Supreme Court: Educational Institutions Should Run On ‘No-Profit-No-Loss’ Basis

supreme court on private institutions
Supreme Court said the private institutions should not indulge in commercialization of education sector

Madhya Pradesh government had brought ‘Niji Vyavsayik Shikshan Sanstha’ adhyadesh few years back for regulation of admission and fixation of fee in private professional educational institutions in the state. The law mentioned that the state has right to regulate the admission process and also fix the academic fee in institutions, but the same was opposed by private institutions of the state, claiming it to be a direct attack on the autonomy of institutions.

Several private un-aided medical and dental colleges moved to the apex court against the law, but the five-judge bench of Supreme Court ruled in favour of state government and said the State is authorized to regulate admission as well as fix fee for private institutions under its jurisdiction.

The law also empowers state government to fix guidelines for private institutions to provide reservation of seats to reserved categories.

The Supreme Court bench, including of Justices Anil R Dave, AK Sikri, R K Agrawal, Adarsh K Goel and R Banumathi, said in its verdict that educational institutions should not just focus on making more and more money, but should run on ‘no-profit-no-loss’ basis. The bench observed that commercialization of education sector would not be accepted and the government must ensure this. “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,” the bench said.

The bench also said that private institutions are promoted only to bring a fresh approach in the education sector and no such institute should take it as a channel for making profits. The court maintained that the government is there to play a regulatory role in functioning of private institutions, and check if they are not indulging in money-making only.

Commenting on the allegations of hefty capitation fee charged by private institutions for facilitating admissions, the bench said the capitation fee being charged by educational institutions is illegal and there should be no commercialization of education. It also said that the admissions in educational institutions should only be furnished on the basis of merit.

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