Vasavi Engineering College Parents Association v. State of Telangana and Others
NAVIN SINHA, J. 1. Leave granted.
2. This court, in Islamic Academy of Education and another
vs. State of Karnataka and Ors. , (2003) 6 SCC 697, directed the
establishment in each State, of a Committee to regulate the fee structure
in unaided minority and non-minority educational institutio ns. The
Telangana Admission and Fee Regulatory Committee (for Professional
Courses offered in Private Unaided Professional Institutions) Rules, 2006
(hereinafter referred to as “the Rules”) were framed und er Section 15
read with Sections 3 and 7 of the Telangana Educational Institu tions
(Regulation of Admission and Prohibition of Capitation Fee) Act, 1983
(hereinafter referred to as “the Act”). Under Rule 4(v), the Committee
is required to communicate the fee structure determined b y it to the
State Government for notification. The fee structure so notified, i nter
alia for the B.E. and B.Tech courses, for the block period 2 016-17 to
2018-19, on a challenge made by the respondent institutions did not meet
the approval of the learned Single Judge. The matter was remanded to
the Committee. On a reconsideration, the Committee gra nted some
escalation, which was again challenged. Opining that the fixation was
not proper, the learned Single Judge proceeded to fix the fee structure to
his satisfaction. Aggrieved, the State of Telangana and the Fee Regulatory
Committee assailed the same unsuccessfully before the Division Bench.
The parent’s association has also assailed the impugned orders directly
before this Court, after having been granted leave to do so. Thu s, the
appeals.
933
3. Shri K. Radhakrishnan, learned senior counsel appearing for
the State of Telangana, submitted that the Telangana Admission and Fee
Regulatory Committee constituted under the Rules (hereinafter referred
to as “TAFRC”) has framed detailed guidelines under which the private
unaided professional institutions were required to submit fee proposals
for the block period 2016-17 to 2018-19. The guidelines lay down an
elaborate procedure with regard to the requisite information required to
be submitted by an institution in support of the proposal, the factors to be
considered by the TAFRC, the manner of consideration in arriving at a
balanced fee structure, keeping in mind the interest of the students as
also the educational institutions, to ensure that there was no profiteering
or capitation fee. The Committee is headed by a retired H igh Court
Judge, and comprises various domain experts from different fields with
necessary expertise. The recommendations of the TAFRC with r egard
to the fee structure therefore ought not to have been interfered with by
the High Court in exercise of the powers of judicial review by substituting
its own view over that of the TAFRC to redetermine the pro per fee
structure. The fee structure for the three-year block period vi de GOM
No.21 dated 04.07.2016 was initially determined by the TAFRC at Rs.
86,000/- and Rs. 91,000/- for the respondent institutions, which af ter
remand by the High Court was uniformly redetermined at Rs.97,000 /-
per student on 04.02.2017. The TAFRC did not act arbitrarily by declining
to take into consideration relevant materials, or relied on e xtraneous
materials collected behind the back of the respondent institutions. The
TAFRC acted in consultation with the respondent institutions, including
seeking clarifications from them. The High Court did not find that the
TAFRC had acted contrary to the provisions of the Act, the Ru les, the
guidelines or in violation of any basic principles of account ing and
procedures. The fact that after remand the TAFRC may have adopted
a different methodology to determine 10% inflation and 15% furtherance
for the entire block period cannot be construed as arbitrariness. Merely
because in the opinion of the High Court another view could also have
been taken, cannot justify the usurpation of the jurisdiction of the TAFRC
by the High Court.
4. The mere fact that the determination of the fee structure by
the TAFRC has been held to be of a quasi-judicial nature, amenable to
challenge under Article 226 of the Constitution, did not vest in i t the
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
nature of an adversarial dispute between the TAFRC and the respondent
institutions. The disallowance of certain claims, the genuineness of which,
did not meet the approval of the expert committee, does not render the
fee fixation arbitrary.
5. Learned senior counsel Shri F.S. Nariman, appearing on behalf
of the respondent institutions, submitted that the three-year block period
was now over, and the actual expenses are available. The re spondent
institutions, on the fee structure as approved by the TAFRC, would land
up with a huge financial deficit. The fee structure of Rs.1,60,000/- and
Rs.1,37,000/- as fixed by the High Court would almost allow a brea k
even for the respondent institutions. The TAFRC, for th e accepted
expenditure of the base year in the previous block period recommended
a fee structure of Rs.1,15,400/-. Ironically, despite having accepted
increased audited expenditure of Rs.29.26 crores, astonishingly the fee
structure of Rs.97,000/- only has been recommended. 10% inflation
and 15% furtherance in accordance with the methodology of the TAFRC
for the block period justifies fees of Rs.1,58,675/- per stud ent. The
claim of the institutions was reasonable considering the expenses of
equivalent government colleges in the State and the subsidy t hey get
from the State, unlike which the respondent institutions have only fees to
fund their expenses. The State was also not reimbursing the necessary
fee with regard to those students whose parents did not have an annual
income of Rs.2 lakh per year.
6. The submission on behalf of the parents association was th at
the mere giving of an undertaking to abide by the final decision cannot
operate as an estoppel preventing challenge to the fee structure as
determined by the High Court.
7. We have considered the respective submissions. A brief
recapitulation of the essential provisions and facts would be necessary
for better appreciation.
8. Rule 3(i) provides for the constitution of the TAFRC which
shall have a term of three years from the date of constitution under Rule
3(iii). The TAFRC as prescribed under Rule 3(ii) is headed by a retired
High Court Judge and other members as provided therein. The 2006
Rules were modified on 22.07.2015 by GOMs. No.26. The present
constitution of the Committee is as follows:
935
The Admission and Fee Regulatory Committee (AFRC) shall
consist of the following: -
9. Rule 4 deals with fee fixation and provides for examination by
the TAFRC of the proposed fee structure submitted by a n educational
institution. Rule 4(ii) vests power in the TAFRC to decide whether the
proposed fee structure submitted was justified or not and amounte d to
profiteering or capitation fee. Rule 4(ii) and 4(iv) require the TAFRC to
take into consideration the following factors for prescribing the fees.
“4(ii) The AFRC shall decide whether the fees proposed by the
institution is justified and does not amount to profiteering or charging
of capitation fee.
4(iv) The AFRC shall take into consideration the following factors
while prescribing the fee:
a) the location of the professional institution;
b) the nature of the professional course;
c) the cost of available infrastructure;
d) the expenditure on administration and maintenance;
(i) Retired High Court Judge Chairman
(ii) One academic expert on technical
education
Member
(iii) One academic expert on medical
education
Member
(iv) One finance expert Member
(v) One legal expert Member
(vi) One Vice-Chancellor Member
(vii) One representative from Govt. Finance
Department
Member
(viii) The Chairman, Telangana State
Council of Higher Education
Member
(ix) One representative of All India Council
of Technical Education/Medical
Council of India/Bar Council of
India/National Council for Teacher
Education (as the case may be)
Member
(x) Any special invitee as decided by the
Chairman
Member
(xi) The Principal Secretary/Secretary
representing the Education/Health,
Medical & Family Welfare Department
Member
Secretary
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
e) a reasonable surplus required for the growth and development
of the professional institution;
f) the revenue foregone on account of waiver of fee, if any, in
respect of students belonging to schedule castes, schedule tribes
and whenever applicable to the socially and educationally backward
classes and other economically weaker sections of Society , to
such extent as shall be notified by the Government from time to
time.
g) any other relevant factor.”
10. The guidelines framed by the TAFRC under Rule 3(vii) for
submission of the proposed fee structure by an institution ar e detailed
and elaborate. It is therefore considered necessary to rep roduce the
same for better understanding and appreciation of the functioning of the
TAFRC.
“TELANGANA ADMISSION AND FEE REGULATORY
COMMITTEE (TAFRC) GUIDELINES
For Furnishing fee proposals by Private Un-aided Professiona l
Institutions in the State of Telangana for the block period 2016-
2017 to 2018-2019.
As per the provisions of Prohibition of Capitation Fee Ac t, the
collection of capitation fee by Private Unaided Professio nal
Institutions by whatever name is illegal.
The Institutions shall submit audited statements of income and
expenditure, audited balance sheets and requirements for th e
developmental needs for the immediately preceding year 2014-15
and also particulars of expenditure incurred on salari es and
infrastructure and other particulars (with supporting bills, vouchers
or receipts etc.) with projected figures for 2015-16.
Any fee proposals in respect of Private Unaided Profession al
Institutions have to be evaluated keeping in view the above noted
cardinal principles.
It is therefore necessary that the fee proposals furnishe d by the
Private Unaided Professional Institutions have to be evaluated
based on the income and expenditure of the institutions as well as
the Societies/Trusts under which umbrella the said institutions are
established.
937
The fee proposals the following principles will be considered for
adoption keeping in view the interest of both the inst itutions as
well as the student community.
a. All the required financial information should be submitted as
per the Mercantile (Accrual) System of Accounting. Financial
information submitted in any other system of accounting will
not be treated as the information provided by the institution
and the same will not be considered for the purpose o f
evaluation.
b. If an institution previously followed any other system o f
accounting and for the purpose of fee fixation has migrated
to the Mercantile (Accrual) System of Accounting, all the
expenditure which pertains to the financial years 2014-15 and
2015-16(projected) only shall be taken into account while
preparing the financial statements/information to be submitted
to the Telangana Admission and Fee Regulatory Committee
(TAFRC).
c. The fee shall be fixed based on the revenue expend iture
including depreciation on the Assets of the institution.
In order to fix the fee structure for the block period 2016-17 to
2018-19 information given the following schedules will be taken
into consideration.
Reference Details to be furnished in the schedule
Schedule-1 Details of Fee Collections for all the Pr ogrammes in
the Institution for the Financial Year 2014-2015 &
2015-16.
Schedule-2 Income & Expenditure Statement of the Ins titution for
the financial years 2014-2015 & 2015-16.
Schedule-3 Income & Expenditure Statement of the Soc iety for
the financial years 2014-2015 & 2015-16.
Schedule-4 Eligible Teaching Staff Salaries & Arrear s paid by the
institution (including complete employee details)
Schedule-5 Other Teaching Staff Salaries & Arrears p aid by the
institution (including complete employee details)
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
Schedule-6 Regular Non-Teaching Staff Salaries & Arr ears paid
by the institution (including complete employee
details)
Schedule-7 Contract Non-Teaching Staff Salaries & Ar rears paid
by the institution (including complete employee
details)
Schedule-8 Statement of Administrative & Other Expen ses of the
institution for the Financial Year 2014-2015 & 2015-16.
Schedule-9 Statement of Finance Costs of the institu tion for the
financial Years 2014-2015 & 2015-16.
Schedule-10 Fixed Assets Schedule for Depreciation
Schedule-11 Statement of Revenue Grants Received & U tilised by
the Institution for the Financial Years 2014-2015 &
2015-16.
Schedule-12 Status of Utilisation of Amounts collect ed under NRI
Quota
Schedule-13 Status of Utilisation of 10% allowed tow ards
furtherance of education.
Schedule-14 Details of Fixed Deposits of the institu tion.
Schedule-15 Details of Loans Received from Societies , Banks
Financial Institution by the Institution.
Schedule-16 Details of Loans Received from Others by the
Institution (Private Loans)
Schedule-17 Statement of Corpus/Capital Fund of the Institution
Schedule-18 Statement of Capital Grants Received & U tilised by
the Institution
Schedule-19 Balance Sheet for Institution
Schedule-20 Balance Sheet for Society
Schedule-21 Legal Expenditure
Schedule-22 Other Information (Students Results etc. )
B) With regards to the expenditure it is broadly categorized as follows:
A) Salary Expenditure:
939
i) Salary expenditure on teaching faculty for 2014-15 & 2015-16,
who are fully qualified as per norms, including the age of retirement,
Teacher student ratio and cadre strength as per the AICTE norms.
ii) Salary expenditure of teaching faculty for 2014-15 & 2015-16,
who are not fully qualified regarding qualifications, age, and staff
beyond prescribed teacher student ratio etc.
iii) Salary expenditure of non-teaching staff for 2014-15 & 2015-
16, who are on regular scales and within the prescribed teaching
and non-teaching ratio, including the age of retirement.
iv) Salary expenditure of non-teaching staff for 2014-15 & 2015-
16, who are on consolidated/contract emoluments or reemployed
beyond the age of retirement and staff engaged beyon d the
prescribed teaching and non-teaching ratio.
v) The retirement age shall be 65 years for teaching faculty a nd
58 years for non-teaching staff and 60 years for last grade servants.
vi) Arrears of previous years’ salary should not be included in the
gross salary and should be shown separately.
1) In order to consider the expenditure on teaching and non
teaching staff, the cadre strength fixed by the respect ive
competent authorities like AICTE/NCTE and Bar Council of
India etc., have to be adopted. Persons who are appointed
over and above this strength shall be shown in the other related
proforma.
2) Faculty norms shall be as per notification issued by respective
competent authorities like AICTE, NCTE etc.
3) In case services of any of the employee is utilized fo r more
than one programme, such names shall be shown only in one
programme.
4) The teaching faculty should be qualified. Non-qual ified
teaching faculty will not be counted/considered for the purpose
of expenditure.
5) PAN number for teaching faculty is a must. In respect of
non-teaching and other staff also, PAN data shall be furnished,
where monthly salary/emoluments/honorarium/remuneration
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
is Rs.25,000 or more. If no PAN/wrong PAN data of them is
given, the expenditure to that extent will be ignored.
6) Aadhar Card Number has to be indicated both for teaching
faculty/non-teaching faculty.
7) Payment of salaries through cheque/bank will onl y be
considered for expenditure purpose in respect of teaching
faculty. Cash payments shall be subject to production o f
evidence.
8) In case of non-teaching staff, the monthly honorarium/salary
remuneration, as the case may be, is more than Rs.25,000/-
shall be made through cheque/bank. Cash payments shall be
subject to production of evidence.
9) Audited financial statements for the period 01/04/2015 to
30/11/2015 and projected financial statements for the period
01/12/2015 to 01/03/2016 will be the basis for calculating the
expenditure for the Institution.
10) Audited financial statements for the financial year 2014-15 &
2015-16 will be the basis for calculating the expenditure for
the Institution.
11) Audited financial statements for the financial years 2014-15
& 2015-16 shall also be furnished along with the fee proposals.
12) Acknowledgement of Returns of income filed with the Income
Tax Department for the Assessment Years 2014-15 &
2015-16 pertaining to the financial years 2013-14 & 2014-15
together with Form-10B Audit Report shall be submitted along
with the fee proposal.
13) Audit report shall contain the signature of the Auditor, hi s
name, ICAI membership number along with the following
information: -
i) PAN Number of the Auditor.
ii) E-mail id of the Auditor.
iii) Cell No. of the Auditor.
941
If the Auditor is a partner of the firm; following additional details
shall be given:
a) Firm ICAI Registration Number
b) PAN Number of the Firm.
c) E-mail id of the Firm.
NOTE :-
(a) If the above said details are not furnished, auditor’s r eport
will not be considered and the fee proposal will be summarily
rejected.
(b) TAFRC has a right to direct the presence of Auditor or se ek
confirmation from him/her and the corresponding costs, if
any, shall be met by the Institution concerned. It is the
responsibility of the Institution to secure the presence of the
auditor when required.
In case any institution runs more than one programme all the
expenditure can be bifurcated and reflected in respective Schedules
and the bifurcated expenditure shall be certified by Chart ered
Accountant. If clear bifurcation is not given the proposal shall be
rejected.
The entire particulars would be obtained online. However, the
institution shall provide a hardcopy of uploaded information duly
signed by the Auditor/Secretary/Correspondent/Director/Principal
(wherever it is required) by paying prescribed programme wise
processing charges.
To be credited to the “Telangana Admission and Fee Regulatory
Committee (TAFRC)” bearing A/c No. 62436164496, IFSC Code
SBHY0020070, State Bank of Hyderabad, Shantinagar Branch,
Hyderabad.
If a society/trust runs more than one institution, the data/information
shall be furnished institution wise.
Note: All the above schedules can be used for diffe rent
programmes by changing the no. of years of course as deemed
fit. For example, 4 years of duration for under-graduate courses
(3 years for Lateral Entry) and 2 years for PG Programme s etc.
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
Note:
Any expenditure that does not directly relate to the stude nt’s
education shall not be considered.
Projected expenditure like advertisement of the institution in the
ensuing block period, purchase of equipment, new recruitment to
be made during the block period shall be met from the fund s
earmarked for the furtherance of the education.
Percentage of increase between financial year 2014-15 and 2015-
16 will be taken into account to consider expenditure expenditure
pertaining to the financial year 2015-16. However, the Audited
Income & Expenditure for the period 01/04/2015 to 30/11/2015
and Projected Income & Expenditure for the period 01/12/2015
to 31/03/2016 must be submitted.
Schedules for salary payment for the teaching staff will be included
for
(i) Those with qualifications
(ii) Those without qualifications.
Interest on the loan given by the societies to the instituti ons in
respect of internal funds will not be taken into consideration.
When an institution is running more than one course/programme,
the income and expenditure statement and Balance sheet shall be
bifurcated and bifurcated statement certified by the Auditor shall
be furnished along with the fee proposals. If it is not done, t he
proposals will be summarily rejected.
Annual TDS Returns filed in Forms 24Q and 26Q under Income
Tax Act shall be submitted along with the proposal.
Either rent or depreciation will be allowed on the buildings . In
respect of rents the Institution shall obtain Rent Fixation Certificate
from the concerned Executive Engineer of R&B Department and
registered rental Agreement also should be provided.
Any expenditure for which the corresponding income is there shall
be disallowed if no corresponding income is shown.
943
Filling up of the column relating fee proposed (course wise) for
the block period of 2016-17 to 2018-19 in the general information
sheet is mandatory.
Procedure to be adopted for filling the proforma:
i) The Codes allotted by the respective conveners to the institution
shall be used, for example EAMCET code for Engineering
Colleges.
ii) Financial details shall be furnished in Rupees only.
iii) The per student fee proposed should be programme-wise and
for the block period 2016 – 2019 to be shown in the General
Information sheet.
iv) Audited financial statements for the year 2014-15, for the
period 01/04/2015 to 30/11/2015, and also the projected figures
for the period 01/12/2015 to 31/03/2016 must be submitted
duly attested by Secretary/Correspondent of the Society/Trust
shall also to be furnished along with the information relating to
the institution together with the fee proposals. Scanned copy
of the statements shall be furnished online along with the
relevant data.
v) If the institution furnishes incomplete data or fails to remit the
processing charges as prescribed, such proposals will not be
considered and ignored.
The institute has to submit the following documents along wit h
the fee proposals:
1. Formats duly filled in and signed by the Secreta ry
Correspondent/Director/Principal of the Institution;
2. Proof of depositing the processing charges;
3. Audited financial Statements for the period 2014-15 and for
the period 01/04/2015 to 30/11/2015 and also the projected
figures for the period 01/12/2015 to 31/03/2016 must be
submitted and duly certified by Secretary/Correspondent of
the Society/Trust.
4. Details of sanctioned intake given by the competent Authority
for each course wise to be submitted.
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
5. Details of current status of affiliation, programme wise has to
be submitted.
6. Other information/documents, if any (specify)
7. The following directions of Hon’ble High court of A.P., in the
D.B. Judgment dt.29.10.2011 in WP’s No.16547/2010 and
batch reported in 2012 (3) ALT 686 (D.B.) is brought to the
notice of the Institutions: -
“......an institution which is unresponsive or does not submit
statements of income and expenditure, audited balance
sheets, and requirements for developmental needs for the
immediately preceding year; particulars of expenditure
incurred on salaries and infrastructure and other particulars
as may be specified (with supporting bills, vouchers or
receipts, etc.,) shall not be permitted to collect any fee....”
Accordingly, in case of failure to furnish specifie d data as
mentioned above or submission of proposal with incomplete data
the institution/college will not be entitled for determination of fee
and will not be allowed to collect any fee from the stu dents for
the block period 2016-17 to 2018-19 in terms of the said judgment.”
11. The TAFRC initially fixed an annual fee of Rs.86,000/- and
Rs.91,000/- respectively by notification dated 04.07.2016 for the block
period for the respondent institutions, in consulta tion with their
representatives, including the seeking of clarifications from them. The
fact that determination of the fee structure was quasi-judicial in nature,
any disagreement by an institution with the fee structure as determined
by the TAFRC cannot ipso facto be termed arbitrary to create a lis , but
may call for further scrutiny in an appropriate case, in exercise of judicial
review. Initially the Single Judge opined that the determination of the fee
structure for the block period suffered from defects and remand ed the
matter by order dated 14.11.2016, whereafter the TAFRC fixed a uniform
structure of Rs.97,000/- annually per student for the block period notified
on 04.02.2017 which was again challenged by the respondent institutions.
12. The High Court in disagreement with the fresh
recommendations of the TAFRC, took upon itself to redetermine the fee
structure for the block period at Rs.1,60,000/- and Rs.1,37,000/-
respectively, by a process of fresh mathematical ca lculation and
945
accounting, which lay in the exclusive domain and jurisdicti on of the
TAFRC. This despite the fact that the TAFRC had already act ed in
consultation with the representatives of the institutions i ncluding the
seeking of clarifications. The calculation sheet had also been made
available to the institutions. The fact that earlier 10% inflation and 15%
furtherance was calculated on the basis of the gross expenditure
statement, which had now been changed by setting off the income against
expenditure to make the net expenditure the basis of assessme nt, as
compared to previous years, has been held by the High Court to be a
change in methodology by the TAFRC without prior intimation and
reasons, holding the same to be unjustified. But, the High Court did not
return any finding that the TAFRC had acted contrary to the provision
of the Act, Rules, guidelines, principles of natural justice or basic principles
of economics and accounting, yet it chose to arrive at its own conclusions
on a view which appeared to it to be more fairer, desirabl e or more
logical. The High Court, has itself held that the procedural fairness and
bonafides of the TAFRC could not be doubted. Furthermore, an amount
of Rs.4,53,54,741.00 was found to be income with no corresponding
expenditure figures and which had been taken into consideration f or
determination of the fee structure, was sought to be re-ag itated after
remand without corresponding expenditure figures, leading to the rejection
of the same again. The conclusion that inflation and furtherance had to
be allowed separately for each financial year of the block period for that
reason is wholly unsustainable.
13. The High Court also set aside the disallowance of
Rs.1,39,20,000/- with regard to 58 additional teachers in excess of the
356 teachers required according to the norms of the All India Council of
Technical Education (hereinafter referred to as “AICTE”) opining that
it pertained to the jurisdiction of the AICTE and not the TAFR C. The
High Court overlooked that the TAFRC inter alia consisted of domain
experts from the AICTE also and the fact that the TAFRC on 22.10.2016
in response to the data submitted by the respondent institutions had already
intimated in context of the disallowance that the relevant staff were not
having the requisite qualifications. The actions of the TAFRC in this
regard were well within its jurisdiction apparent from the guidelines
extracted hereinabove, more particularly B(A) dealing with permissible
expenditure with regard to teacher strength, qualifications et c as per
AICTE norms. The importance of quality teachers, duly qualified, without
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
overcrowding hardly needs to be emphasised. A teacher is the bedrock
of the foundation on which the future of the nation is built. The High
Court erred in its casual approach.
14. The High Court has laid much emphasis on the fact that it is
the prerogative of an educational institution to determine its fee structure
according to its needs, and that the TAFRC cannot act to scrutinise the
same like a Chartered Accountant. It needs no reiteration that an element
of justified flexibility has to be given to an educational institution in
determination of the fee structure. But flexibility cannot be equated
with elasticity to suit the desire or claims of an institution. Ru le 4 (ii)
vests jurisdiction in the TAFRC to decide whether a proposed fee structure
submitted by an institution was justified or not and whether it amounted
to profiteering or capitation fee. To prune the jurisdiction of the TAFRC
by restraining it from examining and scrutinising the statement of accounts
to decide the justification of the proposed fee structure, and confining its
role to mere perusal and comments, will amount to taking away its
regulatory jurisdiction completely. The object of the TAFRC is to ensure
a justified fee structure which does not reflect profiteering and capitation
fee. Profiteering is the making of an unreasonable profit taking advantage
of a situation by escalating prices which are disapprovi ngly much or
grossly exaggerated income generated through manipulation of price by
the use of a dominant position. On the contrary, the 10% inflation and
15% furtherance allowed by the TAFRC are aspects of a re asonable
return or financial gain, which is but a process of managing or running
the institution allowing a reasonable return for further growth as distinct
from unnecessary profitability. While a Regulatory Author ity will not
allow profiteering, it will have to take into consideration the necessity of
a financial gain required inherent to the nature of the activity as provided
in Rule 4(ii)(e). We do not think the TAFRC has faulted on that score.
15. The detailed and elaborate nature of the information sought
by the TAFRC from an educational institution regarding the prop osed
fee structure submitted to it under the prescribed guidelines has already
been noticed hereinabove. The TAFRC has also interacted wit h the
representative of the respondent institutions and sought clarifica tions
before the final determination by it. The proposition that the TAFRC is
precluded from acting like a chartered accountant inhibiting scrutiny by
it for justification of a proposal submitted to it by an ins titution is too
wide a proposition fraught with possibilities which may inhibit the statutory
947
functions of the TAFRC itself making it a toothless tiger. In other words,
the examination of the proposal will have to be done by the TAFRC in a
manner commensurate and appropriate to an educational institution and
not by rigid adherence to the abstract principles of chartered accountancy
in general, and which may call for some flexibility.
16. In our considered opinion, the crux of the controversy is the
jurisdiction and the extent to which the court can examine the
determination of the fee structure by the TAFRC and approve d by the
State government, in exercise of the powers of judicial review. The
TAFRC, a statutory body headed by a retired High Court Judge, consists
of domain experts from various fields including two from the finance
sector, one of which is from the Government. Rule 3(vii) vests the
TAFRC with the power to frame its own procedure in accordance with
regulations notified by the Government in that regard and pursu ant to
which the guidelines for fee fixation have been framed b y it. The
recommendations of the TAFRC being the resultant of a quasi-judicial
decision-making process, it will undoubtedly be ame nable to the
jurisdiction of the court for scrutiny by judicial review, so as to ensure
adherence to the constitutional principles of reasonableness , fairness
and adherence to the law under Article 14 of the Constitution.
17. Judicial review, as is well known, lies against the decision-
making process and not the merits of the decision itself. If the decision-
making process is flawed inter alia by violation of the basic principles of
natural justice, is ultra-vires the powers of the decision maker, takes into
consideration irrelevant materials or excludes relevant materials, admits
materials behind the back of the person to be affected or is such that no
reasonable person would have taken such a decision in the circumstances,
the court may step in to correct the error by setting aside such decision
and requiring the decision maker to take a fresh decision in accordance
with the law. The court, in the garb of judicial review, cannot usurp the
jurisdiction of the decision maker and make the decision itself. Neither
can it act as an appellate authority of the TFARC. In Fertilizer
Corporation Kamgar Union (Regd.), Sindri v Union of India, (1981)
1 SCC 568, it was observed:
“35. ….We certainly agree that judicial interference with the
administration cannot be meticulous in our Montesquien system
of separation of powers. The court cannot usurp or abdicate, and
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
the parameters of judicial review must be clearly defi ned and
never exceeded. If the directorate of a government company has
acted fairly, even if it has faltered in its wisdom, the court cannot,
as a super auditor, take the Board of Directors to ta sk. This
function is limited to testing whether the administrative action has
been fair and free from the taint of unreasonableness and has
substantially complied with the norms of procedure set for it by
rules of public administration.”
18. Judicial restraint in exercise of Judicial review was considered
in the State of (NCT) of Delhi vs. Sanjeev, (2005) 5 SCC 181 as follows:-
“16.…One can conveniently classify under three heads the
grounds on which administrative action is subject to control by
judicial review. The first ground is “illegality”, th e second
“irrationality”, and the third “procedural impropriety”. T hese
principles were highlighted by Lord Diplock in Council of Civil
Service Unions v. Minister for the Civil Service (commonly known
as CCSU case). If the power has been exercised on a non-
consideration or non-application of mind to relevant factors, the
exercise of power will be regarded as manifestly erroneous. If a
power (whether legislative or administrative) is exercised on the
basis of facts which do not exist and which are patently erroneous,
such exercise of power will stand vitiated.”
19. It needs no emphasis that complex executive decisions in
economic matters are necessarily empiric and based on experimentation.
Its validity cannot be tested on any rigid principles or the application of
any straitjacket formula. The court while adjudging the va lidity of an
executive decision in economic matters must grant a certain measure of
freedom or play in the joints to the executive. Not mere errors, but only
palpably arbitrary decisions alone can be interfered with in judicial review.
The recommendation made by a statutory body consisting of domain
experts not being to the satisfaction of the State Government is an entirely
different matter with which we were not concerned in t he present
discussion. The court should therefore be loath to interfere w ith such
recommendation of an expert body, and accepted by the governm ent,
unless it suffers from the vice of arbitrariness, irrationality, perversity or
violates any provisions of the law under which it is constituted . The
court cannot sit as an appellate authority, entering the arena of disputed
facts and figures to opine with regard to manner in which th e TAFRC
949
ought to have proceeded without any finding of any violation of rules or
procedure. If a statutory body has not exercised jurisdiction pr operly
the only option is to remand the matter for fresh consideration and not to
usurp the powers of the authority. In Peerless General Finance and
Investment Co. Ltd. vs. Reserve Bank of India , (1992) 2 SCC 343, it
was observed:
“31. The function of the court is to see that lawful authority is not
abused but not to appropriate to itself the task entrusted to that
authority. It is well settled that a public body invested with statutory
powers must take care not to exceed or abuse its power. It must
keep within the limits of the authority committed to it. It must act
in good faith and it must act reasonably. Courts are not to interfere
with economic policy which is the function of experts. It is not the
function of the courts to sit in judgment over matters of economic
policy and it must necessarily be left to the expert bodies. In such
matters even experts can seriously and doubtlessly differ. Courts
cannot be expected to decide them without even the aid of experts.”
20. In the context of Indian jurisprudence, the Constitution is the
supreme law. All executive or legislative actions have to b e tested on
the anvil of the same. Such actions will have to draw their sustenance as
also their boundaries under the same. Any action falling foul of the
constitutional guarantees will call for corrective action in judicial review
to ensure adherence to the constitutional ethos. But so long as the fabric
of the constitutional ethos is not set asunder, the court will have to
exercise restraint, more particularly in matters concerning domain experts,
else the risk of justice being based on individual perceptions which may
render myths as realities inconsistent with the constitutional ethos. Courts
often adjudicate disputes that raise the question of how strictly shou ld
they scrutinise executive or legislative action. Therefore, courts have
identified certain questions as being inappropriate for judicial resolution
or have refused on competency grounds to substitute their j udgement
for that of another person on a particular matter. The need for judicial
restraint with regard to recommendations of expert committ ees, more
particularly in matters relating to finance and economics, was considered
in BALCO Employees’ Union (Regd.) vs. Union of India, (2002) 2
SCC 333, it was held:
“65...Nevertheless, contention is sought to be raised that the method
of valuation was faulty, some assets were not taken into
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
consideration and that Rs 551.5 crores offered by M/s. Ster lite
did not represent the correct value of 51% shares of the Company
along with its controlling interest. It is not for this Court to consider
whether the price which was fixed by the Evaluation Committee
at Rs.551.5 crores was correct or not. What has to be seen in
exercise of judicial review of administrative action is to examine
whether proper procedure has been followed and whether the
reserve price which was fixed is arbitrarily low and on the face of
it, unacceptable.
xxx xxx xxx
98. In the case of a policy decision on economic matters, the
courts should be very circumspect in conducting any enquiry or
investigation and must be most reluctant to impugn the judgment
of the experts who may have arrived at a conclusion unles s the
court is satisfied that there is illegality in the decision itself.”
21. Similar view was taken in Government of Andhra Pradesh
vs. P. Laxmi Devi , (2008) 4 SCC 720, observing as follows :
“80. ….As regards economic and other regulatory legislation
judicial restraint must be observed by the court and greater latitude
must be given to the legislature while adjudging the constitutionality
of the statute because the court does not consist of economic or
administrative experts. It has no expertise in these matters, and in
this age of specialisation when policies have to be laid down with
great care after consulting the specialists in the fiel d, it will be
wholly unwise for the court to encroach into the domain of the
executive or legislative ( sic legislature) and try to enforce its own
views and perceptions.”
22. The need for judicial restraint in economic and financial matters
based on reports of domain experts was again considered in Tamil Nadu
Generation and Distribution Corporation Ltd. vs. CSEPDI -Trishe
Consortium, (2017) 4 SCC 318, holding as follows:
“36…. At this juncture we are obliged to say that in a comp lex
fiscal evaluation the Court has to apply the doctrine of restraint.
Several aspects, clauses, contingencies, etc. have to be factored.
These calculations are best left to experts and those who have
knowledge and skills in the field. The financial computation involved,
the capacity and efficiency of the bidder and the perception of
951
feasibility of completion of the project have to be left to the wisdom
of the financial experts and consultants. The courts cannot really
enter into the said realm in exercise of power of judicial review.
We cannot sit in appeal over the financial consultant’s assessment.
Suffice it to say, it is neither ex facie erroneous nor can we perceive
as flawed for being perverse or absurd.”
23. Islamic Academy of Education (supra) was a sequel to T.M.A.
Pai Foundation & Ors. vs State of Karnataka & Ors. , (2002)
8 SCC 481, which was being understood in different perspectives leading
to several litigations. The fixation of fee by the TAF RC is not an
adversarial exercise but is meant to ensure balance in the fee st ructure
between the competing interest of the students, the insti tution and the
requirement and desire of the society for accessible quality education.
It is but a part of the high concept of fairness in oppo rtunities and
accessibility to education, which is an avowed constitutional goal. But to
equate it to the extent of a right to challenge and interfe rence only on
basis of a different view being possible, cannot be a justification to interfere
with the recommendation of an expert committee. It is nobody ’s case
that the TAFRC has acted contrary to principles of accoun ting and
economics or any fundamental precincts of the same. In this conte xt,
the following observations in Modern School vs. Union of India , (2004)
5 SCC 583, are considered relevant in the necessary extract
“20. We do not find merit in the above arguments. Before analysing
the rules herein, it may be pointed out, that as of today, we have
Generally Accepted Accounting Principles (GAAP). As stat ed
above, commercialisation of education has been a problem ar ea
for the last several years. One of the methods of eradicat ing
commercialisation of education in schools is to insist on e very
school following principles of accounting applicable to not-for-
profit organisations/non-business organisations….
xxx xxx xxx
51. Indisputably, the standard of education, the curricular and co-
curricular activities available to the students and various other
factors are matters which are relevant for determining of the fee
structure. The courts of law having no expertise in the matte r
and/or having regard to their own limitations keeping in view the
principles of judicial review always refrain from layin g down
precise formulae in such matters. Furthermore, while undertaking
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]
such exercise the respective cases of each institution, their plans
and programmes for the future expansion and several other factors
are required to be taken into consideration. The Constitution Bench
in Islamic Academy of Education which as noticed hereinbefore
subject to making of an appropriate legislation directed setting up
of two Committees, one of which would be for determining fe e
structure. This Court, both in T.M.A. Pai Foundation and Islamic
Academy of Education had upheld the rights of the minorities and
unaided private institutions to generate a reasonable surplus f or
future development of education.”
24. Before concluding the discussion, in view of the reasons stated
by the High Court for fixation of the appropriate fee structure by itself,
reference may usefully be made to the observations in D.N. Jeevaraj
vs. Chief Secretary, Government of Karnatka , (2016) 2 SCC 653, as
follows:
“43. To this we may add that if a court is of the opinion tha t a
statutory authority cannot take an independent or impartial decision
due to some external or internal pressure, it must give its reasons
for coming to that conclusion. The reasons given by the court for
disabling the statutory authority from taking a decision can always
be tested and if the reasons are found to be inadequate, the decision
of the court to by-pass the statutory authority can always be set
aside. If the reasons are cogent, then in an exceptional case, the
court may take a decision without leaving it to the statuto ry
authority to do so. However, we must caution that if the court
were to take over the decision taking power of the stat utory
authority it must only be in exceptional circumstances and not as
a routine……”
25. The High Court relied on (1986) 2 SCC 679 Comptroller and
Auditor General of India, Gian Prakash, New Delhi and a nother
vs. K.S. Jagannathan and another and (2000) 8 SCC 395 Badrinath
vs. Government of Tamil Nadu and ors. to justify the taking over of
the decision-making process by itself from the TFARC on four grounds.
In our opinion, both the judgments are completely distinguishable on their
own facts and have no relevance to the question for consideration in the
present case. K.S. Jagannathan(supra) concerned prom otion to the
Subordinate Accounts Service. Badrinath (supra) related to a claim for
promotion to super-time scale. Both the cases have no relevance to the
953
present controversy concerning economic recommendations made by a
statutory committee consisting of domain experts, and approved by the
Government. We are, therefore, of the considered opinion in the facts
of the present case, as demonstrated from the available records that
none of the four grounds set out by the High Court can be considered as
making out an exceptional case to warrant usurpation of the deci sion
making jurisdiction of the TFARC by the High Court.
26. We, therefore, hold that the High Court exceeded its jurisdiction
in interfering with the recommendation of the TAFRC for reasons
discussed. The orders of the High Court are set asi de. The
recommendation of the TAFRC dated 04.02.2017 for the block period
2016-2017 and 2018-2019 is restored.
27. In view of the interim order dated 27.06.2017 passed by the
High Court, the bank guarantees furnished by the respondent institutions
and directed to be kept alive are required to be activat ed and action
taken accordingly in accordance with law for protection of the interest
of the students.
28. The appeals are allowed. No costs.
Ankit Gyan Appeals allowed.
VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.
STATE OF TELANGANA AND OTHERS [NAVIN SINHA, J.]