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PETITIONER: INSTITUTE OF HUMAN RESOURCESDEVELOPMENT & ORS. ETC. ETC.

       Vs.

RESPONDENT: T.R.RAMESHKUMAR & ORS. ETC.

DATE OF JUDGMENT12/05/1995

BENCH: MANOHAR SUJATA V. (J) BENCH: MANOHAR SUJATA V. (J) AGRAWAL, S.C. (J)

CITATION:  1995 AIR 1587            1995 SCC  (4) 211  JT 1995 (5)   181        1995 SCALE  (3)619

ACT:

HEADNOTE:

JUDGMENT:           THE 12TH DAY OF MAY, 1995 Present:           Hon’ble Mr. Justice S.C.Agrawal           Hon’ble Mrs. Justice Sujata V. Manohar Mr. Altaf Ahmed and Mr. V.R. Reddy, Additional Solicitor Generals, Mr.V.K.Beeran, Advocate General, Mr.Soli J.Sorabjee, Mr.F.S.Nariman, Mr.Jitender Sharma, Mr.P.S.Poti, Sr. Advs., Mr.M.A.Firoz, Mr.M.T.George, Mr.G.Prakash, Ms.Baby Krishnan, Mr.E.M.S.Anam, Ms. Gunwant Dara, Mr.J.P.Varghees, Mr.P.Guar, Mr.K.M.K.Nair and Ms.Malini Poduval, S.P.Sharma, Advs. with them for the appearing parties.           J U D G M E N T The following Judgment of the Court was delivered:           IN THE SUPREME COURT OF INDIA           CIVIL APPELLATE JURISDICTION           CIVIL APPEAL NOS.45-50 OF 1995 Institute of Human Resources Development and Ors. etc. etc.                        ... Appellants            versus T.R.Rameshkumar and Ors. etc.                        ... Respondents (With C.A.Nos.51-56, 57-62, 63-68 and 69-74 of 1995)           J U D G M E N T Mrs. Sujata V.Manohar.J.      Applications for intervention are allowed.      These appeals  relate to  two colleges  set up  in  the State of  Kerala --  one started  by the  Institute of Human Resources Development  for Electronics (hereinafter referred to as  IHRDE) located at chengannur and the other started by Lal Bahadur  Sastri  Engineering  Research  and  Consultancy Centre (hereinafter  referred to  as LBS  Centre) located at Kasargod, a  backward area  in the  State of  Kerala in  the erstwhile Malabar  District.   These two  colleges have been

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set up  as self-financing  institutions  by  the  above  two Societies under  the control  of the  Government of  Kerala. Does the  scheme framed  by this  Court in  the case of Unni Krishnan. J.P.  and Ors. V. State of Andhra Pradesh and Ors. (1993 (1) SCC 645) apply to these colleges ?      The State of Kerala has an enviable record in the field of education.  The financial position of the State, however, is not strong enough for it to make an investment in the two new Engineering  Colleges --  so the  State  claims.  It  is submitted on  behalf of the State that the decision to start these two  self-financing colleges was arrived at in view of the  growing  demand  in  the  State  for  highly  qualified technical personnel in the areas of Electronics and Computer Science. At  present, the  higher educational  facilities in technical subjects  including Engineering  available  within the State  are hardly  sufficient to  absorb even  those who secure  a   high  first   class  in   the   school   leaving examinations. The  State has only nine Engineering Colleges, six are Government Colleges and three are aided colleges. In contrast, the neighbouring States of Maharashtra, Karnataka, Tamil Nadu  and Andhra  Pradesh  have  62,  55,  42  and  31 Engineering  Colleges  respectively.    In  the  absence  of facilities for higher technical education within the State a large number of students from Kerala are required to migrate to neighbouring  State  to  seek  admission  in  Engineering Colleges  there,   incurring  heavy   expenses.  Many   seek admission to  private Engineering Colleges outside the State spending large amounts in terms of fees, donations etc.      It is  claimed by the appellants that the Government of Kerala  spends   85%  of  its  education  budget  on  higher education.  Nevertheless,   this  outlay  is  inadequate  to provide modern  equipment,  qualified  faculty  members  and training  facilities   even  in   the  existing   Government Engineering,  Medical   and  other  Technical  Colleges  and Institutions. The  State is not, therefore, in a position to provide for  setting up of new Engineering Colleges. In view of   this    position,   the   Government   of   Kerala   by G.O.(MS)191/92/H.Edn. dated  24.12.1992 decided to start two self-financing Engineering Colleges from academic year 1993- 94. A  detailed report from the Institute of Human Resources Development for  Electronics  and  the  Lal  Bahadur  Sastri Engineering Research  and Consultancy  Centre was called for in this connection.      On the  basis of  the reports  submitted by  these  two institutions  the   Government  issued  G.O.(MS)68/93/H.Edn. dated 25.5.1993  fixing the  guidelines for establishment of two self-financing Engineering Colleges and for admission of students to  these two  colleges. It  was decided  that  the college to  be established by IHRDE will impart instructions for B.Tech.  Course in  Computer Engineering  and Electronic Engineering with  an intake  of 120 students in each branch. The college  established by  the Lal  Bahadur Sastri  Centre would impart  instructions for  B.Tech. Course  in  Computer Science  and   Engineering,  Electronics  and  Communication Engineering,  Electrical  and  Electronics  Engineering  and Mechanical Engineering with an intake of 60 students in each branch. As  per the scheme being operated at present, 75% of seats in  these colleges are to be filled up on the basis of open merit  applying  the  existing  reservation  principles prevailing in  the State  of Kerala. 10% of the seats are to be  filled   up  by  Scheduled  Caste  and  Scheduled  Tribe candidates and  the remaining  15% of  the seats  are to  be filled up  by children  of non-resident  Indians. Open merit seats and seats reserved for Scheduled Caste/Scheduled Tribe Candidates are  to be  filled  up  on  the  basis  of  marks

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obtained at  the common  entrance examination which is being conducted by  the Commissioner  for  Entrance  Examinations, Trivendrum. The  seats for  the NRI  quota are  also  to  be filled up  on the  basis of merit. Since the two colleges do not receive any financial help in the form of any grant from the Government  and are  self-financing institutions, tution fee has been fixed for all students at Rs.12,500/- per year. However, in  the case  of  Scheduled  Castes  and  Scheduled Tribes the tution fee is fixed at half the above amount i.e. Rs. 6,250/-  per year.  The students  who are  selected  for admission are also required to give an interest free deposit of rupees  one lakh  refundable on  completion of four years from the date of deposit or on completion of four years from the date  of deposit or on completion of the course to which the student  is admitted,  whichever  is  later.  Candidates belonging to Scheduled Castes and Scheduled Tribes, however, are exempt from payment of this deposit. Candidates selected against the  NRI quota  are required to pay US Dollars 5,000 as development charges which are non-refundable.      The college  run  by  IHRDE  is  affiliated  to  Cochin University of  Science and  Technology while the college run by Lal Bahadur Sastri Centre is affiliated to the University of Calicut. Both these institutions are societies registered under  the   Travancore-Cochin  Literary,   Scientific   and Charitable Societies Registration Act, XII of 1955. Both the societies are  established by  the Government  of Kerala and are fully  controlled by  the Government  of Kerala. The two colleges can,  therefore, be  considered  as  self-financing colleges started  by the Government of Kerala. This position has been  clarified by  G.O.MS.91/94/H.Edn.  dated  8.6.1994 which states  that IHRDE  and LBS  Centre  for  Science  and Technology are  autonomous bodies  fully owned  by the State Government. The  Government is,  therefore, pleased to order that these two self-financing Engineering Colleges set up by these bodies at Chengannur and Kasargod respectively will be treated as Government colleges and the Government undertakes to give  them financial  support in  future if the necessity arises.      The appellants  have sought to justify a departure from the scheme  set up in Unni Krishnan by pointing out that the scheme in  Unni Krishnan  is designed  for private colleges. These two  colleges, however,  are not  private  educational institutions set  up for  the purpose  of profit-making. The State  has  been  compelled  to  go  in  for  self-financing institutions in view of financial stringency. The appellants have also  submitted that the State already runs (as of now) six Government  and three  aided Engineering  Colleges which provide 2391  seats which  are "free seats" available to all candidates on  merit. The  tution fees charged in these nine institutions is  Rs. 495/-  per annum. As against these 2391 seats available  in nine  colleges, two  new  colleges  will provide an  additional 480 seats on payment basis. Since the Government already  runs or  aids a  number of  institutions where all  the  seats  are  "free"  seats,  they  should  be permitted to start two colleges with "paid" seats. The ratio between "free"  and "paid"  seats is  far more favourable to "free"  seats  than  the  50:50  ratio  laid  down  in  Unni Krishnan. Hence  it is  urged that  the appellants should be permitted to  make a  departure  from  the  scheme  in  Unni Krishnan which  requires  a  self-financing  institution  to provide 50% free seats and 50% seats on payment basis. It is also pointed  out that  while  students  occupying  payments seats in  Engineering Colleges  are charged  Rs.46,800/-  as fees, at  present, under  the scheme  as propounded here the fees per  head come  to only  Rs. 12,500/-.  The other  plus

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point of  the scheme  as propounded  is that  the State,  in discharge of  its obligation  to make special provisions for backward classes  under Article  15(4) of  the Constitution, has also  provided for  reservation of 10% of these seats in favour of Scheduled Caste and Scheduled Tribe candidates who will only  pay half the prescribed fees and will not have to pay any  deposit. This  is  done  looking  to  their  socio- economic backwardness.  In the  open merits  seats also  the reservation policy  of the  State in  respect of  such seats will operate.  Such a provision does not find a place in the scheme under Unni Krishnan.      In the  course of hearing the appellants have agreed to modify their  scheme by  reducing the  NRI quota to 10%, and increasing the  open merit seats to 80%. The appellants have also agreed  to institute  freeships or  scholarships to  be made available  to 10% of the students admitted in these two colleges which  will be  awarded on  the basis of merit-cum- means.  For   this  purpose  a  scholarship  fund  shall  be instituted with a corpus of Rs. 10 lakhs by each institution every year  for four  years. This  will be  introduced  from 1995-1996. Loan  facilities  will  be  made  available  from nationalised banks to the needy students for getting amounts to meet  their educational expenses including the payment of deposit. It  is further stated that the capital revenue loss to the  extent of  Rs. 6  lakhs each  year arising  from the reduction of  the NRI  quota will be made good by generating additional  revenue  by  the  college  through  consultancy, conduct of  short-term courses  etc. by  using the available infrastructure.      Can such  a departure  from Unni Krishnan be permitted? The basic  difference between  institutions governed  by the scheme in Unni Krishnan and the present institutions is that these  institutions   are  controlled   by  the  State  and, therefore, their  working and utilisation of funds are under the control  of the  State. The  essence of Unni Krishnan on the other  hand, can  be summed  up in  one sentence:  There should be  no commercialisation  or profit taking by private educational institutions.  This  Court  was  very  concerned about the high fees charged by private technical educational institutions. They  earned  large  profits  which  were  not utilised in  providing adequate  infrastructure or  teaching facilities in  these  institutions.  Most  private  colleges provided sub-standard  training, making  no improvements  in their equipment,  teaching  staff  or  teaching  aids.  They simply pocketed  large profits  made from heavy fees charged to students.  It was  to stop  this exploitation of students that the  scheme was  framed. In  terms, the  Unni  Krishnan scheme provides  that it  will not  be applied to Government Institutions.  It   is  true  that  Unni  Krishnan  did  not contemplate  self-financing   institutions  set   up  by  or sponsored by  the Government.  But looking to the confidence reposed by  Unni Krishnan in the Government in fixing proper fees   even    for   private    self-financing   educational institutions, it  is clear  that the scheme of Unni Krishnan applies only  to  purely  private  educational  institutions which are  self-finacing. It is designed to ensure that they do  not   make  undue  profits  or  exploit  students.  Unni Krishnan, however, is not against self-financing educational institutions. On  the contrary,  it has  recognised the need for self-financing  educational institutions  to augment the efforts  made   by  the  State  in  setting  up  educational institutions in  the field  of technical  education. It  has observed (in paragraphs 193, 194 and 196) :      "193:   Notwithstanding  the  fact  that      education is  the second  highest sector

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    of budgeted  expenditure after  defence,      the  outlay  on  education  is  woefully      inadequate to  meet  the  needs  of  the      people.  Whereas  many  other  countries      spend six  to eight  per cent  of  their      Gross National Product on education, our      expenditure on  education is  only three      per cent  of the Gross National Product.      Seventy-five to  eighty per  cent of the      expenditure goes  in paying the salaries      of  the  teachers  and  other  connected      staff. These  are the statements made in      the  Government   of  India  publication      Challenge  of   Education  --  A  Policy      Perspective  referred  to  hereinbefore.      Even so,  on account  of lack  of proper      supervision, lack of self-discipline and      commitment, the  quality and standard of      instruction in  most of  the  Government      schools  and   colleges  -   except  the      professional colleges  - is woeful. This      has  provided   an   occasion   and   an      opportunity   to   private   educational      institutions to  fill the  void, both in      terms  of  meeting  the  need  and  more      particularly in the matter of quality of      instruction. Because, the State is in no      position to  devote more  resources  and      also  because  the  need  is  constantly      growing,  it   is  not  possible  to  do      without       private        educational      institutions.................      194. The  hard reality  that emerges  is      that  private  educational  institutions      are  a  necessity  in  the  present  day      context.  It   is  not  possible  to  do      without them because the Governments are      in no  position to  meet  the  demand  -      particularly in  the sector  of  medical      and technical  education which  call for      substantial outlays.  While education is      one of  the most  important functions of      the Indian  State  it  has  no  monopoly      therein.       Private       educational      institutions   -    including   minority      educational institutions  - too  have  a      role to play.      196. So  far as unaided institutions are      concerned,  it   is  obvious  that  they      cannot be  compelled to  charge the same      fee  as   is  charged   in  Governmental      institutions. If they do so voluntarily,      it is  perfectly welcome but they cannot      be compelled  to do  so, for  the simple      reason that  they have  to meet the cost      of imparting  education from  their  own      resources -  and the  main source, apart      from donations/charities,  if  any,  can      only be  the  fees  collected  from  the      students. It  is here  that the concepts      of      ’self-financing      educational      institutions’      and       ’cost-based      educational institutions’  come in. This      situation  presents   several  difficult      problems. How  does  one  determine  the

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    ’cost of  education’ and how and by whom      can  it  be  regulated  ?  The  cost  of      education may vary, even within the same      faculty,     from     institution     to      institution.  The  facilities  provided,      equipment, infrastructure,  standard and      quality of  education obtaining may vary      from  institution  to  institution.  The      court cannot  certainly do this. It must      be done  by Government  or University or      such   other   authority   as   may   be      designated in that behalf.............      The entire  scheme in  Unni Krishnan  is  designed  for private educational  institutions.  The  contention  of  the respondent that  the two colleges in question should also be considered as  private Engineering Colleges because they are run by  two societies registered under the Travancore-Cochin Literary, Scientific  and Charitable  Societies Registration Act, 1955,  cannot be  accepted in  view of  the  Government Order dated  8.6.1994. The material which is produced before us  clearly   shows  that  these  two  societies  are  fully controlled by  the State of Kerala. The fees which have been fixed in  the present  case are  also  fixed  by  the  State Government which  has given budget details relating to these two colleges.  The appellants  have  sought  exemption  from providing 50%  free seats  in the light of the fact that the State already  runs or  aids nine Engineering Colleges which are financed  by it  and which provide 2391 free seats. What is more  important, it  is pointed out that if the financing of the  colleges is spread over all the available seats, the fees required  to be charged would be much lower than if the expenses have to be covered by the fees from only 50% of the seats. In  consequence, the  fees charges  are substantially lower  than   fees  charged  for  payments  seats  in  other Engineering Colleges  -- thus  benefiting a  large number of students who may not be in a position to pay the higher fees charged by  private engineering  colleges, but  may be  in a position to  pay the  substantially lower  fees  charged  in these two colleges.      We find  considerable merit  in this submission. In the first place,  the question  of desirability  or otherwise of the   Government    starting   self-financing    educational institutions will depend on many circumstances including the financial  capacity   of   the   State.   Looking   to   the circumstances which  have been  pointed out  in the  present case, the  appellants have  made out  a good  case for being permitted to  start two  self-financing engineering colleges controlled by  the State.  In fact,  control  by  the  State should be  considered as  a plus  point in  the light of the considerations which  moved this  Court in  Unni  Krishnan’s case   because    it   would    be   a   safeguard   against commercialisation and exploitation. To ensure this we direct that the  State fixes  the fees  of these two colleges every year after  taking into  account the  financial needs of the colleges  and  the  accounts  of  these  two  Societies  and Colleges which should be audited in the same manner as other State-run institutions.      The appellants  have  provided  for  an  interest  free deposit  of   rupees  one   lakh  from  each  Student  (with exceptions  set   out  earlier)   to  meet   the  costs   of infrastructural and other permanent facilities. This kind of a deposit  cannot be  accepted as a permanent feature of the scheme. One  can understand  the need  for such a deposit in the initial  stages when proper infrastructure has to be set up and  equipment  purchased  for  technical  colleges.  The

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initial capital costs have to be met. But to accept that the students taking  education in these institutions should bear for ever  the burden of the entire cost of long-term capital expenditure would  not be  fair. It is, therefore, necessary and desirable  that other  funding should  be sought  in the form  of   grants,  loans   or  voluntary   donations   from foundations or  organisations  that  may  benefit  from  the trained personnel  produced by  these colleges  in order  to finance the  capital outlays  in these  institutions. Until, however, such  finances become  available, there  may not be any option  but to  take a  deposit  from  the  students  as proposed. We  direct, however,  that the  funds which become available  as   a  result   of  these   deposits  should  be specifically  earmarked  for  ascertained  requirements  and projects and  should be  utilised only  against  those.  The quantum of deposit shall be reviewed by the State every year looking to the requirements of the two colleges and it shall be refixed  every year, though on no account shall it exceed the proposed amount of rupees one lakh. The State shall also frame a  scheme to  eliminate the  taking of  such a deposit over a period of time.      The NRI  quota has  already been  reduced to  10%.  The future NRI  quota, however,  shall be in accordance with the directions of  this Court  as may be given from time to time under Unni  Krishnan. The  additional features of the scheme which relate  to  reservation  and  fee  concession  are  in accordance with  the obligation  cast  on  the  State  under Article 15(4)  of the Constitutions of India. Hence with the above modifications  and observations,  we  approve  of  the scheme.      It has been strongly urged before us by the respondents that such  a departure  from the  scheme  in  Unni  Krishnan cannot and  should not be permitted. In the first place, the scheme in  Unni Krishnan does not strictly apply to the case which is  before  us.  Nevertheless,  we  have  applied  the underlying principles  of the scheme in Unni Krishnan to the scheme which  is before  us and  have found that this scheme broadly meets  the aims  and objectives  propounded in  Unni Krishnan. This Court has itself not considered the scheme in Unni Krishnan  as sacrosanct. It was required to be modified in a  number of  cases. Thus,  for example,  in  T.M.A.  Pai Foundation & Ors. v. State of Karnataka & Ors. (1994 (2) SCC 734) and  T.M.A. Pai  Foundation &  Ors. (II)  v.  State  of Karnataka  &   Ors.  (1993   (4)  SCC   286).  the  minority educational  institutions   applied  for   and  obtained   a substantial modification  of the  scheme in  view  of  their right  to   reserve  50%  of  the  seats  for  the  minority community. In  Unni Krishnan.  P.J. and  Ors.  v.  State  of Andhra Pradesh  and Ors.  (1993 (4)  SCC 111) and T.M.A. Pai Foundation & Ors. (I) v. State of Karnataka & Ors. (1993 (4) SCC 276), the NRI quota was varied looking to the exigencies of the  situation. A  special quota  for NRIs  was permitted during  the  period  of  transition.  Looking  to  the  very different background  and the  financial constraints  of the State which  has impelled the State to formulate the present scheme of  the self-financing Engineering Colleges under the control of  the Government,  we do  not see  any  reason  to withhold sanction to the scheme subject to the modifications set out earlier.      It is  also  urged  by  the  respondent  that  the  two colleges do  not admit  students entirely on merit because a meritorious student  who is higher on the merit list may not be able  to secure  admission if  he is not in a position to pay the  higher fees. This argument is fallacious. Admission to the  open merit  seats in  these  colleges  is  available

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entirely on  merit. Undoubtedly,  financial capacity to bear the higher  fees will be a consideration which may compel an individual student  to either accept or decline the offer of a seat.  But this  would be so even in a case where the fees are lower. There may be meritorious students who are so poor that they cannot afford even the low fees which are charged. But that  is not  a ground  for saying that the admission is not available  on  merit.  For  those  who  are  financially handicapped,  special   facilities  in  the  form  of  merit scholarships or  freeships should  be made available. We are happy that  at least  for 10%  of such  seats, a meritorious student who  would have otherwise got admission, but for his inability to pay the fees, is going to be granted a freeship under the  present scheme.  We hope  that  such  seats  will increase in  future as  more funding  becomes available. The difficulties of  such students,  however, should not come in the way  of other  meritorious students  who would  like  to avail of  technical education  in these  colleges  and  who, apart from  being meritorious, are also in a position to pay somewhat higher fees in return for obtaining the facility of higher technical education in their home State. Undoubtedly, in  a   State  which   has  a  high  record  of  educational achievements, where  people have  enjoyed  good  educational facilities for  higher education at low cost, this kind of a departure may  cause some  resentment.  But  the  choice  is between not  having the  colleges or  having them on a self- financing basis.  It is  necessary in national interest that we have a sufficient number of technically trained personnel of the  requisite calibre  to work  for the nation. In cases where merit  and means  combine there is no reason why self- financing educational  institutions should  not step  in  to meet the  national requirement  for such qualified personnel of good calibre.      The appeals  are, therefore,  entitled to  succeed. The scheme  as   propounded   by   the   appellants   with   the modifications we have set out earlier is sanctioned. The All India  Council   of   Technical   Education   has   accorded conditional approval  to these  two colleges by their letter dated 31st  of March,  1994. The  conditions so specified in the letter  of 31st of March, 1994 shall be complied with by these two  institutions. However,  the conditions  that  the approval granted  by the  All  India  Council  of  Technical Education is  subject to  full compliance with the scheme as prescribed by this Court in the case of Unni Krishnan is set aside in  view of what we have said hereinabove. The appeals are accordingly allowed. There will, however, be no order as to costs.