People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 07

February 18, 2007



Verdict On Self Financing Colleges


Thomas Joseph


A DIVISION Bench of the Kerala High Court has set aside Sections 3,7, 8(b) and (C), and 10 of Kerala Professional College Act, 2006 and Rules 10 and 11 of the Rules as they are held to be ultra vires Articles 19(1)(g), 26(a) and 30 of the Constitution. The High Court verdict has taken away the authority of the state to provide for a centralised single window admission, determine fee structure, provide reservation to SC/ST/SEBC students and free ship to 50 per cent of the admitted students on merit cum means basis, and to determine the criteria for identifying minority institutions in respect of self financing professional colleges. The article comments on the politics and legality of the judgment. 




A legislation does not stand or fall by virtue of its preamble. The preamble is not a part of an Act. It is only an introduction to it. Its legal function is minimal. It is only an aid to interpretation. By clarifying the objectives of the legislation, it can help resolve ambiguities in drafting, if there is any. Nothing more; nothing less. Despite the above, the preamble to Kerala Professional Colleges Act (Act 19/2006) has been the subject of much controversy. It was attacked by the opposition in the Assembly when the Bill was introduced in the House. Leading members from the opposition strongly pleaded for its repeal. They would at least have it cut to size. It is too lengthy, they argued, though Acts with lengthier preambles had earlier been passed by the very same house, piloted, ironically enough, by the very same members, when they were on the treasury benches. The sentiments expressed by the opposition have now been shared by the Hon’ble High Court of Kerala. A good part of the 311 - page long judgment on the invalidity of the major provisions of the Act has been set apart for vilifying the preamble. 


Hon’ble justices V K Bali and P R Raman have expressed their reservations not only about the length of the preamble, but also about its content, though much of it has been extracted from landmark judgments of the Supreme Court. In fact, their objection is to the selection of some passages to the exclusion of others. The selected passages, it is alleged, have been culled out from lengthy judgments without reference to their context and do not represent the ratio laid down in these judgments. The Hon’ble justices have also expressed their reservations about the political philosophy of the enactment which comes out clearly through the preamble. Their lordships are of the view that an elected government has no obligation to implement its election promises to the voters! 


The long preamble to the Act has set forth Equity and Excellence in unaided professional education as the objectives of the legislation. It has also set forth its legal defence citing various pronouncements of the Supreme Court and parliamentary legislations, which uphold the provisions for common entrance test, freeship, reservation and criteria for identification of minorities. The public campaign for and against the Act which followed its enactment has proved the usefulness of the preamble. It has had the effect of educating the people about the political philosophy and legal validity of the Act. By culling out the ratio of Supreme Court judgments and incorporating the legislation passed by the parliament, it has demystified the process of law making and the mechanism of its defense. People who have read the preamble know what was done by their representatives in the Assembly, how they had done it and why they had done it. The Hon’ble judges could not think of anything more blasphemous than demystifying the highly complex system of dispensing justice. The opposition in the Assembly did not want the progressive politics of education to be projected through the legislation by incorporating its crux in the preamble. Hence the Hon’ble High Court and the opposition, for different reasons, have been united in their objection to the preamble. 


Having reacted so sharply against the preamble, one would expect their lordships to be extremely cautious not to repeat the very same mistakes of which they have accused the legislature guilty. They should have been more careful in culling out the ratio of Supreme Court judgments. They should not have made selective omissions in critical quotes. They should have been judicious enough not to allow their philosophy to dictate their judgment. They should have been as objective as could be and tried the Act for its legal validity. But none of these have unfortunately materialised. They have allowed their philosophy to colour their reading of the Act and influence their verdict against it. In doing so, they have not only denigrated the preamble of the Act, but also disowned the very preamble of the Constitution. They have not only quoted passages from Supreme Court judgments out of context, but also omitted crucial parts of sentences they have quoted, which have led to a distorted understanding of law as laid down by the apex court. Such truncated understanding of the ratio of Supreme Court judgments have produced strange results, often amounting to the negation of the very principles of Fairness, Transparency And Non Exploitation enunciated by the Supreme Court in the making of admissions and fixation of fee by unaided colleges. Strangely enough, the judgment suffers from the very same infirmities that the apex court mandated against in the administration of unaided institutions.




A crucial phrase prohibiting individual institutions from holding their own test and bestowing a discretionary optional right on the state to hold its own test for admission to unaided colleges has been omitted from the extract of two full paragraphs (136 and 137) of Inamdar judgment which has been quoted in paragraph 31 of the High Court judgment. This has resulted in the misinterpretation of law laid down by the Supreme Court. The original version of the sentence, as it appears in the Supreme Court judgment in Inamdar case, from which the omitted phrase “may join together and hold a common entrance test or the State may itself”, has been omitted, reads as follows: 


“Such institutions situated in one State or in more than one State may join together and hold a common entrance test or the State may itself or through an agency arrange for holding of such test” 


The above sentence has been misquoted by the Hon’ble Court as follows: 


“Such institutions situated in one State or in more than one State may itself or through an agency arrange for holding of such test” 


As stated in the above quote from Inamdar Judgment, the Supreme Court has permitted three equally valid options for holding the test, two of which are weighted in favour of the state. The three options are as follows: 


I. A single consortium of managements which represents all managements holding a Common Entrance Test 

II. The state itself holding a Common Entrance Test 

III. An agency of the state holding a Common Entrance Test 


The truncated sentence as extracted and reproduced by the Hon’ble High Court only permits the following options for the conduct of the test:


(1) Individual intuition/institutions holding an entrance test for itself /themselves 

(2) An agency of institution/institutions holding an entrance test on its/their behalf 


There is a world of difference between the law laid down by the Hon’ble Supreme Court and its interpretation by the Hon’ble High Court. The Supreme Court’s dicta have been distorted on the following counts.

I. The Hon’ble Supreme Court has not permitted individual institutions to hold separate entrance tests. Institutions imparting education in the same discipline can hold an entrance test only through a consortium of such institutions. The High Court has permitted individual institutions to hold their own individual examinations or at any rate does not entirely rule out that possibility by omitting the phrase “may join together and hold a common entrance test”, thereby defeating the very objective for which these regulations were laid down by the Supreme Court, namely to prevent inconvenience and excessive expenditure incurred by students who are compelled to appear for multiple examinations. 

II. The option of the state holding a CET on its own as a precautionary measure has been ruled out 

III. The option of the state entrusting its own agency for holding CET has been ruled out 

IV. The state is conceived as an agency of the unaided institution, which may hold a CET for and on behalf of the unaided institutions and exclusively for them and even that only with their consent and only in its capacity as the agency of the unaided institution. 


The misinterpretation of law through omission of the crucial phrases cited above has been strengthened by a misinterpretation of the meaning of the phrases “Such Test” and “Procedure” in paragraphs 136 and 137 of Inamdar. The misconstruction of the role of the state as an agency of the unaided managements has resulted in the misconstruction of the meaning of the phrase “such tests” as referring to the test held exclusively for and on behalf of the unaided institutions. Neither a literal reading of the sentence in question nor a reading of the sentence in the context of the paragraph in which it occurs or with reference to a comprehensive reading of the entire judgment supports such a view. In Inamdar, the State is not conceived as the agency of the unaided institutions, but rather as a regulatory authority clothed with sufficient power and responsibility to ensure that the triple test of fairness, transparency and non exploitation is built into the procedure for holding the Common Entrance Examination. The expression “procedure” is used with wider amplitude and not in the narrow sense of ‘laying down the steps for holding the test by the management’ as understood by the Hon’ble High Court. The procedure could include a procedure of the state itself holding the entrance test, counselling and single window admission. This is evident from the following sentence in paragraph 137 of Inamdar:


“The admission procedure so adopted by a private institution --- can be taken over by the state substituting its own procedure”. 


The prime concern of the Hon’ble Supreme Court, as clearly set out both in the beginning and towards the end of paragraph 136 of Inamdar, is not as much to ensure the absolute protection of the entrepreneurial rights of the managements under Article 19 (g) and minority rights under Article 30, as to ensure rights to equality of educational opportunity on the part of the students under Article 14. In the above context, the Supreme Court has provided the following options for the State government, which may be exercised under different circumstances, depending on the specific needs of each situation:

I. Permitting the consortium of managements to hold the admission on its own 

II. Holding of admission by the state /by an agency of the state as a precautionary measure 

III. Remedial right to take over the entire admission procedure even after permitting the consortium to hold the test in case of maladministration. 


It is evident that the state has the right to substitute its own procedure for that of the consortium of managements, irrespective of the fact of proved maladministration and take over the right once granted to private institutions in case of maladministration. Given the wide amplitude of the powers conferred on the state, it is beside the point to say that the state can take over the procedure of admission only temporarily in case of maladministration and that even such take over is too harsh a measure to be adopted against a single complaint with regard to a single test held by a single consortium. It overlooks not only the right of the state to hold the test on its own, but also the fact that the complaint pertains to medical courses, for which the system of “Suit Case Admission”, as noted by the Hon’ble Supreme Court itself, is an ugly fact of life crying for remedial intervention. 




It is a commonplace to say that the taste of the pudding is in the eating. What is true of pudding is equally true of judgments. No Court should ignore the practical outcomes of its judgments. Courts have a duty to see that an evil sought to be remedied by legislation is not perpetuated by its invalidation. The High Court has not unfortunately displayed such social sensitivity while striking down section 7 of the Act which had empowered the government to fix the fee, to decide the parameters that went into its fixation and to ensure that free ship is extended to 50 per cent of the admitted students on merit-cum means basis. By striking down the provision, the Hon’ble judges have struck down the educational aspirations of the poor and their prospects for a better life. The law in respect of Fee Regulatory Committee has been laid down by the Hon’ble Supreme Court in Islamic Academy case and is fully endorsed by the Inamdar judgment. The scheme laid down by the apex court has carefully balanced the rights of the students to undergo education by paying a “reasonable fee” and the rights of the managements to levy only a “reasonable surplus” for the expansion of the facilities of the institution, not amounting to commercialisation or profiteering. The scheme laid down in paragraphs 7 and 8 of Inamdar do give the right to the Fee Regulatory Committee to fix the fee on the basis of the proposal made by each institution in accordance with the parameters determined by the Fee Regulatory Committee, keeping in mind that “imparting of education is essentially charitable in nature”. Section 7 of Act 19/2006 is only a legislative incorporation of the scheme evolved by the Supreme Court. The Hon’ble High Court, by invalidating the provision, has reversed the roles of the Fee Regulatory Committee and the institutions. As per the judgment, the institution would fix the fee on the basis of parameters fixed by it as “in the very nature of things, it does not appear that the Regulatory Committee would know in depth the affairs of the institution as best as the institution may know itself.” 


The Hon’ble High Court has overlooked the fact that the prime concern of the Supreme Court in regard to fixation of fee was to ensure that the fee structure would be non-exploitative, providing only for a “reasonable surplus” for future expansion and the Regulatory Committee was constituted for ensuring that only a “reasonable fee” was charged and not “adequate fee” that would provide for the entire expense to be incurred in connection with the future expansion of the institution. A construction that the Supreme Court had intended to give permission to the individual institution to collect all expenditure needed for future expansion from the students would amount to a gross misunderstanding of the position taken by the Supreme Court. The High Court has taken the view that the institution can charge any amount as fee, provided it is used for the future expansion of the institution, as is evident from the following rhetorical question raised by the Hon’ble justices:


“To illustrate, if the institution may plan its expansion to double the seats or have double the buildings and infrastructure as according to it, it may be necessary, and accordingly fix the fee, can the Regulatory Committee say the expansion and development of the institution would entail fixation of more fee and therefore it is not permitted”. 


The law laid down in TMA Pai is as follows


“There can, however, be a reasonable revenue surplus, which may be generated by the educational institution for the purpose of development of education and expansion of the institution” 


It would be a travesty of justice if students were made to pay the entire expense incurred in connection with capital investment for the expansion of the institutions and still claim that such educational institutions are performing a charitable activity. What has been conceived as a minor contribution from students for generating only a reasonable surplus for the future expansion of their alma mater, not amounting to exploitation, has now been held by the High Court of Kerala as a mandatory and burdensome responsibility of the students to contribute fully for the future expansion of the institution, without even raising a whimper of doubt as to the reasonableness of the expansion proposals or its necessity or its priority over other proposals, even as there is no guarantee that the infrastructure thus built up by private managements would be permanently used for educational purposes alone. This is mandatory charity in the reverse direction--- on the part of the students for the management and not vice versa as it has been traditionally conceived and upheld by the Hon. Supreme Court. 


The challenge against the provisions for determining minority status has been upheld. The results are bound to be disastrous. The private entrepreneurs who have rushed into the field in search of quick profits are ready to grab any opportunity for deregulation that would free them from the fetters of regulatory control and social obligations. The minority tag has now become a convenient ruse for resisting regulatory intervention by the state, specially against the background of two central legislations, the one relating to the amendment to the Minority Educational Institutions Act and the other the 93rd amendment to the Constitution, both of which were carried out by the parliament in 2006. The amendment to the Minority Educational institutions Act enables any designated minority educational institution to affiliate itself to any university of its choice, provided the targeted university is willing to affiliate it. Since the status of the university has not been prescribed, it could be any university, including private universities/foreign universities, which are waiting on their wings to descend on the Indian educational market. No better choice for commercial exploitation of minority rights can be imagined. The second legislation, which is going to have far reaching implications for the state, is the 93rd amendment to the constitution, which enables the state to provide for reservation in unaided institutions.


Minorities are exempted from the purview of the legislation, obviously because minorities, by definition, constitute a group which is itself in need of special protection and the imposition of any obligation on such a group to provide protection to another equally vulnerable group would be an unworkable proposition. The exemption clause has however become another peg to hang the agenda of avarice for educational entrepreneurs. A proper procedure for distinguishing minorities deserving protection from others already well protected is needed to prevent the exploitation of minority rights by unscrupulous elements. This was the objective of subsections (b) and (c) of Section 8 of the Act. By striking down the provisions, the Hon’ble High Court has given the managements unfettered rights for exploitation under the guise of minority rights.




The virtue of the otherwise unwholesome judgment is that it makes no secret of its prejudices. Just as the preamble to the Act declares its commitment to equity and excellence, the postscript to the judgment embraces its commitment to privatisation and liberalisation. It says:


“The State for variety of reasons and in particular paucity of resources and funds is unable to cater for the need of the society. It is unable to provide quality education to all commensurate the need of the society. It is unable to provide quantitative or qualitative education to all. The students clamouring for education are far more commensurate to the educational institutions established by the government. Unnecessary and unproductive regulations which may virtually amount to take over of such reputed institutions would be counterproductive. The day-to-day monitoring of the institutions and chocking them financially may result in their closure. Such regulatory measures would do far more harm than the good they might be intended to do”. 


The Hon'ble justices appear to be convinced that the government is poor while the people are rich and the rich can look after themselves, only if the government does not meddle with their choices. ‘A poor government with a rich people to govern’ is an oxymoron. But it need not be a reality. The government can always tax the rich citizens and use such taxes for the welfare of the poor. Such cross subsidy is not unlawful. It is in fact the very logic and justification of taxation in a welfare state, leave alone a socialist state. It appears that the Hon’ble justices have little appreciation for the social philosophy of taxation and its implications on public finance and public welfare. This is not an apolitical view, but a highly political view regarding the function of a government. It is a neo liberal, capitalist view. It is opposed to the socialist ethos of our Constitution. In advocating this, the Hon’ble justices have judicially jettisoned the preamble of the Constitution, which is a part of the basic structure of the Constitution. They have failed to live up to their oath of office which casts a duty on them to protect the Constitution of our “Sovereign, Socialist, Secular, and Democratic Republic” constituted on behalf of “WE THE PEOPLE OF INDIA”. Such failure cannot be justified by the expression of pious sentiments for the poor, with which this unjust dispensation of justice is prefaced and concluded. The political battle to expose and oppose the non-inclusive, unethical and neo-liberal politics of the judgment has to be fought in the people’s court even as the legal battle against the distortions of the apex court verdicts is fought in the Supreme Court. 


(Thomas Joseph is president of the All India Federation of University and College Teachers Organisations, AIFUCTO.)