In this article, Charmi Sanjay Chhadva who is currently pursuing M.A. IN BUSINESS LAWS, from NUJS, Kolkata, discusses Can private colleges charge capitation fee?
Can private colleges charge capitation fee
Talking about education, it plays an important role for the development of every country. With education, a fee for the education comes hand in hand. In India, free and compulsory education is made available for children between 6 years and 14 years under Article 21A of the Constitution of India as per ‘The Right of Children to Free and Compulsory Education Act’ or ‘Right to Education Act which is also known as ‘RTE’ and enacted on 4 August 2009.
Free education is for those children, other than those who have been already admitted by his or her parents to a school which is not supported by the appropriate Government and thus, for such children, the education fees shall be paid by the government. Compulsory education is to ensure admission, attendance and completion of elementary education by all children in the 6-14 age groups. With this, India has moved forward to make this framework to ensure that this fundamental child right is practiced in the country.
Moving forward to talk about the college fees, the question of whether or not the tuition fee should be paid by the government remains controversial. Majority of people are not able to pay their amount of fee because the studies of universities / colleges are too much expensive. People who belong to poor families cannot afford the expenditure of the college studies including fee, accommodation rent, and examination fees and so on and so forth. But, education is the back bone of every materialistic as well as the modern society. Hence, it is almost mandatory to provide education to a child apart from the basic education to ensure mental growth of the child and which would ultimately lead to the growth of the society and our country.
The most important point here is that further education is not easy because of several reasons one of them being the ‘capitation fee’. Students who are academically excellent and who are worth receiving further education and learning from a prestigious college/university also cannot be provided with such an education because of this big hurdle known as ‘capitation fee’. It is the amount paid in excess of the fee prescribed.
Understanding the term ‘Capitation fee’
Capitation fee refers to an illegal transaction wherein an organisation that provides (or supposedly provides) education / educational services collects a fee that is more than what is approved by regulatory norms. In the layman language, we know this kind of illegal transaction as donation.
Capitation fee is that fee which is not included in the prospectus of the institution. Such extra amount of amount of money is paid to secure a place in the institutions. This is commonly done at the renowned universities wherein seeking admission is not easy. And therefore, people from the elite class tend to pay extra amount of money in exchange of admission in such institution/colleges/universities. Such activities are illegal in nature because when students who do not deserve get admissions in such institutions by way of the capitation fee, students who deserve cannot secure a place at such institutions.
The Prohibition of Unfair Practices in Technical Educational Institutions, Medical Institutions and Universities Bill 2010 defines it as any amount that:
- Demanded or charged or collected, directly or indirectly, for, or, on behalf of any institution, or paid by any person in consideration for admitting any person as student in such institution; and which is in excess of the fee payable towards tuition fee and other fees and other charges declared by any institution in its prospectus for admitting any person as student in such institution; or
- Paid or demanded or charged or collected, by way of donation, for, or, on behalf of any institution, or paid by any person in consideration for admitting any person as a student in such institution.
Repercussions
Capitation fee has been one of the major contributors to corruption in education and society. It is also not easy to recover the amount which is paid as a capitation fee as it is a huge amount in nature and therefore to recover the amount, students might indulge in wrongful activities. The capitation fee is also not shown for the income tax and hence, it leads to hike in corruption. Some institutions also add the capitation fee along with the fee approved by regulatory norms and this combined fee is presented as the actual fee to the students.
Disputes
We have come across various well known and renowned and prestigious private schools, institutions and colleges all over India wherein such schools, institutions and colleges have been found charging capitation fees from the students to secure a place in such schools, institutions and colleges because of its renowned and prestigious name in the society. It was found that sum of Rs 5,00,000 (Rupees five lakhs) was allegedly paid by a student through a demand draft to Sri Venkateswara College of Engineering (SVCE), a private college in Pennalur, Sriperumbudur, near Chennai. A student had paid such a huge amount of money to the college just because it is a renowned college and the student wanted to secure a place in the college. It has been a very common trend by most of the private colleges to accept such capitation fees due to its renowned name and thus such colleges uses its name and a huge amount of fees is taken by the people who are powerful amongst the management committee. The incident came into light through a surprise check drive initiated by the government in Tamil Nadu at 142 self-financing engineering colleges in the said state.
Another popular scam exposed by a popular news channel, ‘Times Now’ suggested that Information and Broadcasting Minister for State Jagathrakshakan was allegedly associated with the Shree Balaji Medical College in malpractices in admissions. However, the minister totally denied all the allegations or the fact that the minister was having associated with the college.
In February 2002, some students filed a case against Mercedes Benz International School, a prestigious school in Pune for allegedly collecting ‘capitation fees’ under the guise of a building donation fund.
Income Tax Department has been conducting raids on some of the organisations that take capitation fee. Arrests have been made related to cheating associated with admissions.
Here are some of the instances wherein we have come across some private colleges charging capitation fees. Students and others must collectively fight against such malpractices happening in the country in the name of education.
Capitation fee charged by the private colleges is illegal
Capitation fee charged by the private colleges is illegal can be seen in a recent Supreme Court judgment in the case of Modern Dental College and Research Centre vs. State of Madhya Pradesh [Medical Council of India]. On 2nd May 2016, a five judge Constitution bench comprising of Justices A R Dave, A K Sikri, R K Agrawal, A K Goel and R Banumathi in the said case held that education is a noble profession. It was held in the judgment that the fee taken by the institutions shall be on a no profit – no loss basis. The capitation fees collected by the institutions lead to profiteering and commercialising education. The admissions must be based only on merit and it is impossible to control profiteering/charging of capitation fee unless admissions are done on merit.
It was clearly stated that every demand of capitation fee by educational institutions is unethical & illegal. It was held that
‘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’
In the case of TMA Pai Foundation case, it was held that there shall not be any profiteering or acceptance of capitation fee. But we continue to see such malpractices happening in the country and thus it is very important for each citizen to carry out their duties and responsibilities and fight against such malpractices deteriorating the standards of education in the country.
It was held in the judgment that the educational institutions can charge fees that would take care of the various expenses incurred by them and also the provision for the expansion of education for future generations. But fees shall not be taken for their personal expense.
The bench said “The object of setting up educational institutions is not to make profit. 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 Supreme Court has clearly stated that such demand of fee is illegal and unethical. And it has also asked the Centre to make laws to put an end to such practices which ultimately deny admission to the meritorious students who cannot afford to such demands. “Central Government, Ministry of Health and Family Welfare, Central Bureau of Investigation or the Intelligence Wing have to take effective steps to undo such unethical practices or else self-financing institutions will turn to be students financing institutions,” it said.
Some other judgments
The Supreme Court Judgement in the year 1993 in the Unni Krishnan Case clearly said that charging capitation fees was illegal in nature. According to the definitions stated in the Karnataka Educational Institutions (Prohibition of Capitation Fee) Act 1984:
Be it enacted by the Karnataka State Legislature in the Thirty-Fourth Year of the Republic of India as follows, Clause (b) of Section 2 defines the expression ‘Capitation fee’ in the following words: “Capitation fee means any amount, by whatever name called, paid or collected directly or indirectly in excess of the fee prescribed under section 5, but does not include the deposit specified under the proviso to section 3.” These statements were mentioned in the judgment.
Another Supreme Court Judgement in the year 2001 quotes the definition stated in the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987:
Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987, Section 3(a) states that ‘The expression “capitation fee” is defined in Section 2(a) of the Act. Capitation fee means “any amount, by whatever name called, whether in cash or kind, in excess of the prescribed or as the case may be approved, rates of fees regulated under Section 4.”
And hence, we can come to a conclusion that the capitation fees which are charged in excess of the approved fees are illegal and not acceptable.
The Supreme Court in its judgement in October 2002 in the TMA Pai Foundation vs the State of Karnataka case stated that:
57. We, however, wish to emphasize one point, and that is that inasmuch as the occupation of education is, in a sense, regarded as charitable, the government can provide regulations that will ensure excellence in education, while forbidding the charging of capitation fee and profiteering by the institution. Since the object of setting up an educational institution is by definition “charitable”, it is clear that an educational institution cannot charge such a fee as is not required for the purpose of fulfilling that object. To put it differently, in the establishment of an educational institution, the object should not be to make a profit, inasmuch as education is essentially charitable in nature. There can, however, be a reasonable revenue surplus, which may be generated by the educational institution for the purpose of development of education and expansion of the institution.
It was therein held that in such professional unaided institutions, the Management of the college shall have the right to select teachers as per the qualifications and eligibility conditions laid down by the State/University subject to adoption of a rational procedure of selection. A rational fee structure should be adopted by the Management, which would NOT be entitled to charge a capitation fee. Appropriate machinery shall also be devised by the State / University to ensure that no capitation fee is charged and also see to it that there is no profiteering. It is the welfare of students and teachers that is important and without any unfair means in the country for the growth of the students and teachers.
Fair means of education is very important to ensure fair means of trades and practices in any industry in the future. Fair means must start from the education itself for a better future. Few of these remarkable judgments have been passed by the Hon’ble Supreme Court of India to tackle the practices and seize the charging of capitation fees by the professional private colleges in the country.
The judgment also make clear statements on the point whether capitation fee can be charged by the private colleges or no and the question was whether the statutory provisions which regulate the facets of administration like control over educational agencies, control over governing bodies, conditions of affiliation including recognition/withdrawal thereof, and appointment of staff, employees, teachers and principals including their service conditions and regulation of fees, etc. would interfere with the right of administration of minorities? And the answer which was given by the Hon’ble Court was “ Fees to be charged by unaided institutions cannot be regulated but no institution should charge capitation fee”.
Steps taken by the government
To keep a check on the illegal and unfair practices by the professional colleges by charging capitation fee and in accordance with the Supreme Court of India’s directions, the Government has come up with a print release dated July 18, 2016 http://pib.nic.in/newsite/PrintRelease.aspx?relid=147178 wherein a National Fee Committee under the chairmanship of Justice B. N. Shrikrishna was constituted for fixing some fixed norms and guidelines for charging of the tuition and development fees in case of professional courses to avoid practices charging capitation fee. The Committee therein submitted its report recommending upper limits of fee that can be charged by the professional colleges, which shall not include capitation fee. This was one of the important norms required to be taken by the Government to put a cap on the unfair practices. Any Institution who charges capitation fee shall be strictly liable for punitive action under the AICTE Approval Process Handbook.
To bring the higher education within the reach of deserving students, apart from implementing the recommendations of National Fee Committee, the following measures have been taken:
- Under the Pragati Scholarship scheme – Providing scholarships for girl students
- Under the SAKSHAM scheme – Scholarships for the differently-abled
- Scholarships for the post-graduate engineering education through the GATE exam
- Various research fellowships for pursuing PhD programme.
- Tuition fee waiver for economically backward students. In this way, students are not held back from studying due to lack of funds.
This above information was given by the Union Human Resource Development Minister, Shri Prakash Javadekar in a written reply to a Lok Sabha question.
Therefore, we can see that the Government is trying to take interest in such illegal practices for a better future of the young and also for our country and therefore the above mentioned tasks shall be taken by the Government against the unfair.
Also, The Prohibition of Unfair Practices in Technical Educational Institutions, Medical Institutions and Universities Bill 2010 was introduced as a strict measure to bring about the transparency in the educational system regarding the fee structures and other crucial issues. Charging or accepting capitation fee is considered as violation of Provision 6, which prohibits any institution from demanding or accepting capitation fee, directly or indirectly. If found guilty, the institution would be strictly punished with a penalty of up to Rs.5,000,000 (Rupees five lakhs) and a maximum imprisonment for three years. The bill has been criticized by various private institutions. However, this bill lapsed, before it became a law.
Media reports indicate that black money in education in India is generating more than 40,000 crores, while black money generation in medical education would be more than 10,000 crores. The Special Investigation Team (SIT) probing into black money practices in India has started its probe into the area, which was outside the ambit of SIT.
Conclusion
Collection of large and huge amounts of money by the mode of charging capitation fee by the private colleges runs into crores of rupees for courses like MBBS, engineering and other such post-graduate courses to secure a seat in the renowned colleges of the country and therefore such an exorbitant fee and donation etc. is charged. And due to such activities by many of such self- financing institutions, the meritorious and deserving students who are economically poor are kept away from such opportunities of learning from the best colleges in the country. It is also seen that such activities are being held by various institutions, for the additional intake of students, not always for the benefit of the student community and thereby serve the community, but for their own betterment. Such institutions do such activities for their own good and which is profitable to them in some way or the other. This was mentioned by a bench of Hon’ble Justice KS Radhakrishnan and AK Sikri. The court said that quality of education has gone down in private colleges which are turning into students financing institutions.
We cannot lose sight of the fact that these things are happening in our country irrespective of the constitutional pronouncements by the Hon’ble Court in the TMA Pai Foundation case that there shall not be any profiteering or acceptance of capitation fee etc. Therefore after the case of Modern Dental College and Research Centre vs. State of Madhya Pradesh [Medical Council of India], we see a ray of hope that the government shall again work against the practice of charging capitation fee by the private colleges which is shown that it is illegal in nature and thus we can have better growth for the society.
References
https://en.wikipedia.org/wiki/Capitation_fee
http://pib.nic.in/newsite/PrintRelease.aspx?relid=147178
http://timesofindia.indiatimes.com/india/Capitation-fee-is-illegal-rules-Supreme-Court/articleshow/52083382.cms
https://indiankanoon.org/doc/93572510/
http://www.hindustantimes.com/india/special-team-probing-black-money-set-to-crack-down-on-unaccounted-funds-in-education-sector/story-GwCtCVZOVQSTwA7JqG4blK.html
