Supreme Court Clarifies Fee Regulation for Minority Institutions in Madhya Pradesh: Icon Education Society vs. State of Madhya Pradesh (2023) INSC 256

Introduction

Date of the Judgment: 17 March 2023

Citation: (2023) INSC 256

Judges: Justices Dinesh Maheshwari and Sanjay Kumar

Can a minority educational institution in Madhya Pradesh decide its own fee structure, or must it adhere to the fee structure fixed by the Admission and Fee Regulatory Committee (AFRC)? The Supreme Court recently addressed this question, clarifying the extent of fee regulation for minority institutions. This case revolves around the interpretation of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007, and its applicability to minority educational institutions. The Supreme Court held that while the AFRC cannot unilaterally fix fees, it has the power to regulate the fees proposed by the institution to prevent profiteering. The judgment was delivered by a bench comprising Justices Dinesh Maheshwari and Sanjay Kumar.

Case Background

Icon Education Society manages two minority educational institutions in Indore: Indore Institute of Law and Indore Nursing College. These 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 AFRC asked the Indore Institute of Law to submit its fee proposals for regulation. The Society responded on 31.07.2019, arguing that the AFRC lacked the authority to regulate fees for minority institutions. The AFRC rejected this claim on 14.11.2019, stating that all institutions, including minority institutions, must have their fees fixed by the AFRC.

The Society then appealed to the designated authority under Section 10 of the Act of 2007, which was dismissed on 10.01.2020. A review petition was also dismissed on 06.03.2020. Consequently, the Society filed a writ petition (WP No. 9690 of 2020) before the Madhya Pradesh High Court, challenging Sections 4 and 9 of the Act of 2007, arguing that these provisions did not exempt minority institutions from fee-fixation. The High Court dismissed the petition on 19.11.2020, citing previous Supreme Court judgments.

Timeline

Legal Framework

The case primarily concerns the interpretation of the Madhya Pradesh Niji Vyavsayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007.

✓ Section 4 of the Act of 2007 deals with the constitution of the Admission and Fee Regulatory Committee (AFRC). It states that the State Government shall constitute the AFRC for the supervision of the admission process and for the fixation of fees in private professional educational institutions.

✓ Section 4(8) of the Act of 2007 empowers the AFRC to require private aided or unaided professional educational institutions to furnish necessary information for determining fees.

✓ Section 9(1) of the Act of 2007 outlines the factors that the AFRC must consider while determining fees for private unaided professional educational institutions. These include the location of the institution, the nature of the course, infrastructure costs, and reasonable surplus required for growth.

✓ Section 9(2) of the Act of 2007 mandates that the AFRC must provide the institution an opportunity to be heard before fixing any fees. It also states that the fees fixed should not amount to profiteering or commercialization of education.

These provisions are to be read in light of Article 30(1) of the Constitution, which protects the right of minorities to establish and administer educational institutions.

Arguments

The appellant, Icon Education Society, contended that as a minority educational institution, it was exempt from the fee-fixation process under the Act of 2007. They argued that Sections 4 and 9 of the Act of 2007 did not distinguish between minority and non-minority institutions, thereby violating their rights under Article 30(1) of the Constitution.

The State of Madhya Pradesh, on the other hand, argued that the Act of 2007 was valid and applicable to all private professional educational institutions, including minority institutions. They relied on the Supreme Court’s judgment in Modern Dental College and Research Centre and others Vs. State of Madhya Pradesh and others [(2016) 7 SCC 353], which upheld the validity of the Act of 2007.

Issues Framed by the Supreme Court

The core 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

Authorities

The Supreme Court relied on the following authorities:

Judgment

How each authority was viewed by the Court?

✓ T.M.A. Pai Foundation [(2002) 8 SCC 481]: The Court reiterated that while regulatory measures should be minimal for unaided minority institutions, the government can regulate fees to ensure excellence in education and prevent capitation fees and profiteering.

✓ P.A. Inamdar [(2005) 6 SCC 537]: The Court reaffirmed that institutions are free to devise their own fee structures, but these can be regulated to prevent profiteering and capitation fees.

✓ Modern Dental College [(2016) 7 SCC 353]: The Court emphasized that the AFRC’s role is regulatory, and it is only to be satisfied that the fee proposed by the institution does not amount to profiteering or commercialization of education and is based on the factors mentioned in Section 9(1) of the Act of 2007.

✓ Sk. Md. Rafique [(2020) 1 SCT 627(SC)] and Ahmedabad Saint Xaviers College Society [(1974) 1 SCC 717]: The Court reiterated that the right under Article 30(1) is not absolute and that laws of the land must apply equally to majority and minority institutions.

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 interest in preventing profiteering and commercialization of education. The Court emphasized that while minority institutions have the right to administer their institutions, this right is not absolute and is subject to reasonable regulations. The Court also relied heavily on its previous judgments, particularly the Modern Dental College case, which had already clarified the regulatory nature of the AFRC’s role.

The Court’s reasoning was primarily based on the legal precedents set by previous Supreme Court judgments and the interpretation of the Act of 2007.

The Court considered alternative interpretations, such as the complete exemption of minority institutions from fee regulation, but rejected them. The Court emphasized that the AFRC’s role is to ensure that the fees proposed by the institutions are reasonable and do not amount to profiteering or commercialization of education.

The Court held that the AFRC cannot unilaterally fix the fees of minority institutions. Instead, the institutions must propose their fee structure, which is then subject to review and regulation by the AFRC. The Court clarified that the AFRC’s power is limited to ensuring that the proposed fees are based on the factors mentioned in Section 9(1) of the Act of 2007 and do not amount to profiteering.

The Court quoted:

“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 noted:

“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.”

The Court also observed:

“In effect, the liberty given to unaided institutions to propose the fees that they wish to charge, keeping in mind the factors set out in Section 9(1) of the Act of 2007, stands protected and it is only by way of regulating the fees so proposed that the AFRC would exercise the power of reviewing the proposed fees, after giving due opportunity of hearing to the educational institution concerned.”

Key Takeaways

• ✓ Minority educational institutions in Madhya Pradesh are not exempt from fee regulation.
• ✓ The AFRC cannot unilaterally fix fees for minority institutions.
• ✓ Minority institutions must propose their fee structure, which is then subject to review by the AFRC.
• ✓ The AFRC’s role is to ensure that the proposed fees do not amount to profiteering or commercialization of education and are based on the factors mentioned in Section 9(1) of the Act of 2007.
• ✓ This judgment clarifies the regulatory nature of the AFRC’s role and balances the rights of minority institutions with the State’s interest in preventing exploitation.

Directions

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

Development of Law

The ratio decidendi of this case is that while minority institutions have the right to propose their own fee structure, this right is subject to regulation by the AFRC to prevent profiteering and commercialization of education. This judgment reinforces the regulatory role of the AFRC as clarified in Modern Dental College and balances the rights of minority institutions with the State’s interest in ensuring fair and affordable education.

This judgment does not change the previous position of law but clarifies the procedure to be followed by minority institutions and the AFRC.

Conclusion

The Supreme Court’s judgment in Icon Education Society vs. State of Madhya Pradesh clarifies that minority educational institutions in Madhya Pradesh must propose their fee structure, which is then subject to review and regulation by the AFRC. The AFRC cannot unilaterally fix fees, but it can ensure that the proposed fees are reasonable and do not amount to profiteering. This decision balances the rights of minority institutions with the State’s interest in preventing exploitation and ensuring fair access to education.