Full Judgment Text
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PETITIONER:
A POLYTECHNIC BY NAME LARSON AND TOUBRO INSTITUTE OFTECHNOLO
Vs.
RESPONDENT:
ALL INDIA COUNCIL FOR TECHNICAL EDUCATION AND ORS
DATE OF JUDGMENT10/03/1995
BENCH:
JEEVAN REDDY, B.P. (J)
BENCH:
JEEVAN REDDY, B.P. (J)
SEN, S.C. (J)
CITATION:
1995 AIR 1585 1995 SCC (3) 287
JT 1995 (3) 203 1995 SCALE (2)267
ACT:
HEADNOTE:
JUDGMENT:
1. Larson and Toubro Limited, a public limited company, is
a leading engineering concern in this country. It has got a
large work force required for its various projects. In the
year 1983, it set up Larson and Toubro Institute of
Technology. For establishing and running the institute, a
trust called ’Larson and Toubro Staff and Welfare Trust’ was
constituted. Because of certain legal complications, it is
stated, the institute is being run directly by the company,
dispensing with the trust. The institute imparts
instruction in four-year diploma course sixty seats in
diploma in mechanical engineering and sixty seats in diploma
in electrical engineering. According to the copy of the
prospectus filed in
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this writ petition, the admission is open only to children
of the employees of Larson and Toubro group of companies.
It is further required that the employee should have put in
a minimum period of five years of service as confirmed
employee on July 1st of the year of admission to enable his
child to claim the eligibility. The admission is made
purely on the basis of merit determined on the basis of
marks obtained in the Secondary School Certificate Exami-
nation of the Maharashtra State Board of Secondary Education
or an equivalent examination. The minimum marks are fifty
per cent in the case of general candidates and forty five
per cent in the case of backward class students. Thirty
four per cent of the scats arc stated to be reserved in
favour of backward classes. It is further stated before us
by Sri K.K.Venugopal, learned counsel for the petitioners
that no fee whatsoever is charged or collected from the
students or from their parents for admission and/or
instruction in the said institute. It is stated that as a
matter of fact, the Government of Maharashtra had granted
permission for starting this Institute in the year 1983
subject to the specific conditions that (1) no fee shall be
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charged from any student of the said institution; (2) the
parents of the students must be Indian nationals; (3) the
father/mother must be in service of the company for atleast
five years; (4) that government rules regarding reservation
of thirty four per cent of scats for backward classes are
followed and (5) that only where no candidates are available
in the backward class category, that those scats will be
filled up by open category candidates. It is stated that
these conditions are being implicitly and faithfully
followed by the Institute.
2. On February 4, 1993, this Court delivered judgment in
Unnikrishnan, J.P. v. State of Andhra Pradesh (1993 (1)
S.C.C.645) inter alia framing a scheme governing admission
to professional colleges, which expression includes colleges
imparting technical education. The idea behind the scheme
was to put an end to the financial and other iffcgularities
which had become rampant in these institutions, converting
most of these institutions into teaching shops. The idea
was to regulate admission to these colleges. Fifty per cent
of seats are to be filled purely on the basis of merit (who
shall pay only a nominal fee) and other fifty per cent being
treated as repayment seats’, the admission to which seats
also was to be on the basis of merit. On review petitions
being filed by several persons, they were entertained only
to the limited extent of providing a certain percentage of
seats for non-resident Indians. It was directed that five
per cent of the scats shall be reserved for non-resident In-
dian students. It appears that the petitioner was one of
the review petitioners therein though it was not one of the
writ petitioners in the batch of writ petitions disposed of
on February 4, 1993.
3. In pursuance of the judgment in Unnikrishnan, the All-
India Council for Technical Education framed two sets of
regulations under All-India Council of Technical Education
Act, 1987, viz., A.I.C.T.E. (Norms and Guidelines for Fees
and Guidelines for Admissions in Professional Colleges)
Regulations, 1994 dated May 20, 1994 and A.I.C.T.E. (Grant
of Approval for starting new Technical Institutions,
Introduction of Courses or Programmes and Approval of intake
capacity of seats for the Courses or Programmes)
Regulations, 1994 dated October 31, 1994. These regulations
have
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been framed consistent with and in fur therance of the
scheme and directions con tained in the judgment aforesaid.
4.Since the petitioner-institute could not fit itself
into the said scheme, it applied for exemption and for
appropriate orders both from the Government o Maharashtra
and from the A.I.C.T.E. Ile request was to permit it to
continue according to its present scheme and, at the same
time, not to refuse or withdraw the recognition and
affiliation granted by the government and the council.
Since the council expressed its inability to accede to the
said request, the present writ petition was filed.
5. It would be seen from the facts stated above that this
institute is not an engineering college but only a polytech-
nic, which means that primarily it will cater to the
children of comparatively lower echelons of the employees of
the company. It is confined to the children of the em-
ployees alone and that too employees who have put in a
minimum of five years of confirmed service on 1st July of
the relevant year of admission. No fee is charged either
for admission or for imparting instruction, (The admission
to hostel is, of course, a different matter and for which
charges are levied, to which no objection can be taken.)
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Admissions are being made exclusively on the basis of merit
with reference to the marks in the qualifying examination,
viz., the marks obtained in S.S.C. Examination conducted by
the Maharashtra State Board of Secondary Education or any
other equivalent examination. No outside student is being
admitted. The idea is to train the students keeping the
requirements of the company in mind and to absorb them
ultimately in company service to the extent feasible. It is
thus obvious that the purpose for which this institute has
been started and is being maintained and run are in no way
inconsistent with the underlying purpose and object sought
to be achieved by the scheme enunciated in Unnikrishnan and
the regulations framed by the A.I.C.T.E. We arc, therefore,
inclined to allow the institute to function as at present,
i.e., subject to the several conditions mentioned
hereinbefore. In all other respects, the regulations by
All-India Council for Technical tion shall apply as also the
relevant rules and regulations, if any, made by the Edu-
cation and Employment Department (including the office of
Director of Technical Education, Bombay), Government of
Maharashtra. It is made clear that the conditions imposed
by the Maharashtra government while permitting the institute
to be started, referred to above, shall continue to be
observed. It shall be open to the Government of Maharashtra
and AllIndia Council for Technical Education to inspect,
call for records and information and take all other steps to
ensure that the institute is adhering to the above condi-
tions. For this purpose, the institute shall send each
year, to both the government and the council, a statement of
particulars of students who had applied for admission and
those who had been granted admission. The statement shall
contain the full particulars of the students alongwith the
particulars of their parents (in service of the company),
their service particulars, the marks obtained by each
applicant and an integrated merit list and a separate merit
list of the students belonging to backward classes.
6. At the same time, we wanted to ensure that the
institute is run by a public/
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charitable trust as required by one of the clauses of the
scheme in Unnikrishnan. It was, however, explained to us by
Sri Venugopal that initially the company had established a
trust for the purpose of running the said institute but it
had to dispense with the said trust because the amount paid
by the company into the said trust was not being allowed as
a deduction in the assessment of the company under the
Income Tax Act. It is explained that by virtue of insertion
of sub-section (9) in Section 40A of die Income Tax Act by
Finance Act, 1984 (with retrospective effect from April 1,
1980) the amounts paid by the company into the trust were
held not deductible as permissible expenditure by the Income
Tax Department and for this reason the trust had to be
dispensed with. With a view to satisfy ourself as to the
position of law obtaining in this behalf, we requested Sri
J.Ramamurthy, Senior Advocate, to assist us and tell us
whether it would be possible for the company to claim full
deduction for the amounts paid into die trust established,
or to be established, for running the said institute. Sri
Ramamurthy and Sri Venugopal have taken us through the
relevant provisions of the Income Tax Act. We find that by
virtue of sub-section (9) of Section 40A, it may not be
possible for the company to claim such full deduction. Even
if the said trust is recognised for the purpose of Section
80G, the deduction can be only to the extent of fifty per
cent of the amount paid into the trust. In the
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circumstances, we dispense with the said condition in the
case of this institute alone subject to the following
further conditions, viz., the company shall open, if not
already opened, a separate account concerning the petitioner
institute. All the expenditure incurred on the institute
and any other receipts by the said institute shall be
entered therein as also the particulars of the application
of the said amounts. If there is any change in law relevant
in this behalf, it shall be open to the Government of
Maharashtra, A.I.C.T.E. or any other interested person to
apply to this court for appropriate modification.
7. We are grateful to Sri J.Ramamurthy for gladly
assisting us in the matter.
8.The writ petition is disposed of with the above
directions. No costs.
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