Rajasthan High Court: In a civil writ petition challenging the reduction of the grant-in-aid of petitioners’ Institution from 90% to 80% without providing reasons or an opportunity to be heard, a single-judge bench of Avneesh Jhingan, J., set aside the impugned reduction order and held the reduction of grant-in-aid without following the proper procedure and without giving reasons or a hearing violated the principles of natural justice.
In the instant matter, the petitioner, an educational institution offering undergraduate and postgraduate courses, was receiving 90% government aid since 1985. On 08-08-2006, a Grant-in-Aid Committee reduced the aid for 46 institutions, including the petitioner, from 90% to 80%. This reduction was formalized in an order dated 14-10-2009, which changed the petitioner’s institution to “Grade-A,” thereby reducing the grant-in-aid to 80%.
The main issue is whether the reduction in the grant-in-aid without providing an opportunity to be heard or reasons for the decision violates the principles of natural justice and the statutory requirements under the Rajasthan Non-Government Educational Institutions Act, 1989 (the Act) and its corresponding Rules.
The petitioners contended that this change violated Section 7(6) of the Act, which allows reduction of aid only in case of a breach of terms and conditions. The petitioner argued that no breach had occurred, and the institution was not given an opportunity to be heard or provided with reasons for the reduction, violating principles of natural justice.
However, the respondents contended that the grant-in-aid is not a matter of right, as per Section 7(1) of the Act, and can be reduced at the discretion of the sanctioning authority. It was argued that Rule 10(xv) of the Rajasthan Non-Government Educational Institutions Rules, 1993 (the Rules) allows for the reduction of grant-in-aid based on the availability of funds and the institution’s infrastructure development.
The main law points are—
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Section 7(6) of the Rajasthan Non-Government Educational Institutions Act, 1989 allows for the reduction of grant-in-aid only in case of a breach of terms.
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Rule 18 of the Rajasthan Non-Government Educational Institutions Rules, 1993 prescribes the procedure for reducing or suspending grants, including providing an opportunity for a hearing.
The court held that while the grant-in-aid cannot be claimed as a matter of right at the initial stage of sanctioning aid, once granted, any reduction or suspension of aid must follow the procedure outlined in the Act and Rules.
The Court found that no adverse material or inspection report was cited as a reason for the reduction, and the respondents could not rely on the argument of non-availability of funds, as it was not mentioned in the impugned order. The Court emphasised that changes in aid allocation have civil consequences and affected the institution’s functioning and its students’ education. Thus, any decision impacting the aid must comply with the principles of natural justice, including providing reasons and an opportunity to respond. The Court held that the reduction of grant-in-aid without following the proper procedure and without giving reasons or a hearing violated the principles of natural justice.
The Court quashed the reduction order regarding petitioner’s grant-in-aid due to non-compliance with procedural fairness and natural justice principles, emphasising that decisions with civil consequences require proper justification and adherence to the statutory process. The Court clarified that the respondents could initiate fresh proceedings, following the law.
[Managing Committee Seth Motilal (P.G.) College v. State of Rajasthan, 2024 SCC OnLine Raj 2857, Decided on 05-09-2024]
Advocates who appeared in this case :
Mr. Ajit Maloo, Mr. Pratyush Sharma and Mr. Harsh Pratap Singh, Counsel for the Petitioners
Mr. Aditya Singh, Dy. GC, Counsel for the Respondents
