A.N. Parasuraman Etc. v. State of Tamil Nadu

SHARMA, J. The question involved in these appeals relates to the vires of the Tamil Nadu Private Educational Institutions (Regula- G tion) Act, 1966, hereinafter referred to as the Act. The appellants are interested in running educational institutions, which are covered by the expression "private educational institution" within the meaning of s. 2(f) of the Act. The main challenge is directed against ss. 2(c), 3(a), 3(b), 6, 7 read with ss. 15,_ 22 and 28. The High Court struck downs. 28 and uplield the other sections. That part of the judgment where s. 28 H A has been declared to be invalid has not been impugned by the respondent-State. 2. The provisions of the Act which are relevant for appreciating the ground urged by the appellants are as follows. Section 3 mandato­ rily requires a private educational institution to obtain the permission B of the competent authority for the purpose of running it. The Manager of such an institution has to, as required by s. 4, make an application for permission in the prescribed form accompanied by a fee. Section 6 lays down the power of the competent authority to deal with such an application in the following terms: "6. Grant of permission.-On receipt of an applica­ tion under Section 4 the competent authority may grant or refuse to grant the permission after taking into considera­ tion, the particulars contained in such application: Provided that the permission shall not be refused under this Section unless the applicant has been given an opportunity of making his representation: Provided further that in case of refusal of permission the applicant shall be entitled to refund to one-half of the amount.of the fee accompanying the application." The competent authority is empowered under s. 7 to cancel the permission in certain circumstances. One of the conditions for exercise of power is contravention of any direction issued by the competent authority under s. 15. The power to exempt any institution from the provisions of the Act is vested in the State Government under s. 22, F which is quoted below: ''22. Power to exempt.-Notwithstanding anything contained in this Act, the Government may, subject to which conditions as they deem fit, by notification exempt any private educational institution or class of private educational institutions from all or any of the provisions of this Act or from any rule made undr this Act." Section 28, which has been declared invalid by the High Court, states that if any difficulty arises in giving effect to the provisions of this Act, the Government may "do anything which appears to them to be neces- H sary for the purposes of removing the difficulty." A.N. PARASURAMAN v. STATE OF TAMIL NADU [SHARMA.I.] 375 J 3. The Act is impugned on the ground that it does not lay down A . any guide line for the exercise of the power by the delegated authority, as a result of which the authority .is in a position to act according to his whims. The Act having failed to indicate the conditions for exercise of power, the decision of the competent authority is bound to be dis­ criminatory and arbitrary. It has also been argued that the restrictions put by the Act on the appellants, who are running tutorial institutions B are unreasonable and cannot be justified under sub-clause (g) of Artilce 19(1) of the Constitution. 4. The learned counsel appearing for the respondent has attempted to defend the Act on the ground that sufficient guidance is available to the authority concerned from sub-section (2)(c) of s. 4 C which enumerates the particulars required to be supplied in the appli­ cation for permission. They are 10 in number and are mentioned below: "4. Application for permission. ( 1) (2) Every such application shall- (a) . -~ ..... . (c) contain the following particulars, namely:- (i) the name of the private educational institution and the name and address of the manager; (ii) the certificate, degree or diploma for which such private educational institution prepares, trains or guides or proposes to prepare, train or guide its students or the certificate, degree or diploma which it grants or confers or proposes to grant or confer; (iii) the amenities available or porposed to be made available to students; (iv) the names of the members of the teaching staff and the educational qualifications of each such member; '376 SUPREME COURT REPORTS [ 1989] Supp. 1 S.C.R. (v) the equipment, laboratory, library and other facilities for instructions; (vi) the number of students in the private educational institution and the groups into which they are divided; (vii) the scales of fees payable by the students; (viii) the sources of income to ensure the financial stability of the private educational institution; (ix) the situation and the description of the buildings in which such private educational fustitution is being run or is proposed to be prescribed; (x) such other particulars as may be prescribed." 5. The point dealing with legislative delegation has been con- ; ID sidered in numerous cases of this Court, and it is not necessary to discu~s this aspect at length. It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative functions which cannot be delegated. What is permissible is to leave to the delegated authority the task of implementing the object of the Act after the legislature lays down adequate guide lines for the I!'. exercise of power. When exap:iined in this light the impugned provi­ sions miserably fail to come to the required standard. ~· The purpose of the Act is said to regulate the private educa­ tional instltuti()ns but does not give-any idea as to the.manner inlwhich the co'ntrol over the institutions can be exercised. The Preamble which F describes the Act "for regulation" is not helpful at all. Learned counsel for the State said that the Object and the Reasons for the Act are to eradicate corrupt practices in private educational institutions. The expression "private educational institution" has been defined as meaning any college, school or other institution "established and run with the object of preparing, training or guiding its students for any G certificate, degree or diploma", and it can, therefore, be readily infer­ red that the purppse of the Act is to see that such institutions do not exploit the students; and while they impart training and guidance to the students of a standard which may effectively improve their knowledge so as to do well at the examination, they do not charge exhorbitantly for their services. But the question is as to how this ljl objective can be achieved, Section 6 which empowers the competent A.N. PARASURAMAN v. STATE OF TAMIL NADU (SHARMA,J.] 377 auihonty to grant or refuse to grant the permission for establishing and running an institution does not give any idea ·as to the conditions which: it has to fulfil before it can apply for permission under the Act, nor are the tests indicated for refusing permission ·or cancelling under s. 7 of an already granted permission. The authority concerned has been left with unrestricted and unguided discretion which renders the provisions unfair and discriminatory. 7. It was argued on behalf of the State that since an application for permission has to supply the particulars as detailed in s. 4(2)(c) (quoted above in paragraph 4), the Act must be deemed to have given_ adequate guide lines. Special emyhasis was given by the learned counsel on-sub-clauses (iii), (iv) and (v) of s. 4(2)(c), which ask for informatiQn,. atiout the .amenities for the students-the equipments, laboratory, library and other facilities for instruction-and, the names of the teachers with their qualifications. It may be noted that the Act, beyond requiring the applicant to make a factual statement about these matters, does not direct the institution to make provisions for them J or for any or some of them) as condition for grant of permission. The maintenance of any particuli!r standard of these heads are not in contemplation at all, although certain other aspects; not so important, have been dealt with differently in several other sections including s. 4, 5, 9, 10 and 11. Section 4(2)(b) mandatorily requires the applicant to pay the "prescribed" fee; s. 5 gives precise direction regarding the name by which the institution is to be called; ands. 9 about the certifi­ cates to be issued by it; and s. 11 makes it obligatory to maintain accounts in the "prescrioed" niann,li,r. But, there is no indication, what­ soever, about the legislative R(!lic/or the accepted rule of conduct on the vital issue about the maintenance of academic standard of the institution and the other requirements relating to the building, library and necessary amenities for the students, as the Act is absolutely silent about the criteria to be adopted by the prescribed authority for grant­ ing or refusing permission. The rules which were Jlla:de un,cter s. 27 in 1968 and called the Tamil Nadu Private Educational' Institutions / ' ' ' (Regulation) Rules, 1968, are not called upon to lay down any norm on these issues and naturally do not make any reference to these aspects. The result is that the power to grant or refuse permission is to be exercised a5cording to the whims of the authority and it may differ from person to person holding the office. The danger of arbitrariness is enhanced by the unrestricted and unguided discretion vested in the State Government in the choice of "competent autlwrity" defined'in s. (2)( c) in the following words: · ' . 0 El 378 SUPREME COURT REPORTS [1989) Supp. 1 S.C.R. "(c) "competent authority" means any person, officer or other authority authori~ei:i-by the Government, by notification, to perform the functions of the competent authority under this Act for such area or in relation to such class of private educational institutions, as may be specified in the notification;" The only safeguard given to the applicant institution is to be found in the first proviso to s. 6 which says that the permission shall not be refused unless the applicant has been given an opportunity of making his representation, but that does not by itself protect the applicant from discriminatory treatment. So far s. 7 dealing with power to cancel the permission granted ealier is concerned, no objection can be taken to the first ,part of the section, whereunder the permission may be cancelled in case of fraud, misrepresentation, suppression of material particulars or contravention of any provision of the Act or the Rules. But the other ground on which the authority can exercise its power being contravention "of any direction issued by the competent autho­ rity under this Act" again suffers from the vice of arbitrariness. Sec­ tion 15, the relevant section in this regard, states that "the competent authority may, from time to time issue such directions regarding the management of a private educational institution as it may think fit" (emphasis added). The section is too wide in terms without indicating the nature of such direction or the extent within which the authority should confine itself while exercising the power. Similar is the situation in the matter of exemption from the Act. The power to grant exemp­ tion is contained ins. 22, quoted in paragraph 2 above. 8. The provisions of the Act indicate that the State Government has been vested with unrestricted discretion in the matter of the choice F of the competent authority under s. 2(2)(c) as also in picking and choosing the institutions for exemption from the Act under s. 22. Such an unguided power bestowed on the State Government was struck down as offending Article 14 in the case of the State of West Bengal v. Anwar Ali Sarkar, [1952) SCR 284. A similar situation arose in Kunnathat Thathunni Moopil Nair v. The State of Kera/a and Another, Q [1961] 3 SCR 77, where, under s. 4 of the Travancore-Kochin Land Tax Act, 1955, all lands were subjected to the burden of a tax ands. 7 gave power to the Government to grant exemption from the operation of the Act. The section was declared ultra vires on the ground that it gave uncanalised, unlimited and arbitrary power, as the Act did not lay down any principle or policy for the guidance of exercise of the H. discretion in respect of the selection contemplated b,v s. 7. / A.N. PARASURAMAN v. STAIB OF TAMIL NADIJ [SHARMA,J.] 379 9. Similar is the position under ss. 6 and 7 of the present Act. The learned counsel for the resporicient~State contended that by refe­ rence in s. 4 to the particulars to be supplied.in· the application for permission, it can be easily imagined that the competent authority has to take into account all that may be validly relevant for the grant or refusal of permission. We are afraid, the section cannot be saved by recourse to this argument ·in absence of any helpful guidance from the Act. The position in this case cannot be said to be on a better footing than that of the Gold (Control) Act, 1968, which was challenged in Harakchand•Ratanchand Ranthia and Others v. Union of India and Other, [1970] 1 SCR 479. As is indicated by the judgment, the Gold (Control) Act had to be passed as gold was finding its way into the country through illegal channels, affecting the national economy and hampering the country's economic stability and progress, and the Customs department was found unable to effectively combat the smuggling. Section 27(6)(a) of the said Act stated that in the matter of issue or renewal of licences the "Administrator shall have regard to the number of dealers existing in the region in which the applicant intends to carry on business as a dealer". The expression "region" was not defined in the Act and\. 27(6)(b) required the Administrator to have regard to "the anticipated demand, as estimated by him, of orna­ ments in the region". The argument in support of the validity of the Act was that these provisions provided adequate guidance to the Administrator, which this Court rejected, holding that the expression "anticipated demand" was vague and not capable of objective assess­ ment and, therefore, was found to lead to a great deal of uncertainty. The other provisions mentioning "suitability of the applicant" in s. 27(6)(e) and "public interest" in s .. ,27(6)(g) were also held to have failed in laying down any objective standard or notm so as to save the Act. The provisions of the act, with w1Jich-we1 are dealing in the present cases, are far less helpful for the purpose of upholding its validity. 10. For the reasons mentioned abov~, the impugned sections of the Act must be held to be invalid. These provisions are inextricably bound up with the other parts of the Act so as to form part of a single scheme, and it it not possible to sever the other parts Of the Act and save them. In the result, the entire Act is declared ultra vires. The appeal is accordingly allowed, but, in the circumstances, wit)lout costs. G.N. ApPea! allowed.