Islamic Academy of Education v State of Karnataka (2003) and P.A. Inamdar v State of Maharashtra (2005) — after T.M.A. Pai

T.M.A. Pai answered the questions of principle but left the machinery to the States, who read it differently. Islamic Academy built committees to police fees and admissions; Inamdar dismantled the parts of that machinery that went beyond T.M.A. Pai and drew the line the State may not cross in unaided colleges. An answer on Article 30 is incomplete without both.

Facts. Petitions about the regulation of private professional colleges came before a Bench of five (Khare C.J., Variava, Balakrishnan, Pasayat and S.B. Sinha JJ.). "After the judgment was delivered, on 31st October 2002, the Union of India, various State governments and the educational institutions understood the majority judgment in different perspectives. Different statutes/regulations were enacted/framed by different state governments. These led to litigations in several courts." The Bench was constituted to clarify the doubts.

Held. Unaided institutions may fix their own fee structure, "which could include a reasonable revenue surplus for purposes of development of education and expansion of the institution", provided there is no profiteering or capitation fee; but to give effect to T.M.A. Pai pending legislation the Court directed each State to "set up, in each State, a committee headed by a retired High Court judge who shall be nominated by the Chief Justice of that State", with a chartered accountant, a representative of the Medical Council of India or the AICTE, and the State secretary of medical or technical education, to review fee structures, and a second committee to oversee entrance tests and admissions. The Court read St. Xavier's for the proposition that "the essence of Article 30(1) is to ensure equal treatment between the majority and the minority institutions. No one type or category of institution should be disfavoured or for that matter receive more favourable treatment than another. Laws of the land, including rules and regulations, must apply equally to the majority institutions as well as to the minority institutions.

Facts. Further doubts, and the working of the Islamic Academy committees, brought the matter back to the Court under Lahoti C.J.

Held. The Court divided institutions into three: unaided and unrecognised institutions, which enjoy Article 30 to their "heart's content"; institutions seeking affiliation or recognition, which must comply with regulations that are for their benefit; and institutions receiving aid, which must accept regulation of the use of funds and admit non-minority students under Article 29(2). It held that the State cannot impose its reservation policy on unaided private colleges, minority or non-minority, since seat-sharing dictated by the State would nationalise the seats and violate Article 30 and Article 19(1)(g); the management and the State may agree on seat-sharing, but it cannot be forced. Seats may be reserved for non-resident Indians, whose higher fees subsidise poorer students. Merit matters more as the level of education rises. Every institution may fix its own fees, subject to regulation against profiteering. And the committees directed in Islamic Academy could not stand so far as they went beyond T.M.A. Pai: the Court held that Islamic Academy could not exceed T.M.A. Pai.

Unaided institutions, minority or not, admit by their own fair and merit-based process and fix their own fees without profiteering or capitation; the State may not impose quotas on them, though it may set the conditions of recognition and affiliation that serve standards. Aided institutions accept regulation and admit outsiders under Article 29(2). Parliament answered Inamdar with Article 15(5), which permits reservation in private institutions other than minority institutions.