Supreme Court Says Private Universities Cannot Be Run for Profit, Seeks Five Years of Financial Records
The Supreme Court has directed private universities across India to disclose extensive financial, administrative and academic information, stressing that no private university can be operated as a profit-making institution. The directions were issued by a Bench of Justices Ahsanuddin Amanullah and N.V. Anjaria in proceedings arising from a petition involving Amity University, Noida.
The Court’s September 17 order requires the Union Government, States and Union Territories to collect detailed information from private universities and colleges and place it before the Court. The exercise covers five years of audited financial records, including the manner in which funds were generated and utilised, fees collected from students, surplus funds and investments, and payments made to persons not directly connected with the educational functioning of the institution.
The Court made an important distinction between maintaining a financial surplus and operating for profit. It said private universities may retain a reasonable financial cushion to ensure smooth functioning and to provide appropriate compensation to teaching and non-teaching employees. However, resources beyond such requirements cannot be diverted for purposes unrelated to the educational objectives of the institution.
The scrutiny will also cover government benefits received by private universities, including land allotments, concessions, relaxations under applicable laws and other special privileges. The Court is seeking this information as part of a broader examination of how private higher-education institutions are established, financed, governed and regulated.
Admissions and fee structures have also been brought within the scope of the exercise. Universities have been asked to provide details of their admission procedures, the persons responsible for admissions and examinations, fees collected at the time of admission and during courses, and additional collections under categories such as development funds or special events. They must also explain how surplus funds are used and invested.
The Court has sought information concerning teaching and non-teaching employees as well. Universities must disclose how staff are recruited and remunerated, their service conditions and, for records from January 2025, the number of classes allotted to teachers, classes actually conducted and alternative arrangements made when teachers were unavailable.
Student grievance mechanisms are another area under examination. The institutions have been asked to provide details of their grievance-redressal committees, complaints received during the preceding three years, the manner in which those complaints were decided and the time taken for their resolution.
Professional and regulatory bodies have separately been directed to provide information about inspections conducted during the previous five years, including deficiencies identified in institutions, the faculty and supporting staff on the basis of which recognition or affiliation was granted, and whether identified deficiencies were subsequently rectified.
The proceedings originated in a dispute involving Ayesha Jain and Amity University, Noida, concerning the university’s handling of changes in the student’s name and the academic consequences that followed. During the proceedings, however, the Supreme Court expanded its inquiry beyond the individual dispute to wider questions concerning the functioning and regulation of private universities across the country.
The Court’s latest intervention builds on a long line of Supreme Court decisions concerning private educational institutions. Earlier judgments, including T.M.A. Pai Foundation v. State of Karnataka and P.A. Inamdar v. State of Maharashtra, recognised significant autonomy for private unaided educational institutions while also addressing concerns surrounding fees, capitation and profiteering. The Court has previously held that a reasonable surplus can be generated for development and expansion of an educational institution, but education cannot be treated simply as a commercial profit-making activity.
The Centre, States and Union Territories have been given six weeks to collect the requested information and file affidavits. The affidavits are required to be personally affirmed by the respective Chief Secretaries, while regulatory bodies have been directed to file separate affidavits affirmed by their respective heads. The matter is scheduled to come up before the Supreme Court again on November 19, 2026.
