    any guide line for the exercise of the power by the delegated authority,
    as a result of which the authority .is in a position to act according to his
    whims. The Act having failed to indicate the conditions for exercise of
    power, the decision of the competent authority is bound to be dis-
    criminatory and arbitrary. It has also been argued that the restrictions
    put by the Act on the appellants, who are running tutorial institutions        B
    are unreasonable and cannot be justified under sub-clause (g) of
    Artilce 19(1) of the Constitution.

          4. The learned counsel appearing for the respondent has
    attempted to defend the Act on the ground that sufficient guidance is
    available to the authority concerned from sub-section (2)(c) of s. 4           C
    which enumerates the particulars required to be supplied in the appli-
    cation for permission. They are 10 in number and are mentioned
    below:

                "4. Application for permission.
                                                                                   D
                ( 1)

                (2) Every such application shall-

                (a)
                       .   -~   ..... .                                            E

                (c) contain the following particulars, namely:-

                      (i) the name of the private educational institution
                and the name and address of the manager;
                                                                                   F
                       (ii) the certificate, degree or diploma for which such
                private educational institution prepares, trains or guides or
                proposes to prepare, train or guide its students or the
                certificate, degree or diploma which it grants or confers or
                proposes to grant or confer;
                                                                                   G
                      (iii) the amenities available or porposed to be made
                available to students;

                      (iv) the names of the members of the teaching staff
                and the educational qualifications of each such member;
                                                                                   H
    '376         SUPREME COURT REPORTS                  [1989] Supp. 1 S.C.R.

                        (v) the equipment, laboratory, library and other
A
                 facilities for instructions;

                        (vi) the number of students in the private educational
                 institution and the groups into which they are divided;

                       (vii) the scales of fees payable by the students;

                        (viii) the sources of income to ensure the financial
                 stability of the private educational institution;

                       (ix) the situation and the description of the buildings
                 in which such private educational fustitution is being run or
                 is proposed to be prescribed;

                       (x) such other particulars as may be prescribed."

            5. The point dealing with legislative delegation has been con-
;ID sidered in numerous cases of this Court, and it is not necessary to
      discu~s this aspect at length. It is well established that determination of
      legislative policy and formulation of rule of conduct are essential
      legislative functions which cannot be delegated. What is permissible is
      to leave to the delegated authority the task of implementing the object
      of the Act after the legislature lays down adequate guide lines for the
 I!'. exercise of power. When exap:iined in this light the impugned provi-
      sions miserably fail to come to the required standard.

          ~· The purpose of the Act is said to regulate the private educa-
    tional instltuti()ns but does not give-any idea as to the.manner inlwhich
    the co'ntrol over the institutions can be exercised. The Preamble which
F describes the Act "for regulation" is not helpful at all. Learned
    counsel for the State said that the Object and the Reasons for the Act
    are to eradicate corrupt practices in private educational institutions.
    The expression "private educational institution" has been defined as
    meaning any college, school or other institution "established and run
    with the object of preparing, training or guiding its students for any
G certificate, degree or diploma", and it can, therefore, be readily infer-
    red that the purppse of the Act is to see that such institutions do not
    exploit the students; and while they impart training and guidance to
    the students of a standard which may effectively improve their
    knowledge so as to do well at the examination, they do not charge
    exhorbitantly for their services. But the question is as to how this
ljl objective can be achieved, Section 6 which empowers the competent
     A.N. PARASURAMAN v. STATE OF TAMIL NADU (SHARMA,J.] 377

auihonty to grant or refuse to grant the permission for establishing and      A
running an institution does not give any idea ·as to the conditions which:
it has to fulfil before it can apply for permission under the Act, nor are
the tests indicated for refusing permission ·or cancelling under s. 7 of an
already granted permission. The authority concerned has been left
with unrestricted and unguided discretion which renders the provisions
                                                                              B
unfair and discriminatory.

       7. It was argued on behalf of the State that since an application
for permission has to supply the particulars as detailed in s. 4(2)(c)
(quoted above in paragraph 4), the Act must be deemed to have given_
adequate guide lines. Special emyhasis was given by the learned
counsel on-sub-clauses (iii), (iv) and (v) of s. 4(2)(c), which ask for       c
informatiQn,. atiout the .amenities for the students-the equipments,
laboratory, library and other facilities for instruction-and, the names
of the teachers with their qualifications. It may be noted that the Act,
beyond requiring the applicant to make a factual statement about
these matters, does not direct the institution to make provisions for
                                                                              D
them Jor for any or some of them) as condition for grant of permission.
The maintenance of any particuli!r standard of these heads are not in
contemplation at all, although certain other aspects; not so important,
have been dealt with differently in several other sections including s. 4,
5, 9, 10 and 11. Section 4(2)(b) mandatorily requires the applicant to
pay the "prescribed" fee; s. 5 gives precise direction regarding the
name by which the institution is to be called; ands. 9 about the certifi-     E
cates to be issued by it; and s. 11 makes it obligatory to maintain
accounts in the "prescrioed" niann,li,r. But, there is no indication, what-
soever, about the legislative R(!lic/or the accepted rule of conduct on
the vital issue about the maintenance of academic standard of the
institution and the other requirements relating to the building, library
and necessary amenities for the students, as the Act is absolutely silent     F
about the criteria to be adopted by the prescribed authority for grant-
ing or refusing permission. The rules which were Jlla:de un,cter s. 27 in
1968 and called the Tamil Nadu Private Educational'    / '   '
                                                             '
                                                               Institutions
(Regulation) Rules, 1968, are not called upon to lay down any norm
on these issues and naturally do not make any reference to these
aspects. The result is that the power to grant or refuse permission is to     G
be exercised a5cording to the whims of the authority and it may differ
from person to person holding the office. The danger of arbitrariness is
enhanced by the unrestricted and unguided discretion vested in the
State Government in the choice of "competent autlwrity" defined'in s.
(2)( c) in the following words:    · '                                   .
                                                                              H
     378         SUPREME COURT REPORTS                [1989) Supp. 1 S.C.R.

                       "(c) "competent authority" means any person,
A
                 officer or other authority authori~ei:i-by the Government,
                 by notification, to perform the functions of the competent
                 authority under this Act for such area or in relation to such
                 class of private educational institutions, as may be specified
                 in the notification;"
B
     The only safeguard given to the applicant institution is to be found in
     the first proviso to s. 6 which says that the permission shall not be
     refused unless the applicant has been given an opportunity of making
     his representation, but that does not by itself protect the applicant
     from discriminatory treatment. So far s. 7 dealing with power to cancel
     the permission granted ealier is concerned, no objection can be taken
0    to the first ,part of the section, whereunder the permission may be
     cancelled in case of fraud, misrepresentation, suppression of material
     particulars or contravention of any provision of the Act or the Rules.
     But the other ground on which the authority can exercise its power
     being contravention "of any direction issued by the competent autho-
D    rity under this Act" again suffers from the vice of arbitrariness. Sec-
     tion 15, the relevant section in this regard, states that "the competent
     authority may, from time to time issue such directions regarding the
      management of a private educational institution as it may think fit"
      (emphasis added). The section is too wide in terms without indicating
      the nature of such direction or the extent within which the authority
El    should confine itself while exercising the power. Similar is the situation
      in the matter of exemption from the Act. The power to grant exemp-
      tion is contained ins. 22, quoted in paragraph 2 above.

         8. The provisions of the Act indicate that the State Government
   has been vested with unrestricted discretion in the matter of the choice
F  of the competent authority under s. 2(2)(c) as also in picking and
   choosing the institutions for exemption from the Act under s. 22. Such
   an unguided power bestowed on the State Government was struck
   down as offending Article 14 in the case of the State of West Bengal v.
   Anwar Ali Sarkar, [1952) SCR 284. A similar situation arose in
   Kunnathat Thathunni Moopil Nair v. The State of Kera/a and Another,
Q [1961] 3 SCR 77, where, under s. 4 of the Travancore-Kochin Land
   Tax Act, 1955, all lands were subjected to the burden of a tax ands. 7
   gave power to the Government to grant exemption from the operation
   of the Act. The section was declared ultra vires on the ground that it
   gave uncanalised, unlimited and arbitrary power, as the Act did not
   lay down any principle or policy for the guidance of exercise of the
H. discretion in respect of the selection contemplated b,v s. 7.
                                                 /
       A.N. PARASURAMAN v. STAIB OF TAMIL NADIJ [SHARMA,J.] 379

       9. Similar is the position under ss. 6 and 7 of the present Act.     A
 The learned counsel for the resporicient~State contended that by refe-
 rence in s. 4 to the particulars to be supplied.in· the application for
 permission, it can be easily imagined that the competent authority has
 to take into account all that may be validly relevant for the grant or
refusal of permission. We are afraid, the section cannot be saved by
                                                                            B
recourse to this argument ·in absence of any helpful guidance from the
Act. The position in this case cannot be said to be on a better footing
than that of the Gold (Control) Act, 1968, which was challenged in
Harakchand•Ratanchand Ranthia and Others v. Union of India and
Other, [1970] 1 SCR 479. As is indicated by the judgment, the Gold
(Control) Act had to be passed as gold was finding its way into the
country through illegal channels, affecting the national economy and        c
hampering the country's economic stability and progress, and the
Customs department was found unable to effectively combat the
smuggling. Section 27(6)(a) of the said Act stated that in the matter of
issue or renewal of licences the "Administrator shall have regard to
the number of dealers existing in the region in which the applicant
intends to carry on business as a dealer". The expression "region" was      D
not defined in the Act and\. 27(6)(b) required the Administrator to
have regard to "the anticipated demand, as estimated by him, of orna-
ments in the region". The argument in support of the validity of the
Act was that these provisions provided adequate guidance to the
Administrator, which this Court rejected, holding that the expression
"anticipated demand" was vague and not capable of objective assess-         E
ment and, therefore, was found to lead to a great deal of uncertainty.
The other provisions mentioning "suitability of the applicant" in
s. 27(6)(e) and "public interest" in s..,27(6)(g) were also held to have
failed in laying down any objective standard or notm so as to save the
Act. The provisions of the act, with w1Jich-we are dealing in the present
                                                1                           F
cases, are far less helpful for the purpose of upholding its validity.

      10. For the reasons mentioned abov~, the impugned sections of
the Act must be held to be invalid. These provisions are inextricably
bound up with the other parts of the Act so as to form part of a single
scheme, and it it not possible to sever the other parts Of the Act and
save them. In the result, the entire Act is declared ultra vires. The       G
appeal is accordingly allowed, but, in the circumstances, wit)lout costs.

G.N.                                                   ApPea! allowed.