2010 INSC 0914
Charutar Arogya Mandal
v.
State of Gujarat & Another
(Supreme Court Of India)
HON'BLE MR. JUSTICE R.V. RAVEENDRAN HON'BLE MR. JUSTICE H.L. GOKHALE
Charutar Arogya Mandal v. State of Gujarat & Another
Civil Appeal No. 8077 Of 2003 | 15-09-2010

R.V. Raveendran, J: Leave granted. Heard. 2. The appellant Society runs Pramukh Swami
Medical College in the State of Gujarat, which is an unaided college with a sanctioned intake
of 100 students for MBBS Course. As per the provisions of the Gujarat Professional Medical
Educational Colleges or Institutions (Regulation of Admission and Fixation of Fees) Act,
2007 ('Act' for short), 75% of the sanctioned seats in unaided colleges are 'Government seats'
and remaining 25% are 'management seats'. The 25% management quota has two
components-- 15% earmarked as NRI seats and 10% as management seats. In this appeal, we
are concerned with the filling of the ten percent management seats. The Act requires the said
ten percent management seats to be filled by the college management on the basis of inter-se
merit list of students to be admitted against the management seats. The Gujarat Professional
Medical Educational Courses (Regulation of Admission and Payment of Fees) Rules, 2009
('Rules' for short) require all the ten percent management seats in all the unaided colleges to
be filled by a Consortium (that is, an Association of Unaided Colleges/Institutions formed to
facilitate admission to management seats) by adopting a single window system on the basis of
inter se merit list of candidates whose names appear in the merit list prepared by the
Admission Committee. 3. The appellant decided to allot all its ten percent management seats
to deserving meritorious poor students who cannot pursue MBBS Course due to financial
constraints. It therefore formulated a scheme for admission of meritorious economically
weaker section students whose annual family income was not more than Rs.2 lakhs, and who
had secured a minimum of 80% marks (or 75% marks as decided by the appellant) in the 12th
standard Examination in Science Stream and the Gujarat Common Entrance Test (GUJCET).
The admissions would be strictly in the order of inter se merit. The selected students are
required to pay only a token fee of Rs.5,000/- per annum (as against the normal fee of Rs.
four lakhs for management seats fixed by the Fee Regulatory Committee). The balance
tuition fee of Rs.3.95 lakhs is given as a 'scholarship', either by the colllege and/or any
philanthropic organization. The students so admitted will be provided free boarding and
lodging, free selected books, free dissection sets etc. The students admitted under the scheme
will have to give an undertaking that he/she would render remunerated services in rural area
for at least three years from the date he/she graduates. The admissions under the said scheme
will be subjected to a four level scrutiny including a personal surprise visit to the house of the
aspiring student to confirm the annual income of the family of the appellant and to ensure the
bonafides of the applicants. The appellant-college adopted and implemented the said scheme
of admissions for filling up ten percent management seats for the academic year 2008-2009.
4. Out of the six unaided colleges in the State, only the appellant has such a charitable

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scheme for economically disadvantaged students. The other five colleges allot management
seats on regular fee basis and are not interested in such free admission schemes. As it was not
possible for the appellant's college to be a part of any Consortium or Association for making
admissions to the management seats, appellant requested the respondents to permit its college
to admit meritorious economically disadvantaged students, by adopting its own admission
procedure under its scheme. But by letters dated 2.7.2009, 14.7.2009 and 15.7.2009, the
Admission Committee insisted that all unaided Medical Colleges should either form a
Consortium for making admissions to management seats or should make admissions through
the State Admission Committee. Therefore, the appellant filed a writ petition (SCA 7570 of
2009) seeking a direction to respondents to permit the management seats in its medical
college to be filled by following its Scheme followed by it during the academic year 2008-
2009. The appellant also sought cancellation and withdrawal of the communications requiring
the appellant to join the Consortium of unaided colleges for filling up of the management
seats. By interim order dated 4.8.2009, the High Court directed that for 2009-2010
admissions, the State Government may permit the college to follow the procedure followed in
2008-2009, subject to the admission list being finalized with the approval of the Admission
Committee. 5. The High Court disposed of the said writ petition by order dated 9.8.2010,
with the following directions, without considering the various contentions raised by the
appellant on merits: "In the facts and circumstances, instead of giving any finding on merit
and to ensure that admissions are made in accordance with Rules in future, particularly 10%
seats of management quota, the following order is passed: (i) The State Government will
constitute a "Consortium" within one week to ensure admission in the academic session
2010-2011. The "Consortium" will complete all formalities and forward names of the
candidates against management quota to different Professional Medical Educational Colleges
and Institutions by 31st August, 2010. (ii) If the State Government fails to constitute
"Consortium" by 16th August, 2010 and fails to notify any advertisement by 17th August,
2010, the petitioner Trust may proceed by following procedure laid down under the Act and
Rules for selection of candidates. Selection should be confined amongst the students who
have applied pursuant to an advertisement issued by the petitioner Trust. (iii) The
management of different Professional Medical Educational Colleges and Institutions will
constitute "Consortium" for the selection, or the subsequent academic session 2011-12
onwards, "Consortium" must be constituted by 30th September, 2010 failing which the State
Government will call management and will ensure constitution of "Consortium" by 30th
October, 2010 on whose recommendation, Professional Medical Colleges and Institutions
will fill up management quota for the session 2011-12 onwards." 6. Aggrieved by the refusal
of the High Court to consider its contentions on merits, the appellant has challenged the
decision of the High Court in this appeal. It contends that as no other unaided college is
willing to give its seats free (or for a token annual fee of Rs.5000/-) to economically
disadvantaged students, it is not able to join the other unaided colleges to form a consortium
for making admissions to management seats. The respondents contend that permitting a
single college to have its admission procedure would be opposed to the Scheme of the Act
which contemplates admissions only through the State Admission Committee or through a
Consortium. It is submitted that if the appellant is not willing to join the Consortium, it
should make admissions through the State admission Committee. 7. We may refer briefly to
the relevant provisions of the Act. Section 3 provides that all admissions to Professional
Medical Courses should be made in accordance with the provisions of the Act and any

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admission made in contravention of the provisions of the Act shall be invalid. Section 4
provides that the Admission Committee shall guide, supervise and control the entire process
of admission of students to the professional educational colleges. Section 5 authorises the
Admission Committee to prepare the merit list of student. Section 10 of the Act relates to the
powers of the Fee Regulatory Committee. Sub-section (1) thereof provides that the Fee
Regulatory Committee constituted by the State Government shall determine the fee structure
for admission of students in professional courses; and that the Committee may determine
different fee structures for admission of students in different professional courses for different
professional colleges/institutions. Sub-section (3) provides that the fee structure determined
by the Fee Regulatory Committee shall be binding on the unaided professional educational
colleges/institutions for a period of three years; and the fee determined by the Committee
made applicable to a student who is admitted to a professional educational college/institution,
in a particular academic year, shall be continued for the entire period of the course and shall
not be revised till the completion of his professional course. Sub-section (4) bars the unaided
professional colleges/institutions from charging or collecting any fee other than the fee
determined by the Committee under sub-section (1). Section 11 enumerates the factors to be
considered in determining the fees to be charged, which included the location of the
professional college, nature of professional course, available infrastructure, expenditure on
administration and maintenance, reasonable surplus required for the growth and development.
Section 12 prohibits charging or collection of capitation fee by any Unaided Professional
Educational College/Institution. 8. In T.M.A. Pai Foundation v. State of Karnataka-2002 (8)
SCC 481, this court declared that every institution is free to devise its own fee structure
subject to the limitations that there can be no capitation fee or profiteering, directly or
indirectly. This court also clarified that charging of fees in a manner that a reasonable surplus
is left to meet the cost of expansion and augmentation of facilitates, would not amount to
profiteering. In Islamic Academy of Education v. State of Karnataka -- 2003 (6) SCC 697,
this court directed the state governments to set up two committees -- one to regulate
admissions and the other to regulate the fee structure. The fee structure committee was
authorized to decide whether the fees proposed by a college were justified or whether they
amounted to profiteering or charging capitation fee; and if necessary to prescribe a fee
structure different from what was proposed by the institutions. In P.A. Inamdar v. State of
Maharashtra - 2005 (6) SCC 537, this Court reiterated that while every institution is free to
devise its own fee structure, the same can be regulated to prevent profiteering and to ensure
that no capitation fee is charged, either directly or indirectly, or in any form; that if capitation
fee and profiteering are to be checked, the method of admission has to be regulated so that the
admissions are based on merit and are transparent and the students are not exploited; and that
it is, therefore, permissible to regulate admissions and fee structure for achieving the same.
This Court further held: "....Unless the admission procedure and fixation of fees is regulated
and controlled at the initial stage, the evil of unfair practice of granting admission on
available seats guided by the paying capacity of the candidates would be impossible to curb.
Non-minority unaided institutions can also be subjected to similar restrictions which are
found reasonable and in the interest of student community. Professional education should be
made accessible on the criterion of merit and on non-exploitative terms to all eligible students
on a uniform basis. Minorities or non-minorities, in exercise of their educational rights in the
field of professional education have an obligation and a duty to maintain requisite standards
of professional education by giving admissions based on merit and making education equally

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accessible to eligible students through a fair and transparent admission procedure and based
on a reasonable fee-structure. ....... We make it clear that in case of any individual institution,
if any of the Committees is found to have exceeded its powers by unduly interfering in the
administrative and financial matters of the unaided private professional institutions, the
decision of the Committee being quasi-judicial in nature, would always be subject to judicial
review." The entire object of constituting Committees for regulating the admission
procedures and determining the fee structure in regard to unaided colleges is to ensure that
the colleges do not indulge in profiteering or capitation fee. 9. If any college, out of charitable
or philanthropic motive, wants to extend a helping-hand to the economically weaker sections
of the student community by providing a scheme for fee admission to the ten percent
management quota seats, there is no need for the Fee Regulatory Committee to determine and
fix the 'fees' chargeable by the college for such free management seats. Nor will it be
necessary for such a college (which wants to admit economically backward students without
any fee or a token fee) to be a part of a Consortium of unaided colleges which want to charge
fees. 10. If other unaided colleges are willing to have such a free admission scheme for
meritorious poor, then there will be a need for a Consortium of such like minded colleges for
making admissions to such management seats. But where only one college has such a scheme
for giving all its ten percent management seats to meritorious students belonging to
economically weaker sections, it may not be possible or permissible to subject such college to
the common admission procedure applicable for payment seats. But it will however be
necessary to ensure that such a Scheme is not a camouflage for making illegal or irregular
admissions or for clandestinely charging capitation fee or for profiteering. Having regard to
the object and purpose of the Act, such schemes will have to be submitted by the college
concerned to the Admission Committee and the Fee Regulatory Committee for verification
and approval; and only after the Scheme is approved by such Committees, the colleges can
make admissions in terms of the Scheme. 11. The provisions of the Act and the rules are
intended to prevent profiteering or charging of capitation fee, and not to prevent or
discourage any charitable effort by any college to encourage or provide free education for
economically weaker sections. Such Schemes for benefiting economically weaker sections
require to be encouraged by the State and its authorities. The fact that there is only one
unaided college willing to admit students free of any fees in regard to ten per cent
management seats and the fact that it cannot therefore be a part of a fee charging consortium
of unaided colleges, cannot by itself be a ground to deny the college to have a scheme
extending the benefit of free admissions to meritorious poor students, in regard to
management seats. Therefore, the High Court ought to have considered the request of the
appellant on merits, with reference to the provisions of the Act and the Rules, especially as
the issue will arise every year and may arise with reference to other colleges also. In fact, the
High Court by order dated 30.7.2010, had proposed to examine the merits of the contentions
in regard to management seats. But it failed to do so. 12. In so far as the admission for the
current year (2010-2011), the second respondent Committee has taken a very fair and positive
stand. It was submitted by its counsel that the Committee will have no objection for the
appellant's college implementing the scheme in a transparent manner after being duly
approved by the Committee, subject to any monitoring measures. It was further submitted
that the Committee has no objection for the admission procedure followed by the appellant
for the year 2008-09 (set out in para 3 above) being followed for the admissions to the ten
percent management seats for the academic year 2010-2011 also subject to the college

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suitably modifying Clause (3) of the Agreement/Bond (which is required to be executed by
the students and/or their guardians). He submitted that the said clause extracted below, may
cause undue hardship to the students. "That the Mandal provides scholarship on year to year
basis. If the student is not able to clear his/her studies in first attempt in the respective year
the Mandal will not grant scholarship for the ensuing year. Also the awarded scholarship
would have to be refunded with 10% interest in one instalment." As rightly pointed out by the
Committee, a poor student being made liable to pay the tuition fee with interest, if he fails in
the examination, will be impractical and cause great hardship. Learned counsel for the
appellant therefore readily agreed to amend the clause as follows: "That the Mandal provides
scholarship on year to year basis. If the student is not able to clear his/her studies in first
attempt in the respective year the Mandal will not release further scholarship until the student
clears the examination. 13. In view of the above, we dispose of this appeal as follows: (i) The
order of the High Court is set aside, the matter is remanded to the High Court for
consideration and expeditious disposal of the writ petition on merits, in the light of the above
observations. (ii) Insofar as the admissions for academic year 2010-2011 for the management
seats in concerned, the appellant college is permitted to follow the same procedure as it
adopted for 2008-2009 (set out in para 3 above) and make admissions subject to the change in
regard to Clause (3) in the Agreement/Bond referred to in para 12 above.

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Charutar Arogya Mandal v. State of Gujarat & Another

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