CHARUTAR AROGYA MANDALversusSTATE OF GUJRAT & ANR.

                        (2010] 12 S.C.R. 916


A                  CHARUTAR AROGYA MANDAL
                                   V.
                    STATE OF GUJARAT & ANR.
                   (Civil Appeal No. 8077 of 2010)

                       SEPTEMBER 15, 2010
B
         [R.V. RAVEENDRAN AND H.L. GOKHALE, JJ.]

       GUJARAT PROFESSIONL MEDICAL EDUCATIONAL
    COURSES (REGULATION OF ADMISSION AND
C   PAYMENT OF FEES) RULES, 2009:

          Medical Admissions - Admission to MBBS Course -
    Management quota - Rules providing to fill up all 10%
    management seats by Consortium - College filing a writ
    petition with a prayer that it be allowed to fill up the
0   management seats under a charitable scheme fat
    economically disadvantaged students for a token annual fee
    of Rs. 50001- - Refusal by High Court to consider the
    petitioner's case on merits, and direction to the petitioner to
    follow the procedure laid down under the Act and the rules -
E   Held: The entire object of constituting committees for
    regulating the admission procedures and determining the fee
    structure in regard to unaided colleges is to ensure that they
    do not indulge in profiteering or capitation fee - If any college,
    out of charitable or philanthropic motive, wants to extend a
F   helping hand to economicaliy weaker sections of the student
    community by providing a scheme for free admission to the
    ten per cent management quota seats, there is no need for
    the Fee Regulatory Committee to determine and fix the 'fees'
    chargeable by the college for such free management seats
G   - Nor will it be necessary for such a college (which wants to
    admit economically backward students without any fee or a
    token fee) to be a part of consortium of unaided colleges which
    want to charge fees - The provisions of the Act and the Rules
    are intended to prevent profiteering or charging capitation fee,
H                                  916
    CHARUTAR AROGYA MANDAL v. STATE OF                     917
              GUJARAT & ANR.
and not to prevent or discourage any charitable effort by any     A
college to encourage or provide free education for
economically weaker section - The High Court ought to have
considered the request of the college on merits, with reference
to the provisions of the Act and the Rules, especially as the
issue will arise every year and may arise with reference to       B
other colleges also - Order of the High Court is set aside and
the matter remanded to it for consideration and expeditious
disposal of the writ petition on merits, in the light of the
observations made in the instant order - Insofar as the
admissions for academic year 2010-2011 for the                    c
management seats are concerned, the petitioner college is
permitted to follow the same procedure as it adopted for 2008-
2009 to make admissions subject to the change in regard to
 Clause (3) in the AgreemenUBond referred to in the instant
order - Gujarat Professional Medical Educational Colleges
                                                                  0
or Institutions (Regulation of Admission and Fixation of Fees)
Act, 2007 - s. 10.

    TMA Pai Foundation v. State of Karnataka 2002 (3)
 Suppl. SCR 587 = 2002(8) SCC 481,. Islamic Academy of
Education v. State of Karnataka 2003 (2) Suppl. SCR 474           E
=2003(6) SCC 697, P.A. lnamdar v. State of Maharashtra
2005 (2) Suppl. SCR 603 = 2005 (6) SCC 537 - referred
to.

                     Case Law Reference:
                                                                  F
     2002 (3) Suppl. SCR 587         referred to     para 8
     2003 (2) Suppl. SCR474          referred to      para 8
     2005 (2) Suppl. SCR603          referred to      para 8
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.               G
8077 of 2003.
    From the Judgment & Order dated 09.08.2010 of the High
Court of Gujarat at Ahmadabad in Special Civil Application No.
7570 of 2009.                                                     H
    918       SUPREME COURT REPORTS              [201 OJ 12 S.C.R.


A         D.V. Vishwanathan, Dhval Dave, Nikhil Goel, Naveen Goel,
    A. Venayagam Balan for the Appellant
        Shyam Divan, Hemantika Wahi, Jesal, Gaurav Goel,
    Garima, Parshad for the Respondents.

B         The Judgment of the Court was delivered by

          R.V.RAVEENDRAN, J. 1. Leave granted. Heard.
        2. The appellant Society runs Pramukh Swami Medical
   College in the State of Gujarat, which is an unaided college with
C a sanctioned intake of 100 students for MBBS Course. As per
   the provisions of the Gujarat Professional Medical Educational
   Colleges or Institutions (Regulation of Admission and Fixation
   of Fees) Act, 2007 ('Act' for short), 75% of the sanctioned seats
   in unaided colleges are 'Government Seats' and remaining
D 25% are 'management seats'. The 25% management quota
   has two components -15% earmarked as NRI seats and 10%
   as management seats. In this appeal, we are concerned with
  the filling of the ten percent management seats. The Act
   requires the said ten percent management seats to be filled
E by the college management on the basis of inter-se .merit list
  of students to be admitted against the management seats. The
  Gujarat Professional Medical Educational Courses (Regulation
  of Admission and Payment of Fees) Rules, 2009 ('Rules' for
  short) require all the ten percent management seats in all the
F unaided colleges to be filled by a Consortium (that is, an
  Association of Unaided Colleges/Institutions formed to facilitate
  admission to management seats) by adopting a single window
  system on the basis of inter se merit list of candidates whose
  names appear in the merit list prepared by the Admission
  Committee.
G
       3. The appellant decided to allot all its ten percent
  management seats to deserving meritorious poor students who
  cannot pursue MBBS Course due to financial constraints. It
  therefore formulated a scheme for admission of meritorious
H economically weaker section students whose annual family
     CHARUTAR AROGYA MANDAL v. STATE OF                  919
      GUJARAT & ANR. [R.V. RAVEENDRAN, J.]

income was not more than Rs.2 lakhs, and who had secured a A
minimum of 80% marks (or 75% marks as decided by the
appellant) in the 12th standard Examination in Science Stream
and the Gujarat Common Entrance Test (GUJCET). The
admissions would be strictly in the order of inter se merit. The
selected students are required to pay only a token fee of B
Rs.5,000/- per annum (as against the normal fee of Rs. four
lakhs for management seats fixed by the Fee Regulatory
Committee). The balance tuition fee of Rs.3.95 lakhs is given
as a 'scholarship', either by the college and/or any philanthropic
organization. The students so admitted will be provided free    c
boarding and lodging, free selected books, free dissection sets
etc. The students admitted under the scheme will have to give
an undertaking that he/she would render remunerated services
in rural area for at least three years from the date he/she
graduates. The admissions under the said scheme will be 0
 subjected to a four level scrutiny including a personal surprise
visit to the house of the aspiring student to confirm the annual
income of the family of the appellant and to ensure the
bonafides of the applicants. The appellant-college adopted and
implemented the said scheme of admissions for filling up ten E
percent management seats for the academic year 2008-2009.

     4. Out of the six unaided colleges in the State, only the
appellant has such a charitable scheme for economically
disadvantaged students. The other five colleges allot
management seats on regular fee basis and are not interested F
in such free admission schemes. As it was not possible for the
appellant's college to be a part of any Consortium or
Association for making admissions to the management seats,
appellant requested the respondents to permit its college to
admit meritorious economically disadvantaged students, by G
adopting its own admission procedure under its scheme. But
by letters dated 2.7.2009, 14.7.2009 and 15.7.2009, the
Admission Committee insisted that all unaided Medical
Colleges should either form a Consortium for making
admissions to management seats or should make admissions H
    920       SUPREME COURT REPORTS                 (2010] 12 S.C.R.


A   through the State Admission Committee. Therefore, the
    appellant filed a writ petition (SCA 7570 of 2009) seeking a
    direction to respondents to permit the management seats in its
    medical college to be filled by following its Scheme followed
    by it during the academic year 2008-2009. The appellant also
s   sought cancellation and withdrawal of the communications
    requiring the appellant to join the Consortium of unaided
    colleges for filling up of the management seats. By interim order
    dated 4.8.2009, the High Court directed that for 2009-2010
    admissions, the State Government may permit the college to
C   follow the procedure followed in 2008-2009, subject to the
    admission list being finalized with the approval of the Admission
    Committee.

        5. The High Court disposed of the said writ petition by
    order dated 9.8.2010, with the following directions, without
D   considering the various contentions raised by the appellant on
    merits:

          "In the facts and circumstances, instead of giving any
          finding on merit and to ensure that admissions are made
E         in accordance with Rules in future, particularly 10% seats
          of management quota, the following order is passed :

          (i) The State Government will constitute a "Consortium"
          within one week to ensure admissions in the academic
          session 2010-2011. The "Consortium" will complete all
F         formalities and forward names of the candidates against
          management quota to different Professional Medical
          Educational Colleges and Institutions by 31st August,
          2010.

G         (ii) If the State Government fails to constitute "Consortium"
          by 16th August, 2010 and fails to notify any advertisement
          by 17th August, 2010, the petitioner Trust may proceed by
          following procedure laid down under the Act and Rules for
          selection of candidates. Selection should be confined
H
,   CHARUTAR AROGYA MANDAL v. STATE OF                        921
     GUJARAT & ANR. [RV. RAVEENDRAN, J.]

    amongst the students who have applied pursuant to an              A
    advertisement issued by the petitioner Trust.

     (iii) The management of different Professional Medical
     Educational Colleges and Institutions will constitute
     "Consortium" for the selection, or the subsequent                8
     academic session 2011-12 onwards, "Consortium" must
     be constituted by 30th September, 2010 failing which the
     State Government will call management and will ensure
     constitution of "Consortium" by 30th October, 2010 on
     whose recommendation, Professional Medical Colleges              C
     and Institutions will fill up management quota for the
     session 2011-12 onwards."

     6. Aggrieved by the refusal of the High Court to consider
its contentions on merits, the appellant has challenged the
decision of the High Court in this appeal. It contends that as        D
no other unaided college is willing to give its seats free (or for
a token annual fee of Rs.5000/-) to economically disadvantaged
students, it is not able to join the other unaided colleges to form
a consortium for making admissions to management seats.
The respondents contend that permitting a single college to           E
have its admission procedure would be opposed to the
Scheme of the Act which contemplates admissions only
through the State Admission Committee or through a
Consortium. It is submitted that if the appellant is not willing to
join the Consortium, it should make admissions through the            F
State admission Committee.

     7. We may refer briefly to the relevant provisions of the Act.
Section 3 provides that all admissions to Professional Medical
Courses should be made in accordance with the provisions of
the Act and any admission made in contravention of the G
provisions of the Act shall be invalid. Section 4 provides that
the Admission Committee shall guide, supervise and control
the entire process of admission of students to the professional
educational colleges. Section 5 authorises the Admission
Committee to prepare the merit list of students. Section 10 of H
    922     SUPREME COURT REPORTS                (2010] 12 S.C.R.


A   the Act relates to the powers of the Fee Regulatory Committee.
    Sub-section ( 1) thereof provides that the Fee Regulatory
    Committee constituted by the State Government shall determine
    the fee structure for admission of students in professional
    courses; and that the Committee may determine different fee
B   structures for admission of students in different professional
    courses for different professional colleges/ institutions. Sub-
    section (3) provides that the fee structure determined by the
    Fee Regulatory Committee shall be binding on the unaided
    professional educational colleges/institutions for a period of
c   three years; and the fee determined by the Committee made
    applicable to a student who is admitted to a professional
    educational college/institution, in a particular academic year,
    shall be continued for the entire period of the course and shall
    not be revised till the completion of his professional course.
    Sub-section (4) bars the unaided professional colleges/
0
    institutions from charging or collecting any fee other than the
    fee determined by the Committee under sub-section (1 ).
    Section 11 enumerates the factors to be considered in
    determining the fees to be charged, which included the location
    of the professional college, nature of professional course,
E   available infrastructure, expenditure on administration and
    maintenance, reasonable surplus required for the growth and
    development. Section 12 prohibits charging or collection of
    capitation fee by any Unaided Professional Educational
    College/Institution.
F
       8. In TM.A. Pai Foundation v. State of Karnataka - 2002
  (8) sec 481, this court declared that every institution is free
  to devise its own fee structure subject to the limitations that
  there can be no capitation fee or profiteering, directly or
G indirectly. This court also clarified that charging of fees in a
  manner that a reasonable surplus is left to meet the cost of
  expansion and augmentation of facilitates, would not amount
  to profiteering. In Islamic Academy of Education v. State of
  Karnataka - 2003 (6) SCC 697, this court directed the state
H governments to set up two committees - one to regulate
    CHARUTAR AROGYA MANDAL v. STATE OF                           923
     GUJARAT & ANR. [R.V. RAVEENDRAN, J.]

admissions and the other to regulate the fee structure. The fee A
structure committee was authorized to decide whether the fees
proposed by a college were justified or whether they amounted
to profiteering or charging capitation fee; and if necessary to
prescribe a fee structure different from what was proposed by
the institutions. In P.A.lnamdar v. State of Maharashtra - 2005 B
(6) SCC 537, this Court reiterated that while every institution
is free to devise its own fee structure, the same can be
regulated to prevent profiteering and to ensure that no
capitation fee is charged, either directly or indirectly, or in any
form; that if capitation fee and profiteering are to be checked, c
the method of admission has to be regulated so that the
admissions are based on merit and are transparent and the
students are not exploited; and that it is, therefore, permissible
to regulate admissions and fee structure for achieving the
same. This Court further held:
                                                                         D
     " ... Unless the admission procedure and fixation of fees is
     regulated and controlled at the initial stage, the evil of unfair
     practice of granting admission on available seats guided
     by the paying capacity of the candidates would be
     impossible to curb.                                                 E

     Non-minority unaided institutions can also be subjected to
     similar restrictions which are found reas_Q!lable and in the
     interest of student community. Professional education
     should be made accessible on the criterion of merit and F
     on non-exploitative terms to all eligible students on a
     uniform basis. Minorities or non-minorities, in exercise ot .
     their educational rights in the field of professional
     education have an obligation and a _ciuty10 maintain ·---
     requisite standards of professional-education by giving G
     admissions based on merit and making education equally
     accessible to eligible students through a fair and
     transparent admission procedure and based on a
     reasonable fee-structure ...... We make it clear that in case
     of any individual institution, if any of the Committees is H
    924       SUPREME COURT REPORTS                [20101 12 S.C.R.

A         found to have exceeded its powers by unduly interfering
          in the administrative and financial matters of the unaided
          private professional institutions, the decision of the
          Committee being quasi-judicial in nature, would always be
          subject to judicial review."
B
    The entire object of constituting Committees for regulating the
    admission procedures and determining the fee structure in
    regard to unaided colleges is to ensure that the colleges do
    not indulge in profiteering or capitation fee.

C        9. If any college, out of charitable or philanthropic motive,
    wants to extend a helping-hand to the economically weaker
    sections of the student community by providing a scheme for
    free admission to the ten percent management quota seats,
    there is no need for the Fee Regulatory Committee to determine
D   and fix the 'fees' chargeable by the college for such free
    management seats. Nor will it be necessary for such a college
    (which wants to admit economically backward students without
    any fee or a token fee) to be a part of a Consortium of unaided
    colleges which want to charge fees.
E
         10. If other unaided colleges are willing to have such a free
    admission scheme for meritorious poor, then there will be a
    need for a Consortium of such like minded colleges for making
    admissions to such management seats. But where only one
    college has such a scheme for giving all its ten percent
F   management seats to meritorious students belonging to
    economically weaker sections, it may not be possible or
    permissible to subject such college to the common admission
    procedure applicable for payment seats. But it will however be
    necessary to ensure that such a Scheme is not a camouflage
G   for making illegal or irregular admissions or for clandestinely
    charging capitation fee or for profiteering. Having regard to the
    object and purpose of the Act, such schemes will have to be
    submitted by the college concerned to the Admission
    Committee and the Fee Regulatory Committee for verification
H   and approval; and only after the Scheme is approved by such
           CHARUTAR AROGYA MANDAL v. STATE OF                      925
            GUJARAT & ANR. [R.V. RAVEENDRAN, J.]

       Committees, the colleges can make admissions in terms of the        A
       Scheme.

             11. The provisions of the Act and the rules are intended
       to prevent profiteering or charging of capitation fee, and not to
       prevent or discourage any charitable effort by any college to B
       encourage or provide free education for economically weaker
       sections. Such Schemes for benefiting economically weaker
       sections require to be encouraged by the State and its
       authorities. The fact that there is only one unaided college
       willing to admit students free of any fees in regard to ten per C
       cent management seats and the fact that it cannot therefore be
       a part of a fee charging consortium of unaided colleges, cannot
       by itself be a ground to deny the college to have a scheme
       extending the benefit of free admissions to meritorious poor
       students, in regard to management seats. Therefore, the High
       Court ought to have considered the request of the appellant on D
       merits, with reference to the provisions of the Act and the Rules,
       especially as the issue will arise every year and may arise with
       reference to other colleges also. In fact, the High Court by order
       dated 30.7.2010, had proposed to examine the merits of the
       contentions in regard to management seats. But it failed to do E
       so .

            . 12. In so far as the admission for the current year (2010-
       2011 ), the second respondent Committee has taken a very fair
       and positive stand. It was submitted by its counsel that the        F
       Committee will have no objection for the appellant's college
       implementing the scheme in a transparent manner after being
       duly approved by the Committee, subject to any monitoring
       measures. It was further submitted that the Committee has no
       objection for the admission procedure followed by the appellant     G.
       for the year 2008-09 (set out in para 3 above) being followed
       for the admissions to the ten percent management seats for
       the academic year 2010-2011 also subject to the college
       suitably modifying Clause (3) of the Agreement/Bond (which is
       required to be executed by the students and/or their guardians).    H



. [,
    926       SUPREME COURT REPORTS                 [2010] 12 S.C.R.


A   He submitted that the said clause extracted below, may cause
    undue hardship to the students.

          ''That the Manda! provides scholarship on year to year
          basis. If the student is not able to clear his/her studies in
          first attempt in the respective year the Manda! will not grant
B
          scholarship for the ensuing year. Also the awarded
          scholarship would have to be refunded with 10% interest
          in one instalment."

    As rightly pointed out by the Committee, a poor student being
C   made liable to pay the tuition fee with interest, if he fails in the
    examination, will be impractical and cause great hardship.
    Learned counsel for the appellant therefore readily agreed to
    amend the clause as follows:

D         "That the Manda! provides scholarship on year to year
          basis. If the student is not able to clear his/her studies in
          first attempt in the respective year the Manda! will not
          release further scholarship until the student clears the
          examination.
E        13. In view of the above, we dispose of this appeal as
    follows :

          (i) The order of the High Court is set aside, the matter is
          remanded to the High Court for consideration and
F         expeditious disposal of the writ petition on merits, in the
          light of the above observations.

          (ii) Insofar as the admissions for academic year 2010-
          2011 for the management seats is concerned, the
          appellant college is permitted to follow the same
G         procedure as it adopted for 2008-2009 (set out in para 3
          above) and make admissions subject to the change in
          regard to Clause (3) in the Agreement/Bond referred to
          in para 12 above.

H R.P.                                          Appeal disposed of.