IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No 1380 of 2004 in SPECIAL CIVIL APPLICATION No 6623 of 2004 with LETTERS PATENT APPEAL No 1382 of 2004 with LETTERS PATENT APPEAL No 1383 of 2004 with LETTERS PATENT APPEAL No 1395 of 2004 with LETTERS PATENT APPEAL No 1733 of 2004 with CIVIL APPLICATIONS No 9910, 5177, 5187, 5186, 5291 and 7072 of 2004 For Approval and Signature: HON'BLE MR.JUSTICE M.S.SHAH Sd/- and HON'BLE MR.JUSTICE D.H.WAGHELA Sd/- ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? 1 & 2 YES; 3 to 5 NO -------------------------------------------------------------- CHARUTAR AROGYA MANDAL & others Versus JUSTICE R J SHAH (RETD.) FEE COMMITTEE (MEDICAL) FOR SELF FINANCED PROFESSIONAL COLLEGES & others -------------------------------------------------------------- Appearance: 1. LPA Nos. 1380,1382,1383,1395 and 1733 of 2004 & CAs. MR SB VAKIL senior advocate and MR DC DAVE, advocate for Appellants. MR BP TANNA senior advocate with MS KERAWALA and MR NIKHIL KARIEL advocates, MR JR NANAVATI senior advocate with MR AR THAKER advocate and MR ASPI KAPADIA advocate for Respondents. MR KB TRIVEDI ADDL ADVOCATE GENERAL with Ms.SK Vishen AGP for State. -------------------------------------------------------------- CORAM : HON'BLE MR.JUSTICE M.S.SHAH and HON'BLE MR.JUSTICE D.H.WAGHELA Date of decision: 16/03/2005 C.A.V. JUDGEMENT (Per: HON'BLE MR.JUSTICE D.H.WAGHELA for the Court) 1. These appeals under Clause 15 of the Letters Patent are preferred from the common judgment by, or on the basis of which the petitions of the appellants are rejected and challenge of the educational institutions to the fee-structure prescribed by Justice R.J.Shah (Retd.) Fee Committee for Self-financed Professional Colleges is turned down. That Fee Committee, originally joined as the only respondent, was set up pursuant to the directions of the Supreme Court in ISLAMIC ACADEMY OF EDUCATION v. STATE OF KARNATAKA [(2003) 6 SCC 697]. Subsequently, the State of Gujarat have been added by an amendment as a party-respondent and the Parents Association of Medical and Dental Students has also joined as party-respondent. Some students of the medical colleges at Karamsad and Surat also applied for being joined as parties and their advocates were also heard. 2. According to the impugned judgment, mainly two contentions were raised to assail the decision of the respondent Committee. One was that the constitution of the Committee itself was bad in law and, therefore, its decision was ab initio void. The second contention was that the Committee has not given any reason for arriving at the decision as to the amount of fees fixed for particular institutions. The learned Single Judge took the view that once the fee fixed by the Committee was given binding effect by the Apex Court, High Court would not exercise its powers under Article 226 of the Constitution to nullify the binding effect. Even if the binding effect did not foreclose judicial scrutiny under Article 226, High Court would not entertain such petition of a party who had acquiesced in the constitution and proceedings of the Committee and surrendered to its jurisdiction. Even otherwise, the Committee was an expert body in the field and normally the Court would not sit in appeal over the decision of such expert body. It is observed that the powers exercised by the Committee were administrative in nature and it was not always necessary that its decision must be by way of a speaking order. It is noted in the impugned judgment that there was no allegation in the petition that on account of any extraneous consideration the decision of the Committee was vitiated. Adverting to the factual aspect, it is held that if the expert body had, after taking into consideration the details and materials produced, arrived at the decision after actual inspection of the colleges and the relevant records, the Court exercising powers under Article 226 of the Constitution could not undertake the exercise of substituting a different figure of fees. 2.1 It is noted in the impugned judgment that there was no disclosure on the part of the petitioner, at least initially, of the undertaking filed by the petitioner pursuant to the earlier proceedings under which part of the fees already collected were required to be refunded. Such practice on the part of the petitioner was deprecated and it was stated as an additional circumstance which disentitled the appellant from invoking the discretionary and equitable jurisdiction of the Court under Article 226 of the Constitution. 3. There is no doubt or controversy about the fact that the present round of litigations has sprung from the fixation of fees by the Committee set up under the directions of the Supreme Court in ISLAMIC ACADEMY (supra) and its constitution, powers, procedure and parameters are governed by the directions of the Supreme Court. Therefore, it would be advantageous to quote as under, in extenso, the relevant part of the text of the said judgment:- "7. So far as the first question is concerned, in our view the majority judgment is very clear. There can be no fixing of a rigid fee structure by the Government. Each institute must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution and to provide facilities necessary for the benefit of the students. They must also be able to generate surplus which must be used for the betterment and growth of that educational institution. In paragraph 56 of the judgment, it has been categorically laid down that the decision on the fees to be charged must necessarily be left to the private educational institutions that do not seek and which are not dependent upon any funds from the Government. Each institute will be entitled to have its own fee structure. The fee structure for each institute must be fixed keeping in mind the infrastructure and facilities available, the investments made, salaries paid to the teachers and staff, future plans for expansion and/or betterment of the institution etc. Of course, there can be no profiteering and capitation fees cannot be charged. It thus needs to be emphasized that as per the majority judgment, imparting of education is essentially charitable in nature. Thus, the surplus/profit that can be generated must be only for the benefit/use of that educational institution. Profit/surplus cannot be diverted for any other use or purpose and cannot be used for personal gain or for any other business or enterprise. As, at present, there are statutes/regulations which govern the fixation of fees and this Court has not yet considered the validity of those statutes/regulations, we direct that in order to give effect to the judgment of T.M.A.PAI FOUNDATION case, the respective State Governments/ authority concerned shall set up, in each State, a Committee headed by a retired High Court Judge who shall be nominated by the Chief Justice of that State. The other member, who shall be nominated by the Judge, should be a Chartered Accountant of repute. A representative of the Medical Council of India (in short "MCI") or the All India Council for Technical Education (in short "AICTE'), depending on the type of institution, shall also be a member. 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 should be free to nominate/co-opt another independent person of repute, so that the total number of members of the Committee shall not exceed five. Each educational institute must place before this Committee, well in advance of the academic year, its proposed fee structure. Along with the proposed fee structure all relevant documents and books of accounts must also be produced before the Committee for their scrutiny. The Committee shall then decide whether the fees proposed by that institute are justified and are not profiteering or charging capitation fee. The Committee will be at liberty to approve the fee structure or to propose some other fee which can be charged by the institute. The fee fixed by the Committee shall be binding for a period of three years, at the end of which period the institute would be at liberty to apply for revision. Once fees are fixed by the Committee, the institute cannot charge either directly or indirectly any other amount over and above the amount fixed as fees. If any other amount is charged, under any other head or guise e.g. donations, the same would amount to charging of capitation fee...." 4. It is observed by the Apex Court in paragraph 20 and in paragraphs 221 and 223, by way of an epilogue, that:- "20. "Our direction for setting up two sets of Committees in the States has been passed under Article 142 of the Constitution of India which shall remain in force till appropriate legislation is enacted by Parliament......." "221. .......We have laid down new laws and issued directions purported to be in terms of Article 142 of the Constitution. We have interpreted T.M.A.PAI , but we have also made endeavours to give effect to it. In some areas it was possible, in some other, it was not." "223. The superior courts in India exist for interpretation of the Constitution or interpretation of statutes. They cannot evolve a foolproof system on the basis of affidavits filed by the parties or upon hearing their counsel. Certain details of vexing problems on the basis of the interpretation given by this Court must be undertaken by the statutory bodies which have the requisite expertise. It is expected that statutory bodies would be able to perform their duties for which they have been established. The doors of the Court should not be knocked every time, if a problem arises in implementation of the judgment, however slight it may be. The Court has its own limitations. The problems which can be sorted at the ground level by holding consultations should not be allowed to be brought to the Court. It is, in that view of the matter, we have thought it fit to direct setting up of committees for the aforementioned purposes." 4.1 It is also observed in paragraphs 139 to 163 of ISLAMIC ACADEMY (supra) that:- "139. A judgment, it is trite, is not to be read as a statute. The ratio decidendi of a judgment is its reasoning which can be deciphered only upon reading the same in its entirety. The ratio decidendi of a case or the principles and reasons on which it is based is distinct from the relief finally granted or the manner adopted for its disposal." "147. ......It is beyond any doubt that in the matter of determination of the fee structure the unaided institutions exercise a greater autonomy. They, like any other citizen carrying on an occupation, must be held to be entitled to a reasonable surplus for development of education and expansion of the institution. Reasonable surplus doctrine can be given effect to only if the institutions make profits out of their investments. .........What is forbidden is: (a) capitation fee, and (b) profiteering." "154. The fee structure, thus, in relation to each and every college must be determined separately keeping in view several factors, including facilities available, the age of the institution, investments made, future plan for expansion and betterment of the educational standard etc. The case of each institution in this behalf is required to be considered by an appropriate Committee. For the said purpose, even the books of accounts maintained by the institution may have to be looked into. Whatever is determined by the Committee by way of a fee structure having regard to relevant factors, some of which are enumerated hereinbefore, the management of the institution would not be entitled to charge anything more. 155. While determining the fee structure, safeguard has to be provided for so that professional institutions do not become auction houses for the purpose of selling seats. Having regard to the statement of law laid down in paragraph 56 of the judgment, it would have been better, if sufficient guidelines could have been provided for. Such a task which is a difficult one has to be left to the Committee. While fixing the fee structure the Committee shall also take into consideration, 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 institution. 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." 5. Clearer propositions that essentially emerge from perusal of the above observations and directions may be summarised as under:- (a) Each institute must have the freedom to fix its own fee structure taking into consideration the need to generate funds to run the institution, to provide facilities necessary for the benefit of the students and to generate surplus which must be used for betterment and growth of that educational institution; (b) The fee structure for each institute must be fixed keeping in mind the infrastructure and facilities available, the investment made, salaries paid to teachers and staff, future plans for expansion and/or betterment of the institution etc.; (c) There can be no profiteering and capitation fee cannot be charged; (d) Imparting of education is essentially charitable in nature; (e) Committees, as prescribed, have to be set up for giving effect to the judgment of T.M.A.PAI case. The Committees are to be set up through the State by virtue of the direction issued under Article 142 of the Constitution; in absence of appropriate legislation and without sufficient guidelines. Since a foolproof system may not be available and vexing problems arising from the interpretation given by the Court had to be sorted out by a body with requisite expertise, directions to set up the Committees is issued so that the problems which could be sorted out at the ground level are not allowed to be brought to the Court (see paragraph 223 quoted hereinabove). In absence of sufficient guidelines, the difficult task of fixing fees had to be left to the Committee and the State is directed to evolve a detailed procedure for constitution and smooth functioning of the Committee (see paragraph 155 quoted hereinabove). (f) Each educational institute must place before the Committee its proposed fee structure along with all relevant documents and books of accounts; (g) The Committee has to decide whether the fees proposed by the institute are justified and whether there is profiteering or charging of capitation fees; (h) The Committee has to approve the proposed fee structure or propose some other fees; (i) The doors of the Court should not be knocked every time, if a problem arises in implementation of the judgment; (j) The Court has not laid down any fixed guidelines as regards fee structure. However, reasonable surplus should ordinarily vary from 6% to 15%; (k) The problems which can be sorted at the ground level by holding consultation should not be allowed to be brought to the Court. (l) The fees fixed by the Committee shall be binding for a period of three years; and (m) Once fees are fixed by the Committee, the institute cannot charge either directly or indirectly any other amount over and above the amount fixed as fees; It may be pertinent to note here that, as held by the Supreme Court in STATE OF U.P. v. PRADHAN SANGH KSHETTRA SAMITI [AIR 1995 SC 1512], in construing legal documents, it is not just their form but their substance which has to be taken into consideration. 6. Assailing the fee structure prescribed by the respondent Committee and the impugned judgment, learned senior advocate Mr.S.B.Vakil, appearing for the appellants submitted, in substance, that the Committee was not set up by the State Government, and the Committee had not fixed the fee structure, strictly in accordance with the directions of the Apex Court in ISLAMIC ACADEMY (supra). That obviously many non-members were active and participating in the proceedings of the Committee. That the Committee was discharging a quasi-judicial function and in absence of a reasoned order fixing the fee structure in various educational institutions, the fixation was bad in law and non est. That reasons, if any, cannot be supplied subsequently by filing affidavits. That the fee structure prescribed by the Committee violated the fundamental right of the educational institutions as guaranteed under Article 19 of the Constitution and petition under Article 226 was the proper remedy therefor. That there was no suppression of material facts regarding the orders in earlier proceedings and the undertaking filed by the appellants. 7. Learned advocate Mr.D.C.Dave, also appearing for the appellants, submitted that there was nothing on record to show what procedure the Committee had followed in assessing the data furnished by the appellants and how the figures of fees were arrived at. That not the Committee, but the Sub-Committees had visited the institutions and the institutions were not called upon to explain its figures of expenses and projections before discarding them to arrive at a different fee structure. 8. Learned senior advocate Mr.B.P.Tanna, appearing for the Committee, relying upon several affidavits filed on its behalf, submitted that the Committee was duly constituted complying with the essential requirements of the directions of the Supreme Court. That the appellants had submitted to the jurisdiction of and acquiesced in the process carried out by the Committee and the objections now raised were by way of afterthought. That the data methodically collected in the form of questionnaire and tables from the educational institutions had been analysed to get a general idea of the facilities, infrastructure, capital investments incurred over the last two years, plans for development on hand at present and compliance of requirements concerning the faculty and other staff members as prescribed by the regulatory authorities. That the Committee had taken assistance of a team of chartered accountants of high integrity and impeccable character for the purpose of analysis of the data. That the team constituted by the Committee had conducted personal visit of majority of the institutions to verify the facilities and infrastructure available at the institute and the adequacy of staff members and further to clarify on certain issues arising from analysis of the data submitted by the institution concerned. During such visits, the Committee had held discussions with some students and staff members in private to receive their feed-back on certain specific issues. The Sub-Committee had also visited the hospitals run by the institutions to verify the quality of service and care provided to the patients. Since the fees to be arrived at was based on recurring costs as well as some allowances for maintenance and future development, additional data had also been called for to work out the cost of education per student. It was observed by the Committee that almost half of the number of institutions and colleges concerned had not furnished complete data and established colleges hardly had any issue, but new colleges were finding it difficult to manage cash flows and had asked for major increase in fees. That all colleges had not proposed their own fee structure and some of the physiotherapy colleges had proposed fees of Rs.75,000/= to Rs.95,000/= against the fees of Rs.35,000/= charged in the last year. Mostly higher fees were proposed on the basis of promises and plans only and capital cost and fair return on funds invested were, in some cases, claimed as justification for higher fees. That the Committee had to scale down the amounts of depreciation on the basis of economic life of assets as against the depreciation claimed as per the Income Tax Act. That there were divergent claims for inclusion of cost of running the hospital attached to the medical college. That provision for future development was claimed by almost all the institutions at a very high amount. That the Committee had, before finalising the fee structure, analysed the data provided by the colleges, considered the report made on the basis of the personal visit of the Sub-Committee and the views of students and parents. After the final analysis, each institute had been graded as A, B or C depending on the facilities available, infrastructure, assets and liabilities etc. and fee structure for each grade was arrived at. That separate affidavit in respect of each of the appellant-institutions was filed to justify and explain the fee structure prescribed in respect of the institution concerned. 8.1 He submitted that the Committee constituted under the directions of the Apex Court was essentially intended to meet the contingency in absence of appropriate legislation in that regard and, therefore, the function of the Committee was legislative in nature. Therefore, challenge to the fixation of fees on the ground of absence of recorded reasons or violation of any of the principles of natural justice was not maintainable. 8.2 Learned senior counsel Mr.J.R.Nanavaty, appearing for the Parents Association for Medical and Dental Students, submitted that the original petitions under Article 226 of the Constitution were incompetent and did not lie insofar as the Committee joined as party-respondent was constituted under the directions issued by the Supreme Court in exercise of the powers under Article 142 of the Constitution. The order made pursuant to exercise of such power of the Supreme Court cannot be the subject-matter of challenge before the High Court. When it was ordained by the Supreme Court in ISLAMIC ACADEMY (supra) that the fee shall be fixed by the Committee and it shall be binding for a period of three years, no other Court would have the power to examine or nullify the execution and operation of such order. He also submitted that the Committee was neither "State" nor "Authority" nor a "Person" to which writ can be issued under Article 226. That it is clearly provided in Clause (4) of Article 226 that the power conferred on the High Court was not in derogation of the power conferred upon the Supreme Court by Clause (2) of Article 32. He also submitted that reasonable restriction on the fundamental right of the educational institutions under Article 19 was imposed by the Supreme Court in ISLAMIC ACADEMY (supra) and it cannot be raised as an issue before the High Court. He submitted that any dispute or issue arising out of execution of the order of the Supreme Court can only be decided by the Hon'ble Supreme Court. He made an impassioned appeal to relieve the students and parents of the anxiety created by the educational institutions by collecting and demanding very high fees which most of the parents simply cannot afford. 9. Learned Additional Advocate General Mr.K.B.Trivedi, appearing for the State Government, submitted that the Committee, as prescribed by the judgment in ISLAMIC ACADEMY (supra), was put in place by the State Government in substantial compliance of the order. That minor and insignificant irregularity, if any, in appointment of the members did not vitiate the proceedings and the fixation of fees. That objections to the composition or constitution of the Committee or its proceedings were not voiced during the proceedings of the Committee and, therefore, they must be treated as waived. That the Committee discharged a quasi-legislative function and