[Demand or collection] of capitation fee prohibited.- (1) Notwithstanding anything contained in any law for the time being in force, no capitation fee shall be [demanded or collected] by or on behalf of any educational institution or by any person who is in charge of or is responsible for, the management of such institution, from or in relation to, any student in consideration of his admission to, and prosecution of, any course of study or of his promotion to a higher standard or class in, such institution.
(2) Notwithstanding anything contained in sub-section (1), the management may [in good faith, demand or, collect or accept donations in cash or kind in prescribed manner,] from benevolent persons or organisations or public trusts or any other association of persons, for opening of new educational institution or for development or expansion of educational facilities in the existing educational institutions or for creation of endowment fund for award of scholarships, prizes or the like, but while collecting or accepting such donations the management shall not reserve any seats in any educational institution run by it in consideration of such donations. All money and articles received in donation shall be accounted for in the institution and the money shall be deposited in the name of the institution in any scheduled or co-operative bank and shall be applied or expended for the purpose for which such donations are collected or accepted or shall be applied towards the objects of the institution:
Provided that, where in consideration of accepting such donations any seat is reserved for admission to any student in such institution such acceptance of donation shall be deemed to be collection of capitation fee:
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(3) Where the State Government, on receipt of any complaint or otherwise, is satisfied that the management of any institution or any person who is in-charge of or is responsible for the management of such institution, has contravened the provisions of this Act or the rules made thereunder, the State Government may, in addition to any prosecution that may be instituted under this Act, after giving a reasonable opportunity of being heard, direct such institution or person responsible that the capitation fee collected in contravention of this Act shall be refunded to the person from whom it was collected and on its or his failure to do so, the amount together with interest thereon shall-
(a) in the case of an aided educational institution, be deducted from the grant-in-aid payable by the State Government to such institution; and then the same be paid to the person from whom such capitation fee was collected; and
(b) in the case of an un-aided educational institution, be recovered as arrear of land revenue; and when so recovered be paid to the person from whom such capitation fee was collected.
(4) The management of any educational institution or any person who is incharge of or who is responsible for the management of such institution [demanding], collecting or accepting donations under sub-section (2) in connection with or in relation to any student in consideration of his admission to and prosecution of, any course of study or his promotion to a higher standard or class in institution, shall be deemed to have contravened the provisions of sub-section (1) and shall be liable to be proceeded against and punished accordingly.