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PETITIONER: A POLYTECHNIC BY NAME LARSON AND TOUBRO INSTITUTE OFTECHNOLO

       Vs.

RESPONDENT: ALL INDIA COUNCIL FOR TECHNICAL EDUCATION AND ORS

DATE OF JUDGMENT10/03/1995

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) SEN, S.C. (J)

CITATION:  1995 AIR 1585            1995 SCC  (3) 287  JT 1995 (3)   203        1995 SCALE  (2)267

ACT:

HEADNOTE:

JUDGMENT: 1.   Larson and Toubro Limited, a public limited company, is a leading engineering concern in this country.  It has got a large work force required for its various projects.  In  the year  1983,  it  set  up  Larson  and  Toubro  Institute  of Technology.   For establishing and running the institute,  a trust called ’Larson and Toubro Staff and Welfare Trust’ was constituted.  Because of certain legal complications, it  is stated, the institute is being run directly by the  company, dispensing   with   the  trust.    The   institute   imparts instruction  in  four-year diploma course   sixty  seats  in diploma in mechanical engineering and sixty seats in diploma in  electrical  engineering.  According to the copy  of  the prospectus filed in 205 this  writ petition, the admission is open only to  children of  the employees of Larson and Toubro group  of  companies. It is further required that the employee should have put  in a  minimum  period  of five years of  service  as  confirmed employee on July 1st of the year of admission to enable  his child  to  claim  the eligibility.  The  admission  is  made purely  on  the basis of merit determined on  the  basis  of marks  obtained in the Secondary School  Certificate  Exami- nation of the Maharashtra State Board of Secondary Education or  an equivalent examination.  The minimum marks are  fifty per  cent in the case of general candidates and  forty  five per  cent  in the case of backward class  students.   Thirty four  per  cent of the scats arc stated to  be  reserved  in favour of backward classes.  It is further stated before  us by  Sri K.K.Venugopal, learned counsel for  the  petitioners that  no  fee whatsoever is charged or  collected  from  the students   or  from  their  parents  for  admission   and/or instruction  in the said institute.  It is stated that as  a matter  of fact, the Government of Maharashtra  had  granted permission  for  starting this Institute in  the  year  1983 subject to the specific conditions that (1) no fee shall  be

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charged  from any student of the said institution;  (2)  the parents  of the students must be Indian nationals;  (3)  the father/mother must be in service of the company for  atleast five years; (4) that government rules regarding  reservation of  thirty four per cent of scats for backward  classes  are followed and (5) that only where no candidates are available in  the  backward class category, that those scats  will  be filled  up by open category candidates.  It is  stated  that these   conditions  are  being  implicitly  and   faithfully followed by the Institute. 2.   On  February 4, 1993, this Court delivered judgment  in Unnikrishnan,  J.P.  v. State of Andhra  Pradesh  (1993  (1) S.C.C.645)  inter alia framing a scheme governing  admission to professional colleges, which expression includes colleges imparting  technical education.  The idea behind the  scheme was to put an end to the financial and other  iffcgularities which  had become rampant in these institutions,  converting most  of these institutions into teaching shops.   The  idea was to regulate admission to these colleges.  Fifty per cent of seats are to be filled purely on the basis of merit  (who shall pay only a nominal fee) and other fifty per cent being treated  as repayment seats’, the admission to  which  seats also  was to be on the basis of merit.  On review  petitions being  filed by several persons, they were entertained  only to  the limited extent of providing a certain percentage  of seats  for non-resident Indians.  It was directed that  five per cent of the scats shall be reserved for non-resident In- dian  students.  It appears that the petitioner was  one  of the review petitioners therein though it was not one of  the writ petitioners in the batch of writ petitions disposed  of on February 4, 1993. 3.   In pursuance of the judgment in Unnikrishnan, the  All- India  Council  for Technical Education framed two  sets  of regulations  under All-India Council of Technical  Education Act,  1987, viz., A.I.C.T.E. (Norms and Guidelines for  Fees and  Guidelines  for Admissions  in  Professional  Colleges) Regulations,  1994 dated May 20, 1994 and A.I.C.T.E.  (Grant of   Approval  for  starting  new  Technical   Institutions, Introduction of Courses or Programmes and Approval of intake capacity   of   seats  for  the   Courses   or   Programmes) Regulations, 1994 dated October 31, 1994.  These regulations have 206 been  framed  consistent  with and in fur  therance  of  the scheme and directions con tained in the judgment aforesaid. 4.Since  the  petitioner-institute could not  fit  itself into  the  said  scheme, it applied for  exemption  and  for appropriate  orders both from the Government  o  Maharashtra and  from  the A.I.C.T.E. Ile request was to  permit  it  to continue  according to its present scheme and, at  the  same time,  not  to  refuse  or  withdraw  the  recognition   and affiliation  granted  by  the government  and  the  council. Since  the council expressed its inability to accede to  the said request, the present writ petition was filed. 5.   It would be seen from the facts stated above that  this institute is not an engineering college but only a polytech- nic,  which  means  that  primarily it  will  cater  to  the children of comparatively lower echelons of the employees of the  company.   It is confined to the children  of  the  em- ployees  alone  and  that too employees who have  put  in  a minimum  of five years of confirmed service on 1st  July  of the  relevant year of admission.  No fee is  charged  either for  admission or for imparting instruction, (The  admission to  hostel is, of course, a different matter and  for  which charges  are  levied, to which no objection can  be  taken.)

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Admissions are being made exclusively on the basis of  merit with  reference to the marks in the qualifying  examination, viz., the marks obtained in S.S.C. Examination conducted  by the  Maharashtra State Board of Secondary Education  or  any other  equivalent examination.  No outside student is  being admitted.   The  idea is to train the students  keeping  the requirements  of  the  company in mind and  to  absorb  them ultimately in company service to the extent feasible.  It is thus  obvious that the purpose for which this institute  has been  started and is being maintained and run are in no  way inconsistent  with the underlying purpose and object  sought to be achieved by the scheme enunciated in Unnikrishnan  and the regulations framed by the A.I.C.T.E. We arc,  therefore, inclined  to allow the institute to function as at  present, i.e.,   subject   to  the   several   conditions   mentioned hereinbefore.   In  all other respects, the  regulations  by All-India Council for Technical tion shall apply as also the relevant   rules and regulations, if any, made by  the  Edu- cation  and Employment Department (including the  office  of Director  of  Technical Education,  Bombay),  Government  of Maharashtra.   It is made clear that the conditions  imposed by the Maharashtra government while permitting the institute to  be  started,  referred to above, shall  continue  to  be observed.  It shall be open to the Government of Maharashtra and  AllIndia  Council for Technical Education  to  inspect, call for records and information and take all other steps to ensure  that the institute is adhering to the  above  condi- tions.   For  this purpose, the institute  shall  send  each year, to both the government and the council, a statement of particulars  of students who had applied for  admission  and those  who had been granted admission.  The statement  shall contain  the full particulars of the students alongwith  the particulars  of their parents (in service of  the  company), their  service  particulars,  the  marks  obtained  by  each applicant and an integrated merit list and a separate  merit list of the students belonging to backward classes. 6.   At  the  same  time,  we  wanted  to  ensure  that  the institute is run by a public/ 207 charitable  trust as required by one of the clauses  of  the scheme in Unnikrishnan.  It was, however, explained to us by Sri  Venugopal that initially the company had established  a trust  for the purpose of running the said institute but  it had to dispense with the said trust because the amount  paid by the company into the said trust was not being allowed  as a  deduction  in  the assessment of the  company  under  the Income Tax Act.  It is explained that by virtue of insertion of  sub-section (9) in Section 40A of die Income Tax Act  by Finance  Act, 1984 (with retrospective effect from April  1, 1980)  the amounts paid by the company into the  trust  were held not deductible as permissible expenditure by the Income Tax  Department  and  for this reason the trust  had  to  be dispensed  with.  With a view to satisfy ourself as  to  the position  of law obtaining in this behalf, we requested  Sri J.Ramamurthy,  Senior  Advocate, to assist us  and  tell  us whether  it would be possible for the company to claim  full deduction  for the amounts paid into die trust  established, or  to be established, for running the said institute.   Sri Ramamurthy  and  Sri  Venugopal have taken  us  through  the relevant provisions of the Income Tax Act.  We find that  by virtue  of  sub-section (9) of Section 40A, it  may  not  be possible for the company to claim such full deduction.  Even if  the said trust is recognised for the purpose of  Section 80G,  the deduction can be only to the extent of  fifty  per cent   of   the  amount  paid  into  the  trust.    In   the

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circumstances,  we dispense with the said condition  in  the case  of  this  institute alone  subject  to  the  following further  conditions,  viz., the company shall open,  if  not already opened, a separate account concerning the petitioner institute.   All the expenditure incurred on  the  institute and  any  other  receipts by the  said  institute  shall  be entered  therein as also the particulars of the  application of the said amounts.  If there is any change in law relevant in  this  behalf,  it shall be open  to  the  Government  of Maharashtra,  A.I.C.T.E. or any other interested  person  to apply to this court for appropriate modification. 7.   We   are  grateful  to  Sri  J.Ramamurthy  for   gladly assisting us in the matter. 8.The   writ  petition  is  disposed  of  with   the   above directions.  No costs. 210