Supreme Court clarifies fee regulation for minority institutions in Madhya Pradesh: Icon Education Society vs. State of Madhya Pradesh (2023) INSC 237 (17 March 2023)

Date of the Judgment: 17 March 2023

Citation: (2023) INSC 237

Judges: Justice Dinesh Maheshwari and Justice Sanjay Kumar

Can minority educational institutions in Madhya Pradesh set their own fees, or must they adhere to the regulations of the Admission and Fee Regulatory Committee? The Supreme Court of India recently addressed this critical question in a case involving the Icon Education Society. The court clarified the extent to which the state can regulate the fees of minority educational institutions, balancing the rights of these institutions with the need to prevent profiteering and ensure fair access to education. The judgment was delivered by a bench comprising Justice Dinesh Maheshwari and Justice Sanjay Kumar.

Case Background

The Icon Education Society manages two educational institutions in Indore: the Indore Institute of Law and the Indore Nursing College. Both institutions are recognized as minority educational institutions under Section 2(g) of the National Commission for Minority Educational Institutions Act, 2004. On 08.07.2019, the Admission and Fee Regulatory Committee (AFRC), established under Section 4 of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 (the Act of 2007), requested the Indore Institute of Law to submit its fee proposals for regulation. This request was followed by a reminder on 24.07.2019, sent to all private law colleges in Madhya Pradesh.

The appellant society responded on 31.07.2019, arguing that the AFRC lacked the authority to regulate fees for minority educational institutions and requested the notices be withdrawn. However, the AFRC, on 14.11.2019, informed the society that a decision had been made on 08.11.2019, that the fees of minority institutions would be fixed by the AFRC, rejecting the society’s request for exemption.

Aggrieved by this, the appellant society appealed under Section 10 of the Act of 2007, which was dismissed on 10.01.2020. A subsequent review petition was also dismissed on 06.03.2020. Consequently, the society filed a writ petition before the Madhya Pradesh High Court, challenging Sections 4 and 9 of the Act of 2007, seeking exemption from fee-fixation.

Timeline

Course of Proceedings

The Madhya Pradesh High Court at Indore dismissed the writ petition filed by the appellant society on 19.11.2020. The High Court referenced the Supreme Court’s decision in Modern Dental College and Research Centre vs. State of Madhya Pradesh [(2016) 7 SCC 353], which had upheld the validity of the Act of 2007. The High Court also relied on Sk. Md. Rafique vs. Managing Committee, Contai Rahamania High Madrasah [(2020) 1 SCT 627(SC)], which cited Ahmedabad Saint Xaviers College Society vs. State of Gujarat [(1974) 1 SCC 717], stating that the rights under Article 30(1) of the Constitution are not absolute and that laws must apply equally to both majority and minority institutions. The High Court concluded that no grounds were made out to interfere with the AFRC’s orders.

Legal Framework

The case revolves around the interpretation of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007 (the Act of 2007), and its interplay with the rights of minority educational institutions under the Constitution of India.

✓ Section 4 of the Act of 2007: This section deals with the constitution of the Admission and Fee Regulatory Committee (AFRC). Section 4(1) mandates the State Government to constitute the AFRC for supervising admissions and fixing fees in private professional educational institutions. Section 4(8) empowers the AFRC to require institutions to provide necessary information to determine fees.

✓ Section 9 of the Act of 2007: This section pertains to the fixation of fees. Section 9(1) outlines the factors the AFRC must consider while determining fees, including the location of the institution, nature of the course, infrastructure, and reasonable surplus for growth. Section 9(2) requires the AFRC to provide a hearing opportunity to the institution before fixing fees, with a proviso against profiteering or commercialization of education.

✓ Article 30(1) of the Constitution of India: This article grants religious and linguistic minorities the right to establish and administer educational institutions of their choice. The Supreme Court has clarified that this right is not absolute and is subject to reasonable regulations.

Arguments

Arguments of the Appellant Society:

• The appellant society contended that as a minority educational institution, it is exempt from the fee regulation by the AFRC under the Act of 2007.
• They argued that Sections 4 and 9 of the Act of 2007 are ultra vires because they do not distinguish between minority and non-minority institutions, thus violating the rights of minority institutions under Article 30(1) of the Constitution.
• The society asserted its right to fix its own fees without interference from the AFRC, emphasizing the autonomy granted to minority institutions.
• The society relied on the principles laid down in T.M.A. Pai Foundation and others vs. State of Karnataka and others [(2002) 8 SCC 481] and P.A. Inamdar and others vs. State of Maharashtra and others [(2005) 6 SCC 537] to support their claim that minority institutions have the right to administer their institutions, including setting their fee structure.

Arguments of the State of Madhya Pradesh:

• The State argued that the Act of 2007 is a valid regulatory measure aimed at preventing profiteering and commercialization of education.
• They contended that the AFRC’s role is not to fix fees unilaterally but to ensure that the fees proposed by the institutions are reasonable and do not amount to profiteering.
• The State relied on the Supreme Court’s decision in Modern Dental College and Research Centre (supra), which upheld the validity of the Act of 2007.
• The State emphasized that the laws of the land, including fee regulations, must apply equally to majority and minority institutions, as per Sk. Md. Rafique (supra).

The innovativeness of the argument was that the Appellant Society tried to distinguish the applicability of the Act of 2007 to minority institutions by relying on the rights granted under Article 30(1) of the Constitution, arguing for complete autonomy in fee fixation.

Submissions [TABLE]

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether a minority educational institution in the State of Madhya Pradesh is required to get the fees charged by it fixed by the Admission and Fee Regulatory Committee under the provisions of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Cases:

• T.M.A. Pai Foundation and others vs. State of Karnataka and others [(2002) 8 SCC 481] – Supreme Court: This case discussed the extent of regulatory measures that can be applied to unaided minority educational institutions. The Court held that while fees cannot be regulated, institutions cannot charge capitation fees or engage in profiteering.
• P.A. Inamdar and others vs. State of Maharashtra and others [(2005) 6 SCC 537] – Supreme Court: This case reiterated that setting up a reasonable fee structure is part of the right to administer an institution, but it can be regulated to prevent profiteering and capitation fees.
• Modern Dental College and Research Centre and others vs. State of Madhya Pradesh and others [(2016) 7 SCC 353] – Supreme Court: This Constitution Bench decision upheld the validity of the Act of 2007, clarifying that the AFRC’s role is regulatory, not to unilaterally fix fees.
• Sk. Md. Rafique vs. Managing Committee, Contai Rahamania High Madrasah and others [(2020) 1 SCT 627(SC)] – Supreme Court: This case emphasized that laws apply equally to majority and minority institutions.
• Ahmedabad Saint Xaviers College Society and another vs. State of Gujarat and another [(1974) 1 SCC 717] – Supreme Court: This case highlighted that the right under Article 30(1) is not absolute and must be balanced with other legal provisions.

Legal Provisions:

• Section 2(g) of the National Commission for Minority Educational Institutions Act, 2004: This section defines minority educational institutions.
• Section 4 of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007: This section deals with the constitution and establishment of the AFRC.
• Section 9 of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007: This section deals with the fixation of fees by the AFRC.
• Article 30(1) of the Constitution of India: This article grants minorities the right to establish and administer educational institutions.

Authorities [TABLE]

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The Court relied on T.M.A. Pai Foundation [(2002) 8 SCC 481]* to reiterate that while unaided institutions have the right to set fees, this right is subject to reasonable regulations.
• The Court followed P.A. Inamdar [(2005) 6 SCC 537]* to affirm that fee regulation is permissible to prevent profiteering and capitation fees.
• The Court reaffirmed Modern Dental College [(2016) 7 SCC 353]*, stating that the Act of 2007 is a valid regulatory measure and the AFRC’s role is to ensure fees are reasonable.
• The Court cited Sk. Md. Rafique [(2020) 1 SCT 627(SC)]* to support the view that laws of the land apply equally to both majority and minority institutions.
• The Court considered Ahmedabad Saint Xaviers College [(1974) 1 SCC 717]* to highlight that the right under Article 30(1) is not absolute.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to balance the rights of minority educational institutions with the state’s duty to prevent commercialization of education. The Court emphasized that while minority institutions have the right to administer their affairs, including setting fee structures, this right is not absolute. The Court reiterated that the regulatory framework provided by the Act of 2007 is a valid measure to ensure that fees charged by educational institutions are reasonable and not exploitative. The Court also stressed the importance of maintaining a balance between the autonomy of minority institutions and the need to provide affordable and accessible education.

Fact:Law Ratio

The Supreme Court’s decision was more heavily influenced by legal considerations (70%) than factual aspects (30%). The Court focused on interpreting existing laws and precedents to arrive at its decision.

Logical Reasoning

The Supreme Court’s reasoning was based on a careful analysis of previous judgments, particularly the Constitution Bench decisions in T.M.A. Pai Foundation (supra), P.A. Inamdar (supra), and Modern Dental College (supra). The Court reiterated that while minority institutions have the right to administer their institutions, this right is not absolute and is subject to reasonable regulations. The Court emphasized that the Act of 2007 was enacted to prevent profiteering and commercialization of education, which is a legitimate state objective. The Court also noted that the AFRC’s role is not to unilaterally fix fees but to ensure that the fees proposed by the institutions are reasonable and based on the factors mentioned in Section 9(1) of the Act of 2007. The Court specifically rejected the argument that minority institutions are exempt from all forms of fee regulation, stating that such an interpretation would undermine the purpose of the Act of 2007 and the state’s responsibility to ensure fair access to education. The Court also clarified that the AFRC’s power is limited to reviewing the proposed fees, not fixing them unilaterally, thus balancing the autonomy of minority institutions with the need for regulation.

The Court observed that the interpretation of the Act of 2007 in Modern Dental College (supra), wherein the High Court had read down Sections 4(1), 4(8) and 9 of the Act of 2007, had been accepted by the Supreme Court. The Court also noted that:

“…the AFRC which is set up for that purpose is discharging only a regulatory function, as the fee which a particular educational institution seeks to charge from its students has to be suggested by the said educational institution itself and the AFRC is empowered to satisfy itself that the fee proposed by the educational institution did not amount to profiteering or commercialization of education and was based on the intelligible factors mentioned in Section 9(1) of the Act of 2007.”

The Court further stated:

“It is, therefore, too late in the day for the appellant society to again seek to challenge the validity of the Act of 2007, as the provisions of this enactment have already been read down by this Court to mean that the AFRC would have the power only to regulate the fee once the same is proposed by the educational institution itself, keeping in mind the parameters encapsulated in Section 9(1) thereof.”

The Court clarified that:

“It is not open to the AFRC to seek to unilaterally fix the fees to be charged by the appellant society for the professional courses offered through its educational institutions. At the same time, it is not open to the appellant society to claim complete immunity in undertaking this exercise and seek exemption from any interference by the AFRC.”

Key Takeaways

• Minority educational institutions in Madhya Pradesh are not exempt from fee regulation under the Act of 2007.
• These institutions must propose their fee structures to the AFRC for review.
• The AFRC’s role is regulatory; it cannot unilaterally fix fees but can ensure that proposed fees are reasonable and do not amount to profiteering.
• The judgment balances the rights of minority institutions with the state’s duty to prevent commercialization of education.
• The decision reinforces the principle that laws of the land apply equally to both majority and minority institutions, subject to reasonable exceptions.

Directions

The Supreme Court directed that the appellant society must submit the fees proposed by it for the professional courses offered through its institutions to the AFRC for review and regulation, as per the provisions of Section 9 of the Act of 2007 and the principles laid down by the Court in the referenced decisions.

Specific Amendments Analysis

There is no discussion on any specific amendment in this judgment.

Development of Law

The ratio decidendi of the case is that while minority educational institutions have the right to administer their institutions, including proposing their fee structures, this right is not absolute. The AFRC’s role is regulatory, ensuring that fees are reasonable and do not amount to profiteering. This judgment reaffirms the principle that the laws of the land apply equally to both majority and minority institutions, subject to reasonable regulations that balance the rights of minority institutions with the state’s responsibility to prevent commercialization of education. There is no change in the previous position of the law, but the court has clarified the position of the law.

Conclusion

In conclusion, the Supreme Court clarified that minority educational institutions in Madhya Pradesh are not exempt from the regulatory oversight of the Admission and Fee Regulatory Committee (AFRC). While these institutions have the right to propose their fee structures, the AFRC has the authority to review and regulate these fees to ensure they are reasonable and do not amount to profiteering. This decision reinforces the balance between the rights of minority institutions and the state’s interest in preventing commercialization of education, upholding the principles laid down in previous Supreme Court judgments.