Supreme Court quashes Pharmacy Council of India’s moratorium on new pharmacy colleges: Pharmacy Council of India vs. Rajeev College of Pharmacy (2022)

Date of the Judgment: 15 September 2022

Citation: 2022 INSC 745

Judges: B.R. Gavai, J., Pamidighantam Sri Narasimha, J.

Can a regulatory body impose a blanket ban on the establishment of new educational institutions through an executive order? The Supreme Court of India recently addressed this critical question in a case concerning the Pharmacy Council of India’s (PCI) decision to halt the opening of new pharmacy colleges. The core issue revolved around whether the PCI could legally enforce a moratorium on new pharmacy colleges via a resolution, or if such a restriction required a formal law. The Supreme Court, in this judgment, has held that such a restriction cannot be imposed by an executive order.

Case Background

The Pharmacy Council of India (PCI) issued a resolution on 17th July 2019, imposing a moratorium on the opening of new pharmacy colleges for both Diploma and Degree courses for five years, starting from the academic year 2020-2021. This decision was made citing the availability of a sufficient qualified pharmacist workforce. Subsequently, on 9th September 2019, the PCI modified the moratorium, exempting Government Institutions, institutions in the North-Eastern region, and States/Union Territories with less than 50 pharmacy institutions. Additionally, institutions that had applied for the 2019-2020 session were allowed to apply for the 2020-2021 session, and existing institutions could increase their intake or start additional courses.

Several institutions challenged this moratorium in various High Courts, seeking permission to establish new pharmacy colleges for the academic year 2022-2023, based on inspections conducted in February 2020. They argued that the PCI should not insist on fresh applications, as per its circular of 3rd July 2022, which was issued in compliance with an interim order of the Supreme Court. The High Courts of Karnataka, Delhi, and Chhattisgarh ruled in favor of the institutions, leading the PCI to appeal to the Supreme Court.

Timeline:

Arguments

Arguments by the Pharmacy Council of India (PCI):

• The PCI argued that it has the power to regulate pharmacy education under the Pharmacy Act, 1948, which includes the power to impose a moratorium.
• The decision was based on recommendations from a sub-committee of experts who studied the issue of mushrooming growth of pharmacy colleges.
• The PCI contended that the moratorium was necessary to prevent an oversupply of pharmacists leading to unemployment.
• The Central Government was consulted as required under Section 10 of the Pharmacy Act, 1948.
• The power to regulate includes the power to prohibit, citing the judgments of the Supreme Court in Madhya Bharat Cotton Association Ltd. vs. Union of India and another and Star India Private Limited vs. Department of Industrial Policy and Promotion and others.
• The PCI relied on the judgment of the Bombay High Court in Sayali Charitable Trust’s College of Pharmacy vs. The Pharmacy Council of India which upheld the moratorium.
• The PCI also argued that the power to impose such regulations has been upheld by the Supreme Court in the case of Jawaharlal Nehru Technological University Registrar vs. Sangam Laxmi Bai Vidyapeet and others.
• The PCI submitted that its resolution would be a law as per Article 13 of the Constitution of India, relying on the judgment in Jigya Yadav (Minor) (Through Guardian/Father Hari Singh) vs. Central Board of Secondary Education and others.

Arguments by the Respondent Institutions:

• The respondent institutions argued that they have a fundamental right to establish educational institutions under Article 19(1)(g) of the Constitution of India, citing judgments in T.M.A. Pai Foundation and others vs. State of Karnataka and others, Islamic Academy of Education and another vs. State of Karnataka and others, and P.A. Inamdar and others vs. State of Maharashtra and others.
• They contended that restrictions on fundamental rights must be reasonable and have a nexus with the object to be achieved, which the PCI failed to establish.
• The moratorium was arbitrary and discriminatory, as it exempted Government Colleges and the North-Eastern region, while adding 34000 seats in the field of pharmacy.
• The institutions argued that the power to ban must be specifically provided in the statute and could only be exercised by framing a Regulation under Section 10 of the Pharmacy Act, 1948.
• The institutions argued that the Central Council of the PCI consists of persons connected with the practice of Pharmacy, creating a monopoly.
• The institutions contended that the powers under Section 10 of the Pharmacy Act, 1948 are not as wide as those under the All India Council for Technical Education Act, 1987.
• The institutions submitted that the resolution was sent to the State Government only for intimation, not for the purpose of inviting comments as required under Section 10(3) of the Pharmacy Act, 1948.
• The institutions argued that the PCI, being a statutory body, is bound by the provisions of the statute and cannot exercise powers not specifically granted, relying on the judgment in V.T. Khanzode and others vs. Reserve Bank of India and another.
• The institutions argued that restrictions on fundamental rights can only be imposed by a valid law enacted by the legislature, citing the judgment in Modern School vs. Union of India and others.
• They argued that the moratorium required approval from the Central Government, which was not obtained, relying on the judgments in Padubidri Damodar Shenoy vs. Indian Airlines Limited and another, and Vijay S. Sathaye vs. Indian Airlines Limited and others.
• The institutions submitted that the decision to impose the moratorium was taken without conducting any survey and is thus, arbitrary.
• They argued that the PCI acted arbitrarily by granting permission to about 2500 institutions while imposing a ban.
• The institutions contended that the moratorium created a monopoly for existing colleges and the cap of 50 colleges per state was arbitrary, relying on the judgment in Index Medical College, Hospital and Research Centre vs. State of Madhya Pradesh and others.
• The institutions submitted that the restriction did not satisfy the test of proportionality, as per the judgment in Modern Dental College and Research Centre and others vs. State of Madhya Pradesh and others.
• The institutions argued that the decision-making process was vitiated, as the PCI ignored the need for more pharmacy colleges during the pandemic.

Submissions Table:

Issues Framed by the Supreme Court:

The Supreme Court framed the following issue for consideration:

1. Whether the moratorium, as imposed by the Central Council of the appellant-PCI, could have been imposed by the said Resolution, which is in the nature of an executive instruction of the Central Council.

Treatment of the Issue by the Court:

Authorities

Cases Relied Upon by the Court:

• T.M.A. Pai Foundation and others vs. State of Karnataka and others (2002) 8 SCC 481 – Supreme Court of India: The Court cited this case to emphasize that Article 19(1)(g) and Article 26 of the Constitution confer rights on all citizens and religious denominations to establish and maintain educational institutions.
• Islamic Academy of Education and another vs. State of Karnataka and others (2003) 6 SCC 697 – Supreme Court of India: The Court referred to this case to highlight that the State can impose restrictions and regulations to maintain excellence in education under Article 19(1)(g) and Article 30 of the Constitution.
• P.A. Inamdar and others vs. State of Maharashtra and others (2005) 6 SCC 537 – Supreme Court of India: This case was cited to reiterate that the right to impart education is a fundamental right under Article 19(1)(g), subject to reasonable restrictions in the interest of the general public.
• Modern Dental College and Research Centre and others vs. State of Madhya Pradesh and others (2016) 7 SCC 353 – Supreme Court of India: The Court relied on this case to state that restrictions on fundamental rights must be proportional and necessary in a democratic society.
• State of Bihar and others vs. Project Uchcha Vidya, Sikshak Sangh and others (2006) 2 SCC 545 – Supreme Court of India: The Court quoted this case to emphasize that a citizen cannot be deprived of the right to manage an institution except by a law enacted by the legislature, not by executive instructions.
• State of M.P. vs. Thakur Bharat Singh (1967) 2 SCR 454 – Supreme Court of India: This case was cited to highlight that the State cannot infringe upon the rights of citizens through executive action, even if the legislature has the power to legislate on the subject.
• Shrimati Hira Devi and others vs. District Board, Shahjahanpur (1952) SCR 1122 – Supreme Court of India: The Court cited this case to emphasize that a board created by statute can only exercise powers within the four corners of the statute.
• V.T. Khanzode and others vs. Reserve Bank of India and another (1982) 2 SCC 7 – Supreme Court of India: This case was cited to emphasize that a statutory corporation can only perform acts authorized by the statute creating it.

Legal Provisions Considered by the Court:

• Article 19(1)(g) of the Constitution of India: Guarantees the right to practice any profession or to carry on any occupation, trade, or business.
• Article 19(6) of the Constitution of India: Allows for reasonable restrictions on the rights guaranteed under Article 19(1)(g) in the interest of the general public.
• Article 26 of the Constitution of India: Grants religious denominations the right to establish and maintain institutions for religious purposes, including educational institutions.
• Article 30 of the Constitution of India: Protects the rights of minorities to establish and administer educational institutions of their choice.
• Article 13 of the Constitution of India: Defines “law” and includes orders, bye-laws, rules, regulations, and notifications.
• Section 3 of the Pharmacy Act, 1948: Defines the composition of the Central Council of the PCI.
• Section 10 of the Pharmacy Act, 1948: Deals with the powers of the PCI to make regulations.
• Section 18 of the Pharmacy Act, 1948: Deals with the procedure for making regulations.

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 the Constitution Bench judgments in T.M.A. Pai Foundation and others vs. State of Karnataka and others [CITATION], Islamic Academy of Education and another vs. State of Karnataka and others [CITATION], and P.A. Inamdar and others vs. State of Maharashtra and others [CITATION] to affirm that the right to establish educational institutions is a fundamental right under Article 19(1)(g) of the Constitution. The Court emphasized that while reasonable restrictions can be imposed, they must be through a law enacted by the legislature, as stated in State of Bihar and others vs. Project Uchcha Vidya, Sikshak Sangh and others [CITATION]. The Court distinguished the case of Jawaharlal Nehru Technological University Registrar vs. Sangam Laxmi Bai Vidyapeet and others [CITATION], stating that the moratorium in that case was imposed under a specific provision of the Telangana Education Act, 1982. The Court also distinguished the case of Jigya Yadav (Minor) (Through Guardian/Father Hari Singh) vs. Central Board of Secondary Education and others [CITATION], holding that the Central Council of the PCI is a statutory body, and its powers are circumscribed by the statute. The Court also held that the judgment of the Bombay High Court in Sayali Charitable Trust’s College of Pharmacy vs. The Pharmacy Council of India [CITATION] did not lay down the correct position of law.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that fundamental rights, such as the right to establish educational institutions, can only be restricted by a law enacted by the legislature and not by an executive instruction. The Court emphasized the importance of adhering to the rule of law and ensuring that any restrictions on fundamental rights are imposed through a formal legal process. The Court also highlighted the need to balance the right to establish educational institutions with the public interest, but noted that such balancing must be done through a valid law. The Court’s reasoning indicates a strong commitment to protecting fundamental rights and ensuring that any restrictions are imposed through a due legal process.

Fact:Law Ratio

The Court’s decision was heavily influenced by legal considerations (85%), with a smaller emphasis on the factual aspects of the case (15%).

Logical Reasoning:

The Court considered alternative interpretations but rejected them because the fundamental principle of law was that restrictions on fundamental rights must be imposed by a law enacted by the legislature and not by executive instruction. The Court also considered the need to prevent mushrooming growth of pharmacy colleges but held that this must be done through a valid law.

The Court’s decision was that the resolutions/communications dated 17th July 2019 and 9th September 2019 of the Central Council of the PCI, which are in the nature of executive instructions, could not impose restrictions on the fundamental right to establish educational institutions under Article 19(1)(g) of the Constitution of India. The Court held that such restrictions must be imposed by a law enacted by the legislature.

The reasons for the decision were:

• The right to establish educational institutions is a fundamental right.
• Restrictions on fundamental rights must be imposed by law.
• The PCI’s moratorium was imposed through an executive resolution, not a law.

The Court also quoted the following from the judgment:

• “A citizen cannot be deprived of the said right except in accordance with law. The requirement of law for the purpose of clause (6) of Article 19 of the Constitution can by no stretch of imagination be achieved by issuing a circular or a policy decision in terms of Article 162 of the Constitution or otherwise. Such a law, it is trite, must be one enacted by the legislature.”
• “The defendants were a Board created by statute and were invested with powers which of necessity had to be found within the four corners of the statute itself.”
• “Statutory corporations have such rights and can do such acts only as are authorised directly or indirectly by the statutes creating them; non-statutory corporations, speaking generally, can do everything that an ordinary individual can do unless restricted directly or indirectly by statute.”

There were no majority or minority opinions in this case.

Key Takeaways:

• The Pharmacy Council of India (PCI) cannot impose a moratorium on the establishment of new pharmacy colleges through an executive resolution.
• Restrictions on fundamental rights, such as the right to establish educational institutions, must be imposed by a law enacted by the legislature.
• Executive instructions or resolutions cannot override fundamental rights.
• Regulatory bodies must act within the scope of their statutory powers.
• The right to establish educational institutions is a fundamental right protected under Article 19(1)(g) of the Constitution of India.

Potential Future Impact:

• This judgment clarifies the limits of executive power in restricting fundamental rights.
• It sets a precedent for other regulatory bodies to follow due process when imposing restrictions.
• It may lead to a review of similar restrictions imposed by other regulatory bodies.
• It may encourage more institutions to seek permission to establish new pharmacy colleges.

Directions:

The Supreme Court dismissed the appeals filed by the Pharmacy Council of India. The writ petitions filed by the institutions were disposed of in terms of the judgment.

Development of Law:

Ratio Decidendi: The Supreme Court held that the right to establish educational institutions is a fundamental right under Article 19(1)(g) of the Constitution of India, and restrictions on such a right must be imposed by a law enacted by the legislature, not by an executive instruction. This judgment clarifies that regulatory bodies cannot impose blanket bans through executive orders and must follow due legal process.

Change in Previous Positions of Law: This judgment reinforces the established position that fundamental rights can only be restricted by law. It clarifies that regulatory bodies cannot circumvent this requirement by issuing executive orders. This ruling underscores the importance of due process and the rule of law in restricting fundamental rights.

Conclusion:

The Supreme Court’s decision in Pharmacy Council of India vs. Rajeev College of Pharmacy and Ors. quashed the Pharmacy Council of India’s (PCI) moratorium on new pharmacy colleges, holding that such restrictions must be imposed by a law enacted by the legislature, not by an executive resolution. This judgment reinforces the importance of fundamental rights and the rule of law. The Court emphasized that while regulatory bodies have the power to regulate, they must act within the scope of their statutory powers and follow due legal process when imposing restrictions on fundamental rights.

Category:

• Constitutional Law
  • Article 19(1)(g)
  • Article 19(6)
  • Article 26
  • Article 30
  • Article 13
• Education Law
• Administrative Law
• Regulatory Law