AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (5) TMI 1046
X X X X Extracts X X X X
X X X X Extracts X X X X
....institutions that the students seeking admission to MBBS Course to submit bank guarantee against the annual fees for next 3½ years of course duration in addition to deposit of annual fee for the first year of the course, at the time of admission. 2. The relief clause contained in the writ petition reads as under: "(i) the respondent private medical colleges be directed to accept bond (in place of bank guarantee) and that too only from such students with regard to whom the institutions feel that any student/students might leave the Institutes midterm. (ii) the State and the private medical colleges be directed not to seek submission of bond/bank guarantee as a matter of course on the pretext of Judgment of Hon'ble Apex Court in the case of Islamic Academy of Education as no such directions have been given by the Hon'ble Apex Court. (iii) that the action of the respondents in calling upon the students to submit bond/bank guarantee at the time of admission against the tuition fee for remaining course duration of three and half years be declared arbitrary, illegal and bad in the eyes of law. (iv) by an appropriate, writ or direction the respondent private medica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the High Court. The parties are directed to appear before the High Court on 07.01.2020. The application for impleadment is allowed. The special leave petition is disposed of accordingly. Pending application (s), if any, shall also stand disposed of." 6. Pursuant to the directions of the Supreme Court, the matter was listed before this Court on 8.1.2021. It was noticed that the service of notices on respondents No. 1 to 6, 7, 8, 9 & 13 was still awaited. On behalf of respondents No. 1 to 6, 7, 8, 9 & 13, learned counsel put in appearance, however, as per office report, the notices of respondents No. 10, 11 & 13 were not received duly served. Besides, none of the respondents had filed reply to the writ petition. In this view of the matter, the matter could not be taken up for hearing immediately. 7. After service of the notices upon the remaining respondents and reply/counter to the petition being filed on behalf of the respondents appearing, the matter was finally heard. 8. Precisely, the grievance raised in the petition is that all the private medical institutions in the State of Rajasthan at the time of admission in MBBS Course, are insisting upon the students and/or t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay leave in midstream, then at the highest, it may require to give a bond/bank guarantee with the balance fees for the whole course would be received by the Institute even if the student left in the midstream. The grievance of the petitioner is that out of these two modes i.e. bond and bank guarantee provided for as aforesaid, the respondents are invariably insisting for furnishing of bank guarantee only, which is arbitrary and unfair. 10. A reply to the writ petition has been filed on behalf of the State of Rajasthan taking the stand that charging of bank guarantee/advance fee by the private medical institutions in the State of Rajasthan is not approved by the State. The Fee Regulatory Committee constituted has taken a decision that no private institution shall demand or take any kind of formal or informal fee from the students except the fee determined by the Committee and in case, any institution collect any kind of fee other than fixed by the Committee then the same will come under the definition of 'capitation fee' and accordingly, punitive action shall be taken. It is submitted that fee for Government medical colleges and two private medical institutions, American In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t year whereas, in academic session 2012-13, only 5 students continued the course after first year. Further, the fee charged by RUHS College of Dental Science is too meagre as compared to private dental colleges and thus, would face great difficulties in a situation students left it after first year. 13. The private colleges, the respondents no. 6, 7, 8, 9 & 13 have filed their separate reply/counter to the writ petition. 14. A preliminary objection has been raised on behalf of the private medical institutions that no public interest is involved in the present petition so as to permit the petitioner to invoke the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India. The writ petition is conspicuously silent as to whether the students or their parents have ever raised any grievance regarding the condition of bank guarantee before the private medical institutions or the state instrumentalities. According to the respondents, the writ petition filed by the petitioner without approaching the concerned authorities for redressal of the grievance deserves to be dismissed on this count alone. 15. The respondent no. 6-American Institute of Medical Scien....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns to institutions across the nation shall be done by the State Authorities, wherein the private institutions will have minimalistic roles, thus, disabling the institutions from receiving their fees from the students will affect the students community at large as well as the quality of education, in light of the fact that MBBS Course is for 4½ years and if students leave the course midstream, the college has to still sustain the expenses for that academic seat. It is submitted that many students after taking admission in a medical college and blocking their seats again appear in NEET Exams in the next academic session and after securing admission in another college, leave their studies in midstream, wherein the medical colleges have to suffer the loss for the vacant seats. It is contended that the Dental Colleges run by the State Government are also insisting upon submission of the bond and bank guarantee, however, the petitioner has filed the petition only against the private medical institutions whereas he is conspicuously silent regarding the condition imposed by the medical college run by the State Government and thus, the PIL lacks bona fides. 17. The respondent no. 8-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submitted that UG Medical and Dental Admission Counseling Board has published an Information Booklet containing information regarding the eligibility criteria, application fees, procedure of allotment of seats, schedule of dates etc. Under the said Information Booklet, the condition applicable for the private colleges have been mentioned that 'the candidates have to submit a bond/bank guarantee as applicable'. According to the respondent institution, the words 'as applicable', suggest that both the bond as well as bank guarantee are to be submitted by the student at the time of admission wherever required. It is submitted that the bond has been provided in the said Information Booklet under Proforma-9, which is to be executed in the name of State Government to ensure the due compliance of the conditions mentioned therein. The bank guarantee on the other hand cannot be treated to similar to be bond for which the proforma has been provided. It is submitted that the private medical colleges are within their right to demand submission of bank guarantee and the said right has already been recognised and the rational behind the same has been upheld by the Hon'ble Supr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n Committee) and not merely the state run medical colleges and respondent no. 6 & 7 as contended by the respondent. The interlocutory order of Apex court cannot be equated with final order and it cannot be considered as precedent by the State or for that matter by private medical colleges so as to allow them to raise a baseless plea that respondents nos. 8 to 13 do not fall within the domain. According to the petitioner, even in case of the universities established under the statute, the State Fee Determination Committee shall be the final authority. 20. The petitioner has also preferred an application seeking directions to the respondents to submit their bank records. 21. Mr. Deepesh Singh Beniwal, the petitioner, contended that a constitutional Bench of the Hon'ble Supreme Court in Islamic Academy(supra), while dealing with the question 'whether the educational institutions are entitled to fix their own fee structure', categorically held that in educational institutions, there can be no profiteering motive and capitation fee cannot be charged. The institution cannot charge either directly or indirectly any other amount over and above the amount fixed as fees and if ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and every college must be determined separately keeping in view several factors, including facilities available, infrastructure made available, the age of the institution, investment made, future plan of expansion and betterment of the educational standard etc., the management of the institution would not be entitled to charge anything more than the fee determined by an appropriate committee and thus, the contention sought to be raised by the State that except the colleges run by the State and the respondent nos. 6 & 7 herein, the fee structure in remaining institutions is open to be determined by the committee constituted by the private institutions and they are free to ask for bond/bank guarantee as applicable from the students towards 3½ years of the course duration, is apparently in violation of the directions issued by the Supreme Court. According to the petitioner, the issue that no private University/Medical Institutions can charge the fee more than as may be finally determined by the Fee Regulatory Committee constituted by the State, stands settled by a Bench of this Court vide decision dated 25.10.13 rendered in Sachin Mehta's case (supra), against which SLP pre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aring for respondent no. 2-National Medical Commission submitted that in T.M.A. Pai Foundation's case (supra), the Supreme Court categorically held that there should be no commercialisation or profiteering by the educational institutions, which was reiterated in P.A. Inamdar vs. State of Maharashtra: (2005) 6 SCC 537 and thus, keeping in view the said objective in Islamic Academy(supra), the Supreme Court mandated setting up of regulatory committees to oversee the process of admissions and fee regulations and thus, none of the institutions can claim that the fee structure in the medical colleges run by them shall not be governed by the Fee Regulatory Committee constituted by the State pursuant to the directions issued by the Supreme Court. Learned counsel submitted that the law laid down in T.M.A. Pai Foundation's case, Islamic Academy case and T.A. Inamdar's case has been further affirmed by a constitution Bench of Supreme Court in Modern Dental College and Research Centre & Ors. vs. State of Madhya Pradesh & Ors.: (2016) 7 SCC 353. Learned counsel submitted that relying upon the aforesaid decisions of the Supreme Court, a Bench of this Court has upheld the provisions ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e respondent private medical institutions. Learned counsel submitted that the respondent institutions are functioning in accordance with the directions and instructions issued by the Director vide Information Booklet. As per instructions issued, the respondent medical institutions are free to either call for a bank guarantee or a bond from the students and thus, in no manner, it can be said that while insisting upon to furnish the bank guarantee, the respondent institutions have violated the directions issued by the Supreme Court in Islamic Academy (supra). Learned counsel submitted that the advance fee for one year in lieu of bank guarantee is accepted by the respondent institutions only in cases where the students or their parents are not in position to furnish the bank guarantee. No institution is receiving the advance fee for entire course duration. However, learned counsel fairly submitted that the advance fee if any, deposited by the students, is neither kept in separate account nor the interest accrued thereon is refunded to the students at the end of the course or adjusted against the fee payable for the final year. According to the learned counsel in case of advance fee be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of furnishing bank guarantee in no manner amounts to profiteering and thus, the contention sought to be raised by the petitioner that the action of the respondents is in violation of the directions issued by the Supreme Court in Islamic Academy (supra), is absolutely devoid of any merit. Learned counsel urged that as per the institutions issued by the State Government, the respondent institutions are entitled to ask for bond/bank guarantee as applicable, which is not under challenge in the instant petition and thus, the petition filed by the petitioner without setting out the relevant facts in regard to each of the institutions, just on the basis of imaginary facts, deserves to be dismissed on this count alone. 26. Mr. K.K. Sharma, learned Senior Advocate appearing for the respondent no. 9-JNU Institute of Medical Sciences & Research Centre, Jaipur, contended that a lawyer cannot be permitted to espouse the cause of their clients by filing a petition in their behalf and thus, the petitioner who is not an aggrieved person, cannot maintain the petition invoking PIL jurisdiction of this Court. It is submitted that the petition filed is absolutely laconic and vague inasmuch as, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ned counsel Mr. Vikas Balia, learned counsel submitted that even the candidates selected in Government Dental College (RUHS) College of Dental Sciences are required to submit a bond of Rs. 4 lacs in favour of the Principal of the said college alongwith bank guarantee of Rs. 1 lac, which are liable to be forfeited if the candidate leaves the course after second round of counseling and thus, the petition preferred by the petitioner challenging the condition of bank guarantee only qua the private institutions, apparently lacks bonafides. Learned counsel submitted that as per the college fee details for Medical UG Admissions notified, the respondent institutions are asking to the candidates admitted to the course for bank guarantee equivalent to 2 years' fees alongwith post dated cheques of remaining 1.5 years' fee. It is submitted that bank guarantee cannot be treated similar to bond for which the proforma has been provided by the State Government in Information Booklet. According to the learned counsel in case of submission of the bank guarantee, if the candidate commits default, the private medical college will have no option but to undertake long drawn process for releasing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Association & Ors. vs. State of Kerala & Ors.: AIR 2019 Kerala 96, though the SLP against the said judgment is pending before the Supreme Court. 29. We have considered the rival submissions and gone through the decisions cited at the bar. 30. At the outset, it would be appropriate to deal with the preliminary objection raised on behalf of the respondents against the maintainability of this PIL filed by the petitioner, an advocate by profession, espousing the cause of students who intend to pursue medical course. 31. Indubitably, the strict rule of locus standi does not apply to PILs. As a matter of fact, in appropriate case even where the petitioner might have moved a Court in private interest, if such litigation assumes the character of the Public Interest Litigation, the inquiry into the state of affairs of the subject of litigation by the Court, necessary and essential for the administration of justice, cannot be avoided. [vide Shivajirao Nilangekar Patil's case (supra)]. Wherever injustice is meted out to a large number of people, the Court cannot hesitate in stepping in. When the Court is prima facie satisfied about the violation of any constitutional right of a disad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ues raised by the petitioner essentially rolls around the decision of the Hon'ble Supreme Court in Islamic Academy (supra) but, so as to appreciate the controversy raised in correct perspective, it would be appropriate to travel through the history of the judicial pronouncements of the Hon'ble Supreme Court germane to the issues raised. 35. In the first instance, the issue regarding charging of capitation fee in consideration of admission to educational institutions came up for consideration before the Hon'ble Supreme Court of India in the matter of Mohini Jain (Miss) vs. State of Karnataka & Ors.: (1992) 3 SCC 666. The petitioner therein challenged the notification issued by the State of Karnataka, in exercise of the power conferred under Section 5(1) of the Karnataka Educational Institution (Prohibition of Capitation Fee) Act, 1984, permitting the Private Medical Colleges in the State of Karnataka to charge exorbitant tuition fee from the students other than those admitted to the 'Government seat'. After due consideration of the constitutional scheme, the Court held therein that the 'right to education' is concomitant to the fundamental rights enshrin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....olleges, must be described as capitation fee. Regarding the capitation fee, the Court observed that the 'Capitation fee' means charging or collecting amount beyond what is permitted by law. The Court observed that "We must strive to bring about a situation where there is no room or occasion for the management or anyone on its behalf to demand or collect any amount beyond what is permitted. We must clarify that charging the permitted fees by the private educational institutions - which is bound to be higher than the fee charged in similar governmental institutions by itself cannot be characterised as capitation fees." The Court evolved a scheme in the nature of guidelines wherein while emphasizing that 50% seats in every professional college shall be filled by the nominees of the Government or University, as the case may be, which were referred to as 'free seats' to be filled in from amongst the students selected on the basis of the merit determined on the basis of a common entrance examination where it is held or in the absence of an entrance examination by such criteria as may be determined by the competent authority or the appropriate authority, it permitted filli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....harging of capitation fee and profiteering by the institution. Since the object of setting up an educational institution is by definition "charitable", it is clear that an education institution cannot charge such a fee as is not required for the purpose of fulfilling that object. To put it differently, in the establishment of an education institution, the object should not be to make a profit, inasmuch as education is essentially charitable in nature. There can, however, be a reasonable revenue surplus, which may be generated by the educational institution for the purpose of development of education and expansion of the institution. ...xxxxxxx.. 68. It would be unfair to apply the same rules and regulations regulating on to both aided and unaided professional institutions. It must be borne in mind that unaided professional institutions are entitled to autonomy in their administration while, at the same time, they do not forego or discard the principle of merit. It would, therefore, be permissible for the university or the Government, at the time of granting recognition, to require a private unaided institution to provide for merit-based selection while, at the same time, giving....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t that some of the educational institutions are collecting in advance the fees for the entire course i.e. for all the years, observed: "8. It must be mentioned that during arguments it was pointed out to us that some educational institutions are collecting, in advance, the fees for the entire course i.e. for all the years. It was submitted that this was done because the institute was not sure whether the student would leave the institute midstream. It was submitted that if the student left the course in midstream then for the remaining years the seat would lie vacant and the institute would suffer. In our view an educational institution can only charge prescribed fees for one semester/year. If an institution feels that any particular student may leave in midstream then, at the highest, it may require that student to give a bond/bank guarantee that the balance fees for the whole course would be received by the institute even if the student left in midstream. If any educational institution has collected fees in advance, only the fees of that semester/year can be used by the institution. The balance fees must be kept invested in fixed deposits in a nationalised bank. As and when fee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sideration, inter alia, the salary or remuneration paid to the members of the faculty and other staff, the investment made by them, the infrastructure provided and plan for future development of the institution as also expansion of the educational institutions. Future planning or improvement of facilities may be provided for. An institution may want to invest in an expensive device (for medical colleges) or a powerful computer (for technical college). These factors are also required to be taken care of. The State must evolve a detailed procedure for constitution and smooth functioning of the Committee. 156. While this Court has not laid down any fixed guidelines as regards fee structure, in my opinion, reasonable surplus should ordinarily vary from 6% to 15%, as such surplus would be utilized for expansion of the system and development of education. 157. The institutions shall charge fee only for one year in accordance with the rules and shall not charge the fees for the entire course. 158. Profiteering has been defined in Black's Law Dictionary, 5th Edn., as: "Taking advantage of unusual or exceptional circumstances to make excessive profits." 159. With a view to ens....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rest accrued thereupon may enure to the benefit of the students concerned. Ordinarily, however, the management should insist for a bond from the concerned students." (emphasis supplied) 40. Thus, in Islamic Academy (supra), the Supreme Court held that there is autonomy with the institution in fixing the fee structure but there cannot be any profiteering motive and no advance fee could be charged. The Court required setting up of the Committee by each of the State to decide whether fee structure proposed by the institution was justified. In respect of any particular student which may leave the course in the mainstream, the Court observed that such student may be required to give a bond/bank guarantee that the balance fees for the whole course would be received by the institute. However, it was emphasized that in such cases, ordinarily, the management would insist for a bond from the concerned student. 41. In P.A. Inamdar's case (supra), a larger Bench of seven-Judges of Hon'ble Supreme Court, after due consideration of the earlier decision in T.M.A. Foundation, while dealing with the issue of capitation fee, held: "140. Capitation fee cannot be permitted to be charged a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....However, we would like to sound a note of caution to such Committees. The learned counsel appearing for the petitioners have severely criticised the functioning of some of the Committees so constituted. It was pointed out by citing concrete examples that some of the Committees have indulged in assuming such powers and performing such functions as were never given or intended to be given to them by Islamic Academy. Certain decisions of some of the Committees were subject to serious criticism by pointing out that the fee structure approved by them was abysmally low which has rendered the functioning of the institutions almost impossible or made the institutions run into losses. In some of the institutions, the teachers have left their jobs and migrated to other institutions as it was not possible for the management to retain talented and highly qualified teachers against the salary permitted by the Committees. Retired High Court Judges heading the Committees are assisted by experts in accounts and management. They also have the benefit of hearing the contending parties. We expect the Committees, so long as they remain functional, to be more sensitive and to act rationally and reasona....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ations on these rights. .xxxxx 74. The principles enunciated in T.M.A. Pai Foundation and P.A. Inamdar were applied in Islamic Academy of Education where a challenge was mounted against the directions issued by the Director of Education to the recognised unaided schools under Section 24(3) read with Sections 18(4) and 18(5) of the Delhi School Education Act, 1973, inter alia directing that no fee/funds collected from parent/students would be transferred from the recognised unaided school fund to a society or trust or any other institution. After examining the directions and the accounting principles in detail, this Court upheld the said directions on the ground that it was open for the State to regulate the fee in such a manner so as to ensure that no profiteering or commercialisation of education takes place. 75. To put it in a nutshell, though the fee can be fixed by the educational institutions and it may vary from institution to institution depending upon the quality of education provided by each of such institutions, commercialisation is not permissible. In order to see that the educational institutions are not indulging in commercialisation and exploitation, the Governm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....antee that the balance fee for the whole course would be received by the institution if the student left in midstream, however, in such situation, ordinarily, the management should insist a bond from the concerned student and thus, the management of the educational institution cannot insist upon each and every student to furnish a bank guarantee as a matter of course and the advance fee cannot be charged in addition to annual fee for more than one year. 45. In the backdrop of legal position settled as above, adverting to the facts of the present case, it is pertinent to note that the factum of the respondent private medical institutions insisting upon each and every student admitted to the professional course to deposit the fee for one year and to furnish bank guarantee towards the fee for remaining duration of the course, is not even disputed before this Court. Rather, some of the institutions have even admitted that in addition to the fee for one year, the advance fee is being accepted generally for one more year, which is not kept in separate account and the interest accrued thereon is also not credited to the fee account of the concerned student or refunded to him at the time ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the medical/dental colleges run by the State Government must ordinarily accept the bond towards the fee for the 3½ years duration of the course in addition to fee for one year and a bank guarantee from a particular student should only be insisted upon for specific reason as an exception. 48. In view of the discussion above, the view taken by the learned Single Judge of this Court in Harshvardhan Singh's case (supra) laying down in general that the demand of the bank guarantee by the private medical institutions is not illegal as it has been recognised as valid condition by the Apex Court, without referring to the law laid down in Islamic Academy's case (supra) discussed above, is not correct. 49. Coming to the incorporation in the Information Booklet issued by the State Government laying down that at the time of reporting, the selected candidates will have to submit a bond/bank guarantee as applicable, suffice it to say that the same has to be construed in light of the directions issued by the Hon'ble Supreme Court in Islamic Academy (supra) and in no manner it could be inferred therefrom that the private institution has the absolute choice to ask for eithe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....its own fee structure in exercise of the power conferred under Section 28 and/or 33 of the Act of 2011. Referring to the decisions of the Supreme Court in T.M.A. Pai Foundation and Islamic Academy, the Court held: "26. In order to give effect to the directions issued in the judgment of TMA PAI's case (surpa), the Honourable Supreme Court, directed the respective State Governments/concerned authority to set up, in each State, a committee headed by a retired High Court judge, nominated by the Chief Justice of that State. The directions further stipulated that the other members, who shall be nominated by the Judge so nominated by the Chief Justice of that State, must include a Chartered Accountant of repute and further a representative of the Medical Council of India or the All India Council for Technical Education, depending on the type of private educational institution involved with reference to determination of the fee structure. Further, the Secretary of the State Government in charge of Medical Education or Technical Education, as the case may be, shall be a member and Secretary of the Committee. The Committee so formed has been also vested with the discretion to nominate/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(1)(g) in case of unaided professional educational institutions. As has been observed by the Hon'ble Supreme Court the 'Fee Regulation Committee' is headed by Retired High Court Judge, who is assisted by experts in accounts and management fields and the committee have also the advantage of hearing the contending parties while determining the fee structure. Therefore, in our considered conclusion the judgment delivered by the Hon'ble Supreme Court in the case of Islamic Academy, as regards setting up of committee with reference to and fee structure, is not in any way beyond the law declared by the Hon'ble Supreme Court in Pai Foundation(supra), as projected on behalf of the respondent-University. The contentions of the learned senior counsel, on those counts do not have much substance and are, therefore, rejected. .xxxxxx. 32. It is not in dispute that the Hon'ble Supreme Court with reference to the issue of fixation of fee structure to various professional courses in the country including MBBS and BDS Course, directed all the States to the fix fee structure through a Committee as per the directions issued in the case of Islamic Academic of Education (sup....