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Delhi HC Allows Private Unaided Schools to Collect Annual Fees, Sets Aside Orders Preventing Such Collection

Delhi HC Allows Private Unaided Schools to Collect Annual Fees, Sets Aside Orders Preventing Such Collection

11.06.2021 | Education News | EduLegaL  | www.edulegal.org | mail@edulegal.in

31st May 2021, Delhi High Court in the case of “Action Committee Unaided Recognized Private Schools V. Directorate Of education” [W.P.(C)-7526/2020] set aside order dated 18.04.2020 and 28.08.2020 passed by Directorate of Education Govt. of NCT of Delhi. The orders passed prevent private unaided recognized schools/members of the petitioner association from collecting Annual Charges and Development Fees portion of the school fee even beyond the Lockdown period and same was postponed till physical opening of the schools. Single Judge bench of Hon’ble Mr. Justice Jayant Nath set aside both the orders and by applying recent apex court judgment of the case “Indian School, Jodhpur & Anr. vs. State of Rajasthan & Ors.” and allowed collection of the fee.

The court has held that “respondent in the facts and circumstances has no power to indefinitely postpone the collection of Annual Charges and Development fees, as is sought to be done. The impugned acts are prejudicial to the said Schools and would cause an unreasonable restriction in their functioning.”

After the nationwide lockdown due to novel coronavirus on 22 March, 2020 the Directorate of Education of Govt. Of NCT of Delhi passed orders under Delhi School Education Act, 1973 (hereinafter referred to as the DSE Act) and Rule 43 of the Delhi School Education Rules (hereinafter referred to as Rules) on 18.04.2020 directing all schools to collect only tuition fees and no other charges shall be collected till lifting of the lockdown. The lockdown was eased gradually starting from first week of June 2020, and on 28.08.2020 a subsequent order was passed directing the strict compliance to order dated 18.04.2020 and denying Recognized Private Unaided Schools to collect any other fee apart from tuition fee till physical reopening of the schools. The petitioner is association of around 450 such Schools which seeks quashing of the two orders.

The court examined Sections 3, 17(3), 18(3), 18(4) and 24 of the DSE Act, 1973 and Rules 175, 176, 177 and 180 of the Delhi School Education Rules, 1973. Determining what authority, the Government can exercise on private education institute the court placed reliance on of T.M.A. Pai Foundation and Ors. Vs. State of Karnataka & Ors., 2002 (8) SCC 481. The apex court had held that “in setting up a reasonable fee structure, the element of profiteering is not as yet accepted in Indian conditions. However, it has to be left to the institution, if it chooses not to seek any aid from the Government, to determine the scale of fee that it can charge from the students”.

In another judgment Modern School vs. Union of India & Ors., 2004 (5) SCC Apex court had looked into whether Director of Education has the authority to regulate the fees of unaided schools. It observed that “such institutes are entitled to a reasonable surplus for development of education and expansion of the institution. Such institutions, it has been held, have to plan their investment and expenditure so as to generate profit. What is, however, prohibited is commercialization of education. Hence, we have to strike a balance between autonomy of such institutions and measures to be taken to prevent commercialization of education.” Directorate of Education (DoE) has authority to regulate fee collected by private unaided schools only to the extent as to prevent profiteering and commercialization of education. Annual fee includes various heads like rents, taxes, travelling, conveyance, insurance charges, remuneration of auditors, repair and maintenance of building and maintenance of equipment etc. which must be collected apart from tuition fee for smooth functioning of school even if it is shut for physical teaching.

Court relied heavily on the judgment of Apex Court in Indian School, Jodhpur & Anr. vs. State of Rajasthan & Ors. 2021 SCC OnLine SC 359 which was decided on similar matters where Rajasthan Government has directed that schools could only charge tuition fees with a reduction of 30%-40% of the tuition fees of the last academic session. The court had held that state should not interfere between private agreements unless there is causal relation of the government. Supreme Court struck down the said order but directed that the schools cut the fees by 15 % as schools were physically shut and certain expenses will not be incurred by the schools.

Court in the present case observed that the powers of DOE are well marked that as long as the fees fixed is not in the form of capitation, or amount to profiteering in absence of such conditions, it is clearly not open to the DoE to entrench on the territory of the schools. The subjective satisfaction of an unaided educational institution, regarding fixation of its fees, and maintenance of surplus, is to be accorded due respect and, absent any element of profiteering, is not amenable to review, either by the DoE, or by the court.

In the present case, there is no evidence that members of body are involved in profiteering and therefore such orders passed by the court are illegal and ultra vires the powers of the respondent stipulated under the DSE Act and the Rules. The orders to that extent were quashed by the court and applying mutatis mutandis the orders in “Indian School, Jodhpur & Anr. vs. State of Rajasthan & Ors. 2021 SCC OnLine SC 359” deduction of 15 percent on the annual fee amount in lieu of unutilized facilities by the students. The annual fee was directed to be collected in six monthly installments w.e.f. 10.06.2021.

Applications for interim stay on the single judge order dismissed by division bench of Delhi HC hearing appeal of the judgment

07 June 2021, division bench of Hon’ble Ms. Justice Rekha Palli and Hon’ble Mr. Justice Amit Bansal while hearing multiple appeals filed by petitioners against single judge bench decision in the case of “Action Committee Unaided Recognized Private Schools V. Directorate Of education” which allowed collection of annual fees by private unaided educational institutes, Division Bench refused to pass intermediary stay order. It allowed collection of Annual Charges, Development Fees in the meantime.

The court observed “we are prima facie inclined to agree with the findings given by the learned Single Judge in the impugned order that the scheme of the DSE Act and Rules do not vest the Directorate with any power to issue the kind of directions contained in the orders/circulars impugned before it, considering that they have such far reaching financial implications upon the private unaided schools of NCT of Delhi”

Court further noted that “insofar as the appellant’s contention is concerned that these schools are barely using 40-60% of the tuition fee collected by them for payment towards salaries” no valid proof was presented before the court. As managements of the Private Unaided Schools does not receive any aid from the GNCTD, it solely depends on the fee collected from students.

Matter to be listed before roster bench on 12th July 2021.

Vaibhav Karadale | Research Intern | EduLegaL

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