Supreme Court quashes interim fee order for engineering colleges: Rajeev Gandhi Memorial College vs. State of Andhra Pradesh (2020)

LEGAL ISSUE: Whether the State Government can fix interim fees for unaided educational institutions without following the procedure established under the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983 and its Rules.

CASE TYPE: Education Law, Fee Regulation

Case Name: Rajeev Gandhi Memorial College of Engineering and Technology & Anr. vs. The State of Andhra Pradesh & Ors.

Judgment Date: 14 July 2020

Date of the Judgment: 14 July 2020
Citation: [Not Available in Source]
Judges: Rohinton Fali Nariman, J., Navin Sinha, J., B.R. Gavai, J. The judgment was authored by Rohinton Fali Nariman, J.

Can a State Government bypass established procedures for fixing fees in private educational institutions? The Supreme Court addressed this question in a case involving engineering colleges in Andhra Pradesh, where the government had issued an order to continue the old fee structure instead of following the prescribed process. The Court found that the government’s action was not in accordance with the law, emphasizing the importance of adhering to the rules for fee determination.

Case Background

The case involves two private engineering colleges, Rajeev Gandhi Memorial College of Engineering and Technology and another institution, in Andhra Pradesh. For the academic years 2016-2019, the fee for the first college was set at Rs. 86,800 per student, and for the second college, it was Rs. 59,500 per student. When the time came to fix fees for the block period of 2019-2020, the colleges proposed increased fees of Rs. 1.35 lakhs and Rs. 72,000, respectively. However, instead of following the prescribed procedure, the State Government issued an order on 23.07.2019 to continue the old fee structure. This action led the colleges to file a writ petition challenging the government’s order.

Timeline

Course of Proceedings

The colleges filed a writ petition challenging the government’s order of 23.07.2019, which directed the continuation of the old fee structure. A Single Judge of the High Court, on 31.07.2019, found merit in the colleges’ arguments and suspended the government’s order. The Single Judge allowed the colleges to collect fees as proposed by them. However, a Division Bench of the High Court, on 08.08.2019, modified the Single Judge’s order. The Division Bench allowed the colleges to collect the old fees, but also required them to obtain a bank guarantee from the students for 50% of the difference between the fees claimed by the colleges and the fees recommended by the Andhra Pradesh Fee Regulatory Committee (AFRC), whichever was less. The Division Bench’s order was to remain in effect until a new fee structure was notified by the government. The colleges then appealed to the Supreme Court against the Division Bench’s order.

Legal Framework

The case revolves around the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983, and the rules framed under it. Rule 4 of these rules outlines the procedure for fee fixation. According to Rule 4, the Andhra Pradesh Fee Regulatory Committee (AFRC) is required to call for proposed fee structures from each institution, along with relevant documents and books of accounts. The AFRC must then decide if the proposed fees are justified and do not amount to profiteering or charging of capitation fees. The AFRC has the authority to approve or alter the proposed fees. The rules also specify that the AFRC must consider factors such as the location of the institution, the nature of the course, infrastructure costs, administrative expenses, and a reasonable surplus for growth. The fees determined by the AFRC are valid for three years. The relevant portion of Rule 4 is as follows:

“4. FEE FIXATION:
(i)The AFRC shall call for, from each Institution, its proposed fee structure well in advance before the date of issue of notification for admission for the academic year along with all the relevant documents and books of accounts for scrutiny.
(ii)The AFRC shall decide whether the fees proposed by the Institution is justified and does not amount to profiteering or charging of capitation fee.
(iii) The AFRC shall be at liberty to approve or alter the proposed fee for each course to be charged by the Institution.
Provided that it shall give the Institution an opportunity of being heard before fixing any fee or fees.
(iv)The AFRC shall take into consideration the following factors while prescribing the fee:
(a)the location of the professional institution.
(b)the nature of the professional course,
(c)the cost of available infrastructure,
(d)the expenditure on administration and maintenance,
(e)a reasonable surplus required for growth and development of the professional Institution.
(f)the revenue foregone on account of waiver of fee, if any, in respect of students belonging to the Schedule Caste, Schedule Tribes and wherever applicable to the Socially and Educationally Backward Classes and other Economically weaker Sections of the society, to such extent as shall be notified by the Government from time to time.
(g)Any other relevant factor.
Provided that, no such fees, as may be fixed by the AFRC, shall amount to profiteering or commercialization of education.
(v)The AFRC shall communicate the fee structure as determined by it, to the Government, for notification.
(vi)The fee or scale of fee determined by the AFRC shall be valid for a period of three years.
(vii)The fee so determined shall be applicable to a candidate who is admitted to an institution in that academic year and shall not be altered till the completion of his course in the institution in which he was originally admitted. No Professional Educational Institution shall collect at time a fee which is more than one year’s fee from a candidate.”

Arguments

The colleges argued that the State Government’s order of 23.07.2019, which directed the continuation of the old fee structure, was in violation of Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983. They contended that the government should have followed the procedure outlined in Rule 4, which requires the AFRC to determine the fees after considering various factors. The colleges also argued that the Division Bench’s order, which modified the Single Judge’s interim order, was not justified because it did not address the illegality of the government’s order.

The State Government, on the other hand, argued that the interim order was necessary to maintain stability and prevent disruption in the education sector. They also pointed out that a new Act, the Andhra Pradesh Higher Education Regulatory and Monitoring Commission Act, 2019, had come into force on 14.08.2019, which established a commission to determine fees. However, the Supreme Court noted that the 2019 Act was prospective in nature and did not address the issue of fee fixation for the period prior to its enactment.

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame specific issues in the judgment. However, the core issue that the court addressed was:

✓ Whether the State Government could fix interim fees for unaided educational institutions without following the procedure established under the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983 and its Rules.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not cite any specific cases or books in this judgment. The primary authority considered was Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983.

Judgment

Authorities:

The Court relied on the provisions of Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983. The Court held that the state government’s order was illegal as it did not follow the procedure prescribed in Rule 4.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily driven by the need to uphold the rule of law and ensure that government actions are in accordance with established procedures. The Court emphasized that the State Government could not bypass the mandatory procedure for fee fixation as prescribed under Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983. The Court was also influenced by the fact that the Single Judge had correctly identified the illegality in the government’s order, and the Division Bench should not have interfered with the Single Judge’s findings. The Court was not swayed by the State’s argument that the interim order was necessary for stability, emphasizing that the correct procedure had to be followed.

Logical Reasoning:

The Court noted that the interim fee fixed by the Andhra Pradesh Government without following the drill of Rule 4 was correctly found to be prima facie illegal and was therefore correctly suspended by the learned Single Judge’s order of 31.07.2019. The Division Bench ought not to have interfered with the aforesaid order by the impugned order dated 08.08.2019.

The Supreme Court stated, “The interim fee fixed by the Andhra Pradesh Government without following the drill of Rule 4 has correctly been found to be prima facie illegal and has therefore correctly been suspended by the learned Single Judge’s order of 31.07.2019.”

The Court further stated, “The Division Bench ought not to have interfered with the aforesaid order by the impugned order dated 08.08.2019.”

The Court concluded, “The appeals are allowed and the impugned order is set aside and the learned Single Judge’s order will now continue to operate insofar as the period of 2019 onwards is concerned until a final fee is fixed in accordance with the requisite Act and Rules.”

There were no minority opinions in this case.

Key Takeaways

• ✓ State Governments must adhere to the prescribed procedures for fixing fees in private educational institutions.
• ✓ Any deviation from the established rules can be challenged in court.
• ✓ Interim orders by the government cannot bypass the need for proper fee determination by the designated authorities.
• ✓ The Andhra Pradesh Fee Regulatory Committee (AFRC) must follow the procedure outlined in Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983.

Directions

The Supreme Court set aside the Division Bench’s order and restored the Single Judge’s order. The Single Judge’s order will now continue to operate for the period of 2019 onwards until a final fee is fixed in accordance with the requisite Act and Rules.

Development of Law

The ratio decidendi of the case is that State Governments cannot bypass the mandatory procedure for fee fixation as prescribed under Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983. This judgment reinforces the importance of following due process in administrative actions and ensures that fee structures in private educational institutions are determined fairly and transparently. There is no change in the previous position of law, but this case emphasizes the strict adherence to the established procedures.

Conclusion

The Supreme Court’s decision in Rajeev Gandhi Memorial College of Engineering and Technology vs. The State of Andhra Pradesh reaffirms the importance of following due process in administrative actions, particularly in the context of fee fixation for private educational institutions. The Court held that the State Government’s order to continue the old fee structure was illegal because it did not adhere to the procedure outlined in Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983. This judgment underscores that state governments must follow the prescribed legal framework and cannot take arbitrary decisions that affect the rights of educational institutions and students.

Category

Parent Category: Education Law

Child Category: Fee Regulation

Parent Category: Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983

Child Category: Rule 4, Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983

FAQ

Q: Can the government arbitrarily decide the fees for private colleges?
A: No, the government cannot arbitrarily decide fees for private colleges. They must follow the procedure outlined in the relevant laws and rules, such as Rule 4 of the Andhra Pradesh Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983.

Q: What is the role of the Andhra Pradesh Fee Regulatory Committee (AFRC)?
A: The AFRC is responsible for determining the fees for private educational institutions. It must consider various factors such as the location of the institution, the nature of the course, infrastructure costs, and administrative expenses.

Q: What should a college do if the government issues an order that does not follow the prescribed procedure for fee fixation?
A: A college can challenge such an order in court, as was done in this case. The courts will ensure that the government follows the correct legal procedures.

Q: What does this judgment mean for students?
A: This judgment ensures that fees are determined transparently and fairly, preventing arbitrary fee hikes. It also means that the fee structure should be in place before the start of the academic year, and the fee cannot be changed once a student is admitted to a course.

Q: What is the key takeaway from this judgment?
A: The key takeaway is that the government must adhere to the prescribed legal procedures for fee fixation in private educational institutions and cannot bypass these procedures through interim orders.