NEW DELHI: Holding demand of capitation fee by educational institutions illegal, the Supreme Court on Monday ruled that commercialization and exploitation is not permissible in the education sector and institutions must run on ‘no-profit-no-loss’ basis.

A five-judge Constitution bench of Justices A R Dave, A K Sikri, R K Agrawal, A K Goel and R Banumathi said the objective of setting up educational institutions must not be to make profit and the government must step in to regulate the sector to promote merit, curb malpractices and secure merit-based admission in a transparent manner.

“Though education is now treated as an ‘occupation’ and, thus, has become a fundamental right guaranteed under Article 19(1) (g) of the Constitution, at the same time shackles are put in so far as this particular occupation is concerned, which is termed as noble. Therefore, profiteering and commercialization are not permitted and no capitation fee can be charged. The admission of students has to be on merit and not at the whims and fancies of the educational institutions,” the bench said.

“It is to be ensured that this admission process meets the triple test of transparency, fairness and non-exploitativeness,” it said.

The court said unreasonable demand could not be made from the students and their parents. It said the educational institutions can charge fees that would take care of various expenses incurred by them plus provision for the expansion of education for future generations.

“Education is treated as a noble occupation on ‘no-profit-no-loss’ basis. Thus, those who establish and are managing the educational institutions are not expected to indulge in profiteering or commercialize this noble activity. Keeping this objective in mind, the court did not give complete freedom to the educational institutions in respect of right to admit the students and also with regard to fixation of fee,” it said, while referring to its earlier judgement.

The bench said it was the Constitutional duty of the governments to ensure that educational institutions were not indulging in commercialisation and to make sure that institutions functioned to spread education and not to make money.

“The object of setting up educational institutions is not to make profit. There could, however, be a reasonable revenue surplus for development of education. For admission, merit must play an important role. The state or the university could require private unaided institutions to provide for merit-based selection while giving sufficient discretion in admitting students,” the bench said.



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