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Professional education freedom verdict sparks constitutional crisis

Education World, 30 Nov, 1999
By Dilip Thakore

A commonsense judgement of the Supreme Court ruling that the Central and state governments have no right to appropriate admission quotas at arbitrary tuition fees in private professional colleges it hasn't funded or financed, has aroused the indignation of the nation's powerful political class. Dilip Thakore reports

A unanimous judgement of a heavyweight seven-judge bench of the Supreme Court of India freeing privately promo-ted, financially independent professional education (medicine, engineering, business management, pharmacy, nursing etc) colleges from the pernicious licence-permit-quota regime which surreptitiously migrated into education following the liberalisation and deregulation of Indian industry in 1991, has outraged political parties across the board and set Parliament on a collision course with the nation's independent judiciary.  

The historic import of the apex court's judgement which has halted incremental Central and state government interference and micro-management of institutions of professional higher education resulting in plunging standards and severe capacity shortages, was reflected in newspaper headlines on August 13 following the verdict in P.A Inamdar vs. State of Maharashtra (Appeal (Civil) 5041 of 2005) the previous day. States Can't have Quotas or Say in Private Institutions screamed a 40 point front page lead headline in The Times of India . SC Gives a Free hand to Pvt Colleges trumpeted the Bangalore-based Deccan Herald and SC Scraps Quota in Unaided Pvt Colleges headlined The Economic Times .

The sensationalism, perhaps euphoria, of these among the more sedate of the mainstream dailies, is understandable. Because following more than two decades of litigation, the Supreme Court's unanimous judgement in Inamdar's Case has upheld and reaffirmed a previous 11-judge bench judgement of the apex court in TMA Pai Foundation & Ors vs . State of Karnataka & Ors (2002 8 SCC 481) which had struck down the prevalent practice of state governments appropriating more than 60-85 percent of capacity in privately promoted, unaided (i.e financially independent) 327 medical and 1,346 engineering colleges across the country for students topping the CETs (Common Entrance Tests) conducted by state governments. Under a 1993 judgement of the Supreme Court in Unnikrishnan's Case (overruled by the TMA Pai judgement), the managements of private unaided colleges were legally obliged to provide heavily subsidised professional education to students qualifying under the CETs.

"We find great force in the submission made on behalf of the petitioners that the states have no power to insist on seat-sharing in unaided professional education institutions by fixing a quota of seats between the management and the State. The State cannot insist on private educational institutions which receive no aid from the state to implement the State's policy of reservation for granting admission on lesser percentage of marks, i.e on any criterion except merit... As per our understanding neither in the judgement of the Pai Foundation Case nor of the constitution bench in the Kerala Education Bill which was approved by Pai Foundation, there is anything which would allow the state to regulate or control admissions in unaided professional education institutions so as to compel them to give up a share of the available seats to candidates chosen by the State... This would amount to nationalisation of seats which has been specifically disapproved in (the) Pai Foundation (Case)... Such imposition of quota of State seats or enforcing the reservation policy of the State on available seats in unaided professional institutions are acts constituting serious encroachment on the right(s) and autonomy of professional private educational institutions," ruled the seven-judge bench of the Supreme Court delivered by Chief Justice R. C. Lahoti.

Predictably this commonsense judgement of the apex court stating that the Central and state governments have no right to appropriate admission quotas at arbitrary tuition fees in professional colleges it hasn't funded or financed, has aroused the indignation of the nation's powerful politicians and bureaucrats who in the name of equity and social justice have been long accustomed to grabbing quotas and reservations for underprivileged sections of society (i.e vote banks). Instead of promoting and establishing state-owned medical and engineering colleges in greater numbers to meet the constantly rising demand for professional education, post-independence India's wasteful and profligate Central and state governments have resorted to the easy option of expropriating incremental capacity in private sector institutions for disbursement at arbitrarily imposed populist tuition fees for favoured constituencies. They have been recklessly unmindful of the reality that the financial health of private sector unaided colleges has been suffering continuously with most of them unable to provide the laboratory and shopfloor infrastructure required of top grade institutions of professional education.

On August 17 - five days after the Supreme Court's unanimous judgement in Inamdar's Case was delivered - Union human resource development minister Arjun Singh assured angry Lok Sabha members cutting across all party lines that the Union government would enact legislation to overrule the court's verdict to ensure that reservations would continue to be provided for "SC/ STs (scheduled castes and scheduled tribes) and other backward castes" in all institutions of professional education, including private unaided colleges. Pressing for a "national response" to the judgement, the HRD ministry has post haste drafted a Private Professional Educational Institutions (Regulation of Admission and Fixation of Fee) Bill, 2005, to nullify the Supreme Court's judgement in the TMA Pai Foundation case, reaffirmed in P.A Inamdar vs . State of Maharashtra & Ors - the collective wisdom of 18 judges of the Supreme Court (see box p.33).

Although in its watershed unanimous judgement in Inamdar's Case, the seven-judge bench of the Supreme Court had exhorted the Central and/ or state governments to "come out with a detailed, well-thought out legislation on the subject" and "devise a suitable mechanism and appoint competent authority in consonance with the observations" of the court in the judgement, widespread criticism of the highest court by the political class and the confrontationist in-your-face tone and tenor of the draft Bill provoked an angry response from Chief Justice Lahoti. "If this is the attitude of the government... then wind up the courts and do whatever you want," expostulated the chief justice in open court while hearing attorney general Milon Banerjee on August 23.

The chief justice's exasperation with the country's political class which quite patently has no respect for the well-reasoned judgement of the nation's highest court, is understandable. Over a decade ago in Unnikrishnan's Case (1993) the apex court which was of a different composition and heavily influenced by the Left ideological predilections of the learned judges, especially Justice V.K. Krishna Iyer, had mandated an elaborate schema under which top-ranked merit students of state government conducted Common Entrance Tests (CETs) paid astonishingly low (Rs.10,000-35,000 per year for medical education) tuition fees, followed by several layers of "merit payment" students paying one-third to half of the actual cost of providing education, leaving a small percentage (15-30) as "management and NRI quotas" which were permitted to be auctioned by professional college managements. Unsurprisingly such blatant seat grabbing by the state of institutions established with private finance, rankled.

This perhaps explains why the promoters of the more respectable among the estimated 1,050 private unaided colleges established by linguistic and religious minorities providing medical and engineering education in the states of Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra in particular, continued to press their fundamental right to "establish and administer educational institutions of their choice" as mandated by Article 30 of the Constitution, in the courts. Their pleas were accepted by the Supreme Court which constituted a full bench of 11 judges in 2002 to review the court's judgement in Unnikrishnan's Case together with several other related writ petitions filed in various high courts across the country

This persistence paid off spectacularly when in TMA Pai Foundation vs. State of Karnataka & Ors (2002 8 SCC 481), by a wafer thin majority of six-five, the apex court not only upheld the right of minorities to "establish and administer educational institutions of their choice", but also expanded this right to all citizens (including non-minorities) under Article 19 (1) (g) which confers a fundamental right upon all citizens to "practice any profession, or to carry on any occupation, trade or business". Stressing the "essentially charitable nature" of providing education which rules out education as a business, the apex court held that provision of education is a legitimate "occupation". As such the managements of private, unaided institutes of professional education have a fundamental right to establish their own admission processes provided they are based on merit, and to levy their own tuition fees subject to their being reasonable, ruled the court which however specifically banned the levy of capitation fees and "profiteering".

Unfortunately during the course of delivering the 129-page majority judgement in the landmark TMA Pai Foundation Case the then chief justice B. N. Kirpal made some obiter dicta (casual remarks) relating to state governments advising minority and unaided college managements to make provision for needy and backward students "according to local needs". This was interpreted by several state governments as a directive to persist with the status quo. Following the judgements of several high courts staying the implementation of the verdict in TMA Pai's Case, the Supreme Court under Kirpal's successor Chief Justice V.J. Khare constituted a five-judge bench to "clarify" the court's full bench judgement in the TMA Pai Foundation Case.

The upshot of the clarification judgement of the Supreme Court in Islamic Academy vs. Union of India (2003 SCC 697) was a 4-1 verdict which directed all state governments to constitute separate admission and fees fixation committees headed by retired high court judges. But with the judges' committees setting tuition fees of medical and engineering colleges way below cost, another spate of writ petitions followed questioning the rationale of the Islamic Academy Case judgement and contending it virtually overruled the substance of the Supreme Court's verdict in the TMA Pai Case. Hence a seven judge bench was constituted to hear P.A. Inamdar vs. State of Maharashtra to re-clarify the judgements in TMA Pai Foundation and the Islamic Academy cases.

However the apex court's unanimous judgement in Inamdar's Case delivered on August 12, far from bringing closure to the controversy has - as indicated above - aroused the wrath and indignation of the nation's entire political class prompting the formulation of a draft Private Professional Educational Institutions Bill, 2005 whose avowed purpose is to nullify the judgement of the country's highest court. But with Parliament having ignored the court's recommendation that it enact "detailed, well thought-out legislation on the subject" which would be "in consonance with" the verdict in Inamdar's Case, the stage is set for a major face-off between Parliament and the judiciary.

Prof. N.S. Ramaswamy the founder director of three highly respected institutions of professional education (NITIE, the Jamnalal Bajaj Institute of Management Studies, Mumbai and IIM-Bangalore) is of the opinion that the imminent clash between Parliament and the Supreme Court could prove "fatal for democracy in India ". "The unequi-vocal unanimous judgement of the Supreme Court (in Inamdar's Case) has enhanced its prestige and Parliament's response is unbecoming. The court has rightly ruled that there's no logical or moral argument for mandatory subsidy and reservations in institutions of professional education which impart professional training and skill-sets. As such they are on a different footing from other institutions of education which focus on knowledge transmission and character building. That's why world over the provision of professional or craft education is accepted as commercial activity. Following this clear-cut judgement, instead of enacting contradictory legislation, the best course for government would be to negotiate a broad agreement or code of conduct with private unaided medical, engineering etc colleges to make mutually acceptable provision for subsidised education for poor scheduled castes and tribes students. Simultaneously the Central and state governments need to address the supply side and build and/ or encourage the construction of more colleges of professional education," advises Ramaswamy.

Indeed neglect of supply side or capacity augmentation is the nub of the problem. Despite their professed concern for providing affordable education for the underprivileged, particularly the scheduled castes and tribes, the plain truth is that neither the Central nor state governments have built anywhere near enough government-owned institutions of professional education. For instance in Karnataka (pop.56 million) there are only four government promoted medical colleges and one dental college. In Tamil Nadu there are only 14 government medical colleges. Against this the number of private unaided medical colleges in Karnataka is 23 and in Tamil Nadu six. Instead of creating more capacity in the government sector, state governments in particular have opted for the easy option of appropriating seats in private unaided colleges at subsidised prices.

For almost two decades by employing populist social justice rhetoric they got away with backdoor nationalisation of 75-85 percent capacity in heavily capital-intensive private unaided colleges promoted by social entrepreneurs. But in 2002 in the TMA Pai Foundation Case the Supreme Court ended the free-loading party. Statist socialism made a brief comeback following the Islamic Academy Case verdict, but the rationale of the judgement in TMA Pai Foundation has been restored by the apex court's ruling in Inamdar's Case.

But with the entire political class up in arms against the Supreme Court's hands-off directive to government, and the Union HRD ministry having already formulated a draft Bill to reverse the court's latest verdict on the issue, private unaided college managements are acutely aware of the need to tread carefully. "By freeing private college managements from government control and micro management, the Supreme Court has given a huge responsibility to us to provide quality education in a fair and transparent manner to enable our students to attain global standards in their chosen professions. Though tuition fees will definitely be higher than the rock-bottom fees hitherto imposed by government, I don't foresee a dramatic increase. On the contrary I can assure the public that fees levied by private unaided colleges in Karnataka will be 20-25 percent less than what the state government spends per student in government-owned colleges. Moreover recognising that there are poor and meritorious students who don't have the means to avail professional education, all constituent colleges of Comed-K have voluntarily agreed to reserve 25 percent of capacity for eligible students from BPL (below poverty line) families recommended by the state govern-ment," says M. R. Jayaram chairman of Comed-K (Consortium of Medical, Engineering, and Dental Colleges - Karnataka) and of the Gokula Foundation which runs the highly respected M. S. Ramaiah group of 17 education institutions (aggregate enrollment: 15,000 students) sited on a 65 acre campus in Bangalore.

Likewise Dr. C. Rathnasabhapathy principal of the Velammal Engineering College, Chennai and member of the Consortium of Self-financing Professional Arts and Sciences Colleges, Tamil Nadu who famously ridiculed the threat of the state's imperious chief minister J. Jayalalithaa to nationalise professional colleges by pointing out that the state government is almost bankrupt, is also aware of the responsibility imposed upon private colleges to follow the guidelines of the Supreme Court in letter and spirit. "The court's unanimous judgement is fair and well-reasoned and has been welcomed by our consortium and right-thinking people across the country. The reservation policy and admission quotas of the state government had been imposed upon private self-financing colleges for much too long and have played havoc with their financial viability. Of course tuition fees will rise by 10 percent or thereabouts because we have to take into account the heavy infrastructure and faculty costs which our member colleges have incurred. But on the other hand we will now be able to provide globally acceptable high quality professional education," says Rathnasabhapathy.

In Maharashtra too where there was great dissatisfaction with rock-bottom tuition fees mandated by the Justice Jahagirdhar Committee constituted as per the apex court's judgement in the Islamic Academy Case, there is determination to observe the rationale of the Supreme Court's judgement in Inamdar's Case in letter and spirit. Dr. D. Y. Patil secretary of the Forum of Management Institutions which comprises 24 private unaided B-schools in Maharashtra and director of the Bharatiya Vidyapeeth Institute of Management Studies and Research believes that having hard won their freedom, private professional education colleges will take particular care to tread the straight and narrow. "I don't believe that any college will demand capitation fees and/or resort to profiteering which has been expressly forbidden by verdict in Inamdar's Case. With politicians and society watching us closely, our member colleges will levy tuition fees which are commensurate with the capital expenditure incurred and the quality and standard of education they provide," promises Patil.

Inevitably, although most right-thinking people have welcomed the apex court's judgement in Inamdar's Case for upholding citizens' rights to promote and manage private education institutions without the intolerably excessive government interference which was de rigueur even in financially independent institutions of professional education, some knowledgeable intellectuals believe the court missed a great opportunity to go the whole distance. "One very troubling aspect of the judgement is that it didn't comment upon the TMA Pai Foundation observation that education is an essentially charitable activity and warned against profiteering in education. However honest profit-making is no sin in software, footwear or mindware. If the court takes its anti-profiteering stand seriously, it should start with its own profession and regulate the fees charged by lawyers for their services. Moreover to set an example the court should ban all 'profiteering' by judges who work for money after retirement," says Dr. Parth Shah former professor of economics at University of Michigan , USA and currently president of the Centre for Civil Society, an activist Delhi-based think tank.

On the contrary, politicians of all hues, and ideological persuasions believe that the verdict of the Supreme Court in Inamdar's Case has gone too far. Hence in the remarkably short time following the delivery of the judgement, it has circulated the draft Bill which obliges private unaided professional colleges to surrender 50 percent of capacity to the "appropriate authority" (i.e University Grants Commission or state governments) to distribute to students from the scheduled castes, scheduled tribes and socially backward classes and economically weaker sections of society. Moreover the draft Bill provides for the continuance of the admission and fee regulatory committees established by the judgement in the Islamic Academy Case. And most significantly, when enacted the proposed Private Professional Educational Institutions (Regulation of Admission and Fixation of Fee) Bill, 2005 will have overriding effect. "The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act," pronounces s.12 of the draft Bill.

With the apex court's seven judge bench having ruled that the law relating to admissions and fixation of tuition fees in private professional colleges as laid down in Inamdar's Case will become operational from the next academic year (July/ August 2006), this controversy has disappeared from public view for now. But the draft Bill to overrule the verdict of the apex court is being circulated and debated within the country's numerous political parties and a populist consensus is building up in its favour.

"We fully support the provisions of the draft Bill. If the Supreme Court's judgement is enforced, education will become a thoroughly commercialised activity. Even private unaided institutions of education should be subject to social, i.e government, control without which professional education will become a preserve of the moneyed class. This is just not acceptable in our country. While as per our recommendation the proposed legislation reserves 50 percent of seats for students from weaker sections of society, the Bill should unequivocally state that students admitted under this quota should pay tuition fees equivalent to those levied by government colleges. We believe that student fees should cover only the revenue expenses like faculty salaries and lab and other operational expenditure. When the Central or state government licences a promoter to establish a college, it should ensure that he has adequate resources to cover capital and infrastructure expenses. Students should not have to pay for them," argues Pravin Ghuge, all India secretary of the Akhil Bharatiya Vidyarthi Parishad (ABVP), the student wing of the BJP.

This point of view and unapologetic demand for subsidy is common within India 's aspirational middle class which seems oblivious that the licence-permit-quota regime which has migrated from industry into education following the liberalisation of business and industry in 1991 will accentuate capacity shortages in higher education. There is insufficient awareness that governments at the Centre and in the states with their massive fiscal deficits neither have the resources nor administrative capability to promote and/ or competently manage higher education institutions. If the Central government ill-advisedly enacts the proposed Private Professional Educational Institutions Bill, 2005, supply side constraints will drive professional education further beyond the reach of the middle class and meritorious poor. This is the proven experience of almost four decades of licence-permit-quota raj in Indian industry which society can ignore only at its peril.

Quite clearly the apex court's judgements in the TMA Pai and Inamdar's cases which have given the green light for more private sector initiatives in professional education were pronounced with this ground reality in the collective minds of the learned judges. The heavy hand of government upon institutions of professional education and excessive subsidisation of medical and engineering education in the too small number of Central and state government owned colleges, had bred a host of anti-social practices rooted in supply side shortages. It's this overdue correction which the proposed draft Bill of the HRD ministry which if enacted, will reverse.

Instead of persisting with enactment of the Bill and setting the stage for a judiciary-Parliament face-off, the prudent course of action for the Union and state governments would be to negotiate a code of conduct with representative organisations of private professional colleges under which the latter will voluntarily reserve a 25-30 percent quota for state mandated under-privileged and disadvantaged groups such as scheduled castes and tribes. Government quota students could be cross-subsidised and charged pre-agreed tuition fees. As indicated by M.R. Jayaram chairman of the Consortium of Medical, Engineering and Dental Colleges - Karnataka (quoted above), private professional college managements are ready and willing to negotiate such agreements.

That's the way out of this impasse which following the apex court's balanced judgement in Inamdar's Case threatens to snowball into a Parliament-judiciary confrontation which could shake the foundations of the world's most populous democracy.

With Srinidhi Raghavendra ( Bangalore ); Gaver Chatterjee (Mumbai); Hemalatha Raghupathi (Chennai) & Autar Nehru ( Delhi )

Read the report on Education World