(1) No capitation fee shall be collected by or on behalf of the university 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 collect or accept donations in cash or kind, in the prescribed manner, from benevolent persons or organization or public trusts or any other association of persons, for opening of new educational institutions of for creation of endowment fund for award of scholarship, 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. 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, within the meaning of clause (a) of section 2 of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987 (Mah. VI of 1988).