Holding

The State may regulate admissions and fees of unaided professional institutions only to ensure merit, transparency, and prevent profiteering, but cannot impose reservation quotas; the monitoring committees are permissible as interim measures, while the quota‑fixing provision of Islamic Academy is overruled.

Summary

The Supreme Court examined the extent to which State governments may regulate admissions, fee structures, and quota allocations in unaided professional educational institutions, both minority and non‑minority, following the earlier decisions in T.M.A. Pai Foundation and Islamic Academy. It held that while the State may impose reasonable regulations to ensure merit‑based, transparent admissions and to prevent capitation fees or profiteering, it cannot enforce its reservation policy or appropriate a quota of seats in such private institutions. The Court clarified that minority status is determined with reference to the State, not the nation as a whole, and that unaided minority institutions not seeking aid or recognition enjoy unfettered rights under Article 30. Committees created under Islamic Academy to monitor admissions and fees are permissible as temporary measures, but the part of Islamic Academy that fixes a State‑determined quota is overruled. The judgment also permitted a limited NRI quota (up to 15%) subject to conditions and emphasized that any fee structure must be reasonable and free of capitation fees. The decision applies from the next academic year, pending comprehensive legislation.

Issues considered

The extent of State regulation over admissions in unaided minority and non‑minority professional institutions, including the enforceability of reservation policies and quota allocation.
Whether unaided institutions may devise their own admission procedures or must comply with compulsory entrance tests as directed in Islamic Academy.
The validity of Islamic Academy's guidelines on fee regulation for private professional colleges.
Whether the admission and fee‑regulation committees constituted under Islamic Academy can lawfully oversee these matters.

Legislation cited

Constitution of Indias. Article 19(1)(g), s. Article 29, s. Article 30(1), s. Article 41, s. Article 51A

Subjects

minority rightsarticle 30article 19professional educationadmissionsfee structurereservationquotacommitteesislamic academypai foundationcapitation feestate regulationuniversity affiliationNRI seats

Judgment

P.A. !NAMDAR AND ORS. A
v.
STATE OF MAHARASHTRA AND ORS.

AUGUST 12, 2005

I [R.C. LAHOTI, CJ., Y.K. SABHARWAL, D.M. DHARMADHIKARI,
B

I ARUN KUMAR, G.P. MATHUR, TARUN CHATTERJEE AND
P.K. BALASUBRAMANYAN, JJ.)

• Constitution of India, 1950 :

Articles 19(/)(g), 29 and 30{1), 41and51-A, Seventh Schedule, List III,
c
Entry 25-Unaided non-minority and minority (religious and linguistic}
inslilutions-Jmparting professional education-Extent of the power a/State
to regulate adnzissions andfee structure, seat sharing/quota and to implement
reservation policy-Held, 'Minority' status is determinable with reference to
a State and not by taking into consideration population of the country as a D
whole-Articles 29 and 30 are intended to confer protection on minorities
rather than an abstract right.

Right to establish and administer educational institutions

Minority educational institutions not taking any aid from the State and
E
also not seeking any recognition would exercise their right unhampered by
any "restrictions excepting those which are in national interest.

Minority unaided educational institutions seeking affiliation or
recognition-Existence of infrastructure sufficient for its growth can be F
stipulated as a pre-requisite lo grant of recognition or affiliatior>-There
cannot be interference in day-to-day administration-Non-minority unaided
institutions can also be subjected to sbnilar restrictions which are found
reasonable and in the interest of student community-Minorities or non~
minorities, in exercise of their educational rights in the field ofprofessional
education, have an obligation and a duty to maintain requisite standards of
G
professional education by giving admissions based on merit and making
education equally accessible to eligible students through a/air and transparent
admission procedure and based on a reasonable fee-structure.

Admissions in minority institutions, aided or unaided, shall be at the H
603
604 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A State level-Transparency and merit shall have to be assured-Having
regard to larger interest and welfare ofstudent community to promote merit,
achieve excellence and curb mal-practices, it would be permissible to
regulate admissions by providing a centralized and single window procedure-
Till regulations are framed, admission committees constituted pursuant to
B decision in Islamic Academy can oversee admissions to ensure merit.

Fee-Capitation fee and profiteering cannot be permitted-It is permis-
sible to regulate admissions and fee structure in order to ensure merit and
transparency.

C Monitoring Committees-Scheme evolved in Islamic Academy for
setting up Committees for monitoring admission procedure and determining
fee structure cannot be faulted either on ground of alleged infringement of
Article 19(l)(g) as regards unaided non-minority institutions or Article
19(J)(g) read with Article 30 with respect to unaided minority institutions-
D The Union/States are expected to bring legislation on the subject-Till then
the Committees would continue to exist.

Reservation-State cannot insist on unaided private educational
institutions to implement state's policy on reservation in admission.

E Quota-Scheme evolved in Islamic Academy allowing States to fix
quota for seat sharing between Management and the State in unaided private
educational institutions both minority and non-minority disapproved and to
that extent Islamic Academy overruled.

f Articles 41 and 51-A :

Education is national wealth essential for nation's progress and
prosperity-Imparting education even though on occupation, it cannot be
equated to a trade or business.

G Prospective operation ofjudgment-Admission process having already
commenced-The judgment shall be given effect to from next academic year.

Unaided non-minority and minority (both religious and linguistic)
institutions, imparting professional education, felt that in, spite of the
H eleven Judge Bench decision in T.MA. Pai Foundation v. State ofKarnataka,
P.A. JNAMDAR v. STA TE 605

(2001] Suppl. 3 SCR 587 and as explained in Islamic Academy ofEducation A
& Anr. v. State of Karnataka & Ors., [2003] 6 SCC 697, some of the main
questions remained unsettled. Their quest to minimize State's regulatory
role as regards admissions and fee structure, particularly in view of the
situations that emerged after the decision in Islamic Academy, culminated
in the matter being referred to the 7-Judge Bench of the Supreme Court. B

In view of the two orders of reference made in Pushpagiri Medical
Society v. State of Kera/a and Ors., [2004] 8 SCC 135 and in P.A. Inamdar
and Ors. v. State of Maharashtra and Ors., [2004[ 8 SCC 139, the Court
framed the following four questions for its decision :
c
(I) To what extent the State can regulate the admissions made by
unaided (minority or non-minority) educational institutions?
Can the State enforce its policy of reservation and/or
appropriate to itself any quota in admissions to such institutions?
D
(2) Whether unaided (minority and non-minority) educational
institutions are free to devise their own admission procedure
or whether direction made in lslamic Academy for compulsorily
holding entrance test by the State or association of institutions
and to choose therefrom the students entitled to admission in
such institutions, can be sustained in light of the law laid down E
in Pai Foundation? •
(3) Whether Islamic Academy could have issued guidelines in the
matter of regulating the fee payable by the students to the
educational institutions? F
(4) Can the admission procedure and fee structure be regulated
or taken over by the Committtes ordered to be constituted by
Islamic Academy?

Answering the reference : the Court G

HELD : (i) Education.

1. Education, accepted as a useful activity, whether for charity or
for profit, is an occupation. Nevertheless, it does not cease to be a service H
606 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A to the society. And even though an occupation, it cannot be equated to
a trade or a business. In short, education is national wealth essential for
the nation's progress and prosperity. [660-C-D)

The Sole Trustee, Lok Shikshana Trust v. C./. T, (1976] 1 SCC 254 and
B TMA. Pai Foundation v. State of Karnataka, (2002) Suppl 3 SCR 587 :
(2002) 8 sec 481, referred to.

Chambers Dictionary; Advanced Law Lexicon, P. Ramanatha Aiyar,
3rd Edition, 2005, Vol. 2; 'India-Vision 2020' p.250; Eternal Values for
A Changing Society, Vol. Ill; Education for Human Excellence, pp 14 and
c 20, published by Bharatiya Vidya Bhavan, Bombay, referred to.

(ii) Difference between professional and non-professional Educational
Institutions :

2.1. Education institutions imparting higher education, i.e. graduate
D
level and above and in particular specialized education such as technical
or professional, constitute a separate class. Education aimed at imparting
professional or technical qualifications stands on a different footing from
other educational instruction. Apart from other provisions, Article 19(6)
is a clear indicator and so are clauses (h) and (j) of Article 51A. Education
E up to undergraduate level on the one hand and education at graduate and
•
post-graduate levels and in professional and technical institutions on the
other are to be treated on different levels inviting not identical
considerations. [668-D-E, G-H) ..
p 2.2. While recognition or affiliation may not be a must for education
up to undergraduate level or, even if required, may be granted as a
matter of routine, recognition or affiliation is a must and subject to
rigorous scrutiny when it comes to educational institutions awarding
degrees, graduate or post-graduate. post-graduate diplomas, and deg·rees
in technical or professional disciplines. [668-H; 669-A-B]
G
(iii) Article 19(1)(g), 29 and 30(1) : Inter-relation-ship
between :

3.1. As an occupation, right to impart education is a fundamental
H right under Article 19(1)(g) and, therefore, subject to control l:>y clause
P.A. INAMDAR v. STATE 607

(6) of Article 19. This right is available to all citizens without drawing a A
distinction between minority and non-minority. Such a right is, generally
speaking, subject to laws imposing reasonable restrictions in the interest
to the general public. In particular, laws may be enacted on the following
subjects : (i) the professional or technical qualifications necessary for
practicing any profession or carrying on any occupation, trade or business; B
(ii) the carrying on by the State, or by a corporation owned or controlled
by the State of any trade, business, industry or service whether to the
exclusion, complete or partial of citizens or otherwise. Care is taken of
minorities, religious or linguistic, by protecting their right to establish
and administer educational institutions of their choice under Article 30.
To some extent, what· may be permissible by way of restriction under C
Article 19(6) may fall foul of Article 30. This is the additional protection,
which Article 30(1) grants to the minorities. 1661-C-EJ

3.2. Pai Foundation is unanimous on the view that the 'right to
establish and administer an institution', the phrase as employed in Article D
30(1) of the Constitution, comprises of the following rights: (a) to admit
students; (b) to set up a reasonable fee structure; (c) to constitute a
governing body; (d) to appoint staff (teaching and non-teaching); and (e)
to take action if there is dereliction of duty on the part of any of the
employees. (673-C-D]
E
3.3. Aid and affiliation or recognition, both by State, bring in some
amount of regulation as a condition of receiving grant or recognition. The
scope of such regulations, must satisfythe following tests: (a) the regulation
is reasonable and rational; (b) it is regulative of the essential character of
the institution and is conducive to making the institution an effective vehicle F
of education for the minority community or other persons who resort to it;
(c) it is directed towards maintaining excellence of education and efficiency
of administration so as to prevent it from falling in standards. No right can
be absolute. Whether a minority or a non-minority, no community can
claim its interest to be above the national interest. (661-H; 662-A-B, D-EI
G
T.MA. Pai Foundation v. State of Karnataka, (2002) Suppl. 3 SCR
587: (2002] 8 sec 481, explained and followed.

Rev. Sidhrajbhai, AIR (1963) SC 540 and Ahmedabad St. Xavier's
College Society v. State of Gujarat, (1974) I SCC 717, referred to. H
608 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A (iv) 'Minority' and Minority Educational Institutions :

4.1. With the dictum of Pai Foundation, it cannot be doubted that
minority, whether linguistic or religious, is determinable only by refer-
ence to the demography of a State and not by taking into consideration
the population of the country as a whole. The principle would remain the
B same whether it is a Central legislation or a State legislation dealing with
linguistic or religious minority. [663-C-D; 662-G-H)

4.2. It necessarily follows from the law laid down in Pai Foundation
that a minority institution must primarily cater to the requirements of the
C minority of that State else its character of minority institution is lost.
However, a 'sprinkling' of that minority from other State on the same
footing as a sprinkling of non-minority students, would be permissible and
would not deprive the institution ofits essential characterofbeing a minority
institution determined by reference to that State as a unit. [665-G-H)

D In Re : Kera/a Education Bill, 1957 (1958) SCR 998 and State of
Kera/a Etc. v. Very Rev. Mother Provincial, Etc., [1970) 2 SCC 417, relied
·on.

4.3. The twin objects sought to be achieveri by Article 30(1) in the
interest of minorities are: (i) to enable such minority to conserve its religion
E and language, and (ii) to give a thorough, good general education to the
children belonging to such minority. So long as the institution retains its
minority character by achieving and continuing to achieve these objectives,
the institution would remain a minority institution. [663-G-H]

F 4.4. Articles 29 and 30 are intended to confer protection on minori-
ties rather than a right as such. These Articles can be better understood
and utilized if read as a protection and/or a privilege of minority rather
than an abstract right. [664-F-G]

St. Stephen's College v. University of Delhi, [1992) 1 SCC 558, re-
G ferred to.

(v) Right to establish and administer an educational institution:

(i) Minority educational institution, unaided and unrecognized

H 5. Minority educational institutions not taking any aid from the
P.A. !NAMDAR v. STATE 609

State and also not seeking any recognition or affiliation would exercise A
its right under the protection and privilege conferred by Article 30(1) "to
their hearts contents''unhampered by any restrictions excepting those
which are in national interest based on considerations such as public
sa.(ety, national security and. national ih.tegrity, or are aimed at prevent-
ing exploitation of stud.ents to teaching community. Such institutions
cannot indulge in any activity which is violative of any law of the land.
B
They are free to admit .all students of their own minority community if
they so choose to do. [673-E-G)

(i) Minority educational institutions receiving State aid
c
6. Conditions which can normally be permitted to be imposed on the
educational institutions receiving the grant must be related to the proper
utilization of the grant and fulfillment of the objectives of the grant
without diluting the minority status of the educational institution, as held
in Pai Foundation. As aided institutions are not before this Court nor is
D
the Court Called upon to deal with their cases, the discussion is left at
that only. \674-G-Hl

(i) Minority unaided educationG! institutions asking for affiliation or
recognition
E
7.1. Affiliation or recognition by the State or the Board or the University
competent to do so, cannot bedenied solely on the ground thatthe institution
is a minority educational institution. However, the urge or need for affiliation
or recognition brings in the concept of regulation by way of laying down
conditions consistent with the requirement of ensuring merit, excellence of
education and preventing mal-administration. The existence of
F
infrastructure sufficient for its growth can be stipulated as a pre-requisite
to the grant of recognition or affiliation. However, there cannot be
interference in the day-to-day administration. The essential ingredients of
the management, including admission of students recruiting of staff and
the quantum of fee to be charged, cannot be regulated. [674-A-C) G
7.2. Apart from the generalized position of law that right to administer
does not include right to ma I-administer, an additional source of power
to regulate by enacting condition accompanying affiliation or recognition
exists. Balance has to be struck between the two objectives : (i) that '!f
H
610 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A ensuring the standard of excellence of the institution, and (ii) !'hat of
preserving the right of the minority to establish and administer its
educational institution. Subject to reconciliation of the two objectives,
any regulation accompanying affiliation or recognition must satisfy the
triple tests: (i) the test of reasonableness and rationality, (ii) the test that
the regulation would be conducive to making the institution an effective
B
vehicle of education for the minority community or other persons who
resort to it, and (iii) that there is no in-road on tht protection conferred
by Article 30(1) of the Constitution, that is, by framing the regulation the
essential character of the institution being a minority educational
institution, is not taken away. [674-D-F)
c
Q.t. Unaided educational institutions (both minority and non-mi-
nority) - Enforcement of reservation policy and appropriation of quota
by State : [673-A-B]

Reservation :
D
8.1. The State cannot insist on private educational institutions which
receive no aid from the State to implement State's policy on reservation
for granting admission on lesser percentage of marks, i.e. on any criterion
excef>t merit. [675-B-C]
E
Quota:

8.2. Neither the policy of reservation can be enforced by the State
nor any quota or percentage of admissions can be carved out to be
appropriate by the State in a minority or non-minority unaided educational
F institution. Minority institutions are free to admit students of their own
choice including students of non-minority community as also members of
their own community from other States, both to a limited extent only and
not in a manner and to such an extent that their minority educational
institution status is lost. If they do so, they lose the protection of Article
G 30(1). [677-G-H; 678-A-B)

Ahmedabad St. Xavier's College Society v. State of Gujarat, [1974) 1
SCC 717 and Unni Krishnan v. State ofAndhra Pradesh, [19~3] 1SCC645,
stood overruled.

H 8.3. Neither in Pai Foundation nor in Kera/a Education Bill, which
P.A. !NAMDAR v. STATE 611

was approved by Pai Foundation, is there anything which would allow the A
State to regulate or control admissions in the unaided professional
educational institutions so as to compel them to give up a share of the
available seats to the candidates chosen by the State, as if it was filling
the seats available to be filled up at its discretion in such private institutions.
This would amount to nationalization of seats which has been specifically B
disapproved in Pai Foundation. Such imposition of quota of State seats
or enforcing reservation policy of the State on available seats in unaided
professional institutions are acts constituting serious encroachment on
the right and autonomy of private professional educational institutions.
Such appropriation of seats can also not be held to be a regulatory
measure in the interest of minority within the meaning of Article 30(1) c
or a reasonable restriction within the meaning of Article 19(6) of the
Constitution. [675-C-E]

T.MA. Pai Foundation v. State of Karnataka, [2002] Suppl. 3 SCR
587: [2002] 8 SCC 491 and In Re: Kera/a Education Bil/, 1957 [1958] SCR
995, relied on.
D

Ahmedabad St. Xavier's College Society v. State a/Gujarat, (19741 I
SCC 717 and Unni Krishnan v. State ofAndhra Pradesh, [1993( 1SCC645,
referred to.

8.4. Unaided institutions, as they are not deriving any aid from State E
funds, can have their O\\'D admissions if fair, transparent, non-exploitative
and based on merit. The observations in paragraph 68 of the majority
opinion in Pai Foundation, are not to be read disjointly from other parts
of the main judgment. A few observations contained in certain paragraphs
of the judgment, if read in isolation, appear conflicting or inconsistent F
with each other. But if the observations made and the conclusions derived
are read as a whole, the judgment nowhere lays down that unaided
private educational institutions of minorities and non-minorities can be
forced to submit to seat sharing and reservation policy of the State.
(675-F-H; 676-A-B]
G
8.5. Observations on paragraph 68 merely permit unaided private
institutions to maintain merit as the criterion of admission by voluntarily
agreeing for seat sharing with the State or adopting selection based on
common entrance test of the State. There are also observations saying
that they may frame their own policy to give free-ships and scholarships H
612 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A to the needy and poor students or adopt a Policy in line with the reservation
policy of the State to cater to the educational needs of weaker and poorer
sections of the society. [676-B-C]

8.6. The observations in Pai Foundation in paragraph 68 and other
B paragraphs mentioning fixation of percentage of quota are to be read and
understood as possible consensual arrangements which can be reached
between unaided private professional institutions and the State. [676-E-Fl

8. 7. In Pai Foundation, it has been very clearly held at
several places that unaided professional institutions should be
C given greater autonomy in determination of admission procedure and fee
structure. State regulation should be minimal and only with a view to
maintain fairness and transparency in admissi~n procedure and to check
exploitation of the students by charging exorbitant money or capitation
fees. (676-F-G)

D 8.8. The scheme evolved in Islamic Academy to the extent it allows
States to fix quota for seat sharing between management and the States
on the basis oflocal needs of each State, in the unaided private educatinnal
institutions of both minority and non-minority categories cannot be
approved. That part of the judgment in Islamic Academy does not lay
E down the correct law and runs counter to Pai Foundation. (676-G-Hl

Islamic Academy of Education & Anr. v. State of Karnataka & Ors.,
(20031 6 sec 697, partly overruled.

NRJ seats
F
8.9. A limited reservation of seats, not exceeding 15%, may be made
available to NRis depending on the discretion of the management subject
to two conditions. First, such seats should be utilized bona fide by the
NRis on!y and for their children or wards. Secondly, within this quota,
G merit should not be given a complete go-by. The amount of money, in
whatever form collected from such NRis, should be utilized for benefiting
students such as from economically weaker sections of the society, whom,
on well defined criteria, the educational institutional may admi.: on
subsidized payment of their fee. To prevent misutilisation of such quota
H or any malapractice referable to NRI qota seats, suitable legislation or
P.A. !NAMDAR v. STATE 613

regulation needs to be framed. So long as the State does not do it, it will A
be for the Committees constituted pursuant to the directions in Islamic
Academy to regulate. [677-D-F[

Q.2. Admission procedure of unaided educational institutions.
B
9.1. So far as the minority unaided institutions are concerned, to
admit students being one of the components of "right to establish and
_administer an institutiontt, the State cannot interfere therewith. Upto the
level of undergraduate education, the minority unaided educational
institutions enjoy total freedom. However, different considerations \vould
apply for graduate and post-graduate level of education, as also for C
technical and professional educational institution. Such education cannot
be imparted by any institution unless recognized by or affiliated with any
competent authority created by law. Excellence in education and
maintenance of high standards at this level are a must. To fulfil these
objectives, the State can and rather must, in national interest, step in. The D
education, knowledge and learning at this level possessed by individuals
collectively constitutes national wealth. [678-F-G)

9.2. In minority educational institutions, aided or unaided, admissions
shall be at the State level. Transparency and merit shall have to be
assured. [678-F-G] E

9.3. There is nothing wrong in an entrance test being held for one
group of institutions imparting same or similar education. Such institutions
situated in one State or in more than one State may join together and hold
a common entrance test or the State may itself or through an agency arrange F
for holding of such test. Out of such common merit list the successful
candidates can be identified and chosen for being allotted to different
institutions depending on the courses of study offered, the number of seats,
the kind of minority to which the institution belongs and other relevant
factors. Such an agei.cy conducting Common Entrance Test (CET, for
short) must be one enjoying utmost credibility and expertise in the matter. G
This would better ensure the fulfillment of twin objects of transparency
and merit. CET is necessary in the interest of achieving the said objective
and also saving the student community from harassment and exploitation.
Holding to such common entrance test followed by centralized counseling
or, in other words, single window system regulating admissions does not H
614 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A causes any dent in the right of minority unaided educational institutions to
admit students of their choice. Such choice can be exercised from out oflist
of successful candidates prepared at the CET without altering the order of
merit inter se of the student so chosen. [679-A-D)

9.4. Pai Foundation has held that minority unaided institutions can
B legitimately claim unfettered fundamental right to choose the students to
be allowed admissions and the procedure therefor subject to its being fair,
transparent and non-exploitative. The same principle applies to non-
minority unaided institutions. There may be a single institution imparting
a particular type of education which is not being imparted by any other
c institution and having its own admission procedure fulfilling the test of
being fair, transparent and non-exploitative. All institutions imparting
same or similar professional education can join together for holding a
common entrance test satisfying the abovesaid triple tests. The State can
also provide a procedure of holding a common entrance test in the
interest of securing fair and merit-based admissions and preventing mal-
D administration. The admission procedure so adopted by private institution
or group of institutions, if it fails to satisfy all or any of the triple tests,
can be taken over by the State substituting its own procedure. The second
question is answered accordingly. (679-E-G)

E 9.5. It needs to be specifically stated that having regard to the larger
interest and welfare of the student community to promote merit, achieve
excellence and curb mal-practices, it would be permissible to regulate
admissions by providing a centralized and single window procedure.
Such a procedure, to a large extent, can secure grant of merit based
admission·on a transparent basis. Till regulations are framed, the admission
F
committees can oversee admission so as to ensure that merit is not the
casualty. [679-H; 680-A-B)

Q. 3 Fee-Regulation of:

G 10.1. To set up a reasonable fee structure is also a component of"the
right to establish and administer an institution" within the meaning of
Article 30(1) of the Constitution, as per the law declared in Pai Foundation.
Every institution is free to devise its own fee structure subject to the
limitation that there can be no profiteering and no capitation fee can be
H charged directly or indirectly, or in any form. (680-B-C]
- Capitation Fee :
P.A. INAMDAR v. STATE

10.2. Capitation fee cannot be permitted to be charged and no seat
615

A

can be permitted to be appropriated by payment of capitation fee. rr
capitation fee and profiteering is to be checked, the method of admission
has to be regulated so that the admissions are bas•d on merit and trans- B
parency and the students are not exploited. It is permissible to regulate
admission and fee structure for achieving the said purpose. (680-D; F-Gj

TMA. Pai Foundation v. State of Karnataka, [20021 Suppl. 3 SCR
587; [2002) 8 SCC 481 and Unni Krishnan v. State of Andhra Pradesh,
[1993) I SCC 645, referred to. C

Q. 4. Committees formed pursuant to Islamic Academy

I I.I. Pai Foundation upheld Unni Krishnan to the extent to which
it holds the right to primary education as a fundamental right, but D
overruled the scheme relating to grant of admission and fixing of fee.
However, the principle that there should not be capitation fee or
profiteering was upheld. Leverage was allowed to educational institutions
to generate reasonable surplus to meet cost of expansion and augmenta-
tion of facilities which would not amount to profiteering. (681-C-D(
E
Unni Krishnan v. State ofAndhra Pradesh, (1993) l SCC 645, referred
to.

11.2. The two committees for monitoring admission procedure and
determiningfee structure in the judgment of Islamic Academy are permis- F
sible as regulatory measures aimed at protecting the interest of the
student community as a whole as also the minorities themselves, in
maintaining required standards of professional education on non-ex-
ploitative terms in their institutions. Legal provisions made by the State
Legislatures or the Scheme evolved by the Court for monitoring admis-
sion procedure and fee fixation do not violate the right of minorities G
under Article 30(1) or the right of minorities and non-minorities under
Article 19(1 )(g). They are reasonable restrictions in the interest of minor-
ity institutions permissible under Article 30(1) and in the interest of
general public under Article 19(6) of the Constitution. Unless the admis-
sion procedure and fixation of fees is regulated and controlled at the H
616 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A initial stage, the evil of unfair practice of granting admission on available
seats guided by the paying capacity of the candidates would be impossible
-
to curb. (681-H; 682-A-E]

11.3. N~n-minority unaided institutions can also be subjected to
B similar restrictions which are found reasonable and in the interest of
student community - Minorities or non-minorities, in exercise of their
educational rights in the field of professional education, have lln obliga-
tion and a duty to maintain requisite standards of professional education
by giving admission based on merit and making education equally acces-
sible to eligible students through a fair and transparent admission pro-
c cedure and based on a reasonable fee-structure. (682-E-F]

11.4. The judgment in Islamic Academy, in so far as it evolves the .
scheme of two Committees one each for admission and fee structure, does
not go beyond the law laid down in Pai Foundation and earlier decisions
D of this Court, which have been approved in that case. The scheme cannot
be faulted either on the ground of alleged infringement of Article 19(1)(g)
in case of unaided professional educational institutions of both c~tegories
and Article 19(1 )(g) red with Article 30 in case of unaided professional
institutions of minorities. However, the observation by way clarification,
E contained in the latter part of para 19 of Islamic Academy which speaks
of quota and fixation of percentage by State Government is rendered
redundant and must go. (683-H; 682-G-H; 683-A-B; 684-A-B)

Islamic Academy of Education & Anr. v. State of Karnataka & Ors.,
-.,'
'
(2003) 6 sec 697, partly overruled.
F
11.5. A fortiori, there does not seem to be any impediment to the
constitution of the Committees as a stopgap or adhoc arrangement made
in exercise of the power conferred on this Court by Article 142 of the
Constitution until a suitable legislation or regulation framed by the State
G steps in. Such Committees cannot be equated with Unni Krishnan Com-
mittees which were supposed to be permanent in nature. (683-A-B)

11.6. The Committees are expected, so long as they remain func-
tional, to be more sensitive and to act rationally and reasonably with due
regard for realities The should refrain from generalizing fee structures ~
H
,
P.A. !NAMDAR v. STATE 617

and, where needed, should go into accounts, schemes, plans and budgets A
of an individual for the purpose of finding out what would be an ideal
and reasonable fee structure for that institution. [683-E-F)

I 1.7. It is made clear that in case of any individual institution, if any
1ftheCommittees is found to have exceeded its powers by unduly interfering B
in the administrative and financial matters of the unaided private
professional institutions, the decision oft he Committee being quasi-judicial
in nature, would always be subject to judicial review. [683-G-H)

I 1.8. It is for the Central Government or for the State Governments,
in the absence of a Central legislation, to come out with a detailed well C
thought out legislation on the subject. Such a legislation is long awaited.
States must act towards this direction. Till then, the Committees regu-
lating admission procedure and fee structure shall continue to exist, but
only as a temporary measure. [685-A-C)

12. In view of the fact that admission process in several professional
D
educaticmal institutions has already commenced, the Jaw, as Jaid down in
this judgment, shall be given effect to from the academic year commencing
next after the pronouncement of this judgment. [684-G-H)

CIVIL APPELLATE JURJSDICTION : Civil Appeal No. 5041 of2005. E
From the Judgment and Order dated 7.5.2004 of the Bombay High
Court in W.P.LD. No. 1425 of 2004.

WITH
F
C.A. Nos. 5042, 5043/2005, W.P. (C) Nos. 276, 330, 357/2004 I.A.
Nos. 26, 27, 30, 31 and 33 in W.P. (C) No. 350/93, C.A. No. 5035/2005,
W.P.(C) Nos. 302, 347, 349, 350, 387, 423, 480/2004, 19/2005, 261, 265,
380, 358, 359, 360, 361, 362, 363/2004, C.A. Nos. 5257-58, 5259,5260-
5261, 5262-5263, 5996, 5992 5997-5998, 7969-7971, 7972,7973, 7974, G
7975/2004, W.P.(C) Nos. 371, 368/2004, C.A. Nos. 7117-7119, 7124-7126/
2004, C.P.(C) Nos. 561-563/2004 in C.A.No.71I7-19/2004, C.P. (C) No.564-
566/2004 in C.A. Nos. 7124-26/2004, W.P.(C) No. 251/2004, C.P. Nos.
5036, 5037/2005, W.P. (C} No. 318/2004, C.A. Nos. 5038, 5039, 5040/2005,
W.P.(C) Nos. 386, 397 of 2004.
H
618 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A G.E. Vahanvati, Solicitor General, K.P. Pathak, Additional Solicitor
General, Harish N. Salve, Ashok H.Desai, M. Rama Jois, K. Parasaran,
Mukul Rohtagi, Dr. Rajeev Dhavan, K. Radhakrishnan, Soli J. Sorabjee, F.S.
Nariman, Altaf Ahmad, K.K. Venugogal, Vivek K. Tankha, S.K. Gambhir,
S.K. Dholakia, Dr. N.M. Ghatate, Jaideep Gupta, R.F. Nariman, P.P. Rao,
B K. Ramanoorthy, Uday U. Lalit, T.R. Andhyarujina, T.L.V. Iyer, R.N.
Trivedi, Arun Jaitely, Dr. Abhishek Manu Singhvi, Sunil Kumar, Satyajit
Shaha, Vijay Kumar, Ms. Meenakshi Grover, Yatindra Sharma, Ms. Niranjana
Singh, Ms. V.D. Khanna, Ms. Roxna Swamy, Naveen R. Nath, Ms. Anitha
Shenoy, Ms. Lalit Mohini Bhat, Ms. Hetu Arora, Sharan Dev Singh Thakur,
S. Uday K. Sagar, Ms. Beena Madhavan, Ms. Susan Zachariah, Ms. Pooja
c Nanekar, Vinayagam, Ms. Kiran Shetty Naik, S.E. Auhad, B.E. Auhad, Akhil
Sibal, G. Uma Pathy, S. Jayakumar, Rakesh K. Sharma, Senthil Velan, Bharat
Sangal, Subhash Sharma, Ashim Sood, M. Qamaruddin, Ms. M. Qamaruddin,
Ambar Qamaruddin, Wahid Hussain, C.M. Zafarullah, Ms. Ritu Bhardhwaz,
B.P. Sarangi, Romi Chacko, Tufail Ahamed Khan, Girijash Pandey, Sushi!
D Kumar Jain, M.M. Asudhani, Ms. Prathiba Jain, A.P. Dhamija, Ramniwas,
H.D. Thanvi, Sarad Singhania, Ms. Hari Priya Padmanabhan, Krishnan,
Venugopal, K.R. Sasiprabhu, John Mathew, Ms. Indira, G. Prakash, Gaurav
Agarwal, Arvind Choudhry, Kuldip Singh, B.K. Sharma, H.K. Puri, Ujjwal
Banerjee, S.K. Puri, Shiv Gupta, Ms. Priya Puri, V.M. Chauhan, U.A. Rana,
Arvind Kumar, Viju Mattam, Rohit Singh, Sakesh Kumar, Satish K. Agnihotri,
E Dayan Krishnan, Niki! Nayyar, Gautam Narain, Tharachandra Sharma, Ms.
Neelam Sharma, Rajiv Sharma Ajay Sharma, Rupesh Kumar, Tharun
Sharma, Rana Mukherjee, Siddharth Gautam, Goodwill Indeevar, Suchit
Mohanthy, Sanjeev Sen, Partha Sil, Ghanshyam Joshi, P.H. Parekh, E.R. ..
Kuamar, Rohit Alex, Sumit Goyal, Rajeev Mishra, Ms. Ameet Hariyani, Ms.
F Jaymala Godwale, Ashiesh Kumar, Hare Krishna Upadhyya, Siddarth S.
Chauhan, Satyanarayan Prajapathi, Harsh Pathak, S. Wasim, A. Quadri, Ms.
Rameeza Hakeem, Deva Datt Kamat, Ms. Sushma Suri, Chava Badri Nath
Babu, C.M. Aangadi, Ms. Ranjana, Vimal Rai Jat, R. Ayyam Perumal, S.
Vallinayagam, Ms. Mahalakshmi Bavani, G. Balaji Iyer, Sewa Ram, Ashu
Tosh Kumbhakuni, Ravindra, Keshawrao, Adsure, Gautam Godra, Mukesh
G K. Giri, Sanjay R. Hegde, Anil K Mishra, A. Rohan Singh, Ashish Chugh,
S.M. Bhat, Arun K. Sinha, Rakesh Singh, Sandeep Bhargava, Ms. B. Bharathi
Reddy, B. Vikash, Ms. Sneha Bhaskaran, Satish K. Agnihotri, W.A. Nomani,
Rohit K. Singh, Ms. Shweta Garg, M. Shoeb Alam, Neeraj Jain, Nikil Goyar,
Kavita Wadia, Maninder Singh, Ms. Partibha M. Singh, Angad Mirdha,
H Saurabh Mishra, Ejaz Maqbool, D. Mahesh Babu, Anil Kumar, Tandale, G.
P.A. !NAMDAR v. STATE ILAHOTI, CJ.] 619

Ramakrishna Prasad, Mohd. Wasay Khan, T.V. Ratnam, Naresh Kumar, A
Rajjash Aggrawal, Ashok Mathur, Ms. V. Mohana, P.P. Singh, G.
Sivabalamurugan, Y. Aruna Giri, L.K. Pandey, P.V. Yogeswaran, Bhawani
Shanker, V. Gadnis, Shiv Kumar Suri, Ms. A. Subhashini, A. Mariarputham,
Ms. Aruna Mathur, K.N. Madhusoodhanan, R. Sathish, Ms. H. Wahi, Ms.
Sadhana Sandhu, Guntur Prabhakar, Ashok K. Mahajan, B.S. Banthia, B
Sanjeev Saxana, Amit Bhandari, Yash Anand, Ms. Pramila, A.P. Sahaya,
Hemansh Shekhar, Gopal Singh, Anurag Sharma, Amitash Kumar, A.V.
Rangam, A. Ranganadhan, Buddy Ranganadhan, Dr. Sushi! Balwada,
Devendra Singh, U. Hazarika, Satya, Mittra, Sumita Hazarika, Aruneshwar
Gupta, Naveen Kumar Singh, Ms. Shivangi, Ms. Sheela Goyal, Krishna
Srinivasan, M.P. Vinod, Ajay K. Jain, Arvind Kumar, Chandraveer Singh- c
in-person, Hemanshu Munshi, Ms. Anuradha Rustagi, Nitin S. Tambweker,
Sunil Badeker, B.S. Sai, C. Ravi Chandran Iyer, R. Jaganath Goulay, Baldev
Atreya and R.C. Iyer for the appearing parties.

The Judgment of the Court was delivered by
D
R.C. LAHOTI, CJ. :

Preliminary

Leave granted in all SLPs.

A Coram of I I Judges, not a common feature in the Supreme Court of E
India, sat to hear and decide T.MA.Pai Foundation v. State of Karnataka,
[2002] 8 SCC 481 (hereinafter 'Pai Foundation', for short). It was expected
that the authoritative pronouncement by a Bench of such strength on the
issues arising before it would draw a final curtain on those controversies. The
subsequent events tell a different story. A learned academician observes that F
the I I -Judge Bench decision in Pai Foundation is a partial response to some
of the challenges posed by the impact of Liberalisation, Privatisation and
Globalisation (LPG); but the question whether that is a satisfactory response,
is indeed debatable. It was further pointed out that 'the decision raises more
questions than it has answered' (see : Annual Survey of Indian Law, 2002
at p.251, 254). The Survey goes on to observe "the principles laid down by G
the majority in Pai Foundation are so broadly formulated that they provide
sufficient leeway to subsequent courts in applying those principles whife the
lack of clarity in the judgment allows judicial creativity " (ibid at p.256).

The prophecy has come true and while the ink on the opinions in Pai H
620 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A Foundation was yet to dry, the High Courts were flooded with writ petitions,
calling for settlements of several issues which were not yet resolved or which
cropped on floor, post Pai Foundation. A number of Special Leave Petitions
against interim orders passed by High Courts and a few writ petitions came
to be filed directly in this Court. A Constitution Bench sat to interpret the
B 11-Judge Bench decision in Pai Foundation which it did vide its judgment
dated 14.8.2003 (repo1ted as - Islamic Academy of Education & Anr. v. State
of Karnataka & Ors., (2003) 6 SCC 697; "Islamic Academy" for short). The
11 learned Judges constituting the Bench in Pai Foundation delivered five
opinions. The majority opinion on behalf of 6 Judges was delivered by B.N.
Kirpal,; CJ. Khare, J (as His Lordship then was) delivered a separate but
c concurring opinion, supporting the majority. Quadri, J, Ruma Pal, J and
Variava, J (for himself and Bhan, J) delivered three separate opinions partly
dissenting from the majority. Islamic Academy too handed over two opinions.
The majority opinion for 4 learned Judges has been delivered by V.N. Khare,
CJ. S.B. Sinha, -J, has delivered a separate opinion. The events following
D Islamic Academy judgment show that some of the main questions have
remained unsettled even after the exercise undertaken by the Constitution
Bench in Islamic Academy in clarification of the I I-Judge Bench decision
in Pai Foundation. A few of those unsettled questions as also some aspects
of clarification are before us calling for settlement by this Bench of 7 Judges
which we hopefully propose to do.
E
Pai Foundation and Islamic Academy have set out the factual backdrop
of the issues leading to the constitution of 11-Judge and 5-Judge Benches
respectively. For details thereof a reference may be made to the reported
decisions. A brief summary of the past events, highlighting the issues as they
F have travelled in search of resolution would be apposite.

II

BACKDROP

Education used to be charity or philanthropy in good old times.
G Gradually it became an 'occupation'. Some of the Judicial dicta go on to hold
it as an 'industry'. Whether, to receive education, is a fundamental right or
not has been debated for quite some time. But it is settled that establishing
and administering of an educational institution for imparting knowledge to
the students is an occupation, protected by Article 19( l )(g) and additionally
H by Article 26(a), if there is no element of profit generation. As of now,
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 621

imparting education has come to be a means of livelihood for some A
prt.fessionals and a mission in life for some altruists.

Education has since long been a matter of litigation. Law reports are
replete with rulings touching and centering around education in its several
aspects. Until Pai Foundation, there were four oft quoted leading cases B
holding the field of education. They were Unni Krishnan v. State of Andhra
Pradesh, (1993] l SCC 645, St. Stephen's College v. University of Delhi,
[1992] l SCC 558, Ahmedabad St. Xavier's College Society v. State of
Gujarat, (1974] 1 SCC 717 and In Re: Kera/a Education Bill, 1957, (1958]
SCR 995. For convenience sake, these cases will be referred to as Unni
Krishnan, St. Stephen's, St. Xavier's and Kera/a Education Bill respectively. c
All these cases amongst others came up for the consideration of this Court
in Pai Foundation.

Correctness of the decision in St. Stephen's was doubted during the
course of hearing of Writ Petition No. 350of1993 filed by Islamic Academy. D
As St. Stephen's is a pronouncement of 5-Judge Bench, the matter was
directed to be placed before 7-Judge Bench.

An event of constitutional significance which had already happened,
was taken note of by the Constitution Bench. "Education" was a State Subject
.in view of the following Entry 11 placed in List II - State List:· E

"11. Education including universities, subject to the provisions of
entries 63, 64, 65 and 66 of list I and entry 25 of list Ill."

By the Constitution (42nd Amendment) Act 1976, the abovesaid Entry F
was directed to be deleted and instead Entry 25 in List III Concurrent List,
was directed to be suitably amended so as to read as under:·

"25. Education, including technical education, medical education
and universities, subject to the provisio(is of entries 63, 64, 65 and
- 66 of List I; vocational and technical !training of labour. "
'
G
The i-Judge Bench felt that the matter called for hearing by a I I-Judge
Bench. The II -Judge Bench felt that it was not bound by the ratio
propounded in Kera/a Education Bill and St. Xavier ·s and was free to hear
the case in wider perspective so as to discern the true scope and interpretation H
622 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A of Article 30( I) of the Constitution and make an authoritative pronouncement.

Eleven Questions and Five Heads of Issues in Pai Foundation

In Pai Foundation, l l questions were framed for being answered.
Detailed submissions were made centering around the 11 questions. The
B Court dealt with the questions by classifying the discussion under the
following five heads:

I. Is there a fundamental right to set up educational institutions and
if so, under which provision?
c
2. Does Unni Krishnan require reconsideration?

3. In case of private institutions, can there be government regulations
and, if so, to what extent?

D 4. In order to determine the existence of a religious or linguistic
minority in relation to Article 30, what is to be the unit - the State
or the country as a whole?

5. To what extent can the rights of aided private minority institutions
!
to administer be regulated?
E
Having dealt with each of the abovesaid heads, the Court
through the majority. opinion expressed by B.N. Kirpal, CJ, recorded answers
to the 11 questions as they were framed and posed for resolution. The
questions and the answers as given by the majority are set out hereunder:
F
"Q. I. What is the meaning and content of the expression "minorities" in
Article 30 of the Constitution of India?

A. Linguistic and religious minorities are covered by the expression "minority"
under Article 30 of the Constitution. Since reorganization of the States in
G India has been on linguistic lines, therefore, for the purpose of determining
the minority, the unit will be the State and not the whole of India. Thus,
religious and linguistic minorities, who have been put on a par in Article 30,
have to be considered Statewise.

H Q.2. What is meant by the expression "religion" in Article 30(1)? Can the
P.A. !NAMDAR v. STA TE [LAHOTI, CJ.] 623

followers of a sect or denomination of a particular religion claim protection A
under Article 30(1) on the basis that they constitute a minority in the State,
even though the followers cf that religion are in majority in that State?

A. This question need not be answered by this Bench; it will be dealt with
by a regular Bench.
B
Q.3 (a) What are the indicia for treating an educational institution as a
minority educational institution? Would an institution be regarded as a
minority edu.;ational institution because it was established by a person(s)
belonging to a religious or linguistic minority or its being administered by
a person(s) belonging to a religious or linguistic minority? C

A. This question need not be answered by this Benoh; it will be dealt with
by a regular Bench.

Q..3(b) To what extent can professional education be treated as a matter D
coining under minorities' rights under Article 30?

A. Article 30( l) gives religious and linguistic minorities the right to establish
and administer educational institutions of their choice. The use of the words
"of their choice" indicates that even professional educational institutions
would be covered by Article 30. E
Q.. 4. Whether the admission of students to minority educational institution,
whether aided or unaided, can be regulated by the State Government or by
the university to which the institution is affiliated?
F
A. Admission of students to unaided minority educational institutions viz.
schools and undergraduate colleges where the scope for merit-based selection
is practically nil, cannot be regulated by the State or university concerned,
except for providing the qualifications and minimum conditions of eligibility
in the interest of academic standards. [emphasis by us]
G
The right to admit students being an essential facet of the right to
administer educational institutions of their choice, as contemplated under
Article 30 of the Constitution, the State Government or the university may
not be entitled to interfere with that right, so long as the admission to the
unaided educational institutions is on a transparent basis and the merit is H
624 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A adequately taken care of. The right to administer, not being absolute, there
could be regulatory measures for ensuring educational standards and
maintaining excellence thereof, and it is more so in the matter of admissions
to professional institutions. [emphasis by us]

A minority institution does not cease to be so, the moment gr~nt-in-aid
B
is received by the institution. An aided. minority educational institution,
therefore, would be entitled to have the right of admission of students
belonging to the minority group and at the same time, would be required to
admit a reasonable extent of non-minority students, so that the rights under
Article 30(1) are not substantially impaired and further the citizens' rights
·c under Article 29(2) are not infringed. What would be a reasonable extent,
would vary from the types of institution, the courses of education for which
admission is being sought and other factors like educational needs. The State
Government concerned has to notify the percentage of the non-minority
students to be admitted in the light of the above observations. Observance
D of inter se merit amongst the applicants belonging to the minority group could
be ensured. In the case of aided professional institutions, it can also be
stipulated that passing of the common entrance test held by the State agency
is necessary to seek admission. As regards non-minority students who are
eligible to seek admission for the remaining seats, <>dmission should nonnally
be on the basis of the common entrance test h~ld by the State agencyrollowed
E by counselling wherever it exists.

Q.5(a) Whether the minorities' rights to establish and administer educational
institutions of their choice will include the procedure and method of
admission and selection of students?
F
A. A minority institution may have its own procedure and method of
admission as well as selection of students, but such a procedure must be fair
and transparent, and the selection of students in professional and higher
education colleges should be on the basis of merit. The procedure adopted
or selection made should not be tantamount to mat-administration. Even an
G unaided minority institution ought not to ignore the merit of the students for
admission, while exercising its right to admit students to the colleges
aforesaid, as in that event, the institution will fail to achieve excellence.

Q.5(b) Whether the minority institutions' right of admission of students and
H to lay ~own procedure and method of admission, if any, would be affected
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 625

in any way by the receipt of State aid? A

A. While giving aid to professional institutions, it would be permissible for
the authority giving aid to prescribe bye - rules or regulations, the
conditions on the basis of which admission will be granted to different aided
colleges by virtue of merit, coupled with the reservation policy of the State B
- qua non-minority students. The merit may be determined either through a
common entrance test conducted by the university or the Government
concerned followed by counselling, or on the basis of an entrance test
conducted by the individual institutions-the method to be followed is for
the university or the Government to decide. The authority may also devise
other means to ensure that admission is granted to an aided professional C
institution on the basis of merit. In the case of such institutions, it will be
permissible for the Government or the university to provide that consideration
should be shown to the weaker sections of the society.

Q.5(c) Whether the statutory provisions which regulate the facets of D
administration like control over educational agencies, control over governing
bodies, conditions of affiliation including recognition/withdrawal thereof,
and appointment of staff, employees, teachers and principals including their
service conditions and regulation of fees, etc. would interfere with the right
of administration of minorities?
E
A. So far as the statutory provisions regulating the facets of administration
are concerned, in case of an unaided minority 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 F
the appointment of staff, teaching and non-teaching, and 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.
G
For redressing the grievances of employees of aided and unaided
institutions who are subjected to punishment or termination from service, a
mechanism will !Jave to be evolved, and in our opinion, appropriate tribunals
could be constituted, and till then, such tribunals could be presided over hy
a judicial officer of the rank of District Judge. H
626 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

.A 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 appointed as a teacher or a principal of any
educational institution.
. '
Regulations can be framed governing service conditions for teaching
B and other staff for whom aid is provided by the State, without interfering with
the overall administrative control of the management over the staff.

Fees to be charged by unaided institutions cannot be regulated but no
institution should charge capitation fee.
c Q.6(a) Where can a minority institution be operationally located? Where a
religious or linguistic minority in State A establishes an educational institution
in the said State, can such educational institution grant preferential admission/
reservations and other benefits to members of the religious/linguistic group
from other States where they are non-minorities?
D
A. This question need not be answered by this Bench; it will be dealt with
by a regular Bench.

Q. 6. (b) Whether it would be correct to say that only the members of that
minority residing in State A will be treated as the members of the minority
E vis-a-vis such institution?

A. This question need not be answered by this Bench; it will be dealt with
by a regular Bench.

Q. 7. Whether the member of a linguistic non-minority in one State can
F establish a trust/society in another State and claim minority status in that
State?

A. This question need not be answered by this Bench; it will be dealt with
by a regular Bench.

G Q.8. Whether the ratio laid down by this Court in St. Stephen's case (St.
Stephen's College v. University of Delhi, [1992] I SCC 558) is correct? If
no, what order?

A. The basic ratio laid down by this Court in St. Stephen's College case
·.~
H (supra) is correct, as indicated in this judgment. However, rigid percentage
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 627

cannot be stipulated. It has to be left to authorities to prescribe a reasonable A
percentage having regard to the type of institution, population and educa-
tional needs of minorities.

Q. 9. Whether the decision of this Court in Unni Krishnan, J.P. v. State of
A.P., (1993) I sec 645 (except where it holds that primary education is a B
fundamental right) and the scheme framed thereunder require reconsideration/
modification and if yes, what?

A. The scheme framed by this Court in Unni Krishnan case (supra) and the
direction to impose the same, except where it holds that primary education
is a fundamental right, is unconstitutional. However, the principle that there C
should not be capitation fee or profiteering is correct. Reasonable surplus to
meet cost of expansion and augmentation of facilities does not, however,
amount to profiteering.

Q. I 0. Whether the non-minorities have the right to establish and administer D
educational institution under Articles 21 and 29(1) read with Articles I 4 and
15( I), in the same manner and to the same extent as minority institutions?

and

Q. 11. What is the meaning of the expressions "education" and "educational
institutions" in various provisions of the Constitution? Is the right to establish E
and administer educational institutions guaranteed under the Constitution?

A. The expression "education" in the articles of the Constitution means and
includes education at all levels from the primary school level up to the
postgraduate level. It includes professional education. The expression F
"educational institutions" means institutions that impart education, where
"education" is as understood hereinabove.

The right to establish and administer educational institutions is guaranteed
under the Constitution to all citizens under Articles 19(l)(g) and 26, and to
minorities specifically under Article 30. G

All citizens have a right to establish and administer educational
institutions under Articles 19(l)(g) and 26, but this right is subject to the
provisions of Articles 19(6) and 26(a). However, minority institutions will
have a right to admit students belonging to the minority group, in the manner H
628 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A as discussed in this judgment."

The majority led by Kirpal, CJ, in Pai Foundation did say that the
expression "minorities" in Article 30 of the Constitution of India, whether
linguistic or religious, has to be determined by treating the State and not the
B whole of India as unit. Questions such as: (i) what is religion, (ii) what is
the indicia for determining jf an educational institution is a minority
institution, (iii) whether a minority institution can operate extra-territorially
extending its activities into such states where the minority establishing and
administering the institution does not enjoy minority status, (iv) the content
and contour of minority by reference to territories, were not a11swered in Pai
c Foundation and were left to be determined by the regular Benches in
individual cases to be heard after the decision in Pai Foundation. We also
do not propose to involve ourselves by dealing with these questions except
to the extent it.may become necessary to do so for the purpose of answering ·
the questions posed before us.
D
Pai Foundation explained in Islamic Academy

Pai Foundation Judgment was delivered on 31.10.2002. The Union of
India, various State Governments and the Educational Institutions, each
understood the majority judgment in its 0wn way. The State Governments
E embarked upon enacting laws and framing the regulations, governing the
educational institutions in consonance with their own understanding of Pai
Foundation. This led to litigation in several Courts. Interim orders passed
therein by High Courts came to be challenged before this Court. At the
hearing, again the parties through their learned counsel tried to interpret the
F majority decision in Pai Foundation in different ways as it suited them. The
parties agreed that there were certain anomalies and doubts, calling for
clarification. The persons seeking such clarifications were unaided professional
educational institutions, both minority and non-minority. The Court formulated
four questions as arising for c0nsideration in view of the riva! submissions
made before the Court in Islamic Academy:
G
"(l) whether the educational institutions are entitled to fix their own
fee structure;

(2) whether minority and non-minority educational institutions stand
H on the same footing and have the same rights;
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 629

(3) whether private unaided professional colleges are entitled to till A
in their seats, to the extent of I 00% , and if not, to what extent;
and

(4) whether private unaided professional colleges are entitled to admit
students by evolving their own method of admission." B
We could attempt at formulating the gist of the answers given by the
Constitution Bench of the Court as under:

(I) Each minority institution is entitled to have its own fee structure
subject to the condition that there can be no profiteering and capitation fees C
cannot be charged. A provision for reasonable surplus can be made to enable
future expansion. The relevant factors which would go into determining the
reasonability of a fee structure, in the opinion of majority, are: (i) the
infrastructure and facilities available, (ii) the investments made, (iii) salaries
paid to the teachers and staff, (iv) future plans for expansion and betterment D
of the institution etc.

S.B. Sinha, J, defined what is 'capitation' and 'profiteering' and also
said that rea_sonable surplus should ordinarily vary fron: 6 per cent to 15 per
cent for utilization in expansion of the system and development of education.
E
(2) In the opinion of the majority, minority institutions stand on a better
footing than non-minority institutions. Minority educational institutions have
a guarantee or assurance to establish and administer educational institutions
of their choice. State Legislation, primary or delegated, cannot favour non-
minority institution over minority institution. The difference arises because F
of Article 30, the protection whereunder is available to minority educational
institutions only. The majority opinion called it a "special right" given under
Article 30.

Jn the opinion of S.B. Sinha, J, minority educational institutions do not
have a higher right in tems of Article 30(1); the rights of minorities and non- G
minorities are equal. What is conferred by Article 30(1) of the Constitution
is "certain additional protection" with the object of bringing the minorities
on the same platform as that of non-minorities, so that the minorities are
protected by establishing and administering educational institutions for the
benefit of their own community, whether based on religion or language. H
630 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A It is clear that as between minority and. non-minority educational
institutions, the distinction made by Article 30(1) in the fundamental rights
conferred by Article 19(1)(g) has been termed by the majority as "special
right" while in the opinion of S.B.Sinha, J, it is not a right but an "additional
protection". What difference it makes, we shall see a littie later.
B '(3)&(4). Questions 3 and 4 have been taken up for consideration together.
A reading of the opinion recorded in Islamic Academy shows that paras 58,
59 and 68 of Pai Foundation were considered and sought to be explained.
It was not very clear as to what types of institutions were being dealt with
in the above referred to paragraphs by the majority in Pai Foundation.
c Certainly, distinction was being sought to be drawn between professional
colleges and other educational institutions (both minority and unaided).
Reference is also found to have been made to minority and non-minority
· institutions. At some places, observations have been made regarding institutions
divided into groups only by reference to aid, that is whether they are aided
or unaided educational institutions without regard to the fact whether they
D were minority or non-minority institutions. It appears that there are a few
passages/sentences wherein it is not clear which type of institutions the
majority opinion in Pai Foundation was referring to thereat. However, the
majority opinion in Islamic Academy has by explaining Pai Foundation held·
as under:
E
(I) In professional institutions, as they are unaided, there will be full
autonomy in their administration, but the principle of merit cannot be
sacrificed, as excellence in profession is in national interest.

(2) Without interfering with the autonomy of unaided institutions, the
F object of merit based admissions can be secured by insisting on it as
a condition to the grant of recognition and subject to the recognition
of merit, the management can be given certain discretion in admitting
students.

(3) The management can have quota for admitting students at its discretion
G but subject to satisfying the test of merit based admissions, which can
be achieved by allowing management to pick up students of their own
choice from out of those who have passed the common entrance test
conducted by a centralized mechanism. Such common entrance test can
be coqducted by the State or by an association of similarly placed
H institutions in the State.
- (4)
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 631

The State can provide for reservation in favour of financially or socially
backward sections of the society.
A

(5) The prescription for percentage of seats, that is allotment of different
quotas such as management seats, State's quota, appropriated by the
State for allotment to reserved categories etc., has to be done by the
B
State in accordance with the "local needs" and the interests/needs of that
minority community in the State, both deserving paramount consideration.
The exact concept of "local needs" is not clarified. The plea that each
minority unaided educational institution can hold its own admission test
was expressly overruled. The principal consideration which prevailed
with the majority in Islamic Academy for holding in favour of common c
entrance test was to avoid great hardship and incurring of huge cost by
the hapless students in appearing for individual tests of various colleges.

The majority opinion carved out an exception in favour of those
minority educational professional institutions which were established and
D
were having their own admission procedure for at least 25 years from the
requirement of joining any common entrance test, and such institutions were
permitted to have their own admission procedure. The State Governments

- were directed to appoint a permanent Committee to er.sure that the tests
conducted by the association of colleges is fair and transparent.

S.B. Sinha, J, in his separate opinion, agreed with the majority that the
merit and merit alone should be the basis of selection for the candidates. He
E

, also agreed that one single standard for all the institutions was necessary to
achieve the object of selection being made on merit by maintaining uniformity
of standard, which could not be left to any individual institution in the matter F
of professional courses of study. However, the merit criterion in the opinion
of Sinha, J, was required to be associated with the level of education. To
quote his words: "the merit criterion would have to be judged like a pyramid.
At the kindergarten, primary, secondary levels, minorities may have 100%
quota. At this level the merit may not have much relevance at all but at the
level of higher educatior. and in particular, professional education and G
postgraduate-level education, merit indisputably should be a relevant crite-
rion. At the postgraduation level, where there may be a few seats, the minority
institutions -may not have much say in the matter. Services of doctors,

• engineers and other professionals coming out from the institutions of
professional excellence must be made available to the entire country and not H
632 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A to any particular class or group of people. All citizens including the minorities
have also a fundamental duty in this behalf."

Before we part with the task of summing up the answers given to the
four questions in Islamic Academy, we would like to make a few observations
of ours in this regard. First, the majority opinion spread over 30 printed pages,
B and the minority opinion spread over 60 printed pages, both though
illuminating and instructive, have nonetheless not summed up or pointedly
answered the questions. We have endeavoured to cull out and summarize the
answers, noted above, as best and as briefly as we could from the two
opinions. We would, therefore, hasten to add that in order to fully appreciate
c the ratio of the two opinions, they have to be read in detail and our attempt
at finding out and placing in a few chosen words the ratio decidendi of the
two separately recorded opinions, is subject to this limitation. However, we
shall make a reference to relevant passages from the two opinions as and
when it becomes necessary. A point of significance which we would like to
briefly note here itself, a detailed discussion being relegated to a later part
D
of this judgment, is that the opinion of S.B. Sinha, J, has examined in detail,
the scope of protection conferred on minority institutions by reference to their
right to seek recognition or affiliation, an aspect of wider significance which

E
does not seem to have received consideration with that emphasis either in
Pai Foundation or in the majority opinion in Islamic Academy. We shall
revert to this aspect a little later.
..
III

Issues herein

A Few Preliminary observations
F
Before we embark upon dealing with the issues posed before us for
resolution, we would like to make a few preliminary observations as a preface
to our judgment inasmuch as that would outline the scope of the controversy
with which we are actually dealing here. At the very outset, we may state
that our task is not to pronounce our own independent opinion on the several
G issues which arose for consideration in Pai Foundation. Even if we are
inclined to disagree with any of the findings amounting to declaration of law
by the majority in Pai Foundation, we cannot; that being a pronouncement
by 11-Judge Bench, we are bound by it. We cannot express a dissent or
disagreement howsoever we may be inclined to do so on any of the issues.
H The real task before us is to cull out the ratio decidendi of Pai Foundation
P.A. !NAMDAR v. STATE [LAHOTI, CJ.) 633

and to examine if the explanation or clarification given in Islamic Academy A
runs counter to Pai Foundation and if so, to what extent. If we find anything
said or held in Islamic Academy in conflict with Pai Foundation, we shall
say so as being a departure from the law laid down by Pai Foundation and
on the principle of binding efficacy of precedents, over-rule to that extent
the opinion of the Constitution Bench in Islamic Academy.
B
It is pertinent to note, vide paras 2, 3 and 35 of Islamic Academy, that
most of the petitioners/applicants therein were unaided professional educational
institutions (both minority and non-minority). The purpose of constituting the
Constitution Bench, as noted at the end of para I, was "so that doubts/
anomalies, if any, could be clarified." Having answered the questions, the c
Constitution Bench treated all interlocutory applications as regards interim
matters as disposed of (see para 23). All the main matters (writ petitions,
transfer petitions and special leave petitions) were directed to be placed
before the regular Benches for disposal on merits.
D
Islamic Academy in addition to giving clarifications on Interlocutory
Applications, directed setting up of two committees in each State: one
committee "to give effect to the judgment in Pai Foundation" and to approve
the fee structure or to propose some other fee which can be charged by
m_inority institutions (vide para 7), and the other committee- to oversee the
tests to be conducted by the association of institutions (vide para 19). E

Since the direction made in Islamic Academy for appointment of the
Committees has been vehemently assailed during the course of hearing before
us, we would extract from the judgment in Islamic Academy the following
two passages wherein, in the words of Khare, CJ, the purpose and the F
constitution of the Committees, the powers conferred on and the functions
enjoined upon them are given:

" ... we direct that in order to give effect to the judgment in T.MA.
Pai case the respective State Governments/concerned authority shall
set up, in each State, a committee headed by a retired High Court G
Judge who shall be nominated by the Chief Justice of that State. The
other member, who shall be nominated by the Judge, should be a
Chartered Accountant of repute. A representative of the Medical
Council of India (in short "MCI") or the All India Council for
Technical Education (in short "AICTE"), depending on the type of H
634 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A institution, shall also be a member. The Secretary of the State
Government in charge ofMedical Education or Technical Education,
as the case may be, shall be a member and Secretary of the
Committee. The Committee should be free to nominate/co-opt
another independent person of repute, so that the total number of
B members of the Committee shall not exceed five. Each educational
institute must place before this Committee, well in advance of the
academic year, its proposed fee structure. Along with the proposed
fee structure all relevant documents and books of accounts must also
be produced before the Committee for their scrutiny. The Committee
shall then decide whether the fees proposed by that institute are
c justified and are not profiteering or charging capitation fee. The
Committee will be at liberty to approve the fee structure or to
propose some other fee which can be charged by the institute. The
fee fixed by the Committee shall be binding for a period of three
years, at the end of which period the institute would be at liberty__
D to apply for revision. Once fees are fixed by the Committee, the
institute cannot charge either directly or indirectly any other amount
over and above the amount fixed as fees. If any other amount is
charged, under any other head or guise e.g. donations, the same
would amount to charging of capitation fee. The Governments/
appropriate authorities should consider framing appropriate
E regulations, if not already framed, whereunder if it is found that an
institution is charging capitation fees or profiteering that institution
can be appropriately penalised and also face the prospect of losing
its recognition/affiliation. (para 7)

F We now direct that the respective State Governments do
appoint a permanent Committee which will ensure that the tests
conducted by the association of colleges is fair and transparent. For
each State a separate Committee shall be formed. The Committee
would be headed by a retired Judge of the High Court. The Judge
is to be nominated by the Chief Justice of that State. The other
G member, to be nominated by the Judge, would be a doctor or an
engineer of eminence (depending on whether the institution is
medical or engineering/technical). The Secretary of the State in
charge of Medical or Technical Education, as the case may be, shall
also be a member and act as the Secretary of the Committee. The
Committee will be free to nominate/co-opt an independent person
H
P.A. INAMDAR v. STATE [LAHOTI, CJ.] 635

of repute in the field of education as well as one of the Vice- A
Chancellors of the University in that State so that the total number
of persons on the Committee do not exceed five. The Committee
shall have powers to oversee the tests to be conducted by the
association. This would include the power to call for the proposed
question paper(s), to know the names of the paper-setters and
examiners and to check the method adopted to ensure papers are not
B
leaked. The Committee shall supervise and ensure that the test is
conducted in a fair and transparent manner. The Committee shall
have the powers to permit an institution, which has been established
and which has been permitted to adopt its own admission procedure
for the last, at least, 25 years, to adopt its own admission procedure c
and if the Committee feels that the needs of such an institute are
genuine, to admit, students of their community, in excess of the
quota allotted to them by the State Government. Before exempting
any institute or varying in percentage of quota fixed by the State,
the State Government must be heard before the Committee. It is
clarified that different percentage of quota for students to be
D
admitted by the management in each minority or non-minority
unaided professional college(s) shall be separately fixed on the basis
of their need by the respective State Governments and in case of any
dispute as regards fixation of percentage of quota, it will be open
to the management to approach the Committee. It is also clarified E
that no institute, which has not been established and which has not
followed its own admission procedure for the last, at least, 25 years,
shall be permitted to apply for or be granted exemption from
admitting students in the manner set out hereinabove. (para 19)"

Sinha, J. has not specifically spoken of the Committees. Nevertheless F
he made a reference to these Committees in his opinion and thus impliedly
recorded his concurrence with the constitution of these Committees.

Vide para 20, the Constitution Bench has made it clear that the setting
up of two sets of Committees in the States has been directed in exercise of
G
the power conferred on this Court by Article 142 of the Constitution and such
Committees "shall remain in force till appropriate legislation is enacted by
Parliament". Although the term 'permanent' has been used, but it appears to
us that these Committees are intended to be transitory in nature.
Reference for constituting a Bench ofa coram higher than Constitution Bench H
636 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A These matters have been directed to be placed for hearing before a
Bench of seven Judges under Orders of the Chief Justice of India pursuant
to Order dated July 15, 2004 in P.A. Inamdar and Ors. v. State of
Maharashtra and Ors., [2004) 8 SCC 139 and Order dated July 29, 2004 in
Pushpagiri Medical Society v. State of Kera/a and Ors., [2004) 8 SCC 135.
B The aggrieved persons before us are again classifiable in one class, that is,
unaided minority and non-minority institutions imparting professional
education. The issues arising for decision before us are only three:

(i) the fixation of 'quota' of admissions/students in respect of
unaided professional institutions;
c
(ii) the holding of examinations for admissions to such colleges, that
is, who will hold the entrance tests; and

(iii) the fee structure.
D
The questions spelled out by Orders of Reference

In the light of the two orders of reference, referred to hereinabove, we
propose to confine our discussion to the questions set out hereunder which,
according to us, arise for decision:-
E
(I) To what extent the State can regulate the admissions made by
unaided (minority or non-minority) educational institutions?
Can the State enforce its policy of reservation and/or appropriate
to itself any quota in admissions to such institutions?
F
(2) Whether unaided (minority and non-minority) educational
institutions are free to devise their own admission procedure
or whether direction made in Islamic Academy for compulsorily
holding entrance test by the State or association of institutions
and to choose therefrom the students entitled to admission in
G such institutions, can be sustained in light of the law laid down
in Pai Foundation?

(3) Whether Islamic Academy could have issued guidelines in the
matter of regulating the fee payable by the students to the
H educational institutions?
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 637

(4) Can the admission procedure and fee structure be regulated or A
taken over by the Committees ordered to be constituted by
Islamic Academy?

The issues posed before us are referable to headings 3 and 5 out of 'five
headings' formulated by Kirpal, CJ in Pai Foundation. So also speaking by
reference to the 11 questions framed in Pai Foundation, the questions and
B
answers relevant for us would be referable to question Nos. 3 (b), 4, 5 (a)
(b) (c) and (9).
IV

Submissions made c
A number of learned counsel addressed the Court at the time of hearing
raising very many issues and canvassing different view-points of law
referable to those issues. We propose to place on record, as briefly as we can,
the principal submissions made ccnfined to the issues arising for decision
before us. D
The arguments on behalf of the petitioners were led by senior counsel
Shri Harish Salve. Extensively reading various relevant paragraphs and
observations in different opinions in Pai Foundation, learned counsel
contends that the directions for setting up permanent committees for regulating
admissions and fixing fee structure in unaided minority and non-minority E
institutions issued in the case of Islamic Academy are contrary to the ratio
of judgment in Pai Foundation. According to learned counsel, the directions
clearly run counter to all earlier Constitution Bench decisions of this Court
in St. Stephen's, St. Xavier's and Kera/a Education Bill.
F
It is argued that in the judgment of the eleven judges in Pai Foundation
which deals with several diverse issues of considerable complexity, every
observation has to be understcod in its context. Paragraph 68 in Pai
Foundation has wrongly been read as the ratio of the judgment by the Bench
of five judges in the case of Islamic Academy. It is submitted that paragraph
68 in the majority opinion in Pai Foundation has to be read and understood G
in the context of the constitutional interpretation placed on Articles 29 & 30
of the Constitution. Reading thus, the directions for setting up permanent
cGmmittee~, fm fixing quota and fee structure seriously impinge on the
constitutional guarantee of autonomy to minority institutions under Article
30 and to unaided non-minority institutions under Article 19( I )(g). It is H
638 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A submitted that taking over the right to regulate admission and fee structure
of unaided professional institutions is not a 'reasonable restriction' withir;t the
meaning of Article 19(6) of the Constitution. Such restriction is virtual
negation of the constitutional protection of autonomy to minorities in running
educational institutions 'of their choice' as provided in Article 30 of the
B Constitution.

Elaborating his legal propositions, learned senior counsel Shri Salve
argued that establishing and running an educational institution is a guaranteed
fundamental right of' occupation' under Article 19( 1)(g) of the Constitution.
Article 19(6) permits State to make regulations and place reasonable
c restrictions in public interest upon the rights enjoyed by citizens under Article
19(1 )(g) of the Constitution. Any imposition of a system of selection of
students for admission would be unreasonable if it deprives the private
unaided institutions of the right of rational selection which it has devised for
itself. Subject to the minimum qualifications that may be prescribed and to
D some system of computing the equivalence between different kinds of
qualifications like a common entrance test, it can evolve a system of selection
involving both written and oral tests based on principle of fairness. Reference
··is made to paragraph 40 of the judgment in Pai Foundation.

It is submitted that the State can prescribe minimum qualifications and
E may prescribe systems of computing equivalence in ascertaining merit;
however, the right of rational selection, which would necessarily involve the
right to decide upon the method by which a particular institution computes
such equivalence, is protected by Article 19 and infringement of this right
constitutes an unreasonable encroachment upon the constitutionally guaranteed
F autonomy of such institutions.

It is further argued that where States take o~er the right of the institution
to grant admission and/or to fix the fees, it constitutes nationalization of
educational institutions. Such nationalization of education is an unreasonable
restrictio~ on the right conferred under Article 19. Reliance is placed on
G paragraph 38 of the judgment in Pai Foundation.

Learned counsel further argues that schemes framed relating to grant
of admission and fixing of fees in Unni Krishnan has been held to be
unconstitutional by the I I-Judge Bench in Pai Foundation. [Reference is
H made to paragraph 45 of the judgment in Pai Foundation] It is submitted that
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 639

the directions to set up committees for regulation of admission and fee A
structure in Islamic Academy virtually do the same exercise as was done in
Unni Krishnan and disapproved in the larger Bench decision in Pai Foundation.
The submission in substance made is that Unni Krishnan was disapproved
in Pai Foundation and has wrongly been re-introduced in Islamic Academy.
B
It is argued that State necessity cannot be a ground to curtail the right
of a citizen conferred under Article 19(l)(g) of the Constitution. The
Constitution casts a duty upon the States to provide educational facilities. The
State is obliged to carry out this duty from revenue raised by the State. The
shortfall in the efforts of the State is met by the private enterprise, that
however, does not entitle the State to nationalize, whether in the whole or C
in part, such private enterprise. This, it is submitted, is the true ratio of the
Pai Foundation in so far as Article 19 of the Constitution is concerned.

It is next argued that as held in St. Xavier's and re-affirmed in Pai
Foundation the right to establish and administer educational institutions by D
minorities under Article 30 of the Constitution is not an absolute right
meaning thereby that it is subject to such regulations that satisfy a dual test
that is : the test of 'reasonableness' and 'any regulation regulating the
educational character of the institutions so that it is conducive to making the
institution an effective vehicle of education for the minority community and
for the others who resort to it'. Any regulation which impinges upon the E
minority character of the institutions is constitutionally impermissible. It is
submitted that between the right of minorities to establish and administenhe
educational institutions and the right of the State to regulate educational
activities for maintaining standard of education, a balance has to be struck.
The regulation in relation to recognition/affiliation operates in the area of F
standard of excellence and are unquestionable if they do not seriously curtail
or destroy the right of minorities to administer their educational institutions.
Only in maintaining standards of education, State can insist by framing
regulations that they be followed but in all other areas the rights of minority
must be protected. It is conceded that mal-administration is not protected by
Article 30 of the Constitution. Similarly, secular laws with secular object that G
do not directly impinge upon the right of minority institutions and operate
generally upon all citizens do not impinge upon Article 30 of the Constitution.
This has been the constitutional interpretation of Article 30 not because
Article 30 admits no exception like Article 19(6) but because the right
conferred under Article 30 does not extend to these areas. The laws that serve H
640 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A national interest do not impinge upon Article 30.

Learned counsel in elaborating his argument tried to make a distinction
between the rights of aided institutions and unaided institutions. Article 29(2)
places a limitation on the right of an aided institution by providing that if
B State aid is obtained, 'no citizen shall be denied admission on grounds only
of religion, race, caste, language or any of them'. It is submitted that as a
necessary corollary, no such limitation can be placed while regulating
admission in an unaided minority institution which may prefer to admit
students of minority community. So far as unaided minority educational
institutions are concerned, the submission made is that government has no
c right or power, much less duty, to decide as to which method of selection
of students is to be adopted by minority institutions. The role of the
government is confined to ensuring that there is no mat-administration in the
name of selection of students or in the fixation of fees. No doubt, the State
is under a duty to prevent mal-administration, that is to control charging of
D capitation fees for the seats regardless of merit and commercializing education
resulting in exploitation of students, but to prevent mal-administration of the
above nature or on the ground that there is likelihood of such mal-
administration, the State cannot take over the administration of the institutions
themselves into its own hands. The likelihood of an abuse of a constitutional
right cannot ever furnish justification for a denial of that right. An apprehension
E that a citizen may abuse his liberty does not provide justification for imposing
restraints on the liberty of citizens. Similarly, the apprehension that the
minorities may abuse their educational rights under Article 30 of the
Constitution cannot constitute a valid basis for the State to take over those
rights.
F
Learned senior counsel Shri Ashok Desai appearing on behalf of
unaided Karnataka Private Medical Colleges (through its Association) of both
categories of minority and non-minority has questioned the correctness of the
directions in the case of Islamic Academy for setting up permanem committees
for fixation of quota and determination of fees. According to him, as held
G in Pai Foundation, in the name of controlling capitation, there cannot be
indirect nationalization and complete State control of unaided professional
institutes. In the case of Islamic Academy, the ratio of Pai Foundation that
autonomy of unaided non-minority institutions is an important facet of their ~
right under Article 19(1 )(g) and in case of minority under Article 19( l )(g)
H read with Article 30 of the Constitution has been ignored.
. P.A. !NAMDAR v. STATE [LAHOTI, CJ.]

On behalf of unaided private professional colleges, learned counsel
further submitted that there are many private educational institutes which
641

A

have been set up by people belonging to a region or a community or a class
in order to promote their own groups. As long as these groups form an
unaided mir,ority institution, they are entitled to have transparent criteria to
admit students belonging to their group. For instance, scheduled castes and B
scheduled tribes have started Ambedkar Medical College; Lingayaths have
started KLE Medical College in Belgaun and people belonging to Vokalliga
community have started Kempegowda Medical College. Similarly, E<lava
community in Kerala has started its own colleges. Sugar cooperatives in
Maharashtra have started their own colleges. Learned counsel also highlighted
an instance of a college opened in Tamil Nadu by State Transport Workers c
for the education of their children on the engineering side. He submitted that
if the State is allowed,to interfere in the admission procedure in these private
institutions set up with the object of providing educational facilities to their
own group, community or poorer sections, the very purpose and object of
setting up a p,Avate medical college by a group or community for their own D
people would be defeated.

. According to learned counsel, the State control in unaided private
professional colleges can only be to the extent of monitoring or overseeing
its working so that they do not indulge in profiteering by charging capitation
fees and sacrifice merit. According to the learned counsel, in the directions E
contained in Islamic Academy, the main ratio of Pai Foundation that the
unaided institutions should have autonomy in the matter of admission and
fees structure has been totally forgotten. The learned counsel raised very
serious objections to the manner in which the various permanent committees
set up in several States on the directions of Islamic Academy are conducting F
themselves and forcing their decisions on private insti!uiions. The proposed
fee structure is required to be placed before the Committee in advance of the
academic year by the institute. It is the Committee which has to decide
whether the fees proposed by the institute are justified and do not amount
to profiteering or charging of capitation fees. The Committee has been given
liberty to approve the fee structure of the institute or to propose a different G
fee structure. The fee fixed by the Committee is binding for a period of three
years and at the end of the said period the institute would be at liberty to
apply for revision. Learned counsel gave in writing certain illustraiions of
decisions of the Fee Committee in few unaided colleges in the State of
Kamataka and pointed out that without proper financial expertise and without H
A
642 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

studying the relevant documents and accounts, the Committee determined the
..
fee structure by only taking into account the affordability of the parents of
the students with no regard whatsoever to the viability of the institute on the
basis of finances so generated. It is argued as to why private professional
institutes should not be allowed to modernize its facilities and provide better
B professional education than government institutes. It is pointed out that in the
case of non-minority unaided M.S. Ramaiaya Medical College, Bangalore,
the Fee Committee initially fixed annual fee at Rs.2.55 lacs for MBBS course
as against the justification shown by the institute for demanding Rs. 3.90 lacs.
The decision of the Fee Committee led to the filing of writ petition by the
institute in the High Court of Karnataka and agitation and demonstrations by
c the students' union. The CommittP-e under the pressure of the student
community reduced the annual fee to Rs.1.6 lacs which was re-affirmed after
the High Court directed that the management o.(,~he unaided college should
be heard before reducing the annual fee. ·

D Thus the learned counsel on behalf of the Karn~ka Private Medical
College Association questioned the correctness of the directions of the Bench
in Islamic Academy. It is submitted that as decided in Pai Foundation by a
larger Bench, the essence of private educational institutions is the autonomy
that the institution must have in its management and administration. The
'right to establish and administer' particularly comprises the right a) to admit
E students and b) to set up reasonable fee structure. The autonomy of the
institution, therefore, predicates that all seats would be filled by the management
and there can be no reservations or quotas in favour of the State. In Pai
Foundation, the only observations made were that some colleges may be
required to admit a small percentage of students belonging to weaker sections
F of the society by granting them freeships or scholarships. It is conceded that
autonomy of a p~ivate educational institution to admit students of its choice
does not mean that· there can be no insistence on transparency in the
admission procedure ~add on merit being the criterion for admission. It is
submitted that autonomy of a private educational institution could mean that
they can, according to the objects and purposes of their institutions, give
G preference to a particular class or group of students like SC/~T in Ambedkar
Medical College, students from backward area in Bijapur college and
transport employees' children in Madras State Corporation Employees'
College or the children of employees of Larson & Turbo Company in a
college established by that company. The right to charge fees so as to run
H the college and to generate sufficient funds for its betterment and growth
- P.A. !NAMDAR v. STATE [LAHOTI, CJ.]

cannot be controlled by the State. That would seriously encroach upon the
autonomy of the private unaided institution. It is submitted, by quoting Dr.
S. Radhakrishnan, the then Chairman of the University Education Commission,
643

A

- that interests of democracy lie with the resistance of the trend towards
governmental domination of the educational process. In conclusion, learned
counsel representing Association of private unaided colleges in Karnataka B
submits that the decision in Islamic Academy and the directions made therein
go far beyond the law laid down by the larger Bench in Pai Foundation. The
Bench in Islamic Academy virtually reviewed the larger Bench decision in
Pai Foundation in guise of implementation of the said decision and on the
basis of later developments. In Islamic Academy, the Bench accepted that
there could be no rigid fee structure fixed by the government for private c
institutions. An institute should have the freedom to fix its own fee structure
for day-to-day running of the institute and to generate funds for its further
growth. Only capitation and diversion of profits and surplus of the institute
to any other business or enterprise was prohibited. It is submitted that Islamic
Academy contrary to the legal position explained in Pai Foundation, could D
not set up in each State permanent committees headed by retired High Court
Judges with the power to decide on the justification of the fee proposed by
the institute and propose any other fees. It could also not make the fee fixed
by the Committee binding for a period of three years. Learned counsel
submits that once the college infrastructure and hospital facilities attached to
the medical college have been approved by the Medical Counsel of India in E
accordance with its regulations, the total expenses of college and hospital
could be taken into account by the institute to decide upon its own fee
structure. Learned counsel, in criticizing the directions in Islamic Acade1ny,
submitted that although the scheme formulated in Unni Krishnan has been
expressly overruled in Pai Foundation on the ground that it virtually F
nationalized education and resulted in surrendering total process of selection
to the State, the Bench in Islamic Academy's case, in an attempt to take up
preventive measures to ensure merit and check profiteering in private unaided
professional institutions, cannot re-introduce quota system for the management
and the State and thus infringe upon the autonomy of the institute. Such an
attempt, learned counsel contends, would be unconstitutional and violative G
of Article 19(1 )(g) of the Constitution in the case of non-minority unaided
institutions and also violative of Article 30 in the case of minority unaided
professional institutions. Learned counsel argued that constitutionally, as held
in Pai Foundation, it is not permissible for the State to impose a Government
quota, its own reservation policy, a lower scale of fees etc. on a private H
A
644 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

unaided non-minority and unaided minority professional institutions, only by
...
taking into consideration the interests of students. In the State of Kamataka
for the academic year 2004-2005, by illustration, it is shown that 75% of the
intake capacity is the Government quota in which are included 5% quota for
sports, defence and NCC; 50% quota for Scheduled Castes/Economically
B backward classes/Scheduled Tribes/OBC, there is total 55% reservation
quota in 75% of the government quota. The remaining 25% quota left for
the management is also to be taken over by the Government insisting on
admitting students from the select list prepared on the common entrance test
conducted by the State.

C Learned senior counsel Shri F. S. Nariman also supported the submissions
made by other counsel on behalf of the unaided professional institutions and
added that the observations of the Bench in Islamic Academy clearly go far
beyond anything said by eleven judges in Pai Foundation. It is submitted that
the question of quota 50:50 for State and management as referred to in St.
D Stephen's was in respect of aided minority educational institutions and in Pai
Foundation, the Bench never suggested fixation of quota for State and
management in case of unaided professional institutions. Learned senior
counsel particularly pointed out that in Islamic Academy, the observations
that different percentage of quota for students to be admitted by the
management in each minority and non-minority unaided professional
E institutions shall be separately fixed on the basis of their need by the
respective State Government, was a totally new direction, nowhere to be
found or supported by any of the observations in any of the opinions of the
11-Judge Bench in Pai Foundation. With regard to the most controversial
observations contained in paragraph 68 of the opinion prepared by Justice
F Kirpal (the then CJI) in Pai Foundation, learned counsel contended that the
decision in Unni Krishnan having been overruled by 11-Judge Bench in Pai
Foundation, the observations in paragraph 68 which are more in tune with
Unni Krishnan should not be read as the ratio· of the case. Senior counsel
was also critical of all the observations in fixing quota for the State in unaided
institutions on the basis of local needs and not the needs of the community
G for which the institution was set up. Learned counsel also critici:zed the
directions in Islamic Academy which according to him are contrary to the
findings in Pai Foundation that certain unaided private educational institutions
which had been adopting its own admission procedure for the last 25 years
be allowed to continue to do so. It is submitted that as a part of autonomy
H of the private unaided institution, the quantum of fees to be charged must
- P.A. !NAMDAR v. STATE [LAHOTI, CJ.) 645

be left to the institution and except for checking profiteering and capitation
fees, the State can have no say in fixation of fees. The scheme of setting up
A

- permanent committees for even unaided minority and non-minority institutions
. was not at all envisaged in Pai Foundation. Tiie Islamic Academy which was
the case before a smaller Bench could not do anything beyond and contrary
to what has been stated in Pai Foundation. B
Learned senior counsel Shri R.F. Nariman in supporting the argument
advanced against the directior.s in Islamic Academy submitted that any
interference with the autonomy of the institution, other than to prevent mal-
administration, would not be saved by Article 19(6) of the Constitution. The
concept of administration includes choice in admitting students and fixing c
a reasonable fee structure. In the matter of admission, if objective criteria are
adopted so as to reflect the merit, it would be unexceptionable. So far as fee
structure is concerned, no institution can be allowed to charge capitation fees
which only means something taken over and above what the institution needs
by way of revenue and capital expenditure plus a reasonable surplus. Once D
Unni Krishnan was overruled, private education cannot be allowed to be
nationalized. It is submitted that it may be possible for the State to scrutinize
the expenditure of revenue and capital expenditure of an aided and unaided
institution to ensure good administration but the State cannot devise its own
admission procedure and determine in advance a fee structure for the unaided
private institutions. On t~e question of deducing ratio in Pai Foundation, E
learned counsel referred to Halsbury Laws of England Vol. 37 page 378 in
which the meaning of ratio decidendi has been explained. It is submitted that
it is only the essence of the reason or principle upon which the qu~stion
before a court has been decided which is alone binding as a precedJit. It is
dangerous to take one or two observations out of a long judgment an to treat F
them as if they give the ratio decidendi of the case.

Dr. Raj iv Dhawan, learned senior counsel in assailing directions issued
in Islamic Academy for setting up permanent committees to fix quota and fee
structure highlighted that the State of Maharashtra has encroached upon the
rights of unaided institutions by directing in one of its Government Memoranda G
dated 13.02.2003 that even in the quota of seats fixed for management, the
unaided non-minority institutions should implement the rule of reservation
(communal reservation) of the State Government.

• Learned senior counsel contends that the net result of such illegal H

j
646 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A directions is that the reservation policy for schedule castes, schedule tribes
and OBCs is to be applied not only for 50% seats of government quota but
also for the remaining 50% of management quota of unaided non-minority
institutions. Virtually, the management of non-aided institutions has been
completely taken over by the state and as a result of communal reservations,
B the quota of seats fixed for government and quota fixed for the management
may be filled by granting admissions to students of non-minority communities.

Learned senior counsel contends that in Pai Foundation, maximum
autonomy is conceded in favour of unaided institutions. The only insistence
is on maintenance of transparency in method of admission and fixation of
c such fee structure that does not permit charging of capitation fee. Interpreting
provisions of Article 19(6) and Article 30 it is contended that constitutional
limitation necessarily would vary in imposing reasonable restriction where
the institution is unaided or aided.

D On the issue of constitutional protection to the unaided minority
institutions, the contention advanced that general restrictions permissible
under Article 19(6) can also be applied to unaided minority institutions, it
is submitted, is misconceived. The submission is that education is a recog-
nized head of charity. The object of establishing educational institution is not
E to make profit. Imparting education is essentially charitable in nature. The
charitable nature of the occupation of establishing and running an educational
institution has been recognized in Pai Foundation. Therefore, all restrictions,
which are permissible under Article 19(6) in case of other kind of professions
and occupations, cannot apply to educational activities. It is submitted that
restrictions imposed should satisfy the requirements of Article 30 and not
F only of Article 19(6).

·In Pai Foundation, for determining linguistic and religious minorities,
the unit to be taken is State. Therefore, when Tamilians, who are in majority
in Tamil Nadu, establish an institution for Tamil students in Karnataka, it
·G would be a minority institution in Kamataka. What would be the rights of
such an institution of linguistic minority has not been answered either in Pai
Foundation or in Islamic Academy. Therefore, this Bench should decide what
are the rights of such cross-border institutions.

H In short, the submission made by Sr. Counsel Dr. Rajiv Dhawan is that
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 647

there is nothing in Pai Foundation, which permits fixation of quotas for A
government seats, fixation of fee structure by the State, imposition of its

-
reservation policy and imposition of candidates on the basis of common
entrance test conducted by the State. In Pai Foundation, the State can have
some controlling influence on unaided institutions for the purpose of ensuring
transparency in admissions and checking the collection of capitation fee. In B
Pai Foundation, no preemptive action by setting up permanent committees
by the State was envisaged or even indirectly approved.

The decision in Islamic Academy, it is submitted, is contrary to the
decision by the larger Bench in Pai Foundation, and deserves therefore to
be so declared by this Bench. C

Learned senior counsel Shri U.U. Lalit appears for the sole Dental
College established by Muslims in the State of Maharashtra. Apart from
supporting the contention advanced by other counsel against the scheme of
committees evolved in Islamic Academy, learned counsel submitted that the D
judgment of the Bombay High Court against which they have filed an appeal
before this court has resulted in a situation where affluent students are getting
admission at lesser fee and poorer students are kept out of college. It was
submitted that the petitioner institute being the sole institute set up for Muslim
community, their desire to cater to the educational needs of Muslim students
from all over cannot be discouraged. Objecting to the fee structure prescribed E
by the committees in Maharashtra, the suggestion made on behalf of the
institute is as under :-

- (a) 25% students will be charged five times of the average fee,
which was in vogue before TMA Pai's judgment. F

(b) 50% students will be charged average fee.

(c) Remaining 25% will be charged I/4th of the average fee.

It is submitted that in the above proposed fee structure, meritorious G
students coming from all sections of society will be able to take admissions.
At the same time, the educational institutions will be able to recover the
· amount required for running the educational institution in the best possible
manner. It is, therefore, prayed that Bombay High Court judgment dated
H
648 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A 23.08.2003 prescribing unifonn fee structure for all the students be set aside
and minority educational institutions be allowed in the exercise of their
fundamental right, to prescribe fee under a three-tier system subject to the
rider of non-profiteering and not charging capitation fee.

In reply, on behalf of the respondents, senior counsel, Shri K.K.
B
Venugopal, who appeared for the States of Kerala led the arguments. It may
be noted at this stage that after the decisions in Pai Foundation and Islamic
Academy, in the States of Kerala, Kamataka, Maharashtra and Tamil Nadu,
their respective legislatures have passed Acts regulating admissions and
charging of fee in both aided and unaided minority and non-minority private
c educational institutions engaged in imparting education in professional,
medical, engineering and allied courses.

On behalf of the State of Kerala, it is pointed out that only 25% seats
in private professional colleges have been reserved to be filled on the basis
D of common entrance test and remaining 75% seats are to be filled by the
management. It is submitted that the group of paragraphs starting with 67
and ending with 70 in the majority opinion in Pai Foundation carries the title
"Private Unaided Professional Colleges." This heading covers both unaided
minority and non-minority professional colleges. Since paragraph 68 in the
majority opinion in Pai Foundation has been differently understood by the
E High Court of Kamataka and Kerala, an occasion has arisen to resolve the
controversy by a Bench of the present combination of seven judges.

To justify fixation of quota for seat sharing between State and the private
management and fixing a reasonable fee structure to avoid profiteering and
F capitation, the learned counsel highlighted certain illicit practices, which are
being resorted to, by the private institutions to exploit the student community.
It is submitted both the judgments in Pai Foundation and Islamic Academy,
profiteering, commercialization of education and the collection of capitation
fee have been condemned. This court had expressly held that it would be open-
to the government to make regulations for the purpose of preventing
G •commercialization of professional education. It is on the line suggested by this
~that the Government ofKerala had made regulations both for the purpose
or admissions as well as for fixing reasonable fee which will cover not only
the expenditure incurred by the institution but also give them a reasonable
revenue surplus for further growth and bettennent of the institution.
H
P.A. !NAMDAR v. STATE (LAHOTI, CJ.) 649

The High Court of Kerala by its judgment of 23.08.2003 has fixed A'
rupees 1.50 lacs provisionally per annum as the fee. The Government has
fixed 1.76 lacs. What is being disclosed by Pushpgiri Medical College itself
is that they had collected rupees 4.38 lacs and rupees 22 lacs from different
students. The explanation given is that these collections are for the whole
period of five years to prevent the students from leaving the college mid-way. B
This explanation on the face of it is disingenuous as rupees 22 lacs was not
collected uniformly from all the students. Despite the students leaving the
course mid-way, the seats would still be filled. It is due to this menace and
evil practice of exploiting parents and students that a Committee was required
to be set up for restricting admissions in proportion to the need of the peculiar
character of the institution and to check profiteering. c
It is submitted that if the scheme as evolved in Jslamic Academy of
setting up of permanent Committees is not allowed, education which is
already commercialized to some extent would be wholly inaccessible to
students coming from middle classes, lower-middle classes and poor sections D
of the society. To provide access to professional education even to weaker
sections of the society in fifty percent quota of seats to be filled by the
government, the reservation policy of the government has been applied. The
fifty-fifty percent quota between government and management fixed by the
government has been changed to twenty five-seventy five per cent by the
court. Similarly, the court has struck down Regulation I l framed by the State E
on the ground that the State cannot foist fee of students on the institution and
it would be left to the management to make provisions for poorer sections
of the society through free-ships or scholarships.

In the above-mentioned background, learned counsel Shri Venugopal F
submits that this Bench is not considering .the correctness of judgment in
Islamic Academy. It will not and cannot go into the question of correctness
of judgment in Pai Foundation which is of a larger Bench. This Bench has
a limited jurisdiction to examine whether the 5-Judge Bench decision in
Islamic Academy is in any manner inconsistent with I I-Judge Bench
judgment in Pai Foundation. It is submitted that ifthere are certain inherent G
inconsistencies between various paragraphs particularly 59 and 68 of the
judgment in Pai Foundation, they have to be resolved and that was exactly
what was done by the five judges in Islamic Academy.

In Pai Foundation, observation in paragraph 68 under the heading H
650 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A "Private Unaided Professional Colleges" read with para 69 indicates appropriate
machinery to be evolved to regulate admissions in both categories of private
institutions to check exploiters who are charging capitation fee.

It is submitted that if the attempt by the Bench in Islamic Academy to
resolve the apparent inconsistency in the judgment of Pai Foundation,
B
indicated a reasonable and plausible interpretation of the I I-Judge Bench
judgment in Pai Foundation, this court should refrain from substituting
another interpretation.

It is for the first time in Pai Foundation that the question of application
c of Article 30 to minority professional colleges arose. All earlier judgments
of this court were only concerning education in schools and colleges other
than those imparting professional education. For the first time in Pai
Foundation, the court held that running an educational institution is an
'occupation' and Article 19(1) (g) guarantees it as a fundamental right.
D
It is submitted that regulation of non-minority unaided professional
institution is permissible under Article 19(6) of the Constitution to prevent
profiteering, levy of capitation fee and selection of non-meritorious candidates.
Such regulation also does not violate right of minority professional institutions
under Article 30, which this Court has repeatedly held, is not an absolute right
E but is merely a protection extended to minorities against oppression by the
majority.

The issue relating to reservation of seats for schedule castes, schedule
tribes or OBCs, either in management quota or in Government quota did not
F come up for consideration either in Pai Foundation or Islamic Academy. This
has to be separately dealt with by the present Bench

Similarly, it is submitted that right of minority institutions to admit
students from all over the country, irrespective of their religion and community
and also from abroad such as NRls never arose directly for consideration
G either in Pai Foundation or Islamic Academy. In this respect, it is submitted
that the status of minority both religious and linguistic is to be determined
at the state level. The minority institutions cannot claim a right to cater to
the educational needs of their community from all over the country and even
from abroad.
H
P.A. INAMDAR v. STATE [LAHOTI, CJ.] 651

In paragraph 68 of the judgment in Pai Foundation the use of the phrase A
'certain percentage based on local needs' and further phrase 'different
percentages can be fixed' for minority unaided and non-minority unaided
professional colleges· clearly convey that quotas can be fixed based on local
needs for management and for the Government. Meritorious students from
weaker sections are not to be sidelined from higher and professional B
educatkn. It is argued that the phrase 'local need' as used in paragraph 68
in the judgment of Pai Foundation cannot be read to mean the needs of the
institution concerned. So far as the selection based on merit is concerned,
common entrance test has been suggested both for aided and non-aided
professional colleges. When there is no common entrance test, merit becomes
the casualty and the rich and the affluent comer the seats. c
So far as the right to fix a fee structure for unaided minority or non-
minority colleges or institutes is concerned, the argument that pre-fixation
of fee is a serious encroachment on the rights of minority and non-minority,
it is submitted, is not valid as full discretion is given to the management in D
fixing their fee structure. However, they would not be allowed to fix such
high fee as would deny many meritorious students a chance of admission only
because they come from economically weaker sections. It would be of no
consolation to them to find that after admissions are over and classes have
started, the fee has been lowered by the monitoring committee. If the
committee is allowed to scrutinize the justification of fee fixation after the E
admissions and the fee is lowered, it would not be possible for the meritorious
students to again seek admission. Through the Committees set up in Islamic
Academy, the fee structure would be known before hand and would serve the
interest of the institution as also the students seeking admission. The
Committee has to fix fee for each college depending upoo its peculiar F
conditions and its assets and availability of funds. Coming to the question
of cross subsidy, it is submitted that in Pai Foundation, cross-subsidizing the
weaker sections by the more affluent ones has not been held to be
impermissible. The Bench in Pai Foundation overruled the judgment in Unni
Krishnan. The latter provided for "marginally less merited rural or poor
students bearing the burden ofrich and urban students." The learned counsel G
suggests that solution can be to set apart fifteen percent of total seats in a
local college to be filled by NRI/ person of independent origin/ foreign
students who would volunteer to fill up the allotted seats on the management
quota but on inter se merit. Each NRI student would subsidize two other
students belonging to the economically and socially weaker sections liased H
652 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A on an annual income of say less than rupees 2.5 lacs. This would cater to
the financial needs of at least 30 out of 50 students selected on merit fanning
part of the Government quota and this would be a constitutionally pennissible
solution.

B To streamline and further improve the admission procedure and fixation
of fee structure, learned counsel has made the following proposals in writing
submitting that they may be of practical value to the Committees directed
to be set up by Islamic Academy:-

A. ADMISSION:
c
Six months prior to the commencement of the academic year, the
Government would fix the percentage of students to be admitted by
a minority (religious/linguistic) professional college (other than
engineering ), taking into account the local needs of the State, the
D region as well as that of the minority-community. It would be a huge
and cumbersome exercise in practice, to fix a percentage for each
one of the institutions separately and it would be a pragmatic
approach to have a fixed percentage for all the minority institutions
which is fair and reasonable. A practical approach to the problem
would require a very definite percentage to be fixed for minority
E institutions, say, 50% so that even if candidates of their choice,
belonging to the minority institutions, are only 25% they would still
have the right to select non-minority students to make up the 50%,
of course, from the CET held by the Government.

F 1. The CET held by Government would ensure that the various
devices adopted by professional colleges to secretly demand capitation
fees and take the same in black money, thus resulting in merit being
the casualty, would not take place. No prejudice will be caused to
the management of the professional colleges as they could select the
minority students based on inter se merit in the CET held by the
G Government.

2. There would equally be no disadvantage to any particular
section or to Government if the same 50% rule is applied even to
unaided non-minority professional colleges as well.
H
. P.A. !NAMDAR v. STATE (LAHOTI, CJ.] 653

3. The result of following this procedure is that a consortium A
holding the tests for admissions is done away with and a monitoring
committee, preferably headed by a retired High Court or Supreme
Court judge would ensure fairness and transparency both in the
minority and non-minority professional institutions.

4.
B

5.

B. FEES:

The Committee suggested by Islamic Academy and the procedure c
mentioned therein, appears to be the only safe method of ensuring
that extortionate fees are not charged by the medical colleges. At
the same time, it would be wrong to deny expenditure which the
institution undertakes for ensuring excellence in education. Equally,
a reasonable surplus should be permitted so that the fees charged D
cover the entire revenue expenditure and in addition leaves a
reasonable surplus for future expansion. This alone would prevent
the clandestine collection of capitation fees and would result in
entrepreneurs investing in new medical colleges.

The Committee suggested by Islamic Academy appears to be the E
ideal one consisting of a chartered accountant, a representative of
the MCI or AICTE as the case may be, with a retired judge of the
High Court or the Supreme Court as the head.

The fee is to be fixed on the proposal of the institution supported F
by documents and the procedure offee finalization should commence
at least 6 months in advance of the commencement of the academic
year.

These proposals should all be by way of an interim arrangement as
held by Islamic Academy in para 20 with the Parliament bringing G
in a law, as suggested by Islamic Academy without dragging its feet
any longer."

With regard to the ambit of the constitutional guarantee of protection
of educational rights of minorities under Article 30, learned counsel submits H
654 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.
~

A that both religious and linguistic minority, as held in Pai Foundation, are to
be determined at the State level. On this understanding of the concept of
'minority', Article 30 has to be harmoniously construed with Article 19(1)(g)
and in the light of the Directive Principles of the State Policy contained in
the Articles 38, 41 and 46. Rights of minorities cannot be placed higher than
B the general welfare of the students and their right to take up professional
education on the basis of their merit.

The real purpose of Article 30 is to prevent discrimination against
members of the minority community and to place them on an equal footing
with non-minority. Reverse discrimination was not the intention of Article
c 30. If running of educational institutions cannot be said to be at a higher plane
than the right to carry on any other business, reasonable restriction similar
to those placed on the right to carry on business can be placed on educational
institutions conducting professional courses. For the purpose of these
restrictions both minorities and non-minorities can be treated at par and there
D would not be any violation of Article 30(1), which guarantees only protection
against oppression and discrimination of the minority from the majority.
Activities of education being essentially charitable in nature, the educational
institutions both of non-minority and minority character can be regulated and
controlled so that they do not indulge in selling seats of learning to make
money. They can be allowed to generate such funds as would be reasonably
E required to run the institute and for its further growth.

On behalf of the State of Karnataka, learned senior counsel Shri T.R.
Andhyarujina supported the judgment in Islamic Academy of setting up
permanent Committees for regulating admission and fee structure. Learned
F senior counsel submitted that relevant parts of paragraphs 58, 59 and 68 and
answer to question no. 4 in Pai Foundation have to be read and reconciled.
They cannot be ignored simply as obiter. A com~ined reading of the relevant
paragraphs and the answer to question no.4 makes it clear that regulations
can be made by the State for admission in minority and non-minority private
educational institutions and more so in professional institutions. The merit
G for admission to professional courses is generally determined by Government
agencies. In Pai Foundation the reservation on certain percentage of seats
by the Government to be filled up by counseling by state agency, is held
permissible.

H With regard to the quota fixation, learned counsel submits that paragraph
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 655

68 in Pai Foundation allows reservation of quota for management and for A
the Government for available seats. It is submitted that the educational
institutions cannot merely read the answer to question no.4 given by
judgment in Pai Foundation and ignore the other observations in other
paragraphs of the judgment.
B
So far as the case of minority and non-minority unaided institutions is
concerned, learned counsel submits that the balancing act has been performed
in the judgme~t of Pai Foundation by regulating the economy of educational
institutions moderated by necessary State legislation. Observation in paragraph
68 in Pai Foundation does not amount to permitting nationalization or
takeover of the private institutions which was the main feature found foul C
in the decision in Unni Krishnan and was consequently overruled. The
observation in Pai Foundation in paragraph 68 strikes the balance between
the academy and education. To read paragraph 68 as merely giving an
instance would be to ignore the concern of the Bench in Pai Foundation of
providing reservation to poorer or backward sections of society even in D
private institutions. The description of percentage of reservation in paragraph
68 is different from reservation policy of the State for State institutions and
in State quota.

It is submitted that the reservation spoken of in paragraph 68 of Pai
Foundation is to cater to the needs of poorer and weaker sections and also E
other students depending upon the local needs.

So far as the regulation offee structure is concerned, it is submitted that
in paragraph 69 in Pai Foundation there is a mention of "appropriate
machinery to be devised by the State or University to ensure that no capitation F
fee is charged and profiteering is checked." The judgment in Islamic
Academy merely implements the legal position explained by Pai Foundation
by providing a fee determination committee. In reply to the argument that
post-fixation audit may be permitted to check profiteering and capitation, the
learned counsel answers that if the role of the Committee is limited to
supervisory post fixation audit, it would amount to denying credible restric- G
tion to the charging of capitation fee. It is chimerical to suggest that the
student should first pay the exorbitant fee fixed by the institution and later
on complain about it to the post audit machinery to recover the excess through
court of law. The controlling of the fee fixing machinery is necessarily to
be done before it is charged otherwise it is meaningless to the benefit of the H
656 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A students for whom it is suggested in paragraph 69. The general principle for
scrutinizing the fee structure is two-fold; (1) that education is a charity, (2)
that educational institutions cannot charge such fee as is not required for the
purpose of fulfilling that object which means cost plus reasonable surplus for
expansion and growth of the institution. These are the parameters before the
B Committee whose decisions, in any case, are subject to judicial review.

So far as the admissions based on common entrance test are concerned,
it is submitted that paragraphs 58 and ·59 of Pai Foundation pennit
regulations to be framed for admission in professional institutions by State
agency to ensure admission on merit. In the absence of CET and centralized
c counseling, private educational institutions would pick and choose candidates
ignoring merit, as has been evident from the Karnataka experience. If the
private professional educational institutions conceive that merit cannot be
ignored in granting admission, direction to make selection based on CET does
not in any manner adversely affect the character of the minority institution.
The State regulation providing for CET is a reasonable restriction and it will
D pass the test of Article 19(6) both in respect of aided and unaided non-
minority institutions. Private unaided institutions have also to admit students
on the basis of merit in a fair and transparent manner in the interest of student
community. Right of private educational institutions to admit students can
be regulated. Such regulations if in national and public interest do not in any
E manner impinge on the right of minority.

Learned counsel points out that so far as the State of Karnataka is
concerned, no reservation policy is being insisted upon in the seats or quota
given to the management.

F Arguments were also advanced supporting the directions in Islamic
Academy by learned senior counsel Shri P.P. Rao appearing for the State of
Tamil Nadu. It is submitted that already a statement had been made in the·
High Court that the State of Tamil Nadu would not be insisting on communal
reservation based on State policy in the minority institution.
G Learned counsel pressed into service Article 5 I-AG) providing for
Fundamental Duties in the Constitution. It is submitted that fundamental duty
is enjoined on citizens to so direct their individual and collective activities
that the nation constantly rises to higher levels of endeavour and achievement.
This duty implies that the State on its part is to facilitate discharge of duties
H by the citizen in relation to the professional education. The State is bound
P.A. !NAMDAR v. STATE [LAHOT!, CJ.] 657

to ensure admission to colleges that are made purely on relative merit to be A
objectively assessed by a responsible agency. The decisions of this court
rendered from time to time consistently and unanimously held that regulation
could be made for achieving standards of excellence in education. Reliance
is placed on Dr. Prithvi v. State of MP, [1999] 7 SCC 120 at 153 and 155;
Professor Yashpal v. State ofChhattisgarh, [2005] 2 sec 61at79 paragraph B
90.

v
A few concepts

There are a few concepts which should be very clear in our minds at c
the very outset, as these are the concepts which flow as undercurrents in the
sea of issues surfacing for resolution in all edui;ational cases. These concepts
are referable to : (i) What is 'education'? (ii) What is the inter-relationship
of Articles 19( 1)(g), 29 and 30 of the Constitution? (iii) In the context of
minority educational institutions, what difference does it make if they are
aided or unaided or if they seek recognition or affiliation or do not do so? D
(iv) Would it make any difference if the instructions imparted in such
educational institutions relate to professional or non-professional courses of
study?

Education E
'Education' according to Chambers Dictionary is "bringing up or
training; strengthening of the powers of body or mind; culture."

In Advanced Law Lexicon (P. Ramanatha Aiyar, 3rd Edition, 2005,
Vol.2) 'education' is defined in very wide terms. It is stated: "Education is F
the bringing up; the process of developing and training the powers and
capabilities of human beings. In its broadest sense the word comprehends not
merely the instruction received at school, or college but the whole course of
training moral, intellectual and physical; is not limited to the ordinary
instruction of the child in the pursuits of literature. It also comprehends a
proper attention to the moral and religious sentiments of the child. And it is
G
sometimes used as synonymous with 'learning'."

In The Sole Trustee, Lok Shikshana Trust v. C.l.T., [1976] l SCC 254,
the term 'education' was held to mean - "the systematic instruction,
schooling or training given to the young in preparation for the work of life. H
658 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A It also connotes the whole course of scholastic instruction which a person
. has received. What education connotes is the process of training and
developing the knowledge, skill, mind and character of students by formal
schooling."

In 'India - Vision 2020' published by Planning Commission of India,
B
it is stated (at p.250)- "Education is an important input both for the growth
of the society as well as for the individual. Properly planned educational input
can contribute to increase in the Gross National Products, cultural richness,
build positive attitude towards technology and increase efficiency and
effectiveness of the governance. Education opens new horizons for an
c individual, provides new aspirations and develops new values. It strengthens
competencies and develops commitment. Ed•1cation generates in an individual
a critical outlook on social and political realities and sharpens the ability to
self-examination, self-monitoring and self-criticism."

D "The term 'Knowledge Society', 'Information Society' and 'Leaming
Society' have now become familiar expressions in the educational parlance,
communicating emerging global trends with far-reaching implications for
growth and development of any society. These are not to be seen as mere
cliche or fads but words that are pregnant with unimaginable potentialities.
Information revolution, information technologies and knowledge industries,
E constitute important dimensions of an information society and contribute
effectively to the growth of a knowledge society." (ibid, µ.246)

"Alvin Toffler ( 1980) has advanced the idea that power at the dawn of
civilization resided in the 'muscle'. Power then got associated with money
F and in 20th century it shifted its focus to 'mind'. Thus the shift from physical
power to wealth power to mind power is an evolution in the shifting
foundations of economy. This shift supports the observation of Francis Bacon
who said 'knowledge itself is power'; stressing the same point and upholding
the supremacy of mind power, in his characteristic expression, Winston
Churchill said, "the Empires of the future shall be empires of the mind". Thus,
G he corroborated Bacon and profess..:d the emergence of the knowledge·
society." (ibid, p.247)

Quadri, J. has well put it in his opinion in Pai Foundation (para 287)
- "Education plays a cardinal role in transforming a society into a civilised
H nation. It accelerates the progress of the country in every sphere of national
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 659

activity. No section of the citizens can be ignored or left behind because it A
would hamper the progress of the country as a whole. It is the duty of the
State to do all it could, to educate every section of citizens who need a helping
hand in marching ahead along with others".

According to Dr. Zakir Hussain, a great statesman with democratic B
credentials, a secularist and an educationist, a true democracy is one where
each and every citizen is involved in the democratic process and this end
cannot be achieved unless we remove the prevailing large-scale illiteracy in
• our country. Unless universal education is achieved which allows every
citizen to participate actively in the processes of democracy, we can never
claim to be a true democracy. Dr. Zakir Hussain sought to ensure that the C

. seeds of knowledge were germinated in the minds of as many citizens as
possible, with a view to enabling them to perfomn their assigned roles on the
stage of democracy. [Dr. Zakir Hussain, as quoted by Justice A.M. Ahmadi,
the then Chief Justice of India, [!996] 2 SCC (J) I, at 2-3.]
D
Under Article 4 l of the Constitution, right to education, amongst others,
is obligated to be secured by the State by making effective provision therefor.
Fundamental duties recognized by Article 5 IA include, amongst others, (i)
to develop the scientific temper, humanism and the spirit of inquiry and
refomn; and (ii) to strive towards excellence in all spheres of individual and
collective activity so that the nation constantly rises to higher levels of E
endeavour and achievement. None can be achieved or ensured except by
means of education. It is well accepted by the thinkers, philosophers and
academicians that if JUSTICE, LIBERTY, EQUALITY and FRATERNITY,
including social, economic and political justice, the golden goals set out in
the Preamble to the Constitution oflndia are to be achieved, the Indian polity F
has to be educated and educated with excellence. Education is a national
wealth which must be distributed equally and widely, as far as possible, in
the interest of creating an egalitarian society, to enable the country to rise
high and face global competition. 'Tireless striving stretching its arms
towards perfection' (to borrow the expression from Rabindranath Tagore)
would not be successful unless strengthened by education. G

Education is "continual growth of personality, steady development of
character, and the qualitative improvement of life. A trained mind has the
capacity to draw spiritual nourishment rrom every experience, be it defeat
or victory, sorrow or joy. Education is training the mind and not stuffing the H
660 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A brain." (See Eternal Values for A Changing Society, Vol. III Education for
Human Excellence, published by Bharatiya Vidya Bhavan, Bombay, at p. 19)

"We want that education by which character is formed, strength of mind
is increased, the intellect is expanded, and by which one can stand on one's
own feet." "The end of all education, all training, should be man-making. The
B
end and air.i of all training is to make the man grow. The training by which
the current and expression of will are brought under control and become
fruitful is called education." (Swami Vivekanand as quoted in ibid, at p.20)

Education, accepted as a useful activity, whether for charity or for
c profit, is an occupation. Nevertheless, it does not cease to be a service to the
society. And even though an occupation, it cannot be equated to a trade or
a business.

In short, education is national wealth essential for the nation's progress
D and prosperity.

Articles 19(J)(g), 29(2) and 30(1): inter-relationship between

The right to establi~h an educational institution, for charity or for profit,
being an occupation, is protected by Article 19(1) (g). Notwithstanding the
E fact that the right of a minority to establish and administer an educational
institution would be protected by Article 19(1 )(g) yet the Founding Fathers
of the Constitution felt the need of enacting Article 30. The reasons are too
obvious to require elaboration. Article 30(1) is intended to instill confidence
in minorities against any executive or legislative encroachment on their right
F to establish and administer educational institution of their choice. Article
30(1) though styled as a right, i~ more in the nature of protection for
minorities. But for Article 30, an educational institution, even though based
on religion or language, could have been controlled or regulated by law
enacted under Clause (6) of Article 19, and so, Article 30 was enacted as a
guarantee to the minorities that so far as the religious or linguistic minorities
G are concerned, educational institu~ions of their choice will enjoy protection
from such legislation. However, such institutions cannot be ciiscriminated
against by the State solely on account of their being minority institutions. The
minorities being numerically less qua non-minorities, may not be able to
protect their religion or language and such cultural values and their educational
H institutions will be protected under Article 30, at the stage of law making.
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 661

However, merely because Article 30(1) has been enacted, minority educational A
institutions do not become immune from the operation of regulatory measure
because the right to administer does not include the right to mat-administer.
r To what extent the State regulation can go, is the issue. The real purpose
sought to be achieved by Article 30 is to give minorities some additional
protection. Once aided, the autonomy conferred by the protection of Article B
30(1) on the minority educational institution is diluted as provisions of Article
29(2) will be attracted. Certain conditions in the nature of regulations can
legitimately accompany the State aid.

- As an occupation, right to impart education is a fundamental right under
Article l9(l)(g) and, therefore, subject to control by clause (6) of Article 19. C
This right is available to all citizens without drawing a distinction between
minority and non-minority. Such a right is, generally speaking, subject to
laws imposing reasonable restrictions in the interest of the general public. In
particular, laws may be enacted on the following subjects: (i) the professional
or technical qualifications necessary for practicing any profession or carrying D
on any occupation, trade or business; (ii) the carrying on by the State, or by
a corporation owned or controlled by the State of any trade, business, industry
or service whether to the exclusion, complete or partial of citizens or
otherwise. Care is taken of minorities, religious or lin3uistic, by protecting
their right to establish and administer educational institutions of their choice
under Article 30. To some extent, what may be permissible by way of E
restriction under Article l 9(6) may fall foul of Article 30. This is the
additional protection which Article 30(1) grants to the minorities.

The employment of expressions 'right to establish and administer' and
'educational institution of their choic.e' in Article 30(1) gives the right a very F
wide amplitude. Therefore, a minority educational institution has a right to
admit students of its own choice, it can, as a matter of its own freewill, admit
students ofnon-minority community. However, non-minority students cannot
be forced upon it. The only restriction on the freewill of the minority
educational institution admitting students belonging to non-minority
community is, as spelt out by Article 30 itself, that the manner and number G
of such admissions should not be violative of the minority character of the
institution.

Aid and affiliation or recognition, both by State, bring in some amount
of regulation as a condition of receiving grant or recognition. The scope of H
662 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A such regulations, as spelt out by 6-Judge Bench decision in Rev. Sidhrajbhai
case AIR (1963) SC 540 and 9-Judge Bench case in St. Xavier's must satisfy
the following tests: (a) the regulation is reasonable and rational; (b) it is
regulative of the essential character of the institution and is conducive to
making the institution an effective vehicle of education for the minority
B community or other persons who resort to it; (c) it is directed towards
maintaining excellence of the education and efficiency of administration so
as to prevent it from falling in standards. These tests have met the approval
of Pai Foundation. However, Rev. Sidhrajbhai's case and St. Xavier's go on
to say that no regulation can be cast in 'the interest of the nation' if it does
not serve the interest of the minority as well. This proposition (except when
c it is read in the light of the opinion of Quadri, J.) stands overruled in Pai
Foundation where Kirpal, CJ, speaking for majority has ruled (vide para I 07)
- "any regulation framed in the national interest must necessarily apply to
all educational institutions, whether run by the majority or the minority. Such "
a limitation must necessarily be read into Article 30. The right under Article
D 30( 1) cannot be such as to override the national interest or to prevent the
Government from framing regulations in that behalf'. (Also see, paras I I 7
to 123 and para 138 of Pai Foundation where Kirpal, CJ has dealt with St.
Xavier's in details). No right can be absolute. Whether a minority or a non-
minority, no community can claim its interest to be above the national
interest.
E
'Minority' And 'Minority Educational Institutions'

The tenn 'minority' is not defined in the Constitution. Chief Justice
Kirpal, speaking for the majority in Pai Foundation, took clue from the
F provisions of the State Reorganisation Act and held that in view of India
having been divided into different linguistic States, carved out on the basis
of the language of the majority of persons of that region, it is the State, and
not the whole of India, that shall have to be taken as the unit for detennining
linguistic minority viz-a-viz Article 30. Inasmuch as Article 30(1) places on
par religions and languages, he held that the minority status, whether by
G reference to language or by reference to religion, shall have to be detennined
by treating the State as unit. The principle would remain the same whether
it is a Central legislation or a State legislation dealing with linguistic or
religious minority. Khare, J. (as His Lordship then was), Quadri, J. and
Variava & Bhan, JJ. in their separate concurring opinions agreed with Kirpal,
H CJ. According to Khare, J., take the population of any State as a unit, find
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 663

out its demography and calculate if the persons speaking a particular A
language or following a particular religion are less than 50% o: the
population, then give them the status of linguistic or religious minority. The
population of the entire country is irrelevant for the purpose of determining
such status. Quadri, J. opined that the word 'minority' literally means 'a non-
dominant' group. Ruma Pal, J. defined the word 'minority' to mean B
'num.erically less'. However, she refused to take the Sta!e as a unit for the
purpose of determining minority status as, in her opinion, the question of
minority status must be determined with reference to the country as a whole.
She assigned reasons for the purpose. Needless to say, her opinion is a lone
voice. Thus, with the dictum of Pai Foundation, it cannot be doubted that
minority, whether linguistic or religious, is detenninable only by reference c
to the demography of a State and not by taking into consideration the
population of the country as a whole.

Such definition of minority resolves one issue but gives rise to many
a questions when it comes to defining 'minority educational institution'. D
Whether a minority educational institution, though established by a minority,
can cater to the needs of that minority only? Can there be an enquiry to
identify the person or persons who have really established the institution? Can
a minority institution provide cross-border or inter-State educational facilities
• and yet retain the character of minority educational institution?
E
In Kera/a Education Bill, the scope and ambit of right conferred by
Article 30(1) came up for consideration. Article 30(1) does not require that
minorities based on religion should establish educational institutions for
teaching religion only or that linguistic minority should establish educational
institution for teaching its language only. The object underlying Article 30(1) F
is to see the desire of minorities being fulfilled that their children should be
brought up properly and efficiently and acquire eligibility for higher university
education and go out in the world fully equipped with such intellectual
attainments as will make them fit for entering public services, educational
institutions imparting higher instructions including general secular education.
Thus, the twin objects sought to be achieved by Article 30(1) in the interest G
of minorities are: (i) to enable such minority to conserve its religion and
language, and (ii) to give a thorough, good general education to the children
belonging to such minority. So long as the institution retains its minority
character by achieving and continuing to achieve the above said two
objectives, the institution would remain a minority institution. H
664 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A The learned Judges in Kera/a Education Bill were posed with the issue
projected by Article 29(2). What will happen if the institution was receiving
aid out of State funds? The apparent conflict was resolved by the Judges
employing a beautiful expression. They said, Article 29(2) and 30(1), read
together, clearly contemplate a minority institution with a 'sprinkling of
B outsiders' admitted in it. By admitting a member of non-minority into the
minority institution, it does not shed its character and cease to be a minority
institution. The learned Judges went on to observe that such 'sprinkling'
would enable the distinct language, script and culture of a minority being
propagated amongst non-members of a particular minority community and
that would indeed better serve the object of conserving the language, religion
c and culture of that minority.

Chief Justice Hidayatullah, speaking for the Constitution Bench in State ·"
of Kera/a, Etc. v. Very Rev. Mother Provincial, Etc., [1970] 2 SCC 417, has
not used the expression 'sprinkling' but has explained the reason why that
D was necessary. He said - "It matters not if a single philanthropic individual
with his own means, founds the institution or the community at large
contributes the funds. The position in law is the same and the intention in
either case must be to found an institution for the benefit of a minority
community by a member of that community. It is equally irrelevant that in
addition to the minority community others from other minority communities ..
E or even from the majority community can take advantage of these institutions.
Such other communities bring in income and they do not have to be turned
away to enjoy the protection". (para 8)

Much of controversy can be avoided if only the nature of the right
F conferred by Articles 29 and 30 is clearly understood. The nature and content
of these articles stands more than clarified and reconciled inter seas also with
other articles if only we understand that these twv articles are intended to
confer protection on minorities rather than a right as such. In St. Stephen's,
their Lordships clearly held (vide para 28) that Article 30(1) is "a protective
measure only" and further said (vide para 59) that Article 30(1) implied
G certain 'privilege'. Articles 29 and 30 can be better understood and utilized
if read as a protection and/or a privilege of minority rather than an abstract
right.

In this background arises the complex question of trans-border opera-
H tion of Article 30(1). Pai Foundation has clearly ruled in favour of the State
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 665

(or a province) being the unit for the purpose of deciding minority. By this A
declaration of law, certain consequences follow. First, every community in
India becomes a minority because in one or the other State of the country
it will be in minority - linguistic or religious. What would happen if a minority
belonging to a particular State establishes an educational institution in that
State and administers it but for the benefit of members belonging to that B
minority domiciled in the neighbouring State where that community is in
majority? Would it not be a fraud on the Constitution? In St. Stephen's, their
Lordships had ruled that Article 30(1) is a protective measure only for the
benefit of religious and linguistic minorities and "no illfit or camouflaged
institution should get away with the constitutional protection" (para 28). The
question need not detain us for long as it stands answered in no uncertain
c
terms in Pai Foundation. Emphasising the need for preserving its minority
character so as to enjoy the privilege of protection under Article 30(1), it is
necessary that the objective of establishing the institution was not defeated.
"If so, such an institution is under an obligation to admit the bulk of the
students fitting into the description of the minority community. Therefore, D
the students of that group residing in the State in which the institution is
located have to be necessarily admitted in a large measure because they
constitute the linguistic minority group as far as that State is concerned. In
other words, the predominance of linguistic minority students hailing from
the State in which the minority educational institution is established should E
be present. The management bodies of such institutions cannot resort to the
device ofadmitting the linguistic students of the adjoining State in which they
are in a majority, under the fagade of the protection given under Article
30(1)." (para !53). The same principle applies to religious minority. If any
other view was to be taken, the very objective of conferring the preferential
right of admission by harmoniously constructing Articles 30(1) and 29(2),
F
may be distorted.

It necessarily follows from the law laid down in Pai Foundation that
to establish a minority institution the institution must primarily cater to the
requirements of that minority of that State else its character of minority G
institution is lost. However, to borrow the words of Chief Justice S.R. Das
(in Kera/a Education Bil[) a 'sprinkling' of that minority from other State
on the same footing as a sprinkling of non-minority students, would be
permissible and would not deprive the institution of its essential character of
being a minority institution determined by reference to that State as a unit. H
666 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A Minority educational institutions: classifiable in three

To establish an educational institution is a Fundamental Right. Several
educational institutions have come up. In Kera/a Education Bill, 'minority
educational institutions' came to be classified into three categories, namely,
B (i) those which do not seek either aid or recognition from the State; (ii) those
which want aid; and (iii) those which want only recognition but not aid. It
was held that the first category protected by Article 30(1) can "exercise that
right to their hearts' content" unhampered by restrictions. The second
category is most significant. Most of the educational institutions would fall
in that category as no educational institution can, in modem times, afford to
c subsist and efficiently function without some State aid. So is with the third
category. An educational institution may survive without aid but would still
stand in need of recognition because in the absence of recognition, education
imparted therein may not really serve the purpose as for want of recognition
the students passing out from such educational institutions may not be entitled
D to admission in other educational institutions for higher studies and may also
not be eligible for securing jobs. Once an educational institution is granted
aid or aspires for recognition, the State may grant aid or recognition
accompanied by certain restrictions or conditions which must be follo\\'.,,ed as
essential to the grant of such aid or recognition. This Court clarified in Kera/a
Educational Bill that 'the right to establish and administer educational
E institutions' conferred by Article 30(1) does not include the right to mal-
administer, and that is very obvious. Merely because an educational institution
belongs to minority it cannot ask for aid or recognition though running in
unhealthy surroundings, without any competent teachers and which does not
maintain even a fair standard of teaching or which teaches matters subversive
F to the welfare of the scholars. Therefore, the State may prescribe reasonable
regulations to ensure the excellence of the educational institutions to be
granted aid or to be recognized. To wit, it is open to the State to lay down
conditions for recognition such as, an institution must have a particular
amount of funds or properties or number of students or standard of education
and so on. The dividing line is that in the name of laying down conditions
G for aid or recognition the State cannot directly or indirectly defeat the very
protection conferred by Article 30(1) on the minority to establish and
administer educational institutions. Dealing with the third category of
institutions, which seek only recognition but not aid, their Lordships held that
'the right to establish and administer educational institutions oftheir choice'
H must mean the right to establish real institutions which will effectively serve
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 667

the needs of the community and scholars who resort to these educational A
institutions. The dividing line between how far the regulation would remain
within the constitutional limits and when the regulations would cross the
limits and be vulnerable is fine yet perceptible and has been demonstrated
in several judicial pronouncements which can be cited as illustrations. They
bve been dealt with meticulous precision coupled with brevity by S.B. B
Sinha, J. in his opinion in Islamic Academy. The considerations for granting
recognition to a minority educational institution and casting accompanying
regulation would be similar as applicable to a non-minority institution subject
to two overriding considerations: (i) the recognition is not denied solely on
the ground of the educational institution being one belonging to minority, and
(ii) the regulation is neither aimed at nor has the effect of depriving the C
institution of its minority status.

Article 30(1) speaks of 'educational institutions' generally and so does
Article 29(2). These Articles do not draw any distinction between an
educational institution dispensing theological education or professional or D
non-professional education. However, the terrain of thought as has developed
through successive judicial pronouncements culminating in
Pai Foundation is that looking at the concept of education, in the backdrop
of constitutional provisions, the professional educational institutions constitute
a class by themselves as distinguished from the educational institutions
imparting non-professional education. It is not necessary for us to go deep E
into this aspect of the issue posed before us inasmuch as Pai Foundation has
clarified that merit and excellence assume special significance in the context
of professional studies. Though merit and excellence are not anathema to
non-professional education, yet at that level and due to the nature of
education which is more general, the need for merit and excellence therein F
is not of the degree, as is called for in the context of professional education.

Difference between professional and non-professional education institutions

Dealing with unaided minority educational institutions, Pai Foundation
holds that Article 30 does not come in the way of the State stepping in for G
the purpose of securing transparency and recognition of merit in the matter
of admissions. Regulatory measures for ensuring educational standards and
maintaining excellence thereof are no anathema to the protection conferred
by Article 30( I). However, a distinction is to be drawn between unaided
. minority educational institution of the level of schools and undergraduate H
668 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A colleges on one side and the institutions of higher education, in particular,
those imparting professional education on the other side. In the fonner, the
scope for merit based selection is practically nil and hence may not call for
regulation. But in the case of latter, transparency and merit have to be
unavoidably taken care of and cannot be compromised. There could be
B regulatory measures for ensuring educational standards and maintaining
excellence thereof. (See para 161, Answer to Q.4, in Pai Foundation). The
source of this distinction between two types of educational institutions
referred to hereinabove is to be found in the principle that right to administer
does not include a right to mal-administer.

C S.B. Sinha, J. has, in his separate opinion in Islamic Academy, described
(in para 199) the situation as a pyramid like situation and suggested the right
of minority to be read along with fundamental duty. Higher the level of
education, lesser are the seats and higher weighs the consideration for merit.
It will, necessarily, call for more State intervention and lesser say for
D minority.

Educational institutions imparting higher education, i.e. graduate level
and above and in particular specialized education such as technical or
professional, constitutes a separate class. While embarking upon resolving
issues of constitutional significance, where the letter of the Constitution is
E not clear, we have to keep in view the spirit of the Constitution, as spelt out
by its entire scheme. Education aimed at imparting professional or technical
qualifications stand on a different footing from other educational instruction.
Apart from other provisions, Article 19(6) is a clear indicator and so are
clauses (h) and G) of Article 51 A. Education upto undergraduate level aims
F at imparting knowledge just to enrich mind and shape the personality of a
student. Graduate level study is a doorway to admissions in educational
institutions imparting professional or technical or other higher education and,
therefore, at that level, the considerations akin to those relevant for professional
or technical educational institutions step in and become relevant. This is in
national interest and strengthening the national wealth, education included.
G Education up to undergraduate level on one hand and education at graduate
and post-graduate levels and in professional and technical institutions on the
other are to be treated on different levels inviting not identical considerations,
is a proposition not open to any more debate after Pai Foundation. A number
of legislations occupying the field of education whose constitutional validity
H has been tested and accepted suggest that while recognition or affiliation may
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 669

not be a must for education up to undergraduate level or, even if required, A
may be granted as a matter of routine, recognition or affiliation is a must and
subject to rigorous scrutiny when it comes to educational institutions
awarding degrees, graduate or post-graduate, post-graduate diplomas and
degrees in technical or professional disciplines. Some such legislations are
found referred in paras 81 and 82 of S.B. Sinha, J's opinion in Islamic B
Academy.

Having so stated and clarified these principles which would be germane
to answering the four questions posed before us, now we take up each of the
four questions seriatim and answer the same.
c
And yet, before we do so, let us quote and reproduce paragraphs 68,
69 and 70 from Pai Foundation to enable easy reference thereto as the core
of controversy touching the four questions which we are dealing with seems
to have originated therefrom. These paragraphs read as under:
D
"68.(I) It would be unfair to apply the same rules and regula-
tions regulating admission to both aided and unaided professional
.. institutions. It must be borne in mind that unaided professional
institutions are entitled to autonomy in their administration while,
at the same time, they do not forego or discard the principle of merit.
It would, therefore, be permissible for the university or the Govern- E
ment, at the time of granting recognition, to require a private
unaided institution to provide for merit-based selection while, at the
same time, giving the management sufficient discretion in admitting
students. This can be done through various methods.
F
(II) For instance, a certain percentage of the seats can be
reserved for admission by the management out of those students
who have passed the common entrance test held by itself or by the
State/university and have applied to the. college concerned for
admission, while the rest of the seats may be filled up on the basis
of counselling by the State agency. This will incidentally take care G
of poorer and backward sections of the society. The prescription of
percentage for this purpose has to be done by the Government
according to the local needs and different percentages can be fixed
for minority unaided and non-minority unaided and professional
colleges. The same principles may be applied to other non- H
670 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A professional but unaided educational institutions viz. graduation and
postgi:aduation non-professional colleges or institutes.

69. In such professional unaided institutions, the management
will have the right to select teachers as per the qualifications and
eligibility conditions laid down by the State/university subject to
B
adoption of a rational procedure of selection. A rational fee structure
should be adopted by the management, which would not be entitled
to charge a capitation fee. Appropriate machinery can be devised by
the State or university to ensure that no capitation fee is charged and
that there is no profiteering, though a reasonable surplus for the
c furtherance of education is permissible. Conditions granting
recognition or affiliation can broadly cover academic and educational
matters including the welfare of students and teachers.

70. It is well established all over the world that those who seek
D professional education must pay for it. The number of seats available
in government and government-aided colleges is very small, compared
to the number of persons seeking admission to the medical and
engineering colleges. All those eligible and deserving candidates
who could not be accommodated i~ government colleges would
stand deprived of professional education. This void in the field of
E medical and technical education has been filled by institutions that
are established in different places with the aid of donations and the
active part taken by public-minded individuals. The object of
establishing an institution has thus been to provide technical or
professional education to the deserving candidates, and is not
F necessarily a commercial venture. In order that this intention is
meaningful, the institution must be recognized. At the school level,
the recognition or affiliation has to be sought from the educational
authority or the body that conducts the school-leaving examination.
It is only on the basis of that examination that a school-leaving
certificate is granted, which enables a student to seek admission in
G further courses of study after school. A college or a professional
educational institution has to get recognition from the university
concerned, which normally requires certain conditions to be fulfilled
before recognition. It has been held that conditions of affiliation or
recognition, which pertain to the academic and educational character
H of the institution and ensure uniformity, efficiency and excelience
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 671

in educational courses are valid, and that they do not violate even A
the provisions of Article 30 of the Constitution; but conditions that
are laid down for granting recognition should not be such as may
lead to governmental control of the administration of the private
educational institutions.
B
In /s/amic Academy the majority has (vide para 12) paraphrased the
contents of para 68 by dividing it into seven parts. S.B. Sinha, J has read the
same para 68 by paraphrasing it in five parts (vide para 172 of his opinion).
However, we have reproduced para 68 by dividing it into two parts. A reading
of the majority judgment in Pai Foundation in its entirety supports the
conclusion that while the first part of para68 is law laid down by the majority, c
the second part is only by way of illustration, tantamounting to just a
suggestion or observation, as to how the State may devise a possible
mechanism so as to take care of poor and backward sections of the society.
The second part of para 68 cannot be read as law laid down by the Bench.
It is only an observation in passing or an illustrative situation which may be D
reached by consent or agreement or persuasion.

A Comment

It was submitted at the Bar that a flourish of language or just a flow
of thoughts placed on paper when read in isolation gives an impression as E
if such is the law laid down though in reality even the author of the judgment
had not intended to do so. A mere observation or a reasoning leading to
formulation of ultimate opinion on a disputed· question of law cannot be read
as a ratio of the decision. Such submissions forcefully advanced at the Bar,
have been kept in view by us while reading the several opinions in Pai F
Foundation and Islamic Academy. In Islamic Academy the petitioners-
applicants were private unaided institutions (minority and non-minority both)
and the petitioners-applicants before us are also private unaided institutions,
non-minority and minority (religions and linguistic) both. It was submitted
that the majority opinion in Islamic Academy has, while embarking upon
clarifying the law laid down in Pai Foundation, not only reiterated some of G
the propositions of law laid down in Pai Foundation but has also added
something more which was not said in Pai Foundation and the two have been
so intertwined as to become inseparable and that has been the reason for a
spate of litigation post Islamic Academy. S.B. Sinha, J., writing his separate
opinion in Islamic Academy, has not himself chosen to say whether his is a H
672 SUPREME COURT REPORTS [2005) SUPP. 2 S.C.R.

A concurring opinion or a dissenting one. However, it was pointed out that S.B.
Sinha, J's opinion is analytical, clear and more in consonance with the
majority opinion of Pai Foundation. It.was urged that the task was difficult
and unwittingly, for the sake of aiming at brevity, certain omissions have
taken place. Illustratively it was pointed out that vide para 59 of Pai
B Foundation Kirpal, CJ, has said -

"Merit is usually determined, for admission to professional and
higher education colleges, by either the marks that the student
obtains at the qualifying examination or school-leaving certificate
stage followed by the interview, or by a common entrance test
c conducted by the institution, or in the case of professional colleges,
by governm~nt agencies."
(emphasis by us)

In Islamic Academy, vide para 70, sub-para (2)(i)(a), the abovesaid
D passage has been quoted as under:-

"Admission to professional colleges should be based on merit by a
ccmmon entrance test conducted by the government agencies".
(emphasis by us)

E It was pointed out that Pai Foundation vide para 59 was just making
a note of what is 'prevailing as the usual systems' for admitting students but
Islamic Academy vide para 70 gives an impression that the view taken in Pai
Foundation is to confine to common entrance test conducted by the
government agencies as the only source of admission to professional
F colleges.

While expressing their appreciation of the task performed in Islamic
Academy of attempting resolution of several issues raised post Pai Foundation,
the learned counsel addressing us have tried to put across and demonstrate
several such anomalies which Islamic Academy read in juxta position with
G Pai Foundation has raised.

Having generally dealt with the several legal propositions, relevant for
our purpose, now we come to specifically dealing with the questions before
us.
H
P.A. !NAMDAR v. STA TE [LAHOTI, CJ.] 673

Q.1. Unaided educational institutions; appropriation of quota by State and A
enforcement of reservation policy

First, we shall deal with minority unaided institutions.

We have in the earlier part of this judgment referred to Kera/a
Education Bill and stated the three categories of minority educational B
institutions as classified and dealt with therein. The 7-Judge Bench decision
in Kera/a Education Bill still holds the field and has met the approval of I/-
Judge Bench in Pai Foundation. We cull out and state what Pai Foundation
has to say about such category of institutions:-
c
..
(i) Minority educational institution, unaided and unrecognized

Pai Foundation is unanimous on the view that the right to establish and
administer an institution, the phrase as employed in Article 30( I) of the
Constitution, comprises of the following rights: (a) to admit students; (b) to
set up a reasonable fee structure; (c) to constitute a governing body; (d) to D
appoint staff (teaching and non-teaching); and (e) to take action if there is
dereliction of duty on the part of any of the employees. (para 50)

A minority educational institution may choose not to take any aid from
the State and may also not seek any recognition or affiliation. It may be
imparting such instructions and may have students learning such knowledge
E
that do not stand in need of any recognition. Such institutions would be those
where instructions are imparted for the sake of instructions and learning is
only for the sake of learning and acquiring knowledge. Obviously, such
institutions would fall in the category of those who would exercise their right
under the protection and privilege conferred by Article 30( I) "to their hearts F
content" unhampered by any restrictions excepting those which are in
national interest based on considerations such as public safety, national
security and national integrity or are aimed at preventing exploitation of
students or teaching community. Such institutions cannot indulge in any
activity which is violative of any law of the land.
G
They are free to admit all students of their own minority community
if they so choose to do. (para 145, Pai Foundation)

(ii) Minority unaided educational institutions asking for affiliation or
recognition H
674 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A Affiliation or recognition by the State or the Board or the University
competent to do so, cannot be denied solely on the ground that the institution
is a minority educational institution. However, the urge or need for affiliation
or recognition brings in the concept of regulation by way of laying down
conditions consistent with the requirement of ensuring merit, excellence of
education and preventing mal-administration. For example, provisions can be
B
made indicating the quality of the teachers by prescribing the minimum
qualifications that they must possess and the courses of studies and curricula.
The existence of infrastructure sufficient for its growth can be stipulated as
a pre-requisite to the grant of recognition or affiliation. However, there
cannot be interference in the day-to-day administration. The essential ingre-
c dients of the management, including admission of students, recruiting of staff
and the quantum of fee to be charged, cannot be regulated. (para 55, Pai
Foundation)

Apart from the generalized position of law that right to administer does
D not include right to mal-administer, an additional source of power to regulate
by enacting condition accompanying affiliation or recognition exists. Balance
has to be struck between the two objectives: (i) that of ensuring the standard
of excellence of the institution, and (ii) that of preserving the right of the
minority to establish and administer its educational institution. Subject to
reconciliation of the two objec.:tives, any regulation accompanying affiliation
E or recognition must satisfy the triple tests: (i) the test of resonableness and
rationality, (ii) the test thatthe regulation would be conducive to making the
institution an effective vehicle of education for the minority community or
other persons who resort to it, and (iii) that there is no in-road on the
protection conferred by Article 30(1) of the Constitution, that is, by framing
F the regulation the essential character of the institution being a minority
educational institution, is not taken away. (para 122, Pai Foundation)

(iii) Minority educational institutions receiving State aid

Conditions which can normally be permitted to be imposed on the
G educational institutions receiving the grant must be related to the proper
utilization of the grant and fulfillment of the objectives of the grant without
diluting the minority status of the educational institution, as held in Pai
Foundation (See para 143 thereof). As aided institutions are not before us
and we are not called upon to deal with their cases, we leave the discussion
H at that only.
P.A. !NAMDAR v. STA TE [LAHOTI, CJ.] 675

So far as appropriation of quota by the State and enforcement of its A
reservation policy is concerned, we do not see much of difference between
non-minority and minority unaided educational institutions. We find great
force in the submission made on behalf of the petitioners that the States have
no power to insist on seat sharing in the unaided private professional
educational institutions by fixing a quota of seats between the management B
and the State. The State cannot insist on private educational institutions which
receive no aid from the State to implement State's policy on reservation for
granting admission on lesser percentage of marks, i.e. on any criterion except
merit.

As per our understanding, neither in the judgment of Pai Foundation C
nor in the Constitution Bench decision in Kera/a Education Bill, which was
approved by Pai Foundation, there is anything which would allow the State
to regulate or control admissions in the unaided professional educational
institutions so as to compel them to give up a share of the available seats
to the candidates chosen by the State, as if it was filling the seats available D
to be filled up at its discretion in such private institutions. This would amount
to nationalization of seats which has been specifically disapproved in Pai
Foundation. Such imposition of quota of State seats or enforcing reservation
policy of the State on available seats in unaided professional institutions are
acts constituting serious encroachment on th1.. right and autonomy of private
professional educational institutions. Such appropriation of seats can also not E
be held to be a regulatory measure in the interest of minority within the
meaning of Article 30( 1) or a reasonable restriction within the meaning of
Article I 9(6) of the Constitution. Merely because the resources of the State
in providing professional education are limited, private educational institutions,
which intend to provide better professional education, cannot be forced by F
the State to make admissions available on the basis of reservation policy to
less meritorious candidate. Unaided institutions, as they are not deriving any
aid from State funds, can have their own admissions if fair, transparent, non-
exploitative and based on merit.

The observations in paragraph 68 of the majority opm1on in Pai G
Foundation, on which the learned counsel for the parties have been much
at variance in their submissions, according to us, are not to be read disjointly
from other parts of the main judgment. A few observations contained in
certain paragraphs of the judgment in Pai Foundation, if read in isolation,
appear conflicting or inconsistent with each other. But if the observations H
676 SUPREME COURT REPORTS (2005) SUPP. 2 S.C.R.

A made and the conclusions derived are read as a whole, the judgment nowhere
lays down that unaided private educational institutions of minorities and non-
minorities can be forced to submit to seat sharing and reservation policy of
the State. Reading relevant parts of the judgment on which learned counsel
have made comments and counter comments and reading the whole judgment
(in the light of previous judgments of this Court, which have been approved
B
in Pai Foundation) in our considered opinion, observations in paragraph 68
merely permit unaided private institutions to maintain merit as the criterion
of admission by voluntarily agreeing for seat sharing with the State or
adopting selection based on common entrance test of the State. There are also
observations saying that they may frame their own policy to give free-ships
c and scholarships to the needy and poor students or adopt a policy in line with
the reservation policy of the state to cater to the educational needs of weaker
and poorer sections of the society.

Nowhere in Pai Foundation, either in the majority or in the minority
D _opinion, have we found any justification for imposing seat sharing quota by
the State on unaided private professional educational institutions and
reservation policy of the State or State quota seats or management seats.

We make it clear that the observations in Pai Foundation in paragraph
68 and other paragraphs mentioning fixation of percentage of quota are to
E be read and understood as possible consensual arrangements which can be
reached between unaided private professional institutions and the State.

In Pai Foundation, it has been very clearly held at several places that
unaided professional institutions should be given greater autonomy in
F determination of admission procedure and fee structure. State regulation
should be minimal and only with a view to maintain fairness and transparency
in admission procedure and to check exploitation of the students by charging
exorbitant money or capitation fees.

For the aforesaid reasons, we cannot approve of the scheme evolved in
G Islamic Academy to the extent it allows States to fix quota for seat sharing
between management and the States on the basis of local needs of each State,
in the unaided private educational institutions of both mi110rity and non-
minority categories. That part of the judgment in Islamic Academy, in our
considered opinion, does not lay down the correctJaw and runs counter to
H Pai Foundation.
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 677

NRI seats A

Here itself we are inclined to deal with the question as to seats allocated
for Non-Resident Indians ('NRI', for short) or NRJ seats. It is common
knowledge that some of the institutions grant admiss·ions to certain number
of students under such quota by charging a higher amount of fee. In fact, B
the term 'NRI' in relation to admissions is a misnomer. By and large, we have
noticed in cases after cases coming to this Court, neither the students who
get admissions under this category nor their parents are NRis. In effect and
reality, under this category, less meritorious students, but who can afford to
bring more money, get admission. During the course of hearing, it was
pointed out that a limited number of such seats should be made available as c
the money brought by such students admitted against NRI quota enables the
educational institutions to strengthen its level of education and also to enlarge
its educational activities. It was also pointed out that people of Indian origin,
who have migrated to other countries, have a desire to bring back their
children to their own country as they not only get education but also get D
reunited with Indian cultural ethos by virtue of being here. They also wish
the money which they would be spending elsewher$' on education of their
children should rather reach their own motherland. A limited reservation of
such seats, not exceeding 15%, ill: our opinion, may be made available to
NRls depending on the discretion of the management subject to two
conditions. First, such seats should be utilized bona fide by the NRis only E
and for their children or wards. Secondly, within this quota, the merit should
not be given a complete go-by. The amount of money, in whatever form
collected from such NR!s, should be utilized for benefiting students such as
from economically weaker sections of the society, whom, on well defined
criteria, the educational institution may admit on subsidized payment of their F
fee. To prevent misutilisation of such quota or any malpractice referable to
NRI quota seats, suitable legislation or regulation needs to be framed. So long
as the State does not do it, it will be for the Committees constituted pursuant
to the directions in Islamic Academy to regulate.

Our answer tv the first question is that neither the policy of reservation G
can be enforced by the State nor any quota or percentage of admissions can
be carved out to be appropriated by the State in a minority or non-minority
unaided educational institution. Minority. institutions are free to admit
students of their own choice including students of non-minority community
as also members of their own community from other States, both to a limited H
678 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A extent only and not in a manner and to such an extent that their minority
educational institution status is lost. If they do so, they lose the protection
of Article 30(1).

Q.2. Admission procedure of unaided educational institutions.
B
So far as the minority unaided institutions are concerned to admit
students being one of the components of "right to establish and administer
an institution", the State cannot interfere therewith. Upto the level of
undergraduate education, the minority unaided educational institutions enjoy >
total freedom.
c
However, different considerations would apply for graduate and post-
graduate level of education, as also for technical and professional educational
institutions. Such education cannot be imparted by any institution unless
recognized by or affiliated with any competent authority created by law, such
D as a University, Board, Central or State Government or the like. Excellence
in education and maintenance of high standards at this level are a must. To
fulfill these objectives, the State can and rather must, in national interest, step
in. The education, knowledge and learning at this !eve! possessed by
individuals collectively constitutes national wealth.

E Pai Foundation has already held that the minority status of educational
institutions is to be determined by treating the States as units. Students of that
community residing in other States where they are not in minority, shall not
be considered to be minority in that particular State and hence their admission
would be at par with other non-minority students of that State. Such
F admissions will be only to a limited extent that is like a 'sprinkling' of such
admissions, the tenn we have used earlier borrowing from Kera/a Education
Bill, 1957. In minority educational institutions, aided or unaided, admissions
shall be at the State level. Transparency and merit shall have to be assured.

Whether minority or non-minority institutions, there may be more than
G one similarly situated institutions imparting education in any one discipline,
in any State. The same aspirant seeking admission to take education in any
one discipline of education shall have to purchase admission forms from
several institutions and appear at several admission tests conducted at
different places on same or different dates and there may be a clash of dates.
H If the same candidate is required to appear in several tests, he would be
- P.A. !NAMDAR v. STA TE [LAHOTI, CJ.]

subjected to unnecessary and avoidable expenditure and inconvenience.
There is nothing wrong in an entrance test being held for one group of
679

A

institutions imparting same or similar education. Such institutions situated in
• one State or in more than one State may join together and hold a common
entrance test or the State may itself or through an agency arrange for holding
of such test. Out of such common merit list the successful candidates can be
B
identified and chosen for being allotted to different institutions depending on
the courses of study offered, the number of seats, the kind of minority to
which the institution belongs and other relevant factors. Such an agency
conducting Common Entrance Test (CET, for short) must be one enjoying
utmost credibility and expertise in the matter. This would better ensure the
fulfillment of twin objects of transparency and merit. CET is necessary in C
the interest of achieving the said objectives and also for saving the student
community from harassment and exploitation. Holding of such common
entrance test followed by centralized counseling or, in other words, single
window system regulating admissions does not cause any dent in the right
of minority unaided educational institutions to admit students of their choice. D
Such choice can be exercised from out of list of successful candidates
prepared at the CETwithout altering the order of merit inter se of the students
so chosen.

Pai Foundation has held that minority unaided institutions can
legitimately claim unfettered fundamental right to choose the students to be E
allowed admissions and the procedure therefor subject to its being fair,
transparent and non-exploitative. The same principle applies to non-minority
unaided institutions. There may be a single institution imparting a particular
type of education which is not being imparted by any other institution and
having its own admission procedure fulfilling the test of being fair, transparent F
and non-exploitative. All institutions imparting same or similar professional
education can join together for holding a common entrance test satisfying the
abovesaid triple tests. The State can also provide a procedure of holding a
common entrance test in the interest of securing fair and merit-based
admissions and preventing mal-administration. The admission procedure so
adopted by private institution or group of institutions, if it fails to satisfy all G
or any of the triple tests, indicated hereinabove, can be taken over by the State
substituting its own procedure. The second question is answered accordingly.

It needs to be specifically stated that having regard to the larger interest
and welfare of the student community to promote merit, achieve excellence H
680 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A and curb mal-practices, it would be permissible to regulate admissions by
providing a centralized and single window procedure. Such a procedure, to
a large extent, can secure grant of merit based__adinissions on a transparent
basis. Till regulations are framed, the admission committees can oversee
admissions so as to ensure that merit is not the casualty.
B
Q. 3 Fee, regulation of

To set up a reasonable fee structure is also a component of "the right
to establish and administer an institution" within the meaning of Article 30(1)
of the Constitution, as per the law declared in Pai Foundation. Every
c institution is free to devise its own fee structure subject to the limitation that
there can be no profiteering and no capitation fee can be charged directly
or indirectly, or in any form (Paras 56 to 58 and 161 [Answer to Q.5(c)] of
Pai Foundation are relevant in this regard).

D Capitation Fees

Capitation fee cannot be permitted to be charged and no seat can be
permitted to be appropriated by payment of capitation fee. 'Profession' has
to be distinguished from 'business' or a mere 'occupation'. While in business,
and to a certain extent in occupation, there is a profit motive, profession is
E primarily a service to society wherein earning is secondary or incidental. A
student who gets a professional degree by payment of capitation fee, once
qualified as a professional, is likely to aim more ilt earning rather than serving
and that becomes a bane to the society. The charging of capitation fee by
unaided minority and non-minority institutions for professional courses is just
F not permissible. Similarly, profiteering is also not permissible. Despite the
legal position, this Court cannot shut its eyes to the hard realities of
commercialization of education and evil p!"r:ctices being adopted by many
institutions to earn large amounts for their private or selfish ends. If capitation
fee and profiteering is to be checked, the method of admission has to be
regulated so that the admissions are based on merit and transparency and the
G students are not exploited. It is permissible to regulate admission and fee
structure for achieving the purpose just stated.

Our answer to Question-3 is that every institution is free to devise its
own fee structure but the same can be regulated in the interest of preventing
H profiteering. No capitation fee can be charged.
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 681

Q.4. Committees formed pursuant to Islamic Academy A

Most vehement attack was laid by aH the learned counsel appearing for
the petitioner-applicants on that part of Islamic Academy which has directed
the constitution of two committees dealing with admissions and fee structure.
Attention of the Court was invited to paras 35,37, 38, 45 and 161 (answer B
to question 9) of Pai Foundation wherein similar scheme framed in Unni
Krishnan was specifically struck down. Vide para 45, Chief Justice Kirpal
has clearly ruled that the decision in Unni Krishnan insofar as it framed the
scheme relating to the grant of admission and the fixing of the fee, was not
correct and to that extent the said decision and the consequent directions
given to UGC, AICTE, MCI, the Central and the State Governments etc. are c
overruled. Vide para 161, Pai Foundation upheld Unni Krishnan to the extent
to which it holds the right to primary education as a fundamental right, but
the scheme was overruled. However, the principle that there should not be
capitation fee or profiteering was upheld. Leverage was allowed to educa-
tional institutions to generate reasonable surplus to meet cost of expansion D
and augmentation of facilities which would not amount to profiteering. It was
submitted that Islamic Academy has once again restored such Committees
which were done away with by Pai Foundation.

The learned senior counsel appearing for different private professional
institutions, who have questionec:[ the scheme of permanent Committees set E
up in the judgment of Islamic Academy, very fairly do not dispute that even
unaided minority institutions can be subjected to regulatory measures with
a view to curb commercialization of education, profiteering in it and
exploitation of students. Policing is permissible but not nationalization or
total take over, submitted Shri Harish Salve, the learned senior counsel. F
Regulatory measures to ensure fairness and transparency in admission
procedures to be based on merit have not been opposed as objectionable
though a mechanism other than formation of Committees in terms of Islamic
Academy was insisted on and pressed for. Similarly, it was urged that
regulatory measures, to the extent permissible, may form part of conditions
of recognition and affiliation by the university concerned and/or MCI and G
AICTE for maintaining standards of excellence in professional education.
Such measures have also not been questioned as violative of the educational
rights of either minorities or non· minorities.

The f\vo committees for 1nonitoring admission procedure and determining H
682 SUPREME COURT REPORTS (2005] SUPP. 2 S.C.R.

A fee structure in the judgment of Islamic Academy, are in our view, permissible
as regulatory measures aimed at protecting the interest of the student
community as a whole as also the minorities themselves, in maintaining
required standards of professional education on non-exploitative terms in
their institutions. Legal provisions made by the State Legislatures or the
B scheme evolved by the Court for monitoring admission procedure and fee
fixation do not violate the right of minorities under Article 30(1) or the right
of minorities and non-minorities under Article 19(l)(g). They are reasonable
restrictions in the interest of minority institutions permissible under Article
30(1) and in the interest of general public under Article 19(6) of the '•

Constitution.
c
The suggestion made on behalf of minorities and non-minorities that
the same purpose for which Committees have been set up can be achieved
by post-audit or checks after the institutions have adopted their own
admission procedure and fee structure, is unacceptable for the reasons shown
D by experience of the educational authorities of various States. Unless the
admission procedure and fixation of fees is regulated and controlled at the
initial stage, the evil of unfair practice of granting admission on available
seats guided by the paying capacity of the candidates would be impossible
to curb.

E Non-minority unaided institutions can also be subjected to similar
restrictions which are found reasonable and in the interest of student
community. Professional education should be made accessible on the criterion
of merit and on non-exploitative terms to all eligible students on an uniform
basis. Minorities or non-minorities, in exercise of their educational rights in
F the field of professional education have an obligation and a duty to maintain
requisite standards of professional education by giving admissions based on
merit and making education equally accessible to eligible students through
a fair and transparent admission procedure and based on a reasonable fee-
structure.

G In our considered view, on the basis of judgment in Pai Foundation and
various previous judgments of this Court which have been taken into
consideration in that case, the scheme evolved of setting up the two
Committees for regulating admissions and determining fee structure by the
judgment in Islamic Academy cannot be faulted either on the ground of
H alleged infringement of Article 19( 1)(g) in case of unaided professional
P.A. !NAMDAR v. STA TE [LAHOTI, CJ.] 683

educational institutions of both categories and Article 19(1 )(g) read with A
Article 30 in case of unaided professional institutions of minorities.

A fortiori, we do not see any impediment to the constitution of the
Committees as a stopgap or adhoc arrangement made in exercise of the power
c0nferred on this Court by Article 142 of the Constitution until a suitable B
legislation or regulation framed by the State steps in. Such Committees
cannot be equated with Unni Krishnan Committees which were supposed to
be permanent in nature.

However, we would like·to sound a note of caution to such Committees.
The learned counsel appearing for the petitioners have severely criticised the C
functioning of some of the Committees so constituted. It was pointed out by
citing concrete examples that some of the Committees have indulged in
assuming such powers and perfonning such functions as were never given
or intended to be given to them by Islamic Academy. Certain decisions of
some of the Committees were subjected to serious criticism by pointing out D
that the fee structure approved by them was abysmally low which has
rendered the functioning of the institutions almost impossible or made the
institutions run into losses. Jn some of the institutions, the teachers have left
their job and migrated to other institutions as it was not possible for the
management to retain talented and highly qualified teachers against the salary
permitted by the Committees. Retired High Court Judges heading the E
Committees are assisted by experts in accounts and management. They also
have the benefit of hearing the contending parties. We expect the Committees,
so long as they remain functional, to be more sensitive and to act rationally
and reasonably with due regard for realities. They should refrain from
generalizing fee structures and, where needed, should go into accounts, F
schemes, plans and budgets of an individual institution for the purpose of
finding out what would be an ideal and reasonable fee structure for that
institution.

We make it clear that in case of any individual institution, if any of the
Committees is found to have exceeded its powers by unduly interfering in G
the administrative and financial matters of the unaided private professional
institutions, the decision of the Committee being quasi:iudicial in nature,
would always be subject to judicial review.

On Question-4, our conclusion, therefore, is that the judgment in Islamic H
684 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A Academy, in so far as it evolves the scheme of two Committees, one each
for admission and fee structure, does not go beyond the law laid down in
Pai Foundation and earlier decisions of this Court, which have been
approved in that case. The challenge to setting up of two Committees in
accordance with the decision in Islamic Academy, therefore, fails. However,
B the observation by way of clarification, contained in the latter part of para
19 of Islamic Academy which speaks of quota and fixation of percentage by
State Government is rendered redundant and must go in view of what has
been already held by us in the earlier part of this judgment while dealing with
Question No. I.

C Epilogue

We have answered the four questions fonnulated by us in the manner
indicated hereinabove. All other issues which we leave untouched, may be
dealt with by the regular Benches which will take up individual cases for
D decision.

We have placed on record in the earlier part of this judgment and, yet, •
before parting we would like to reiterate, that certain recitals, certain
observations and certain findings in Pai Foundation are contradictory inter
se and such conflict can only be resolved by a Bench of a coram larger than
E Pai Foundation. There are several questions which have remained unanswered
and there are certain questions which have cropped up post Pai Foundation
and Islamic Academy. To the extent the area is left open, the Benches hearing
individual cases after this judgment would find the answers. Issues referable
to those areas which are already covered by Pai Foundation and yet open
F to question shall have to be answered by a Bench of a larger coram than Pai
Foundation. We leave those issues to be taken care of by posterity.

We are also conscious of the fact that admission process in several
professional educational institutions has already commenced. Some admissions
have been made or are in the process of being made in consonance with the
G schemes and procedures as approved by Committees and in some cases
pursuant to interim directions made by this Court or by the High Courts. This
judgment shall not have the effect of disturbing the admissions already made
or with regard to which the process has already commenced. The law, as laid
down in this judgment, shall be given effect to from the academic year
H commencing next after the pronouncement of this judgment.
P.A. !NAMDAR v. STATE [LAHOTI, CJ.] 685

It is for the Central Government, or for the State Governments, in the A
absence of a Central legislation, to come out with a detailed well thought out
legislation on the subject. Such a legislation is long awaited. States must act
towards this direction. Judicial wing of the State is called upon to act when
the other two wings, the Legislature and the Executive, do not act. Earlier
the Union of India and the State Governments act, the better it would be. The
B
Committees regulating admission procedure and fee structure shall continue
to exist, but only as a temporary measure and an inevitable passing phase
until the Central Government or the State Governments are able to devise
a suitable mechanism and appoint competent authority in consonance with
the observations made hereinabove. Needless to say, any decision taken by
such Committees and by the Central or the State Governments, shall be open c
to judicial review in accordance with the settled parameters for the exercise
of such jurisdiction.

Before parting, we would like to place on record our appreciation of
the valuable assistance rendered by all the learned senior counsel and other
D
counsel appearing in the case and who have addressed us, highlighting very
many aspects of the ticklish issues in the field of professional education
which have cropped up for decision in the light of the I I-Judge Bench
decision in Pai Foundation and Constitution Bench decision in Is/aniic
Academy. But for their assistance, the issues would have defied resolution.
E
All the petitions, Civil Appeals and !As shall now be listed before
appropriate Benches for hearing.

R.P Answering the reference.