Holding

The Supreme Court held that fixation of fees is a matter of administrative autonomy of an educational institution and, so long as the fee is reasonable, not a capitation fee, and based on legitimate financial needs, the university may vary fees for different batches and is not estopped.

Summary

The Cochin University of Science & Technology (Cochin University) introduced a B.Tech. programme in 1995 reserving 10% seats for NRI students, charging them a one‑time development fee of US$5,000 and a semester fee of Rs.20,000, while other students paid only Rs.20,000 per semester. In 1996‑97 the university raised the NRI fee to US$4,000 per annum for three admission years, then reverted to the original fee structure in 1999‑2000. NRI students admitted in 1997‑98 and 1998‑99 claimed they were unfairly discriminated against and sought parity with the later fee structure, filing writ petitions that the High Court allowed, directing the university to refund the excess fee. On appeal, the Supreme Court examined whether the university’s fee differentiation violated Article 14, whether estoppel barred the university from varying fees, and the extent of judicial interference in fee fixation. The Court held that fee fixation is a part of the institution’s administrative autonomy, that reasonable fee structures are permissible provided they are not capitation fees, and that the university was not estopped from changing fees for different batches. Consequently, the High Court’s order was set aside and the appeals were allowed.

Issues considered

Whether the university's differential fee structure for NRI students for different admission batches is arbitrary, unfair and violative of Article 14 of the Constitution.
Whether the doctrine of estoppel can be invoked by the university to prevent the NRI students from challenging the fee variation.
Whether the fixation of fees by a self‑financing educational institution is subject to judicial scrutiny or is a matter of administrative autonomy.
Whether the fee charged to NRI students amounts to a capitation fee or profiteering prohibited by law.

Subjects

fee fixationeducational institution autonomyArticle 14estoppelcapitation feeself‑financing universityNRI studentsadministrative law

Judgment

[2008] 7 S.C.R. 887

COCHIN UNIVERSITY OF SCIENCE & A
TECHNOLOGY & ANR.
II.
THOMAS P. JOHN & ORS.
(Civil Appeal No. 4159 of 2003)
MAY 6, 2008 B
....
[HARJIT SINGH BEDI, G.S. SINGHVI AND B.N.
AGRAWAL, JJ.]
Administrative Jaw: Educational institutions - Fixation of
fee - Held: Matter relating to fixation of fee is a part of the c
administration of educational institution - The Courts should
be slow in interfering with this purely administrative matter -
However, it should not be understood that educational
institution has a carte b/anche to fix any fee that it likes but
D
., substantaial autonomy must be left to it.
Education/Educational institutions: Fee - Reduction of
- Introduction of new course - 10% seats reserved for Non-
resident Indian (NRI) students - NRI students required to
deposit US $5000 at the time of their admission towards E
'development charges' and to pay in addition a fee of
Rs. 20, 0001- per semester whereas all other categories of
students required to pay a uniform fee of Rs. 20, 0001- per
semester - After a year, University increased the fee for NRI
-:::.J
students to US $4000 per annum whereas the other students F
continued to pay fee at the rate of Rs. 20, 000 per semester -
"
This practice continued for three admission years - Thereafter
provisions made in the first year re. confining payment of fee
to one time payment US $5,000 and Rs.20,0001-per semester
were restored - Challenged by NRI students admitted in (
second and third year claiming that they had been adversely
treated by the appellant University and that they were entitled
to claim parity vis-a-vis the fee structure for other NRJ students
- Held: The new course required funds for infrastructure
887 r
888 SUPREME COURT REPORTS (2008] 7 S.C.R.

A development and the development of faculty - It would be
impossible for educational institution to have effective
administration and to maintain high educational standards, if
a downward revision during the pendency of a course would
be automatically made applicable to students admitted earlier
8 under a different fee structure - NRI students took admission
on certain specific conditions and University has a right to
insist that those conditions are observed - Argument of
estoppel in such a case would thus be available to educational
institution - Doctrine of estoppel.
c In 1995, the appellant university started 4 yea rs
B.Tech Course of 8 semesters wherein 10% seats were
reserved for Non-Resident lntlian (NRI) students. As per
>
the prospectus such students were required to make a
deposit of US $5000 at the time of their admission towards
0
'development charges' and to pay in addition a fee of
Rs.20,0001- per semester whereas all the other categories
of students were required to pay a uniform fee of
Rs.20,000/- per semester. From the academic year 1996-
E 97, however, the University increased the fee for NRI
students to US $4000 per annum whereas the other
students continued to pay fee at the rate of Rs.20,000 per
semester. This practice was continued for three
admission years, i.e. 1996-97, 1997-98 and 1998-99, but
F from the year 1999-2000 the provisions made in the year
1995-96 i.e. confining the payment of fee to a one time
payment US $5,000 and Rs.20,000/-per semester were
restored. The respondents who had been admitted to the
course in question during the years 1997-98 and 1998-99
G filed representations claiming that they had been
adversely treated by the appellant University and that
they were entitled to claim parity vis-a-vis the fee
structure for NRI students as from the years 1999-2000
onwards. As the representations bore no result, 34 of the
H 56 NRI students who had been admitted to the course
COCHIN UNIVERSITY OF SCIENCE & TECHNOLOGY 889
& ANR. v. THOMAS P. JOHN & ORS.

during the two years, filed two writ petitions before the A
High Court.
High Court allowed the writ petitions holding that
there was no rationale for subjecting the respondents to
a higher rate of fee than the rate fixed in the years 1995-96
8
and 1999-2000; that even assuming that the university had
the right to fix the rate of fee, a duty was still cast on it to
act fairly, and being a statutory body, its decision was to
be based on reasonable facts and if a classification
between the different categories of students was pleaded,
it must satisfy the test of having a rational basis; that C
though the University had issued a prospectus disclosing
the fee structure, it would not bind the respondents even
on the principle of estoppel, as estoppel was a principle
of equity and as it appeared that the fundamental right of
the writ petitioner under Article 14 of the Constitution had D
been violated, the same could not be waived even by their
own action and thus University was directed to refund
the extra fee charged from the respondents.
In appeals to this Court, appellant-University E
contended that it was open to a self financing institution
to fix its own fees and interference in this exercise by the
Court was not called for; that there was adequate material
on record to show that the University was in need of
funds as the course set up was a new one and the F
necessary infrastructure and facilities had yet to be
developed which justified a substantial fee on those who
could best afford it; that it would be a very dangerous
doctrine to lay down, that a student having accepted
admission under a particular fee structure could turn G
around and say at a later stage that the fee which was
called upon to pay was excessive and that he was liable
to pay such fee which was leviable on students admitted
in subsequent years; that there would be complete
uncertainty in the quantum of funds available and that it H
890 SUPREME COURT REPORTS [2008) 7 S.C.R.

A would be well nigh impossible for any educational
institution to chalk out its own parameters for ...
development and that having taken admissions under a
certain fee regime the NRI students were estopped from
challenging the same in Court.
B
Allowing the appeals, the Court
HELD: 1. The matter relating to the fixation of a fee is
a part of the administration of an educational institution
and it would impose a heavy onus on such an institution
C to be called upon to justify the levy of a fee with
mathematical precision. This Court laid down several
broad principles with regard to the fixation of fees and as
of today, those principles are being adopted by the
committees set up for the purpose. It must be understood
D at the outset that an educational institution chalks out its
own programme year wise on the basis of the projected
receipts and expenditure and for the court to interfere in
this purely administrative matter would be impinging
excessively on this right. From this, however, it should
E not be understood that the educational institution has a
carte blanche to fix any fee that it likes but substantial
autonomy must be left to it. [Para 7] [898-C, D, E]
2. The affidavits filed by the appellant University
F reveal that the University had set up the new course in
the year 1995-96 for which funds were required for .
infrastructure development, the development of a faculty,
which would mean making provision for adequate salary
for the teaching and supporting staff so as to attract the
G best minds. It has also been emphasized in the second
affidavit that the fees had been first increased and
subsequently reduced as experience had shown that the
amount of US $ 5000 per year was excessive and left out
of consideration a large number of NRI students who
H could not afford the fee and in order to make the course
COCHIN UNIVERSITY OF SCIENCE & TECHNOLOGY 891
& ANR. v. THOMAS P. JOHN & ORS.

available to a larger segment amongst this category, the A
fee had been reduced: No contradiction or fault can be
found with the University in taking these two stances in
the two affidavits as they supplement each other and
make out a justification for the initial increase in the fee
and subsequent downward revision. [Para 7J [898-F, G, H; B
899-A, BJ
3. A reading of the *TM.A. Pai case and **Islamic
Academy case would reveal that the broad principle is that
an educational institution must be left to its own devices
in the matter of fixation of fee though profiteering or the
c
imposition of capitation fee is to be ruled out and that
some amount towards surplus funds available to an
institution must be permitted and visualized but it has also
been laid down by inference that if the broad principles
D
with regard to fixation of fee are adopted, an educational
institution cannot be called upon to explain the receipts
and the expenses as before a Chartered Accountant. [Para
11J [902-A, B, CJ
*TM.A.Pai Foundation vs. State of Karnataka (2002) 8 E
SCC 481 and **Islamic Academy of Education & Anr vs. State
of Karnataka & Ors. (2003) 6 sec 697 - relied on.

PA. lnamdar & Ors. vs. State of Maharashtra & Ors. (2005)
6 SCC 537; Om Prakash Shukla vs. Akhilesh KrShukla &
F
Ors. (1986) Supp. SCC 285 and Standard Chartered Bank
vs. Andhra Bank Financial Services Ltd. & Ors. (2006) 6 SCC
94 - referred to.
4. There is a surplus in the hands of institution but in
the facts that a new course was being initiated which G
would require huge investments, the surplus was not
unconscionable so as to require interference. Moreover,
...; the University had made its budget estimates keeping in
view the proposed receipts and if the fee levied by it and
H
892 SUPREME COURT REPORTS [2008] 7 S.C.R.

A accepted by the students was permitted to be cut down
mid term on the premise that the University had not been
able to explain each and every item to justify the levy, it
would perhaps be impossible for it to function effectively.
[Para 11] [902-E, F, G]
B
5. It would be well nigh impossible for an educational
institution to have an effective administration and to
maintain high educational standards, if a downward
revision during the pendency of a course would be
C automatically made applicable to students admitted earlier
under a different fee structure. A periodic revision is also
visualized in the directions of this Court in **Islamic
Academy's case wherein it has been provided that the fee
structure fixed by a committee headed by a retired Judge
would be operable for 3 years. The NRI students took
0
admission on certain specific conditions and the
University has a right to insist that those conditions are
observed. Therefore, it would not be open to the
students to contend that notwithstanding that they had
E been admitted on a certain fee structure they were
entitled to claim as a matter of right, a reduction in fee
to bring them at par with students admitted later under
a lower fee structure. The argument of estoppal in such
a case would, thus, be available to an educational
F institution. The High Court was influenced by the fact
that estoppal was a plea in equity and as the right of
the NRI students under Article 14 appeared to have
been violated, this plea was not available to the
University. This submission cannot be accepted for
G several reasons, firstly the NRI students have not been
granted admission on their over all merit but on the basis
of the 10% reservation in their favour and as such any
claim based on equity would be suspect and secondly
each set of admissions made year wise cannot be said to
H over lap the admissions made earlier or later. There is no

•
COCHIN UNIVERSITY OF SCIENCE & TECH. & ANR. 893
v. THOMAS P. JOHN & ORS. [HARJIT SINGH BED!, J.]

merit in submission that the fee had the trappings of a A
capitation fee as the fee is being levied year wise for the
course. [Para 12) [902-G; 903-A-F]
CIVILAPPELLATE JURISICTION : Civil Appeal No. 4159
of 2003
B
From the Judgment dated 2.4.2003 of the High Court of
Kerala at Ernakulam in O.P. No. 25424/1999 (B)
WITH
Civil Appeal No. 6418/2003. c
T.L.V. Iyer, T.G. Narayanan Nair for the Appellants.
L.N. Rao, Romy Chacko, Arpit Gupta and P.V. Dinesh for
the Respondents.
D
The Judgment of the Court was delivered by
HARJIT SINGH BEDI, J. 1. These appeals by special
leave arise out of the following facts:
2. In the Undergraduate 4 years B. Tech. Cost-Sharing
E
Engineering Course of eight semesters started in the year 1995
by the appellant university, 10% seats were reserved for Non-
Resident Indian Students (hereinafter called "NRI students"). As
per the prospectus such students were required to make a
deposit of US $5000 at the time of their admission towards
F
'development charges' and to pay in addition a fee of Rs.20,000/
- per semester whereas all the other categories of students were
required to pa'y a uniform fee of Rs.20,000/- per semester. From
the academic year 1996-97, however, the University increased
the fee for NRI students to US $4000 per annum whereas the G
other students continued to pay fee at the rate of Rs.20,000 per
semester. This practice was continued for three admission
years, i.e. 1996-97, 1997-98 and 1998-99, but from the year
1999-2000 the provisions made in the year 1995-96 i.e.
confining the payment of fee to a one time payment US $5,000 H
894 SUPREME COURT REPORTS [2008] 7 S.C.R.

A and Rs.20,000/-per semester were restored. The respondents
herein who had been admitted to the course in question during
the years 1997-98 and 1998-99 filed representations claiming
that they had been adversely treated by the appellant University
and that they were entitled to claim parity vis-a-vis the fee
B structure for NRI students as from the years 1999-2000 onwards.
As the representations bore no result, 34 of the 56 NRI students
who had been admitted to the course during the two years, filed
two writ petitions before the Kerala High Court. On notice, a
counter affidavit was filed by the Registrar on behalf of the
C appellant University pointing out that the NRI students had not
been admitted to the course on the basis of merit and that the
B. Tech. programme conducted at the Centre was a self-
financing and unaided one being run exclusively with funds
collected by way of fees. The fact as to the increase and the
D changes made from time to time in the fee structure were
broadly admitted but it was pleaded that the Syndicate of the
University had reduced the fee for the batch entering the course
for the year 1999-2000 before the admission process had
commenced and that the writ petitioners could not claim an
E automatic reduction in the fee and it was essential that the fee
structure designed for a particular batch should be allowed to
continue as to make a change midway would lead to a complete
break down of the finances of the University. The Division Bench
of the High Court observed that two questions arose for
F consideration:

(1) Is the action of the Univer!>ity in charging fee at
different rates from the students on the basis of the
batches in which they were admitted arbitrary and
unfair?
G
(2) Are the petitioners estopped from challenging the
impugned action?
and then went on to examine each point under specific
H heads. While dealing with the question No.1, the Court observed
COCHIN UNIVERSITY OF SCIENCE & TECH. & ANR. 895
v. THOMAS P. JOHN & ORS. [HARJIT SINGH BEDI, J.]
...
that there appeared to be no rationale for subjecting the writ A
petitioners to a higher rate of fee than the rate fixed in the years
1995-96 and 1999-2000 onwards more particularly as in the
written statement filed on behalf of the University no basis for a
differential treatment had been disclosed and the averment that
a reduction in the fee would lead to financial stress in the conduct B
~
of the courses had not been substantiated by facts and figures.
The Court also observed that even assuming that the university
had the right to fix the rate of fee, a duty was still cast on it to act
fairly, and being a statutory body, its decision was to be based
on reasonable facts and if a classification between the different c
categories of students was pleaded, it must satisfy the test of
having a rational basis.

3. On question No.2, the Court held that though the
University had issued a prospectus disclosing the fee structure,
D
,. it would not bind the respondents even on the principle of
estoppel, as estoppel was a principle of equity and as it
appeared that the fundamental right of the writ petitioner under
Article 14 of the Constitution had been violated, the same could
not be waived even by their own action. The ultimate direction
E
was accordingly rendered on 2nd April 2003 as under:

"In view of the above, the writ petitions are allowed. The
University is directed to refund the extra fee charged from
the petitioners. It may be noticed in this connection that
initially the levy of an additional fee had been stayed by F
' ' this Court. However, on a subsequent date, the order of
stay was vacated. At that time an undertaking was given
by the University that in case the writ petition is allowed,
the disputed amount of fee shall be refunded. The
University shall do so within two weeks from the date of G
receipt of a certified copy of this order. In case of failure
,, to refund within the time as aforesaid, it shall be liable to
pay the amount along with interest at the rate of 10% from
the date of deposit till the date of refund. The University is
H
896 SUPREME COURT REPORTS (2008] 7 S.C.R.

A also directed to declare the result of the petitioners
forthwith."

4. It is against this judgment and order of the Division Bench
that the present appeals have been filed by way of Special Leave.
8 This matter first came up for hearing on 9th May 2003 on which
date leave was granted and pending proceedings the order for
refund was stayed. We have also been told that this Court had
directed the respondent students as an interim measure to pay
the entire fee as per the fee structure under which they had been
C admitted and it is the conceded position that all the students
have in fact deposited the amounts in question.

5. Mr. T.L.V. Iyer, the learned senior counsel appearing for
the University has seriously controverted the conclusions of the
High Court and has pointed out that it was open to a self
D financing institution to fix its own fees and interference in this
exercise by the Court was not called for. He has submitted that
there was adequate material on record to show that the
University was in need of funds as the course set up was a new
one and the necessary infrastructure and facilities had yet to be
E developed which justified a substantial fee on those who could
best afford it. The learned counsel has placed reliance for this
submission on TM.A.Pai Foundation vs. State of Karnataka
(2002) 8 sec 481, Islamic Academy of Education & Anr. VS.
State of Karnataka & Ors. (2003) 6 SCC 697, PA.lnamdar &
F Ors. vs. State of Maharashtra & Ors. (2005) 6 SCC 537. On , '
the second question., posed by the High Court, Mr. Iyer has
submitted that it would be a very dangerous doctrine to lay down,
that a student having accepted admission under a particular
fee structure could turn around and say at a later stage that the
G fee which was called upon to pay was excessive and that he
was liable to pay such fee which was leviable on students
admitted in subsequent years. It has been highlighted and in
this situation that there would be complete uncertaintly in the
quantum of funds available and that it would be well nigh
H
COCHIN UNIVERSITY OF SCIENCE & TECH. & ANR. 897
v. THOMAS P. JOHN & ORS. [HARJIT SINGH BEDI, J.]
-<.
impossible for any educational institution to chalk out its own .A
parameters for development. It has finally been submitted that
having taken admissions under a certain fee regime the NRI
students were estopped from challenging the same in Court.
In support of this argument, the learned counsel has relied
upon Om Prakash Shukla vs. Akhilesh Kr.Shukla & Ors. B
_. (1986) Supp. SCC 285 and Standard Chartered Bank vs.
Andhra Bank Financial Services Ltd. & Ors. (2006) 6 SCC
94.

6. Mr. Rao, the learned senior counsel for the respondents
has, however, supported the judgment of the Division Bench
c
and has submitted that though the right of the University to fix a
fee was undeniable, but the quantum was required to be
reasonable and also supported by relevant material to justify
the levy. He has pointed out the stand of the university had been
D
a vacillating one, as before the High Court the plea taken was
r that the funds available from the NRI students were required for
infrastructure development whereas a complete somersault had
been made in the affidavit filed in this Court by pleading that it
had been observed, that during the admissions made in the
E
year 1997-98 and 1998-99 meritorious NRI students had not
sought admission on account of the high fee and it was in that
eventuality that the University had decided to re-introduce the
fee structure for the year 1995-96, so as to attract NRI students
from a wider base. It has been submitted by Mr. Rao that the
F
quantum of the fees and the manner of its imposition suggested
~
that the fees was, in fact, a capitation fee, the levy of which was
completely barred by several judgments of this Court and in this
connection has placed reliance on TM.A.Pai Foundation & Ors.
(supra). It has been pleaded that as per the budget estimates G
shown in the affidavit filed by the university in this Court ( from
the year 1996-97 to 1999-2000) it was clear that there were
substantial reserves with the University during the years 1997-
...
98 (academic years) which did not warrant an increase in the
fee. It has finally been argued that in the light of the judgments H
898 SUPREME COURT REPORTS [2008] 7 S.C.R.

,._
A aforequoted, the fee structure for the year 1995-96, and 1996-
97 had been determined by a committee and as such any
deviation therefrom by the University was unjustified. For this
pleading on facts Mr. Rao has referred us to Civil Appeal No.
6143/2003.
B
7. At the very outset, it must be observed that the dispute ...
pertains only to two years and as of today there appears to be
no difficulty, as the fee structure is now devised by committees
set up under the orders of the Supreme Court in the aftermath
the judgment in TM./.. Pa i's case (supra). We are also of the
c of
opinion that the matter relating to the fixation of a fee is a part of
the administration of an educational institution and it would
impose a heavy onus un such an institution to be called upon to
justify the levy of a fee with mathematical precision. The Supreme
Court has laid down several broad principles with regard to the
D
fixation of fees and as of today, those principles are being ...
adopted by the committees set up for the purpose. It must be
understood at the outset that an educational institution chalks
out its own programme year wise on the basis of the projected
receipts and expenditure and for the court to interfere in this
E
purely administrative matter would be impinging excessively on
this right. From this, however, it should not be understood that
the educational institution has a carte blanche to fix any fee that
it likes but substantial autonomy must be left to it. Mr. Rao has
very candidly admitted that it was undoubtedly open to an
F
educational institution to fix its fee but subject to certain broad ;
principles. We have accordingly gone through the affidavits filed
by the appellant University and they reveal that the University
had set up the new course in the year 1995-96 for which funds
G
were required for infrastructure development, the development
of a faculty, which would mean making provision for adequate
salary for the teaching and supporting staff so as to attract the
best minds. It has also been emphasized in the second affidavit .
that the fees had been first increased and subsequently reduced
H as experience had shown that the amount of US $ 5000 per
'~

COCHIN UNIVERSITY OF SCIENCE & TECH. & ANR. 899
v. THOMAS P. JOHN & ORS. [HARJIT SINGH BEDI, J.]

year was excessive and left out consideration a large number A
of NRI students who could not afford the fee and in order to
make the course available to a larger segment amongst this
category, the fee had been reduced. We are of the opinion that
no contradiction or fault can be found with the University in taking
these two stances in the two affidavits as they supplement each B
other and make out a justification for the initial increase in the
fee and subsequent downward revision.
8. We have also gone through the judgments cited by the
learned counsel. In TM.A.Pai case (supra) several questions
as to the rights of minority institutions to manage their own affairs
c
were taken up -one of the significant questions being the right
to determine and levy fee. Question 5(c) and its answer are
reproduced below:
Q.5(c) Whether the statutory provisions which regulate the D
facets of administration like control over educational
agencies, control over governing bodies, conditions of
affiliation including recognition/ withdrawal thereof, and
appointment of staff, employees, teachers and principles
c( including their service conditions an regulation of fees, E
etc. would interfere with the right of administration of
minorities?
A. So far as the statutory provisions regulating the facets
of administration are concerned, in case of an unaided minority
F
... educational institution, the regulatory measure of control should
be minimal and the conditions of recognition as well as the
conditions of affiliation to a university or board have to be
complied with, but in the matter of day-to-day management, like
the appointment of staff, teaching and hon-teaching, and
G
administrative control over them, the management should have
the freedom and there should not be any external controlling
. agency. However, a rational procedure for the selection of
teaching staff and for taking disciplinary action has to be evolved
by the management itself.
H
900 SUPREME COURT REPORTS [2008) 7 S.C.R.

A For redressing the grievances of employees of aided and
unaided institutions who are subjected to punishment or
termination from service, a mechanism will have to be evolved,
and in our opinion, appropriate tribunals could be constituted,
and till then, such tribunals could be presided over by a judicial
B officer of the rank of District Judge.

The State or other controlling authorities, however, can
always prescribe the minimum qualification, experience and
other conditions bearing on the merit of an individual for being
C appointed as a teachl'lr or a principal of any educational
institution.

Regulations car: be framed governing service conditions
for teaching and other staff for whom aid is provided by the State,
without interfering with the overall administrative control of the
D management over the staff.

Fees to be charged by unaided institutions cannot be
regulated but no institution should charge capitation fee."

9. It was further held that though no capitation fee or
E profiteering was permissible but "reasonable surplus to cost
(sic) expansion and augmentation( sic) facilities do not, however,
amount to profiteering". This judgment came up for consideration
in the Islamic Academy case (supra) primarily at the instance of
unaided professional educational institutions, both minority and
F non-minority. Several questions were posed before the Court
and question No.1 was whether the educational institutions were
entitled to fix their own fee structure. This question was answered
as under:
G "So far as the first question is concerned, in our view the
majority judgment is very clear. There can be no fixing of a rigid
fee structure by the Government. Each institute must have the
freedom to fix its own fee structure taking into consideration the
need to generate funds to run the institution and to provide
H facilities necessary for the benefit of the students. They must
COCHIN UNIVERSITY OF SCIENCE & TECH. & ANR 901
v. THOMAS P. JOHN & ORS. [HARJIT SINGH BEDI, J]

also be able to generate surplus which must be used for the A
betterment and growth of that educational institution. In
paragraph 56 of the judgment it has been categorically laid down
that the decision on the fees to be charged must necessarily be
left to the private educational institutions that do not seek and
which are not dependent upon any funds from the Government B
Each institute will be entitled to have its own fee structure. The
fee structure for each institute must be fixed keeping in mind
the infrastructure and facilities available, the investments made,
salaries paid to the teachers and staff, future plans for expansion
and/or betterment of the institution etc. Of course there can be c
no profiteering and capitation fees cannot be charged. It thus
needs to be emphasized that as per the majority judgment
imparting of education is essentially charitable in nature. Thus
the surplus/profit that can be generated must be only for the
benefit/use of that educational institution. Profits/surplus D
cannot be diverted for any other use or purpose and cannot
be used for personal gain or for any other business or
enterprise."

10. It was as a consequence of the directions issued in
E
this case that a committee headed by a retired Judge was set
up in each State to examine the fee structure which would be
applicable both to aided and non-aided educational institutions
with a further direction that the recommendations made by the
committee were to remain binding for 3 years. Both the
F
aforesaid judgments came up for consideration in P.A.lnamdar's
case (supra) and it was observed that though a limited number
of seats not exceeding 15% may be made available to NRls
depending upon the discretion of the management. two essential
conditions were to be kept in mind; (1) the seats would be utilized
G
for the benefit of bonafide NRls and their children or wards and
that within this quota merit would not be given a complete go-by
and (2) further that the amount of money "in whatever form .
collected by such NRls, should be utilized for the benefiting
students such as from economically weaker sections of the
H
902 SUPREME COURT REPORTS [2008] 7 S.C.R

A society, whom, on well-defined criteria, the educational institution
may admit on subsidized payment of fee."

11. A reading of the aforesaid judgments would reveal that
the broad principle is that an educational institution must be left
to its own devices in the matter of fixation of fee though
8
profiteering or the imposition of capitation fee is to be ruled out
and that some amount towards surplus funds available to an
institution must be permitted and visualized but it has also been
laid down by inference that ifthe broad principles with regard to
C fixation of fee are adopted, an educational institution cannot be
called upon to explain the receipts and the expenses as before
a Chartered Accountant. We find that the observations of the
Division Bench of the High Court that no rational basis for the
fixation of a higher fee for two years had been furnished, lays
down an onus on the educational institution. which would be
0
difficult for it to discharge with accuracy. It bears repetition that
the University had set up the self-financing B.Tech. Course in
the year 1995 and no grant in aid was available during this period
or later and it had to make arrangements for its own funds. We
E have also examined the budget estimates. receipts and
expenditure from the year 1996-97 to 1999-2000. We do find
that there is a surplus in the hands of institution but in the ...
facts that a new course was being initiated which would
require huge investments. the surplus was not
F unconscionable so as to require interference. Moreover. the
University had made its budget estimates keeping in view the
proposed receipts and if the fee levied by it and accepted by
the students was permitted to be cut down mid term on the
premise that the University had not been able to explain each
G and every item to justify the levy, it would perhaps be impossible
for 1! to function effectively
12 We are also of the opinion that it would be well nigh ~
impossible for an educational institution to have an effective
admin1st1 at1on and to maintain high educational standards 11 a
'
,-1
COCHIN UNIVERSITY OF SCIENCE & TECH. & ANR. 903
-4 v. THOMAS P JOHN & bRS. [HARJIT SINGH BEDI, J.]

downward revision during the pendency of a course would be A
automatically made applicable to students admitted earlier under
a different fee structure. A periodic revision is also visualized in
the directions of the Supreme Court in Islamic Academy's case
(supra) wherein it has been provided that the fee structure fixed
by a committee headed by a retired Judge would be operable E!
for 3 years. In the present case, we find that the NRI students
took admission on certain specific conditions and the University
has a right to insist that those conditions are observed. To our
-I mind, therefore, it would not be open to the students to contend
that notwithstanding that they had been admitted on a certain c
fee structure they were entitled to claim as a matter of right, a
reduction in fee to bring them at par with students admitted later
under a lower fee structure. The argument of estoppel in such a
case would, thus. be available to an educational institution. The
) High Court was influenced by the fact that estoppel was a plea c
in equity and as the right of the NRI students under Article 14
appeared to have been violated, this plea was not available to
the University. We do not agree with this submission for several
reasons, firstly the NRI students have not been granted
admission on their over all merit but on the basis of the 10% E
reservation in their favour and as such any claim based on equity
would be suspect and secondly each set of admissions made
year wise cannot be said to over lap the admissions made
earlier or later. We have also considered Mr. Rao's submission
' that the fee had the trappings of a capitation fee. We find no F
merit in this assertion, as the fee is being levied year wise for
""( the course. We have also gone through the judgments cited by
Mr. Iyer. To our mind, they are not applicable to the facts of this
case.
G
13. Mr. Rao has finally submitted that as the fee for the
:=:
... years 1995-96 and 1996-97 had been fixed by a committee
set up under the directions of the Supreme Court it was not
open to the Syndicate to suggest a higher fee thereafter. We
~
find. however that there seems to be a misconception as to the
H
904 SUPREME COURT REPORTS [2008] 7 S.C.R.

A facts as it is the specific case of the University that the fee had
been fixed by the Syndicate under Section 18 of the Cochftl
University of Science and Technology Act, 1976 and not by an~
committee.
14. We therefore. find that the judgment of the Division
8
Bench of the High Court cannot be sustained. We accordingly
set it aside and allow the appeals with no order as to costs.
D.G. Appeals allowed

I
~ I