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  • Section 5, Subsection 2 of the 1983 Income Tax Act
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

Christian Medical College, Ludhiana (“CMC”), a minority institution with an intake of 50 MBBS seats, was entitled—by an earlier Supreme Court order dated 1-6-2005 in Christian Medical College v. State of Punjab (2004) 13 SCC 5—to fill 75% of its seats with minority students, leaving 25% (12 seats) for candidates allotted by the State of Punjab on the basis of the Punjab Medical Entrance Test (PMET).

The Supreme Court in Mridul Dhar (5) v. Union of India (2005) 2 SCC 65 had fixed 30-8-2005 as the last date for second-round counselling under the State quota. Because the State/University failed to allot any candidates by that date—owing to cancellation of the first PMET, re-conduct of PMET, litigation over wrong key answers, and consequent delay in results—CMC filled the 12 unallotted seats from its own merit list.

Six State-quota candidates later allotted seats in mid-September 2005 were denied admission by CMC and approached the Punjab & Haryana High Court. By judgment dated 4-1-2006, the High Court: (1) protected the admission of the private respondents already studying at CMC; (2) directed that the six writ-petitioners be admitted in the 2006-2007 session against management quota; (3) ordered CMC to pay each writ-petitioner Rs 2 lakhs as compensation and to deposit Rs 2 lakhs as costs with Baba Farid University.

CMC complied with the admission directions but, aggrieved by the monetary consequences, filed the present appeals by special leave before the Supreme Court.

Legal Issues Presented

  1. Whether the High Court was justified in directing CMC to pay Rs 2 lakhs compensation to each of the six writ-petitioners for loss of one academic year, mental tension, and economic loss.
  2. Whether the High Court was justified in imposing Rs 2 lakhs as costs payable by CMC to Baba Farid University of Health Sciences.

Arguments of the Parties

Appellant (Christian Medical College, Ludhiana)

  • Accepted and implemented the High Court’s directions granting the six writ-petitioners admission in 2006-2007 and did not seek to disturb them.
  • Contended that compensation and costs were unwarranted because the delay in State-quota counselling was attributable to the State/University’s failure to adhere to the Mridul Dhar schedule.
  • Submitted that the withholding of marksheets for 12 students admitted against the unfilled State quota had no legal basis once the High Court had protected their admission.

Respondents

  • Three of the six writ-petitioners appeared and expressly waived their claim to compensation.
  • The University argued that costs were properly awarded because CMC had wrongly denied admission to State-quota allottees and filled the seats with its own candidates.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Mridul Dhar (5) v. Union of India (2005) 2 SCC 65 Laid down a binding time-schedule for admissions to MBBS courses, including 30-8-2005 as the last date for second-round counselling and 30-9-2005 as the ultimate cut-off for admissions. Used to assess whether State/University and CMC adhered to the prescribed timeline; Court noted clear violation by State/University.
Christian Medical College v. State of Punjab (2004) 13 SCC 5 Fixed the seat-sharing arrangement: 75% management/minority quota and 25% State quota for CMC. Provided the basis for determining which seats were to be filled by CMC and which by State-allotted candidates.
Guru Nanak Dev University, SLP (C) No. 16952 of 2005, order dated 24-8-2005 (2005) 13 SCC 749 Directed re-evaluation of PMET answer scripts after correction of key answers. Cited by the High Court to explain the State/University’s delay in finalising the PMET merit list.
Saumil Garg v. State of Punjab (CWP 10272/2005, Punjab & Haryana High Court) Challenged wrong key answers in second PMET; High Court ordered preparation of correct key. Referred to illustrate litigation that contributed to the delayed counselling.

Court's Reasoning and Analysis

The Supreme Court observed that the undisputed violation of the Mridul Dhar timeline was primarily attributable to the State and the University, which had to cancel and re-conduct PMET, correct key answers, and re-evaluate answer sheets, leading to results being declared only on 29-8-2005—after several critical counselling dates had lapsed.

Even if CMC had “selectively” invoked Mridul Dhar to fill seats from its own list, the Court found it inequitable to burden the college with compensation and costs when the State’s breach of schedule was a substantial, proximate cause of the students’ predicament. Since the six writ-petitioners had already been accommodated in the subsequent academic session and three of them expressly waived compensation, the Court held that monetary relief was unnecessary.

Regarding the Rs 2 lakhs costs awarded to the University, the Court reasoned that the University itself contributed to the delay; therefore, granting it costs against CMC was unjustified.

Holding and Implications

Appeals allowed in part. Directions (4) and (5) of the High Court—ordering payment of Rs 2 lakhs compensation to each writ-petitioner and Rs 2 lakhs costs to the University—are set aside. Directions (1) to (3) stand undisturbed, and CMC’s compliance with them is noted.

Consequences: CMC is relieved from paying the imposed compensation and costs. The University must immediately treat the 12 students admitted against the erstwhile State quota as duly admitted and release their marksheets and other academic documents. The decision addresses the equities between the parties without setting a new legal precedent beyond reaffirming adherence to admission schedules.

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    Christian Medical College v. State Of Punjab And Others

    R.V Raveendran, J.— Leave granted. In Mridul Dhar (5) v. Union of India (2005) 2 SCC 65, this Court approved the following time schedule for admission to medical courses (first MBBS course):

    Schedule for admission Seats filled up by the State Governments/institutions Conduct of entrance examination Month of May Declaration of result of qualifying exam/entrance exam By 15th June First round of counselling/admission To be over by 17th July Last date for joining the allotted college and course 29th July Second round of counselling for allotment of seats from waiting list 25th to 28th August Last date for joining for candidates allotted seats in the second round of counselling from the waiting list 30th August
    Commencement of academic session 1st of August to 31st August Last date up to which students can be admitted against vacancies arising due to any reason 30th September
    (emphasis supplied)

    2. The appellant (Christian Medical College, Ludhiana) is a minority institution running a medical college with an intake capacity of 50. As per the order dated 1-6-2005 of this Court in Christian Medical College v. State of Punjab (2004) 13 SCC 5, 75% of the seats were to be filled according to the choice of the appellant College from the members of the minority community and balance 25% seats to be filled by the candidates allotted by the State on the basis of the merit list prepared by it. Thus it is not in dispute that for the academic year 2005-2006, out of the 50 seats, 38 seats were to be filled by the College with minority students and 12 seats were to be filled by the candidates allotted by the State.

    3. On the ground that the State did not allot any candidate till 30-8-2005 which was the last date as per the schedule approved by this Court in Mridul Dhar (5) (2005) 2 SCC 65, the appellant College claims to have filled those seats by candidates from its merit list, namely, Respondents 6 and 17 (Respondents 8 to 19 in the second matter). The State/University allotted candidates towards their quota after belated counselling with reference to merit list prepared on the basis of second Punjab Medical Entrance Test (PMET) during the middle of September 2005. The appellant denied to those candidates admission on the ground that the last date for allotment being over, those seats were filled by candidates from its own merit list. Aggrieved by their non-admission, six of the State quota allottees, namely, Respondents 4 and 5 in the first matter and Respondents 4 to 7 in the second matter, approached the High Court and sought a direction for admission.

    4. Several contentions were urged by the appellant resisting the said petitions. Ultimately the High Court by a common judgment dated 4-1-2006 allowed the two writ petitions with the following directions:

    “(1) The admission of the private respondents to the MBBS course at CMC for the academic year 2005-2006 is protected.
    (2) The petitioners cannot be granted admission in MBBS classes in the current academic year after 30-9-2005, as their admission would be a midstream admission which has been prohibited by the Hon'ble Supreme Court.
    (3) The petitioners will be admitted to the MBBS course at CMC for the academic session 2006-2007 against the management quota seats in terms of the directive contained in para 35(11) of Mridul Dhar (5) judgment (2005) 2 SCC 65, as it has exceeded its quota during the academic year 2005-2006.
    (4) CMC would compensate each of the petitioners with an amount of Rs. 2 lakhs each for the loss of one year, for the mental tension and for economic loss caused to them.
    (5) CMC is burdened with costs of Rs. 2 lakhs to be deposited, with Baba Farid University of Health Sciences, Faridkot, within three months from today, for being utilised towards students welfare fund.
    (emphasis supplied)

    5. The said judgment is challenged in these appeals by special leave. Though several grounds were urged in the special leave petitions at the time of hearing, the learned counsel for the appellant College submitted that in compliance with the judgment of the High Court, the appellant has admitted the six writ petitioners (Respondents 4 and 5 in the first matter and Respondents 4 to 7 in the second matter) for the academic session 2006-2007 against the management quota, and they have been prosecuting their studies without hindrance and they will not be disturbed by the appellant. As a consequence, there is no need to examine the several contentions urged in the appeals on merits challenging the judgment of the High Court.

    6. What remains for consideration is the correctness of the two directions that the College should compensate the six writ petitioners by paying Rs. 2 lakhs each for the loss of one year and for mental tension and economic loss, and the direction to pay costs of Rs. 2 lakhs to Baba Farid University of Health Sciences. Three of the six writ petitioners (Respondent 5 in the first matter and Respondents 4 and 5 in the second matter) have entered appearance and they submitted that they do not press for payment of the compensation of Rs. 2 lakhs awarded to each of them. The other three writ petitioners (Respondent 4 in the first matter and Respondents 6 and 7 in the second matter) have not appeared and contested the matter.

    7. The learned counsel for the University submitted that the High Court had examined the matter in detail and costs were awarded in view of the failure of the appellant College to admit the candidates allotted by the State and admission of candidates of its own choice to the State quota seats. He submitted that the order of the High Court regarding costs did not call for interference.

    8. In view of the above, the question is whether the direction for payment of compensation of Rs. 2 lakhs each to Respondent 4 in the first matter and Respondents 6 and 7 in the second matter, and the award of costs of Rs. 2 lakhs to the University, require interference. The fact that the time schedule laid down in Mridul Dhar (5) (2005) 2 SCC 65 was not followed by the State and the University is not in dispute. In fact the High Court has recorded the following findings in regard to the delays on the part of the State/University:

    “The reasons for not being able to abide by the time schedule laid down in Mridul Dhar (5) case (2005) 2 SCC 65 are known to every one concerned with the matter. The first PMET 2005 was held on 5-6-2005. As there was leakage of question papers, therefore, the said entrance test was cancelled as a whole on 7-6-2005. The second PMET was held on 30-6-2005 and the result thereof, was declared on 2-7-2005. Because of wrong key answers, the merit list prepared on the basis of the second PMET held on 30-6-2005 was challenged in this Court through CWP No. 10272 of 2005 (Saumil Garg v. State of Punjab) and a large bunch of similar writ petitions. This Court directed the preparation of correct key answers vide its judgment dated 8-8-2005. Guru Nanak Dev University which was one of the respondents in that case, filed a petition for special leave to Appeal (Civil) No. 16952 of 2005. The said petition/appeal was decided by the Hon'ble Supreme Court vide its order dated 24-8-2005 (2005) 13 SCC 749. The answer sheets of candidates who had taken the second PMET, were required to be re-evaluated on the basis of correct key answers in respect of eight questions. The result of the second PMET was to be declared within two days, and a further period of 72 hours was granted to the candidates to file objection (as per the decision of the Hon'ble Supreme Court). Admittedly, the result of the second PMET 2005 was declared on 29-8-2005.
    The narration of the facts stated above clearly reveals, that the time schedule as laid down in the Regulation dated 25-2-2004 issued by MCI and as approved by the Hon'ble Supreme Court in Mridul Dhar (5) judgment (2005) 2 SCC 65, could not be observed for admission to the MBBS courses, insofar as the State quota is concerned, as the dates for holding of entrance test (in May) declaration of the result of entrance test (15th June), the date of first round of counselling/admission (17th July) and the date of second round the counselling or allotment of seats from waiting list (25th to 28th August) had already expired, before the result was declared on 29-8-2005, and therefore, the observance of these dates was not at all possible by any stretch of imagination.”

    9. Therefore, even assuming that the appellant had read the judgment in Mridul Dhar (5) (2005) 2 SCC 65 selectively to achieve its object, as held by the High Court, we are of the view that the award of compensation of Rs. 2 lakhs on each of the six writ petitioners may not be warranted, as there was also a clear violation of the time schedule by the State. The writ petitioners have been accommodated and they no longer have any grievance. As the State/University were responsible for the delay in conforming to the schedule for counselling and allotment of candidates under the State quota, on account of leakage of question papers and preparation of wrong key answers, which resulted in the non-admission of the six writ petitioners, the award of costs in favour of the University was not warranted.

    10. We accordingly allow these appeals in part and set aside Directions (4) and (5) in the impugned order of the High Court for payment of compensation of Rs. 2 lakhs to each of the six writ petitioners and the levy of costs of Rs. 2 lakhs in favour of the University. We make it clear that we have not expressed any opinion regarding Directions (1) to (3) as they have been accepted and acted upon by the appellant College.

    11. The learned counsel for the appellant submitted that in regard to the 12 students admitted by the appellant against the vacant State quota seats, that is, Respondents 6 to 17 (who are Respondents 8 to 19 in the second matter), the marksheets have not been released by the University on the ground of non-payment of costs of Rs. 2 lakhs and pendency of these appeals. Insofar as those 12 students are concerned, the High Court had protected their admission and held that their admission need not be disturbed. We extract below the relevant observations of the High Court:

    “So far as quashing of the admission granted to the private respondents in CMC against the government quota seats is concerned, undoubtedly, their admission is on provisional basis, but nothing has been placed on the file to show if these candidates had played any condemnable role in seeking admission, or that they had connived with CMC for getting admission to the course under reference. It seems that the private respondents have been given admission by CMC out of its own merit list prepared on the basis of the entrance test conducted by it. In our view, therefore, it is only CMC, which is responsible for admitting the private respondents against the seats of government quota. Therefore, the career of the private respondents, who have been admitted in CMC against the State quota seats should not be cut down for the fault of CMC.”

    12. In the circumstances the University will have to deal with the said 12 students as having been regularly admitted and if their results or marksheets or other documents have been withheld, release the same without delay.

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    Christian Medical College v. State Of Punjab And Others
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