Summary of The Supreme Court Judgment

'Unaided colleges can fix fees, seats; state can check profiteering'

In a ruling that is going to grant greater autonomy to unaided colleges across the country, the Supreme Court in an order on August 12, 2005 freed them from the obligation to admit any students against the Government quota in medical, engineering and other professional courses. "Neither the policy of reservation can be enforced by the states nor any quota or percentage of admissions can be carved out to be appropriated by it in a minority or non-minority unaided educational institutions," the court said.

A seven-judge bench, headed by Chief Justice R C Lahoti, said unaided institutions had an ''unfettered fundamental right to choose students and procedure therefore, subject to it being fair, transparent and non-exploitative.''

The bench also recommended a Common Entrance Test to do away with unnecessary avoidable expenditure and inconvenience to students who would otherwise be forced to take several tests. However to ensure transparency in admission, the state governments "can provide a procedure for holding a common entrance test (CET) in the interest of securing fair and merit-based admissions and prevent mal-administration"

Asking all such institutions to follow the principle of triple tests - fairness, transparency and non-exploitation of students - in giving admissions, as laid down by a 11-judge Constitution Bench in the TMA Pai case, the court said the private and minority institutions could adopt the procedure for holding CET by forming a group among themselves.
If such a CET failed to satisfy all or any of the triple tests, the state could take over holding of the test by "substituting its own procedure," said the Bench.

If the state took upon itself the responsibility of holding the CET, it has to be done through an agency, which enjoyed "utmost credibility and expertise" in holding such exams to achieve twin objectives of transparency and merit.

It further clarified that the minority institutions were free to admit students of their own choice, including those from their own community or non-minorities from other states, to a limited extent in a manner that their minority status was not lost in the process. "If they do so, they would lose the protection of Article 30(1) of the Constitution" under which minorities were permitted to set up their own institutions, it ruled.

The bench, while interpreting the apex court's verdict in the T M A Pai case, gave colleges the power to fix their fee structure, but added that the state could interfere to ensure that the measure did not lead to profiteering. (Complete ban on capitation fee)
A 15 per cent quota for NRI students was also carved out in private colleges. While they can be charged higher fees, there's a rider: ''the amount of money collected against such seats should be utilized for benefiting students from economically weaker sections of the society.''

Asking states to frame suitable legislation to protect the interest of the student community in matters of admission, the bench said that until then, the committees set up by the court in each state (after its ruling in the Islamic Academy case) will continue to monitor the admission procedure and fee structure.

Such regulation, the bench said, would not violate minority rights under Article 30 (1) of the Constitution or the right of the minorities and non-minorities under Article 19(1)(G) to establish and administer educational institutions of their choice, it said.
And for minority institutions, aided and unaided, the bench said they could admit students from other communities, but not to such an extent as to alter the minority status.

It cautioned the committees against "generalising" the fee structure, but said they could go into the accounts of the colleges, look into their schemes, plans and budgets for the purpose of finding out what would be "an ideal and reasonable fee for that particular institution".

Taking note of grievances against the regulatory authorities put in place by the court following the Islamic Academy case order, the bench asked them to be more sensitive and act rationally keeping the realities in mind.

At the end it can be said that this judgment puts an end to the confusion and uncertainties generated by the T.M.A. Pai Foundation case and the subsequent clarifications given by a five judge bench. It will by no means resolve all the issues pertaining to the regulation of higher education, but it is a good beginning. Many will have legitimate apprehensions about the consequences of this decision. Will it lead to a denial of access to marginalised communities? Will professional education become more expensive for middle-class families? The judgment is not by any means immune to the force of these questions. The Court has reiterated its traditional opposition to profiteering and capitation fees, and allows the possibility of regulation in this area. The Court is also facilitating the provision of cross subsidies by allowing institutions to admit 15 per cent NRI students, provided this subsidy is actually used to help poorer students.

But the implication of the Supreme Court judgment is that as a society we now have to think more creatively and compellingly about how we achieve the goal of a society where everyone can get access to higher education appropriate to them.