A two-judge Bench of Justice SK Kaul and Justice MM Sundresh has held that the right to aid is not a fundamental right and the challenge to a decision made in implementing it shall only be on restricted grounds.

The Court has also held that there exists no difference between minority and non-minority institutions, when it comes to aided institutions.

Appeals were preferred before the Supreme Court by the State of Uttar Pradesh against the decision of the Division Bench of the Allahabad High Court holding that Regulation 101 of the Intermediate Education Act, 1921, as amended, is unconstitutional as it violates Article 14 of the Constitution of India. The High Court had also held that 'Outsourcing' as a concept to make the available staff to perform 'Class IV' jobs is unconstitutional.

The Appellant before the Supreme Court (State) contended that the institutions being the recipients of aid are bound by the conditions attached, as there exists neither a fundamental right to receive aid nor a vested one. The Respondents were not eligible to question the policy decision of the Appellant as the said policy was applicable uniformly across all departments of the State.

The Respondents (Writ Petitioners) had contended before the Court that Regulation 101 of the Act as it stands is a clear violation of Article 14 of Constitution of India in filling the sanctioned posts of Class 'IV' employees alone by way of 'Outsourcing'.

The Respondents further argued that there was no power or authority for the introduction of amended regulation 101 under section 16G of the Act and the power of the State cannot be extended under section 9 of the Act to make the impugned regulation. It was pleaded that Section 16G of the Act is sought to be impliedly overruled by the impugned regulation. There must exist a difference between minority and non-minority institutions, else the main regulation would violate the fundamental rights of the minority institutions, contended the Respondent.

The Respondents also asserted that those who were recruited after the amendment were under the belief that their appointment was made in accordance with the law and they cannot be made to suffer and Article 162 would be violated if the impugned regulation is sustained.

The Apex Court made the following observations after considering the contentions of both the parties at length –

  • Right to Aid

The Court held that the decision to grant aid is by way of a policy decision and the Government considers all the factors relevant while taking such a decision to grant the aid and manner of its disbursement.

"Once we hold that right to get an aid is not a fundamental right, the challenge to a decision made in implementing it, shall only be on restricted grounds. Therefore, even in a case where a policy decision is made to withdraw the aid, an institution cannot question it as a matter of right. Maybe, such a challenge would still be available to an institution, when a grant is given to one institution as against the other institution which is similarly placed. Therefore, with the grant of an aid, the conditions come. If an institution does not want to accept and comply with the conditions accompanying such aid, it is well open to it to decline the grant and move in its own way. On the contrary, an institution can never be allowed to say that the grant of aid should be on its own terms," the Bench opined.

"We are dealing with a case where aid is not denied in toto but sought to be given in different form. The reason for such a decision is both efficiency and economy. When such a decision is made as a matter of policy and is being applied not only to educational institutions but spanning across the entire State in every department, one cannot question it and that too when there is no express arbitrariness seen on the face of it."

  • Minority and Non-Minority

The Court held that there can be no difference between the minority and non-minority institutions.

"When it comes to aided institutions, there cannot be any difference between a minority and non-minority one. Article 30 of the Constitution of India is subject to its own restrictions being reasonable. A protection cannot be expanded into a better right than one which a non-minority institution enjoys. Law has become quite settled on this issue and therefore does not require any elaboration."

"Thus, on the aforesaid issue we have no hesitation in reiterating the principle that an institution receiving aid is bound by the conditions imposed and therefore expected to comply. Once we hold so, the challenge made on various grounds, falls to the ground."

  • Policy Decision

The Court asserted that Regulation 101 is in the form of subordinate legislation and the subordinate legislation can also be in the form of policy decision.

"A policy decision is presumed to be in public interest, and such a decision once made is not amenable to challenge, until and unless there is manifest or extreme arbitrariness, a constitutional court is expected to keep its hands off."

"A challenge to a regulation stands on a different footing than the one that can be made to an enactment. However, when the regulation is nothing but a reiteration of a policy reinforcing the decision of the Government made earlier, 19 then the parameters required for testing the validity of an Act are expected to be followed by the Court."

"An executive power is residue of a legislative one, therefore the exercise of said power i.e., the amendment of the impugned regulation, cannot be challenged on the basis of mere presumption. Once a rule is introduced by way of a policy decision, a demonstration on the existence of manifest, excessive and extreme arbitrariness is needed," observed the Court.

Further, the Court was of the view that 'Outsourcing' as a matter of policy was introduced throughout the State. "Outsourcing" per se is not prohibited in law. It is clear that a recruitment by way of "Outsourcing" may have its own deficiencies and pit falls, however, a decision to take "Outsourcing" cannot be declared as ultra vires of the constitution on the basis of mere presumption and assumption," noted the Bench.

"One cannot simply presume that "Outsourcing" as a method of recruitment would necessarily be adopting contract labour and that there exists an element of unfair trade practice, as sought to be contended by the respondent."

  • Article 14 of the Constitution of India

The Court held that Article 14 does not prohibit discrimination and is positive in nature. "Article 14 is positive in nature. Adequate leverage is to be provided to the law maker in making the classification. Article 14 of the Constitution of India does not prohibit discrimination, what is required is a valid discrimination against a hostile one."

  • Regarding the Act of 1921

Further, the Court opined, "The concept of "always speaking" as a principle of interpretation is to be applied for a proper understanding of an old enactment. After all, such a statute having its intended object which certainly includes regulating the functions of aided institutions requires to be interpreted to deal with the past, present, and future situations. Therefore, an interpretation which is reasonable, constructive and purposive would serve the purpose."

Consequent to the aforesaid findings, the Court set aside the impugned Judgment of the Allahabad High Court with a direction to the Appellants to create an adequate mechanism to see to it that those employed by the process of 'Outsourcing' are not exploited in any manner.