RUSTOM KERAWALLA FOUNDATION versus STATE OF MAHARASHTRA AND ORS.

Citation: [2017] 13 S.C.R. 330 · Decided: 03-08-2017 · Supreme Court of India · Bench: ADARSH KUMAR GOEL · Disposal: Disposed off

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Judgment (excerpt)

A 
[2017] 13 S.C.R. 330 
RUSTOM KERAWALLA FOUNDATION 
V. 
STATE OF MAHARASHTRA AND ORS. 
(Civil Appeal No. 3696 of2017) 
B 
AUGUST03,2017 
c 
D 
[ADARSH KiuMAR GOEL AND UDAY UMESH LALIT, JJ.] 
Maharashtra Educational Institutions (Prohibition of 
Capitation Fe'!) Act. 1987 - Appellant-Foundation runs a School -
Whether the Appellants are entitled to take the entirety of lease rent 
into account while having the fee structure approved in terms of 
provisions of the Act and if not, what should be the correct 
approach - Held: Under sub-clause (b) to s.4(2) of the Act the State 
is empowered, to exclude certain expenditure in regulating fees 
collected by the educational institution - The exercise on part of 
State Government must be guided to arrive at a just balance between 
two essentials. one-interest of the unaided institution to have a just 
and reasonable fee structure and other -the very purpose of the 
legislation to curb the capitation fee - In instant case, the plot of 
land of school came to be allotted not through normal competitive 
E 
channels but purely under discretionwy quota - Consideration 
payable for th~ plot was not guided by market conditions, and public 
property was made over purely for sub-serving public interest -
The land in question was originally given by MHADA (Maharashtra 
Housing and Area Development Authority) on behalf of the State 
F 
Government at concessional rate to MP MCT (Trust) - Thereafter. a 
tripartite agreement was executed between the MHADA, MPMCT 
and a limited company - Consequent to which the said plot of land 
was sub-leased, to the company, which in turn gave leasehold rights 
to the appellant-Foundation to run the School from the building 
situated - The appellant-Foundation is paying rupees 2.5 crores 
G 
every year towards rent - Respondent No.3 is not off" the mark in 
contention thai in the process substantial sums of money are being 
made over to Me company in which the trustees of the Foundation 
are the only directors - Since, the lease deed and subsequent lease 
deed in the present case was on non-competitive basis and purely 
H 
on discretion{j1y quota of the State Government. the locational 
advantages of the land ought to be completely severed and 
330 
RUSTOM KERAWALLA FOUNDATION v. STATE OF 
331 
MAHARASHTRA AND ORS. 
segregated and what should be basis for computation must be purely 
A 
that what was expended "on land and building" - Matter 
accordingly remanded to the State Government for fresh 
consideration - MHADA (Disposal of Land) Regulations 1982 -
regn.16. 
Disposing of the appeals and transfer petitions, the Court 
B 
HELD: 1. On perusal of documents on record, it 'shows 
that the allotment in question was made by Maharashtra Housing 
and Area Development Authority (MHADA) pursuant to the 
decision of the State Government to lease out a plot of land under 
2% discretionary quota of the State Government, in terms of c 
Regulation 16(2) ofMHADA (Disposal of Land) Regulati~ns 1982. 
In the instant case, the plot ofland came to be allotted not through 
norn.ial competitive channels but purely under discretionary quota. 
The consideration payable for the plot was also not guided by 
market conditions, and public property was made over purely for 
sub-serving public interest. Going by the test laid down that aid D 
may take several forms and that when public property or funds 
arc given as grant, they carry public character wherever they go, 
the allotment made by MHADA at the instance of the Q9vernment 
in favour of a lessee can certainly be termed as "aid". As laid 
down in Unni Krishnan J.P. case, among others, the condition 
that the institution shall not be entitled to charge any fees higher 
than what is charged in Government htstitutions for similar 
courses, shall be understood to be the condition of grant of aid. 
The fact however remains that the lessee spent Rs.40.17 lakhs 
only for allotment of 6032 Sq. mtrs. through non-competitive 
mode. [Paras 13, 16] [353-G-H; 355-E-G; 356-B] 
2.1 Section 3(1) of the Maharashtra Educational Institutions 
(Prohibition of Capitation Fee) Act, 1987 prohibits demand or 
collection of any capitation fee from any student in consideration 
of hi.s admission to, and prosecution of any course of study, or 
promotion to a higher standard or class in any educational 
institution. The definition of educational institution under Section 
2(b) means.a school including kindergarten, pre-primary, balwadi 
or nursery,

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