caselaws.org
Supreme Court of India
Najiya Neermunda vs Kunhitharuvai Memorial … on 25 February, 2021Author: 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:
1 | Page
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
2 | Page
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
3 | Page
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
4 | Page
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
5 | Page
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,
6 | Page
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
7 | Page
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
8 | Page
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
9 | Page
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
10 | P a g e
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.
11 | P a g e
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
12 | P a g e
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
13 | P a g e
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
14 | P a g e
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
15 | P a g e
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.
16 | P a g e
Comments