Najiya Neermunda vs Kunhitharuvai Memorial … on 25 February, 2021


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Supreme Court of India

Najiya Neermunda vs Kunhitharuvai Memorial … on 25 February, 2021

Author: L. Nageswara Rao

Bench: Hon’Ble The Justice, L. Nageswara Rao, S. Ravindra Bhat

                                                                        Non-Reportable

                                     IN THE SUPREME COURT OF INDIA
                                      CIVIL APPELLATE JURISDICTION
                                       Civil Appeal Nos. 606 - 616 of 2021

                         Najiya Neermunda & Anr. Etc.              ... Appellant(s)
                                                   Versus


                         Kunhitharuvai Memorial Charitable Trust & Ors. Etc.
                                                                …. Respondent (s)
                                                   WITH
                                        Civil Appeal Nos. 617-634 of 2021

                                           Civil Appeal No. 635 of 2021

                                           Civil Appeal No. 636 of 2021

                                           Civil Appeal No. 637 of 2021

                                           Civil Appeal No. 666 of 2021

                                           Civil Appeal No. 679 of 2021


                                                JUDGMENT

L. NAGESWARA RAO, J.

1. The controversy in these Appeals pertains to fee

fixation by the Admission and Fee Regulatory Committee for

MBBS students in private self-financing medical colleges in

the State of Kerala.

Signature Not Verified

Digitally signed by
Sanjay Kumar
Date: 2021.02.25
14:42:50 IST
Reason:

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2. Pursuant to the judgement of this Court in P.A.

Inamdar & Ors. v. State of Maharashtra & Ors.1, the

State of Kerala enacted Kerala Professional Colleges or

Institutions (Prohibition of Capitation Fee, Regulation of

Admission, Fixation of Non-Exploitative Fee and Other

Measures to Ensure Equity and Excellence in Professional

Education) Act, 2006. The Rules framed under the said Act

came into force w.e.f. 2006. The said Act was replaced by

Kerala Medical Education (Regulation and Control of

Admission to Private Medical Educational Institutions) Act,

2017 (hereinafter referred to as “the 2017 Act”). Certain

provisions of the 2017 Act were challenged by way of Writ

Petitions filed in the High Court of Kerala. The fixation of

admission fee for all the medical colleges in the State of

Kerala provisionally at Rs. 5 Lakh by the Admission and Fee

Regulatory Committee was also subject matter of challenge

in the said Writ Petitions. Section 8 of the 2017 Act

delineates the powers and functions of the Admission and

Fee Regulatory Committee (hereinafter referred to as “the

Committee”) constituted under Section 3 of the 2017 Act.

Section 8(1)(a) provides that the Committee can direct a

private aided or unaided medical institution to furnish the

required information along with necessary material for
1 (2005) 6 SCC 537

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enabling the Committee to determine the fee that may be

charged by the institution in respect of each medical course.

Section 11 of the 2017 Act mentions the factors that are to

be taken into account by the Committee for determination of

the fee to be charged by a private aided or unaided medical

institution. The challenge to Sections 8(1)(a) and Section 11

of the 2017 Act was rejected by the High Court in its

judgment dated 02.11.2017. However, the High Court held

that fixation of fee provisionally was ultra vires the 2017 Act.

After examining the law laid down by this Court in T.M.A. Pai

Foundation & Ors. v. State of Karnataka & Ors.2,

Islamic Academy of Education v. State of Karnataka &

Ors.3, P.A. Inamdar (supra) and Modern Dental College

& Research Centre & Ors. v. State of Madhya Pradesh

& Ors.4 with respect to fixation of fee for professional

courses in unaided medical colleges, the High Court of Kerala

held that the institutions shall propose the fee structure and

the scrutiny by the Committee shall only be for the purpose

of ensuring that such fee is not exploitative and that the

institutions are not indulging in profiteering or collecting

capitation fee. According to the High Court, the Committee

can formulate a policy of directing the colleges to submit

2 (2002) 8 SCC 481
3 (2003) 6 SCC 697
4 (2016) 7 SCC 353

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audited accounts of previous years for the purpose of

ascertaining that there is no profiteering by the institutions in

fixing the fee. The High Court made it clear that the

Committee cannot go into the desirability or appropriateness

of the expenses incurred by the institution as per its own

notions and standards. While disposing of the Writ Petitions,

the High Court fixed a time schedule for finalizing the fee to

be paid by students as it would be detrimental to the

interests of both students and the institutions to keep the

finalization of fee pending for a long time.

3. Consequent upon the judgment dated 02.11.2017 of

the High Court, the Committee fixed fee for the MBBS course

for the years 2017-18 and 2018-19 for private medical

colleges. Dissatisfied with the fee fixed by the Committee,

the managements of private self-financing medical colleges

again approached the High Court by filing Writ Petitions

which were heard and disposed of by the High Court on

28.02.2019. The principal contentions of the managements

before the High Court were that the Committee acted in

excess of its jurisdiction in fixing fee for the years 2017-18

and 2018-19 and that all the members of the Committee

were not parties to the order of fee fixation. Considering the

first point of the Committee acting in excess of the

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jurisdiction vested in it by the 2017 Act, the High Court was

of the opinion that the Committee was empowered to ensure

that the fee fixed by the institutions was reasonable. The

contention of the managements that the proposal made by

them in respect of the fee to be collected from the students

has to be accepted by the Committee which does not have

the power to disallow any expenditure, was not accepted by

the High Court. That the Committee lacked the power to fix

a fee different from the one proposed by the managements

was also rejected by the High Court. After carefully

considering the judgments of this Court relating to fee

fixation and the judgments of the High Court on the same

point, a Division Bench of the High Court of Kerala in its

judgment dated 28.02.2019 observed that the Committee

has the power to examine whether the fee proposed by the

managements of private self-financing medical colleges was

not excessive and non-exploitative, apart from considering

that the surplus proposed was reasonable and was being

ploughed back into the institution. The managements of

private self-financing medical colleges were directed to

cooperate with the Committee by furnishing all the

accounting details as directed by the Committee. It is

important to note that the High Court observed that the

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Committee has the power to examine the material furnished

by the institutions for eliminating impermissible ingredients

so as to arrive at a reasonable fee that can be charged by

the management. As all members of the Committee were

not present during the decision-making process of fixation of

fee, the High Court set aside the order passed by the

Committee. The Committee was directed to pass fresh

orders for fixing the fee in accordance with law at the

earliest. The Committee issued fresh orders in July, 2019 in

respect of fixation of fee for MBBS Course for the years 2017-

18 and 2018-19. Proceeding on the premise that the orders

passed earlier fixing the fee were set aside by the High Court

for lack of quorum, the Committee did not re-examine the

proposals made by the managements earlier. The

Committee reiterated the fee that was fixed for the medical

colleges in its earlier orders. The managements of private

self-financing colleges approached the High Court of Kerala

by filing Writ Petitions challenging the orders passed by the

Committee by which the fee fixed for the years 2017-18 and

2018-19 had been repeated again. By an order dated

14.01.2020, the High Court directed the managements of

private self-financing colleges to provide a statement,

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accompanied with an affidavit and a list of documents within

a period of 3 weeks from the date of the order, relating to:

a. The cost of land and building with date of acquisition
of land and construction of building,
b. Listed value of infrastructure,
c. List of equipment, its value and approximate life,
d. The salary and allowances paid to the teaching and
non-teaching staff,
e. The expenditure on administration and maintenance
of the medical educational institution,
f. Any other expenditure, and
g. Surplus for future development.

4. Prima facie, the High Court was convinced that the

Committee did not reconsider the matter after the judgment

of the High Court dated 28.02.2019. The High Court was

convinced that the orders passed by the Committee fixing

fee for the years 2017-18 and 2018-19 suffered from the vice

of non-application of mind. The order dated 14.01.2020 was

subject matter of challenge in the SLPs filed in this Court

which were disposed of on 06.03.2020 with a request to the

High Court to decide the Writ Petitions. The High Court was

also given the liberty to decide whether it can itself decide

the fee.

5. On 19.05.2020, the High Court disposed of the Writ

Petitions in which orders passed by the Committee were

assailed. After examining the orders passed by the

Committee, the High Court was of the opinion that there was

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no fresh consideration for fixation of fee in spite of directions

issued by the Division Bench of the High Court in its

judgment dated 28.02.2019. The High Court was not

satisfied with the hearing that was given to the

managements with an interval of 15 minutes. The failure on

the part of the Committee in not reconsidering the matter of

fee fixation was found fault with by the High Court. The High

Court found it inappropriate to fix the fee by itself and

remanded the matter back to the Committee to re-examine

the proposals of the managements of private self-financing

colleges and to pass suitable orders. The High Court gave a

specific direction to the Committee to examine whether the

estimate of the expenditure provided by the institutions are

in accordance with the audited balance sheets and in the

absence of audited balance sheets, in accordance with the

provisional profit and loss accounts to be furnished by the

managements. The High Court directed the Committee to

examine the audited balance sheets only for the purpose of

considering whether the expenditure that is shown by the

managements should be excluded or not. The Committee

was directed to arrive at a decision regarding fixation of fee

without being influenced by its earlier orders. A fair

opportunity was directed to be given to the managements of

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private self-financing medical colleges. The State of Kerala

and the students of private self-financing medical colleges

have challenged the judgment dated 19.05.2020 by filing

these Appeals.

6. We have heard Mr. Jaideep Gupta and Mr. Paramjit

Singh Patwalia, learned Senior Counsel appearing on behalf

of the State of Kerala, Mr. P.S. Narasimha, learned Senior

Counsel, Mr. Raghenth Basant and Mr. Wills Mathew, learned

counsel appearing on behalf of the students, Mr. Dushyant

Dave and Mr. Shyam Divan, learned Senior Counsel

appearing on behalf of the managements of private self-

financing colleges. The main contention of the State of

Kerala is that the earlier orders of fee fixation for the years

2017-18 and 2018-19 have been upheld by the High Court in

its judgment dated 28.02.2019. The matter was remanded

back by the High Court only because the orders were passed

without quorum. It was argued on behalf of the State that

the managements of private self-financing colleges were

given an opportunity to furnish additional material, if any,

which was not availed of. There was no necessity for

reconsideration of fee fixation for the years 2017-18 and

2018-19 with which no fault was found by the High Court by

its judgment dated 28.02.2019. The State of Kerala is also

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aggrieved by the direction given by the High Court in the

impugned judgment restricting the powers of the Committee

in exercise of its jurisdiction to fix the fee. The directions

given by the High Court are contrary to Section 11 of the

2017 Act, which refers to factors that have to be taken into

account by the Committee for fee fixation. On behalf of the

students, a submission was made that the fee fixed by the

Committee is appropriate and should not be interfered with.

A fervent appeal was made on behalf of the students that

any revision of fee would impose financial burden on the

students and their families. Relying upon the judgments of

this Court, it was argued on behalf of the students that the

fee charged by the private self-financing colleges should be

reasonable.

7. The managements of private self-financing colleges

stressed on the fact that they have a right guaranteed under

Article 19 (1)(g) of the Constitution of India which can be

curtailed only by reasonable restrictions. They have a right

to establish and administer an institution without any undue

interference. The case canvassed on behalf of the

managements is that the power of the Committee is

restricted to scrutinize the proposals made by them for

charging the fee. No doubt, the managements should not be

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permitted to charge excessive fee but reasonable surplus is

permitted under Section 11 of the 2017 Act. Expenditure

involved in running an institution along with reasonable profit

is permitted by the statute. There is no error committed by

the High Court in directing the audited accounts to be

considered for fee fixation. Reference has been made to

higher fee fixed for a Deemed University in Kerala and by

other States to argue that the fee for the years 2017-18 and

2018-19 shall be fixed at par with those institutions. The

submission of the management is that there should have

been a de novo consideration after remand by the High Court

on 28.02.2019. They have complained about the hearing

that was given to them after the remand, wherein 19 private

self-financing colleges were directed to be present before the

Committee with an interval of 15 minutes, which is wholly

unreasonable. The stand of the managements is that the

fixation of fee for students pursuing medical courses 2017-18

onwards should not be delayed any further.

8. Fixation of fee payable by students pursing their

medical courses in the State of Kerala since 2017-18 has not

been finalized till date. One college complains of non-

finalization of fee from the year 2016-17. The students are

continuing their education after remitting a provisional fee.

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Sections 8 and 11 of the 2017 Act which provide for the

powers and functions of the Committee and the factors to be

taken into account for fixation of fee have been upheld by

the High Court. The exercise undertaken by the Committee

for finalizing the fee payable by the students for the years

2017-18 and 2018-19 was examined by the High Court at the

behest of the managements. The High Court by its judgment

dated 28.02.2019 remanded the matter back to the

Committee directing that fresh orders be passed. The State

contends that the remand was for a limited purpose as the

fee fixation by the Committee was set aside only because it

lacked quorum and not otherwise. On the other hand, the

managements insisted that the Committee had to re-

examine the matter on remand by the High Court. If the

remand was only on a technical ground of lack of quorum,

the High Court would have mentioned it in its judgment

dated 28.02.2019. The stand taken by the managements

was accepted by the High Court in the impugned judgment.

The High Court was of the firm opinion that the Committee

ought to have considered the matter de novo and fixed the

fee after giving an opportunity to the managements and

after considering the proposals again. A close scrutiny of the

judgement dated 28.02.2019 would not indicate that the

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remand was only for the purpose of curing the defect of lack

of quorum. The High Court in its judgment dated 28.02.2019

considered the submissions of the managements that the

Committee acted in excess of its jurisdiction conferred by

Section 8 of the 2017 Act. The additional point raised by the

managements that the fee was fixed without regard to the

factors mentioned in Section 11 of the Act was also

considered by the High Court in its judgment dated

28.02.2019. Moreover, the fee that was fixed by the

Committee was not approved by the High Court in its

judgment dated 28.02.2019. Nonetheless, the High Court

held that the Committee should closely scrutinize the fee

suggested by the managements to examine if fee proposed

was not excessive and to eliminate any element of

profiteering or collection of capitation fee. The

managements were directed to co-operate with the

Committee in the matter of fixation of fee. The powers and

functions of the Committee and the factors to be considered

by the Committee for fixation of the fee have been discussed

by the High Court in its judgment dated 28.02.2019, without

finally expressing its mind on the correctness of the fee fixed

by the Committee. In the impugned judgment, the High

Court rejected the contention of the students and the State

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of Kerala and held that the matter was not sent back for

reconsideration only on the ground of lack of quorum. If the

remand was only on this technical issue, the High Court

would have specifically mentioned in the judgment. In any

event, the High Court in the impugned judgment held that it

was incumbent on the Committee to reconsider the proposals

for fee fixation afresh, as the matter was remanded by the

High Court after giving reasonable opportunity of hearing to

the stakeholders. The fee fixation of the Committee is

subject to an appeal as per provisions of the 2017 Act.

Except laying down principles of fee fixation, the High Court

did not examine the merits of any case while remanding the

matter for reconsideration in accordance with law by its

judgment dated 28.02.2019. The Committee shall re-

examine the proposals of the Managements of Medical

Colleges for the fixation of fee 2017-18 onwards.

9. The other issue that requires to be considered relates to

the restrictions placed by the High Court in the matter of

fixation of fee by the Committee. We find force in the

submission of Mr. Jaideep Gupta, learned Senior Counsel

appearing on behalf of the State, that no fetter can be placed

on the exercise of power for fee fixation by the Committee,

which shall be in accordance with the factors that are

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mentioned in Section 11 of the 2017 Act. The High Court

committed an error in directing the Committee to take into

account only audited balance sheets, and provisional profit

and loss accounts in the absence of audited balance sheets,

to fix the fee. Though we are in agreement with the

submission made on behalf of the managements that the fee

as proposed by them should be considered by the

Committee, it is no more res integra that the right conferred

on the institutions to fix fee for professional courses is

subject to regulation. It need not be reiterated that unaided

professional institutions have the autonomy to decide on the

fee to be charged, subject to the fee not resulting in

profiteering or collection of capitation fee. Regulation of fee

is within the domain of the Committee which shall ensure

that the fee is non-exploitative and reasonable. There is no

need to repeat the judgments of this Court, especially P.A.

Inamdar & Ors. (supra), which have been copiously referred

to by the High Court in the 3 rounds of litigation to indicate

the principles to be followed for fixation of fee in private

medical colleges. Suffice it to mention that the Committee

shall reconsider the proposals of the managements for fee

fixation 2017-18 onwards by taking into account the factors

mentioned in Section 11 of the 2017 Act and the law laid

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down by this Court in Modern Dental College & Research

Centre (supra). The delay that is caused in finalizing the fee

in medical colleges is beneficial neither to the institutions nor

the students. Therefore, we direct the Committee to

expeditiously reconsider the proposals of the private self-

financing colleges for fee fixation from 2017-18 onwards.

Needless to mention that fee for earlier years also needs to

be finalized in case it has not been done in respect of any

college. It can direct the managements to furnish any

information that is required for the purpose of arriving at a

decision that the fee proposed by the managements is

neither excessive nor exploitative in nature. A reasonable

opportunity should be given to the managements of private

self-financing colleges in respect of their proposals for fee

fixation. The entire exercise shall be completed within a

period of three months from today.

10. For the aforementioned reasons, the Appeals are

disposed of accordingly.

……………………………….J.

[ L. NAGESWARA RAO ]

……………………………….J.

[ S. RAVINDRA BHAT ]

New Delhi,
February 25, 2021.

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