New Writ Petition Filed in Supreme Court on IIM Fee Cut

DATELINE: Grand Rapids (Michigan, USA), March 27, 2004

On March 27, a fresh writ petition was filed by Prof. Vipin Gupta (IIM-A, 1990 batch), along with two co-petitioners - Shashi Bhushan Singh (IIM-B, 2003 batch) and Kamal Sharma (IIM-A 1973 batch) challenging the legality of the fee cut order, emphasizing that the GOI is trying to go beyond the powers available to it in its relationship with the IIMs and thus violating the autonomy of the IIMs illegally, and seeking a stay on the fee cut order.

On Feb 5, 2004, V.S. Pandey, Joint Secretary, Ministry of Human Resource Development, Government of India, signed and issued an order whereby the fees charged by the IIMs was directed to be reduced from near about Rs.1,50,000/- per year to Rs.30,000/- per year. With reference to the PIL filed by Sandeep Parekh and others, the petitioners point that unfortunately, it was not brought to the notice of the Court that the impugned order dated 05.02.2004, and the procedure adopted for passing such an order per se was illegal and in violation of Article 3(h) and Article 5 of Memorandum of Association, which is the basis on which Indian Institute of Management have been established.

The relationship between the Central Government, the concerned State Government of the State in which the IIM is located and the concerned IIM Society is governed by the provisions of the Memorandum of Association, Rules, Byelaw and Societies Registration Act, 1860, and is distinguishable from the other Government Colleges and Institutions where there is no Society to conduct the affairs of the Government College/ Institutions.  The situation in case of IIM's is different from Government Colleges as the property and management of the Institute vests in the I.I.M Society and not in the respective State Govt. or the Central Govt. The Central Government has power under the Memorandum of Association to issue directives to the IIM Society only after following the procedure prescribed in Article 5 of the Memorandum of Association.  In any event the Central Govt. has no power to issue any direction either to the Board of Governors or The Director of the Institute.  The Memorandum of Association and the Rules do not confer power on the Central Govt. to control or interfere with the internal administration, day to day affairs and autonomy of the Institute.

In any event while giving the direction to charge a particular fee on a lower side has not given consideration  to all relevant facts and in particular the  actual annual revenue shortfall of the Institutes and thus, the afore mentioned step of the Government is a retrograde step towards imparting quality education. It will ultimately adversely affect the academic excellence for which to-day the I.I.Ms are known world over. The grants made by the Central & State Govts. are not sufficient to meet the entire funding of the Institute and Society meets the deficit out of resources generated by contributions made by its alumni as also grants made by Industrial houses and benevolent philanthropists. The IIMs can not be compelled to compromise with the standard and quality of education by incurring losses and in the process to wipe out the fund generated from their own resources to meet the growing cost of imparting quality education. Unless and until the GOI undertakes to meet the entire funding of the Institute, it has no power to compel the Institute to lower the fees charged from the students and to incur further deficit.

Under Article 5 of the Memorandum of Association, the Central Govt. can not give any direction either to the Society or the Institute to charge a particular fee as power under Article 5 can be exercised only to review the work and progress of the Society or the Institute and that too after complying the procedure prescribed therein.

The GOI is empowered under Article 5 of MOA to issue direction to the IIM Society on issues relating to work and progress of the Society or the Institute only. The GOI has not been vested with any power to make any enquiry in relation to fee to be charged by the Society for imparting various Post Graduate courses to the students. Since the power to fix fees has been conferred on the IIM Society under Article 3(h), the GOI has no power to give any direction in this regard.

The GOI cannot usurp and exercise the powers vested in the IIM Society under Article 3(h) to prescribe reasonable fee structure.  In TMA Pai's case reported in (2002) 8 SCC 481, the Supreme Court had held that fees charged should be reasonable and so long as there is no illegal profiteering an educational institution could charge reasonable fees.  Reasonable fee structure has to provide for need to generate funds to be utilized for the betterment and growth of the educational institutions, including the expenses incurred on providing proper facilities and equipments as also further facilities and amenities to be provided by the institute in future to the students.  Thus, the reasonable surplus generated for the furtherance of education, which is also a component of fee structure, is permissible.

Further, in violation of the powers vested in the GOI under Article 5, the GOI did not consult any State Governments nor it appointed any person to review the work/progress or enquire into the fee fixation issue.  In the absence of any overriding power conferred upon the GOI or the power to issue directions to the I.I.Ms/ Director of the IIMs, the GOI can't determine fee which is contrary to and/or inconsistent with the fee fixed by the Management of the Institute.

The petitioners have requested the Supreme Court to quash aside the fee cut order, and to restrain the Ministry of HRD, Minister of HRD, and V.S. Pandey (Joint Secretary, Ministry of HRD) from interfering in day to day affaire, internal administration and/or autonomy of the IIMs.

The new academic session will start in June 2004.  If the operation of the impugned order is not stayed, the institute will be compelled to charge only such fees as has been directed by the GOI.  In the event of this petition being allowed, it will become difficult for the institute to recover the difference of fees from the students. Since the poor and needy students are given liberal loans on concessional rate of interest and scholarships, and no student has ever filed a grievance in regard to the fee, the petitioners have also requested a stay for the fee cut order from the Supreme Court.

Prof. Vipin Gupta is International Business Scholar (Grand Valley State University); Ph.D. (Wharton School, 1998), PGDM (IIM Ahmedahad, 1990, Gold medallist).  He is a Visiting Faculty at IIM Indore and IIM Bangalore, and a Guest Faculty at IIM Calcutta.  He is also a research collaborator with IIM Indore, and with faculty at IIM Ahmedabad, IIM Bangalore, IIM Lucknow, and IIM Calcutta.