Reducing Grant Of Aided Institutions Affects Students' Education, Requires Adhering To Natural Justice Principles: Rajasthan High Court

The Jaipur bench of the Rajasthan High Court has said that Section 7(1) of the Rajasthan Non-Government Educational Institutions Act–which states that grant in aid cannot be claimed as a matter of right by institutions and can be halted anytime by the state–comes into play only at the initial stage when the aid gets sanctioned. 

Once such aid has been granted, any subsequent reduction/stopping of the aid would have to adhere to principles of natural justice under Rule 18 of the Rajasthan Non-Government Educational Institutions (Recognition, Grant-In-Aid and Service Conditions Etc.) Rules, as any such change can effect the education of the students, it added.

A single judge bench of Justice Avneesh Jhinghan in its order said, "Section 7(1) provides that no aid shall be claimed by the institution as a matter of right. This provision shall come into play at initial stage of sanctioning of the aid. Once aid is granted, for changing the category or suspension or reduction or stopping of aid, procedure prescribed has to be followed. The change of category and reduction of the grant-in-aid has civil consequences and effect the education of students of institution. It is settled law that even while passing administrative order having civil consequences, the reasons are not only to be recorded but are to be supplied to the affected parties". 

For context Section 7(1) of the Act lays down that the grant in aid cannot be claimed as a matter of right by the institutions and can be stopped by the State Government at any time. Section Rule 18 of the Rules stipulates a procedure of the sanctioning authority to stop, reduce or suspend the grant-in-aid after giving an opportunity of hearing to the concerned institution.

The order was passed in a batch of three petitions filed by government aided educational institutions offering undergraduate and post graduate courses. They contended that they had been granted 90% aid, however, the Committee for Grant-in-Aid changed the category of the institutions to Grade A and reduced the aid to 80% while exercising its powers under the Act.

The institutions said that as per Section 7(6) of the Act, sanctioning authority had the power to stop, reduce or suspend the grant only in case of breach of any terms and conditions which was not the case here. They also argued that no opportunity of hearing was provided to them before the order was passed and no reasons were given justifying the order.

Opposing this the State Government argued that grant-in-aid was not a matter of right and the sanctioning authority was empowered to reduce, stop and suspend the grant. It was also submitted that the infrastructure of the institution was fully developed and thus, full grant-in-aid was not required thereafter.

Rejecting the state's contention the high court observed that Rule 18 stated the procedure for the sanctioning authority to stop, reduce or suspend the Grant-in-aid after being satisfied of the failure of the management to abide with terms and conditions or comply with the provision or to manage institution efficiently.

But before doing so, the court noted, it is necessary to give the management "an opportunity to show cause" for the charges levelled against it. 

"The principles of natural justice for reducing, stopping and suspending the grant-in-aid has been provided in Rule 18. From the perusal of the minutes of meeting held on 08.08.2006 and the order dated 14.10.2009, it is evident that the for changing the category and reducing the Grant-in-aid, the petitioner was neither issued a show cause notice nor supplied reasons for doing so. The order passed is in violation of principles of natural justice and the procedure prescribed in Rule 18. The contention of learned counsel for the respondents that grant-in-aid is not a matter of right, is noted to be rejected," the high court observed. 

The court further noted that no reference was made to any adverse material collected by the committee against the institutions in its order, which would form the basis for reducing the aid granted to the institutions. 

Accordingly, the high court allowed the petitions while setting aside the order of the State Government reducing the grant-in-aid of the institutions.

Title: Managing Committee Seth Motilal (P.G.) College, Ranisati Road, Jhunjhunu v State of Rajasthan & Anr. and batch

Citation: 2024 LiveLaw (Raj) 260

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