Allowed

M/s. Sibar Institute of Dental Sciences, v. The State of Andhra Pradesh

Andhra Pradesh HC5 Oct 2021WP/9659/2021

Case brief

AI extract

What is this about?

A single judge dismissed writ petitions challenging a fee structure order for private medical colleges. The court set aside the Government Order because the regulating Commission failed to issue individual speaking orders addressing specific objections after provisional fee proposals were made.

What did the court decide?

Impugned G.O.Ms.No.42 dated 15.04.2021 and Commission's fee fixation orders dated 06.04.2021 set aside; Commission directed to pass fresh speaking orders within 4 weeks.

M/s. Sibar Institute of Dental Sciences, Vs… — Education and Admissions | Andhra Pradesh HC (2021)

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HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO

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W.P.Nos.9599, 9600, 9601, 9602, 9659, 9690, 10078, 10405, 10409, 10410, 10641, 10643, 12722 and 13020 of 2021

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COMMON ORDER:

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All these writ petitions have been filed by various medical colleges offering medical education in the State of Andhra Pradesh. They are aggrieved by G.O.Ms.No.42, dated 15.04.2021 issued by the State of Andhra Pradesh notifying the fee structure for Post-graduate Medical courses conducted by the petitioners for the block period 2017-2018 to 2019-2020. The Association of Private Medical and Dental Colleges has also filed W.P.No.9690 of 2021.

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As these writ petitions are on the same issue and challenge

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the same Government Order, a common order is being passed in all these cases.

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The fee structure for post-graduate medical courses in the State of Andhra Pradesh for the block period 2017-2018 to 2019-2020 was notified by G.O.Ms.No.70, Health, Medical and Family Welfare (C-1) Department, dated 03.05.2017 on the basis of a consensual agreement dated 02.05.2017 between the State and the Association of the Private Medical Colleges (petitioner in W.P.No.9690 of 2021). This G.O. along with other G.Os were challenged by the students studying in these courses by way of W.P.(PIL).No.131 and 132 of 2017 and batch. The said writ petitions were disposed of by a Division Bench of this Court on 20.01.2021 with certain directions. The said directions are –

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The discretion to fix the fees payable to private institutions is, subject to regulation by the State, with the private institutions.

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The State cannot regulate the fees, in any manner it deems fit. The regulation by the State or any instrumentality of the State is restricted to ensuring that the proposed fee does not involve profiteering or collection of capitation fee.

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The fee proposed by each private institution needs to be verified and regulated on an individual basis and a common uniform fees cannot be fixed as a general fee payable to every institution.

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The observations and directions of the Hon’ble Supreme Court in T.M.A. Pai , Islamic Academy and P.A. Inamdar , would be applicable to matters regulated under G.O.Ms.No.6, dated 08.01.2007. The guidelines in G.O.Ms.No.6, dated 08.01.2007, are to be interpreted and controlled by the directions issued by the Hon’ble Supreme Court.

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The challenge to G.O.Ms.No.70 Health, Medical & Family Welfare (C1) Department, dated 03.05.2017, is rejected.

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The consensual agreement dated 02.05.2017 to the extent of fixation of fees and consequently G.O.Ms.No.72 Health, Medical & Family Welfare (C1) Department, Dated 03.05.2017 and G.O.Ms.No.77 Health, Medical & Family Welfare (C1) Department, Dated 06.05.2017, are set aside on the ground that they fall foul of the directions of the Hon’ble Supreme Court in Islamic Academy and P.A. Inamdar and are also not in accordance with G.O.Ms.No.6, dated 08.01.2007.

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The private institutions shall submit their statements of expenditure incurred, in relation to the courses covered under G.O.Ms.No.72 and G.O.Ms.No.77, for the year 2017-2018, along with all supporting documents to the Commission within two weeks of this Judgement.

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The Commission shall scrutinise all the documents to arrive at the expenditures incurred by the private institutions for the year 2017-2018. For this purpose the Commission can call for all such information and documents it deems fit from the private institutions for the purposes of arriving at the actual expenditures of the private institutions. This exercise shall be completed within a period of three weeks from the date of receipt of the expenditure details from the private institutions.

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The private institutions shall co operate with the Commission and produce all documents required by the Commission.

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The Commission shall inform the private institutions of the expenditure being accepted by the Commission, and propose the fees, in accordance with the directions of the Hon’ble Supreme Court and the guidelines in G.O.Ms.No.6, dated 08.01.2007, for the block period 2017-2018 to 2019-2020 and give an opportunity to the private institutions to file such objections as they may have within two weeks thereafter.

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The Commission, after considering the objections of the private institutions, if any, shall, by way of a speaking order, arrive at the acceptable expenditure for the year 2017-2018 and the fees payable to each private institution, in accordance with the directions of the Hon’ble Supreme Court and the guidelines in G.O.Ms.No.6, dated 08.01.2007, for the block period 2017-2018 to 2019-2020 within two weeks of receipt of the objections and forward the same to the Government for notification. The Fees shall be recommended for each individual institution on the basis of their individual expenditure.

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The Commission, to obviate any challenge of bias on account of the fixation of fees for the period 2020-2021 to 2022-2023, shall carry out the entire exercise without reference to the fees recommended by it or fixed by the Government for the period 2020-2021 to 2022-2023.

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The Government of Andhra Pradesh shall notify the Fees recommended by the Commission within one week of receiving the recommendations.

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Upon such notification, the private institutions shall be entitled to collect or refund the difference between the fees already collected and the notified fees from the students.

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All the parties shall scrupulously adhere to the time lines prescribed here.

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In pursuance to these directions, it is stated that the

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2^nd respondent-commission had forwarded its recommendations, relating

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to fee structure for each medical college, to the Government under letter

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dated 07.04.2020 and thereafter, the Government had issued G.O.Ms.No.42, dated 15.04.2021 notifying the fee structure of the medical colleges in the State of Andhra Pradesh.

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The petitioners have challenged the same by way of this batch of writ petitions, on the ground that the directions of the Division Bench dated 20.01.2021 have not been followed and as there is no speaking order of the 2^nd respondent-commission, as directed under paragraph No.52 (11) of the order of the Division Bench dated 20.01.2021.

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Heard Sri D. Prakash Reddy, learned Senior Counsel representing Sri Chall Gunaranjan, learned counsel for the petitioners, (the other counsel appearing in other writ petitions have adopted the submission of Sri D. Prakash Reddy,) learned Advocate General appearing for the 1^st respondent-State, Sri K.S.Murthy and Sri C. Sudesh Anand appearing for the 2^nd respondent-commission, Sri K.G. Krishna Murthy learned Senior Counsel and Sri G.R. Sudhakar appearing for the students, who had impleaded themselves in the present set of writ petitions; Sri G. Vijayakumar, learned Standing Counsel for Dr. NTR Health University; Sri Vivek Chandra Sekhar S. learned counsel appearing for National Medical Commission and learned Government Pleader for Medical, Health and Family Welfare.

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Sri D. Prakash Reddy, learned Senior Counsel assails the procedure adopted by the 2^nd respondent-commission on two grounds. Firstly, on the ground that a speaking order, as required under Direction No.11 of the order of the Division Bench, has not been passed and secondly, on the ground that the 2^nd respondent-commission did not act in

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accordance with the guidelines in G.O.Ms.No.6, dated 08.01.2007 and the directions of the Hon’ble Supreme Court.

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The chronology of events, as set out by Sri D. Prakash

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Reddy, learned Senior Counsel, are as follows:

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a) Upon a request made by the 2^nd respondent-commission dated 25.01.2021, in pursuance of the directions of the Division Bench, the medical colleges had uploaded their statements of income and expenditure to the 2^nd respondent-commission.

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b) After receipt of the said details, the 2^nd respondent-commission had considered the same in its meeting held on 12.02.2021 and issued notices dated 16.02.2021 and 18.02.2021 setting out the disallowances that would be considered by the commission and also calling for further information from the colleges.

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c) This information was submitted by the colleges and the 2^nd respondent commission had conducted a hearing in which it heard the objections of the medical colleges in the meeting held on 23.02.2021 and 25.02.2021.

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d) The commission held a meeting on 12.03.2021 and the minutes of the said meeting were communicated to the medical colleges on 16.03.2021 and 17.03.2021 calling upon the medical colleges to give their objections to the provisional decision taken by the commission in the meeting held on 12.03.2021.

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e) The medical colleges had submitted their objections on

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27.03.2021 and 30.03.201.

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f) The commission in its meeting held on 06.04.2021 decided the fee structure and forwarded the same to the Government under letter dated 07.04.2021.

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g) The Government issued the impugned G.O.No.42 dated 15.04.2021.

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Sri D. Prakash Reddy, learned Senior Counsel, would submit that the commission, which had followed the schedule set out in the directions of the Division Bench, had failed to pass a speaking order and as such the entire exercise would have to be set aside. Sri D. Prakash Reddy would also submit that a speaking order would mean that the commission would have to consider the objections of the medical colleges and pass orders either accepting or rejecting the said objections by way of giving reasons for such a decision, and thereafter, to forward a copy of the said order to the medical colleges. As such a course of action had not been undertaken, the recommendations of the commission would have to be set aside and consequently G.O.Ms.No.42 dated 15.04.2021.

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Sri D. Prakash Reddy, learned Senior Counsel would also submit that G.O.Ms.No.6, dated 08.01.2007 had set out the guidelines within which the proposals of the private institutions, for fixation of fee, would have to be considered. The Division Bench in Direction Nos.10 and 11 had also required the commission to fix the fee payable to each private institution in accordance with the directions of the Hon’ble Supreme Court and the guidelines in G.O.Ms.No.6 dated 08.01.2007. The commission in its meeting held on 12.03.2021, as recorded in the minutes of the meeting, had also stated that the fees payable to the private institutions would be fixed in accordance with the guidelines set out in G.O.Ms.No.6

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dated 08.01.2007. However, the commission did not follow these guidelines.

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As an example, Sri D. Prakash Reddy, learned Senior Counsel would submit the following:-

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“One of the guidelines set out in G.O.Ms.No.6 dated 08.01.2007 was that the interest paid on any loan taken from a sister concern or from the parent society by the private institution would not be taken into account while determining the expenditure incurred by the private institution for the purpose of fee fixation. However, this guideline was discarded in G.O.Ms.No.12, which laid down the guideline that interest on any loan taken by the private institution was directed to be disallowed. In the present case, the commission instead of following the guideline in G.O.Ms.No.6, dated 08.01.2007 in relation to the admissibility of interest taken from any outside source, had disallowed the interest taken from such third parties.”

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Sri Gunaranjan Challa, learned Counsel appearing for the petitioner in W.P. No. 9600 of 2021, would raise another ground that, the 2^nd respondent Commission heard the students behind the back of the institutions and the Commission without putting the institutions on notice about the issues raised by the students appears to have passed orders partly basing on these allegations made by the students and the same cannot be countenanced.

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Sri C. Sudesh Anand and Sri K.S. Murthy, learned counsel appearing for the 2^nd respondent-commission would submit that the commission had given its recommendations to the Government after a proper enquiry into the matter and strictly in accordance with the directions of the Division Bench. The counsel would also submit that the

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commission in its minutes/order dated 16.02.2021, 18.02.2021, 16.03.2021 and 17.03.2021 had given out all the reasons for fixation of fees and since the subsequent objections of the private institutions did not, in any manner, require any further consideration, the said orders should be treated as speaking orders as required under Direction No.11 of the Division Bench.

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Sri K. G. Krishna Murthy, learned Senior Counsel appearing for the impleaded students, would submit that the purport of the directions of the Division Bench is that the private institutions should be given adequate opportunity to set out their objections and that the commission, after taking into account those objections, should pass necessary orders. He submits that even as per the chronology of events set out by Sri D. Prakash Reddy, learned Senior Counsel, the private institutions were given two opportunities for setting out their objections and the commission, after considering all those objections, had fixed the fees for each individual private institution. He would submit that there has been compliance of the directions of the Division Bench of this Court and the proceedings of the commission and the consequential G.O issued by the Government cannot be faulted on the ground of non-compliance of the directions of the Division Bench.

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Consideration of the Court :

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In view of the submissions made by Sri D. Prakash Reddy, learned Senior Counsel appearing for the petitioners, the scope of this writ petition is reduced to the question – whether the directions of the Division Bench have been followed by the 2^nd respondent-commission or not ? All other issues raised by the Petitioners are left open.

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The said directions required a certain procedure to be followed and certain guidelines to be followed. As far as the procedure that needed to be followed by the commission is concerned, the same was set out in Direction Nos.7 to 11 in the order of the Division Bench of this Court, dated 20.01.2021 in W.P.(PIL).No.131 and 132 of 2017 and batch.

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The facts, which emerge from the pleadings and the arguments on both sides, can be summarised in the following manner.

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a) In Direction No.7 the private institutions were to submit their statements of expenditure incurred in the year 2017-2018 along with supporting documents. This was complied by the 2^nd respondentcommission requesting the private institutions on 25.01.2021 to submit their statements of Income and Expenditure and the said statements being uploaded by the private institutions to the website of the 2^nd respondent-commission.

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b) Direction No. 8 required the commission to scrutinize the documents to arrive at the expenditure incurred by the institutions and also call for such further information and documents it deems fit from the private institutions. This direction was complied by the 2^nd respondentcommission, which had considered the statements of Income and Expenditure in its meeting held on 12.02.2021 and issued notices dated 16.02.2021 and 18.02.2021 giving out a prima facie view of the statement of Income and Expenditure given by the private institutions and calling for further information from the colleges, which was submitted by the private institutions in the meeting held with the 2^nd respondent-commission on 23.02.2021 and 25.02.2021. The 2^nd Respondent sent reminders, dated 03.03.2021, to those institutions which had not given the information and those Institutions submitted some more information.

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c) Direction No.10 required the 2^nd respondent-commission to inform the private institutions of the expenditure being accepted by the commission and propose the fees proposed to be fixed, in accordance with the guidelines under G.O.Ms.No.6, dated 8.01.2007 and the directions of the Hon’ble Supreme Court. Upon such proposal being given the private institutions would have an opportunity to file their objections. This was complied by the 2^nd respondent-commission considering the information given by the petitioners on 23.02.2021 and 25.02.2021 in its meeting held on 12.03.2021 and communicating the provisional decision taken by the 2^nd respondent-commission and directing the private institutions to give their objections to the provisional decision, by notices dated 16.03.2021 and 17.03.2021.

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d) Direction 11 required the Commission to consider the objections raised by the private institutions and pass a speaking order for each institution arriving at the acceptable expenditure for the year 2017-2018 and the fees payable for the block period. The controversy begins here.

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The private institutions had uploaded their objections on 27.03.2021 and 30.03.2021. The 2^nd respondent-commission in its meeting held on 06.04.2021 decided the fee structure and forwarded the same to the Government under letter dated 07.04.2021. The minutes of the meeting dated 06.04.2007 and the covering letter dated 07.04.2007 were not available with the petitioner and the same were filed by the 2^nd respondent-commission.

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The Petitioners contend that the speaking order required, under Direction No. 11 of the order of the Division Bench, has to be passed after the receipt of the objections filed by the petitioners on 27.03.2021 and 30.03.2021 and has to deal with each individual case of

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the institutions. The contention of the learned counsel opposing the Petitioners is that the proceedings of the Commission dated 12.2.2021 and 12.03.2021 should be treated as the speaking order stipulated in Direction No. 11. A look at the communications is necessary to answer the rival contentions in this regard.

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The proceedings dated 16.02.2021, communicating the minutes of the meeting of the Commission held on 12.02.2021, were sent to each individual institution with an attached annexure. In this annexure a table was set out giving the expenditure which was proposed to be disallowed, for that Institution, in one column with the reasons for the proposed disallowance being given in the next column. A closer look at these reasons would show that the said reasons, to a large extent, were essentially a request for further information and for clarifications of the accounts submitted to the Commission. The Commission gave a hearing to the Institutions on 23.02.20221 and 25.02.2021, where the institutions were called upon to furnish the required clarifications/shortfalls within two days. As some of the information was not forthcoming from some of the institutions, reminders were sent to the colleges, by the Commission, on 03.03.2021 to furnish such information including evidence of payment of stipends to the students and other particulars which were required by the auditors, in the meetings held on 23.02.2021 and 25.02.2021. Some of the Institutions were said to have furnished further information.

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In the further communication dated 16.03.2021, the commission communicated the minutes of the meeting of the 2^nd respondent-commission held on 12.03.2021. The 2^nd respondentcommission had also attached separate notices to the minutes, setting out the provisional fee structure proposed for each individual institution. In

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this individual notice, a worksheet for evaluation of the proposed tuition fee was attached, in which disallowances were set out along with reasons on the basis of which, the said disallowances are proposed. The Commission, in paragraph-11 of its minutes of the meeting held on 12.03.2021 stated as follows:

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“The Fees proposed by the commission for the block period 2017-18 to 2019-20 are in accordance with the directions of the Hon’ble Supreme Court/High Court, Rules and Guidelines issued in G.O.Ms. No. 6 dated 08.01.2007. The concerned institutions are hereby given opportunity to file objections in writing, if any, within two (2) weeks from the date of receipt of the proceedings failing which the provisional order will become final”

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The Communication of the Commission dated 16.03.2021,

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stated as follows:

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“Based on the above, the Commission has proposed the provisional fee structure for the P.G. Medical course(s) of your college. The proceedings of the Commission dated 12.03.2021 and the worksheet(s) showing the provisional fee structure are herewith enclosed. Accordingly, you are called upon to submit your objections, if any, in writing within two (2) weeks from today, failing which the Provisional fee structure will become final.”

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Thereafter, the institutions had given their objections on 27.03.2021 and 30.03.2021 and speaking orders would have to be passed on these objections.

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The Commission itself had held that its communications of 16.02.2021 and 16.03.2021 are provisional orders against which the institutions were entitled to file objections. Once such objections have

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been filed, the Commission would have to consider the same and pass a speaking order.

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Apart from this, there is a difference in the fees proposed by the Commission in its communication of 16.03.2021 and the fees proposed in the communication of 07.04.2021. By way of an example the cases of the petitioners in W.P.No. 9599 and 9600 are taken up.

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26. The following table would show the said difference:

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Name of the		Con	venor	Manag	ement	N.	R.I
Petitioner	Course	16.03.2021	06.04.2021	16.03.2021	06.04.2021	16.03.2021	06.04.2021
		Rs.	Rs.	Rs.	Rs.	Rs.	Rs.
WPNo.9599/2021 Alluri Sitarama	Clinical	3,76,627	3,85,936	11,29,882	11,57,807	Actual fee collected	Actual fee collected
Raju Academy of Medical Sciences (ASRAM)	Paraclinical	1,04,565	1,06,782	2,09,130	2,13,564	Nil	Nil
WPNo.9600/2021 Katuri Medical College	Clinical	3,52,709	3,59,500	10,58,127	10,78,500	Actual fees collected	Actual fee collected
	Paraclinical	NIL	NIL	NIL	NIL	NIL	NIL

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Though no reasons are given for this variation in the

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calculation of the fees, the fact would remain that the Commission had modified its earlier view and obviously even the commission is not considering the said orders as final orders. The contention that the communications of 16.02.2021 and 16.03.2021 of the Commission should be treated as the speaking orders required under Direction No. 11 of the order of the Division bench cannot be accepted.

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The question that now arises in whether the Letter dated 07.04.2021 or the minutes of the meeting of the commission held on 06.04.2021 can be treated as a speaking order recommending fees for each individual institution on the basis of their individual expenditure? Before looking at the said proceedings, it is necessary to consider what

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would amount to a speaking order that was directed under direction No.11 of the judgement of the division bench.

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The Division Bench in its direction Nos.2 to 4 had observed

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as follows:

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The State cannot regulate the fees, in any manner it deems fit. The regulation by the State or any instrumentality of the State is restricted to ensuring that the proposed fee does not involve profiteering or collection of capitation fee.

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The fee proposed by each private institution needs to be verified and regulated on an individual basis and a common uniform fees cannot be fixed as a general fee payable to every institution

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The observations and directions of the Hon’ble Supreme Court in T.M.A. Pai , Islamic Academy and P.A. Inamdar , would be applicable to matters regulated under G.O.Ms.No.6, dated 08.01.2007. The guidelines in G.O.Ms.No.6, dated 08.01.2007, are to be interpreted and controlled by the directions issued by the Hon’ble Supreme Court.

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This would mean that each institution was entitled to fix its own fee structure and the task of the 2^nd respondent Commission was to look at the expenditure incurred by the Institutions and fix the fees. In the process of taking the said expenditure into account, the Commission was required to verify whether the expenditure claimed by the institutions was inadmissible under the guidelines given in G.O.Ms.No.6, subject to the guidelines given in the judgements of the Hon’ble Supreme Court. That determination was to be done by way of a speaking order by giving reasons as to which expenditures were admissible and which expenditures were inadmissible, in each individual case.

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Therefore the Commission would have to inform each institution as to the expenditures which are accepted, the expenditures

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which are disallowed, the income which is accepted, the income which will be added with reasons being given to each institution as why such a decision is being taken in relation to each institution. A general discussion as to what are admissible and inadmissible expenses and what incomes are to be added would not meet the requirement of Direction No. 11. Even otherwise, the orders of the 2^nd Respondent Commission would have to meet the requirements of principles of natural Justice. A reasoned order is one of the fundamental precepts of the principles of natural justice, as any higher forum, before whom, such an order is challenged, would need to know the reasons and grounds on which the primary authority had passed its order so as to determine whether those reasons are valid and germane to the decision.

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The minutes of the meeting of the Commission held on 06.04.2021 and the covering letter of 07.04.2021 have been filed into this court by the Commission. Paragraphs 1 to 12 of the minutes of the meeting of 12.03.2021 are a repetition of the minutes of the meeting held on 12.02.2021. The order effectively starts from Para 14 which is a general statement that all objections have been considered.

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The Commission, in paragraph 15 states that “The objections were considered college-wise specifically along with calculation worksheets and generally as follows:” However, there is no discussion of the individual objections of the institutions. The discussion set out in paragraphs 15 and 16 is a general discussion. The work sheets attached to the said communication contain details of expenditures and income accepted by the Commission, in relation to each Institution. However, the reasons for such disallowances are not set out individually. The said proceedings are not in compliance of Direction No. 11 of the order of the

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Division Bench, which required the consideration of the objections of the Institutions at the individual level.

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Another issue arises on account of the observations of the Commission in Paragraph 13 of the minutes. It is stated that there was a direction by a Division Bench of the erstwhile High Court of Andhra Pradesh in Consortium of Engineering Colleges Managements Association (CECMA), Hyderabad and Ors., v. Government of Andhra Pradesh and Ors.,¹ that there should be a uniform fee for the Convenor Quota and management Quota of seats. However, the Commission fixed separate fees for the students in the Convenor Quota and the Management Quota. No explanation is given in the minutes as to why the Commission, after noticing the above judgement had deviated from the said directions.

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In the circumstances, it would have to be held that the 2^nd respondent-commission had not acted in accordance with the Direction No.11 of the Division Bench, which requires the commission to issue a speaking order in relation to each individual private institution. Consequently, the impugned G.O.Ms.No.42, dated 15.04.2021, which is based on the above proceedings, would also have to go.

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Accordingly, these writ petitions are allowed with the following directions:

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A) The fixation of fees by the 2^nd respondent Commission in its meeting held 06.04.2021 and the communication of the 2^nd Respondent Commission to the 1^st Respondent Government dated 07.04.2021 is set aside.

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1 (2013) 3 ALD 572

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B) G.O.Ms.No.42, dated 15.04.2021, issued by the 1^st Respondent is set aside.

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C) The 2^nd respondent Commission shall pass fresh orders in all the cases of the institutions, whose fees have been fixed under G.O.Ms.No.42 dated 15.04.2021, within 4 weeks from today.

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D) The said orders will be passed by the Commission, after considering the objections of the institutions, which have already been filed before the Commission. In case the Commission is considering any other material, which has not been put to the institutions, the same would have to be put to the institutions and considered only after hearing them.

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E) The Commission shall pass speaking orders, fixing the fee structure, for the block period 2017-18 to 2019-20, giving reasons, in relation to each individual Institution.

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F) The orders of fixation of fees shall be forwarded to the 1^st respondent Government which shall notify the said fees within one week of receiving the said orders from the 2^nd Respondent Commission.

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As a sequel, pending miscellaneous petitions, if any, shall stand

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closed. There shall be no order as to costs.

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________________________ R. RAGHUNANDAN RAO, J

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05^th October, 2021

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