Student lawsuit sparks sweeping private universities’ audit
In an unusually broad move, India’s Supreme Court ordered a nationwide audit of all private, non-government and deemed universities across the country, requiring them to provide complete information about their establishment, governance, funding sources, and regulatory compliance.
The court said it was in the “larger public interest” to ensure the institutions are adhering to the rules, including operating on a non-profit basis.
The court’s sweeping demand for complete transparency and accountability amounts to a major regulatory investigation into the sector.
According to the latest available All India Survey on Higher Education (AISHE) report for 2021 to 2022, 514 private universities are registered in various states throughout India.
Welcoming the move, an independent watchdog organisation, India Research Watch, said many private universities, though legally required to be not-for-profit, were allegedly profiting through creative accounting while continuing to receive government funds.
The IRF said that taxpayers’ money should not be diverted through financial irregularities and stressed the need for rigorous audits and transparent governance.
The top court’s directive follows a petition from a student of the private Amity University in Noida, Uttar Pradesh, which began as a routine complaint but raised serious concerns about the functioning and accountability of private universities.
During the proceedings on this case, which remain sub judice, the court asked the central government in New Delhi, state governments, and higher education regulator the University Grants Commission (UGC) for complete disclosure, requesting affidavits specifying the legal basis, approval process, and conditions for the establishment of every private university in the country.
This encompasses any financial, administrative or statutory benefits granted to them, including allocations of land, tax exemptions or other preferential treatment.
In the larger public interest
Supreme Court Justices Ahsanuddin Amanullah and Nilay Vipinchandra Anjaria stated such an audit is needed in the larger public interest to verify whether private universities actually operate on a “no profit, no loss” basis, as they claim, and to ensure no funds are being diverted for unintended purposes.
The court said universities must disclose who controls and manages the institution, who holds the actual ownership, how the governing body is formed, and the identities of all persons involved in its administration.
“Full details of the personnel connected with the establishment/management of such universities shall be placed on record,” it said.
The court’s intervention has revived long-standing concerns. In 2005, it struck down the Chhattisgarh Private Universities Act after more than 100 ‘shell’ universities were found operating in the Central Indian state of Chhattisgarh without even basic infrastructure.
In 2009, the apex court pulled up 44 “deemed” universities across 13 states for failing to meet minimum academic standards, recommending the withdrawal of their status. Legal battles ensued between the authorities and the universities, lasting several years.
This time, the court emphasised that senior officials would be held personally responsible for the accuracy of all information provided. The bench stated: “Each deponent must take full responsibility for the information provided and its accuracy.”
It also issued a stern warning against any attempt to conceal or distort facts. The order warned: “Any attempt to withhold, suppress, or misrepresent information in the affidavit sought will compel this court to take a firm stand.”
The court has also called for an affidavit from the UGC which includes information about the UGC’s role in overseeing and monitoring compliance of these universities, student admissions politics, staff recruitment policies of the universities, how the authorities have enforced the “no profit, no loss” regulations and ensured “no diversion of monies towards anything unconnected with the institutions, including salaries/expenses towards founders/family members and assets acquired by them”.
Achal Agrawal, founder of India Research Watch, told University World News: “It is an open secret that many private universities make profits through creative accounting. In a survey conducted by India Research Watch in December 2024 that drew over 1,000 respondents, 95% said [they were of the opinion] that private universities secretly make a profit.”
Agrawal was referring to an informal survey on social media platform LinkedIn which stated, “Private universities in India are supposed to be not-for-profit”, and asked: “Given the high fees and poor salaries, are they secretly making profit?”
“Given that a lot of aid is given to private universities in many forms, it is important to ensure that the university benefiting from aid is not secretly making a profit. We hope that the audit is enlarged to also look at the rapid increase in research misconduct and gaming of rankings,” Agrawal told University World News.
When asked about the possible outcome of the audits ordered by the Court, Agrawal said: “It depends on how deep the audits are. The respective (central and state) governments will definitely say that all is well in the universities administered by them. If the current standard accreditation satisfies the honourable court, then the order will not change anything.
“However, if the order demands third-party audits from respected accountancy firms, a lot of irregularities might be found.”
Sparked by petition
The court directive came on 20 November while the bench was hearing a petition filed by 23-year-old Ayesha Jain, who alleged that Amity University refused to change her name in its records despite her submitting all legally valid documents.
Jain, whose previous name was Khushi Jain, officially changed her name in 2021 and completed a certificate course under her new identity before joining the MBA programme in 2024. She claimed in court documents that the university not only refused to update her name but also barred her from classes and exams, resulting in the loss of an academic year.
She accused the institution of “arbitrariness and discrimination” and claimed in court documents that the university even ridiculed her for changing her name to a Muslim name.
The court decided to convert the petition into a public interest litigation.
“The issues have now come before this court, which the present coram has also deliberated in detail; in the larger public interest, it is deemed appropriate to examine the aspects relating to the creation, establishment and setting-up of all private universities, either under the state governments/union territories or the central government, and connected concerns,” the justices stated.
Academics say the move could trigger disruption and could harm universities placed under scrutiny. Some could face funding challenges or even the risk of losing their university status if serious non-compliance issues come to light.
“Institutions that once operated with minimal oversight will now be held fully accountable. The move has the potential to usher in long-overdue transparency, stronger governance and better safeguards for students,” a research scholar in a private university in Delhi said, speaking on condition of anonymity.
A lecturer at a leading private university in Sonipat, Haryana, near Delhi, also speaking on condition of anonymity, said: “India's private universities manage significant financial resources derived from student fees and other revenue sources.
“These funds form the backbone of their operations, supporting infrastructure, academic services, and the education of a large and growing student population.”
He said private universities are growing in popularity because many of them offer wider course options, better infrastructure, industry-focused training, and help meet rising demand for higher studies by providing programmes aligned with specific career needs.