Admission, the Court said, is the aspect that concerns it most, because the education system exists for the public at large. From that starting point it laid down a proposition with wide consequences: a private university cannot be run to make a profit. It may keep a financial cushion to run responsibly and pay its staff, but no diversion of funds to a governing board or its members will be permitted. To see whether that line is being observed, the Court ordered universities and colleges across the country, through the Union and the States, to open their books, their admission processes, their fee collections and their faculty records to scrutiny on affidavit.
New Delhi: The Supreme Court has held that no private university shall be allowed to be run as a profit-making institution, and has directed a sweeping disclosure and audit exercise covering the finances, admissions, fee structures, faculty deployment and grievance mechanisms of universities and colleges across the country [Ayesha Jain v. Amity University, Noida and Others].
A Bench of Justice Ahsanuddin Amanullah and Justice N.V. Anjaria passed the directions in a writ petition concerning educational standards, in which a large number of States, Union Ministries and statutory regulators are arrayed as respondents.
‘No profit-making institution’
The Court framed the issue as one of public concern, admissions being, in its words, the aspect that concerns the Court most in a matter where education is imparted for the public at large. On that footing it stated the governing principle:
“…we make it clear that no private university shall be allowed to be run as a profit-making institution. It has to serve a purpose with some sort of a cushion so that its finances/resources are responsibly managed to ensure smooth functioning of the institution and that the teaching and non-teaching employees are compensated suitably.”
Beyond a reasonable cushion, the Court held, no diversion of funds under any head, such as the payment of salaries to a governing board of directors or the provision of facilities to members of the board or governing bodies, would be permitted.
The disclosure regime
The heart of the order is a detailed set of disclosures the Court required to be placed before it on affidavit. The States were directed to ensure that all universities within their jurisdiction submit audited reports for the last five years on the funds generated, their utilisation, and payments made to individuals who may not be directly related to the functioning of the university as an educational institution, along with details of the benefits taken from Central and State Governments by way of land allotment, relaxations in existing laws or other privileges.
The disclosures the Court called for extend across the whole working of an institution: the exact procedure for admitting students to each course and the persons in charge of admissions, paper-setting, examinations, evaluation and funds; the fees collected at admission and during the course, including development funds or event funds by whatever name; the manner in which surplus funds and investments are dealt with; the mode of recruitment, salaries and service conditions of teaching and non-teaching staff; and, notably, a course-by-course record, from January 2025 onwards, of which teacher was allotted how many classes, how many were actually taken, and what alternative arrangements were made where a teacher did not take them, so that students did not suffer. The institutions were also required to disclose their grievance-redressal mechanisms and the complaints handled over the last three years, and details of any hospitals attached to them.
The affidavits, the Court directed, are to be filed by the Union of India and the concerned State and Union Territory Governments, after obtaining the details from the universities and colleges, within six weeks, and are to be personally affirmed by the respective Chief Secretaries. The Union and the States were cautioned not to withhold any information and were reminded that they have the power, including coercive measures, to compel the institutions to furnish it.
The professional regulators
The Court also directed the affiliating and recognising bodies, the National Medical Commission, the Dental Council of India, the National Commission for Allied and Healthcare Professions, the Indian Nursing Council, the Bar Council of India, the National Commission for Indian System of Medicine, the National Commission for Homeopathy, the Veterinary Council of India and the Pharmacy Council of India, to file, for the last five years, details of the inspections held for recognition or affiliation, including the full faculty and supporting staff on whose basis recognition was granted, and to disclose the names of the doctors in each post, on affidavits affirmed by their respective heads. Each such body was further directed to state what deficiencies were pointed out in its last inspection and whether they had been removed.
Costs on the absent, and a new impleadment
Taking a stern view of non-appearance, the Court imposed a cost of Rs 5 lakh each on the respondents who were not represented before it, to be deposited within two weeks, and directed the highest authority of each such respondent to show cause for the absence. Counsel who had entered online appearances without disclosing the party for whom they appeared had their appearances rejected, with the concerned respondent made liable to the same cost, subject to one opportunity to file a physical appearance. The Court also impleaded the All India Council for Technical Education and the Commissioner of Police, Delhi, as respondents, and directed notice to them.
The Delhi schools-safety matter, tagged in
On an application by Dr. R.M. Sharma, chairperson of a committee inspecting the safety of children in Delhi schools in a suo motu proceeding before the Delhi High Court, the Court noted that grave violations of safety norms had been reported and that no effective order had been passed in that matter since November 2023. Considering that the present case also concerned the education system, the Court transferred the Delhi High Court proceeding to itself to be tagged with the present matter, directed the records to be transmitted, and passed a series of directions empowering Dr. Sharma’s committee to inspect schools, with the full cooperation of the school authorities, the State Government and the Delhi Police, and requiring the Chief Secretary and the Commissioner of Police to act on the committee’s reports.
Why it matters
The order is an unusually broad exercise of the Court’s supervisory reach over the education sector. The proposition that a private university cannot be run for profit is not new in principle, Indian courts have long held that education is not a trade and that commercialisation and profiteering in education are impermissible, but the Court has here paired the principle with a concrete, document-level audit designed to test compliance across every private institution, rather than leaving it as an abstract prohibition. The demand for five years of audited accounts, the tracing of funds paid to persons unconnected with the institution’s educational function, and the disclosure of land and legal concessions received, together aim at surfacing exactly the kind of diversion the Court has forbidden.
The breadth of the disclosure is what makes the order significant. By reaching into admissions, fees, surplus-fund investments, faculty recruitment and, strikingly, a class-by-class record of teaching actually delivered, the Court has signalled that the quality and integrity of what students receive, not merely an institution’s balance sheet, is within its concern. The parallel direction to the professional councils to lay bare their inspection records and the faculty on whose strength recognition was granted goes to a recurring anxiety in professional education, that recognitions may rest on paper faculty and that regulatory inspections may not be rigorous.
The Rs 5 lakh costs on absent respondents, and the transfer of the Delhi schools-safety matter, show a Court intent on both compliance and consolidation, gathering related strands of the education system, from universities to school safety, under a single supervisory umbrella. What has been passed so far is a directions order, not a final adjudication; the substantive questions will be considered once the affidavits are on record. But the scope of the disclosure the Court has commanded, and the personal accountability it has fixed on Chief Secretaries and regulatory heads, mark this as a consequential intervention whose effects will depend on what the mandated audits reveal.
Case Title: Ayesha Jain v. Amity University, Noida and Others [W.P. (Civil) No. 531/2025]
Bench: Justice Ahsanuddin Amanullah and Justice N.V. Anjaria, Supreme Court of India
Date of Order: September 17, 2026
Status: Directions order. No private university to be run as a profit-making institution; audited accounts and wide-ranging disclosures directed on affidavit within six weeks; Rs 5 lakh costs on unrepresented respondents; Delhi schools-safety matter transferred and tagged. Matter to be considered further after affidavits are filed.