Policy Decisions of the State are not to be disturbed/interfered with unless they are found to be grossly arbitrary or irrational; Supreme Court.

Policy Decisions of the State are not to be disturbed/interfered with unless they are found to be grossly arbitrary or irrational; Supreme Court

Courts cannot usurp the jurisdiction of Decision Makers in the garb of Judicial Review, held Supreme Court of India, while setting aside the Telangana High Court's Orders fixing Fee Structure of Unaided Minority & Non-minority Institutions for Engineering Courses for 2016-17 & 2018-19 academic years in Civil Appeal Nos 5133-35 of 2019 (arising out of SLP (C) No. 30090 of 2018) titled Vasavi Engineering College Parents Association Vs State of Telangana & Ors.

The Supreme Court of India in Islamic Academy of Education & Anr, Vs State of Karnataka & Ors., (2003) 6 SCC 697, directed the establishment in each State, of a Committee to regulate the Fee Structure in Unaided Minority & Non­-minority Educational Institutions. The Telangana Admission & Fee Regulatory Committee (for Professional Courses offered in Private Unaided Professional Institutions) Rules, 2006 were framed under Section 15 read with Sections 3 and 7 of the Telangana Educational Institutions (Regulation of Admission and Prohibition of Capitation Fee) Act, 1983. Under Rule 4 (v), the Committee is required to communicate the Fee Structure determined by it to the State Government for notification.

The Fee Structure so notified, inter alia for the B. E. & B. Tech Courses, for the block period 2016­-2017 to 2018­-2019, on a challenge made by the institutions did not meet the approval of the Learned Single Judge. The matter was remanded back to the Telangana Admission & Fee Regulatory Committee.

On a reconsideration, the Telangana Admission & Fee Regulatory Committee granted some escalation, which was again challenged. Opining that the fixation was not proper, the Learned Single Judge proceeded to fix the Fee Structure to his satisfaction.

Aggrieved, the State of Telangana & the Fee Regulatory Committee assailed the same unsuccessfully before the Division Bench. The Parent’s Association also assailed the impugned orders directly before the Supreme Court, after having been granted leave to do so. Thus, the appeals.

Constitution of India is based on the basic principle of separation of powers, though there is some overlapping. There are mainly three wings of the State, namely, Legislature, Executive and Judiciary. Each wing of the State has the power to act in its own sphere of activity. Legislature is to make laws. Executive is to make policies (subject to law), implement them, and run the administration. Judiciary is to apply laws, interpret laws, and to decide disputes and deliver justice.

This is only a basic description of their activities. Therefore, making policies and executing them comes within the sphere of activities of the Executive. It is not within the power of the Judiciary. Moreover, the Judiciary does not have the expertise and the domain knowledge to make policies or to amend them. On the other hand, the Executive has experts, professionals, administrators, advisors, etc., in a given field and has the expertise to make policies after taking into consideration all aspects of a matter.

It is settled law that policy decisions of the State are not to be disturbed unless they are found to be grossly arbitrary or irrational. In this context reference may be had to the judgment of the Supreme Court in the case of Federation of Railway Officers Association & Ors. Vs. Union of India, (2003) 4 SCC 289, where the court held as follows:
12. In examining a question of this nature where a policy is evolved by the Government judicial review thereof is limited. When policy according to which or the purpose for which discretion is to be exercised is clearly expressed in the statute, it cannot be said to be an unrestricted discretion.

On matters affecting policy and requiring technical expertise the Court would leave the matter for decision of those who are qualified to address the issues. Unless the policy or action is inconsistent with the Constitution and the laws or arbitrary or irrational or abuse of power, the Court will not interfere with such matters.

Reference may also be had to the judgment of the Supreme Court in the case of Directorate of Film Festivals & Ors. Vs. Gaurav Ashwin Jain & Ors., (2007) 4 SCC 737, where the Court held as follows:
16. The scope of judicial review of governmental policy is now well defined. Courts do not and cannot act as Appellate Authorities examining the correctness, suitability and appropriateness of a policy nor are courts Advisors to the executive on matters of policy which the executive is entitled to formulate.

The scope of judicial review when examining a policy of the government is to check whether it violates the fundamental rights of the citizens or is opposed to the provisions of the Constitution, or opposed to any statutory provision or manifestly arbitrary. Courts cannot interfere with policy either on the ground that it is erroneous or on the ground that a better, fairer or wiser alternative is available. Legality of the policy, and not the wisdom or soundness of the policy, is the subject of judicial review.

The scope of judicial review in policy matters is no longer res integra.

It is settled law that the Court would not ordinarily interfere with the policy decision of the executive unless the same can be faulted on the grounds of malafides, unreasonableness, arbitrariness or unfairness, in which case the policy would render itself to be declared unconstitutional.

In State of Punjab & Ors. Vs Ram Lubhaya Bagga & Ors., (1998) 4 SCC 117, it was held thus;
........When Government forms its policy, it is based on number of circumstances on facts, law including constraints based on its resources. It is also based on expert opinion. It would be dangerous if Court is asked to test the utility, beneficial effect of the policy or its appraisal based on facts set out in affidavits. The Court would dissuade itself from entering into this realm which belongs to the executive. It is within this matrix that it is to be seen whether the new policy violates Article 21when it restricts reimbursement on account of its financial constraints.

On similar lines was the pronouncement of Apex Court in case of Ugar Sugar Works Ltd. Vs Delhi Administration & Ors; (2001) 3 SCC 635, wherein the Apex Court held as under:
The challenge, thus, in effect, it to the executive policy regulating trade in liquor in Delhi. It is well settled that the Courts, in exercise of their power of judicial review, do not ordinarily interfere with the policy decisions of the executive, unless the policy can be faulted on grounds of mala fide, unreasonableness, arbitrariness or unfairness etc. Indeed, arbitrariness, irrationality, perversity and mala fide will render the policy unconstitutional.

However, if the policy cannot be faulted on any of these grounds, the mere fact that it would hurt business interests of a party, does not justify invalidating the policy. In tax and economic regulation cases, there are good reasons for judicial restraint, if not judicial deference to the judgment of the executive. The Courts are not expected to express their opinion as to whether at a particular point of time or in a particular situation any such policy should have been adopted or not. It is best left to the discretion of the State,

In Balco Employees Union (Regd.) Vs Union of India & Ors;
(2002) 2 SCC 333, the Apex Court in Paragraph 92 & 98 held as under:
92. In a democracy, it is the prerogative of each elected Government to follow its own policy. Often a change in Government may result in the shift in focus or change in economic policies. Any such change may result in adversely affecting some vested interests. Unless any illegality is committed in the execution of the policy or the same is contrary to law or mala fide, a decision bringing about change cannot per se be interfered with by the Court.

98. In the case of a policy decision on economic matters, the Courts should be very circumspect in conducting any enquiry or investigation and must be most reluctant to impugn the judgment of the experts who may have arrived at a conclusion unless the Court is satisfied that there is illegality in the decision itself.

This view has recently been reiterated by the Apex Court in Parisons Agrotech Private Limited & Anr Vs Union of India & Ors; (2015) 9 SCC 657, the Supreme Court observed as under:
14. No doubt, the Writ Court has adequate power of judicial review in respect of such decisions. However, once it is found that there is sufficient material for taking a particular policy decision, bringing it within the four corners of Article 14 of the Constitution of India, power of Judicial Review would not extend to determine the correctness of such a policy decision or to indulge into the exercise of finding out whether there could br more appropriate or better alternatives.

Once we find that parameters of Article 14 are satisfied; there was due application of mind in arriving at the decision which is backed by cogent material; the decision is not arbitrary or irrational and; it is taken in public interest, the Court has to respect such a decision of the Executive as the policy making is the domain of the Executive and the decision in question has passed the test of the Judicial Review.

Supreme Court while allowing the Civil Appeal No 5133 of 2019 (arising out of SLP (C) No.30090 of 2018) titled Vasavi Engineering College Parents Association Vs State of Telangana & Ors. held that:
17. Judicial review, as is well known, lies against the decision­ making process and not the merits of the decision itself. If the decision­ making process is flawed inter alia by violation of the basic principles of natural justice, is ultra­vires the powers of the decision maker, takes into consideration irrelevant materials or excludes relevant materials, admits materials behind the back of the person to be affected or is such that no reasonable person would have taken such a decision in the circumstances, the court may step in to correct the error by setting aside such decision and requiring the decision maker to take a fresh decision in accordance with the law.

The Court in the garb of Judicial Review, cannot usurp the jurisdiction of the decision maker and make the decision itself. Neither can it act as an Appellate Authority of the Telangana Admission & Fee Regulatory Committee.

In Fertilizer Corporation Kamgar Union (Regd.), Sindri v Union of India, (1981) 1 SCC 568, it was observed:
35. ….We certainly agree that judicial interference with the administration cannot be meticulous in our Montesquien system of separation of powers. The court cannot usurp or abdicate, and the parameters of judicial review must be clearly defined and never exceeded. If the directorate of a government company has acted fairly, even if it has faltered in its wisdom, the court cannot, as a super auditor, take the Board of Directors to task.

This function is limited to testing whether the administrative action has been fair and free from the taint of unreasonableness and has substantially complied with the norms of procedure set for it by rules of public administration.

18. Judicial restraint in exercise of Judicial Review was considered in the State of (NCT) of Delhi Vs Sanjeev, (2005) 5 SCC 181 as follows:
16.…One can conveniently classify under three heads the grounds on which administrative action is subject to control by Judicial Review. The first ground is illegality, the second irrationality, and the third procedural impropriety.

These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (commonly known as CCSU case). If the power has been exercised on a non-­consideration or non-­application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated.

19. It needs no emphasis that complex executive decisions in economic matters are necessarily empiric and based on experimentation. Its validity cannot be tested on any rigid principles or the application of any straitjacket formula. The Court while adjudging the validity of an executive decision in economic matters must grant a certain measure of freedom or play in the joints to the executive. Not mere errors, but only palpably arbitrary decisions alone can be interfered with in judicial review.

The recommendation made by a statutory body consisting of domain experts not being to the satisfaction of the State Government is an entirely different matter with which we were not concerned in the present discussion. The Court should therefore be loath to interfere with such recommendation of an expert body, and accepted by the Government, unless it suffers from the vice of arbitrariness, irrationality, perversity or violates any provisions of the law under which it is constituted.

The Court cannot sit as an appellate authority, entering the arena of disputed facts and figures to opine with regard to manner in which the TAFRC ought to have proceeded without any finding of any violation of rules or procedure. If a statutory body has not exercised jurisdiction properly the only option is to remand the matter for fresh consideration and not to usurp the powers of the authority.

In Peerless General Finance & Investment Co. Ltd. Vs Reserve Bank of India, (1992) 2 SCC 343. it was observed;
31. The function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably. Courts are not to interfere with economic policy which is the function of experts.

It is not the function of the Courts to sit in judgment over matters of economic policy and it must necessarily be left to the expert bodies. In such matters even experts can seriously and doubtlessly differ. Courts cannot be expected to decide them without even the aid of experts.
20. In the context of Indian jurisprudence, the Constitution is the supreme law.

All executive or legislative actions have to be tested on the anvil of the same. Such actions will have to draw their sustenance as also their boundaries under the same. Any action falling foul of the constitutional guarantees will call for corrective action in Judicial Review to ensure adherence to the constitutional ethos. But so long as the fabric of the constitutional ethos is not set asunder, the Court will have to exercise restraint, more particularly in matters concerning domain experts, else the risk of justice being based on individual perceptions which may render myths as realities inconsistent with the constitutional ethos.

Courts often adjudicate disputes that raise the question of how strictly should they scrutinise executive or legislative action. Therefore, Courts have identified certain questions as being inappropriate for judicial resolution or have refused on competency grounds to substitute their judgment for that of another person on a particular matter.

23. Islamic Academy of Education (supra) was a sequel to T. M. A Pai Fountain & Ors. Vs State of Karnataka & Ors., (2002) 8 SCC 481, which was being understood in different perspectives leading to several litigations.

The fixation of fee by the TAFRC is not an adversarial exercise but is meant to ensure balance in the fee structure between the competing interest of the students, the institution and the requirement and desire of the society for accessible quality education. It is but a part of the high concept of fairness in opportunities and accessibility to education, which is an avowed constitutional goal. But to equate it to the extent of a right to challenge and interference only on basis of a different view being possible, cannot be a justification to interfere with the recommendation of an expert committee.

It is nobody’s case that the TAFRC has acted contrary to principles of accounting and economics or any fundamental precincts of the same. In this context, the following observations in Modern School Vs Union of India, (2004) 5 SCC 583, are considered relevant in the necessary extract. 20.

We do not find merit in the above arguments. Before analysing the rules herein, it may be pointed out, that as of today, we have Generally Accepted Accounting Principles (GAAP). As stated above, commercialisation of education has been a problem area for the last several years. One of the methods of eradicating commercialisation of education in schools is to insist on every school following principles of accounting applicable to not­ for ­profit organisations/non­ business organisations….

51. Indisputably, the standard of education, the curricular and co­-curricular activities available to the students and various other factors are matters which are relevant for determining of the Fee Structure. The Courts of law having no expertise in the matter and/or having regard to their own limitations keeping in view the principles of Judicial Review always refrain from laying down precise formulae in such matters. Furthermore, while undertaking such exercise the respective cases of each institution, their plans and programmes for the future expansion and several other factors are required to be taken into consideration.

The Constitution Bench in Islamic Academy of Education which as noticed hereinbefore subject to making of an appropriate legislation directed setting up of two Committees, one of which would be for determining fee structure. This Court, both in T. M. A. Pai Foundation & Islamic Academy of Education had upheld the rights of the minorities and unaided private institutions to generate a reasonable surplus for future development of education.

24. Before concluding the discussion, in view of the reasons stated by the High Court for fixation of the appropriate Fee Structure by itself, reference may usefully be made to the observations in D. N. Jeevaraj Vs Chief Secretary, Government of Karnataka, (2016) 2 SCC 653, as follows:
43. To this we may add that if a Court is of the opinion that a statutory authority cannot take an independent or impartial decision due to some external or internal pressure, it must give its reasons for coming to that conclusion. The reasons given by the Court for disabling the statutory authority from taking a decision can always be tested and if the reasons are found to be inadequate, the decision of the Court to by­pass the statutory authority can always be set aside.

If the reasons are cogent, then in an exceptional case, the Court may take a decision without leaving it to the statutory authority to do so. However, we must caution that if the Court were to take over the decision taking power of the statutory authority it must only be in exceptional circumstances and not as a routine……

The recommendations of the Telangana Admission & Fee Regulatory Committee being the resultant of a quasi-judicial decision making process, it will undoubtedly be amenable to the jurisdiction of the Court for scrutiny by Judicial Review, so as to ensure adherence to the constitutional principles of reasonableness, fairness and adherence to the law under Article 14 of the Constitution, the Bench said.

The Court, in the garb of Judicial Review, cannot usurp the jurisdiction of the decision maker and make the decision itself. Neither can it act as an Appellate Authority of the Telangana Admission & Fee Regulatory Committee, held the Bench comprising of Justices Arun Mishra & Naveen Sinha.

We, therefore, hold that the High Court exceeded its jurisdiction in interfering with the recommendation of the Telangana Admission & Fee Regulatory Committee for reasons discussed. The Orders/Judgments of the High Court are set aside. The recommendation of the TAFRC dated February 04, 2017 for the block period 2016-2017 & 2018-2019 is restored, the Supreme Court said.

It said that not mere errors, but only palpably arbitrary decisions alone can be interfered with in Judicial Review. The Court should therefore be loath to interfere with such recommendation of an expert body, and accepted by the Government, unless it suffers from the vice of arbitrariness, irrationality, perversity or violates any provisions of the law under which it is constituted, the Bench said.

Written By: Dinesh Singh Chauhan, Advocate
J&K High Court of Judicature, Jammu.
Email: [email protected], [email protected]