State's 'Absolute Discretion' Under S.109(3)(d) MPU Act for College LOI Guided by Relevant Factors, Not Arbitrary: Bombay High Court - 2025-04-27

Bombay High Court Upholds State 's Discretion in Granting Letter of Intent for New Colleges

Pune/Mumbai: The Bombay High Court has dismissed petitions challenging the Maharashtra government's decision to grant Letters of Intent (LOI) for establishing new colleges in Haveli, Pune, while rejecting the petitioners' proposals. The court, comprising Justices A. S. Chandurkar and Jitendra Jain , held that the State's "absolute discretion" under Section 109(3)(d) of the Maharashtra Public Universities Act, 2016 (MPU Act) is not arbitrary but must be exercised based on relevant factors.

The judgment, pronounced on February 21, 2024, stems from two writ petitions (WP No. 6256 of 2022 filed by M/s. Jagruti Foundation and WP No. 9694 of 2022 by Sanjay Modak Education Society) challenging a Government Resolution (GR) dated April 20, 2022. This GR granted LOIs to three respondent institutions ( Jaywant Shikshan Prasarak , Loksevak Pratishthan, and Sant Tukaram Shikshan Sanstha) and refused the petitioners' proposals.

Background of the Case

The dispute arose from the Savitribai Phule Pune University's five-year perspective plan (2018-2023) for increasing colleges. Pursuant to this, the State issued a GR on September 15, 2017, outlining the procedure for setting up new colleges. Applicants, like the petitioners, submitted proposals to the University, which would scrutinize them, conduct site visits, and make recommendations to the State government. The State then had the power to issue LOIs.

The petitioners had applied in December 2017. In the first round, their proposals were refused while LOIs were granted to the three respondent institutions via a GR dated February 28, 2018. This decision was challenged in WP No. 4805 of 2018. The High Court, in its order dated December 2, 2021, quashed the earlier GR and the refusal letter to the petitioners, remanding the matter for fresh consideration by the State government, primarily due to the lack of reasons for the refusal in the original order, which were later attempted to be supplemented in affidavits. The State was directed to pass a fresh order within one week. Following this, the impugned GR of April 20, 2022, was issued, again granting LOIs to the same three institutions and refusing the petitioners.

Petitioners' Arguments

The petitioners contended that the reasons cited by the State for refusing their proposals were irrelevant and discriminatory, violating Article 14 of the Constitution. The State's reasons included the petitioners being "comparatively new" (established in 2005 vs. 1991-1998 for others), having "less financial position," "number of schools/colleges run is NIL," and possessing "less movable and immovable properties."

The petitioners argued that the University's initial report had found them eligible and even given them preference, noting good financial position and experience through their trustees. They also highlighted that they were located in a hilly area lacking educational facilities and argued that criteria like NAAC accreditation were irrelevant at the LOI stage for a new institution. They alleged political considerations in the grant of LOIs and pointed out alleged infirmities in the proposals of the selected institutions, such as identical project reports between two respondents and insufficient land details in another's submission.

Respondents' Counter-Arguments

The State respondents defended their decision, stating that they considered relevant factors as per the MPU Act and the 2017 GR, including academic and social status, experience, financial capacity, and local demand. They presented a comparative tabular statement justifying their choices. They argued that the petitioners' financial position and infrastructure were weaker, pointing to limited cash reserves, rental premises, and a lack of owned immovable property mentioned in their proposal. They questioned the validity of a Gram Panchayat certificate regarding the hilly nature of the area and argued that their decision, being a policy matter, warranted limited judicial review.

The respondent institutions echoed the State's arguments, emphasizing their longer existence, experience in running educational institutes (including degree colleges), better financial standing, and infrastructure compared to the petitioners. They supported the State's comparative analysis and submitted that the selection process was not arbitrary.

Court's Analysis and Decision

The High Court meticulously analyzed the scheme under Chapter X of the MPU Act, particularly Section 109, which outlines the procedure for permission, affiliation, and recognition. The court clarified that its scope of judicial review in such policy-based decisions is limited to the "decision making process" and not the merits of the decision itself. Intervention is warranted only if the decision is arbitrary, unfair, illegal, irrational, or unreasonable.

Interpreting the phrase "absolute discretion" in Section 109(3)(d), the bench referred to the Supreme Court's decision in State of Gujarat Vs. M/s.Krishna Cinema & Ors. and held that this phrase does not confer arbitrary power. It is diluted by the subsequent words requiring the State to take into account "relevant factors, the suitability of the management, State level priority," etc. The court found these factors to be illustrative, allowing the State to consider other relevant aspects for an educational institution.

Applying this to the facts, the court found that the State's decision to grant LOIs was based on a comparative analysis of relevant factors such as the age/experience of the institution, existing educational infrastructure (schools/colleges run), financial capacity, and availability of property/infrastructure. The court deemed these factors "germane for deciding the suitability of the institution proposing to set up the educational institution."

The court rejected the petitioners' argument that factors like infrastructure and finance should only be considered at the final approval stage (Section 109(3)(g)). It reasoned that Section 109 outlines a multi-stage filtering process, and considering these parameters at the LOI stage is a valid way to select the best proposals.

While acknowledging the similarities in the project reports of two respondent institutions, the court noted that the State's decision was based on other factors (age, finance, existing institutions) as per the tabular statement, not on the project reports themselves. Thus, the decision-making process was not vitiated on that ground. The court also distinguished the Supreme Court precedents cited by the petitioners, finding them inapplicable to the specific context of educational institution suitability under the MPU Act or the facts of the case.

Regarding the allegation of political influence, the court noted the lack of material evidence and pointed out that one of the petitioners had also submitted a recommendation letter from a sitting MLA, weakening their argument. The contention that the perspective plan had expired was also dismissed, as the delay was partly attributable to the petitioners' own litigation and obtained stay orders.

Conclusion and Observations

Finding no perversity, arbitrariness, or extraneous factors in the State's decision-making process, the court concluded that it would not be appropriate to intervene under Article 226. Both writ petitions were accordingly dismissed.

The court, however, made an observation regarding the need to balance the consideration of experienced institutions with new entrants to avoid monopolistic situations and suggested that adopting a fixed point system for evaluating parameters based on the University's report could enhance clarity and fairness in the selection process. This observation was left for the State's consideration.

Upon request from the petitioners' counsel, the court granted a stay on the operation of the judgment for a period of two weeks to allow them to pursue further legal recourse.