INSTITUTE OF HUMAN RESOURCES DEVELOPMENT AND ORS. ETC. ETC.versusT.R. RAMESHKUMAR AND ORS. ETC.

         INSTITUTE OF HUMAN RESOURCES DEVELOPMENT                             A
                       AND ORS. ETC. ETC.
                                       v.
                  T.R. RAMESHKUMAR AND ORS. ETC.

                                MAY 12, 1995
                                                                              B
         [S.C. AGRAWAL AND MRS. SUJATA V. MANOHAR, JJ.]


          Educatioir-Engineering Colleges-Government starting two self-
    financing education institutions-Applicability of scheme framed by this   C
    court-Scheme sanctioned subject to modifications.

           The Government of Kerala by G.0.(MS) 191/92/H.Edn. dated
    24.12.1992 decided to start two self financing Engineering Colleges from
    academic year 1993-94. As per the scheme 75% of seats in these colleges
    were to be filled up on the basis of open merit applying the existing D
    reservation principles prevailing in the State of Kerala, 10% of the seats
\   were to be filled up by Scheduled Caste and Scheduled Tribe candidates
    and the remaining 15% of the seats by children of non-resident Indians.
    Open merit seats and seats reserved for Scheduled Caste/Scheduled Tribe
    Candidates were to be filled up on the basis of marks obtained at the
    common entrance examination being conducted by the Commissioner for E
    Entrance examinations, Trivandrum. The seats .for the NRI quota were
    also to be filled up on the basis of merit. Since the two colleges did not
    receive any financial help in the form of any grant from the Government
    and were self-financing institutions, tution fee had been fixed for all
    students at Rs. 12,500 per year. However, in the case of Scheduled Castes .F
    and Schedules Tribes the tution fee was fixed at half the above amount i.e.
    Rs. 6,250 per year. The students who were selected for admission were also
    required to give an interest free deposit of rupees one lakh refundable on
    completion of four years from the date of deposit or on completion of the
    course to which the student was admitted, whichever was later. Candidates G
    belonging to Scheduled Castes and Scheduled Tribes, however, were ex-
    empted from payment of this deposit. Candidates selected against the NRI
    quota were required to pay US Dollars 5,000 as development charges which
    were non-refundable.

         The appellant sought to justify a departure from the scheme set up   H
                                      447
    448                   SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A in the case of Umii K1ishnan, J.P. & 01>·. v. State of A.P. & Ors., (1993) 1
    SCC 645, by pointing out that the scheme in Unni /(Jishnan was designed
    for private colleges and these two colleges, however, were not private
    educational institutions set up for the purpose of profit-making; that the
    State had been compelled to go in for self-financing institutions in view of
    financial stringency; that since the Government already· runs ur aids a
B   number of institutions where all the seats are 'free' seats, they should be
    permitted to start two colleges with 'paid' seats; that the ratio between
    'free' and 'paid' seats being far more favourable to 'free' seats than the
    50:50 ratio laid down in Unni /(Jishnan, the appellants should be permitted
    tu make a departure from the scheme in Unni Krishnan which required a
C   self financing institution to provide 50% free seats and 50% seats on
    payment basis; that while students occupying payment seats in Engineer-
    ing Colleges were charged Rs. 46,800 as fees, at present, under the scheme
    the fees per head came to only Rs. 12,500; that the State, in discharge of
    its obligation to make special provisions for backward classes under Art.
D   15(4) of the Constitution, had also provided for reservation of 10% of these
    seats in their favour who will only pay half the prescribed fees and will not
    have to pay any deposit. The appellants agreed to modify their scheme by        '
    reducing the NRI quota to 10%, and increasing the open merit seats to
    80% and also to institute freeships or scholarships to be made available
    to 10% of the students admitted in these two colleges which will be awarded
E    on the basis of merit-cum-means. Loan facilities will be made available
    from nationalised banks to the needy students for getting amounts to meet
    their educational expenses including the payment of deposit and the
    capital revenue loss to the extent of Rs. 6 lakhs each year arising from the
     reduction of the NRI quota will be made good for generating additional
F   revenue by the college through consultancy, short-term courses etc. by
    using the available infrastructure.

         The question raised was whether such a departure from Unni /(Jish-
    nan be permitted.

G         The respondent contended that these two colleges should also be
    considered as private Engineering Colleges because they were being run
    by two societies registered under the Societies Regulation Act, 1955 and
    that such a departure from the scheme in Unni /(Jishnan could not and
    should not be permitted and that the two colleges did not admit students
H   entirely on merit because a meritorious student who was higher on the
    INSTT. OF HUMAN RESOURCES DEV. v. T.R. RAMESH KUMAR 449

merit list might not be able to secure admission, if he was not in a position A
to pay the higher fees.

      Allowing the appeals, this Court

       HELD : 1.1. The basic difference between institutions governed by
the scheme in Unni Krishnan and the present institutions was that these B
institutions were controlled by the State and, therefore, their working and
utilisation of funds were p'.ider the control of the State. In terms, the Unni
!0ishnan scheme provides that it will not be applied to Government
Institutions. Unni Krishnan did not contemplate self financing institutions
set up by or sponsored by the Government. But looking to the confidence C
reposed by Unni Krishnan in the Government in fixing proper fees even for
private self-financing educational institutions, it is deaf that the scheme
of Unni Klishnan applied only to purely private educational institutions
which are self-financing. It is designed to ensure that they do not make
undue profits or exploit students. Unni K11.shnan, however, is not against
self-financing educational institutions. On the contrary, it has recognised D
the need for self-financing educational institutions to augment the efforts
made by the State in setting up educational institutions in the field of
technical education. [455-F, 456-A-C]

      1.2. These two societies were fully controlled by the State of Kerala.
                                                                             E
The fees which had been fixed in the present case was also fixed by the
State Government which had given budget details relating to these two
colleges. The appellants had sought exemption from providing 50% free
seats in the light of the fact that the State already runs or aids nine
Engineering Colleges which are financed by it and which provide 2391 free
seats. [457-G·H]                                                             F

       1.3. The question of desirability or otherwise of the Government
starting self-financing educational institutions will depend on many cir-
cumstances including the financial capacity of the State. In the present
case, the appellants had made out a good case for being permitted to start · G
two self-financing engineering colleges controlled by the State. In fact,
control by the State should be considered as a plus point in the light of
the considerations which moved this Court in Unni [(Jishnan 's case because
it would be a safeguard against commercialisation and exploitation. To
ensure this the State was directed to fix the fees of these two colleges every
year after taking into account the financial needs of the colleges and the H
    450·                  SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A accounts of these two Societies and Colleges which should be audited in
    the same manner as other State-run institutions. [458-C-E]

         1.4. The appellants had provided for an interest free deposit of rupees
  one lakb each student (with exceptions) to meet the costs of infrastructural
B and other permanent facilities. This kind of a deposit ci.n_not be accepted as
  a permanent feature of the schemes. One can unilerstand the need for such
  a deposit in the initial stages when proper infrastructure has to be set up
  and eqnipment purchased for technical colleges. The initial capital costs
  have to be met. But to accept that the students taking education in these
  institutions should bear for ever the burden of the entire cost of long-term
C capital expenditure would not be fair. It is, therefore, necessary and
  desirable that other funding should be sought in the form of grant, loans or
  voluntary donations from foundations or organisations that may benefit
  from the trained personnel produced by these colleges in order to finance
  the capital outlays in these institutions. Until, however, such finances be-
D come available, there may not be any option but to take a deposit from the
  students as proposed. The funds which become available as a result of these
  deposits should be specifically earmarked for ascertained requirements
  and projects and should be utilised only against those. The quantum of
  deposit shall be reviewed by the State every year looking to the requirements
  of the two colleges and it shall be refixed every year, though on no account
E shall it exceed the proposed amount of rupees one lakb. The State shall also
  frame a scheme to eliminate the taking of such a deposit over a period of
  time. [458-F-H, 459-A-B]

           1.5. The NRI quota had already been reduced to 10%. The future NRI
F quota, however, shall be in accordance with the directions of this Court as
    may be given from time to time under U11ni Krishnan. The additional
    features of the scheme which relate to resenation and fee concession are
    in accordance with the obligation cast on the State under Article 15(4) of
    the Constitution of India. Hence with the above modifications and obser-
    vations, the scheme is approved. [459-C]
G
        1.6. Undoubtedly, in a State which has a high record of educational
  achievements, where people have enjoyed good educational facilities for
  higher education at low cost, this kind of a departure may cause some
  resentment. But the choice is between not having the colleges or having
H them on a self- financing basis. It is necessary in national interest that we
    INSTI. OF HUMAN RESOURCES DEV. v. T.R. RAMESH KUMAR 451

have a sufficient number of technically trained personnel of the requisite A
calibre to work for the nation. Jn cases where merit and means combine
there is no reason why self-financing educational institutions set up by the
Government which are not exploiting the students should not step into
meet the national requirements for such qualified personnel for good
calibre. At least 10% of free seats are made available to those without B
means but having merit. (460-F-G, DJ

      1.7. The All India Council of Technical Education has accorded
conditional approval to these two colleges by their letter dated 31st of
March, 1994. The. conditions so specified in the letter shall be complied
with by these two institutions. However, the condition that the approval     C
granted by the All India Council of Technical Education is subject to full
compliance with the scheme as prescribed by this Court in the case of Unni
Krishnan is set aside. (460-A, 461-A]

     Unni Krishnan, J.P. & Ors. v. State of Andhra Pradesh & 01!., (1993]
1 sec 645, relied on.                                                     D
      T.MA. Pai Foundation & Ors. v. State of Kamataka & Ors., (1994) 2
SCC 734 and T.MA. Pai Foundation & Ors. v. State of Kamataka & Ors.,
(1993] 4 sec 286, referred to.

     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 45-50 of E
1995 Etc. Etc.

     From the Judgment and Order dated 14.11.94 of the Kerala High
Court in O.P. Nos. 10422, 11580/93 & 10925 of 1994.

      Altaf Ahmed and V.R. Reddy, Additional Solicitor Generals, V.K.
                                                                             F
Beeran, Advocate Gneral, Soli J. Sorabjee, F.S. Nariman, Jitender Sharma,
P.S. Poli, M.A. Firoz, M.T. George, G. Prakash, Ms. Baby Krishnan, E.M.
S. Anam, Ms. Gunwant Dara, J.P. Varghees, P. Guar, K.M.K. Nair and
Ms. Malini Poduval and S.P. Sharma for the appearing parties.
                                                                             G
      The Judgment of the Court was delivered by

      MRS. SUJATA V. MANOHAR, J. Applications for intervention are
allowed.

      These appeals relate to two colleges set up in the State of Kerala -   H
    452                   SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A one started by the Institute of Human Resources Development for
    Electronics (hereinafter referred to as IHRDE) located at Chengannur
    and the other started by Lal Bahadur Sastri Engineering Research and
    Consultancy Centre (hereinafter referred to as LBS Centre) located at
    Kasargod, a backward area in the State of Kerala in the erstwhile Malabar
B   District. These two colleges have been set up as self-financing institutions
    by the above two Societies under the control of the Government of Kerala.
    Does the scheme framed by this Court in the case of Unni Klishnan, J.P.
    and Ors. v. State of Andhra Pradesh and Ors., [1993] 1 SCC 645 apply to
    these colleges?

C           The State of Kerala has an enviable record in the field of education.
    The financial position of the State, however, is not strong enough for it to
    make an investment in the two new Engineering Colleges - so the State
    claims. It is submitted on behalf of the State that the decision to start these
    two self financing colleges was arrived at in view of the growing demand
D   in the State for highly qualified technical personnel in the areas of
    Electronics and Computer Science. At present, the higher educational
    facilities in technical subjects including Engineering available within the
    State are hardly sufficient to absorb even those who secure a high first class
    in the school leaving examinations. The State has only nine Engineering
E   Colleges, six are Government Colleges and three are aided colleges. In
    contrast, the neighbouring States of Maharashtra, Karnataka, Tamil Nadu
    and Andhra Pradesh have 62, 55, 42 and 31 Engineering Colleges respec-
    tively. In the absence of facilities for higher technical education with the
    State a large number of students from Kerala are required to migrate to
    neighbouring States to seek admission in Engineering Colleges there, in-
F   curring heavy expenses. Many seek admission to private Engineering Col-
    leges outside the State spending large amounts in terms of fees, donations
    etc.

           It is claimed by the appellants that the Government of Kerala spends
G   85% of its education budget on higher education. Nevertheless, this outlay
    is inadequate to provide modern equipment, qualified faculty members and
    training facilities even in the existing Government Engineering, Medical
    and other Technical Colleges and Institutions. The State is not, therefore,
    in a position to provide for setting up of new Engineering Colleges. In view
H   of this position, the Government of Kerala by G.O.(MS) 191/92/H.Edn.
        INSIT. OF HUMAN RESOURCES DEV. ~·- T.R. RAMESH KUMAR [SUJATA V. MANO HAR, J.)   453

dated 24.12.1992 decided to start two self-financing Engineering Colleges A
from academic year 1993-94. A detailed report from the Institute of Human
Resources Development for Electronics and the Lal Bahadur Sastri En-
gineering Research and Consultancy Centre was called for in this connec-
tion.
                                                                                              B
       On the basis of the reports submitted by these two institutions the
Government issued G.O.(MS)68/93/H.Edn. dated 25.5.1993 fixing the
guidelines for establishment of two self-financing Engineering Colleges and
for admission of students to these two colleges. It was decided that the
college to be established by IHRDE will impart instructions for B.Tech. C
Course in computer Engineering and Electronic Engineering with an in-
take of 120 students in each branch. The college established by the Lal
Bahadur Sastri Centre would impart instructions for B.Tech. Course in
Computer Science and Engineering, Electronics and Communication En-
gineering, Electrical and Electronics Engineering and Mechanical En-
gineering with an intake of 60 students in each branch. As per the scheme D
being operated at present, 75% of seats in these colleges are to be filed up
on the basis of open merit applying the existing reservation principles
prevailing in the State of Kerala. 10% of the seats are to be filled up by
Scheduled Caste and Scheduled Tribe candidates and the remaining 15%
of the seats are to be filled up by children of non-resident Indians. Open E
merit seats and seats reserved for Scheduled Caste/Scheduled Tribe Can-
didates are to be filled up on the basis of marks obtained at the common
entrance examination which is being conducted by the Commissioner for
Entrance Examinations, Trivandrum. The seats for the NRI quota are also
to be filled up on the basis of merit. Since the two colleges do not receive F
any financial help in the form of any grant from the Government and are
self-financing institutioas, tution fee has been fixed for all students at Rs.
12,500 per year. However, in the case of Scheduled Castes and Scheduled
Tribes the tution fee is fixed at half the above amount i.e. Rs. 6,250 per
year. The students who are selected for admission are also required to give
an interest free deposit of rupees one lakh refundable on completion of G
four years from the date of deposit or on completion of the course to which
the student is admitted, whichever is later. Candidates belonging to
Sche.duled Castes and Scheduled Tribes, however, are exempt from pay-
ment of this deposit. Candidates selected against the NRI quota are
required to pay US Dollars 5,000 as development charges which are H
    454                    SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.

A non-refundable.

        · The college run by IHRDE is affiliated to Cochin University of
  Science and Technology while the college run by Lal Bahadur Sastri Centre
  is affiliated to the University of Calicut. Both these institutions are societies
B registered under the Travancore-Cochin Literary, Scientific and Charitable
  Societies Registration Act, XII of 1955. Both the societies are established
  by the Government of Kerala and are fully controlled by the Government
  of Kerala. The two colleges can, therefore, be considered as self-financing
  colleges started by the Government of Kerala. This position has been
  clarified by G.O. MS.91/94/H.Edn. dated 8.6.1994 which states that
C IHRDE and LBS Centre for Science and Technology are autonomous
  bodies fully owned by the State Government. The Government is, there-
  fore, pleased to order that these two self-financing Engineering Colleges
  set up by these bodies at Chengannur and Kasargod respectively will be
  treated as Government colleges and the Government undertakes to give
D them financial support in future if the necessity arises.

          The assellants have sought to justify a departure from the scheme set
   up in Unni Krishnan by pointing out that the scheme in Unni Krishnan is
   designed for private colleges. These two colleges, however, are not private
E educational institutions set up for the purpose of profit-making. The State
   has been compelled to go in for self-financing institutions in view of
   financial stringency. The appellants have also submitted that the State
   already runs (as of now) six Government and three aided Engineering
 . Colleges which provide 2391 seats which are "free seats" available to all
F candidates on merit. The tution fees charged in these nine institutions is
   Rs. 495/- per annum. As against these 2391 seats available in nine colleges,
   two new colleges will provide an additional 480 seats on payment basis.
   Since the Government already runs or aids a number of institutions where
   all the seats are "free" seats, they should be permitted to start two colleges
    with "paid 11 seats. The ratio between "free 11 and 11paid 11 seats is far more
G favourable to "free" seats than the 50:50 ratio laid down in Unni Krishana.
  Hence it is urged that the appellant should be permitted to make a
  departure from the scheme in Unni Krishnan which requires a self financ-
  ing institution to provide 50% free seats and 50% seats on payment basis.
  It is also pointed out that while students occupying payments seats in
H Engineersing Colleges are charged Rs. 46,800 as fees, at present, under the
      INSIT. OF HUMAN RESOURCES DEV. v. T.R. RAMFSH KUMAR [SUJATA V. MANO HAR, J.}   455

scheme as propounded here the fees per head come to only Rs. 12,500. A
The other plus point of the scheme as propounded is that the State, in
discharge of its obligation to make special provisions for backward classes
under Article 15(4) of the Constitution, has also provided for reservation
of 10% of these seats in favour of Scheduled Caste and Scheduled Tride
candidates who will only pay half the prescribed fees and will not have to B
pay any deposit. This is done looking to their socio-economic backward-
ness. In the open merits seats also the reservation policy of the State in
respect of such seats will operate. Such a provision does not. find a place
in the scheme under Unni Krishnan.

       In the course of hearing !~appellants have agreed to modify their C
scheme by reducing the NRI quo a to 10%, and increasing the open merit
seats to 80%. The appellants ha . also agreed to institute freeships or
scholarships to be made '!.vailable to 10% of the students admitted in these
two colleges which will be awarded on the basis of merit-cum-means. For
this purpose a scholarship fund shall be instituted with a corpus of Rs. 10 D
lakhs by each institution every year for four years. This will be introduced
from 1995-1996. Loan facilities will be made available from nationalised
banks to be needy students for getting amounts to meet their educational
expenses including the payment of deposit. It is further stated that the
capital revenue loss to the extent of Rs. 6 lakhs each year arising from the E
reduction of the NRI quota will be made good by generating additional
revenue by the college through consultancy, conduct of short-term courses
etc. by using the available infrastructure.

       Can such i departure from Unni Krishnan be permitted? The basic
difference between institutions governed by the scheme in Unni Krishnan
                                                                               F
and the present institutions is that these institutions are e-0ntrolled by the
State and, therefore, their working and utilisation of funds are under the
control of the State. The essence. of Unni Krishnan on the other hand, can
be summed up in one sentence: There should be no commercialisation or
profit taking by private educational institutipns. This Court was very con- G
cerned about the high fees charged by private technical educational institu-
tions. They earned large profits which were not utilised in providing
adequate infrastructure or teaching facilities in these institutions. Most
private colleges provided sub-standard training, making no imprCivements
in their equipment, teaching staff or teaching aids. They simply pocketed H
    456                   SUPREME COURT REPORTS [1995] SUPP. l S.C.R.

A large profits made from heavy fees charges to students. It was to stop this
    exploitation of students that the scheme was framed. In terms, the Unni
    Krishnan scheme provides that it will not be applied to Government
    Institutions. It is true that w111i Krishnan did not contemplate self-financing
  institutions set up by or sponsored by the Government. But looking to the
B confidence reposed by U,nni Klishnan in the Government in fixing proper
  fees even for private self-financing educational institutions, it is clear that
  the scheme of Unni Krishnan applies only to purely private educational
  institutions which are self-fnancing. It is designed to ensure that they do
  not make undue profits or exploit students. Unni Krishnan, however, is not
  against self-financing educational institutions. On the contrary, it has recog-
C nised the need for self-financing educational institutions to augment the
  efforts made by the State in setting up educational institutions in the field
  of technical education. It has observed (in paragraphs 193, 194 and 196) :

             "193: Notwithstanding the fact that education is the second highest
D            sector of budgeted expenditure after defence, the outlay on educa-
             tion is woefully inadequate to meet the needs of the people.
             whereas many other countries spend six to eight per cent of their
             Gross National Product on education, our expenditure on educa-
             tion is only three per cent of the Gross National Product. Seven-
E            ty-five to eighty per cent of the expenditure goes in paying the
             salaries of the teachers and other connected staff. These are the
             statements made in the Government of India publication Challenge
             of Education-A Policy Perspective referred to hereinbefore. Even
             so, on account of lack of proper supervision, lack of self-discipline
             and commitment, the quality and standard of instruction in most
F            of the Government schools and colleges - except the professional
             colleges - is woeful. This has provided an occasion and an oppor-
             tunity to private educational institutions to fill. the void, both in
             terms of meeting the need and more particularly in the matter of
             quality of instruction. Because, the State is in no position to devote
G            more resources and also because the need is constantly growing,
             it is not possible to do without private educational institutions .....


             194. The hard reality that emerges is that private educational
             institutions are a necessity in the present day context. It is not
H            possible to do without them because the Governments are in no
     !NSIT. OF HUMAN RESOURCES DEV. v. T.R RAMESH KUMAR [SUJATA V. MANO HAR. J.]   457

        position to meet the demand - particularly in the sector of medical A
        and technical education which call for substantial outlays. While
        education is one of the most important functions of the Indian
        State it has no monopoly therein. Private educational institutions
        - including minority educational institutions - too have a role to
        ~                                                                                B
        196. So far as unaided institutions are concerned, it is obvious that
        they cannot be compelled to charge the same fee as is charged in
        Governmental institutions. If they do so voluntarily, it is perfectly
        welcome but they cannot be compelled to do so, for the simple
        reason that they have to meet the cost of imparting education from C
        their own resources - and the main source, apart from dona-
        tions/charities, if any, can only be the fees collected from the
        students. It is here that the concepts of 'self-fmancing educational
        institutions' and 'cost-based educational institutions' come in. This
        situation presents several difficult problems. How does one deter- D
        mine the 'cost of education' and how and by whom can it be
        regulated? The cost of education may vary, even within the same
        faculty, from institution to institution. The facilities provided,
        equipment, infrastructure, standard and quality of education ob-
        taining may vary from institution to institution. The court cannot
        certainly do this. It must be done by Govermnent or University or E
        such other authority as may be designated in that behalf...... "


       The entire scheme in Unni Krishnan is designed for private educa-
tional institutions. The contention of the respondent that the two colleges
in question should also be considered as private Engineering Colleges
                                                                             F
because they are run by two Societies registered under the Travencore-
Cochin Literary, Scientific and Charitable Societies Registration Act, 1955,
cannot be accepted in view uf the .Government Order dated 8.6.1994. The
material which is produced before us clearly shows that these two societies
are fully controlled by the State of Kerala. The fees which have been fixed G
in the present case are also fixed by the State Government which has given
budget details relating to these two colleges. The appellants have sought
exemption from providing 50% free seats in the light of the fact that the
State already runs of aids nine Engineering Colleges which are financed by
it and which provide 2391 free seats. What is more important, it is pointed H
    458                   SUPREME COURT REPORTS (1995) SUPP. 1 S.C.R.

A   out that if the financing of the colleges is spread over all the available seats,
    the fees required to be charges would be much lower than if the expenses
    have to be covered by the fees from only 50% of the seats. In consequence,
    the fees charges are substantially lower than fees charged for payments' .
    seats in other Engineering Colleges-{hus benefiting a large number of
B   students who may not be in a position to pay the higher fees charged by
    private engineering colleges, but may be in a position to pay the substan-
    tially lower fees charges in these two colleges.

           We fmd considerable merit in this submission. In the first place, the
    question of desirability or otherwise of the Government starting self-financ-
e   ing educational institutions will depend on many circumstances including
    the financial capacity of the State. Looking to the circumstances which have
    been pointed out in the present case, the appellants have made out a good
    case for being permitted to start two s.elf-financing engineering colleges
    controlled by the State. In fact, control by the State should be considered
D   as a plus point in the light of the considerations which moved this Court
    in Unni Krishnan's case because it would be a safeguard against commer-
    cialisation and exploitation. To ensure this we direct that the State fixes
    the fees of these two colleges every year after taking into account the
                                                                                        .
    financial needs of the colleges and the accounts of these two Societies and
E   Colleges which should be audited in the same manner as other State-run
    institutions.

         The appellants have provided for an interest free deposit of rupees
  one lakhs from each student (with exceptions set out earlier) to meet the
F costs of infrastructural and other permanent facilities. This kind of a
  deposit cannot be accepted as a permanent feature of the scheme. One can
  understand the need for such a deposit in the initial stages when proper
  infrastructure has to be set up and equipment purchased for technical
  colleges. The initial capital costs have to be met. But to accept that the
  students taking education in these institutions should bear for ever the
G burden of the entire cost of long-term capital expenditure would not be
  fair. It is, therefore, necessary and desirable that other funding should be
  sought in the form of grants, loans or voluntary donations from foundations
  or organisations that may benefit from the trained personnel produced by
  these colleges in order to finance the capital outlays in these institutions.
H Until, however, such finances become available, there may not be any
     IN SIT. OF HUMAN RESOURCF.SDEV. v. T.R. RAMESH KUMAR(SUJATA V. MANOHAR, J.J   459

option but to take a deposit from the students as proposed. We direct, A
however, that the funds which become available as a result of these deposits
should be specifically earmarked for ascertained requirements and projects
and should be utilised only against those. The quantum of deposit shall be
reviewed by the State every year looking to the requirements of the two
colleges and it shall be refixed every year, though on no account shall it B
exceed the propose amount of rupees one lakh. The State shall also frame
a scheme to eliminate the taking of such a deposit over a period of time.

      The NRI quota has already been reduced to 10%. The future NRI
quota, however, shall be in accordance with the directions of this Court as
may be given from time to time under Unni Krishnan. The additional                       C
features of the scheme which relate to reservation and fee concession are
in accordance with the obligation cast on the State under Article 15(4) of
the Constitution of India. Hence with the. above modifications and obser-
vations, we approve of the scheme.
                                                                                         D
       It has been strongly urged before us by the respondents that such a
departure from the scheme in Unni Krishnan cannot and should not be
permitted. In the first place, the scheme in Unni Krishnan does not strictly
apply to the case which is before us. Nevertheless, we have applied the
underlying principles of the scheme in Unni Krishnan to the scheme which E
is before us and have found that this scheme broadly meets the aims and
objectives propounded in Unni Krishnan. This Court has itself not con-
sidered the scheme in Unni Krishnan as sacrosant. It was required to be
modified in a number of cases. Thus, for example, in T.MA. Pai Founda-
tion & Ors. v. State of Karnataka & Ors., (1994] 2 SCC 734 and T.MA. Pai F
Foundadon & Ors. (II) v. State of Karnataka & Ors., (1993] 4 SCC 286, the
minority educational institutions applied for and obtained a substantial
modification of the scheme in view of their right to reserve 50% of the seats
for the minority community. In Unni Krishnan P.J. & Ors. v. State of
Andhra Pradesh and Ors., (1993] 4 SCC 111 and T.MA. Pai Foundation &
Ors. (I) v. State of Karnataka & Ors., (1993] 4 SCC 286, the NRI quota was G
varied looking to the exigencies of the situation. A special quota for NR!s
was permitted during the period of transition. Looking to the very different
background and the ·financial constraints of the State .which has impelled
the State to formulate the present scheme of the self-financing Engineering
Colleges under the control of the Government, we do not see any reason H ·
    460                   SUPREMECOURTREPORTS (1995) SUPP. lS.C.R.

A to withhold sanction to the scheme subject to the modifications set out
    earlier.

         It is also urged by the respondent that the two colleges do not admit
  students entirely on merit because a meritorious student who is higher on
B the merit list may not be able to secure admission if he is not in a position
  to pay the higher fees. This argument is fallacious. Admission to the open
  merit seats in these colleges is available entirely on merit. Undoubtedly,
  financial capacity to bear the higher fees will be a consideration which may
  compel an individual student to either accept or decline the offer of a seat.
  But this would be so even in a case where the fees are lower. There may
C be meritorious students who are so poor that they cannot afford even the
  low fees which are charged. But that is not a ground for saying that the
  admission is not available on merit. For those who are fmancially hand-
  icapped, special facilities in the form of merit scholarships or freeships
  should be made available. We are happy that at least for 10% of such seats,
D a meritorious student who would have otherwise got admission, but for his
  inability to pay the fees, is going to the granted a freeship under the present
  scheme. We hope that such seats will increase in future as more funding
  becomes available. The difficulties of such students, however, should not
  come in the way of other meritorious students who would like to avail of
E technical education in these colleges and who, apart from being
  meritorious, are also in a position to pay somewhat higher fees in return
  for obtaining the facility of higher technical education in their home State.
  Undoubtedly, in a State which has a high record of educational achieve-
  ments, where people have enjoyed good educational facilities for higher
F education at low cost, this kind of a departure may cause some resentment.
  But the choice is between not having the colleges or having them on a
  self-financing basis. It is necessary in national interest that we have a
  sufficient number of technically trained personnel of the requisite calibre
  to work for the nation. In cases where merit and means combine there is
  no reason why self-financing educational institutions should not step in to
G meet the national requirement for such qualified personnel of good calibre.

          The appeals are, therefore, entitled to succeed. The scheme as
    propounded by the appellants with the modifications we have set out
    earlier is sanctioned. The All India Council of Technical Education has
H   accorded conditional approval to these two colleges by their letter dated
       INSIT. OF HUMAN RESOURCES DEV. v. T.R. RAMESH KUMAR !SUJATA V. MANO HAR, J.j   461

31st of March, 1994. The conditions so specified in the letter of 31st of                   A
March, 1994 shall be complied with by these two institutions. However, the
condition that the approval granted by the All India Council of Technical
Education is subject to full compliance with the scheme as prescribed by
this Court in the case of Unni Krishnan is set aside in view of what we have
said hereinabove. The appeals are accordingly allowed. There will, how-                     B
ever, be no order as to costs.

R.A.                                                                  Appeals allowed.