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2021 (5) TMI 1046

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..... he right to establish an educational institution can be regulated; but such regulatory measures must, in general, be to ensure the maintenance of proper academic standards, atmosphere and infrastructure (including qualified staff) and the prevention of maladministration by those in charge of management. In establishment of the education institutions, there cannot be a profiteering motive but it is permissible for such institution to generate a reasonable revenue surplus for the purpose of development of education and expansion of the institution - There is autonomy with the institution in fixing the fee structure but it has to be rational and there cannot be any profiteering motive and no capitation fee could be charged. Until the suitable legislation or regulation framed by the State, the fee structure in various institutions shall be determined by the Committee separately having regard to relevant factor and the management is not entitled to charge anything more. It is permissible for the institutions to charge fee only for one year in accordance with the rules and not the fee for the entire course. As laid down in Islamic Academy [ 2003 (8) TMI 469 - SUPREME COURT] , if an ed .....

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..... ed by the institute even if the student left in midstream. The fee structure determined by the 'Fee Fixation Committee' constituted by the respondent University in supersession of fee structure already proposed by the 'Fee Regulatory Committee' constituted by the State of Rajasthan pursuant to the directions of the Supreme Court was held not sustainable in the eyes of law. Petition allowed. - D.B. Civil Writ Petition No. 13535/2020 - - - Dated:- 31-5-2021 - SANGEET LODHA AND RAMESHWAR VYAS, JJ. For the Appellant : Party-in-Person For the Respondent : Mukesh Rajpurohit, ASG, Navneet Singh Birkh, R.S. Saluja, Manish Vyas, AAG, Kailash Choudhary, Vikas Balia, Kunal Bishnoi, Hemant Dutt, Keshar Singh, Akhilesh Rajpurohit, Milap Chopra, Kamlakar Sharma, Sr. Advocate and Alankrita Sharma ORDER Sangeet Lodha, J. 1. This writ petition (PIL) has been filed by the petitioner, an advocate by profession, challenging the condition imposed by the respondents private medical institutions that the students seeking admission to MBBS Course to submit bank guarantee against the annual fees for next 3 years of course duration in addition to deposit .....

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..... furnishing the bank guarantee for remaining 3 years, subject to outcome of present writ petition/stay petition. 4. Aggrieved by the interim order passed by this Court as aforesaid, the respondent Nos. 6, 7, 9 13 preferred a Special Leave Petition ('SLP') (Civil) No. 15950/2020, wherein, the Hon'ble Supreme Court, on 24.12.2020, while issuing notices passed the interim order in the following terms: In the meanwhile, there will be a stay of the operation of the interim order dated 17.12.2020 passed by the High Court. 5. Later, vide order dated 4.1.2021, the SLP preferred was disposed of by the Hon'ble Supreme Court with the observations/directions as under: We are inclined to request the High Court to decide the writ petition finally within a period of one week from today in view of the admission process being at the final stage for the current academic year. The interim order passed by this Court on 24.12.2020 shall continue to operate till the disposal of the writ petition by the High Court. The parties are directed to appear before the High Court on 07.01.2020. The application for impleadment is allowed. The special leave petition is di .....

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..... would come to Rs. 59,25,93,750. It is further averred that in view of the impossibility of the parents arranging the bank guarantee equivalent to the fees for 3 years, the private medical institutions taking advantage of this position, are forcing them to deposit advance fee of 1 years or at least 1 year in addition to the annual fee deposited for the first year and thus, according to the petitioner, the private medical institutions, which cannot charge any capitation fee or book profit, are creating a situation where the students/parents are left with no option but to deposit an advance fee of minimum period of 1 year. Relying upon the decisions of the Hon'ble Apex Court in T.M.A. Pai Foundation Ors. vs. State of Karnataka Ors.: (2002) 8 SCC 481 and Islamic Academy of Education vs. State of Karnataka: (2003) 6 SCC 697, it is submitted that the educational institution can only charge prescribed fees for one semester/year and even if an institution feels that any particular student may leave in midstream, then at the highest, it may require to give a bond/bank guarantee with the balance fees for the whole course would be received by the Institute even if the student left i .....

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..... ion No. 13414/16 (Dr. Sharwan Ram vs. State of Rajasthan Ors.) was disposed of by this Court in terms of the order dated 16.2.15 passed by the Hon'ble Supreme Court in SLP No. 35001/13. The respondents no. 8 to 13 being the Universities established and incorporated under the statute, are deciding their fee as per the Fee Regulatory Committee constituted under the relevant statute as per the order dated 16.2.15 and are not governed by the respondent no. 5. 12. By way of an additional affidavit, it is brought on record by the State of Rajasthan that in Government Dental College i.e. RUHS College of Dental Sciences, Jaipur, the State has prescribed a bond of Rs. 4 lacs and bank guarantee of Rs. 1 lac from the students admitted to BDS Course. The said condition of bank guarantee is implemented due to the fact that the students started to drop a course in the second year after securing seat in MBBS Course in medical college. It is averred that in 2011-12, complete batch left the college after first year whereas, in academic session 2012-13, only 5 students continued the course after first year. Further, the fee charged by RUHS College of Dental Science is too meagre as compared .....

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..... Judge. 16. The respondent no. 7-Ananta Institute of Medical Sciences, in its counter to the writ petition submitted that the levy of fee by the respondent college is governed by Fee Regulatory Committee, Department of Medical Education, Government of Rajasthan. According to the respondent institution, in light of the law laid down by Supreme Court in Islamic Academy(supra), the institutions are permitted to receive the bank guarantee from the students for the balance fees for the whole course to secure the institution in the event the students leave in midstream. It is averred that the respondent medical college is a self financed institution and is receiving no aid from the Government authorities and the fees charged from the students is the only amount utilized for the benefit/use of that educational institution and the institute is not charging either directly or indirectly any other amount except the amount fixed as fees. It is submitted that as already recognized by the Court that all medical admissions to institutions across the nation shall be done by the State Authorities, wherein the private institutions will have minimalistic roles, thus, disabling the institutions fro .....

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..... , NEET 2020 in the State of Rajasthan. According to the respondent, in the instructions issued, it is clearly laid down that at the time of reporting, the selected candidates will have to submit a bond/bank guarantee as applicable and thus, the controversy alleged does not warrant any interference by this Court. 18. The respondent no. 9-JNU Institute of Medical Sciences and Research Centre, while justifying that condition of bank guarantee relying upon the decision of the Hon'ble Supreme Court in case of Islamic Academy, contended that the prayer of the petitioner that the condition for requiring submission of bond will be insisted only from such student with regard to whom the institution feels that any student or students might leave the institution in the midstream is absolutely irrational and without any basis as at the time of taking admission in MBBS Course, the private colleges have no means to comprehend and determine as to which student may or may not leave the MBBS Course midstream. It is submitted that UG Medical and Dental Admission Counseling Board has published an Information Booklet containing information regarding the eligibility criteria, application fees, p .....

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..... rom them as advance fees in lieu of bank guarantee. This is manifest from the official website of the Counseling Board where the option of submission of bond does not find mention. It is further submitted that the official representatives of the college at the time of counseling categorically directs parents/students to submit bank guarantee only and do not approve bond as a security to secure the fees of MBBS Course. According to the petitioner, the charging of advance fees is in the cognizance of State authorities as the payment of advance fee is accepted through bank accounts only and moreso the private medical colleges are required to submit their account to the Fee Determination Committee in order to seek revision of fees. Thus if genuine account books are submitted the fact of acceptance of advance fee is well within the knowledge of the State. According to the petitioner all the private medical colleges in the State of Rajasthan fall within the domain of State only (or for that matter Fee Determination Committee) and not merely the state run medical colleges and respondent no. 6 7 as contended by the respondent. The interlocutory order of Apex court cannot be equated with .....

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..... the course and thus, the respondent institutions are apparently indulged in profiteering and charging capitation fee in defiance of the directions issued by the Hon'ble Supreme Court. Reiterating the submissions made in the writ petition, the petitioner contended that submission of bond/undertaking does not stand on the same footing as submission of bank guarantee inasmuch as, generally, no bank guarantee is provided by the bank unless adequate amount is deposited in the bank and thus, on account of insistence of the respondent private medical institutions to furnish the bank guarantee compulsorily, grave hardship is caused to the students belonging to middle class families/low income groups. The petitioner contended that the writ petition preferred deserves to be allowed in light of the decision of the Supreme Court in Islamic Academy(supra) alone. 22. Relying upon paras 154 155 of decision of the Supreme Court in Islamic Academy(supra), it is submitted that though the fee structure in relation to each and every college must be determined separately keeping in view several factors, including facilities available, infrastructure made available, the age of the institution, .....

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..... Regulatory Committee constituted by the State pursuant to the directions of the Supreme Court, but in the institutions run by the universities established under the statute, fee structure is determined through the committees constituted in conformity with the relevant provisions of the statute. Learned AAG submitted that if any institution is collecting any amount other than the annual fee determined by the concerned committee then the same will come under the definition of 'capitation fee' and accordingly, punitive action shall be taken. Drawing the attention of the Court to the factual position summarised in additional affidavit filed, learned AAG submitted that taking into consideration the fact that the students started to drop the course in second year of BDS, the answering respondents have imposed a condition upon the students admitted to the course of furnishing bank guarantee of Rs. 1 lac and bond of Rs. 4 lacs, which cannot be said to be capricious. 24. Mr. R.S. Saluja, learned counsel appearing for respondent no. 2-National Medical Commission submitted that in T.M.A. Pai Foundation's case (supra), the Supreme Court categorically held that there should be n .....

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..... Court in the present writ petition. Regarding the application preferred by the petitioner seeking directions to the respondent institutions to produce their bank accounts, learned counsel submitted that in the present petition, the petitioner has only questioned the insistence for bank guarantee/advance fee and thus, the question of this Court entering into a roving and fishing inquiry at the instance of the petitioner, does not arise. Reliance in this regard is placed on decisions of the Supreme Court in the matters of Ashok Kumar Pandey vs. State of W.B..: (2004) 3 SCC 349 and Purushottam Kumar Jha vs. State of Jharkhand Anr.: (2006) 9 SCC 458. Learned counsel submitted that the petition filed lacks bona fide inasmuch as, while questioning the action of the respondent institutions in insisting for furnishing bank guarantee towards the fees for 3 years, the petitioner has not chosen to implead the dental colleges run by the Government and other private institutions, which are similarly situated qua the respondent private medical institutions. Learned counsel submitted that the respondent institutions are functioning in accordance with the directions and instructions issued by .....

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..... as categorically laid down that in the matter of determination of the fee structure, unaided institutions exercise greater autonomy and they are like other citizen carrying on an occupation, must be held to be entitled for reasonable surplus for development of education and expansion of institution. Drawing the attention of the Court to para 8 of the decision in Islamic Academy (supra), learned counsel submitted that the institution has been given option that if an institution feels that any particular student may leave in midstream, then it may require that student to give bond/bank guarantee towards the balance fee for the whole course and thus, the respondent institutions are free to ask the students to furnish either bond or bank guarantee. Learned counsel submitted that when even the bank would not issue the bank guarantee without collateral security, then why, the respondent institutions should take financial risk by accepting bond and not the bank guarantee. Learned counsel submitted that the condition of furnishing bank guarantee in no manner amounts to profiteering and thus, the contention sought to be raised by the petitioner that the action of the respondents is in viola .....

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..... t to property and has been held to be a part of fundamental right being a right of occupation envisaged under Article 19(1)(g) of the Constitution of India and therefore, the conditions imposed by the private institutions while entering into contract with the students cannot be said to be invalid and no restriction can be imposed except by way of appropriate legislation. Learned counsel submitted that regarding the capitation fee, the petitioner has only levelled general allegations and therefore, no adjudication can be made on the issue by this Court on the basis of such pleadings. Learned counsel submitted that no case has been set out by the petitioner against any institution collecting excess money or diverting the same to other use. It is submitted that the bank guarantee is called when a student is admitted and the decisions of the Supreme Court in this regard has to be read keeping in view the practical aspects pointed out by the private institutions. Reiterating the contention raised by the learned counsel Mr. Vikas Balia, learned counsel submitted that even the candidates selected in Government Dental College (RUHS) College of Dental Sciences are required to submit a bond .....

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..... PIL. It is submitted that the material facts are not even disputed by the respondent institutions and it is only the matter with regard the implementation of the directions issued by the Supreme Court in Islamic Academy (supra) and other subsequent decisions of this Court and the Supreme Court and thus, there is no reason as to why the issues raised by the petitioner out of public spirit espousing the cause of the students admitted to MBBS Course should not be entertained and adjudicated upon by this Court. Reliance is placed in this regard on the decisions of the Supreme Court in Shivajirao Nilangekar Patil vs. Dr. Mahesh Madhav Gosavi Ors.: (1987) 1 SCC 227 and Guruvayoor Devaswom Managing Committee Anr. vs. C.K. Rajan Ors.: (2003) 7 SCC 546. It is submitted that in Kerala, the condition regarding furnishing of bank guarantee for payment of the fees for entire course was deleted by the State Government which has been upheld by a Bench of Kerala High Court in Kerala Private Medical College Managements Association Ors. vs. State of Kerala Ors.: AIR 2019 Kerala 96, though the SLP against the said judgment is pending before the Supreme Court. 29. We have considered the r .....

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..... n of larger interest of students intending to pursue the studies of medical courses. As noticed above, in the petition filed, essentially, the petitioner has only sought implementation of the directions issued by the Hon'ble Supreme Court. The respondents must appreciate the tangible binding force embodied in directions issued by the Hon'ble Supreme Court and it goes without saying that if the action of the respondents in demanding bank guarantee or the advance fees, is found to be in violation of the directions issued by the Hon'ble Supreme Court, the same has to be set at naught. Thus, on the facts and in the circumstances of the case, we are not inclined to non suit the petitioner on the ground of locus standi to maintain the PIL petition espousing the cause of student community intending to pursue the medical courses in the State of Rajasthan. Accordingly, the preliminary objection raised on behalf of the respondents questioning the maintainability of the writ petition is rejected. 34. The issues raised by the petitioner essentially rolls around the decision of the Hon'ble Supreme Court in Islamic Academy (supra) but, so as to appreciate the controversy raise .....

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..... sh Ors. (1993) 1 SCC 645, a Constitution Bench of Hon'ble Supreme Court while upholding the declaration made in Mohini Jain's case (supra) that the right to education flows directly from right to life guaranteed under Article 21 , held that it must be construed in light of directive principles enshrined under Part IV of the Constitution. The Court held that a child (citizen) has a fundamental right to free education upto the age of 14 years. Thereafter, the obligation of the State to provide education is subject to limits of its economic capacity and development of the State. The Court rejected the argument that right to establish an educational institution is an activity which could be classified as 'profession' and deemed fit to treat the same equivalent to an 'occupation'. Regarding the capitation fee, the Court observed that Mohini Jain's case was not right in saying that the charging of any amount, by whatever name it is called, over and above the fee charged by the Government in its colleges, must be described as capitation fee. Regarding the capitation fee, the Court observed that the 'Capitation fee' means charging or collecting amount .....

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..... er Article 19(6). In Webster's Third New International Dictionary, at p. 1650, occupation is, inter alia, defined as an activity in which one engages or a craft, trade, profession or other means of earning a living. ..xxxxxx 54. The right to establish an educational institution can be regulated; but such regulatory measures must, in general, be to ensure the maintenance of proper academic standards, atmosphere and infrastructure (including qualified staff) and the prevention of maladministration by those in charge of management. The fixing of a rigid fee structure, dictating the formation and composition of a governing body, compulsory nomination of teachers and staff for appointment of nominating students for admissions would be unacceptable restrictions. ..xxxx. 57. We, however, wish to emphasize one point, and that is that inasmuch as the occupation of education is, in a sense, regarded as charitable, the Government can provide regulations that will ensure excellence in education, while forbidding the charging of capitation fee and profiteering by the institution. Since the object of setting up an educational institution is by definition charitable , it is .....

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..... iversity to ensure that no capitation fee is charged and that there is no profiteering, though a reasonable surplus for the furtherance of education is permissible. Conditions granting recognition or affiliation can broadly cover academic and educational matters including the welfare of students and teachers. (emphasis supplied) The scheme framed by the Supreme Court in Unni Krishnan's case (supra) and the directions to impose the same except where it holds that the primary education is a fundamental right was declared unconstitutional. However, principle that there should not be capitation or profiteering was upheld. It was observed that reasonable surplus to meet cost of expansion and augmentation of facilities does not amount to profiteering. 39. After the decision in T.M.A. Pai Foundation's case (supra), the issue inter alia regarding the extent of autonomy in fixing the fee structure, came up for consideration before the Hon'ble Supreme Court in Islamic Academy (supra), wherein the Court while noticing the fact that some of the educational institutions are collecting in advance the fees for the entire course i.e. for all the years, observed: 8. It mus .....

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..... nfrastructure made available, the age of the institution, investment made, future plan for expansion and betterment of the educational standard etc. The case of each institution in this behalf is required to be considered by an appropriate Committee. For the said purpose, even the books of accounts maintained by the institution may have to be looked into. Whatever is determined by the Committee by way of a fee structure having regard to relevant factors, some of which are enumerated hereinbefore, the management of the institution would not be entitled to charge anything more. 155. While determining the fee structure, safeguard has to be provided for so that professional institutions do not become auction houses for the purpose of selling seats. Having regard to the statement of law laid down in paragraph 56 of the judgment, it would have been better, if sufficient guidelines could have been provided for. Such a task which is a difficult one has to be left to the Committee. While fixing the fee structure the Committee shall also take into consideration, inter alia, the salary or remuneration paid to the members of the faculty and other staff, the investment made by them, the infr .....

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..... he students concerned directly. The statutory authority may consider the desirability of framing an appropriate regulation inter alia to the effect that in the event it is found that the management of a private unaided professional institution has accepted any amount other than the fees prescribed by the Committee, it may have to pay a penalty ten to fifteen times of the amount so collected and in a suitable case it may also lose its recognition or affiliation. 162. However, there cannot be any doubt that before any such order is passed, the institutions concerned shall be entitled to an opportunity of being heard. For the aforementioned purpose, the State shall set up a machinery to detect cases where amounts in excess of the permitted limit are collected as it is the general experience that students pay a huge amount. 163. However, if for some reason, fees have already been collected for a longer period the amount so collected shall be kept in a fixed deposit in a nationalized bank against which no loan or advance may be granted so that the interest accrued thereupon may enure to the benefit of the students concerned. Ordinarily, however, the management should insist for a .....

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..... ame can be regulated in the interest of preventing profiteering. No capitation fee can be charged. (emphasis supplied) 42. The Court categorically held that on the basis of judgment in T.M.A. Pai Foundation and various previous judgments, the scheme evolved out of setting up of two Committees for regulating admission and determining fee structure by the judgment in Islamic Academy (supra), cannot be faulted either on the ground of alleged infringement of Article 19(1)(g) in case of unaided professional educational institutions of both categories and Article 19(1)(g) read with Article 30 in case of unaided professional institution of minorities. The Court further observed that there is no impediment in constitution of the Committees as stop-gap or ad hoc arrangement made in exercise of the power conferred under Article 142 of the Constitution until suitable legislation or regulation framed by the State steps in. However, while dealing with the criticism to the decisions of the Committees, the Court cautioned the Committees with observations as under: 149. However, we would like to sound a note of caution to such Committees. The learned counsel appearing for the petitioner .....

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..... bserved: 49. Thus, the contention raised on behalf of the appellants that the private medical colleges had absolute right to make admissions or to fix fee is not consistent with the earlier decisions of this Court. Neither merit could be compromised in admissions to professional institutions nor capitation fee could be permitted. To achieve these objects it is open to the State to introduce regulatory measures. We are unable to accept the submission that the State could intervene only after proving that merit was compromised or capitation fee was being charged. As observed in the earlier decisions of this Court, post-audit measures would not meet the regulatory requirements. Control was required at the initial stage itself. Therefore, our answer to the first question is that though occupation is a fundamental right, which gives right to the educational institutions to admit the students and also fix the fee, at the same time, scope of such rights has been discussed and limitations imposed thereupon by the aforesaid judgments themselves explaining the nature of limitations on these rights. .xxxxx 74. The principles enunciated in T.M.A. Pai Foundation and P.A. Inamdar wer .....

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..... a reasonable revenue surplus for the purpose of development of education and expansion of the institution. Each and every educational institution is free to determine fee structure keeping in view several factors including facilities available, investment made, future plan for expansion and betterment of educational standard etc. There is autonomy with the institution in fixing the fee structure but it has to be rational and there cannot be any profiteering motive and no capitation fee could be charged. Until the suitable legislation or regulation framed by the State, the fee structure in various institutions shall be determined by the Committee separately having regard to relevant factor and the management is not entitled to charge anything more. It is permissible for the institutions to charge fee only for one year in accordance with the rules and not the fee for the entire course. As laid down in Islamic Academy (supra), if an educational institution feels that any particular student may leave in midstream then at the highest it may require that student to give bond/bank guarantee that the balance fee for the whole course would be received by the institution if the student left .....

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..... the banks and the bank guarantee could be obtained only on furnishing collateral security or fixed deposits. As a matter of fact, as a rule, banks are discouraged from giving unsecured guarantee even by the Reserve Bank of India. Thus, insisting upon the students who are otherwise eligible to be admitted to the course being meritorious but are not in position to arrange the requisite funds to procure a bank guarantee towards the fees for entire course duration would be absolutely unjustified. As discussed hereinabove, the directions issued by the Hon'ble Supreme Court in Islamic Academy are quite unequivocal that if an institution feels that any particular student may leave in midstream then, at the highest, it may require that student to give a bond/bank guarantee that the balance fees for the whole course would be received by the institute even if the student left in midstream. Further, ordinarily, the management should insist for a bond from the concerned student. (Vide para 163 - Islamic Academy). In this view of the matter, as a rule the respondent institutions including the medical/dental colleges run by the State Government must ordinarily accept the bond towards the fe .....

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..... e Regulatory Committee' constituted by the State Government pursuant to the directions issued by the Hon'ble Supreme Court in Islamic Academy (supra), the said issue already stand settled by a Bench decision of this Court in Sachin Mehta's case (supra). The petitioner therein had challenged the action of Mahatma Gandhi University of Medical Sciences Technology, the respondent no. 10 herein, in notifying fee structure decided by the 'Fee Fixation Committee' of the said University for the students admitted to MBBS and BDS Courses. Precisely, it was contended that the University having been established under the provisions of the Mahatma Gandhi University of Medical Sciences Technology, Jaipur Act, 2011 ('the Act of 2011') passed by the Legislative Assembly of State of Rajasthan, it is entitled to fix its own fee structure, which is approved by 'Fee Fixation Committee' constituted under the provisions of the Act of 2011. The Court categorically held that the University could not have put in place a 'Fee Fixation Committee' to prepare its own fee structure in exercise of the power conferred under Section 28 and/or 33 of the Act of 2011. R .....

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..... hat institution can be appropriately penalised and also face loss of recognition/affiliation. Thus, from a bare perusal of the nature of directions issued by the honourable Supreme Court, as aforesaid, it is apparent on the face of record that the matter for determination of fee structure is within the exclusive domain of the 'Fee Regulatory Committee' to be put in place by the concerned State. .xxxxxxxxx. 29. There cannot be two views on the established proposition of law that even the non-minority unaided professional educational institutions can be subject to similar restrictions which are found reasonable and in the interest of the public at large and student community in particular. In our considered view, on the basis of the judgment in Pai Foundation (supra), and various other judgments of the Hon'ble Supreme Court, the scheme evolved for setting up the Committees for regulatory admissions as well as for determination of fee structure by the judgment in the case of Islamic Academy (supra), cannot be faulted on the ground of alleged infringement of Article 19(1)(g) in case of unaided professional educational institutions. As has been observed by the Hon' .....

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..... also been prepared on that basis and students allotted to the institutes including the medical college of the respondent-University. In other words, once the process of selection had started on the basis of the terms and conditions spelt out in the INFORMATION BOOKLET and further detailed out while allotting the students to the concerned colleges, including the constant medical College of the respondent-University, then it was not within the jurisdiction and competence of the respondent-University to effect any changes in the criterion relating to fee structure contrary to one which has been determined by the 'Fee Regulatory Committee' constituted by the State of Rajasthan. Accordingly, the fee structure determined by the 'Fee Fixation Committee' constituted by the respondent University in supersession of fee structure already proposed by the 'Fee Regulatory Committee' constituted by the State of Rajasthan pursuant to the directions of the Supreme Court was held not sustainable in the eyes of law. 52. As a matter of fact, the question with regard to the determination of fee structure is not directly raised before us in the present petition and theref .....

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