Fee Fixation: AP High Court Backs Commission's Data Demands But Mandates Sharing Worksheets & Rejects Expenditure 'Slabs' Under APHERMC Rules - 2025-07-15

AP High Court Balances Power and Transparency in Engineering College Fee Dispute

Amaravati: In a significant ruling that redefines the contours of fee regulation for private higher education in Andhra Pradesh, the High Court has upheld the authority of the Andhra Pradesh Higher Education Regulatory and Monitoring Commission (APHERMC) to demand extensive financial data from engineering colleges, while simultaneously mandating greater transparency and striking down the practice of imposing arbitrary caps on expenditure.

A Division Bench comprising Chief Justice Dhiraj Singh Thakur and Justice Ravi Cheemalapati delivered a nuanced judgment, modifying a single-judge order and setting a new course for the contentious process of fee fixation for the 2023-26 block period.

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Background of the Dispute

The case stems from a series of writ petitions filed by private unaided engineering colleges and their associations challenging a 2022 notification by the APHERMC. The notification required them to furnish detailed financial data as per 31 prescribed schedules to determine the fee structure for the 2023-26 block period.

The colleges argued that the data demanded was "unnecessary, irrelevant, and cumbersome," making compliance "not humanly possible." They specifically contested the relevance of 13 schedules, including those for legal and gardening expenses, society balance sheets, and tax deduction details. A single-judge bench had previously granted them interim relief from submitting some of this data. The single judge later quashed a government order (G.O.Ms.No.41) that defined an all-inclusive fee structure and directed the Commission to furnish worksheets and refrain from setting expenditure slabs.

This led to the present appeals by the Commission before the Division Bench.

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Key Arguments

For the Commission (Appellant): Senior Counsel Mr. P. Veera Reddy argued that the detailed data across all 31 schedules was essential to prevent "profiteering and commercialization of education." He contended that colleges often inflate expenses under heads like legal fees, gardening, and seminars to justify higher fees. Citing past instances where colleges claimed expenses ranging from ₹5 lakhs to ₹1 crore for gardening, he defended the Commission's decision to set "slabs" or caps on such expenditures as a measure to protect students from bearing the burden of inflated costs.

For the Colleges (Respondents): Senior Counsel Mr. N. Subba Rao, representing the colleges, relied on Supreme Court precedents, particularly Cochin University of Science and Technology v. Thomas P. John , to argue that educational institutions should not be scrutinized "as before a Chartered Accountant." They maintained their autonomy in fee fixation, with the state's role limited to preventing profiteering, not micromanaging every expense.

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The Court's Legal Analysis and Precedents

The Division Bench meticulously balanced the principles laid down by the Supreme Court in landmark cases.

TMA Pai Foundation v. State of Karnataka: The Court acknowledged the principle that private unaided institutions have the right to determine their own fee structure to maintain quality and infrastructure.

Islamic Academy of Education v. State of Karnataka & P.A. Inamdar v. State of Maharashtra: The Bench also emphasized the corollary principle that education is charitable in nature and cannot involve profiteering. This justifies the existence of a regulatory committee to scrutinize fee proposals based on genuine expenditure and reasonable surplus (6% to 15%) for growth.

The Court held that the Commission's power to demand information under Regulation 4.4 of the APHERMC Regulations, 2020, is broad and necessary for its function.

"In the instant case, information that is sought in terms of Schedules does not appear to us to be in any manner, irrelevant or beyond the scope of powers, which are otherwise vested in the Commission," the Bench observed.

However, the Court found no legal basis for the Commission's practice of fixing rigid expenditure slabs.

"There cannot be any slabs fixed by the Commission which is entrusted with the job of only scrutinizing whether the fee which is claimed under those heads is justified or not. Each case will have to be scrutinized individually and the expense would have to be justified by that particular institution."

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Final Verdict and Directions

The High Court set aside parts of the single-judge order while upholding others, issuing a comprehensive set of directions to resolve the impasse:

1. Full Data Submission: All colleges must furnish the complete data as required under Schedules 1 to 31 of the 2022 notification within two weeks.
2. No Expenditure Slabs: The Commission is barred from imposing pre-determined "slabs" or caps on expenditure heads like gardening or seminars. Each claim must be assessed on its individual merit.
3. Worksheet Transparency: The Commission must provide its "worksheets" to each institution, showing how the fee was calculated and which claims were disallowed. This is crucial for a "meaningful" opportunity to be heard, as mandated by Rule 8(3).
4. Fee Determination: The Commission will re-determine the fee structure strictly in accordance with Rule 8(4) of the APHERMC Rules, 2019, which lists factors like location, course nature, infrastructure cost, and reasonable surplus.
5. All-Inclusive Fee Upheld: The Court overturned the single judge's finding against an all-inclusive fee, stating that the definition of 'fee' in Rule 2(b) is inclusive, not exhaustive, and can cover various charges beyond tuition and development fees.
6. Tentative Fees: The fees notified by the government in July 2024 will remain tentative and subject to the final determination by the Commission following these directions.

This judgment establishes a procedural framework that respects the regulatory power of the state while ensuring that the process is transparent, rational, and not arbitrary, providing a clear path forward for both the regulators and the educational institutions in Andhra Pradesh.