VASAVI ENGINEERING COLLEGE PARENTS ASSOCIATION vs. THE STATE OF TELANGANA

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(s).5133 OF 2019 (arising out of SLP(C)No.30090 of 2018) VASAVI ENGINEERING COLLEGE  PARENTS ASSOCIATION ...APPELLANT(S) VERSUS STATE OF TELANGANA AND OTHERS         ...RESPONDENT(S) WITH CIVIL APPEAL NO(s).5135 OF 2019 (arising out of SLP(C)No.32626 of 2018) THE STATE OF TELANGANA REPRESENTED BY ITS PRINCIPAL SECRETARY, HIGHER EDUCATION DEPARTMENT AND OTHERS ...APPELLANT(S) VERSUS VASAVI ACADEMY OF EDUCATION      ...RESPONDENT(S) CIVIL APPEAL NO(s).5134 OF 2019 (arising out of SLP(C)No.31983 of 2018) STATE OF TELANGANA ...APPELLANT(S) VERSUS SREE EDUCATIONAL SOCIETY & OTHERS     ...RESPONDENT(S) Signature Not Verified Digitally signed by ARJUN BISHT Date: 2019.07.01 16:30:39 IST Reason: 1 JUDGMENT NAVIN SINHA, J. Leave granted. 2. This   court,   in   Islamic   Academy   of   Education   and , (2003) 6 SCC 697, another vs. State of Karnataka and Ors. directed   the   establishment   in   each   State,   of   a   Committee   to regulate the fee structure in unaided minority and non­minority educational   institutions.   The   Telangana   Admission   and   Fee Regulatory Committee (for Professional Courses offered in Private Unaided   Professional   Institutions)   Rules,   2006   (hereinafter referred to as “the Rules”) were framed under Section 15 read 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 Committee   is   required   to   communicate   the   fee   structure determined by it to the State Government for notification.  The fee structure so notified, inter alia for the B.E. and B.Tech courses, for the block period 2016­17 to 2018­19, on a challenge made by the   respondent   institutions   did   not   meet   the   approval   of   the learned   Single   Judge.     The   matter   was   remanded   to   the 2 Committee. On a reconsideration, the Committee granted some escalation, which was again challenged.  Opining that the fixation was not proper, the learned Single Judge proceeded to fix the fee structure to his satisfaction.   Aggrieved, the State of Telangana and   the   Fee   Regulatory   Committee   assailed   the   same unsuccessfully   before   the   Division   Bench.     The   parent’s association has also assailed the impugned orders directly before this Court, after having been granted leave to do so. Thus, the appeals. 3.   Shri K. Radhakrishnan, learned senior counsel appearing for   the   State   of   Telangana,   submitted   that   the   Telangana Admission and Fee Regulatory Committee constituted under the Rules (hereinafter referred to as “TAFRC”) has framed detailed guidelines   under   which   the   private   unaided   professional institutions were required to submit fee proposals for the block period 2016­17 to 2018­19. The guidelines lay down an elaborate procedure with regard to the requisite information required to be submitted by an institution in support of the proposal, the factors to be considered by the TAFRC, the manner of consideration in arriving at a balanced fee structure, keeping in mind the interest 3 of the students as also the educational institutions, to ensure that there was no profiteering or capitation fee.   The Committee is headed by a retired High Court Judge, and comprises various domain experts from different fields with necessary expertise. The recommendations of the TAFRC with regard to the fee structure therefore   ought   not   to   have   been  interfered   with   by   the   High Court in exercise of the powers of judicial review by substituting its own view over that of the TAFRC to redetermine the proper fee structure.  The fee structure for the three­year block period vide GOM No.21   dated   04.07.2016   was   initially   determined   by   the TAFRC   at   Rs.   86,000/­   and   Rs.   91,000/­   for   the   respondent institutions, which after remand by the High Court was uniformly redetermined   at   Rs.97,000/­   per   student   on   04.02.2017.  The TAFRC   did   not   act  arbitrarily  by   declining   to   take   into consideration   relevant   materials,   or   relied   on   extraneous materials   collected   behind   the   back   of   the   respondent institutions.   The   TAFRC   acted   in   consultation   with   the respondent   institutions,   including   seeking   clarifications   from them.   The High Court did not find that the TAFRC had acted contrary to the provisions of the Act, the Rules, the guidelines or 4 in violation of any basic principles of accounting and procedures. The   fact   that   after   remand   the   TAFRC   may   have   adopted   a different   methodology   to   determine   10%   inflation   and   15% furtherance for the entire block period cannot be construed as arbitrariness.   Merely because in the opinion of the High Court another   view   could   also   have   been   taken,   cannot   justify   the usurpation of the jurisdiction of the TAFRC by the High Court.  4. The mere fact that the determination of the fee structure by the   TAFRC   has   been   held   to   be   of   a   quasi­judicial   nature, amenable to challenge under Article 226 of the Constitution, did not vest in it the nature of an adversarial dispute between the TAFRC   and   the   respondent   institutions.     The   disallowance   of certain   claims,   the   genuineness   of   which,   did   not   meet   the approval of the expert committee, does not render the fee fixation arbitrary.  5. Learned   senior   counsel   Shri   F.S.   Nariman,   appearing   on behalf of the respondent institutions, submitted that the three­ year block period was now over, and the actual expenses are available.   The respondent institutions, on the fee structure as approved by the TAFRC, would land up with a huge financial 5 deficit.  The fee structure of Rs.1,60,000/­ and Rs.1,37,000/­ as fixed by the High Court would almost allow a break even for the respondent institutions. The TAFRC, for the accepted expenditure of the base year in the previous block period recommended a fee structure of Rs.1,15,400/­.   Ironically, despite having accepted increased audited expenditure of Rs.29.26 crores, astonishingly the fee structure of Rs.97,000/­ only has been recommended. 10%   inflation   and   15%   furtherance   in   accordance   with   the methodology of the TAFRC for the block period justifies fees of Rs.1,58,675/­  per student.    The  claim  of the  institutions  was reasonable   considering   the   expenses   of   equivalent   government colleges in the State and the subsidy they get from the State, unlike which the respondent institutions have only fees to fund their expenses.  The State was also not reimbursing the necessary fee with regard to those students whose parents did not have an annual income of Rs.2 lakh per year. 6. The submission on behalf of the parents association was that   the   mere   giving   of   an   undertaking   to   abide   by   the   final decision cannot operate as an estoppel preventing challenge to the fee structure as determined by the High Court. 6 7. We   have   considered   the   respective   submissions.     A   brief recapitulation   of   the   essential   provisions   and   facts   would   be necessary for better appreciation. 8.     Rule 3(i) provides for the constitution of the TAFRC which shall have a term of three years from the date of constitution under Rule 3(iii).   The TAFRC as prescribed under Rule 3(ii) is headed by a retired High Court Judge and other members as provided therein. The 2006 Rules were modified on 22.07.2015 by GOMs. No.26. The present constitution of the Committee is as follows: The Admission and Fee Regulatory Committee (AFRC) shall consist of the following: ­

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9. Rule 4 deals with fee fixation and provides for examination by the TAFRC  of   the  proposed  fee  structure  submitted   by  an educational institution. Rule 4(ii) vests power in the TAFRC to decide whether the proposed fee structure submitted was justified or not and amounted to profiteering or capitation fee.  Rule 4(ii) and   4(iv)   require   the   TAFRC   to   take   into   consideration   the following factors for prescribing the fees. “4(ii) The AFRC shall decide whether the fees proposed by the   institution   is   justified   and   does   not   amount   to profiteering or charging of capitation fee. 4(iv) The AFRC shall take into consideration the following factors while 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; 8 e)   a   reasonable   surplus   required   for   the   growth   and development of the professional institution; f) the revenue foregone on account of waiver of fee, if any, in respect of students belonging to schedule castes, schedule tribes   and   whenever   applicable   to   the   socially   and educationally   backward   classes   and   other   economically weaker   sections   of   Society,   to   such   extent   as   shall   be notified by the Government from time to time. g) any other relevant factor.” 10. The guidelines framed by the TAFRC under Rule 3(vii) for submission of the proposed fee structure by an institution are detailed  and   elaborate.   It   is   therefore   considered   necessary   to reproduce the same for better understanding and appreciation of the functioning of the TAFRC.  “ TELANGANA   ADMISSION   AND   FEE   REGULATORY COMMITTEE (TAFRC) GUIDELINES For   Furnishing   fee   proposals   by   Private   Un­aided Professional Institutions in the State of Telangana for the block period 2016­2017 to 2018­2019.  As per the provisions of Prohibition of Capitation Fee Act, the collection of capitation fee by Private Unaided Professional Institutions by whatever name is illegal.  The   Institutions   shall   submit   audited   statements   of income and expenditure, audited balance sheets and requirements   for   the   developmental   needs   for   the immediately   preceding   year   2014­15   and   also 9 particulars   of   expenditure   incurred   on   salaries   and infrastructure and  other particulars (with supporting bills, vouchers or receipts etc.) with projected figures for 2015­16.  Any   fee   proposals   in   respect   of   Private   Unaided Professional Institutions have to be evaluated keeping in view the above noted cardinal principles.  It   is   therefore   necessary   that   the   fee   proposals furnished   by   the   Private   Unaided   Professional Institutions have to be evaluated based on the income and   expenditure   of   the   institutions   as   well   as   the Societies/Trusts   under   which   umbrella   the   said institutions are established.  The   fee   proposals   the   following   principles   will   be considered for adoption keeping in view the interest of both the institutions as well as the student community. a. All   the   required   financial   information   should   be submitted  as  per  the   Mercantile   (Accrual)  System  of Accounting.   Financial   information   submitted   in   any other system of accounting will not be treated as the information provided by the institution and the same will not be considered for the purpose of evaluation. b. If an institution previously followed any other system of accounting   and   for   the   purpose   of   fee   fixation   has migrated   to   the   Mercantile   (Accrual)   System   of Accounting, all the expenditure which pertains to the financial   years   2014­15   and   2015­16(projected)   only shall   be   taken   into   account   while   preparing   the financial statements/information to be submitted to the Telangana   Admission   and   Fee   Regulatory   Committee (TAFRC). c. The fee shall be fixed based on the revenue expenditure including depreciation on the Assets of the institution. In order to fix the fee structure for the block period 2016­17   to   2018­19   information   given   the   following schedules will be taken into consideration.

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B) With regards to the expenditure it is broadly categorized as follows: A) Salary Expenditure:  i) Salary expenditure on teaching faculty for 2014­15 & 2015­16,   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 2014­15 & 2015­16,   who   are   not   fully   qualified   regarding qualifications, age, and staff beyond prescribed teacher student ratio etc.  iii) Salary expenditure of non­teaching staff for 2014­15 & 2015­16, who are on regular scales and within the prescribed teaching and non­teaching ratio, including the age of retirement. 12 iv) Salary expenditure of non­teaching staff for 2014­15 &   2015­16,   who   are   on   consolidated/contract emoluments   or   reemployed   beyond   the   age   of retirement   and   staff   engaged   beyond   the   prescribed teaching and non­teaching ratio. v) The retirement age shall be 65 years for teaching faculty   and   58   years   for   non­teaching   staff   and   60 years for last grade servants. vi)   Arrears   of   previous   years’   salary   should   not   be included   in   the   gross   salary   and   should   be   shown separately. 1) In order to consider the expenditure on teaching and non­teaching   staff,   the   cadre   strength   fixed   by   the respective competent authorities like AICTE/NCTE and Bar Council of India etc., have to be adopted. Persons who are appointed over and above this strength shall be shown in the other related proforma.  2) Faculty norms shall be as per notification issued by respective competent authorities like AICTE, NCTE etc. 3)   In case services of any of the employee is utilized for more than one programme, such names shall be shown only in one programme. 4) The teaching faculty should be qualified. Non­qualified teaching faculty will not be counted/considered for the purpose of expenditure. 5) PAN number for teaching faculty is a must.  In respect of non­teaching and other staff also, PAN data shall be furnished,   where   monthly salary/emoluments/honorarium/remuneration   is Rs.25,000 or more. If no PAN/wrong PAN data of them is given, the expenditure to that extent will be ignored. 6)   Aadhar   Card   Number   has   to   be   indicated   both   for teaching faculty/non­teaching faculty. 7) Payment of salaries through cheque/bank will only be considered   for   expenditure   purpose   in   respect   of 13 teaching faculty.   Cash payments shall be subject to production of evidence. 8)   In   case   of   non­teaching   staff,   the   monthly honorarium/salary/remuneration, as the case may be, is   more   than   Rs.25,000/­   shall   be   made   through cheque/bank.   Cash   payments   shall   be   subject   to production of evidence. 9) Audited financial statements for the period 01/04/2015 to 30/11/2015 and projected financial statements for the period 01/12/2015 to 01/03/2016 will be the basis for calculating the expenditure for the Institution. 10)   Audited   financial   statements   for   the   financial   year 2014­15 & 2015­16 will be the basis for calculating the expenditure for the Institution. 11)  Audited financial statements  for  the  financial  years 2014­15 & 2015­16 shall also be furnished along with the fee proposals. 12) Acknowledgement of Returns of income filed with the Income   Tax   Department   for   the   Assessment   Years 2014­15 & 2015­16 pertaining to the financial years 2013­14   &   2014­15   together   with   Form­10B   Audit Report shall be submitted along with the fee proposal. 13) Audit report shall contain the signature of the Auditor, his   name,   ICAI   membership   number   along   with   the following information: ­  i) PAN Number of the Auditor. ii) E­mail id of the Auditor.  iii) Cell No. of the Auditor.  If   the   Auditor   is   a   partner   of   the   firm;   following additional details shall be given:  a) Firm ICAI Registration Number  b) PAN Number of the Firm.  c) E­mail id of the Firm. 14 NOTE :­  (a)If the above said details are not furnished, auditor’s report will not be considered and the fee proposal will be summarily rejected. (b)TAFRC has a right to direct the presence of Auditor or seek confirmation from him/her and the corresponding costs, if any, shall be met by the Institution concerned. It is the responsibility of the Institution to secure the presence of the auditor when required.  In case any institution runs more than one programme all the expenditure can be bifurcated and reflected in respective   Schedules   and   the   bifurcated   expenditure shall   be   certified   by   Chartered   Accountant.   If   clear bifurcation is not given the proposal shall be rejected.  The   entire   particulars   would   be   obtained   online. However,   the   institution  shall   provide   a  hardcopy  of uploaded   information   duly   signed   by   the Auditor/Secretary/Correspondent/Director/Principal (wherever   it   is   required)   by   paying   prescribed programme wise processing charges.  To be credited to the “Telangana Admission and Fee Regulatory   Committee   (TAFRC)”   bearing   A/c   No. 62436164496, IFSC Code SBHY0020070, State Bank of Hyderabad, Shantinagar Branch, Hyderabad.  If a society/trust runs more than one institution, the data/information shall be furnished institution wise. Note: All the above schedules can be used for different programmes by changing the no. of years of course as deemed fit.  For example, 4 years of duration for under­ graduate courses (3 years for Lateral Entry) and 2 years for PG Programmes etc. Note:  Any   expenditure   that   does   not   directly   relate   to   the student’s education shall not be considered.  15  Projected   expenditure   like   advertisement   of   the institution   in   the   ensuing   block   period,   purchase   of equipment,   new   recruitment   to   be   made   during   the block period shall be met from the funds earmarked for the furtherance of the education.  Percentage of increase between financial year 2014­15 and   2015­16   will   be   taken   into   account   to   consider expenditure expenditure pertaining to the financial year 2015­16. However, the Audited Income & Expenditure for   the   period   01/04/2015   to   30/11/2015   and Projected   Income   &   Expenditure   for   the   period 01/12/2015 to 31/03/2016 must be submitted.  Schedules for salary payment for the teaching staff will be included for  (i) Those with qualifications (ii) Those without qualifications.   Interest   on   the   loan   given   by   the   societies   to   the institutions   in   respect   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 be bifurcated and bifurcated statement certified by the Auditor shall be furnished along with the fee proposals. If it is not done, the proposals will be summarily rejected.   Annual   TDS   Returns   filed   in   Forms   24Q   and   26Q under Income Tax Act shall be submitted along with the proposal.  Either   rent   or   depreciation   will   be   allowed   on   the buildings.     In   respect   of   rents   the   Institution   shall obtain   Rent   Fixation   Certificate   from   the   concerned Executive Engineer of R&B Department and registered rental Agreement also should be provided. 16  Any expenditure for which the corresponding income is there shall be disallowed if no corresponding income is shown.  Filling up of the column relating fee proposed (course wise) for the block period of 2016­17 to 2018­19 in the general information sheet is mandatory. Procedure to be adopted for filling the proforma:  i) The Codes allotted by the respective conveners to the institution shall be used, for example EAMCET code for Engineering Colleges.  ii) Financial details shall be furnished in Rupees only. iii) The per student fee proposed should be programme­ wise and for the block period 2016 – 2019 to be shown in the General Information sheet. iv) Audited financial statements for the year 2014­15, for the period 01/04/2015 to 30/11/2015, and also the projected   figures   for   the   period   01/12/2015   to 31/03/2016   must   be   submitted   duly   attested   by Secretary/Correspondent   of   the   Society/Trust   shall also to be furnished along with the information relating to   the   institution   together   with   the   fee   proposals. Scanned   copy   of   the   statements   shall   be   furnished online along with the relevant data. v) If the institution furnishes incomplete data or fails to remit   the   processing   charges   as   prescribed,   such proposals will not be considered and ignored. The institute has to submit the following documents along with the fee proposals:  1. Formats   duly   filled   in   and   signed   by   the Secretary/Correspondent/Director/Principal   of   the Institution; 2. Proof of depositing the processing charges; 17 3. Audited financial Statements for the period 2014­15 and for the period 01/04/2015 to 30/11/2015 and also the projected figures for the period 01/12/2015 to 31/03/2016 must be submitted and duly certified by Secretary/Correspondent of the Society/Trust. 4. Details of sanctioned intake given by the competent Authority for each course wise to be submitted. 5. Details   of   current  status   of   affiliation,   programme wise has to be submitted. 6. Other information/documents, if any (specify) 7. The following directions of Hon’ble High court of A.P., in   the   D.B.   Judgment   dt.29.10.2011   in   WP’s No.16547/2010 and batch reported in 2012 (3) ALT 686   (D.B.)   is   brought   to   the   notice   of   the Institutions: ­   “......an institution which is unresponsive or does not   submit   statements   of   income   and expenditure,   audited   balance   sheets,   and requirements   for   developmental   needs   for   the immediately   preceding   year;   particulars   of expenditure   incurred   on   salaries   and infrastructure and other particulars as may be specified   (with   supporting   bills,   vouchers   or receipts, etc.,) shall not be permitted to collect any fee....”  Accordingly, in case of failure to furnish specified data as   mentioned   above   or   submission   of   proposal   with incomplete   data   the   institution/college   will   not   be entitled for determination of fee and will not be allowed to collect any fee from the students for the block period 2016­17 to 2018­19 in terms of the said judgment.” 18 11. The TAFRC initially fixed an annual fee of Rs.86,000/­ and Rs.91,000/­ respectively by notification dated 04.07.2016 for the block period for the respondent institutions, in consultation with their representatives, including the seeking of clarifications from them.  The fact that determination of the fee structure was quasi­ judicial in nature, any disagreement by an institution with the fee structure   as   determined   by   the   TAFRC   cannot   ipso   facto   be termed arbitrary to create a  lis , but may call for further scrutiny in an appropriate case, in exercise of judicial review.   Initially the Single Judge opined that the determination of the fee structure for   the   block   period   suffered   from   defects   and   remanded   the matter by order dated 14.11.2016, whereafter the TAFRC fixed a uniform structure of Rs.97,000/­ annually per student for the block period notified on 04.02.2017 which was again challenged by the respondent institutions. 12. The   High   Court   in   disagreement   with   the   fresh recommendations of the TAFRC, took upon itself to redetermine the   fee   structure   for   the   block   period   at   Rs.1,60,000/­   and Rs.1,37,000/­ respectively, by a process of fresh mathematical calculation and accounting, which lay in the exclusive domain 19 and jurisdiction of the TAFRC.   This despite the fact that the TAFRC had already acted in consultation with the representatives of the institutions including the seeking of clarifications.   The calculation sheet had also been made available to the institutions. The   fact   that   earlier   10%   inflation   and   15%   furtherance   was calculated on the basis of the gross expenditure statement, which had   now   been   changed   by   setting   off   the   income   against expenditure to make the net expenditure the basis of assessment, as compared to previous years, has been held by the High Court to   be   a   change   in   methodology   by   the   TAFRC   without   prior intimation and reasons, holding the same to be unjustified.  But, the High Court did not return any finding that the TAFRC had acted   contrary   to   the   provision   of   the   Act,   Rules,   guidelines, principles of natural justice or basic principles of economics and accounting, yet it chose to arrive at its own conclusions on a view which appeared to it to be more fairer, desirable or more logical. The High Court, has itself held that the procedural fairness and bonafides of the TAFRC could not be doubted.  Furthermore, an amount of Rs.4,53,54,741.00 was found to be income with no corresponding expenditure figures and which had been taken into 20 consideration for determination of the fee structure, was sought to be re­agitated after remand without corresponding expenditure figures, leading to the rejection of the same again.  The conclusion that inflation and furtherance had to be allowed separately for each financial year of the block period for that reason is wholly unsustainable. 13. The   High   Court   also   set   aside   the   disallowance   of Rs.1,39,20,000/­ with regard to 58 additional teachers in excess of the 356 teachers required according to the norms of the All India Council of Technical Education (hereinafter referred to as “AICTE”) opining that it pertained to the jurisdiction of the AICTE and not the TAFRC. The High Court overlooked that the TAFRC inter alia consisted of domain experts from the AICTE also and the fact that the TAFRC on 22.10.2016 in response to the data submitted by the respondent institutions had already intimated in context of the disallowance that the relevant staff were not having the   requisite   qualifications.   The   actions   of   the   TAFRC   in   this regard   were   well   within   its   jurisdiction   apparent   from   the guidelines extracted hereinabove, more particularly B(A) dealing with   permissible   expenditure   with   regard   to   teacher   strength, 21 qualifications etc as per AICTE norms.  The importance of quality teachers, duly qualified, without overcrowding hardly needs to be emphasised.  A teacher is the bedrock of the foundation on which the future of the nation is built.   The High Court erred in its casual approach. 14. The High Court has laid much emphasis on the fact that it is the prerogative of an educational institution to determine its fee structure according to its needs, and that the TAFRC cannot act to scrutinise the same like a Chartered Accountant. It needs no reiteration that an element of justified flexibility has to be given to an educational institution in determination of the fee structure. But flexibility cannot be equated with elasticity to suit the desire or claims of an institution.   Rule 4 (ii) vests jurisdiction in the TAFRC to decide whether a proposed fee structure submitted by an institution was justified or not and whether it amounted to profiteering   or   capitation   fee.   To   prune   the   jurisdiction   of   the TAFRC   by   restraining   it   from   examining   and   scrutinising   the statement of accounts to decide the justification of the proposed fee   structure,   and   confining   its   role   to   mere   perusal   and comments, will amount to taking away its regulatory jurisdiction 22 completely.  The object of the TAFRC is to ensure a justified fee structure which does not reflect profiteering and capitation fee. Profiteering   is   the   making   of   an   unreasonable   profit   taking advantage   of   a   situation   by   escalating   prices   which   are disapprovingly   much   or  grossly   exaggerated   income   generated through manipulation of price by the use of a dominant position. On the contrary, the 10% inflation and 15% furtherance allowed by the TAFRC are aspects of a reasonable return or financial gain, which is but a process of managing or running the institution allowing a reasonable return for further growth as distinct from unnecessary profitability. While a Regulatory Authority will not allow   profiteering,   it   will   have   to   take   into   consideration   the necessity of a financial gain required inherent to the nature of the activity as provided in Rule 4(ii)(e).  We do not think the TAFRC has faulted on that score. 15. The detailed and elaborate nature of the information sought by   the   TAFRC   from   an   educational   institution   regarding   the proposed   fee   structure   submitted   to   it   under   the   prescribed guidelines has already been noticed hereinabove.  The TAFRC has also   interacted   with   the   representative   of   the   respondent 23 institutions   and   sought   clarifications   before   the   final determination by it.  The proposition that the TAFRC is precluded from acting like a chartered accountant inhibiting scrutiny by it for justification of a proposal submitted to it by an institution is too wide a proposition fraught with possibilities which may inhibit the statutory functions of the TAFRC itself making it a toothless tiger.  In other words, the examination of the proposal will have to be   done   by   the   TAFRC   in   a   manner   commensurate   and appropriate   to   an   educational   institution   and   not   by   rigid adherence to the abstract principles of chartered accountancy in general, and which may call for some flexibility.   16. In our considered opinion, the crux of the controversy is the jurisdiction and the extent to which the court can examine the determination of the fee structure by the TAFRC and approved by the State government, in exercise of the powers of judicial review. The TAFRC, a statutory body headed by a retired High Court Judge, consists of domain experts from various fields including two from the finance sector, one of which is from the Government. Rule  3(vii)   vests   the   TAFRC   with   the   power   to   frame   its   own procedure   in   accordance   with   regulations   notified   by   the 24 Government in that regard and pursuant to which the guidelines for fee fixation have been framed by it. The recommendations of the TAFRC being the resultant of a quasi­judicial decision­making process, it will undoubtedly be amenable to the jurisdiction of the court for scrutiny by judicial review, so as to ensure adherence to the   constitutional   principles   of   reasonableness,   fairness   and 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 decision­making process is flawed inter alia by violation of the basic principles of natural justice, is ultra­vires the powers of the decision maker, takes into consideration irrelevant materials or excludes relevant materials, admits materials behind the back of the person to be affected or is such that no reasonable person would have taken such a decision in the circumstances, the court may step in to correct the error by setting aside such decision and requiring   the   decision   maker   to   take   a   fresh   decision   in accordance with the law. The court, in the garb of judicial review, cannot usurp the jurisdiction of the decision maker and make the 25 decision itself. Neither can it act as an appellate authority of the TFARC.   In   Fertilizer   Corporation   Kamgar   Union   (Regd.),  (1981) 1 SCC 568, it was observed:         Sindri v Union of India, “35. ….We certainly agree that judicial interference with the   administration   cannot   be   meticulous   in   our Montesquien system of separation of powers. The court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the directorate of a government company has acted fairly, even if it has faltered in its wisdom, the court cannot, as a super auditor, take the Board of Directors to task. This function is limited to testing whether the administrative action   has   been   fair   and   free   from   the   taint   of unreasonableness and has substantially complied with the norms   of   procedure   set   for   it   by   rules   of   public administration.”      18.   Judicial   restraint   in   exercise   of   Judicial   review   was considered in the  State of (NCT) of Delhi vs. Sanjeev,  (2005) 5 SCC 181 as follows:­ “16.…One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review.  The first ground is “illegality”, the   second   “irrationality”,   and   the   third   “procedural impropriety”.  These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (commonly known as CCSU case).   If the power has been exercised on a non­consideration or non­application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous.  If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are 26 patently erroneous, such exercise of power will stand vitiated.” 19.  It needs no emphasis that complex executive decisions in economic   matters   are   necessarily   empiric   and   based   on experimentation.     Its   validity   cannot   be   tested   on   any   rigid principles or the application of any straitjacket formula. The court while adjudging the validity of an executive decision in economic matters must grant a certain measure of freedom or play in the joints   to   the   executive.     Not   mere   errors,   but   only   palpably arbitrary decisions alone can be interfered with in judicial review. The   recommendation   made   by   a   statutory   body   consisting   of domain   experts   not   being   to   the   satisfaction   of   the   State Government is an entirely different matter with which we were not concerned in the present discussion.   The court should therefore be loath to interfere with such recommendation of an expert body, and accepted by the government, unless it suffers from the vice of arbitrariness, irrationality, perversity or violates any provisions of the law under which it is constituted.   The court cannot sit as an appellate   authority,   entering   the   arena   of   disputed   facts   and figures to opine with regard to manner in which the TAFRC ought 27 to have proceeded without any finding of any violation of rules or procedure.     If   a   statutory   body   has   not   exercised   jurisdiction properly   the   only   option   is   to   remand   the   matter   for   fresh consideration and not to usurp the powers of the authority.   In Peerless General Finance and Investment Co. Ltd.  vs.  Reserve Bank of India ,  (1992) 2 SCC 343, it was observed: “31.   The   function   of   the   court   is   to   see   that   lawful authority is not abused but not to appropriate to itself the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith   and   it   must   act   reasonably.   Courts   are   not   to interfere   with   economic   policy   which   is   the   function   of experts.   It   is   not   the   function   of   the   courts   to   sit   in judgment   over   matters   of   economic   policy   and   it   must necessarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts.”  20. In the context of Indian jurisprudence, the Constitution is the supreme law.  All executive or legislative actions have to be tested on the anvil of the same. Such actions will have to draw their sustenance as also their boundaries under the same. Any action falling foul of the constitutional guarantees will call for corrective 28 action in judicial review to ensure adherence to the constitutional ethos.  But so long as the fabric of the constitutional ethos is not set   asunder,   the   court   will   have   to   exercise   restraint,   more particularly in matters concerning domain experts, else the risk of justice being based on individual perceptions which may render myths   as   realities   inconsistent   with   the   constitutional   ethos. Courts often adjudicate disputes that raise the question of how strictly   should   they   scrutinise   executive   or   legislative   action. Therefore,   courts   have   identified   certain   questions   as   being inappropriate   for   judicial   resolution   or   have   refused   on competency   grounds   to   substitute   their   judgement   for   that   of another   person   on   a   particular   matter.  The   need   for   judicial restraint with regard to recommendations of expert committees, more particularly in matters relating to finance and economics, was considered in  BALCO Employees’ Union (Regd.) vs. Union of (2002) 2 SCC 333, it was held:  India,    “65...Nevertheless, contention is sought to be raised that the method of valuation was faulty, some assets were not taken into consideration and that Rs 551.5 crores offered  by  M/s. Sterlite  did  not  represent the   correct value   of   51%   shares   of   the   Company   along   with   its controlling interest. It is not for this Court to consider whether  the price  which was fixed  by the  Evaluation Committee at Rs.551.5 crores was correct or not. What 29 has   to   be   seen   in   exercise   of   judicial   review   of administrative   action   is   to   examine   whether   proper procedure has been followed and whether the reserve price which was fixed is arbitrarily low and on the face of it, unacceptable. xxx xxx xxx 98. In the case of a policy decision on economic matters, the courts should be very circumspect in conducting any enquiry or investigation and must be most reluctant to impugn   the   judgment   of   the   experts   who   may   have arrived at a conclusion unless the court is satisfied that there is illegality in the decision itself.” 21.  Similar view was taken in  Government of Andhra Pradesh vs. P. Laxmi Devi , (2008) 4 SCC 720,   observing as follows :   “80.  ….As   regards   economic   and   other   regulatory legislation   judicial   restraint   must   be   observed   by   the court   and   greater   latitude   must   be   given   to   the legislature while adjudging the  constitutionality  of the statute because the court does not consist of economic or administrative experts. It has no expertise in these matters, and in this age of specialisation when policies have to be laid down with great care after consulting the specialists in the field, it will be wholly unwise for the court to encroach into the domain of the executive or legislative   ( sic   legislature)   and   try   to   enforce   its   own views and perceptions.” 22.  The   need   for   judicial   restraint   in   economic   and   financial matters based on reports of domain experts was again considered in  Tamil Nadu Generation and Distribution Corporation Ltd. 30 (2017) 4 SCC 318,  holding as vs. CSEPDI­Trishe Consortium,   follows: “36…. At this juncture we are obliged to say that in a complex   fiscal  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 have knowledge   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 wisdom of the financial experts and consultants. The courts cannot really enter 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  perceive  as flawed for being perverse or absurd.” 23.  Islamic Academy of Education (supra) was a sequel to  T.M.A.

leading to several litigations. The fixation of fee by the TAFRC is not an adversarial exercise but is meant to ensure balance in the fee structure between the competing interest of the students, the institution   and   the   requirement   and   desire   of   the   society   for accessible quality education.  It is but a part of the high concept of fairness in opportunities and accessibility to education, which is an avowed constitutional goal.  But to equate it to the extent of 31 a right to challenge and interference only on basis of a different view being possible, cannot be a justification to interfere with the recommendation of an expert committee.  It is nobody’s case that the TAFRC has acted contrary to principles of accounting and economics 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 analysing the rules herein, it may be pointed out, that as of today, we have Generally Accepted Accounting Principles (GAAP).   As stated above, commercialisation of education has been a problem area for the last several years. One of the methods of eradicating commercialisation of education in schools is to insist on every school following principles of accounting applicable to not­for­profit organisations/non­ business organisations….  xxx xxx xxx 51. Indisputably, the standard of education, the curricular and co­curricular activities available to the students and various   other   factors   are   matters   which   are   relevant  for determining of the fee structure. The courts of law having no expertise in the matter and/or having regard to their own limitations keeping in view the principles of judicial review always refrain from laying down precise formulae in such   matters.   Furthermore,   while   undertaking   such exercise the respective cases of each institution, their plans and programmes for the future expansion and several other factors   are   required   to   be   taken   into   consideration.   The Constitution Bench in Islamic Academy of Education which as noticed hereinbefore subject to making of an appropriate 32 legislation directed setting up of two Committees, one of which would be for determining fee structure. This Court, both   in   T.M.A.   Pai   Foundation   and   Islamic   Academy   of Education   had   upheld   the   rights   of   the   minorities   and unaided   private   institutions   to   generate   a   reasonable surplus for future development of education.” 24.  Before   concluding   the   discussion,   in   view   of   the   reasons stated   by   the   High   Court   for   fixation   of   the   appropriate   fee structure   by   itself,   reference   may   usefully   be   made   to   the observations in  D.N. Jeevaraj vs. Chief Secretary, Government of Karnatka , (2016) 2 SCC 653, as follows: “43. To this we may add that if a court is of the opinion that a statutory authority cannot take an independent or impartial   decision   due   to   some   external   or   internal pressure,   it   must   give   its   reasons   for   coming   to   that conclusion. The reasons given by the court for disabling the statutory authority from taking a decision can always be tested and if the reasons are found to be inadequate, the decision of the court to by­pass the statutory authority can always be set aside. If the reasons are cogent, then in an exceptional case, the court may take a decision without leaving it to the statutory authority to do so. However, we must   caution   that   if   the   court   were   to   take   over   the decision taking power of the statutory authority it must only   be   in   exceptional   circumstances   and   not   as   a routine……”  25.     The High Court relied on (1986) 2 SCC 679   Comptroller and Auditor General of India, Gian Prakash, New Delhi and 33  and (2000) 8 SCC another vs. K.S. Jagannathan and another 395   Badrinath vs. Government of Tamil Nadu and ors.   to justify the taking over of the decision­making process by itself from   the   TFARC   on   four   grounds.     In   our   opinion,   both   the judgments are completely distinguishable on their own facts and have no relevance to the question for consideration in the present case.     K.S.   Jagannathan(supra)   concerned   promotion   to   the Subordinate Accounts  Service.   Badrinath (supra) related to a claim for promotion to super­time scale.  Both the cases have no relevance   to   the   present   controversy   concerning   economic recommendations made by a statutory committee consisting of domain   experts,   and   approved   by   the   Government.     We   are, therefore, of the considered opinion in the facts of the present case, as demonstrated from the available records that none of the four grounds set out by the High Court can be considered as making   out   an   exceptional   case   to   warrant   usurpation   of   the decision making jurisdiction of the TFARC by the High Court. 26. We,   therefore,   hold   that   the   High   Court   exceeded   its jurisdiction in interfering with the recommendation of the TAFRC 34 for reasons discussed.     The orders of the High Court are set aside. The recommendation of the TAFRC dated 04.02.2017 for the block period 2016­2017 and 2018­2019 is restored. 27.   In view of the interim order dated 27.06.2017 passed by the High Court, the bank guarantees furnished by the respondent institutions   and   directed   to   be   kept   alive   are   required   to   be activated and action taken accordingly in accordance with law for protection of the interest of the students.  28.  The appeals are allowed.  No costs. ………………………. J.                 (Arun Mishra) ………………………. J.    (Navin Sinha)   New Delhi, July 01, 2019. 35