SC rules capitation fees illegal, says institutes must run on “no-profit-no-loss” basis

The Supreme Court on Monday ruled that charging capitation fees in educational institutions is illegal. A five-judge Constitution bench said that commercialisation and exploitation is not permissible in the education sector and institutes must run on “no-profit-no-loss” basis, reported Times of India.

The bench also stated that it was the constitutional duty of the government to ensure that institutes functioned to spread education and not make money. The court also ruled that admission of students has to be on merit and not “at the whims and fancies of the educational institutes.”

"Education is treated as a noble occupation on 'no-profit-no-loss' basis. Thus, those who establish and are managing the educational institutions are not expected to indulge in profiteering or commercialize this noble activity,” read the judgement, as reported in TOI.

The apex court, however, granted permission to institutions to charge fees that would take care of various expenses incurred by them as well as any expansion plans to meet the educational needs of future generations.