Judgment Case ID: 6207

Judgment:
vil Appeal Nos. 182 1 to 1826 of 1971 etc. From the Judgment and Order dated 11.8.1971 of the Madras High Court in Writ Petition Nos. 3818	 4019	 4020	 4254	 4566 of 1968 and 82 of 1969. section Padmanabhan	 K.R. Nambiar	 A.T.M. Sampath for the Appellants and Appellant in person in C.A. No. 2062 of 1971. K. Rajendra Chowdhary and V. Krishnamurthy for the Respondent. The Judgment of the Court was delivered by SHARMA	 J. The question involved in these appeals relates to the vires of the Tamil Nadu Private Educational Institutions (Regulation) Act	 1966	 hereinafter referred to as the Act. The appellants are interested in running educa tional institutions	 which are covered by the expression "private educational institution" within the meaning of section 2(f) of the Act. The main challenge is directed against sections 2(c)	 3(a)	 3(b)	 6	 7 read with sections 15	 22 and 28. The High Court struck down section 28 and upheld the other sections. That part of the judgment where section 28 374 has been declared to be invalid has not been impugned by the respondent State. The provisions of the Act which are relevant for appreciating the ground urged by the appellants are as follows. Section 3 mandatorily requires a private education al institution to obtain the permission of the competent authority for the purpose of running it. The Manager of such an institution has to	 as required by section 4	 make an applica tion for permission in the prescribed form accompanied by a fee. Section 6 lays down the power of the competent authori ty to deal with such an application in the following terms: "6. Grant of permission. On receipt of an application under Section 4 the compe tent authority may grant or refuse to grant the permission after taking into considera tion	 the particulars contained in such appli cation: Provided that the permission shall not be refused under this Section unless the applicant has been given an opportunity of making his representation: Provided further that in case of refusal of permission the applicant shall be entitled to refund to one half of the amount of the fee accompanying the application. The competent authority is empowered under section 7 to cancel the permission in certain circumstances. One of the condi tions for exercise of power is contravention of any direc tion issued by the competent authority under section 15. The power to exempt any institution from the provisions of the Act is vested in the State Government under section 22	 which is quoted below: "22. Power to exempt Notwithstand ing anything contained in this Act	 the Gov ernment may	 subject to which conditions as they deem fit	 by notification exempt any private educational institution or class of private educational institutions from all or any of the provisions of this Act or from any rule made under this Act. " Section 28	 which has been declared invalid by the High Court	 states that if any difficulty arises in giving effect to the provisions of this Act	 the Government may "do any thing which appears to them to be necessary for the purposes of removing the difficulty. " 375 3. The Act is impugned on the ground that it does not lay down any guide line for the exercise of the power by the delegated authority	 as a result of which the authority is in a position to act according to his whims. The Act having failed to indicate the conditions for exercise of power	 the decision of the competent authority is bound to be discrimi natory and arbitrary. It has also been argued that the restrictions put by the Act on the appellants	 who are running tutorial institutions are unreasonable and cannot be justified under sub clause (g) of Article 19(1) of the Constitution. The learned counsel appearing for the respondent has attempted to defend the Act on the ground that sufficient guidance is available to the authority concerned from sub section (2)(c) of section 4 which enumerates the particulars required to be supplied in the application for permission. They are 10 in number and are mentioned below: "4. Application for permission. (1) . . . . (2) Every such application shall (a) . . . . . (c) contain the following particulars	 namely: (i) the name of the private educa tional institution and the name and address of the manager; (ii) the certificate	 degree or diploma for which such private educational institution prepares	 trains or guides or proposes to prepare	 train or guide its stu dents or the certificate	 degree or diploma which it grants or confers or proposes to grant or confer; (iii) the amenities available or proposed to be made available to students; (iv) the names of the members of the teaching staff and the educational qualifica tions of each such member; 376 (v) the equipment	 laboratory	 library and other facilities for instructions; (vi) the number of students in the private educational institution and the groups into which they are divided; (vii) the scales of fees payable by the stu dents; (viii) the sources of income to ensure the financial stability of the private educational institution; (ix) the situation and the descrip tion of the buildings in which such private educational institution is being run or is proposed to be prescribed; (x) such other particulars as may be pre scribed. The point dealing with legislative delegation has been considered in numerous cases of this Court	 and it is not necessary to discuss this aspect at length. It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative functions which cannot be delegated. What is permissible is to leave to the delegated authority the task of implementing the object of the Act after the legislature lays down ade quate guide lines for the exercise of power. When examined in this light the impugned provisions miserably fail to come to the required standard. The purpose of the Act is said to regulate the pri vate educational institutions but does not give any idea as to the manner in which the control over the institutions can be exercised. The Preamble which describes the Act "for regulation" is not helpful at all. Learned counsel for the State said that the Object and the Reasons for the Act are to eradicate corrupt practices in private educational insti tutions. The expression "private educational institution" has been defined as meaning any college	 school or other institution "established and run with the object of prepar ing	 training or guiding its students for any certificate	 degree or diploma"	 and it can	 therefore	 be readily in ferred that the purpose of the Act is to see that such institutions do not exploit the students; and while they impart training and guidance to the students of a standard which may effectively improve their knowledge so as to do well at the examination	 they do not charge exhorbitantly for their services. But the question is as to how this objective can be achieved. Section 6 which empowers the competent 377 authority to grant or refuse to grant the permission for establishing and running an institution does not give any idea as to the conditions which it has to fulfil before it can apply for permission under the Act	 nor are the tests indicated for refusing permission or cancelling under section 7 of an already granted permission. The authority concerned has been left with unrestricted and unguided discretion which renders the provisions unfair and discriminatory. It was argued on behalf of the State that since an application for permission has to supply the particulars as detailed in section 4(2)(c) (quoted above in paragraph 4)	 the Act must be deemed to have given adequate guide lines. Special emphasis was given by the learned counsel on sub clauses (iii)	 (iv) and (v) of section 4(2)(c)	 which ask for information about the amenities for the students the equip ments	 laboratory	 library and other facilities for instruc tion and	 the names of the teachers with their qualifica tions. It may be noted that the Act	 beyond requiring the applicant to make a factual statement about these matters	 does not direct the institution to make provisions for them (or for any or some of them) as condition for grant of permission. The maintenance of any particular standard of these heads are not in contemplation at all	 although cer tain other aspects	 not so important	 have been dealt with differently in several other sections including section 4	 5	 9	 10 and 11. Section 4(2)(b) mandatorily requires the appli cant to pay the "prescribed" fee; section 5 gives precise direc tion regarding the name by which the institution is to be called; and section 9 about the certificates to be issued by it; and section 11 makes it obligatory to maintain accounts in the "prescribed" manner. But	 there is no indication	 whatsoev er	 about the legislative policy or the accepted rule of conduct on the vital issue about the maintenance of academic standard of the institution and the other requirements relating to the building	 library and necessary amenities for the students	 as the Act is absolutely silent about the criteria to be adopted by the prescribed authority for granting or refusing permission. The rules which were made under section 27 in 1968 and called the Tamil Nadu Private Educa tional Institutions (Regulation) Rules	 1968	 are not called upon to lay down any norm on these issues and naturally do not make any reference to these aspects. The result is that the power to grant or refuse permission is to be exercised according to the whims of the authority and it may differ from person to person holding the office. The danger of arbitrariness is enhanced by the unrestricted and unguided discretion vested in the State Government in the choice of "competent authority" defined in section (2)(c) in the following words: 378 "(c) "competent authority" means any person	 officer or other authority authorised by the Government	 by notification	 to perform the functions of the competent authority under this Act for such area or in relation to such class of private educational institutions	 as may be specified in the notification;" The only safeguard given to the applicant institution is to be found in the first proviso to section 6 which says that the permission shall not be refused unless the applicant has been given an opportunity of making his representation	 but that does not by itself protect the applicant from discrimi natory treatment. So far section 7 dealing with power to cancel the permission granted earlier is concerned	 no objection can be taken to the first part of the section	 whereunder the permission may be cancelled in case of fraud	 misrepre sentation	 suppression of material particulars or contraven tion of any provision of the Act or the Rules. But the other ground on which the authority can exercise its power being contravention "of any direction issued by the competent authority under this Act" again suffers from the vice of arbitrariness. Section 15	 the relevant section in this regard	 states that "the competent authority may	 from time to time issue such directions regarding the management of a private educational institution as it may think fit" (empha sis added). The section is too wide in terms without indi cating the nature of such direction or the extent within which the authority should confine itself while exercising the power. Similar is the situation in the matter of exemp tion from the Act. The power to grant exemption is contained in section 22	 quoted in paragraph 2 above. The provisions of the Act indicate that the State Government has been vested with unrestricted discretion in the matter of the choice of the competent authority under section 2(2)(c) as also in picking and choosing the institutions for exemption from the Act under section 22. Such an unguided power bestowed on the State Government was struck down as offend ing Article 14 in the case of the State of West Bengal vs Anwar Ali Sarkar; 	 A similar situation arose in Kunnathat Thathunni Moopil Nair vs The State of Kerala and Another	 ; 	 where	 under section 4 of the Travancore Kochin Land Tax Act	 1955	 all lands were sub jected to the burden of a tax and section 7 gave power to the Government to grant exemption from the operation of the Act. The section was declared ultra vires on the ground that it gave uncanalised	 unlimited and arbitrary power	 as the Act did not lay down any principle or policy for the guidance of exercise of the discretion in respect of the selection contemplated by section 7. 379 9. Similar is the position under sections 6 and 7 of the present Act. The learned counsel for the respondent State contended that by reference in section 4 to the particulars to be supplied. in the application for permission	 it can be easily imagined that the competent authority has to take into account all that may be validly relevant for the grant or refusal of permission. We are afraid	 the section cannot be saved by recourse to this argument in absence of any helpful guidance from the Act. The position in this case cannot be said to be on a better footing than that of the Gold (Control) Act	 1968	 which was challenged in Harakchand Ratanchand Ranthia and Others vs Union of India and Other	 ; As is indicated by the judgment	 the Gold (Control) Act had to be passed as gold was finding its way into the country through illegal channels	 affecting the national economy and hampering the country 's economic sta bility and progress	 and the Customs department was found unable to effectively combat the smuggling. Section 27(6)(a) of the said Act stated that in the matter of issue or renew al of licences the "Administrator shall have regard to the number of dealers existing in the region in which the appli cant intends to carry on business as a dealer". The expres sion "region" was not defined in the Act and section 27(6)(b) required the Administrator to have regard to "the anticipat ed demand	 as estimated by him	 of ornaments in the region". The argument in support of the validity of the Act was that these provisions provided adequate guidance to the Adminis trator	 which this Court rejected	 holding that the expres sion "anticipated demand" was vague and not capable of objective assessment and	 therefore	 was found to lead to a great deal of uncertainty. The other provisions mentioning "suitability of the applicant" in section 27(6)(e) and "public interest" in section 27(6)(g) were also held to have failed in laying down any objective standard or norm so as to save the Act. The provisions of the act	 with which we are dealing in the present cases	 are far less helpful for the purpose of upholding its validity. For the reasons mentioned above	 the impugned sec tions of the Act must be held to be invalid. These provi sions are inextricably bound up with the other parts of the Act so as to form part of a single scheme	 and it is not possible to sever the other parts of the Act and save them. In the result	 the entire Act is declared ultra vires. The appeal is accordingly allowed	 but	 in the circumstances	 without costs. G.N. Appeal allowed.

Summary:
The appellants are interested in running educational institutions which are covered by the expression "private educational institution" within the meaning of Section 2(f) of the Tamil Nadu Private Educational Institutions (Regula tion) Act	 1966. The vires of the Act especially sections 2(c)	 3(a)	 3(b)	 6	 7	 read with sections 15	 22 and 28	 was challenged before the High Court	 by way of a writ petition. The High Court struck down section 28 and upheld the other sections. This appeal by certificate is against the High Court 's judgment upholding the validity of the said sections. As regards the striking down of section 28	 it has not been impugned by the respondent State. The appellants contended that the Act does not lay down any guideline for the exercise of power by the delegated authority and so the decision of the competent authority is bound to be discriminatory and arbitrary. It was also con tended that the Act imposed unreasonable restrictions on the appellants in the running of tutorial institutions	 and such regulations were violative of Article 29(1)(g) of the Con stitution of India. On behalf of the respondent	 it was stated that suffi cient guidance is available to the authority concerned	 by virtue of subsection (2)(c) of Section 4 and hence the appellants ' contentions were not justified. 372 Allowing the appeal	 HELD: 1.1. It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative functions which cannot be delegated. What is permissible is to leave to the delegated authority the task of implementing the object of the Act after the legislature lays down adequate guidelines for the exercise of power. Examined in this light	 the impugned provisions of the Tamil Nadu Private Educational Institutions (Regulation) Act	 1966 miserably fail to come to the required standard. These sections are held to be invalid. They are inextricably bound up with the other parts of the Act so as to form part of a single scheme	 and it is not possible to sever the other parts of the Act and save them. Hence	 the entire Act is declared ultra vires. [376D E; 379G] 1.2. There is no indication	 whatsoever	 about the legislative policy or the accepted rule of conduct on the vital issue about the maintenance of academic standard of the institution and the other requirements relating to the building	 library and necessary amenities for the students	 as the Act is absolutely silent about the criteria to be adopted by the prescribed authority for granting or refusing permission. Even the rules which were made under Section 27 in 1968 and called the Tamil Nadu Private Educational Insti tutions (Regulation) Rules	 1968	 are not called upon to lay down any norm on these issues and naturally do not make any reference to these aspects. The result is that the power to grant or refuse permission is to be exercised according to the whims of the authority and it may differ from person to person holding the office. The danger of arbitrariness is enhanced by the unrestricted and unguided discretion vested in the State Government under Section 2(c) of the Act in the choice of competent authority. [377E G] 2.1. Section 6 which empowers the competent authority to grant or refuse to grant permission for establishing and running an institution does not give any idea as to the conditions which it has to fulfil before it can apply for permission under the Act	 nor are the tests indicated for refusing permission or cancelling under Section 7 of an already granted permission. [376H; 377A] 2.2. The only safeguard given to the applicant institu tion is to be found in the first proviso to Section 6 which says that the permission shall not be refused unless the applicant has been given an opportunity of making his repre sentation	 but that does not by itself protect the applicant from discriminatory treatment. So far as Section 7 dealing with 373 power to cancel the permission granted earlier is concerned	 no objection can be taken to the first part of the section	 whereunder the permission may be cancelled in case of fraud	 misrepresentation	 suppression of material particulars or contravention of any provision of the Act or the Rules. But the other ground on which the authority can exercise its power being contravention "of any direction issued by the competent authority under this Act" again suffers from the vice of arbitrariness. [378B D] 2.3 Section 15 is too wide in terms and does not indi cate the nature of the direction or the extent within which the authority should confine itself while exercising the power. Similarly under Section 22	 the State Government has been vested with unrestricted discretion in picking and choosing the institutions for exemption from the Act. [378D E] State of West Bengal vs Anwar Ali Sarkar	 ; ; Kunnathat Thathunni Moopil Nair vs The State of Kerala and Anr.	 ; ; Harakchand Ratanchand Banthia and Ors. vs Union of India & Ors. 	 ; 	 relied on.