SC Orders Nationwide Audit of Private Universities’ Finances and Admissions

Ayesha Jain Vs Amity University (Supreme Court of India)

Private Universities Cannot Become Profit-Making Institutions: Supreme Court Orders Nationwide Financial and Admission Audit

Supreme Court Seeks Complete Financial and Administrative Disclosure

The Supreme Court has issued wide-ranging directions requiring private universities across India to disclose their financial affairs, admission procedures, fee collections, utilisation of surplus funds, staff recruitment practices, grievance-redressal mechanisms and benefits received from the Central and State Governments.

The Court categorically declared that no private university can be permitted to operate as a profit-making institution. Although an educational institution may maintain a reasonable financial cushion for its smooth functioning and for adequately compensating teaching and non-teaching employees, its funds cannot be diverted for unrelated purposes.

The Court specifically stated that diversion of university funds through payments of salaries or provision of facilities to members of the governing board or other governing bodies would not be permitted unless such payments were connected with the functioning of the institution.

Five Years’ Audited Financial Records Called For

The Supreme Court directed every State to ensure that private universities falling within its jurisdiction submit their audited financial records for the preceding five years.

The disclosure must contain complete particulars of the funds generated by each university, the manner in which those funds were utilised and payments made to persons who were not directly involved in the functioning of the university as an educational institution.