VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION versus STATE OF TELANGANA AND OTHERS

[2019] 8 S.C.R. 927

VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION

STATE OF TELANGANA AND OTHERS

(Civil Appeal No. 5133 of 2019)

JULY 01, 2019

[ARUN MISHRA AND NAVIN SINHA, JJ.]

Telangana Educational Institutions (Regulation of Admissionand Prohibition of Capitation Fee) Act, 1983 – s.15 r/w. ss.3 and 7– Telangana Admission and Fee Regulatory Committee (forProfessional Courses offered in Private Unaided ProfessionalInstitutions) Rules, 2006 – rr. 3 and 4(v) – The Telangana Admissionand Fee Regulatory Committee (TAFRC) u/r. 4 (v) communicatedthe fee structure determined by it to the State Government forNotification – The fee structure was notified, inter-alia for the B.E.and B. Tech Courses, for the block period 2016-17 to 2018-19 –The said fee structure was challenged by the respondent institutionsbefore the High Court – Single Judge of the High Court remandedthe matter to the TAFRC for reconsideration – Pursuant thereto,the Committee granted some escalations, however, the same waschallenged again – Thereafter, the High Court redetermined thefee structure for the block period itself – Aggrieved, the State andthe fee Regulatory Committee assailed the same unsuccessfully beforethe Division Bench of the High Court – On appeal, held: Judicialreview lies against the decision-making process and not the meritsof the decision itself – If the decision-making process is flawed,inter-alia by violation of the basic principles of natural justice, isultra-vires the powers of the decision maker, takes into considerationirrelevant materials or excludes relevant materials, admit materialsbehind the back of the person to be affected or is such that noreasonable persons would have taken such decision in thecircumstances, the Court may step in to correct the error by settingaside such decision and requiring the decision maker to take afresh decision in accordance with the law – However, the Court, inthe garb of judicial review, cannot usurp the jurisdiction of thedecision maker and make the decision itself – It cannot act as anappellate authority of the TAFRC – Further, TAFRC is statutory

Abody headed by retired High Court Judge, consists of domainexperts from various fields including two from the finance sector,one of which is from the Government – The Court should avoid tointerfere with the recommendations of an expert body, which isaccepted by the Government, unless it suffers from the vice ofarbitrariness, irrationality, perversity or violates any provisions ofBthe law under which it was constituted – In the instant case, asdemonstrated from the available records none of the grounds setout by the High Court can be considered as making out anexceptional case to warrant usurpation of the decision makingjurisdiction of the TAFRC by the High Court – Thus, the High CourtCexceeded its jurisdiction in interfering with recommendation of theTAFRC – The orders of the High Court set aside – Judicial Review.

Allowing the appeals, the Court

HELD : 1. The crux of the controversy is the jurisdictionand the extent to which the court can examine the determinationDof the fee structure by the Telangana Admission and FeeRegulatory Committee (TAFRC) and approved by the Stategovernment, in exercise of the powers of judicial review. TheTAFRC, statutory body headed by retired High Court Judge,consists of domain experts from various fields including two fromEthe finance sector, one of which is from the Government. Rule3(vii) of Telangana Admission and Fee Regulatory Committee(for Professional Courses offered in Private Unaided ProfessionalInstitutions) Rules, 2006 vests the TAFRC with the power toframe its own procedure in accordance with regulations notifiedby the Government in that regard and pursuant to which theFguidelines for fee fixation have been framed by it. Therecommendations of the TAFRC being the resultant of quasi-judicial decision-making process, it will undoubtedly be amenableto the jurisdiction of the court for scrutiny by judicial review, soas to ensure adherence to the constitutional principles ofGreasonableness, fairness and adherence to the law under Article14 of the Constitution. [Para 16] [947-B-D]

2. Judicial review, as is well known, lies against thedecision-making process and not the merits of the decision itself.If the decision-making process is flawed inter alia by violation of

VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION v.STATE OF TELANGANA AND OTHERS

the basic principles of natural justice, is ultra-vires the powers ofthe decision maker, takes into consideration irrelevant materialsor excludes relevant materials, admits materials behind the backof the person to be affected or is such that no reasonable personwould have taken such decision in the circumstances, the courtmay step in to correct the error by setting aside such decisionand requiring the decision maker to take fresh decision inaccordance with the law. The court, in the garb of judicial review,cannot usurp the jurisdiction of the decision maker and makethe decision itself. Neither can it act as an appellate authority ofthe TAFRC. [Para 17] [947-E-G]

3. It needs no emphasis that complex executive decisionsin economic matters are necessarily empiric and based onexperimentation. Its validity cannot be tested on any rigidprinciples or the application of any straitjacket formula. The courtwhile adjudging the validity of an executive decision in economicmatters must grant certain measure of freedom or play in thejoints to the executive. Not mere errors, but only palpablyarbitrary decisions alone can be interfered with in judicial review.The recommendation made by statutory body consisting ofdomain experts not being to the satisfaction of the StateGovernment is an entirely different matter with which this Courtis not concerned in the present discussion. The court shouldtherefore be loath to interfere with such recommendation of anexpert body, and accepted by the government, unless it suffersfrom the vice of arbitrariness, irrationality, perversity or violatesany provisions of the law under which it is constituted. Thecourt cannot sit as an appellate authority, entering the arena ofdisputed facts and figures to opine with regard to manner in whichthe TAFRC ought to have proceeded without any finding of anyviolation of rules or procedure. If statutory body has notexercised jurisdiction properly the only option is to remand thematter for fresh consideration and not to usurp the powers of theauthority. [Para 19] [948-E-H; 949-A-B]

4. In the context of Indian jurisprudence, the Constitutionis the supreme law. All executive or legislative actions have tobe tested on the anvil of the same. Such actions will have to draw

Atheir sustenance as also their boundaries under the same. Anyaction falling foul of the constitutional guarantees will call forcorrective action in judicial review to ensure adherence to theconstitutional ethos. But so long as the fabric of the constitutionalethos is not set asunder, the court will have to exercise restraint,more particularly in matters concerning domain experts, else theBrisk of justice being based on individual perceptions which mayrender myths as realities inconsistent with the constitutionalethos. Courts often adjudicate disputes that raise the question ofhow strictly should they scrutinise executive or legislative action.Therefore, courts have identified certain questions as beingCinappropriate for judicial resolution or have refused oncompetency grounds to substitute their judgement for that ofanother person on particular matter. The need for judicialrestraint with regard to recommendations of expert committees,more particularly in matters relating to finance and economics,

was considered in various Supreme Court Judgments. [Para 20]D[949-E-G]

5. Therefore, of the considered opinion in the facts of thepresent case, as demonstrated from the available records thatnone of the four grounds set out by the High Court can beconsidered as making out an exceptional case to warrantEusurpation of the decision making jurisdiction of the TAFRC bythe High Court. [Para 25] [953-A-B]

Fertilizer Corporation Kamgar Union (Regd.), Sindriv. Union of India, (1981) 1 SCC 568 : [1981] 2 SCR52 ; State of (NCT) of Delhi v. Sanjeev, (2005) 5 SCCF181 : [2005] 3 SCR 151 ; Peerless General Financeand Investment Co. Ltd. v. Reserve Bank of India, (1992)2 SCC 343 : [1992] 1 SCR 406 ; BALCO Employees’Union (Regd.) v. Union of India (2002) 2 SCC 333 :[2001] 5 Suppl. SCR 511 ; Government of AndhraGPradesh v. P. Laxmi Devi, (2008) 4 SCC 720 : [2008] 3SCR 330 ; Tamil Nadu Generation and DistributionCorporation Ltd. v. CSEPDI-Trishe Consortium, (2017)4 SCC 318 : [2016] 7 SCR 495 – relied on.

Comptroller and Auditor General of India, GianHPrakash, New Delhi and another v. K.S. Jagannathan

and another (1986) 2 SCC 679 : [1986] 2 SCR 17 ;Badrinath v. Government of Tamil Nadu and ors. (2000)8 SCC 395 – distinguished.

Islamic Academy of Education and another v. State ofKarnataka and Ors., (2003) 6 SCC 697 : [2003] 2Suppl. SCR 474 ; T.M.A. Pai Foundation & Ors. v. Stateof Karnataka & Ors. (2002) 8 SCC 481 : [2002]3 Suppl. SCR 587 ; Modern School v. Union of India,(2004) 5 SCC 583 : [2004] 1 Suppl. SCR 668 ; D.N.Jeevaraj v. Chief Secretary, Government of Karnatka,(2016) 2 SCC 653 : [2015] 12 SCR 115 – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5133of 2019.

From the Judgment and Order dated 24.08.2018 of the High Courtof Judicature at Hyderabad for the State of Telangana and the State ofAndhra Pradesh in Writ Appeal No. 798 of 2017.

With

C. A. No. 5135/2019 and C.A. No. 5134/2019

AK. Radhakrishnan, Sr. Adv., D. Mahesh Babu, Shishir Pinaki,Ms. Suchitra Hrangkhawl, Sravan Kumar, Aditya Kumar, VijendraMishra, Sidhartha Iyer, P. Venkat Reddy, Abhisekh Reddy, Prashant Tyagifor M/s. Venkat Palwai Law Associates, Advs. for the Appellant.

Fali S. Nariman, Parag P. Tripathi, K. V. Viswanathan,BK. Radhakrishnan, Sr. Advs., A. V. Rangam, Buddy A. Ranganadhan,M. Ravindranath Reddy, Mrs. Stuti Krishn, Suhas Reddy, A. Mukunda,L. Joshi, Sidhartha Iyer, P. Venkat Reddy, Abhisekh Reddy, PrashantTyagi for M/s. Venkat Palwai Law Associates, Advs. for theRespondents.

CHasan Murtaza and Ravinder Kumar, Advs. for the Impleaders.The Judgment of the Court was delivered byNAVIN SINHA, J. 1. Leave granted.

2. This court, in Islamic Academy of Education and anotherDvs. State of Karnataka and Ors., (2003) 6 SCC 697, directed theestablishment in each State, of Committee to regulate the fee structurein unaided minority and non-minority educational institutions. TheTelangana Admission and Fee Regulatory Committee (for ProfessionalCourses offered in Private Unaided Professional Institutions) Rules, 2006(hereinafter referred to as “the Rules”) were framed under Section 15Eread with Sections 3 and 7 of the Telangana Educational Institutions(Regulation of Admission and Prohibition of Capitation Fee) Act, 1983(hereinafter referred to as “the Act”). Under Rule 4(v), the Committeeis required to communicate the fee structure determined by it to theState Government for notification. The fee structure so notified, interalia for the B.E. and B.Tech courses, for the block period 2016-17 toF2018-19, on challenge made by the respondent institutions did not meetthe approval of the learned Single Judge. The matter was remanded tothe Committee. On reconsideration, the Committee granted someescalation, which was again challenged. Opining that the fixation wasnot proper, the learned Single Judge proceeded to fix the fee structure toGhis satisfaction. Aggrieved, the State of Telangana and the Fee RegulatoryCommittee assailed the same unsuccessfully before the Division Bench.The parent’s association has also assailed the impugned orders directlybefore this Court, after having been granted leave to do so. Thus, theappeals.

3. Shri K. Radhakrishnan, learned senior counsel appearing forthe State of Telangana, submitted that the Telangana Admission and FeeRegulatory Committee constituted under the Rules (hereinafter referredto as “TAFRC”) has framed detailed guidelines under which the privateunaided professional institutions were required to submit fee proposalsfor the block period 2016-17 to 2018-19. The guidelines lay down anelaborate procedure with regard to the requisite information required tobe submitted by an institution in support of the proposal, the factors to beconsidered by the TAFRC, the manner of consideration in arriving at abalanced fee structure, keeping in mind the interest of the students asalso the educational institutions, to ensure that there was no profiteeringor capitation fee. The Committee is headed by retired High CourtJudge, and comprises various domain experts from different fields withnecessary expertise. The recommendations of the TAFRC with regardto the fee structure therefore ought not to have been interfered with bythe High Court in exercise of the powers of judicial review by substitutingits own view over that of the TAFRC to redetermine the proper feestructure. The fee structure for the three-year block period vide GOMNo.21 dated 04.07.2016 was initially determined by the TAFRC at Rs.86,000/- and Rs. 91,000/- for the respondent institutions, which afterremand by the High Court was uniformly redetermined at Rs.97,000/-per student on 04.02.2017. The TAFRC did not act arbitrarily by decliningto take into consideration relevant materials, or relied on extraneousmaterials collected behind the back of the respondent institutions. TheTAFRC acted in consultation with the respondent institutions, includingseeking clarifications from them. The High Court did not find that theTAFRC had acted contrary to the provisions of the Act, the Rules, theguidelines or in violation of any basic principles of accounting andprocedures. The fact that after remand the TAFRC may have adopteda different methodology to determine 10% inflation and 15% furtherancefor the entire block period cannot be construed as arbitrariness. Merelybecause in the opinion of the High Court another view could also havebeen taken, cannot justify the usurpation of the jurisdiction of the TAFRCby the High Court.

4. The mere fact that the determination of the fee structure bythe TAFRC has been held to be of quasi-judicial nature, amenable tochallenge under Article 226 of the Constitution, did not vest in it the

Anature of an adversarial dispute between the TAFRC and the respondentinstitutions. The disallowance of certain claims, the genuineness of which,did not meet the approval of the expert committee, does not render thefee fixation arbitrary.

5. Learned senior counsel Shri F.S. Nariman, appearing on behalfBof the respondent institutions, submitted that the three-year block periodwas now over, and the actual expenses are available. The respondentinstitutions, on the fee structure as approved by the TAFRC, would landup with huge financial deficit. The fee structure of Rs.1,60,000/- andRs.1,37,000/- as fixed by the High Court would almost allow breakeven for the respondent institutions. The TAFRC, for the acceptedCexpenditure of the base year in the previous block period recommendeda fee structure of Rs.1,15,400/-. Ironically, despite having acceptedincreased audited expenditure of Rs.29.26 crores, astonishingly the feestructure of Rs.97,000/- only has been recommended. 10% inflationand 15% furtherance in accordance with the methodology of the TAFRCDfor the block period justifies fees of Rs.1,58,675/- per student. Theclaim of the institutions was reasonable considering the expenses ofequivalent government colleges in the State and the subsidy they getfrom the State, unlike which the respondent institutions have only fees tofund their expenses. The State was also not reimbursing the necessaryfee with regard to those students whose parents did not have an annualEincome of Rs.2 lakh per year.6. The submission on behalf of the parents association was thatthe mere giving of an undertaking to abide by the final decision cannotoperate as an estoppel preventing challenge to the fee structure asdetermined by the High Court.F

7. We have considered the respective submissions. briefrecapitulation of the essential provisions and facts would be necessaryfor better appreciation.

8. Rule 3(i) provides for the constitution of the TAFRC whichGshall have term of three years from the date of constitution under Rule3(iii). The TAFRC as prescribed under Rule 3(ii) is headed by retiredHigh Court Judge and other members as provided therein. The 2006Rules were modified on 22.07.2015 by GOMs. No.26. The presentconstitution of the Committee is as follows:

The Admission and Fee Regulatory Committee (AFRC) shallconsist of the following: -

(i)Retired High Court JudgeChairman(ii) One academic expert on technical Member education(iii) One academic expert on medical Member education (iv) One finance expert Member (v)One legal expertMember(vi) One Vice-Chancellor Member (vii) One representative from Govt. Finance Member Department(viii) The Chairman, Telangana State Member Council of Higher Education(ix) One representative of All India Council Member of Technical Education/Medical Council of India/Bar Council of India/National Council for Teacher Education (asthecase maybe)(x) Any special invitee as decided by the Member Chairman (xi) The Principal Secretary/Secretary Member representing the Education/Health, Secretary Medical & Family Welfare Department

9. Rule 4 deals with fee fixation and provides for examination bythe TAFRC of the proposed fee structure submitted by an educationalinstitution. Rule 4(ii) vests power in the TAFRC to decide whether theproposed fee structure submitted was justified or not and amounted toprofiteering or capitation fee. Rule 4(ii) and 4(iv) require the TAFRC totake into consideration the following factors for prescribing the fees.

“4(ii) The AFRC shall decide whether the fees proposed by theinstitution is justified and does not amount to profiteering or chargingof capitation fee.

4(iv) The AFRC shall take into consideration the following factorswhile prescribing the fee:

a) the location of the professional institution;

b) the nature of the professional course;

c) the cost of available infrastructure;

d) the expenditure on administration and maintenance;

Ae) reasonable surplus required for the growth and developmentof the professional institution;

f) the revenue foregone on account of waiver of fee, if any, inrespect of students belonging to schedule castes, schedule tribesand whenever applicable to the socially and educationally backwardBclasses and other economically weaker sections of Society, tosuch extent as shall be notified by the Government from time totime.

g) any other relevant factor.”

10. The guidelines framed by the TAFRC under Rule 3(vii) forCsubmission of the proposed fee structure by an institution are detailedand elaborate. It is therefore considered necessary to reproduce thesame for better understanding and appreciation of the functioning of theTAFRC.

“TELANGANA ADMISSION AND FEE REGULATORYDCOMMITTEE (TAFRC) GUIDELINES

For Furnishing fee proposals by Private Un-aided ProfessionalInstitutions in the State of Telangana for the block period 2016-2017 to 2018-2019.

As per the provisions of Prohibition of Capitation Fee Act, theEcollection of capitation fee by Private Unaided ProfessionalInstitutions by whatever name is illegal.

The Institutions shall submit audited statements of income andexpenditure, audited balance sheets and requirements for thedevelopmental needs for the immediately preceding year 2014-15Fand also particulars of expenditure incurred on salaries andinfrastructure and other particulars (with supporting bills, vouchersor receipts etc.) with projected figures for 2015-16.

Any fee proposals in respect of Private Unaided ProfessionalInstitutions have to be evaluated keeping in view the above notedGcardinal principles.

It is therefore necessary that the fee proposals furnished by thePrivate Unaided Professional Institutions have to be evaluatedbased on the income and expenditure of the institutions as well asthe Societies/Trusts under which umbrella the said institutions areHestablished.

The fee proposals the following principles will be considered foradoption keeping in view the interest of both the institutions aswell as the student community.

a.All the required financial information should be submitted asper the Mercantile (Accrual) System of Accounting. Financialinformation submitted in any other system of accounting willBnot be treated as the information provided by the institutionand the same will not be considered for the purpose ofevaluation.

b.If an institution previously followed any other system ofaccounting and for the purpose of fee fixation has migratedCto the Mercantile (Accrual) System of Accounting, all theexpenditure which pertains to the financial years 2014-15 and2015-16(projected) only shall be taken into account whilepreparing the financial statements/information to be submittedto the Telangana Admission and Fee Regulatory CommitteeD(TAFRC).

c.The fee shall be fixed based on the revenue expenditureincluding depreciation on the Assets of the institution.

In order to fix the fee structure for the block period 2016-17 to2018-19 information given the following schedules will be takeninto consideration.

ReferenceDetails to be furnished in the scheduleSchedule-1Details of Fee Collections for all the Programmes inthe Institution for the Financial Year 2014-2015 &2015-16.Schedule-2Income & Expenditure Statement of the Institution forthe financial years 2014-2015 & 2015-16.Schedule-3Income & Expenditure Statement of the Society forthe financial years 2014-2015 & 2015-16.Schedule-4Eligible Teaching Staff Salaries & Arrears paid by theinstitution (including complete employee details)Schedule-5Other Teaching Staff Salaries & Arrears paid by theinstitution (including complete employee details)

ASchedule-6Regular Non-Teaching Staff Salaries & Arrears paidby the institution (including complete employeedetails)Schedule-7Contract Non-Teaching Staff Salaries & Arrears paidby the institution (including complete employeeBdetails)Schedule-8Statement of Administrative & Other Expenses of theinstitution for the Financial Year 2014-2015 & 2015-16.Schedule-9Statement of Finance Costs of the institution for thefinancial Years 2014-2015 & 2015-16.CSchedule-10Fixed Assets Schedule for DepreciationSchedule-11Statement of Revenue Grants Received & Utilised bythe Institution for the Financial Years 2014-2015 &2015-16.Schedule-12Status of Utilisation of Amounts collected under NRIDQuotaSchedule-13Status of Utilisation of 10% allowed towardsfurtherance of education.Schedule-14Details of Fixed Deposits of the institution.Schedule-15Details of Loans Received from Societies, BanksEFinancial Institution by the Institution.Schedule-16Details of Loans Received from Others by theInstitution (Private Loans)Schedule-17Statement of Corpus/Capital Fund of the InstitutionFSchedule-18Statement of Capital Grants Received & Utilised bythe InstitutionSchedule-19Balance Sheet for InstitutionSchedule-20Balance Sheet for SocietySchedule-21Legal ExpenditureGSchedule-22Other Information (Students Results etc.)

B) With regards to the expenditure it is broadly categorized as follows:

A) Salary Expenditure:

i) Salary expenditure on teaching faculty for 2014-15 & 2015-16,who are fully qualified as per norms, including the age of retirement,Teacher student ratio and cadre strength as per the AICTE norms.

ii) Salary expenditure of teaching faculty for 2014-15 & 2015-16,who are not fully qualified regarding qualifications, age, and staffbeyond prescribed teacher student ratio etc.

iii) Salary expenditure of non-teaching staff for 2014-15 & 2015-16, who are on regular scales and within the prescribed teachingand non-teaching ratio, including the age of retirement.

iv) Salary expenditure of non-teaching staff for 2014-15 & 2015-16, who are on consolidated/contract emoluments or reemployedbeyond the age of retirement and staff engaged beyond theprescribed teaching and non-teaching ratio.

v) The retirement age shall be 65 years for teaching faculty and58 years for non-teaching staff and 60 years for last grade servants.

vi) Arrears of previous years’ salary should not be included in thegross salary and should be shown separately.

1) In order to consider the expenditure on teaching and nonteaching staff, the cadre strength fixed by the respectivecompetent authorities like AICTE/NCTE and Bar Council ofIndia etc., have to be adopted. Persons who are appointedover and above this strength shall be shown in the other relatedproforma.

2) Faculty norms shall be as per notification issued by respectivecompetent authorities like AICTE, NCTE etc.

3) In case services of any of the employee is utilized for morethan one programme, such names shall be shown only in oneprogramme.

4) The teaching faculty should be qualified. Non-qualifiedteaching faculty will not be counted/considered for the purposeof expenditure.

5) PAN number for teaching faculty is must. In respect ofnon-teaching and other staff also, PAN data shall be furnished,where monthly salary/emoluments/honorarium/remuneration

Ais Rs.25,000 or more. If no PAN/wrong PAN data of them isgiven, the expenditure to that extent will be ignored.

6) Aadhar Card Number has to be indicated both for teachingfaculty/non-teaching faculty.

7) Payment of salaries through cheque/bank will only beBconsidered for expenditure purpose in respect of teachingfaculty. Cash payments shall be subject to production ofevidence.

8) In case of non-teaching staff, the monthly honorarium/salaryremuneration, as the case may be, is more than Rs.25,000/-Cshall be made through cheque/bank. Cash payments shall besubject to production of evidence.

9) Audited financial statements for the period 01/04/2015 to30/11/2015 and projected financial statements for the period01/12/2015 to 01/03/2016 will be the basis for calculating theDexpenditure for the Institution.

10) Audited financial statements for the financial year 2014-15 &2015-16 will be the basis for calculating the expenditure forthe Institution.

11) Audited financial statements for the financial years 2014-15E& 2015-16 shall also be furnished along with the fee proposals.

12) Acknowledgement of Returns of income filed with the IncomeTax Department for the Assessment Years 2014-15 &2015-16 pertaining to the financial years 2013-14 & 2014-15together with Form-10B Audit Report shall be submitted alongFwith the fee proposal.

13) Audit report shall contain the signature of the Auditor, hisname, ICAI membership number along with the followinginformation: -

Gi) PAN Number of the Auditor.

ii) E-mail id of the Auditor.

iii) Cell No. of the Auditor.

If the Auditor is partner of the firm; following additional detailsshall be given:

a) Firm ICAI Registration Number

b) PAN Number of the Firm.

c) E-mail id of the Firm.

NOTE:-

(a) If the above said details are not furnished, auditor’s reportwill not be considered and the fee proposal will be summarilyrejected.

(b) TAFRC has right to direct the presence of Auditor or seekconfirmation from him/her and the corresponding costs, ifany, shall be met by the Institution concerned. It is theresponsibility of the Institution to secure the presence of theauditor when required.

In case any institution runs more than one programme all theexpenditure can be bifurcated and reflected in respective Schedulesand the bifurcated expenditure shall be certified by CharteredAccountant. If clear bifurcation is not given the proposal shall berejected.

The entire particulars would be obtained online. However, theinstitution shall provide hardcopy of uploaded information dulysigned by the Auditor/Secretary/Correspondent/Director/Principal(wherever it is required) by paying prescribed programme wiseprocessing charges.

To be credited to the “Telangana Admission and Fee RegulatoryCommittee (TAFRC)” bearing A/c No. 62436164496, IFSC CodeSBHY0020070, State Bank of Hyderabad, Shantinagar Branch,Hyderabad.

If society/trust runs more than one institution, the data/informationshall be furnished institution wise.

Note: All the above schedules can be used for differentprogrammes by changing the no. of years of course as deemedfit. For example, 4 years of duration for under-graduate courses(3 years for Lateral Entry) and 2 years for PG Programmes etc.

ANote:

Any expenditure that does not directly relate to the student’seducation shall not be considered.

Projected expenditure like advertisement of the institution in theensuing block period, purchase of equipment, new recruitment toBbe made during the block period shall be met from the fundsearmarked for the furtherance of the education.

Percentage of increase between financial year 2014-15 and 2015-16 will be taken into account to consider expenditure expenditurepertaining to the financial year 2015-16. However, the AuditedCIncome & Expenditure for the period 01/04/2015 to 30/11/2015and Projected Income & Expenditure for the period 01/12/2015to 31/03/2016 must be submitted.

Schedules for salary payment for the teaching staff will be includedfor

(i) Those with qualifications

(ii) Those without qualifications.

Interest on the loan given by the societies to the institutions inrespect of internal funds will not be taken into consideration.

When an institution is running more than one course/programme,the income and expenditure statement and Balance sheet shall bebifurcated and bifurcated statement certified by the Auditor shallbe furnished along with the fee proposals. If it is not done, theproposals will be summarily rejected.

Annual TDS Returns filed in Forms 24Q and 26Q under IncomeTax Act shall be submitted along with the proposal.

Either rent or depreciation will be allowed on the buildings. Inrespect of rents the Institution shall obtain Rent Fixation Certificatefrom the concerned Executive Engineer of R&B Department andGregistered rental Agreement also should be provided.

Any expenditure for which the corresponding income is there shallbe disallowed if no corresponding income is shown.

Filling up of the column relating fee proposed (course wise) forthe block period of 2016-17 to 2018-19 in the general informationsheet is mandatory.

Procedure to be adopted for filling the proforma:

i)The Codes allotted by the respective conveners to the institutionshall be used, for example EAMCET code for EngineeringColleges.

ii) Financial details shall be furnished in Rupees only.

iii) The per student fee proposed should be programme-wise andfor the block period 2016 – 2019 to be shown in the GeneralInformation sheet.

iv) Audited financial statements for the year 2014-15, for theperiod 01/04/2015 to 30/11/2015, and also the projected figuresfor the period 01/12/2015 to 31/03/2016 must be submittedduly attested by Secretary/Correspondent of the Society/Trustshall also to be furnished along with the information relating tothe institution together with the fee proposals. Scanned copyof the statements shall be furnished online along with therelevant data.

v) If the institution furnishes incomplete data or fails to remit theprocessing charges as prescribed, such proposals will not beconsidered and ignored.

The institute has to submit the following documents along withthe fee proposals:

1. Formats duly filled in and signed by the SecretaryCorrespondent/Director/Principal of the Institution;

2. Proof of depositing the processing charges;

3. Audited financial Statements for the period 2014-15 and forthe period 01/04/2015 to 30/11/2015 and also the projectedfigures for the period 01/12/2015 to 31/03/2016 must besubmitted and duly certified by Secretary/Correspondent ofthe Society/Trust.

4. Details of sanctioned intake given by the competent Authorityfor each course wise to be submitted.

A5. Details of current status of affiliation, programme wise has tobe submitted.

6. Other information/documents, if any (specify)

7. The following directions of Hon’ble High court of A.P., in theD.B. Judgment dt.29.10.2011 in WP’s No.16547/2010 andBbatch reported in 2012 (3) ALT 686 (D.B.) is brought to thenotice of the Institutions: -

“......an institution which is unresponsive or does not submitstatements of income and expenditure, audited balancesheets, and requirements for developmental needs for theCimmediately preceding year; particulars of expenditureincurred on salaries and infrastructure and other particularsas may be specified (with supporting bills, vouchers orreceipts, etc.,) shall not be permitted to collect any fee....”

Accordingly, in case of failure to furnish specified data asDmentioned above or submission of proposal with incomplete datathe institution/college will not be entitled for determination of feeand will not be allowed to collect any fee from the students forthe block period 2016-17 to 2018-19 in terms of the said judgment.”

11. The TAFRC initially fixed an annual fee of Rs.86,000/- andERs.91,000/- respectively by notification dated 04.07.2016 for the blockperiod for the respondent institutions, in consultation with theirrepresentatives, including the seeking of clarifications from them. Thefact that determination of the fee structure was quasi-judicial in nature,any disagreement by an institution with the fee structure as determinedby the TAFRC cannot ipso facto be termed arbitrary to create lis, butFmay call for further scrutiny in an appropriate case, in exercise of judicialreview. Initially the Single Judge opined that the determination of the feestructure for the block period suffered from defects and remanded thematter by order dated 14.11.2016, whereafter the TAFRC fixed uniformstructure of Rs.97,000/- annually per student for the block period notifiedGon 04.02.2017 which was again challenged by the respondent institutions.12. The High Court in disagreement with the freshrecommendations of the TAFRC, took upon itself to redetermine the feestructure for the block period at Rs.1,60,000/- and Rs.1,37,000/-respectively, by process of fresh mathematical calculation and

accounting, which lay in the exclusive domain and jurisdiction of theTAFRC. This despite the fact that the TAFRC had already acted inconsultation with the representatives of the institutions including theseeking of clarifications. The calculation sheet had also been madeavailable to the institutions. The fact that earlier 10% inflation and 15%furtherance was calculated on the basis of the gross expenditurestatement, which had now been changed by setting off the income againstexpenditure to make the net expenditure the basis of assessment, ascompared to previous years, has been held by the High Court to be achange in methodology by the TAFRC without prior intimation andreasons, holding the same to be unjustified. But, the High Court did notreturn any finding that the TAFRC had acted contrary to the provisionof the Act, Rules, guidelines, principles of natural justice or basic principlesof economics and accounting, yet it chose to arrive at its own conclusionson view which appeared to it to be more fairer, desirable or morelogical. The High Court, has itself held that the procedural fairness andbonafides of the TAFRC could not be doubted. Furthermore, an amountof Rs.4,53,54,741.00 was found to be income with no correspondingexpenditure figures and which had been taken into consideration fordetermination of the fee structure, was sought to be re-agitated afterremand without corresponding expenditure figures, leading to the rejectionof the same again. The conclusion that inflation and furtherance had tobe allowed separately for each financial year of the block period for thatreason is wholly unsustainable.

13. The High Court also set aside the disallowance ofRs.1,39,20,000/- with regard to 58 additional teachers in excess of the356 teachers required according to the norms of the All India Council ofTechnical Education (hereinafter referred to as “AICTE”) opining thatit pertained to the jurisdiction of the AICTE and not the TAFRC. TheHigh Court overlooked that the TAFRC inter alia consisted of domainexperts from the AICTE also and the fact that the TAFRC on 22.10.2016in response to the data submitted by the respondent institutions had alreadyintimated in context of the disallowance that the relevant staff were nothaving the requisite qualifications. The actions of the TAFRC in thisregard were well within its jurisdiction apparent from the guidelinesextracted hereinabove, more particularly B(A) dealing with permissibleexpenditure with regard to teacher strength, qualifications etc as perAICTE norms. The importance of quality teachers, duly qualified, without

Aovercrowding hardly needs to be emphasised. teacher is the bedrockof the foundation on which the future of the nation is built. The HighCourt erred in its casual approach.

14. The High Court has laid much emphasis on the fact that it isthe prerogative of an educational institution to determine its fee structureBaccording to its needs, and that the TAFRC cannot act to scrutinise thesame like Chartered Accountant. It needs no reiteration that an elementof justified flexibility has to be given to an educational institution indetermination of the fee structure. But flexibility cannot be equatedwith elasticity to suit the desire or claims of an institution. Rule 4 (ii)vests jurisdiction in the TAFRC to decide whether proposed fee structureCsubmitted by an institution was justified or not and whether it amountedto profiteering or capitation fee. To prune the jurisdiction of the TAFRCby restraining it from examining and scrutinising the statement of accountsto decide the justification of the proposed fee structure, and confining itsrole to mere perusal and comments, will amount to taking away itsDregulatory jurisdiction completely. The object of the TAFRC is to ensurea justified fee structure which does not reflect profiteering and capitationfee. Profiteering is the making of an unreasonable profit taking advantageof situation by escalating prices which are disapprovingly much orgrossly exaggerated income generated through manipulation of price bythe use of dominant position. On the contrary, the 10% inflation andE15% furtherance allowed by the TAFRC are aspects of reasonablereturn or financial gain, which is but process of managing or runningthe institution allowing reasonable return for further growth as distinctfrom unnecessary profitability. While Regulatory Authority will notallow profiteering, it will have to take into consideration the necessity ofFa financial gain required inherent to the nature of the activity as providedin Rule 4(ii)(e). We do not think the TAFRC has faulted on that score.

15. The detailed and elaborate nature of the information soughtby the TAFRC from an educational institution regarding the proposedfee structure submitted to it under the prescribed guidelines has alreadyGbeen noticed hereinabove. The TAFRC has also interacted with therepresentative of the respondent institutions and sought clarificationsbefore the final determination by it. The proposition that the TAFRC isprecluded from acting like chartered accountant inhibiting scrutiny byit for justification of proposal submitted to it by an institution is toowide proposition fraught with possibilities which may inhibit the statutoryH

functions of the TAFRC itself making it toothless tiger. In other words,the examination of the proposal will have to be done by the TAFRC in amanner commensurate and appropriate to an educational institution andnot by rigid adherence to the abstract principles of chartered accountancyin general, and which may call for some flexibility.

16. In our considered opinion, the crux of the controversy is thejurisdiction and the extent to which the court can examine thedetermination of the fee structure by the TAFRC and approved by theState government, in exercise of the powers of judicial review. TheTAFRC, statutory body headed by retired High Court Judge, consistsof domain experts from various fields including two from the financesector, one of which is from the Government. Rule 3(vii) vests theTAFRC with the power to frame its own procedure in accordance withregulations notified by the Government in that regard and pursuant towhich the guidelines for fee fixation have been framed by it. Therecommendations of the TAFRC being the resultant of quasi-judicialdecision-making process, it will undoubtedly be amenable to thejurisdiction of the court for scrutiny by judicial review, so as to ensureadherence to the constitutional principles of reasonableness, fairnessand adherence to the law under Article 14 of the Constitution.17. Judicial review, as is well known, lies against the decision-making process and not the merits of the decision itself. If the decision-making process is flawed inter alia by violation of the basic principles ofnatural justice, is ultra-vires the powers of the decision maker, takes intoconsideration irrelevant materials or excludes relevant materials, admitsmaterials behind the back of the person to be affected or is such that noreasonable person would have taken such decision in the circumstances,the court may step in to correct the error by setting aside such decisionand requiring the decision maker to take fresh decision in accordancewith the law. The court, in the garb of judicial review, cannot usurp thejurisdiction of the decision maker and make the decision itself. Neithercan it act as an appellate authority of the TFARC. In FertilizerCorporation Kamgar Union (Regd.), Sindri v Union of India, (1981)1 SCC 568, it was observed:

“35. ….We certainly agree that judicial interference with theadministration cannot be meticulous in our Montesquien systemof separation of powers. The court cannot usurp or abdicate, and

Athe parameters of judicial review must be clearly defined andnever exceeded. If the directorate of government company hasacted fairly, even if it has faltered in its wisdom, the court cannot,as super auditor, take the Board of Directors to task. Thisfunction is limited to testing whether the administrative action hasbeen fair and free from the taint of unreasonableness and hasBsubstantially complied with the norms of procedure set for it byrules of public administration.”

18. Judicial restraint in exercise of Judicial review was consideredin the State of (NCT) of Delhi vs. Sanjeev, (2005) 5 SCC 181 as follows:-

C“16.…One can conveniently classify under three heads thegrounds on which administrative action is subject to control byjudicial review. The first ground is “illegality”, the second“irrationality”, and the third “procedural impropriety”. Theseprinciples were highlighted by Lord Diplock in Council of CivilService Unions v. Minister for the Civil Service (commonly knownDas CCSU case). If the power has been exercised on non-consideration or non-application of mind to relevant factors, theexercise of power will be regarded as manifestly erroneous. If apower (whether legislative or administrative) is exercised on thebasis of facts which do not exist and which are patently erroneous,Esuch exercise of power will stand vitiated.”

19. It needs no emphasis that complex executive decisions ineconomic matters are necessarily empiric and based on experimentation.Its validity cannot be tested on any rigid principles or the application ofany straitjacket formula. The court while adjudging the validity of anFexecutive decision in economic matters must grant certain measure offreedom or play in the joints to the executive. Not mere errors, but onlypalpably arbitrary decisions alone can be interfered with in judicial review.The recommendation made by statutory body consisting of domainexperts not being to the satisfaction of the State Government is an entirelydifferent matter with which we were not concerned in the presentGdiscussion. The court should therefore be loath to interfere with suchrecommendation of an expert body, and accepted by the government,unless it suffers from the vice of arbitrariness, irrationality, perversity orviolates any provisions of the law under which it is constituted. Thecourt cannot sit as an appellate authority, entering the arena of disputedHfacts and figures to opine with regard to manner in which the TAFRC

ought to have proceeded without any finding of any violation of rules orprocedure. If statutory body has not exercised jurisdiction properlythe only option is to remand the matter for fresh consideration and not tousurp the powers of the authority. In Peerless General Finance andInvestment Co. Ltd. vs. Reserve Bank of India, (1992) 2 SCC 343, itwas observed:

“31. The function of the court is to see that lawful authority is notabused but not to appropriate to itself the task entrusted to thatauthority. It is well settled that public body invested with statutorypowers must take care not to exceed or abuse its power. It mustkeep within the limits of the authority committed to it. It must actin good faith and it must act reasonably. Courts are not to interferewith economic policy which is the function of experts. It is not thefunction of the courts to sit in judgment over matters of economicpolicy and it must necessarily be left to the expert bodies. In suchmatters even experts can seriously and doubtlessly differ. Courtscannot be expected to decide them without even the aid of experts.”

20. In the context of Indian jurisprudence, the Constitution is thesupreme law. All executive or legislative actions have to be tested onthe anvil of the same. Such actions will have to draw their sustenance asalso their boundaries under the same. Any action falling foul of theconstitutional guarantees will call for corrective action in judicial reviewto ensure adherence to the constitutional ethos. But so long as the fabricof the constitutional ethos is not set asunder, the court will have toexercise restraint, more particularly in matters concerning domain experts,else the risk of justice being based on individual perceptions which mayrender myths as realities inconsistent with the constitutional ethos. Courtsoften adjudicate disputes that raise the question of how strictly shouldthey scrutinise executive or legislative action. Therefore, courts haveidentified certain questions as being inappropriate for judicial resolutionor have refused on competency grounds to substitute their judgementfor that of another person on particular matter. The need for judicialrestraint with regard to recommendations of expert committees, moreparticularly in matters relating to finance and economics, was consideredin BALCO Employees’ Union (Regd.) vs. Union of India, (2002) 2SCC 333, it was held:

“65...Nevertheless, contention is sought to be raised that the methodof valuation was faulty, some assets were not taken into

consideration and that Rs 551.5 crores offered by M/s. Sterlitedid not represent the correct value of 51% shares of the Companyalong with its controlling interest. It is not for this Court to considerwhether the price which was fixed by the Evaluation Committeeat Rs.551.5 crores was correct or not. What has to be seen inexercise of judicial review of administrative action is to examinewhether proper procedure has been followed and whether thereserve price which was fixed is arbitrarily low and on the face ofit, unacceptable.

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98. In the case of policy decision on economic matters, thecourts should be very circumspect in conducting any enquiry orinvestigation and must be most reluctant to impugn the judgmentof the experts who may have arrived at conclusion unless thecourt is satisfied that there is illegality in the decision itself.”

21. Similar view was taken in Government of Andhra Pradeshvs. P. Laxmi Devi, (2008) 4 SCC 720, observing as follows:

“80. ….As regards economic and other regulatory legislationjudicial restraint must be observed by the court and greater latitudemust be given to the legislature while adjudging the constitutionalityof the statute because the court does not consist of economic orEadministrative experts. It has no expertise in these matters, and inthis age of specialisation when policies have to be laid down withgreat care after consulting the specialists in the field, it will bewholly unwise for the court to encroach into the domain of theexecutive or legislative (sic legislature) and try to enforce its ownFviews and perceptions.”

22. The need for judicial restraint in economic and financial mattersbased on reports of domain experts was again considered in Tamil NaduGeneration and Distribution Corporation Ltd. vs. CSEPDI-TrisheConsortium, (2017) 4 SCC 318, holding as follows:

“36…. At this juncture we are obliged to say that in complexfiscal evaluation the Court has to apply the doctrine of restraint.Several aspects, clauses, contingencies, etc. have to be factored.These calculations are best left to experts and those who haveknowledge and skills in the field. The financial computation involved,the capacity and efficiency of the bidder and the perception of

feasibility of completion of the project have to be left to the wisdomof the financial experts and consultants. The courts cannot reallyenter into the said realm in exercise of power of judicial review.We cannot sit in appeal over the financial consultant’s assessment.Suffice it to say, it is neither ex facie erroneous nor can we perceiveas flawed for being perverse or absurd.”

23. Islamic Academy of Education (supra) was sequel to T.M.A.Pai Foundation & Ors. vs State of Karnataka & Ors., (2002)8 SCC 481, which was being understood in different perspectives leadingto several litigations. The fixation of fee by the TAFRC is not anadversarial exercise but is meant to ensure balance in the fee structurebetween the competing interest of the students, the institution and therequirement and desire of the society for accessible quality education.It is but part of the high concept of fairness in opportunities andaccessibility to education, which is an avowed constitutional goal. But toequate it to the extent of right to challenge and interference only onbasis of different view being possible, cannot be justification to interferewith the recommendation of an expert committee. It is nobody’s casethat the TAFRC has acted contrary to principles of accounting andeconomics or any fundamental precincts of the same. In this context,the following observations in Modern School vs. Union of India, (2004)5 SCC 583, are considered relevant in the necessary extract

“20. We do not find merit in the above arguments. Before analysingthe rules herein, it may be pointed out, that as of today, we haveGenerally Accepted Accounting Principles (GAAP). As statedabove, commercialisation of education has been problem areafor the last several years. One of the methods of eradicatingcommercialisation of education in schools is to insist on everyschool following principles of accounting applicable to not-for-profit organisations/non-business organisations….

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51. Indisputably, the standard of education, the curricular and co-curricular activities available to the students and various otherfactors are matters which are relevant for determining of the feestructure. The courts of law having no expertise in the matterand/or having regard to their own limitations keeping in view theprinciples of judicial review always refrain from laying downprecise formulae in such matters. Furthermore, while undertaking

Asuch exercise the respective cases of each institution, their plansand programmes for the future expansion and several other factorsare required to be taken into consideration. The Constitution Benchin Islamic Academy of Education which as noticed hereinbeforesubject to making of an appropriate legislation directed setting upof two Committees, one of which would be for determining feeBstructure. This Court, both in T.M.A. Pai Foundation and IslamicAcademy of Education had upheld the rights of the minorities andunaided private institutions to generate reasonable surplus forfuture development of education.”

24. Before concluding the discussion, in view of the reasons statedCby the High Court for fixation of the appropriate fee structure by itself,reference may usefully be made to the observations in D.N. Jeevarajvs. Chief Secretary, Government of Karnatka, (2016) 2 SCC 653, asfollows:

“43. To this we may add that if court is of the opinion that aDstatutory authority cannot take an independent or impartial decisiondue to some external or internal pressure, it must give its reasonsfor coming to that conclusion. The reasons given by the court fordisabling the statutory authority from taking decision can alwaysbe tested and if the reasons are found to be inadequate, the decisionEof the court to by-pass the statutory authority can always be setaside. If the reasons are cogent, then in an exceptional case, thecourt may take decision without leaving it to the statutoryauthority to do so. However, we must caution that if the courtwere to take over the decision taking power of the statutoryauthority it must only be in exceptional circumstances and not asFa routine……”

25. The High Court relied on (1986) 2 SCC 679 Comptroller andAuditor General of India, Gian Prakash, New Delhi and anothervs. K.S. Jagannathan and another and (2000) 8 SCC 395 Badrinathvs. Government of Tamil Nadu and ors. to justify the taking over ofGthe decision-making process by itself from the TFARC on four grounds.In our opinion, both the judgments are completely distinguishable on theirown facts and have no relevance to the question for consideration in thepresent case. K.S. Jagannathan(supra) concerned promotion to theSubordinate Accounts Service. Badrinath (supra) related to claim forHpromotion to super-time scale. Both the cases have no relevance to the

present controversy concerning economic recommendations made by astatutory committee consisting of domain experts, and approved by theGovernment. We are, therefore, of the considered opinion in the factsof the present case, as demonstrated from the available records thatnone of the four grounds set out by the High Court can be considered asmaking out an exceptional case to warrant usurpation of the decisionmaking jurisdiction of the TFARC by the High Court.

26. We, therefore, hold that the High Court exceeded its jurisdictionin interfering with the recommendation of the TAFRC for reasonsdiscussed. The orders of the High Court are set aside. Therecommendation of the TAFRC dated 04.02.2017 for the block period2016-2017 and 2018-2019 is restored.

27. In view of the interim order dated 27.06.2017 passed by theHigh Court, the bank guarantees furnished by the respondent institutionsand directed to be kept alive are required to be activated and actiontaken accordingly in accordance with law for protection of the interestof the students.

28. The appeals are allowed. No costs.

Ankit Gyan