Supreme Court mandates fee regulation for Annamalai University’s medical and engineering courses: M. Aamira Fathima vs. Annamalai University (2018)

Date of the Judgment: 13 July 2018

Citation: (2018) INSC 614

Judges: Arun Mishra, J. and Uday Umesh Lalit, J.

Can a university, established under a state law, set its own fee structure for professional courses like medicine and engineering, or is it bound by the regulations of the State’s Fee Fixation Committee? The Supreme Court of India recently addressed this crucial question in the case of M. Aamira Fathima and Others vs. Annamalai University and Others. This judgment clarifies the applicability of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992, to universities and their fee structures for professional courses. The bench comprised Justices Arun Mishra and Uday Umesh Lalit, with the judgment authored by Justice Uday Umesh Lalit.

Case Background

Annamalai University was originally established under the Annamalai University Act, 1928. In 1985, the University established Rajah Muthiah Medical College. The Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992 (hereinafter referred to as “1992 Act”) was enacted to regulate fees in educational institutions. The University, despite receiving substantial funding from the State Government, faced financial difficulties due to non-adherence to statutory provisions and norms. This led to the appointment of a Special Local Fund Audit Team and a High-Level Committee, which revealed significant irregularities and financial mismanagement. In 2013, the Annamalai University Act, 2013, replaced the 1928 Act, continuing the University’s existence under the new legislation. Students who had taken admission in First MBBS Course in Respondent No.2 College for the Academic Session 2013-14 challenged the high fees of more than Rs. 5.54 lakhs per annum imposed by the University. They argued that the fees were excessively high compared to those in government and other self-financing colleges.

Timeline

Course of Proceedings

The students challenged the high fees imposed by the University in the High Court of Judicature at Madras. The Single Judge dismissed the petitions, stating that the 1992 Act did not apply to the University because it was not specifically notified by the State Government under the Act. The Single Judge also held that the students were bound by the terms of the prospectus. This decision was appealed to a Division Bench of the High Court, which also dismissed the appeals, affirming the Single Judge’s reasoning. The Division Bench held that the University was empowered to fix its own fees under the 2013 Act. Aggrieved by this, the students appealed to the Supreme Court of India.

Legal Framework

The primary legal provisions under consideration were:

✓ Section 2(b) of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992: This section defines “educational institution.” It states:

“(b) “educational institution” means any institution by whatever name called, whether managed by any person, private body, local authority, trust or University, carrying on the activity of imparting education leading to a degree or diploma (including a degree or diploma in law, medicine or engineering) conferred by any University established under any law made by the Legislature of the State of Tamil Nadu and any other educational institution or class or classes of educational institutions (other than any educational institution established by the Central Government or under any law made by Parliament) as the Government may, by notification, specify;”

✓ Section 4 of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992: This section deals with the regulation of tuition fees. Initially, it empowered the Government to regulate fees by notification. However, after the judgment of this Court in Islamic Academy of Education and another v. State of Karnataka and others, sub-section (2-A) was added. The amended section reads:

“4. (1) Notwithstanding anything contained in any other law for the time being in force, the Government may, by notification, regulate the tuition fee or any other fee or deposit that may be received or collected by any educational institution or class or classes of such educational institutions in respect of any or all class or classes of students :
Provided that before issuing a notification under this sub-section, the draft of which shall be published in the Tamil Nadu Government Gazette stating that any objection or suggestion which may be received by the Government, within such period as may be specified therein, shall be considered by them.
(2) No educational institution shall receive or collect any fee or accept deposit in excess of the amount notified under sub-section (1).
(2-A) Notwithstanding anything contained in sub-section (1) or sub-section (2), no educational institution imparting education leading to a degree in medicine or engineering shall receive or collect any fee in excess of the amount fixed by the ‘Committee on fixation of fee’ constituted by the Government.
Explanation – For the purpose of this sub-section ‘Committee on fixation of fee’ means the Committee constituted in pursuance of the direction of the Supreme Court in Islamic Academy of Education and another v. State of Karnataka and others [(2002) 6 SCC 697].
(3) Every educational institution shall issue an official receipt for the fee or deposit received or collected by it.”

✓ Sections 3(1), 4(13), and 20(1)(m) and (ab) of the Annamalai University Act, 2013: These sections deal with the establishment, powers, and functions of the University, including the power to fix and collect fees.

“3(1)On and from the date of commencement of this Act, the Annamalai University established under the Annamalai University Act, 1928 shall be deemed to have been established and incorporated under this Act and is hereby declared to be the University by the aforesaid name.
4.The University shall have the following objects and powers, namely:-
(1) to (12)…………………
(13) to fix fees and to demand and receive such fees as may be prescribed;
“20. (1) The Syndicate shall have the following powers, namely:-
(a)to (l)……………….
(m) to prescribe the fees to be charged for admission to the examinations, degrees, titles and diplomas of the University and for all or any of the purposes specified in section 4:
(n) to (z)(aa)…………….
(ab) to charge and collect such fees as may be prescribed;
(ac) to (an)……………”

The 1992 Act was enacted to prohibit the collection of capitation fees by educational institutions in Tamil Nadu. It empowers the State Government to regulate fees charged by educational institutions, particularly those offering professional courses like medicine and engineering. The 2013 Act, on the other hand, provides the University with the power to fix and collect fees.

Arguments

Arguments on behalf of the Students:

• The students argued that the 1992 Act, particularly Section 2(b), should apply to Annamalai University. They contended that the University, being an institution imparting education leading to degrees conferred by a state-legislature-established university, falls under the definition of “educational institution” as per the 1992 Act.
• They submitted that the High Court erred in holding that the University needed to be specifically notified by the Government to be covered by the 1992 Act. They argued that the first part of the definition of “educational institution” in Section 2(b) is self-sufficient and does not require any notification.
• The students highlighted the vast difference between the fees charged by the University and the fees fixed by the Government and the Fee Fixation Committee for other institutions. They prayed that the matter of fee fixation be referred to the Committee as per the 1992 Act.
• They argued that Section 4(2-A) of the 1992 Act, which was inserted following the Supreme Court’s decision in the Islamic Academy case, mandates that the fees for medical and engineering courses must be fixed by the Fee Fixation Committee.

Arguments on behalf of the University:

• The University contended that the fees it charged were in accordance with its statutes and the provisions of the 2013 Act, which empowers it to fix its own fees.
• It argued that the 1992 Act was primarily intended to regulate self-financing colleges and that government colleges and state universities did not fall under its purview.
• The University submitted that the 1992 Act would not apply without a specific reference from the State Government to the Fee Fixation Committee.
• The University stated that it was running in deficit and that reducing the fee structure would further jeopardize its financial condition.
• It argued that the students were estopped from challenging the fee structure since they had taken admission under the stipulated fee structure as per the prospectus.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court framed the following key issue:

1. Whether the University was entitled to devise its own fee structure without having the fee fixed by the Committee on Fixation of Fee as contemplated under the 1992 Act.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• Islamic Academy of Education and another v. State of Karnataka and others [(2002) 6 SCC 697] – Supreme Court of India: This case directed the constitution of Fee Fixation and Admissions Committees. The Court relied on this case to highlight the need for a Fee Fixation Committee to prevent profiteering by educational institutions.
• P.A. Inamdar and others v. State of Maharashtra and others (2005) 6 SCC 537 – Supreme Court of India: This case upheld the scheme of the two Committees (Admission and Fee) as evolved in Islamic Academy. The Court referred to this case to reinforce the validity of the Fee Fixation Committee.
• Cochin University of Science and Technology and another v. Thomas P . John and others (2008) 8 SCC 821 – Supreme Court of India: The Court distinguished this case, stating that the principle of estoppel cannot override express legislative provisions.
• East End Dwellings Co. Ltd. v. Finsbury Borough Council 1952 AC 109 – House of Lords: The Court quoted this case to emphasize the effect of legal fiction.
• Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum and others (1978) 3 SCC 383 – Supreme Court of India: The Court relied on this case to emphasize that a legal fiction must be given full effect.

Legal Provisions:

• Section 2(b) of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992: The Court analyzed this definition of “educational institution” to determine if the University fell within its scope.
• Section 4 of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992: The Court examined this section, particularly sub-section (2-A), to understand the powers of the Fee Fixation Committee.
• Sections 3(1), 4(13), and 20(1)(m) and (ab) of the Annamalai University Act, 2013: The Court considered these sections to determine the University’s powers to fix and collect fees.

Authority Usage 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 Islamic Academy of Education and another v. State of Karnataka and others [(2002) 6 SCC 697]* to emphasize the need for a Fee Fixation Committee to prevent profiteering by educational institutions.
• The Court followed P.A. Inamdar and others v. State of Maharashtra and others (2005) 6 SCC 537* to reinforce the validity of the Fee Fixation Committee.
• The Court distinguished Cochin University of Science and Technology and another v. Thomas P . John and others (2008) 8 SCC 821*, stating that the principle of estoppel cannot override express legislative provisions.
• The Court quoted East End Dwellings Co. Ltd. v. Finsbury Borough Council 1952 AC 109* to emphasize the effect of legal fiction.
• The Court relied on Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum and others (1978) 3 SCC 383* to emphasize that a legal fiction must be given full effect.
• The Court interpreted Section 2(b) of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992* to determine if the University fell within its scope.
• The Court examined Section 4 of the Tamil Nadu Educational Institutions (Prohibition of Collection of Capitation Fee) Act, 1992*, particularly sub-section (2-A), to understand the powers of the Fee Fixation Committee.
• The Court considered Sections 3(1), 4(13), and 20(1)(m) and (ab) of the Annamalai University Act, 2013* to determine the University’s powers to fix and collect fees.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to ensure compliance with statutory provisions and to prevent profiteering in education. The Court emphasized that the University, despite its autonomy, could not operate outside the ambit of the 1992 Act, particularly Section 4(2-A). The Court highlighted that the legislative intent behind the 1992 Act was to regulate fees in educational institutions and that this intent should not be undermined by allowing universities to fix their own fees for professional courses without the intervention of the Fee Fixation Committee. The Court also noted that the University, being a state-funded institution, should not be allowed to charge exorbitant fees. The Court’s decision was also influenced by the principle that legal fictions must be given full effect. The Court further emphasized that the principle of estoppel cannot override express legislative provisions. The Court’s reasoning was also guided by the need to ensure that the directions issued in Islamic Academy (supra) regarding the constitution of the Fee Fixation Committee are given full effect.

Fact:Law Ratio

Logical Reasoning

Judgment

The Supreme Court allowed the appeals and set aside the judgments of the High Court. The Court held that the University was not entitled to devise its own fee structure without having the fee fixed by the Committee on Fixation of Fee as contemplated under the 1992 Act. The Court directed the University to place all relevant material, including its balance sheet and accounts, before the Fee Fixation Committee within two weeks from the date of the judgment. The Committee was directed to fix an appropriate fee structure for the academic year 2013-14 onwards, including the current academic session 2018-19. The Court stated that if the fee structure fixed by the University was found to be inappropriate, consequential benefits and advantages should be given to each student.

The Court stated, “The legislative intent is very clear and no educational institution which comes within the scope of sub-section (2-A) can receive or collect any fees in excess of the amount fixed by the “Committee on Fixation of Fee”.”

The Court also observed, “If a particular modality is prescribed by the Legislature any action in defiance or ignorance of such modality cannot be protected or preserved on the plea of estoppel.”

The Court further stated, “The provisions of Section 4(2-A) of 1992 Act are specific and special and apply to courses leading to degrees in Medicine and Engineering.”

Key Takeaways

• Universities offering professional courses like medicine and engineering must comply with the fee regulations set by the State’s Fee Fixation Committee.
• The principle of estoppel cannot override express legislative provisions.
• Thelegislative intent behind the 1992 Act is to regulate fees in educational institutions and to prevent profiteering.
• Students are protected from excessive fees, and universities cannot arbitrarily fix their fee structures.
• The judgment reinforces the need for statutory compliance and transparency in fee fixation for educational institutions.

Conclusion

The Supreme Court’s judgment in M. Aamira Fathima vs. Annamalai University is a significant step in ensuring that educational institutions adhere to statutory fee regulations. The Court’s emphasis on the applicability of the 1992 Act and the powers of the Fee Fixation Committee underscores the importance of preventing profiteering in education. This judgment serves as a reminder that universities, even those established under state laws, are not exempt from the regulatory framework designed to protect students from excessive fees. The ruling has far-reaching implications for the regulation of fees in higher education and the protection of students’ rights.