2009 (9) SCR 845 MODERN DENTAL COLLEGE & RESEARCH CENTRE & ORS.

v. STATE OF MADHYA PRADESH & ORS.

(Civil Appeal No. 4060 of 2009) MAY 27, 2009

[MARKANDEY KATJU AND DEEPAK VERMA, JJ.]

O R D E R

The Impleadment and Intervention applications are allowed.

Leave granted.

Heard learned counsel for the parties.

Since  this  is  a  batch  of  several  appeals  involving  common  

questions, we are taking the facts from Civil Appeal arising from  

Special Leave Petition No. 13111 of 2009.

This  Appeal  has  been filed  against  the  impugned judgment  

and order dated 15.05.2009 of the High Court of Madhya Pradesh  

at Jabalpur in Writ Petition No.2732 of 2009.

In this case, we had earlier passed an order dated 21st May,  

2009 but we are substituting that interim order by this interim order  

which we are passing now.  

The appellants in these appeals are Private Unaided Medical  

and Dental Colleges or Association of such Colleges in the State  

of Madhya Pradesh.

The common question arises for consideration in this batch of  

appeals is “How far is it permissible under the Constitution for the  

State to control and regulate admission and fee in Private Unaided  

Professional  Educational  Institutions  in  the  State  of  Madhya  

Pradesh”.

The matter was first considered by an Eleven Judge Bench of  

this Court in T.M.A. Pai Foundation vs. State of Karnataka (2002)  

8 SCC 481.  

Since, there were some doubts or some questions remained  

unanswered in the aforesaid judgment, the matter was referred to  

a  Five  Judge  Bench  of  this  Court  which  decided  it  in  Islamic  

Academy of Education vs. State of Karnataka (2003) 6 SCC 697.  

Despite the judgment in Islamic Academy of Education's case  

(supra),  still  there were some doubts and the matter  was again  

referred to a Seven Judge Bench of this Court which decided it in  

P.A.Inamdar & Others vs. State of Maharashtra & Others (2005) 6  

SCC 537.

In paragraph 153 of  P.A. Inamdar's  case (supra), it has been  

stated:

“....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.”

Thus, it is evident that even in  Inamdar's  case (supra), it has  

been observed that there are still  some doubts or grey areas in  

relation to the question of extent of State control over the Private  

Unaided Institutions imparting professional education.

We have gone through the aforesaid decisions with great care.

In para 91 of Inamdar's case (supra), it has been observed:

“The right to establish an educational institution, for charity or  

for profit, being an occupation, is protected by Article 19(1)(g)  

of the Constitution...”

Thus,  it  is  clear  that  the  right  to  establish  and  run  an  

educational  institution  is  a  fundamental  right  guaranteed  under  

Article 19(1)(g) of the Constitution. Of course, under Article 19(6)  

of the Constitution, reasonable restrictions can be placed on such  

a fundamental right, and hence we have to examine whether such  

restrictions are reasonable or not.

Before  dealing  with  this  issue  we  may  refer  to  some  

observations made in the decision of this Court in the  TMA Pai  

Foundation case (supra).

In paragraphs 37-45 of the aforesaid decision this Court held  

that the decision of this Court in  Unni Krishnan vs. State of A.P.  

(1993)  1  SCC  645  in  so  far  as  it  relates  to  the  schemes  of  

admission and fee were not correct.  

Paragraphs 35-41 of  the aforesaid decision in the  TMA Pai  

Foundation case (supra) reads as follows:

“35. It appears to us that the scheme framed by this Court and  

thereafter followed by the governments was one that cannot be  

called  a  reasonable  restriction  under  Article  19(6)  of  the  

Constitution.  Normally,  the  reason  for  establishing  an  

educational  institution  is  to  impart  education.  The institution  

thus  needs  qualified  and  experienced  teachers  and  proper  

facilities and equipment, all of which require capital investment.  

The teachers are required to be paid properly. As pointed out  

above,  the  restrictions  imposed  by  the  scheme,  in  Unni  

Krishnan's  case,  made  it  difficult,  if  not  impossible,  for  the

educational  institutions  to  run  efficiently.  Thus,  such  

restrictions cannot be said to be reasonable restrictions.

36.  The  private  unaided  educational  institutions  impart  

education, and that cannot be the reason to take away their  

choice  in  matters,  inter  alia,  of  selection  of  students  and  

fixation of fees. Affiliation and recognition has to be available to  

every  institution  that  fulfills  the  conditions  for  grant  of  such  

affiliation and recognition. The private institutions are right in  

submitting that it is not open to the Court to insist that statutory  

authorities  should  impose  the  terms  of  the  scheme  as  a  

condition for grant of affiliation or recognition; this completely  

destroys the institutional autonomy and the very objective of  

establishment of the institution.

37. Unni Krishnan judgment has created certain problems, and  

raised  thorny  issues.  In  its  anxiety  to  check  the  

commercialization  of  education,  a  scheme  of  "free"  and  

"payment"  seats  was  evolved  on  the  assumption  that  the  

economic capacity of the first 50% of admitted students would  

be greater than the remaining 50%, whereas the converse has  

proved to be the reality. In this scheme, the "payment seat"  

student would not only pay for his own seat, but also finance  

the cost of a "free seat" classmate. When one considers the  

Constitution Bench's earlier statement that higher education is  

not a fundamental right,  it  seems unreasonable to compel a  

citizen  to  pay for  the  education  of  another,  more  so  in  the  

unrealistic world of competitive examinations which assess the  

merit for the purpose of admission solely on the basis of the  

marks  obtained,  where  the  urban  students  always  have  an

edge over the rural students. In practice, it has been the case  

of the marginally less merited rural or poor student bearing the  

burden of a rich and well-exposed urban student.

38.  The  scheme in  Unni  Krishnan's  case  has  the  effect  of  

nationalizing education in respect of important  features,  viz.,  

the right of a private unaided institution to give admission and  

to fix the fee. By framing this scheme, which has led to the  

State Governments legislating in conformity with the scheme,  

the  private  institutions  are  indistinguishable  from  the  

government institutions; curtailing all the essential features of  

the  right  of  administration  of  a  private  unaided  educational  

institution can neither be called fair or reasonable. Even in the  

decision  in  Unni  Krishnan's  case,  it  has  been  observed  by  

Jeevan Reddy, J., at page 749, para 194, as follows:

"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."

39.  That  private  educational  institutions  are  a  necessity  

becomes evident from the fact that the number of government-

maintained professional has more or less remained stationary,  

while  more  private  institutions  have  been  established.  For  

example,  in  the  State  of  Karnataka  there  are  19  medical

colleges out of which there are only 4 government-maintained  

medical  colleges.  Similarly,  out  of  14  Dental  Colleges  in  

Karnataka, only one has been established by the government,  

while in the same State, out of 51 Engineering Colleges, only  

12 have been established by the government. The aforesaid  

figures  clearly  indicate  the  important  role  played  by  private  

unaided  educational  institutions,  both  minority  and  non-

minority,  which  cater  to  the  needs  of  students  seeking  

professional education.

40. Any system of student selection would be unreasonable if it  

deprives the private unaided institution of the right of rational  

selection,  which it  devised for itself,  subject to the minimum  

qualification that  may be prescribed and to  some system of  

computing  the  equivalence  between  different  kinds  of  

qualifications, like a common entrance test. Such a system of  

selection can involve both written and oral tests for selection,  

based on principle of fairness.

41.  Surrendering the total process of selection to the state is   

unreasonable, as was sought to be done in the Unni Krishnan   

scheme. Apart from the decision in  St. Stephen's College vs.   

University of Delhi [(1992) 1 SCC 558], which recognized and  

upheld the right of a minority aided institution to have a rational  

admission  procedure  of  its  own,  earlier  Constitution  Bench  

decisions of this Court have, in effect, upheld such a right of an  

institution devising a rational manner of selecting and admitting  

students.”

From the above observations it is clear that surrendering the  

total  process  of  selection  in  private  unaided  professional

institutions to  the State is unreasonable and illegal.  The private  

unaided institutions have a right  to  devise a rational  manner  of  

selecting and admitting students.

The  aforesaid  decision  of  the  Eleven  Judge  Bench  of  this  

Court in TMA Pai Foundation (supra) was no doubt considered in  

Islamic  Academy  case (supra)  and  Inamdar’s case (supra),  but  

those  latter  two  decisions  were  of  smaller  Benches  and  hence  

cannot  be  deemed  to  have  overruled  or  laid  down  anything  

contrary  to  the  Eleven  Judge  Bench  decision  in  TMA  Pai  

Foundation  (supra). It is well-settled that a larger Bench decision  

prevails over the decision of a smaller Bench.

We may now examine some observations in  Inamdar’s  case  

(supra).

In para 109 of  Inamdar's  case (supra), it has been observed  

that “it  would be unfair  to apply the same rules and regulations  

regulating  admission  to  both  aided  and  unaided  professional  

institutions”. It was also observed, following the decision in TMA  

Pai Foundation (supra) that greater autonomy must be granted to  

private  unaided  institutions  as  compared  to  private  aided  

institutions. The reason for this is obvious. The unaided institutions  

have to generate their own funds and hence they must be given  

more autonomy as compared to aided institutions, so that they can  

generate these funds.

However,  this  does  not  mean  that  the  private  unaided  

professional  institutions  have  absolute  autonomy  in  the  matter.  

There can validly be a certain  degree of  State control  over the  

private  unaided  professional  institutions  for  the  reason  that  

recognition has to be granted by the State authorities and it is also

the duty of the State to see that high standards of education are  

maintained in all professional institutions. However, to what degree  

the State can interfere with respect to private unaided institutions  

is a matter deserving careful consideration.

In  paragraph  137  of  Inamdar's case  (supra),  it  has  been  

observed:

“......The  admission  procedure  so  adopted  by  a  private  

institution or group of institutions, if it fails to satisfy all or any of  

the triple tests, indicated hereinabove, can be taken over by  

the State substituting its own procedure.”

Thus,  it  has been held in  Inamdar's  case (supra)  that  while  

ordinarily  admissions  in  private  unaided  professional  institutions  

could be done by those institution or association of such unaided  

professional  institutions,  the State can interfere if  the admission  

procedure  fails  to  satisfy  certain  tests.  The  reason  for  this  is  

obviously  that  the  State  has  an  interest  in  maintaining  high  

standards in professional institutions.

The question, however, arises as to which is the body which  

can decide whether the private unaided institutions have failed to  

satisfy  the triple  tests,  referred to  in  Inamdar's case (supra).  In  

Inamdar's case (supra), there is no mention as to which is the body  

which will decide whether the prviate instituions have satisfied or  

not  satisfied  the  triple  tests,  referred  to  in  para  137  of  the  

Inamdar's case (supra). Thus, there is a lacuna in Inamdar's case  

(supra).

In our view, it cannot be left to the unilateral decision of the  

State Government to say that the private institutions have failed to  

meet  with  the  triple  tests  mentioned  in  Inamdar's  case  (supra),

because  that  will  be  giving  unbridled,  absolute  and  unchecked  

power to the State Government.  In our prima facie opinion,  the  

M.P.  Niji  Vyavsayik  Shikshan  Sanstha  (Pravesh  Ka  Viniyaman  

Avam Shulk Ka Nirdharan) Adhiniyam, 2007 (for short 'the Act of  

2007'),  appears to  handover  the entire  selection process to  the  

State  Government  or  the  agencies  appointed  by  the  State  

Government  for  under-graduate,  graduate  and  post-graduate  

medical/dental colleges and fee fixation. This, in our prima facie  

opinion,  is  contrary  to,  and  inconsistent  with  the  observations  

(quoted above) made by the 11 Judge Bench decision of this Court  

in  T.M.A.  Pai’s  case  (supra),  and  hence  the  2007  Act  would  

become unconstitutional if it is read literally. We have therefore to  

read down the 2007 Act and Rules to make them constitutional.  

Such  reading  down  of  a  statute  is  permissible,  since  it  is  well  

settled that the Court should make all efforts to sustain the validity  

of a statute, even if that involves reading its language down vide  

G. P Singh’s ‘Principles of Statutory Interpretation’ Ninth Edition,  

2004 pp. 496-503. Thus, while considering the validity of the Hindu  

Women’s Right to Property Act, 1937, the Federal Court construed  

the word ‘property’  as meaning ‘property,  other than agricultural  

land’, vide In re Hindu Women’s Right to Property Act AIR 1941  

F.C.  72  (75),  otherwise  the  Act  would  have  become  

unconstitutional.  

Similarly, in Kedarnath vs. State of Bihar, AIR 1962 SC 1955,  

this  Court  while  interpreting  Section  124A I.P.C read  down the  

words “by words, either spoken or written or by signs or visible  

representations,  or  otherwise,  brings  or  attempts  to  bring  into  

hatred or contempt,  or  excites or  attempts to excite disaffection  

towards the Government established by law”. This Court held that

to avoid violation of Articles 19 (1)(a) and 19(2) of the Constitution,  

Section 124A must be limited in its application “to acts involving  

intention or tendency to create disorder or disturbance of law and  

order or incitement to violence”.  

In our view, a balance has hence to be struck because while  

on the one hand, the State Government does have an element of  

interest in the private unaided professional institutions, this does  

not mean that there will  be no autonomy to the private unaided  

institutions.  After  all,  the  private  unaided  institutions  have  to  

generate  their  own resources and funds and consequently they  

must have a larger degree of autonomy as compared to the aided  

institutions or the State Governments institutions.

In this situation, we are of the opinion that this Court must use  

its  creativity  and  find  out  a  workable,  balanced,  via  media  to  

safeguard the interest of both parties, namely State Government  

on the one hand, and private unaided institutions on the other, and  

also to keep the interest of the students in mind.

We, therefore, direct that the admissions in the private unaided  

medical/dental  colleges in  the State of  Madhya Pradesh will  be  

done by first excluding 15% N.R.I. seats (which can be filled up by  

the private institutions as per para 131 of  Inamdar's  case),  and  

allotting half of the 85% seats for admission to the under-graduate  

and post-graduate courses to be filled in by an open competitive  

examination by the State Government, and the remaining half by  

the Association of the Private Medical and Dental Colleges. Both  

the  State  Government  as  well  as  the  Association  of  Private  

Medical and Dental colleges will hold their own separate entrance  

examination for this purpose. As regards the 'NRI Seats', they will

be filled as provided under the Act and Rules, in the manner they  

were done earlier.  

We make it clear that the aforesaid directions will for the time  

being only be applicable for this academic year i.e. 2009-10. We  

also make it clear that if there are an odd number of seats then it  

will  be  rounded  off  in  favour  of  the  private  institutions.  For  

example, if  there are 25 seats,  12 will  be filled up by the State  

Government and 13 will be filled up by the Association of Private  

Medical/Dental Colleges. In Specialities in P.G. courses also half  

the seats will be filled in by the State Government and and half by  

the  Association  of  Private  Medical/Dental  Colleges  and  any  

fraction will  be rounded off in favour of the Association. In other  

words if  in any discipline there are, say, 9 seats, then 5 will  be  

filled  in  by  the  Association  and  remaining  4  will  by  the  State  

Government.  Capitation  fee  is  prohibited,  both  to  the  State  

Government as well  as the private institutions, vide para 140 of  

Inamdar's  case  (supra).  Both  the  State  Government  and  the  

Association of Private Medical/Dental Colleges will separately hold  

single window examinations for the whole State (vide para 136 of  

Inamdar' case (supra).

We make it clear that the solution we have arrived at may not  

be perfect, but we have tried to do our best to find out the best via  

media. Although this order is only for the academic year 2009-10,  

we recommend that it may also be considered for future sessions.

Six weeks' time is allowed for filing counter affidavit and four  

weeks thereafter for filing rejoinder.  

List these appeals for final hearing in September, 2009. In the  

meantime, pleadings may be completed by the parties.