Supreme Court Says Private Universities Cannot Run for Profit, Seeks Five Years of Financial Records
The Supreme Court has made it clear that private universities cannot be operated as profit-making institutions and has ordered a nationwide exercise to examine their finances, fee structures, administration and academic functioning. The directions were issued by a Bench of Justices Ahsanuddin Amanullah and N.V. Anjaria on September 17, 2026, in proceedings arising from Ayesha Jain v. Amity University, Noida & Ors.
The Court clarified that a private university may maintain a reasonable financial cushion to ensure smooth functioning and provide appropriate compensation to teaching and non-teaching employees. At the same time, resources cannot be diverted for purposes unrelated to the educational functions of the institution.
As part of the exercise, private universities have been asked to disclose five years of audited financial records. The information is required to cover funds generated and their utilisation, payments made to persons who are not directly involved in educational functions, surplus funds and investments made from those surpluses.
The Supreme Court has also sought details of fees collected from students at admission and during their courses. Universities must disclose additional collections made under different heads, including development funds and amounts collected for special events, along with details of how surplus money is handled.
The disclosure exercise extends to government benefits received by private universities. Institutions will have to provide details concerning land allotted by governments, relaxations granted under existing laws and other special privileges or benefits provided by the Centre or States.
The Court is also examining the manner in which admissions and examinations are conducted. Universities have been directed to disclose the procedures followed for admission to each course and identify those responsible for admissions, setting examination papers, conducting examinations, evaluating answer sheets and handling funds, as well as the role of management in these processes.
Faculty and staff arrangements have been brought within the scrutiny as well. Universities must provide details of recruitment, salaries and other remuneration, payment mechanisms and service conditions for teaching and non-teaching employees. Information from January 2025 onwards must also show classes allotted to teaching staff, classes actually conducted and alternative arrangements made where teachers were unavailable.
The Court has further sought information on student grievance-redressal mechanisms. Universities are required to disclose the composition of their grievance committees, the nature and number of complaints received during the previous three years, their outcomes and the time taken to resolve them.
The scrutiny is not limited to universities themselves. Professional and regulatory bodies have also been directed to provide details of inspections conducted during the previous five years, deficiencies identified during inspections and whether those deficiencies were subsequently rectified.
The proceedings initially arose from a dispute involving a student and Amity University, Noida, but the Supreme Court subsequently widened the examination to issues concerning private universities more broadly. The Court has indicated that the larger public interest requires greater examination of the establishment, regulation, finances and functioning of such institutions.
The Union Government, States and Union Territories have been directed to obtain the required information from universities and colleges and file affidavits within six weeks from the September 17 order. The affidavits are to be filed through the respective Chief Secretaries. The matter is scheduled to be considered next on November 19, 2026.
