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CASE NO.: Appeal (civil)  4159 of 2003

PETITIONER: Cochin University of Science & Technology & Anr

RESPONDENT: Thomas P. John & Ors

DATE OF JUDGMENT: 06/05/2008

BENCH: B.N. AGRAWAL & HARJIT SINGH BEDI & G.S. SINGHVI

JUDGMENT: J U D G M E N T REPORTABLE

CIVIL APPEAL NO.4159 OF  2003 With  C.A. No. 6418/2003

HARJIT SINGH BEDI,J.

1.      These appeals by special leave arise out of the following  facts: 2.      In the Undergraduate 4 years B. Tech. Cost-Sharing  Engineering Course of eight semesters started in the year 1995  by the appellant university, 10% seats were reserved for Non- Resident Indian Students  (hereinafter called "NRI students").   As per the prospectus such students were required to make a  deposit of US $5000 at the time of their admission towards  ’development charges’ and to pay in addition a fee of  Rs.20,000/- per semester whereas all the other categories of  students were required to pay a uniform fee of Rs.20,000/- per  semester.  From the academic year 1996-97, however, the  University increased the fee for NRI students to US $4000 per  annum whereas the other students continued to pay fee at the  rate of Rs.20,000 per semester.  This practice was continued for  three admission years, i.e.  1996-97, 1997-98 and 1998-99, but  from the year 1999-2000 the provisions made in the year 1995- 96 i.e. confining the payment of fee to a one time payment US  $5,000 and Rs.20,000/-per semester were restored.  The  respondents herein who had been admitted to the course in  question during the years 1997-98 and 1998-99 filed  representations claiming that they had been adversely treated  by the appellant University and that they were entitled to claim  parity  vis-‘-vis the fee structure for  NRI students as from the  years 1999-2000 onwards.  As the representations bore no  result, 34 of the 56 NRI students who had been admitted to the  course during the two years, filed two writ petitions before the  Kerala High Court.  On notice,  a counter affidavit was filed by  the Registrar on behalf of the appellant University pointing out  that the NRI students had not been admitted to the course on  the basis of merit and that the B. Tech. programme conducted  at the Centre was a self-financing and unaided one being run  exclusively with funds collected by way of fees.  The fact as to  the increase and the changes made from time to time in the fee  structure were broadly admitted but it was pleaded that the  Syndicate of the University had reduced the fee for the batch  entering the course for the year 1999-2000 before the  admission process had commenced and that the writ petitioners  could not claim an automatic reduction in the fee and it was

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essential that the fee structure designed for a particular batch  should be allowed to continue as to make a change midway  would lead to a complete break down of the finances of the  University.  The Division Bench of the High Court observed that  two questions arose for consideration: (1)          Is the action of the University in  charging fee at different rates from the  students on the basis of the batches in  which they were admitted arbitrary  and unfair ?

(2)     Are the petitioners estopped from  challenging the impugned action?

and then went on to examine each point under specific heads.    While dealing with the question No.1, the Court observed that  there appeared to be no rationale for subjecting the writ  petitioners to a higher rate of fee than the rate fixed in the years  1995-96 and 1999-2000 onwards more particularly as in the  written statement filed on behalf of the University no basis for a  differential treatment had been disclosed and the averment that  a reduction in the fee would lead to financial stress in the  conduct of the courses had not been substantiated by facts and  figures.  The Court also observed that even assuming that the  university had the right to fix the rate of fee, a duty was still  cast on it to act fairly,  and being a statutory body,  its decision  was to be based on reasonable facts and if a classification  between the different categories of students was pleaded,  it  must satisfy the test of having a rational basis.                         3.      On question No.2, the Court held that though the  University had issued a prospectus disclosing the fee structure,  it would not bind the respondents even on the principle of  estoppel, as estoppel was a principle of equity and as it  appeared that the fundamental right of the writ petitioner under  Article 14 of the Constitution had been violated, the same could  not be waived even by their own action.  The ultimate direction  was accordingly rendered on 2nd April 2003 as under:         "In view of the above, the writ  petitions are allowed.  The University is  directed to refund the extra fee charged  from the petitioners.  It may be noticed in  this connection that initially the levy of  an additional fee had been stayed by this  Court.  However, on a subsequent date,  the order of stay was vacated. At that  time an undertaking was given by the  University that in case the writ petition is  allowed, the disputed amount of fee shall  be refunded. The University shall do so  within two weeks from the date of receipt  of a certified copy of this order.  In case of  failure to refund within the time as  aforesaid, it shall be liable to pay the  amount along with interest at the rate of  10% from the date of deposit till the date  of refund. The University is also directed  to declare the result of the petitioners  forthwith."

4.      It is against this judgment and order of the Division Bench  that the present appeals have been filed by way of Special  Leave.  This matter first came up for hearing on 9th May 2003  on which date leave was granted and pending proceedings the  order for refund was stayed.  We have also been told that this

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Court had directed the respondent students as an interim  measure to pay the entire fee as per the fee structure under  which they had been admitted and it is the conceded position  that all the students have in fact deposited the amounts in  question. 5.      Mr. T.L.V.Iyer, the learned senior counsel appearing for  the University has seriously controverted the conclusions of the  High Court and has pointed out that it was open to a self  financing institution to fix its own fees and interference in this  exercise by the Court was not called for.  He has submitted that  there was adequate material on record to show that the  University was in need of funds as the course set up was a new  one and the necessary infrastructure and facilities had yet to be  developed which justified a substantial fee on those who could  best afford it.  The learned counsel has placed reliance for this  submission on T.M.A.Pai Foundation vs. State of Karnataka  (2002) 8 SCC 481, Islamic Academy of Education & Anr.  vs.  State of Karnataka & Ors. (2003) 6 SCC 697, P.A.Inamdar &  Ors. vs. State of Maharashtra & Ors. (2005) 6 SCC 537.   On  the second question, posed by the High Court, Mr. Iyer has  submitted that it would be a very dangerous doctrine to lay  down, that a student having accepted admission under a  particular fee structure could turn around and say at a later  stage that the fee which was called upon to pay was excessive  and that he was liable to pay such fee which was leviable on  students admitted in subsequent years.  It has been highlighted  and in this situation that there would be complete uncertaintly  in the quantum of funds available and that it would be well  nigh impossible for any educational institution to chalk out its  own parameters for development.  It has finally been submitted  that having taken admissions under a certain fee regime the  NRI students were estopped from challenging the same in  Court.  In support of this argument, the learned counsel has  relied upon Om Prakash Shukla vs. Akhilesh Kr.Shukla &  Ors. (1986) Supp. SCC 285 and Standard Chartered Bank vs.  Andhra Bank Financial Services Ltd. & Ors. (2006) 6 SCC  94. 6.      Mr. Rao, the learned senior counsel for the respondents  has, however, supported the judgment of the Division Bench  and has submitted that though the right of the University to fix  a fee was undeniable, but the quantum was required to be  reasonable and also supported by relevant material to justify  the levy.  He has pointed out the stand of the university had  been a vacillating one, as before the High Court the plea taken  was that the funds available from the NRI students were  required for infrastructure development whereas a complete  somersault had been made in the affidavit filed in this Court by  pleading that it had been observed, that during the admissions  made  in the year 1997-98 and 1998-99 meritorious NRI  students had not sought admission on account of the high fee  and it was in that eventuality that the University had decided to  re-introduce the fee structure for the year 1995-96, so as to  attract NRI students from a wider base.  It has been submitted  by Mr. Rao that the quantum of the fees and the manner of its  imposition suggested that the fees was, in fact, a capitation fee,  the levy of which was completely barred by several judgments of  this Court and in this connection has placed reliance on  T.M.A.Pai Foundation & Ors. (supra).  It has  been pleaded  that as per the budget estimates shown in the affidavit filed by  the university in this Court ( from the year 1996-97 to 1999- 2000) it was clear that there were substantial reserves with the  University during the years 1997-98 (academic years) which did  not warrant an increase in the fee.  It has finally been argued  that in the light of the judgments aforequoted, the fee structure  for the year 1995-96, and 1996-97 had been determined by a

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committee and as such any deviation therefrom by the  University was unjustified.  For this pleading on facts Mr. Rao  has referred us to Civil Appeal No. 6143/2003. 7.      At the very outset, it must be observed that the dispute  pertains only to two years and as of today there appears to be  no difficulty, as the fee structure is now devised by committees  set up under the orders of the Supreme Court in the aftermath  of the judgment in T.M.A.Pai’s case (supra).   We are also of  the opinion that the matter relating to the fixation of a fee is a  part of the administration of an educational institution and it  would impose a heavy  onus on such an institution to be called  upon to justify the levy of a fee with mathematical precision.   The Supreme Court has laid down several broad principles with  regard to the fixation of fees and as of today, those principles  are being adopted by the committees set up for the purpose.   It  must be understood at the outset that an educational  institution chalks out its own programme year wise on the basis  of the projected receipts and expenditure and for the court to  interfere in this purely administrative matter would be  impinging excessively on this right. From this, however, it  should not be understood that the educational institution has a  carte blanche to fix any fee that it likes but substantial  autonomy must be left to it.  Mr. Rao has very candidly  admitted that it was undoubtedly open to an educational  institution to fix its fee but subject to certain broad principles.   We have accordingly gone through the affidavits filed by the  appellant University and they reveal that the University had set  up the new course in the year 1995-96 for which funds were  required for infrastructure development, the development of a  faculty, which would mean making provision for adequate  salary for the teaching and supporting staff so as to attract the  best minds.  It has also been emphasized in the second affidavit  that the fees had been first increased and subsequently reduced  as experience had shown that the amount of US $ 5000 per  year was excessive and left out consideration a large number of  NRI students who could not afford the fee and in order to make  the course available to a larger segment amongst this category,  the fee had been reduced.  We are of the opinion that no  contradiction or fault can be found with the University in taking  these two stances in the two affidavits as they supplement each  other and make out a justification for the initial increase in the  fee and subsequent downward revision. 8.      We have also gone through the judgments cited by the  learned counsel.  In T.M.A.Pai case (supra) several questions  as to the rights of minority institutions to manage their own  affairs were taken up \026one of the significant questions being  the right to determine and  levy fee.  Question 5(c) and its  answer are reproduced below:         Q.5(c) Whether the statutory provisions  which regulate the facets of  administration like control over  educational agencies, control over  governing bodies, conditions of affiliation  including recognition/ withdrawal  thereof, and appointment of staff,  employees, teachers and principles  including their service conditions an  regulation of fees, etc. would interfere  with the right of administration of  minorities?

A.      So far as the statutory provisions  regulating the facets of administration  are concerned, in case of an unaided  minority educational institution, the

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regulatory measure of control should be  minimal and the conditions of recognition  as well as the conditions of affiliation to a  university or board have to be complied  with, but in the matter of day-to-day  management, like the appointment of  staff, teaching and 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.

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

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

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

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

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

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

10.     It was as a consequence of the directions issued in this  case that a committee headed by a retired Judge was set up in  each State to examine the fee structure which would be  applicable both to aided and non-aided educational institutions  with a further direction that the recommendations made by the  committee were to remain binding for 3 years. Both the  aforesaid judgments came up for consideration in P.A.Inamdar’s  case (supra) and it was observed that though a limited number  of seats not exceeding 15% may be made  available to NRIs  depending upon the discretion of the management, two  essential conditions were to be kept in mind; (1) the seats would  be utilized for the benefit of bonafide NRIs and their children or  wards and that within this quota merit would not be given a  complete go-by and (2) further that the amount of money "in  whatever form collected by such NRIs, should be utilized for the  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 fee." 11.           A reading of the aforesaid judgments would reveal that  the broad principle is that an educational institution must be  left to its own devices in the matter of fixation of fee though  profiteering or the imposition of capitation fee is to be ruled out  and that some amount towards surplus funds available to an  institution must be permitted and visualized but it has also  been laid down by inference that if the broad principles with  regard to fixation of fee are adopted, an educational institution  cannot be called upon to explain the receipts and the expenses  as before a Chartered Accountant.  We find that the  observations of the Division Bench of the High Court that no  rational basis for the fixation of a higher fee for two years had  been furnished,  lays down an onus on the educational  institution, which would be difficult for it to discharge with  accuracy.  It bears repetition that the University had set up the  self-financing B.Tech. Course in the year 1995 and no grant in

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aid was available during this period or later and it had to make  arrangements for its own funds.  We have also examined the  budget estimates, receipts and expenditure from the year 1996- 97 to 1999-2000.   We do find that there is a surplus in the  hands of institution but in the facts that a new course was  being initiated which would require huge investments, the  surplus was not unconscionable so as to require interference.   Moreover, the University had made its budget estimates keeping  in view the proposed receipts and if the fee levied by it and  accepted by the students was permitted to be cut down mid  term on the premise that the University had not been able to  explain each and every item to justify the levy, it would perhaps  be impossible for it to function effectively. 12.     We are also of the opinion that it would be well nigh  impossible for an educational institution to have an effective  administration and to maintain high educational standards, if a  downward revision during the pendency of a course would be  automatically made applicable to students admitted earlier  under a different fee structure.  A periodic revision is also  visualized in the directions of the Supreme Court in Islamic  Academy’s case (supra) wherein it has been provided that the  fee structure fixed by a committee headed by a retired Judge  would be operable for 3 years.  In the present case, we find that  the NRI students took admission on certain specific conditions  and the University has a right to insist that those conditions are  observed.   To our mind, therefore, it would not be open to the  students to contend that notwithstanding that they had been  admitted on a certain fee structure they were entitled to claim  as a matter of right, a reduction in fee to bring them at par with  students admitted later under a lower fee structure.   The  argument of estoppel in such a case would, thus, be available to  an educational institution.  The High Court was influenced by  the fact that estoppel was a plea in equity and as the right of  the NRI students under Article 14 appeared to have been  violated, this plea was not available to the University.  We do  not agree with this submission for several reasons, firstly the  NRI students have not been granted admission on their over all  merit but on the basis of the 10% reservation in their favour  and as such any claim based on equity would be suspect and  secondly each set of admissions made year wise cannot be said  to over lap the admissions made earlier or later. We have also  considered Mr. Rao’s submission that the fee had the trappings  of a capitation fee. We find no merit in this assertion, as the fee  is being levied year wise for the course.  We have also gone  through the judgments cited by Mr. Iyer.  To our mind, they are  not applicable to the facts of this case. 13.     Mr. Rao has finally submitted that as the fee for the  years 1995-96 and 1996-97 had been fixed by a committee set  up under the directions of the Supreme Court  it was not open  to the Syndicate to suggest a higher fee thereafter.  We find,  however, that there seems to be a misconception as to the facts  as it is the specific case of the University that the fee had been  fixed by the Syndicate under Section 18 of the Cochin  University of Science and Technology Act, 1976 and not by any  committee. 14.    We  therefore,  find that the judgment of the Division  Bench of the High Court cannot be sustained.  We accordingly  set it aside and allow the appeals with no order as to costs.