"Will Impact Students & Staff": Bombay High Court Refuses Closure Of Only Engineering College In Gondia District Of Maharashtra

A division bench of Justices Nitin Jamdar and Anil Pansare, in a judgement on Tuesday, upheld the Vice-Chancellor of University's order, rejecting the closure permission sought by the management of the Manoharbhai Patel Institute of Engineering and Technology – established and run by the Gondia Education Society since 1983-84.

According to the institute's website, Varsha Patel is the president of GES. She is the wife of former union minister Praful Patel and daughter-in- law of late philanthropist and politician Manoharbai Patel.

"The Legislature has not accepted an unfettered right of a management to close down an institution at will. The closure of an institution impacts the education/studies and staff employed therein," the bench observed, adding.

"We are not convinced to record a conclusive finding that it is impossible for the Management to perform its statutory obligation to pay the legitimate dues of its Employees."

The VC of the Rashtrasant Tukdoji Maharaj Nagpur University had, in August 2018, rejected the management's application seeking to close down the institute from the academic year 2018-19 citing six reasons. Those were:

1. Admissions in the college are satisfactory;

2. This is only the Engineering College in Gondia District;

3. Financial position of the society is enough to sustain the current situation;

4. Salary delay and related problems had arisen due to non-release of scholarship fund pending with the State Government;

5 & 6. Court cases filed against the institute by the staff members were pending.

The bench also allowed petitions filed by the staff members seeking arrears of their salary as per the sixth pay commission. The court has directed the management to clear the dues of the staff, along with increased dearness allowance as applicable from time to time and Naxalite allowance from the date of their entitlement, along with 6% interest per annum. In case the management has been given four months' time to clear the dues upto March 31, 2022, failing which the interest rate on the arrears would increase to 8 per cent per annum.

Senior Advocate S P Dharmadhikari, appearing for the management as well as the institute, assailed the VC's order saying that the order "denying closure was arbitrary and illegal." The counsels submitted to the court that the expenses of the College, including payment of teaching and non-teaching staff, were borne exclusively out of the amount received by the College from the fees of the students.

It was also submitted that as compared to all other Colleges in Vidarbha, the Management had provided the best service benefits to its employees. The State Government had constituted a Shikshan Shulk Samiti for deciding fee structure which worked out a theoretical fee structure but in reality, the situation was different, which substantially impacted the revenue available to the Management.

According to the lawyers, the 6th Pay Commission's recommendations from 1 June 2011 for teaching and non-teaching staff had increased the financial burden for the institute and the increase in dearness allowance was also substantial. They added that the management had never shirked making payments to its employees, however, the increase in dearness allowance and implementation of the 6th Pay Commission substantially affected its financial position.

Despite the financial position, the petition filed by the non-teaching staff in 2013, regarding arrears of 6th Pay Commission and dearness allowance, a compromise was arrived at in July 2017, by which dues of non-teaching employees were paid. They also told the court that the strength of students had steadily declined since the year 2014-15. The counsels cited the institute's deficit as 12% for 2014-15, 29% for 2015-16, 32% for 2016-17 and 38% for 2017-18.

The State Government was also blamed for not paying fees of the students belonging to the reserved category, amounting to over Rs 9.59 crore, resulting in the management's liabilities exceeding its reserve fund. Stating these reasons, the counsels pleaded that the management had no other option but to close the college. The management passed a resolution in January 2018 that the college, running courses in six streams of engineering, needed to be shut down.

The employees were represented by Advocate Gauri Venkatraman assisted by Prasad Gupta.

A reply filed by the employees of the institute laid bare the financial position of the management. The affidavit pointed out that the management was one of the richest in the State as one of the trustees of the trust and member of the governing council of the management (Gondia Education Society) had, in an Election affidavit filed in the year 2015, declared assets worth Rs.143 crore and that the managing trustee of the Management lead a lavish lifestyle and had several assets, and had spent extravagant amounts on family weddings.

The employees' affidavit also contended that the same management ran over 40 other educational institutes in other parts of the State including one engineering college at Shahapur in Bhandara district. The list of institutes run by the management included colleges in Commerce, Science, Pharmacy etc.

The employees alleged that the management had deliberately not taken admissions for the academic year 2018-19 to show zero students for that new academic year.

The bench also noticed that there was no formal application made by the management to shut down the institute as per section 121 of the Maharashtra Public Universities Act, 2016, and it was on the basis of the resolution passed by the management sent to the All India Council of Technical Education and to the University that the order rejecting the closure was passed.

The court noted that as per section 121, the management desirous of closing down a college or recognised institution has to apply to the University, setting out the grounds for closure and the financial position assets etc, and upon receipt of such an application, Academic Council is required to make an enquiry. It also prescribes that the application be made on or before August 1 of the year preceding which the closure is being sought. In this case, the proposal based on the resolution was sent in February 2018, seeking closure from the next academic year.

The bench observed that even in the "proposal", the management proceeded as if the college was a "standalone self-financed institution" and only the colleges accounts regarding the fees received from the students and scholarship amounts were projected on one side and the salaries of employees and other expenses on the other. Without disclosing any other details, the proposal sought "progressive closure" of the institute.

"There is no reference whatsoever to the financial worth of the management both in the Resolution dated 17 January 2018 and the affidavit of the Secretary dated 22 February 2018," the bench observed, adding that the financial position put forward by the employees was not disputed by the management.

The court said that the University has made it clear that the application for closure of the Management was refused primarily for non-payment of staff dues. "In totality of the circumstances, we do not find that stand of the University to refuse permission for closure is perverse, arbitrary or that no authority in the right mind would have come to such a conclusion."

The court said exercise of writ jurisdiction, which is rooted in equity, is not automatic and judicial conscience must be satisfied that if the Court does not intervene, there will be a failure of justice. "In this case, no intervention is necessary. That being the position, we refuse to entertain the challenge of the Management to the order of closure in writ jurisdiction."

Case Title: Barun Kumar and Ors v. The State of Maharashtra and Ors., and connected matters

Citation:2022 LiveLaw (Bom) 150