Supreme Court Upholds Autonomy of Unaided Minority and Non-Minority Educational Institutions; Strikes Down State-Imposed Quotas and Reservations

7-Judge Bench clarifies that State cannot appropriate seats or impose reservation policies on unaided professional colleges, but allows regulatory committees to oversee fair admission and fee structures to prevent exploitation.

In a landmark judgment delivered on August 12, 2005, the Supreme Court of India (7-Judge Constitutional Bench) in P.A. Inamdar & Ors. v. State of Maharashtra & Ors. has conclusively addressed contentious issues relating to the rights of unaided minority and non-minority educational institutions on admissions, fee fixation, and State regulation.

The case was a sequel to two earlier critical judgments - the 11-Judge Bench decision in T.M.A. Pai Foundation v. State of Karnataka (2002) and the 5-Judge Constitution Bench judgment in Islamic Academy of Education v. State of Karnataka (2003), both of which had left several questions unresolved and had led to widespread litigation.

Key Highlights of the Judgment:

• 1. Autonomy of Unaided Institutions Affirmed:- The Court emphasized that unaided minority and non-minority professional educational institutions enjoy constitutional protection under Articles 19(1)(g), 29(2), and 30(1). These institutions have the fundamental right to establish and administer themselves, which includes the right to admit students and fix a reasonable fee structure. The Court clarified that while the State can prescribe minimum qualifications and academic standards, it cannot interfere with day-to-day management, admissions, staff appointments, or the quantum of fees, except as reasonable restrictions.

• 2. State-Imposed Quotas and Reservations Declared Unconstitutional:- The Court struck down the State’s power to appropriate any quota of admissions or enforce its reservation policy on seats in unaided minority or non-minority professional institutions. It held that such State-imposed seat-sharing amounts to nationalization of private institutions, which the Court rejected as unconstitutional. The judgment clarified that private unaided institutions may voluntarily agree to admit some socially or economically weaker sections but cannot be compelled by the State to do so through reservations.

• 3. Admissions and Common Entrance Tests (CET):- While unaided institutions have the right to devise their own admission procedures, the Court acknowledged the practical difficulties faced by students appearing for multiple entrance tests. It upheld the concept of a common entrance test conducted by the State or an association of institutions to ensure transparency and merit-based selection. Minority institutions retain the right to select students of their choice from the successful candidates of such tests without altering merit order, preserving their autonomy.

• 4. Regulation of Fees and Prevention of Exploitation:- The Court recognized the importance of setting a reasonable fee structure as part of the right to administer an institution. However, it prohibited charging of capitation fees and profiteering. It endorsed the constitution of regulatory committees, as directed in Islamic Academy, headed by retired judges and experts, to scrutinize fee proposals in advance and ensure that fees are justified and not exploitative. These committees are a temporary measure pending suitable legislation by Parliament or State Governments.

• 5. On Non-Resident Indian (NRI) Quotas:- The Court noted the misuse of ‘NRI seats’ where admissions are often granted to affluent candidates irrespective of their genuine NRI status. It permitted a limited reservation of up to 15% seats for bona fide NRIs subject to merit-based selection and directed that the funds collected from such seats should be used to subsidize economically weaker students. The Court called for legislation to regulate this category to prevent malpractice.

• 6. Minority Status and Territorial Unit:- Reaffirming the 11-Judge Bench in Pai Foundation, the Court held that minority status under Article 30(1) is determined by reference to the State’s demography, not the entire country. Minority institutions must primarily cater to the minority community of the State in which they are established. Admission of non-minority students or minority students from other States is allowed only to a limited extent so as not to dilute the minority character.

• 7. Judicial Review of Committee Decisions:- The Court cautioned regulatory committees to act reasonably and sensitively, considering the financial realities of institutions. It allowed judicial review of any arbitrary or excessive interference by these committees in institutional administration or finances.

• 8. Scope and Limitations of Article 30 and Article 19:- The Court clarified that the right to establish and administer educational institutions under Article 30 is a protective right for minorities and does not amount to absolute immunity from regulation. Reasonable regulations are permissible if they ensure educational excellence, transparency, and prevent mal-administration. Likewise, the right under Article 19(1)(g) for all citizens to carry on an occupation includes establishing educational institutions but is subject to reasonable restrictions in the public interest.

Background and Context:

The judgment arose from the controversies and conflicting interpretations following Pai Foundation and Islamic Academy. The earlier rulings had recognized the fundamental right to establish and administer educational institutions but left open issues regarding State regulation, admission quotas, fee fixation, and the role of common entrance tests.

In Islamic Academy, the Supreme Court had directed the creation of committees in each State to regulate admissions and fees in private unaided professional colleges, including minority institutions. This led to widespread discontent among private institutions alleging excessive interference and violation of constitutional rights.

The present 7-Judge Bench was constituted to resolve these conflicts, clarify the scope of regulation, and harmonize the earlier judgments.

Impact and Way Forward:

The judgment delineates a balanced approach, protecting the autonomy of unaided minority and non-minority educational institutions while allowing reasonable State regulation to prevent exploitation and ensure merit-based admissions.

It strikes down the imposition of State quotas and reservation policies in unaided professional institutions, reaffirming that seat-sharing can only be voluntary.

The Court calls upon the Parliament and State Legislatures to enact comprehensive legislation to govern admissions and fee structures in private professional educational institutions, indicating that the existing Committees are only an interim measure.

This judgment will provide much-needed clarity to educational institutions, State Governments, and students, and is expected to reduce litigation and arbitrariness in professional education admissions and fee fixation.

Conclusion:

The Supreme Court has reaffirmed that the constitutional protection for minorities under Article 30 and the fundamental right under Article 19(1)(g) to establish and administer educational institutions are paramount and cannot be diluted by arbitrary State measures such as enforced quotas or fee fixation. At the same time, it recognizes the need for regulatory oversight to maintain fairness, merit, and prevent commercialization of education.

The judgment is a significant milestone in the jurisprudence of educational rights in India, balancing institutional autonomy with social justice and public interest.

Statutory provisions:- Article 19(1)(g), Article 19(6), Article 29(2), Article 30(1), Article 41, Article 42, Article 51A(j), Article 142 of the Constitution of India

P.A. Inamdar v. State of Maharashtra, (SC)(Constitutional Bench) : Law Finder Doc Id # 84268