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In the Matter of: Action Committee Unaided Recognized Private Schools v/s. Directorate of Education [W.P.(C) 7526/2020]

 

Forum: High Court of Delhi

 

Order Delivered on: May 31, 2021

 

Factual Background: The writ petition was filed by the Action Committee Unaided Recognized Private Schools, an association of approximately 450 private unaided schools in Delhi seeking a writ of certiorari to quash the orders dated April 18, 2020 and August 28, 2020, passed by the respondent, Directorate of Education. The said orders inter alia regulated and restricted the collection of fees by private unaided schools in Delhi on account of the COVID-19 pandemic.

 

Initially, the respondent exercising its rights under section 17 of the Delhi School Education Act, 1973 (DSE Act) read with rule 43 of the Delhi School Education Rules, 1973 (DSE Rules) had passed an order on April 18, 2020, directing the private unaided recognized schools in Delhi as below:

 

“i.         No fee, except Tuition fees will be charged from the parents during the lockdown period.

 

ii.          Annual and Development Charges can be charged from the parents, on pro rata basis, only on monthly basis after completion of the lockdown period.

 

iii.         No earmarked levies such as transportation charges will be charged from the parents during the period the schools remains closed.”

 

Post lifting of the lockdown restrictions, the respondent issued another order on August 28, 2020, which inter alia directed the private unaided recognized schools in Delhi as below:

 

1.        To comply with the directions issued vide order dated 18/04/2020 in its totality.

 

2.         If any Private Un-aided Recognized School has charged fees/amount other than the tuition fees in contravention of order dated 18/04/2020, the same shall be refunded or adjusted immediately.

 

3.         It is again reiterated that no amount other than the tuition fee or any increased amount in tuition fee in contravention of order dated 18/04/2020, shall be charged by any Private Un-aided Recognized School.

 

4.         ……..”  

 

The petitioner contended that the private unaided schools in Delhi were not being allowed to charge annual fee and development fee, which fee was towards the recurring expenses of the schools, such as administrative and general expenses, rents, rates and taxes, communication expenses, electricity and water charges, insurance charges, remuneration of auditors, repair and maintenance of building, expenses towards furniture, computers, water coolers, air conditioner, RO water treatment plant, fire safety equipment etc.

 

It was further contended by the petitioner that the action of issuance of the two impugned orders by the respondent which sought to curtail the rights of the private unaided schools to fix and collect their fee is illegal and without any authority or jurisdiction. It was submitted that the respondent has limited jurisdiction to regulate the fee to prevent commercialization and profiteering by the schools.

 

The respondent submitted that the schools are bound to comply with the provisions of the DSE Act and the DSE Rules as well as any orders, notifications and circulars as may be issued by the respondent. It was further submitted that the rationale behind the impugned order dated April 18, 2020, was to ameliorate to the extent possible the financial constraints which were faced by the parents on account of the COVID-19 pandemic and to avoid the possibility of children being denied education due to parents’ incapability to pay the school fees. The respondent while issuing the orders also considered that during the lockdown period only teaching facilities are being provided by the schools and the schools were thus submitted to charge tuition fee to enable the schools incur their expenses towards salary and allowances of teachers and staff members.      

 

Judgment: The Hon'ble High Court observed that the respondent does exercise control for the purpose of prevention of commercialization of education by unaided schools to ensure that private unaided schools do not indulge in collection of capitation fee or profiteering. Apart from the said power of the respondent, the private unaided schools have complete autonomy vis-à-vis fixation of their fees.

 

The High Court further noted that in the absence of a finding of commercialization of education or exploitation, the respondent cannot indefinitely cut down the established fees or restrain a school from collecting a portion of their existing fee.

 

As regards the right of issuing the impugned orders under section 17(3) of the DSE Act read with rule 43 of the DSE Rules, the High Court noted that section 17(3) of the DSE Act restricts a school from charging any fee in excess of the fee specified in the statement of fee submitted with the Director of Education before commencement of any academic session. Since there is no increase in the fee being charged by the schools, section 17(3) of the DSE Act has no relevance to the facts of this case. Furthermore, rule 43 of the DSE Rules needs to be read jointly with the DSE Act and thus it does not give any power to the respondent to indefinitely reduce any portion of fees legitimately being charged by schools across the board for an indefinite period as was being sought to be done by the impugned act of the respondent.

 

Recognizing the need of the private unaided schools to charge annual and development fee, the High Court observed that bare perusal of the head of expenses clearly demonstrates that most of the expenses are not correlated or connected with the actual physical opening of the school for the students. Expenses like rents, taxes, travelling, conveyance, insurance charges, remuneration of auditors, repair and maintenance of building and maintenance of equipment, furniture and fixture are all expenses which will continue to be incurred by the schools irrespective of the physical shut down. If the said repairs and expenses are not done, it is bound to cause damage to the building, infrastructure and functioning of the schools. It cannot be said that the school building is completely shut. The building would remain functional for administrative reasons and even for conducting online classes etc.

 

The High Court also stated that the private recognized unaided schools are dependent only on the fees collected from the parents to cover their salary, establishment and all other expenditure of the schools. Any regulations or order which seek to restrict or indefinitely postpone their powers to collect normal and usual fees, as is sought to be done by the impugned orders passed by the respondent if bound to create grave financial prejudice and harm to the schools.

 

Thus, the Hon’ble High Court quashed the said impugned orders dated April 18, 2020 and August 28, 2020 to the extent they forbid the private unaided recognized schools or postpone the collection of annual charge and development fee on account of the said orders being illegal and ultra vires the powers of the respondent as stipulated under the DSE Act and the DSE Rules.

 

Additionally, recognizing the present situation on account of the COVID-19 pandemic, the Hon’ble High Court further ordered that the directions given by the Hon’ble Supreme Court in the case of Indian School, Jodhpur & Anr. vs. State of Rajasthan & Ors. [2021 SCC OnLine SC 359], which give directions concerning collection of fees, shall mutatis mutandis apply to the private unaided recognized schools in Delhi.

 

Analysis: The Delhi High Court’s judgment has brought a much-awaited relief to the private unaided schools within Delhi. On one hand, the schools were restrained from collection of fees by the impugned orders passed under the DSE Act and DSE Rules and on the other hand, the schools had to incur their recurring expenses, such as payment of salary and allowances for their teaching and non-teaching staff, lease rent, taxes, insurance premium etc. and the schools were thus struggling to meet their recurring expenses. Private unaided schools, like any other institution, are providing services, incur substantial expenses and need to sustain on the fees charged. Any impact on the self-sustaining model of the school is bound to impact not only the quality of education but also the continuity of the education itself.

 

The year 2020 saw closure of hundreds of schools which could not sustain and manage the dual onslaught of fee reduction by regulatory authorities without corresponding reduction in expenses and non-payment of fee by the parents. These closures had cascading consequences including loss of jobs of thousand of teachers and staff, loss of income for service providers and discontinuation of education for thousands of students in tier 2 and tier 3 cities and towns of India. Even though the schools are required to operate under a not-for-profit model, it doesn’t take away their right to charge reasonable fees commensurate to the services and infrastructure provided, which right has been recognized over the years by several Supreme Court judgements.

 

Further, fee regulation legislations have been enacted in several states including in the states of Uttar Pradesh, Maharashtra, Tamil Nadu, Gujarat, Punjab etc. but these regulations have not necessarily led to resolution of tussle between the schools and unhappy parents. Therefore, balance between the rights of the private unaided schools to charge fees and the rights of the state to interfere as and when private schools levy unreasonably exorbitant amounts towards fees and charges will have to be maintained.

 

It is also possibly time to evaluate the not-for-profit structure of the Indian education system and reforms are surely needed in this area to avoid creation of multi-tier structures which are sometimes abused for diversion of funds from these not-for-profit entities to related party for-profit service entities. The regulatory authorities are aware of these issues but considering the socio-political ramifications of overhauling the Indian education system, moving forward without reasonable consensus will not be advisable.


If you have questions or would like additional information on the material covered herein, please contact:

 

Seema Jhingan, Partner

sjhingan@lexcounsel.in

 

Dhruv Manchanda, Associate Partner

dmanchanda@lexcounsel.in

 

Nikita Bhandari, Associate

nbhandari@lexcounsel.in


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