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Friday, August 12, 2005

Supreme Court Appeal (civil) 5041 of 2005

Appeal (civil) 5041 of 2005

P.A. Inamdar & Ors.

State of Maharashtra & Ors.

DATE OF JUDGMENT: 12/08/2005



(Arising out of Special Leave Petition (C) No.9932 of 2004)
Civil Appeal No. 5042 of 2005 (@ SLP(C) No.9935/2004); Civil
Appeal No. 5043 of 2005 (@ SLP(C) No. 9936/2004); W.P. (C)
No. 276/2004; W.P. (C) No. 330/2004; W.P. (C) No. 357/2004;
I.A. NOS. 26, 27, 30, 31 AND 33 IN W.P. (C) No.350/1993; Civil
Appeal No. 5035 of 2005 (@ SLP(C) No.11244/2004; W.P.(C)
No. 302/204; W.P. (C) No. 347/2004; W.P. (C) No. 349/2004;
W.P. (C) No. 350/2004; W.P. (C) No. 387/2004; W.P. (C) No.
423/2004; W.P. (C) No. 480/2004; W.P. (C) No. 19/2005; W.P.
(C) No. 261/2004; W.P. (C) No. 265/2004; W.P. (C) No.
380/2004; W.P. (C) No. 358/2004; W.P. (C) No. 359/2004; W.P.
(C) No. 360/2004; W.P. (C) No.361/2004; W.P. (C) No.
362/2004; W.P. (C) No. 363/2004; C.A. No. 5257-5258/2004;
C.A. No. 5259/2004; C.A. No. 5260-5261/2004; C.A. No. 5262-
5263/2004; C.A. No. 5996/2004; C.A. No. 5992/2004; C.A. No.
5997-5998/2004; C.A. No. 7969-7971/2004; C.A. No.
7972/2004; C.A. No. 7973/2004; C.A. No. 7974/2004; C.A. No.
7975/2004; W.P. (C) No. 371/2004; W.P. (C) No.
368/2004; C.A. No. 7117-7119/2004; C.A. No. 7124-
7126/2004; CONMT.PET. (CIVIL) No. 561-563/2004 In C.A. No.
7117-7119/2004; CONMT. PET. (Civil) No. 564-566/2004 in
C.A. No. 7124-7126/2004; W.P. (C) No. 251/2004; Civil Appeal
No. 5036 of 2005 (@ SLP (C) No. 17464/2004); Civil Appeal No.
5037 of 2005 (@ SLP (C) No. 17549/2004); W.P. (C) No.
318/2004; Civil Appeal No. 5038 of 2005 (@ SLP(C) No.
17930/2004; Civil Appeal No. 5039 of 2005 (@ SLP (C) No.
17931/2004); Civil Appeal No. 5040 of 2005 (@ SLP (C) No.
17326/2003); W.P. (C) No. 386/2004; W.P. (C) No. 397/2004

R.C. Lahoti, CJI


Leave granted in all SLPs.

A Coram of 11 Judges, not a common feature in the
Supreme Court of India, sat to hear and decide T.M.A.Pai
Foundation v. State of Karnataka (2002) 8 SCC 481
(hereinafter 'Pai Foundation', for short). It was expected that
the authoritative pronouncement by a Bench of such strength on
the issues arising before it would draw a final curtain on those
controversies. The subsequent events tell a different story. A
learned academician observes that the 11-Judge Bench decision
in Pai Foundation is a partial response to some of the
challenges posed by the impact of Liberalisation, Privatisation
and Globalisation (LPG); but the question whether that is a
satisfactory response, is indeed debatable. It was further
pointed out that 'the decision raises more questions than it has
answered' (see : Annual Survey of Indian Law, 2002 at p.251,
254). The Survey goes on to observe "the principles laid down
by the majority in Pai Foundation are so broadly formulated
that they provide sufficient leeway to subsequent courts in
applying those principles while the lack of clarity in the judgment
allows judicial creativity " (ibid at p.256).

The prophecy has come true and while the ink on the
opinions in Pai Foundation was yet to dry, the High Courts
were flooded with writ petitions, calling for settlements of
several issues which were not yet resolved or which propped on
floor, post Pai Foundation. A number of Special Leave
Petitions against interim orders passed by High Courts and a few
writ petitions came to be filed directly in this Court. A
Constitution Bench sat to interpret the 11-Judge Bench decision
in Pai Foundation which it did vide its judgment dated
14.8.2003 (reported as - Islamic Academy of Education &
Anr. v. State of Karnataka & Ors., (2003) 6 SCC 697;
"Islamic Academy" for short). The 11 learned Judges
constituting the Bench in Pai Foundation delivered five
opinions. The majority opinion on behalf of 6 Judges was
delivered by B.N. Kirpal, CJ. Khare, J (as His Lordship then was)
delivered a separate but concurring opinion, supporting the
majority. Quadri, J, Ruma Pal, J and Variava, J (for himself and
Bhan, J) delivered three separate opinions partly dissenting from
the majority. Islamic Academy too handed over two opinions.
The majority opinion for 4 learned Judges has been delivered by
V.N. Khare, CJ. S.B. Sinha, J, has delivered a separate opinion.
The events following Islamic Academy judgment show
that some of the main questions have remained unsettled even
after the exercise undertaken by the Constitution Bench in
Islamic Academy in clarification of the 11-Judge Bench
decision in Pai Foundation. A few of those unsettled questions
as also some aspects of clarification are before us calling for
settlement by this Bench of 7 Judges which we hopefully propose
to do.

Pai Foundation and Islamic Academy have set out the
factual backdrop of the issues leading to the formulation of 11-
Judge and 5-Judge Benches respectively. For details thereof a
reference may be made to the reported decisions. A brief
summary of the past events, highlighting the issues as they have
travelled in search of resolution would be apposite.

Education used to be charity or philanthropy in good old
times. Gradually it became an 'occupation'. Some of the
Judicial dicta go on to hold it as an 'industry'. Whether, to
receive education, is a fundamental right or not has been
debated for quite some time. But it is settled that establishing
and administering of an educational institution for imparting
knowledge to the students is an occupation, protected by Article
19(1)(g) and additionally by Article 26(a), if there is no element
of profit generation. As of now, imparting education has come
to be a means of livelihood for some professionals and a mission
in life for some altruists.

Education has since long been a matter of litigation. Law
reports are replete with rulings touching and centering around
education in its several aspects. Until Pai Foundation, there
were four oft quoted leading cases holding the field of education.
They were Unni Krishnan v. State of Andhra Pradesh (1993)
1 SCC 645, St. Stephen's College v. University of Delhi
(1992)1 SCC 558, Ahmedabad St. Xavier's College Society
v. State of Gujarat (1974)1 SCC 717 and In Re: Kerala
Education Bill, 1957, (1958) SCR 995. For convenience sake,
these cases will be referred to as Unni Krishnan, St.
Stephen's, St. Xavier's and Kerala Education Bill
respectively. All these cases amongst others came up for the
consideration of this Court in Pai Foundation.

Correctness of the decision in St. Stephen's was doubted
during the course of hearing of Writ Petition No. 350 of 1993
filed by Islamic Academy. As St. Stephen's is a
pronouncement of 5-Judge Bench, the matter was directed to
be placed before 7-Judge Bench.

An event of constitutional significance which had already
happened, was taken note of by the Constitution Bench.
"Education" was a State Subject in view of the following Entry 11
placed in List II ___ State List:-

"11. Education including universities,
subject to the provisions of entries 63,
64, 65 and 66 of List I and entry 25 of
List III."

By the Constitution (42nd Amendment) Act 1976, the
abovesaid Entry was directed to be deleted and instead Entry 25
in List III  Concurrent List, was directed to be suitably amended
so as to read as under:-

"25. Education, including technical
education, medical education and
universities, subject to the provisions of
entries 63, 64, 65 and 66 of List I;
vocational and technical training of

The 7-Judge Bench felt that the matter called for hearing
by a 11-Judge Bench. The 11-Judge Bench felt that it was not
bound by the ratio propounded in Kerala Education Bill and
St. Xavier's and was free to hear the case in wider perspective
so as to discern the true scope and interpretation of Article 30(1)
of the Constitution and make an authoritative pronouncement.

Eleven Questions and Five Heads of Issues in Pai

In Pai Foundation, 11 questions were framed for being
answered. Detailed submissions were made centering around
the 11 questions. The Court dealt with the questions by
classifying the discussion under the following five heads:

1. Is there a fundamental right to set up educational
institutions and if so, under which provision?
2. Does Unni Krishnan require reconsideration?
3. In case of private institutions, can there be government
regulations and, if so, to what extent?
4. In order to determine the existence of a religious or
linguistic minority in relation to Article 30, what is to be
the unit __ the State or the country as a whole?
5. To what extent can the rights of aided private minority
institutions to administer be regulated?

Having dealt with each of the abovesaid heads, the Court
through the majority opinion expressed by B.N. Kirpal, CJ,
recorded answers to the 11 questions as they were framed and
posed for resolution. The questions and the answers as given by
the majority are set out hereunder:

"Q.1. What is the meaning and content of the expression
"minorities" in Article 30 of the Constitution of India?

A. Linguistic and religious minorities are covered by the
expression "minority" under Article 30 of the Constitution. Since
reorganization of the States in India has been on linguistic lines,
therefore, for the purpose of determining the minority, the unit
will be the State and not the whole of India. Thus, religious and
linguistic minorities, who have been put on a par in Article 30,
have to be considered Statewise.

Q.2. What is meant by the expression "religion" in Article
30(1)? Can the followers of a sect or denomination of a
particular religion claim protection under Article 30(1) on the
basis that they constitute a minority in the State, even though
the followers of that religion are in majority in that State?

A. This question need not be answered by this Bench; it will be
dealt with by a regular Bench.

Q.3 (a) What are the indicia for treating an educational
institution as a minority educational institution? Would an
institution be regarded as a minority educational institution
because it was established by a person(s) belonging to a
religious or linguistic minority or its being administered by a
person(s) belonging to a religious or linguistic minority?

A. This question need not be answered by this Bench; it will be
dealt with by a regular Bench.

Q.3(b) To what extent can professional education be treated as
a matter coming under minorities' rights under Article 30?

A. Article 30(1) gives religious and linguistic minorities the right
to establish and administer educational institutions of their
choice. The use of the words "of their choice" indicates that
even professional educational institutions would be covered by
Article 30.

Q.4. Whether the admission of students to minority educational
institution, whether aided or unaided, can be regulated by the
State Government or by the university to which the institution is

A. Admission of students to unaided minority educational
institutions viz. schools and undergraduate colleges where the
scope for merit-based selection is practically nil, cannot be
regulated by the State or university concerned, except for
providing the qualifications and minimum conditions of eligibility
in the interest of academic standards.
[emphasis by us]

The right to admit students being an essential facet of the
right to administer educational institutions of their choice, as
contemplated under Article 30 of the Constitution, the State
Government or the university may not be entitled to interfere
with that right, so long as the admission to the unaided
educational institutions is on a transparent basis and the merit is
adequately taken care of. The right to administer, not being
absolute, there could be regulatory measures for ensuring
educational standards and maintaining excellence thereof, and it
is more so in the matter of admissions to professional
[emphasis by us]

A minority institution does not cease to be so, the moment
grant-in-aid is received by the institution. An aided minority
educational institution, therefore, would be entitled to have the
right of admission of students belonging to the minority group
and at the same time, would be required to admit a reasonable
extent of non-minority students, so that the rights under Article
30(1) are not substantially impaired and further the citizens'
rights under Article 29(2) are not infringed. What would be a
reasonable extent, would vary from the types of institution, the
courses of education for which admission is being sought and
other factors like educational needs. The State Government
concerned has to notify the percentage of the non-minority
students to be admitted in the light of the above observations.
Observance of inter se merit amongst the applicants belonging
to the minority group could be ensured. In the case of aided
professional institutions, it can also be stipulated that passing of
the common entrance test held by the State agency is necessary
to seek admission. As regards non-minority students who are
eligible to seek admission for the remaining seats, admission
should normally be on the basis of the common entrance test
held by the State agency followed by counselling wherever it

Q.5(a) Whether the minorities' rights to establish and
administer educational institutions of their choice will include the
procedure and method of admission and selection of students?

A. A minority institution may have its own procedure and
method of admission as well as selection of students, but such a
procedure must be fair and transparent, and the selection of
students in professional and higher education colleges should be
on the basis of merit. The procedure adopted or selection made
should not be tantamount to mal-administration. Even an
unaided minority institution ought not to ignore the merit of the
students for admission, while exercising its right to admit
students to the colleges aforesaid, as in that event, the
institution will fail to achieve excellence.

Q.5(b) Whether the minority institutions' right of admission of
students and to lay down procedure and method of admission, if
any, would be affected in any way by the receipt of State aid?

A. While giving aid to professional institutions, it would be
permissible for the authority giving aid to prescribe bye __ rules
or regulations, the conditions on the basis of which admission
will be granted to different aided colleges by virtue of merit,
coupled with the reservation policy of the State qua non-minority
students. The merit may be determined either through a
common entrance test conducted by the university or the
Government concerned followed by counselling, or on the basis
of an entrance test conducted by the individual institutions  the
method to be followed is for the university or the Government to
decide. The authority may also devise other means to ensure
that admission is granted to an aided professional institution on
the basis of merit. In the case of such institutions, it will be
permissible for the Government or the university to provide that
consideration should be shown to the weaker sections of the

Q.5(c) Whether the statutory provisions which regulate the
facets of administration like control over educational agencies,
control over governing bodies, conditions of affiliation including
recognition/withdrawal thereof, and appointment of staff,
employees, teachers and principals including their service
conditions and regulation of fees, etc. would interfere with the
right of administration of minorities?

A. So far as the statutory provisions regulating the facets of
administration are concerned, in case of an unaided minority
educational institution, the regulatory measure of control should
be minimal and the conditions of recognition as well as the
conditions of affiliation to a university or board have to be
complied with, but in the matter of day-to-day management, like
the appointment of staff, teaching and non-teaching, and
administrative control over them, the management should have
the freedom and there should not be any external controlling
agency. However, a rational procedure for the selection of
teaching staff and for taking disciplinary action has to be evolved
by the management itself.

For redressing the grievances of employees of aided and
unaided institutions who are subjected to punishment or
termination from service, a mechanism will have to be evolved,
and in our opinion, appropriate tribunals could be constituted,
and till then, such tribunals could be presided over by a judicial
officer of the rank of District Judge.

The State or other controlling authorities, however, can
always prescribe the minimum qualification, experience and
other conditions bearing on the merit of an individual for being
appointed as a teacher or a principal of any educational

Regulations can be framed governing service conditions for
teaching and other staff for whom aid is provided by the State,
without interfering with the overall administrative control of the
management over the staff.

Fees to be charged by unaided institutions cannot be
regulated but no institution should charge capitation fee.

Q.6(a) Where can a minority institution be operationally
located? Where a religious or linguistic minority in State A
establishes an educational institution in the said State, can such
educational institution grant preferential admission/reservations
and other benefits to members of the religious/linguistic group
from other States where they are non-minorities?

A. This question need not be answered by this Bench; it will be
dealt with by a regular Bench.

Q. 6. (b) Whether it would be correct to say that only the
members of that minority residing in State A will be treated as
the members of the minority vis-`-vis such institution?

A. This question need not be answered by this Bench; it will be
dealt with by a regular Bench.

Q.7. Whether the member of a linguistic non-minority in one
State can establish a trust/society in another State and claim
minority status in that State?

A. This question need not be answered by this Bench; it will be
dealt with by a regular Bench.

Q.8. Whether the ratio laid down by this Court in St. Stephen's
case (St. Stephen's College v. University of Delhi, (1992) 1
SCC 558) is correct? If no, what order?

A. The basic ratio laid down by this Court in St. Stephen's
College case (supra) is correct, as indicated in this judgment.
However, rigid percentage cannot be stipulated. It has to be left
to authorities to prescribe a reasonable percentage having
regard to the type of institution, population and educational
needs of minorities.

Q. 9. Whether the decision of this Court in Unni Krishnan, J.P.
v. State of A.P., (1993) 1 SCC 645 (except where it holds that
primary education is a fundamental right) and the scheme
framed thereunder require reconsideration/modification and if
yes, what?

A. The scheme framed by this Court in Unni Krishnan case
(supra) and the direction to impose the same, except where it
holds that primary education is a fundamental right, is
unconstitutional. However, the principle that there should not be
capitation fee or profiteering is correct. Reasonable surplus to
meet cost of expansion and augmentation of facilities does not,
however, amount to profiteering.

Q. 10. Whether the non-minorities have the right to establish
and administer educational institution under Articles 21 and
29(1) read with Articles 14 and 15(1), in the same manner and
to the same extent as minority institutions?

Q. 11. What is the meaning of the expressions "education" and
"educational institutions" in various provisions of the
Constitution? Is the right to establish and administer
educational institutions guaranteed under the Constitution?

A. The expression "education" in the articles of the Constitution
means and includes education at all levels from the primary
school level up to the postgraduate level. It includes
professional education. The expression "educational institutions"
means institutions that impart education, where "education" is
as understood hereinabove.

The right to establish and administer educational
institutions is guaranteed under the Constitution to all citizens
under Articles 19(1)(g) and 26, and to minorities specifically
under Article 30.

All citizens have a right to establish and administer
educational institutions under Articles 19(1)(g) and 26, but this
right is subject to the provisions of Articles 19(6) and 26(a).
However, minority institutions will have a right to admit students
belonging to the minority group, in the manner as discussed in
this judgment."

The majority led by Kirpal, CJ, in Pai Foundation did say
that the expression "minorities" in Article 30 of the Constitution
of India, whether linguistic or religious, has to be determined by
treating the State and not the whole of India as unit. Questions
such as: (i) what is religion, (ii) what is the indicia for
determining if an educational institution is a minority institution,
(iii) whether a minority institution can operate extra-territorially
extending its activities into such states where the minority
establishing and administering the institution does not enjoy
minority status, (iv) the content and contour of minority by
reference to territories, were not answered in Pai Foundation
and were left to be determined by the regular Benches in
individual cases to be heard after the decision in Pai
Foundation. We also do not propose to involve ourselves by
dealing with these questions except to the extent it may become
necessary to do so for the purpose of answering the questions
posed before us.

Pai Foundation explained in Islamic Academy
Pai Foundation Judgment was delivered on 31.10.2002.
The Union of India, various State Governments and the
Educational Institutions, each understood the majority judgment
in its own way. The State Governments embarked upon
enacting laws and framing the regulations, governing the
educational institutions in consonance with their own
understanding of Pai Foundation. This led to litigation in
several Courts. Interim orders passed therein by High Courts
came to be challenged before this Court. At the hearing, again
the parties through their learned counsel tried to interpret the
majority decision in Pai Foundation in different ways as it
suited them. The parties agreed that there were certain
anomalies and doubts, calling for clarification. The persons
seeking such clarifications were unaided professional educational
institutions, both minority and non-minority. The Court
formulated four questions as arising for consideration in view of
the rival submissions made before the Court in Islamic

"(1) whether the educational institutions are entitled to fix their
own fee structure;
(2) whether minority and non-minority educational institutions
stand on the same footing and have the same rights;
(3) whether private unaided professional colleges are entitled
to fill in their seats, to the extent of 100% , and if not, to
what extent; and
(4) whether private unaided professional colleges are entitled
to admit students by evolving their own method of

We could attempt at formulating the gist of the answers
given by the Constitution Bench of the Court as under:

(1) Each minority institution is entitled to have its own fee
structure subject to the condition that there can be no
profiteering and capitation fees cannot be charged. A provision
for reasonable surplus can be made to enable future expansion.
The relevant factors which would go into determining the
reasonability of a fee structure, in the opinion of majority, are:
(i) the infrastructure and facilities available, (ii) the investments
made, (iii) salaries paid to the teachers and staff, (iv) future
plans for expansion and betterment of the institution etc.

S.B. Sinha, J, defined what is 'capitation' and 'profiteering'
and also said that reasonable surplus should ordinarily vary from
6 per cent to 15 per cent for utilization in expansion of the
system and development of education.

(2) In the opinion of the majority, minority institutions stand on
a better footing than non-minority institutions. Minority
educational institutions have a guarantee or assurance to
establish and administer educational institutions of their choice.
State Legislation, primary or delegated, cannot favour non-
minority institution over minority institution. The difference
arises because of Article 30, the protection whereunder is
available to minority educational institutions only. The majority
opinion called it a "special right" given under Article 30.

In the opinion of S.B. Sinha, J, minority educational
institutions do not have a higher right in terms of Article 30(1);
the rights of minorities and non-minorities are equal. What is
conferred by Article 30(1) of the Constitution is "certain
additional protection" with the object of bringing the minorities
on the same platform as that of non-minorities, so that the
minorities are protected by establishing and administering
educational institutions for the benefit of their own community,
whether based on religion or language.

It is clear that as between minority and non-minority
educational institutions, the distinction made by Article 30(1) in
the fundamental rights conferred by Article 19(1)(g) has been
termed by the majority as "special right" while in the opinion of
S.B.Sinha, J, it is not a right but an "additional protection".
What difference it makes, we shall see a little later.

(3)&(4). Questions 3 and 4 have been taken up for
consideration together. A reading of the opinion recorded in
Islamic Academy shows that paras 58, 59 and 68 of Pai
Foundation were considered and sought to be explained. It
was not very clear as to what types of institutions were being
dealt with in the above referred to paragraphs by the majority in
Pai Foundation. Certainly, distinction was being sought to be
drawn between professional colleges and other educational
institutions (both minority and unaided). Reference is also found
to have been made to minority and non-minority institutions. At
some places, observations have been made regarding
institutions divided into groups only by reference to aid, that is
whether they are aided or unaided educational institutions
without regard to the fact whether they were minority or non-
minority institutions. It appears that there are a few
passages/sentences wherein it is not clear which type of
institutions the majority opinion in Pai Foundation was
referring to thereat. However, the majority opinion in Islamic
Academy has by explaining Pai Foundation held as under:

(1) In professional institutions, as they are unaided, there will
be full autonomy in their administration, but the principle
of merit cannot be sacrificed, as excellence in profession is
in national interest.

(2) Without interfering with the autonomy of unaided
institutions, the object of merit based admissions can be
secured by insisting on it as a condition to the grant of
recognition and subject to the recognition of merit, the
management can be given certain discretion in admitting
(3) The management can have quota for admitting students at
its discretion but subject to satisfying the test of merit
based admissions, which can be achieved by allowing
management to pick up students of their own choice from
out of those who have passed the common entrance test
conducted by a centralized mechanism. Such common
entrance test can be conducted by the State or by an
association of similarly placed institutions in the State.

(4) The State can provide for reservation in favour of
financially or socially backward sections of the society.

(5) The prescription for percentage of seats, that is allotment
of different quotas such as management seats, State's
quota, appropriated by the State for allotment to reserved
categories etc., has to be done by the State in accordance
with the "local needs" and the interests/needs of that
minority community in the State, both deserving
paramount consideration. The exact concept of "local
needs" is not clarified. The plea that each minority unaided
educational institution can hold its own admission test was
expressly overruled. The principal consideration which
prevailed with the majority in Islamic Academy for
holding in favour of common entrance test was to avoid
great hardship and incurring of huge cost by the hapless
students in appearing for individual tests of various

The majority opinion carved out an exception in favour of
those minority educational professional institutions which were
established and were having their own admission procedure for
at least 25 years from the requirement of joining any common
entrance test, and such institutions were permitted to have their
own admission procedure. The State Governments were
directed to appoint a permanent Committee to ensure that the
tests conducted by the association of colleges is fair and

S.B. Sinha, J, in his separate opinion, agreed with the
majority that the merit and merit alone should be the basis of
selection for the candidates. He also agreed that one single
standard for all the institutions was necessary to achieve the
object of selection being made on merit by maintaining
uniformity of standard, which could not be left to any individual
institution in the matter of professional courses of study.
However, the merit criterion in the opinion of Sinha, J, was
required to be associated with the level of education. To quote
his words: "the merit criterion would have to be judged like a
pyramid. At the kindergarten, primary, secondary levels,
minorities may have 100% quota. At this level the merit may
not have much relevance at all but at the level of higher
education and in particular, professional education and
postgraduate-level education, merit indisputably should be a
relevant criterion. At the postgraduation level, where there may
be a few seats, the minority institutions may not have much say
in the matter. Services of doctors, engineers and other
professionals coming out from the institutions of professional
excellence must be made available to the entire country and not
to any particular class or group of people. All citizens including
the minorities have also a fundamental duty in this behalf."

Before we part with the task of summing up the answers
given to the four questions in Islamic Academy, we would like
to make a few observations of ours in this regard. First, the
majority opinion spread over 30 printed pages, and the minority
opinion spread over 60 printed pages, both though illuminating
and instructive, have nonetheless not summed up or pointedly
answered the questions. We have endeavoured to cull out and
summarize the answers, noted above, as best and as briefly as
we could from the two opinions. We would, therefore, hasten to
add that in order to fully appreciate the ratio of the two opinions,
they have to be read in detail and our attempt at finding out and
placing in a few chosen words the ratio decidendi of the two
separately recorded opinions, is subject to this limitation.
However, we shall make a reference to relevant passages from
the two opinions as and when it becomes necessary. A point of
significance which we would like to briefly note here itself, a
detailed discussion being relegated to a later part of this
judgment, is that the opinion of S.B. Sinha, J, has examined in
detail, the scope of protection conferred on minority institutions
by reference to their right to seek recognition or affiliation, an
aspect of wider significance which does not seem to have
received consideration with that emphasis either in Pai
Foundation or in the majority opinion in Islamic Academy.
We shall revert to this aspect a little later.
Issues herein

A Few Preliminary observations
Before we embark upon dealing with the issues posed
before us for resolution, we would like to make a few preliminary
observations as a preface to our judgment inasmuch as that
would outline the scope of the controversy with which we are
actually dealing here. At the very outset, we may state that our
task is not to pronounce our own independent opinion on the
several issues which arose for consideration in Pai Foundation.
Even if we are inclined to disagree with any of the findings
amounting to declaration of law by the majority in Pai
Foundation, we cannot; that being a pronouncement by 11-
Judge Bench, we are bound by it. We cannot express a dissent
or disagreement howsoever we may be inclined to do so on any
of the issues. The real task before us is to cull out the ratio
decidendi of Pai Foundation and to examine if the explanation
or clarification given in Islamic Academy runs counter to Pai
Foundation and if so, to what extent. If we find anything said
or held in Islamic Academy in conflict with Pai Foundation,
we shall say so as being a departure from the law laid down by
Pai Foundation and on the principle of binding efficacy of
precedents, over-rule to that extent the opinion of the
Constitution Bench in Islamic Academy.

It is pertinent to note, vide paras 2, 3 and 35 of Islamic
Academy, that most of the petitioners/applicants therein were
unaided professional educational institutions (both minority and
non-minority). The purpose of constituting the Constitution
Bench, as noted at the end of para 1, was "so that
doubts/anomalies, if any, could be clarified." Having answered
the questions, the Constitution Bench treated all interlocutory
applications as regards interim matters as disposed of (see para
23). All the main matters (writ petitions, transfer petitions and
special leave petitions) were directed to be placed before the
regular Benches for disposal on merits.

Islamic Academy in addition to giving clarifications on
Interlocutory Applications, directed setting up of two committees
in each State: one committee "to give effect to the judgment in
Pai Foundation" and to approve the fee structure or to propose
some other fee which can be charged by minority institutions
(vide para 7), and the other committee __ to oversee the tests
to be conducted by the association of institutions (vide para 19).

Since the direction made in Islamic Academy for
appointment of the Committees has been vehemently assailed
during the course of hearing before us, we would extract from
the judgment in Islamic Academy the following two passages
wherein, in the words of Khare, CJ, the purpose and the
constitution of the Committees, the powers conferred on and the
functions enjoined upon them are given:
"..we direct that in order to give effect to
the judgment in T.M.A. Pai case the
respective State Governments/concerned
authority 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. The
Governments/appropriate authorities should
consider framing appropriate regulations, if
not already framed, whereunder if it is found
that an institution is charging capitation fees
or profiteering that institution can be
appropriately penalised and also face the
prospect of losing its recognition/affiliation.
(para 7)

We now direct that the respective State
Governments do appoint a permanent
Committee which will ensure that the tests
conducted by the association of colleges is fair
and transparent. For each State a separate
Committee shall be formed. The Committee
would be headed by a retired Judge of the
High Court. The Judge is to be nominated by
the Chief Justice of that State. The other
member, to be nominated by the Judge,
would be a doctor or an engineer of eminence
(depending on whether the institution is
medical or engineering/technical). The
Secretary of the State in charge of Medical or
Technical Education, as the case may be, shall
also be a member and act as the Secretary of
the Committee. The Committee will be free to
nominate/co-opt an independent person of
repute in the field of education as well as one
of the Vice-Chancellors of the University in
that State so that the total number of persons
on the Committee do not exceed five. The
Committee shall have powers to oversee the
tests to be conducted by the association. This
would include the power to call for the
proposed question paper(s), to know the
names of the paper-setters and examiners
and to check the method adopted to ensure
papers are not leaked. The Committee shall
supervise and ensure that the test is
conducted in a fair and transparent manner.
The Committee shall have the powers to
permit an institution, which has been
established and which has been permitted to
adopt its own admission procedure for the
last, at least, 25 years, to adopt its own
admission procedure and if the Committee
feels that the needs of such an institute are
genuine, to admit, students of their
community, in excess of the quota allotted to
them by the State Government. Before
exempting any institute or varying in
percentage of quota fixed by the State, the
State Government must be heard before the
Committee. It is clarified that different
percentage of quota for students to be
admitted by the management in each minority
or non-minority unaided professional
college(s) shall be separately fixed on the
basis of their need by the respective State
Governments and in case of any dispute as
regards fixation of percentage of quota, it will
be open to the management to approach the
Committee. It is also clarified that no
institute, which has not been established and
which has not followed its own admission
procedure for the last, at least, 25 years, shall
be permitted to apply for or be granted
exemption from admitting students in the
manner set out hereinabove. (para 19)"

Sinha, J. has not specifically spoken of the Committees.
Nevertheless he made a reference to these Committees in his
opinion and thus impliedly recorded his concurrence with the
constitution of these Committees.
Vide para 20, the Constitution Bench has made it clear
that the setting up of two sets of Committees in the States has
been directed in exercise of the power conferred on this Court
by Article 142 of the Constitution and such Committees "shall
remain in force till appropriate legislation is enacted by
Parliament". Although the term 'permanent' has been used, but
it appears to us that these Committees are intended to be
transitory in nature.

Reference for constituting a Bench of a coram higher than
Constitution Bench

These matters have been directed to be placed for hearing
before a Bench of seven Judges under Orders of the Chief
Justice of India pursuant to Order dated July 15, 2004 in P.A.
Inamdar and Ors. v. State of Maharashtra and Ors., (2004)
8 SCC 139 and Order dated July 29, 2004 in Pushpagiri
Medical Society v. State of Kerala and Ors., (2004) 8 SCC
135. The aggrieved persons before us are again classifiable in
one class, that is, unaided minority and non-minority institutions
imparting professional education. The issues arising for decision
before us are only three:
(i) the fixation of 'quota' of
admissions/students in respect of unaided
professional institutions;

(ii) the holding of examinations for admissions
to such colleges, that is, who will hold the
entrance tests; and

(iii) the fee structure.

The questions spelled out by Orders of Reference
In the light of the two orders of reference, referred to
hereinabove, we propose to confine our discussion to the
questions set out hereunder which, according to us, arise for

(1) To what extent the State can regulate the
admissions made by unaided (minority or non-
minority) educational institutions? Can the
State enforce its policy of reservation and/or
appropriate to itself any quota in admissions to
such institutions?

(2) Whether unaided (minority and non-minority)
educational institutions are free to devise their
own admission procedure or whether direction
made in Islamic Academy for compulsorily
holding entrance test by the State or
association of institutions and to choose
therefrom the students entitled to admission in
such institutions, can be sustained in light of
the law laid down in Pai Foundation?

(3) Whether Islamic Academy could have issued
guidelines in the matter of regulating the fee
payable by the students to the educational

(4) Can the admission procedure and fee structure
be regulated or taken over by the Committees
ordered to be constituted by Islamic

The issues posed before us are referable to headings 3
and 5 out of 'five headings' formulated by Kirpal, CJ in Pai
Foundation. So also speaking by reference to the 11 questions
framed in Pai Foundation, the questions and answers relevant
for us would be referable to question Nos. 3 (b), 4, 5 (a) (b) (c)
and (9).
Submissions made
A number of learned counsel addressed the Court at the
time of hearing raising very many issues and canvassing
different view-points of law referable to those issues. We
propose to place on record, as briefly as we can, the principal
submissions made confined to the issues arising for decision
before us.

The arguments on behalf of the petitioners were led by
senior counsel Shri Harish Salve. Extensively reading various
relevant paragraphs and observations in different opinions in Pai
Foundation, learned counsel contends that the directions for
setting up permanent committees for regulating admissions and
fixing fee structure in unaided minority and non-minority
institutions issued in the case of Islamic Academy are contrary
to the ratio of judgment in Pai Foundation. According to
learned counsel, the directions clearly run counter to all earlier
Constitution Bench decisions of this Court in St. Stephen's,
St. Xavier's and Kerala Education Bill.

It is argued that in the judgment of the eleven judges in
Pai Foundation which deals with several diverse issues of
considerable complexity, every observation has to be understood
in its context. Paragraph 68 in Pai Foundation has wrongly
been read as the ratio of the judgement by the Bench of five
judges in the case of Islamic Academy. It is submitted that
paragraph 68 in the majority opinion in Pai Foundation has to
be read and understood in the context of the constitutional
interpretation placed on Articles 29 & 30 of the Constitution.
Reading thus, the directions for setting up permanent
committees, for fixing quota and fee structure seriously impinge
on the constitutional guarantee of autonomy to minority
institutions under Article 30 and to unaided non-minority
institutions under Article 19(1)(g). It is submitted that taking
over the right to regulate admission and fee structure of unaided
professional institutions is not a 'reasonable restriction' within
the meaning of Article 19(6) of the Constitution. Such restriction
is virtual negation of the constitutional protection of autonomy to
minorities in running educational institutions 'of their choice' as
provided in Article 30 of the Constitution.

Elaborating his legal propositions, learned senior counsel
Shri Salve argued that establishing and running an educational
institution is a guaranteed fundamental right of 'occupation'
under Article 19(1)(g) of the Constitution. Article 19(6) permits
State to make regulations and place reasonable restrictions in
public interest upon the rights enjoyed by citizens under Article
19(1)(g) of the Constitution. Any imposition of a system of
selection of students for admission would be unreasonable if it
deprives the private unaided institutions of the right of rational
selection which it has devised for itself. Subject to the minimum
qualifications that may be prescribed and to some system of
computing the equivalence between different kinds of
qualifications like a common entrance test, it can evolve a
system of selection involving both written and oral tests based
on principle of fairness. Reference is made to paragraph 40 of
the judgment in Pai Foundation.

It is submitted that the State can prescribe minimum
qualifications and may prescribe systems of computing
equivalence in ascertaining merit; however, the right of rational
selection, which would necessarily involve the right to decide
upon the method by which a particular institution computes such
equivalence, is protected by Article 19 and infringement of this
right constitutes an unreasonable encroachment upon the
constitutionally guaranteed autonomy of such institutions.

It is further argued that where States take over the right
of the institution to grant admission and/or to fix the fees, it
constitutes nationalization of educational institutions. Such
nationalization of education is an unreasonable restriction on the
right conferred under Article 19. Reliance is placed on paragraph
38 of the judgment in Pai Foundation.

Learned counsel further argues that schemes framed
relating to grant of admission and fixing of fees in Unni
Krishnan has been held to be unconstitutional by the 11-Judge
Bench in Pai Foundation. [Reference is made to paragraph 45
of the judgment in Pai Foundation] It is submitted that the
directions to set up committees for regulation of admission and
fee structure in Islamic Academy virtually do the same
exercise as was done in Unni Krishnan and disapproved in the
larger Bench decision in Pai Foundation. The submission in
substance made is that Unni Krishnan was disapproved in Pai
Foundation and has wrongly been re-introduced in Islamic

It is argued that State necessity cannot be a ground to
curtail the right of a citizen conferred under Article 19(1)(g) of
the Constitution. The Constitution casts a duty upon the States
to provide educational facilities. The State is obliged to carry out
this duty from revenue raised by the State. The shortfall in the
efforts of the State is met by the private enterprise, that
however, does not entitle the State to nationalize, whether in the
whole or in part, such private enterprise. This, it is submitted, is
the true ratio of the Pai Foundation in so far as Article 19 of
the Constitution is concerned.

It is next argued that as held in St. Xavier's and re-
affirmed in Pai Foundation the right to establish and administer
educational institutions by minorities under Article 30 of the
Constitution is not an absolute right meaning thereby that it is
subject to such regulations that satisfy a dual test that is : the
test of 'reasonableness' and 'any regulation regulating the
educational character of the institutions so that it is conducive to
making the institution an effective vehicle of education for the
minority community and for the others who resort to it'. Any
regulation which impinges upon the minority character of the
institutions is constitutionally impermissible. It is submitted that
between the right of minorities to establish and administer the
educational institutions and the right of the State to regulate
educational activities for maintaining standard of education, a
balance has to be struck. The regulation in relation to
recognition/affiliation operates in the area of standard of
excellence and are unquestionable if they do not seriously curtail
or destroy the right of minorities to administer their educational
institutions. Only in maintaining standards of education, State
can insist by framing regulations that they be followed but in all
other areas the rights of minority must be protected. It is
conceded that mal-administration is not protected by Article 30
of the Constitution. Similarly, secular laws with secular object
that do not directly impinge upon the right of minority
institutions and operate generally upon all citizens do not
impinge upon Article 30 of the Constitution. This has been the
constitutional interpretation of Article 30 not because Article 30
admits no exception like Article 19(6) but because the right
conferred under Article 30 does not extend to these areas. The
laws that serve national interest do not impinge upon Article 30.

Learned counsel in elaborating his argument tried to make
a distinction between the rights of aided institutions and unaided
institutions. Article 29(2) places a limitation on the right of an
aided institution by providing that if State aid is obtained, 'no
citizen shall be denied admission on grounds only of religion,
race, caste, language or any of them'. It is submitted that as a
necessary corollary, no such limitation can be placed while
regulating admission in an unaided minority institution which
may prefer to admit students of minority community. So far as
unaided minority educational institutions are concerned, the
submission made is that government has no right or power,
much less duty, to decide as to which method of selection of
students is to be adopted by minority institutions. The role of the
government is confined to ensuring that there is no mal-
administration in the name of selection of students or in the
fixation of fees. No doubt, the State is under a duty to prevent
mal-administration, that is to control charging of capitation fees
for the seats regardless of merit and commercializing education
resulting in exploitation of students, but to prevent mal-
administration of the above nature or on the ground that there is
likelihood of such mal-administration, the State cannot take over
the administration of the institutions themselves into its own
hands. The likelihood of an abuse of a constitutional right cannot
ever furnish justification for a denial of that right. An
apprehension that a citizen may abuse his liberty does not
provide justification for imposing restraints on the liberty of
citizens. Similarly, the apprehension that the minorities may
abuse their educational rights under Article 30 of the
Constitution cannot constitute a valid basis for the State to take
over those rights.

Learned senior counsel Shri Ashok Desai appearing on
behalf of unaided Karnataka Private Medical Colleges (through its
Association) of both categories of minority and non-minority has
questioned the correctness of the directions in the case of
Islamic Academy for setting up permanent committees for
fixation of quota and determination of fees. According to him, as
held in Pai Foundation, in the name of controlling capitation,
there cannot be indirect nationalization and complete State
control of unaided professional institutes. In the case of Islamic
Academy, the ratio of Pai Foundation that autonomy of
unaided non-minority institutions is an important facet of their
right under Article 19(1)(g) and in case of minority under Article
19(1)(g) read with Article 30 of the Constitution has been
On behalf of unaided private professional colleges, learned
counsel further submitted that there are many private
educational institutes which have been set up by people
belonging to a region or a community or a class in order to
promote their own groups. As long as these groups form an
unaided minority institution, they are entitled to have
transparent criteria to admit students belonging to their group.
For instance, scheduled castes and scheduled tribes have started
Ambedkar Medical College; Lingayaths have started KLE Medical
College in Belgaun and people belonging to Vokalliga community
have started Kempegowda Medical College. Similarly, Edava
community in Kerala has started its own colleges. Sugar
cooperatives in Maharashtra have started their own colleges.
Learned counsel also highlighted an instance of a college opened
in Tamil Nadu by State Transport Workers for the education of
their children on the engineering side. He submitted that if the
State is allowed to interfere in the admission procedure in these
private institutions set up with the object of providing
educational facilities to their own group, community or poorer
sections, the very purpose and object of setting up a private
medical college by a group or community for their own people
would be defeated.

According to learned counsel, the State control in unaided
private professional colleges can only be to the extent of
monitoring or overseeing its working so that they do not indulge
in profiteering by charging capitation fees and sacrifice merit.
According to the learned counsel, in the directions contained in
Islamic Academy, the main ratio of Pai Foundation that the
unaided institutions should have autonomy in the matter of
admission and fees structure has been totally forgotten. The
learned counsel raised very serious objections to the manner in
which the various permanent committees set up in several
States on the directions of Islamic Academy are conducting
themselves and forcing their decisions on private institutions.
The proposed fee structure is required to be placed before the
Committee in advance of the academic year by the institute. It is
the Committee which has to decide whether the fees proposed
by the institute are justified and do not amount to profiteering or
charging of capitation fees. The Committee has been given
liberty to approve the fee structure of the institute or to propose
a different fee structure. The fee fixed by the Committee is
binding for a period of three years and at the end of the said
period the institute would be at liberty to apply for revision.
Learned counsel gave in writing certain illustrations of decisions
of the Fee Committee in few unaided colleges in the State of
Karnataka and pointed out that without proper financial
expertise and without studying the relevant documents and
accounts, the Committee determined the fee structure by only
taking into account the affordability of the parents of the
students with no regard whatsoever to the viability of the
institute on the basis of finances so generated. It is argued as to
why private professional institutes should not be allowed to
modernize its facilities and provide better professional education
than government institutes. It is pointed out that in the case of
non-minority unaided M.S. Ramaiaya Medical College, Bangalore,
the Fee Committee initially fixed annual fee at Rs.2.55 lacs for
MBBS course as against the justification shown by the institute
for demanding Rs. 3.90 lacs. The decision of the Fee Committee
led to the filing of writ petition by the institute in the High Court
of Karnataka and agitation and demonstrations by the students'
union. The Committee under the pressure of the student
community reduced the annual fee to Rs.1.6 lacs which was re-
affirmed after the High Court directed that the management of
the unaided college should be heard before reducing the annual

Thus the learned counsel on behalf of the Karnataka
Private Medical College Association questioned the correctness of
the directions of the Bench in Islamic Academy. It is submitted
that as decided in Pai Foundation by a larger Bench, the
essence of private educational institutions is the autonomy that
the institution must have in its management and administration.
The 'right to establish and administer' particularly comprises the
right a) to admit students and b) to set up reasonable fee
structure. The autonomy of the institution, therefore, predicates
that all seats would be filled by the management and there can
be no reservations or quotas in favour of the State. In Pai
Foundation, the only observations made were that some
colleges may be required to admit a small percentage of
students belonging to weaker sections of the society by granting
them freeships or scholarships. It is conceded that autonomy of
a private educational institution to admit students of its choice
does not mean that there can be no insistence on transparency
in the admission procedure and on merit being the criterion for
admission. It is submitted that autonomy of a private
educational institution could mean that they can, according to
the objects and purposes of their institutions, give preference to
a particular class or group of students like SC/ST in Ambedkar
Medical College, students from backward area in Bijapur college
and transport employees' children in Madras State Corporation
Employees' College or the children of employees of Larson &
Turbo Company in a college established by that company. The
right to charge fees so as to run the college and to generate
sufficient funds for its betterment and growth cannot be
controlled by the State. That would seriously encroach upon the
autonomy of the private unaided institution. It is submitted, by
quoting Dr. S. Radhakrishnan, the then Chairman of the
University Education Commission, that interests of democracy lie
with the resistance of the trend towards governmental
domination of the educational process. In conclusion, learned
counsel representing Association of private unaided colleges in
Karnataka submits that the decision in Islamic Academy and
the directions made therein go far beyond the law laid down by
the larger Bench in Pai Foundation. The Bench in Islamic
Academy virtually reviewed the larger Bench decision in Pai
Foundation in guise of implementation of the said decision and
on the basis of later developments. In Islamic Academy, the
Bench accepted that there could be no rigid fee structure fixed
by the government for private institutions. An institute should
have the freedom to fix its own fee structure for day-to-day
running of the institute and to generate funds for its further
growth. Only capitation and diversion of profits and surplus of
the institute to any other business or enterprise was prohibited.
It is submitted that Islamic Academy contrary to the legal
position explained in Pai Foundation, could not set up in each
State permanent committees headed by retired High Court
Judges with the power to decide on the justification of the fee
proposed by the institute and propose any other fees. It could
also not make the fee fixed by the Committee binding for a
period of three years. Learned counsel submits that once the
college infrastructure and hospital facilities attached to the
medical college have been approved by the Medical Counsel of
India in accordance with its regulations, the total expenses of
college and hospital could be taken into account by the institute
to decide upon its own fee structure. Learned counsel, in
criticizing the directions in Islamic Academy, submitted that
although the scheme formulated in Unni Krishnan has been
expressly overruled in Pai Foundation on the ground that it
virtually nationalized education and resulted in surrendering total
process of selection to the State, the Bench in Islamic
Academy's case, in an attempt to take up preventive measures
to ensure merit and check profiteering in private unaided
professional institutions, cannot re-introduce quota system for
the management and the State and thus infringe upon the
autonomy of the institute. Such an attempt, learned counsel
contends, would be unconstitutional and violative of Article
19(1)(g) of the Constitution in the case of non-minority unaided
institutions and also violative of Article 30 in the case of minority
unaided professional institutions. Learned counsel argued that
constitutionally, as held in Pai Foundation, it is not permissible
for the State to impose a Government quota, its own reservation
policy, a lower scale of fees etc. on a private unaided non-
minority and unaided minority professional institutions, only by
taking into consideration the interests of students. In the State
of Karnataka for the academic year 2004-2005, by illustration, it
is shown that 75% of the intake capacity is the Government
quota in which are included 5% quota for sports, defence and
NCC; 50% quota for Scheduled Castes/Economically backward
classes/Scheduled Tribes/OBC, there is total 55% reservation
quota in 75% of the government quota. The remaining 25%
quota left for the management is also to be taken over by the
Government insisting on admitting students from the select list
prepared on the common entrance test conducted by the State.

Learned senior counsel Shri F. S. Nariman also supported
the submissions made by other counsel on behalf of the unaided
professional institutions and added that the observations of the
Bench in Islamic Academy clearly go far beyond anything said
by eleven judges in Pai Foundation. It is submitted that the
question of quota 50:50 for State and management as referred
to in St. Stephen's was in respect of aided minority educational
institutions and in Pai Foundation, the Bench never suggested
fixation of quota for State and management in case of unaided
professional institutions. Learned senior counsel particularly
pointed out that in Islamic Academy, the observations that
different percentage of quota for students to be admitted by the
management in each minority and non-minority unaided
professional institutions shall be separately fixed on the basis of
their need by the respective State Government, was a totally
new direction, nowhere to be found or supported by any of the
observations in any of the opinions of the 11-Jud

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