Modern Dental College vs State of MP: The Supreme Court’s foray into proportionality and public goods

Earlier this week, a Constitution Bench of the Supreme Court handed down a unanimous judgment (with a majority and concurring opinion) in the case of Modern Dental College vs State of Madhya Pradesh. The Petitioner’s had challenged the constitutional validity of the ‘Niji Vyavasayik Shikshan Sanstha (Pravesh Ka Viniyaman Avam Shulk Ka Nirdharan) Adhiniyam, 2007′ [“the Act”], as well as the Admissions Rules, 2008 and the Madhya Pradesh Private Medical and Dental Post Graduate Courses Entrance Examination Rules, 2009, which were framed by the State Government in exercise of the power conferred upon it under the Act. Broadly speaking, the Act and Rules were framed to regulate private professional educational institutions. Among other things, they prescribed a compulsory common entrance examination administered by the government (Section 6), provisions for fee fixation by a government committee based on certain detailed criteria (Section 9), and for the reservation of seats. Before the Madhya Pradesh High Court, the petitioners’ primary contention was that the Act and Rules amounted to excessive interference in the autonomy of private educational institutions, and consequently, violated Article 19(1)(g) of the Constitution. The MP High Court rejected the petitioners’ arguments entirely, and upheld the validity of the Act and Rules. The High Court’s judgment was based upon the precedent in T.M.A. Pai, P.A. Inamdar, and subsequent cases, which had decided the extent to which the State could intervene into the functioning of private, unaided colleges.

Before the Supreme Court, the primary contention of the Petitioners was that “by the impugned legislation the State seeks to wipe out the choice available with the appellants institutions to devise their own admission procedure and the provisions of Section 6 read with Section 3(d) necessitate that the admission be carried out only on the basis of a CET to be conducted by the State Government or any agency appointed by it…  in addition, Section 9 of the Act provides for the Committee defined under Section 3(c) of the Act to ‘determine’ and ‘fix’ the fees to be charged by the appellants and thereby completely trample the rights of the appellants to determine and charge the fee…”, and that the provision of reservation violated the judgment of the Supreme Court in Ashoka Kumar Thakur’s Case. (paragraph 19) In other words, through the impugned Act and Rules, the State was effectively attempting to “take over the control of the affairs of the institutions” (paragraph 22), and that this could not be justified as a reasonable restriction under Article 19(6).

The petitioners’ arguments were rejected by the Supreme Court, which upheld the judgment of the High Court and the constitutional validity of the Act and Rules. The Court started by observing 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 insofar as this particular occupation is concerned which is termed as ‘noble’. Therefore, profiteering and commercialisation are not permitted and no capitation fee can be charged.” (paragraph 30) Leaving aside for the moment the general merits of this view, effectively, the argument here seems to be that insofar as an educational institution is engaged in profiteering, it cannot invoke the protection of Article 19(1)(g) to start with. If this is the case, then there is no need to carry out an Article 19(6) analysis. This is precisely what the Court proceeds to do, however. Perhaps, then, a better way of understanding the issue (although the Court doesn’t put it this way) is that the prevention of profiteering is a weighty reason in support of the reasonableness of the restrictions placed upon the Article 19(1)(g) right.

Much of the analysis that follows is essentially a dense, textual reading of the T.M.A. Pai and Inamdar judgments, both of which bind the Court. There is, therefore, little profit in analysing the reasoning of this part of the judgment. Put briefly, the Court follows T.M.A. Pai in holding that the freedom of occupation of educational institutions under Article 19(1)(g) includes the freedom to admit, to set up a reasonable fee structure, to appoint staff, and to take action in cases of dereliction of duty (paragraph 33). T.M.A. Pai had then held that in the case of professional institutions, the admissions criteria must be “fair, transparent and non-exploitative” (paragraph 36), with the overriding consideration being merit. For this purpose, T.M.A. Pai had permitted the government to frame regulations (paragraph 37). Furthermore, P.A. Inamdar had held that the constitution of Committees for monitoring admissions and fee structure, in order to prevent exploitation, was constitutional (paragraph 42). Post-audit measures were insufficient for this task (paragraph 43).

Relying upon this precedent, the Court then considered the question of whether the impugned Act and Rules constituted reasonable restrictions under Article 19(6). In a rare instance of clarity and decisiveness when it came to Article 19, the Supreme Court expressly held that determining “reasonableness” required a proportionality enquiry. There is nothing especially novel or original here. As far as State of Madras vs V.G. Row, the Supreme Court had effectively read proportionality into the reasonableness requirement under Article 19(6):

“The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict.”

In the intervening years, however, the Court has rarely fleshed out the contours of this test. The nadir of its Article 19(2) – (6) jurisprudence was undoubtedly Society for Un-Aided Private Schools vs Union of India where the Supreme Court upheld the RtE’s compulsory requirement that private schools admit students from under-privileged backgrounds to the extent of 25% of their strength, without even an attempt to analyse the restriction in the context of reasonableness under Article 19(6). At the very least, therefore, in its present judgment, the Supreme Court did well by bringing proportionality back upon the centre-stage of an Article 19(1)(g)-19(6) analysis:

“… a limitation of a constitutional right will be constitutionally permissible if: (i) it is designated for a proper purpose; (ii) the measures undertaken to effectuate such a limitation are rationally connected to the fulfillment of that purpose; (iii) the measures undertaken are necessary in that there are no alternative measures that may similarly achieve that same purpose with a lesser degree of limitation; and finally (iv) there needs to be a proper relation (‘proportionality stricto sensu’ or ‘balancing’) between the importance of achieving the proper purpose and the social importance of preventing the limitation on the constitutional right.” (paragraph 53)

The Court then went into a detailed survey of proportionality jurisprudence in other countries (paragraph 53 – 59), before endorsing the test in the context of Indian Article 19 jurisprudence.

Unfortunately, however, after laying out the test with admirable clarity, the Court failed to apply it to the present case. In paragraph 61, it noted:

“We are of the view that the larger public interest warrants such a measure. Having regard to the malpractices which are noticed in the CET conducted by such private institutions themselves, for which plethora of material is produced, it is, undoubtedly, in the larger interest and welfare of the students community to promote merit, add excellence and curb malpractices. The extent of restriction has to be viewed keeping in view all these factors and, therefore, we feel that the impugned provisions which may amount to ‘restrictions’ on the right of the appellants to carry on their ‘occupation’, are clearly ‘reasonable’ and satisfied the test of proportionality.”

This, however, is merely an assertion. Proportionality would require the Court to actively consider alternative options, and ask whether they were adequate to meet the goal of ensuring “fair, transparent, and non exploitative” procedures. For instance, the Court ought to have given cogent reasons as to why a post-admission audit (which infringes Article 19(1)(g) to a significantly lesser extent) was not adequate. The mere fact of prevailing exploitation and other malpractices was not enough to justify the particular State action in the present case, which – admittedly – constituted far-reaching interference with the autonomy of private educational institutions. The same problem plagues the Court’s analysis of fee-fixation: the Court rejected post-audit measures without explaining why – something that was not open to it if it was faithfully applying a proportionality test. (paragraph 73) Admittedly, the Court did make an attempt to do so in Paragraph 88, where it referred to numerous irregularities in privately-conducted entrance tests, and pointed to the greater accountability of State-administered ones (an assertion which, itself, would be open to doubt). This, however, is certainly not enough to reach such a strong conclusion about the reasonableness of the restriction.

This should not be taken to mean that the Supreme Court was necessarily incorrect. However, its application of the proportionality standard was certainly insufficient, since the whole purpose of that standard is a careful sifting of evidence, so as to ensure that restrictions are proportionate, and that if the same goal could be achieved by a different route, that did not infringe upon rights to the same extent, then it is the responsibility of the State to choose that route.

In addition to the discussion of proportionality, there is another significant aspect of this judgment that is worth noting. In paragraph 83, the Court observed:

Thus, when there can be Regulators which can fix the charges for telecom companies in respect of various services that such companies provide to the consumers; when Regulators can fix the premium and other charges which the insurance companies are supposed to receive from the persons who are insured, when Regulators can fix the rates at which the producer of electricity is to supply the electricity to the distributors, we fail to understand as to why there cannot be a regulatory mechanism when it comes to education which is not treated as purely economic activity but welfare activity aimed at achieving more egalitarian and prosperous society by empowering the people of this country by educating them. In the field of the education, therefore, this constitutional goal remains pivotal which makes it distinct and special in contradistinction with other economic activities as the purpose of education is to bring about social transformation and thereby a better society as it aims at creating better human resource which would contribute to the socie-economic and political upliftment of the nation.”

This is crucial, because the justification for regulation under Article 19(6) has gone from the “charitable nature” of education, to education as a public utility. The latter is a far more defensible basis for regulation. The charitable activity argument, which has plagued the Court for quite a few decades, is little more than an imposition of the Court’s personal morality upon unwilling education providers, and entirely at war with reality. Education’s public function, however, is independent of the subjective intention with which providers engage in the business, and is also a constitutional basis for regulation. We can surely hope that the Courts will, after this, gradually abandon the no-profiteering-because-charitable-activity view of education, and move to a conceptual framework that places issues of public good and access at the heart of the enquiry.

Consequently, while parts of the reasoning of the Court’s judgment are open to serious question, there are two important things that the judgment does. First, it places proportionality at the centre of the “reasonableness” enquiry, and lays the groundwork for the future development of jurisprudence along these lines. And secondly, it initiates a shift in the discourse from the charitable character of education, to its role as a public utility. It remains to be seen whether either of these developments will have an impact in the coming years.

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1 Comment

Filed under Freedom of Trade, Public goods

One response to “Modern Dental College vs State of MP: The Supreme Court’s foray into proportionality and public goods

  1. Pingback: The Constitutional Challenge to Aadhaar/PAN – III: The Petitioners’ Rejoinder and the Issues before the Court | Indian Constitutional Law and Philosophy

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