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PETITIONER: A.N. PARASURAMAN ETC.

       Vs.

RESPONDENT: STATE OF TAMIL NADU

DATE OF JUDGMENT05/10/1989

BENCH: SHARMA, L.M. (J) BENCH: SHARMA, L.M. (J) THOMMEN, T.K. (J)

CITATION:  1990 AIR   40            1989 SCR  Supl. (1) 371  1989 SCC  (4) 683        JT 1989 (4)    69  1989 SCALE  (2)759

ACT:     Constitution  of  India, 1950:  Article  14--Tamil  Nadu Private    Educational   Institutions   (Regulation)    Act, 1966--Whether violative of.     Tamil Nadu Private Educational Institutions (Regulation) Act,  1966:  Sections  2(c), 3(a), 3(b), 6, 7,  15,  22  and 28--Whether invalid and ultra vires.     Administrative  Law: Delegation of  power----Determining legislative policy and rule of conduct--Essential  functions of Legislature-Whether could be delegated.

HEADNOTE:     The  appellants  are interested in  running  educational institutions  which are covered by the  expression  "private educational institution" within the meaning of Section  2(f) of the Tamil Nadu Private Educational Institutions  (Regula- tion)  Act, 1966. The vires of the Act  especially  sections 2(c),  3(a), 3(b), 6, 7, read with sections 15, 22  and  28, was  challenged  before  the High Court, by way  of  a  writ petition.     The  High  Court struck down section 28 and  upheld  the other  sections. This appeal by certificate is  against  the High  Court’s  judgment upholding the validity of  the  said sections. As regards the striking down of section 28, it has not been impugned by the respondent-State.     The appellants contended that the Act does not lay  down any  guideline  for the exercise of power by  the  delegated authority and so the decision of the competent authority  is bound  to be discriminatory and arbitrary. It was also  con- tended that the Act imposed unreasonable restrictions on the appellants in the running of tutorial institutions, and such regulations  were violative of Article 29(1)(g) of the  Con- stitution of India.     On  behalf of the respondent, it was stated that  suffi- cient  guidance is available to the authority concerned,  by virtue  of  subsection  (2)(c) of Section 4  and  hence  the appellants’ contentions were not justified. 372 Allowing the appeal,     HELD: 1.1. It is well established that determination  of legislative  policy and formulation of rule of  conduct  are

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essential  legislative functions which cannot be  delegated. What  is permissible is to leave to the delegated  authority the  task  of implementing the object of the Act  after  the legislature  lays down adequate guidelines for the  exercise of power. Examined in this light, the impugned provisions of the Tamil Nadu Private Educational Institutions (Regulation) Act,  1966 miserably fail to come to the required  standard. These sections are held to be invalid. They are inextricably bound up with the other parts of the Act so as to form  part of  a  single scheme, and it is not possible  to  sever  the other parts of the Act and save them. Hence, the entire  Act is declared ultra vires. [376D-E; 379G]     1.2.  There  is  no indication,  whatsoever,  about  the legislative  policy or the accepted rule of conduct  on  the vital  issue about the maintenance of academic  standard  of the  institution and the other requirements relating to  the building, library and necessary amenities for the  students, as  the  Act is absolutely silent about the criteria  to  be adopted by the prescribed authority for granting or refusing permission. Even the rules which were made under Section  27 in 1968 and called the Tamil Nadu Private Educational Insti- tutions (Regulation) Rules, 1968, are not called upon to lay down any norm on these issues and naturally do not make  any reference to these aspects. The result is that the power  to grant  or refuse permission is to be exercised according  to the whims of the authority and it may differ from person  to person  holding the office. The danger of  arbitrariness  is enhanced by the unrestricted and unguided discretion  vested in the State Government under Section 2(c) of the Act in the choice of competent authority. [377E-G]     2.1. Section 6 which empowers the competent authority to grant  or  refuse to grant permission for  establishing  and running  an  institution does not give any idea  as  to  the conditions  which it has to fulfil before it can  apply  for permission  under the Act, nor are the tests  indicated  for refusing  permission  or cancelling under Section  7  of  an already granted permission. [376H; 377A]      2.2. The only safeguard given to the applicant institu- tion is to be found in the first proviso to Section 6  which says  that  the permission shall not be refused  unless  the applicant has been given an opportunity of making his repre- sentation, but that does not by itself protect the applicant from  discriminatory treatment. So far as Section 7  dealing with 373 power to cancel the permission granted earlier is concerned, no objection can be taken to the first part of the  section, whereunder the permission may be cancelled in case of fraud, misrepresentation,  suppression of material  particulars  or contravention of any provision of the Act or the Rules.  But the  other  ground on which the authority can  exercise  its power  being contravention "of any direction issued  by  the competent  authority under this Act" again suffers from  the vice of arbitrariness. [378B-D]     2.3  Section 15 is too wide in terms and does not  indi- cate the nature of the direction or the extent within  which the  authority  should confine itself while  exercising  the power. Similarly under Section 22, the State Government  has been  vested  with unrestricted discretion  in  picking  and choosing  the  institutions  for  exemption  from  the  Act. [378D-E]     State  of  West Bengal v. Anwar Ali Sarkar,  [1952]  SCR 284; Kunnathat Thathunni Moopil Nair v. The State of  Kerala and Anr., [1961] 3 SCR 77; Harakchand Ratanchand Banthia and Ors. v. Union of India & Ors., [1970] 1 SCR 479, relied on.

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JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 182 1 to 1826 of 1971 etc. etc.     From  the  Judgment  and Order dated  11.8.1971  of  the Madras  High Court in Writ Petition Nos. 3818,  4019,  4020, 4254, 4566 of 1968 and 82 of 1969.     S.  Padmanabhan,  K.R. Nambiar, A.T.M. Sampath  for  the Appellants and Appellant-in-person in C.A. No. 2062 of 1971.     K.   Rajendra  Chowdhary and V.  Krishnamurthy  for  the Respondent. The Judgment of the Court was delivered by     SHARMA,  J.   The  question involved  in  these  appeals relates  to the vires of the Tamil Nadu Private  Educational Institutions (Regulation) Act, 1966, hereinafter referred to as the Act. The appellants are interested in running  educa- tional  institutions,  which are covered by  the  expression "private  educational institution" within the meaning of  s. 2(f) of the Act. The main challenge is directed against  ss. 2(c), 3(a), 3(b), 6, 7 read with ss. 15, 22 and 28. The High Court struck down s. 28 and upheld the other sections.  That part of the judgment where s. 28 374 has been declared to be invalid has not been impugned by the respondent-State.     2.  The  provisions of the Act which  are  relevant  for appreciating  the  ground  urged by the  appellants  are  as follows. Section 3 mandatorily requires a private education- al  institution  to obtain the permission of  the  competent authority for the purpose of running it. The Manager of such an institution has to, as required by s. 4, make an applica- tion for permission in the prescribed form accompanied by  a fee. Section 6 lays down the power of the competent authori- ty to deal with such an application in the following terms:                         "6. Grant of permission.--On receipt               of  an application under Section 4 the  compe-               tent  authority may grant or refuse  to  grant               the  permission after taking  into  considera-               tion, the particulars contained in such appli-               cation:                         Provided  that the permission  shall               not  be refused under this Section unless  the               applicant  has  been given an  opportunity  of               making his representation:                         Provided  further  that in  case  of               refusal  of permission the applicant shall  be               entitled  to refund to one-half of the  amount               of the fee accompanying the application. The  competent authority is empowered under s. 7  to  cancel the  permission in certain circumstances. One of the  condi- tions  for exercise of power is contravention of any  direc- tion  issued  by the competent authority under  s.  15.  The power  to exempt any institution from the provisions of  the Act is vested in the State Government under s. 22, which  is quoted below:                         "22. Power to  exempt--Notwithstand-               ing  anything contained in this Act, the  Gov-               ernment  may, subject to which  conditions  as               they  deem  fit, by  notification  exempt  any               private  educational institution or  class  of               private  educational institutions from all  or               any of the provisions of this Act or from  any               rule made under this Act."

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Section  28,  which has been declared invalid  by  the  High Court, states that if any difficulty arises in giving effect to  the provisions of this Act, the Government may "do  any- thing which appears to them to be necessary for the purposes of removing the difficulty." 375     3.  The Act is impugned on the ground that it  does  not lay down any guide line for the exercise of the power by the delegated  authority, as a result of which the authority  is in a position to act according to his whims. The Act  having failed to indicate the conditions for exercise of power, the decision of the competent authority is bound to be discrimi- natory  and  arbitrary.  It has also been  argued  that  the restrictions  put  by  the Act on the  appellants,  who  are running tutorial institutions are unreasonable and cannot be justified  under  sub-clause  (g) of Article  19(1)  of  the Constitution.     4. The learned counsel appearing for the respondent  has attempted  to defend the Act on the ground  that  sufficient guidance  is available to the authority concerned from  sub- section  (2)(c)  of s. 4 which  enumerates  the  particulars required  to be supplied in the application for  permission. They are 10 in number and are mentioned below:               "4. Application for permission.               (1) .................               (2) Every such application shall--               (a) .............                ..............               (c)   contain   the   following   particulars,               namely:--                        (i)  the name of the  private  educa-               tional institution and the name and address of               the manager;                        (ii)   the  certificate,  degree   or               diploma  for  which such  private  educational               institution  prepares,  trains  or  guides  or               proposes  to prepare, train or guide its  stu-               dents  or the certificate, degree  or  diploma               which  it  grants or confers  or  proposes  to               grant or confer;                        (iii)  the  amenities  available   or               proposed to be made available to students;                        (iv) the names of the members of  the               teaching staff and the educational  qualifica-               tions of each such member;               376                         (v)   the   equipment,   laboratory,               library and other facilities for instructions;                        (vi)  the number of students  in  the               private educational institution and the groups               into which they are divided;               (vii)  the scales of fees payable by the  stu-               dents;                        (viii)  the  sources  of  income   to               ensure the financial stability of the  private               educational institution;                        (ix)  the situation and the  descrip-               tion  of the buildings in which  such  private               educational  institution  is being run  or  is               proposed to be prescribed;               (x)  such  other particulars as  may  be  pre-               scribed."     5.  The  point dealing with legislative  delegation  has been  considered in numerous cases of this Court, and it  is not  necessary to discuss this aspect at length. It is  well

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established  that  determination of legislative  policy  and formulation  of  rule of conduct are  essential  legislative functions which cannot be delegated. What is permissible  is to leave to the delegated authority the task of implementing the  object of the Act after the legislature lays down  ade- quate  guide lines for the exercise of power. When  examined in this light the impugned provisions miserably fail to come to the required standard.     6.  The purpose of the Act is said to regulate the  pri- vate educational institutions but does not give any idea  as to the manner in which the control over the institutions can be  exercised.  The Preamble which describes  the  Act  "for regulation"  is not helpful at all. Learned counsel for  the State  said that the Object and the Reasons for the Act  are to eradicate corrupt practices in private educational insti- tutions.  The expression "private  educational  institution" has  been  defined as meaning any college, school  or  other institution "established and run with the object of  prepar- ing,  training or guiding its students for any  certificate, degree  or diploma", and it can, therefore, be  readily  in- ferred  that  the  purpose of the Act is to  see  that  such institutions  do  not exploit the students; and  while  they impart  training and guidance to the students of a  standard which  may effectively improve their knowledge so as  to  do well  at the examination, they do not  charge  exhorbitantly for  their  services.  But the question is as  to  how  this objective  can  be achieved. Section 6  which  empowers  the competent 377 authority  to  grant or refuse to grant the  permission  for establishing  and running an institution does not  give  any idea  as to the conditions which it has to fulfil before  it can  apply for permission under the Act, nor are  the  tests indicated  for refusing permission or cancelling under s.  7 of  an already granted permission. The  authority  concerned has  been  left with unrestricted  and  unguided  discretion which renders the provisions unfair and discriminatory.     7.  It was argued on behalf of the State that  since  an application for permission has to supply the particulars  as detailed  in s. 4(2)(c) (quoted above in paragraph  4),  the Act  must  be  deemed to have given  adequate  guide  lines. Special  emphasis was given by the learned counsel  on  sub- clauses  (iii),  (iv) and (v) of s. 4(2)(c), which  ask  for information about the amenities for the students--the equip- ments, laboratory, library and other facilities for instruc- tion--and,  the names of the teachers with their  qualifica- tions.  It may be noted that the Act, beyond  requiring  the applicant  to make a factual statement about these  matters, does not direct the institution to make provisions for  them (or  for  any  or some of them) as condition  for  grant  of permission.  The maintenance of any particular  standard  of these  heads are not in contemplation at all, although  cer- tain  other aspects, not so important, have been dealt  with differently in several other sections including s. 4, 5,  9, 10  and 11. Section 4(2)(b) mandatorily requires the  appli- cant to pay the "prescribed" fee; s. 5 gives precise  direc- tion  regarding the name by which the institution is  to  be called; and s. 9 about the certificates to be issued by  it; and  s. 11 makes it obligatory to maintain accounts  in  the "prescribed" manner. But, there is no indication,  whatsoev- er,  about  the legislative policy or the accepted  rule  of conduct on the vital issue about the maintenance of academic standard  of  the  institution and  the  other  requirements relating  to the building, library and  necessary  amenities for the students, as the Act is absolutely silent about  the

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criteria  to  be  adopted by the  prescribed  authority  for granting  or refusing permission. The rules which were  made under s. 27 in 1968 and called the Tamil Nadu Private Educa- tional Institutions (Regulation) Rules, 1968, are not called upon  to lay down any norm on these issues and naturally  do not make any reference to these aspects. The result is  that the  power to grant or refuse permission is to be  exercised according  to the whims of the authority and it  may  differ from  person  to person holding the office.  The  danger  of arbitrariness  is enhanced by the unrestricted and  unguided discretion  vested in the State Government in the choice  of "competent authority" defined in s. (2)(c) in the  following words: 378                        "(c) "competent authority" means  any               person, officer or other authority  authorised               by the Government, by notification, to perform               the functions of the competent authority under               this Act for such area or in relation to  such               class of private educational institutions,  as               may be specified in the notification;" The only safeguard given to the applicant institution is  to be  found in the first proviso to s. 6 which says  that  the permission  shall  not be refused unless the  applicant  has been given an opportunity of making his representation,  but that does not by itself protect the applicant from discrimi- natory  treatment. So far s. 7 dealing with power to  cancel the  permission granted earlier is concerned,  no  objection can  be taken to the first part of the  section,  whereunder the permission may be cancelled in case of fraud,  misrepre- sentation, suppression of material particulars or contraven- tion of any provision of the Act or the Rules. But the other ground  on which the authority can exercise its power  being contravention  "of  any direction issued  by  the  competent authority  under  this Act" again suffers from the  vice  of arbitrariness.  Section  15, the relevant  section  in  this regard, states that "the competent authority may, from  time to time issue such directions regarding the management of  a private educational institution as it may think fit" (empha- sis  added). The section is too wide in terms without  indi- cating  the  nature of such direction or the  extent  within which  the authority should confine itself while  exercising the power. Similar is the situation in the matter of  exemp- tion from the Act. The power to grant exemption is contained in s. 22, quoted in paragraph 2 above.     8.  The  provisions of the Act indicate that  the  State Government  has been vested with unrestricted discretion  in the matter of the choice of the competent authority under s. 2(2)(c) as also in picking and choosing the institutions for exemption  from the Act under s. 22. Such an unguided  power bestowed on the State Government was struck down as  offend- ing  Article 14 in the case of the State of West  Bengal  v. Anwar Ali Sarkar, [1952] SCR 284. A similar situation  arose in  Kunnathat Thathunni Moopil Nair v. The State  of  Kerala and  Another,  [1961]  3 SCR 77, where, under s.  4  of  the Travancore-Kochin  Land Tax Act, 1955, all lands  were  sub- jected  to  the burden of a tax and s. 7 gave power  to  the Government to grant exemption from the operation of the Act. The  section was declared ultra vires on the ground that  it gave uncanalised, unlimited and arbitrary power, as the  Act did not lay down any principle or policy for the guidance of exercise  of  the  discretion in respect  of  the  selection contemplated by s. 7. 379     9.  Similar  is the position under ss. 6 and  7  of  the

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present  Act. The learned counsel for  the  respondent-State contended that by reference in s. 4 to the particulars to be supplied.  in  the  application for permission,  it  can  be easily  imagined  that the competent authority has  to  take into account all that may be validly relevant for the  grant or refusal of permission. We are afraid, the section  cannot be  saved  by recourse to this argument in  absence  of  any helpful  guidance  from the Act. The position in  this  case cannot  be said to be on a better footing than that  of  the Gold (Control) Act, 1968, which was challenged in Harakchand Ratanchand  Ranthia and Others v. Union of India and  Other, [1970] 1 SCR 479. As is indicated by the judgment, the  Gold (Control)  Act had to be passed as gold was finding its  way into  the  country through illegal channels,  affecting  the national  economy and hampering the country’s economic  sta- bility  and progress, and the Customs department  was  found unable to effectively combat the smuggling. Section 27(6)(a) of the said Act stated that in the matter of issue or renew- al  of licences the "Administrator shall have regard to  the number of dealers existing in the region in which the appli- cant intends to carry on business as a dealer". The  expres- sion  "region"  was not defined in the Act and  s.  27(6)(b) required the Administrator to have regard to "the anticipat- ed demand, as estimated by him, of ornaments in the region". The argument in support of the validity of the Act was  that these provisions provided adequate guidance to the  Adminis- trator, which this Court rejected, holding that the  expres- sion  "anticipated  demand"  was vague and  not  capable  of objective assessment and, therefore, was found to lead to  a great  deal of uncertainty. The other provisions  mentioning "suitability  of the applicant" in s. 27(6)(e)  and  "public interest"  in s. 27(6)(g) were also held to have  failed  in laying down any objective standard or norm so as to save the Act. The provisions of the act, with which we are dealing in the  present cases, are far less helpful for the purpose  of upholding its validity.     10.  For the reasons mentioned above, the impugned  sec- tions  of the Act must be held to be invalid.  These  provi- sions are inextricably bound up with the other parts of  the Act  so  as to form part of a single scheme, and it  is  not possible to sever the other parts of the Act and save  them. In  the result, the entire Act is declared ultra vires.  The appeal  is accordingly allowed, but, in  the  circumstances, without costs. G.N.                                     Appeal allowed. 380