* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009,
8614/2009, 9228/2009, 11139/2009, 10801/2009,
6952/2009, 1727/2010
RESERVED ON: MAY 13, 2011
% PRONOUNCED On: AUGUST 12, 2011
+ W.P. (C) No.7777 of 2009
Delhi Abhibhavak Mahasangh And Ors. . . . Petitioners
VERSUS
Govt. of NCT of Delhi and Ors. . . .Respondents
+ W.P. (C) No.8147 of 2009
The Action Committee of Unaided Pvt. Schools and Ors.
...Petitioners
VERSUS
Director of Education and Ors. ...Respondents
+ W.P. (C) No.8610 of 2009
Association of Public Schools Regd. and Anr. ...Petitioners
VERSUS
Director of Education and Anr. ...Respondents
+ W.P. (C) No.8614 of 2009
Forum for Promotion of Quality Education for All & Anr.
...Petitioners
VERSUS
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 1 of 134
Director of Education and Anr. ...Respondents
+ W.P. (C) No.9228 of 2009
The Forum for Minority School ...Petitioner
VERSUS
Director of Education and Anr. ...Respondents
+ W.P. (C) No.11139 of 2009
Convent of Jesus and Mary ...Petitioner
VERSUS
Director of Education An. ...Respondents
+ W.P. (C) No.10801 of 2009
The Summer Field Schools Parents Association
...Petitioner
VERSUS
The Summer Field School and Ors. ...Respondents
+ W.P. (C) No.6952 of 2009
The Society of Catholic School of the Archdiocese of Delhi
...Petitioner
VERSUS
Director of Education & Anr. ...Respondents
+ W.P. (C) No.1727 of 2010
St. Mary‟s School, Dwarka Parents‟ Association
...Petitioner
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 2 of 134
VERSUS
The Government of N.C.T. and Ors. ...Respondents
Counsel for the petitioner: Mr. Ashok Agarwal with Mr.
Vikas K. Chadha and Ms. Kusum Sharma, Advocates in W.P.
(C) No.7777/2009.
Mr. M.S. Syali, Sr. Advocate with Mr. Mukul Talwar and Mr.
Sradhananda Mohapatra, Advocates in W.P. (C) No.8614 of
2009.
Ms. Rekha Palli with Ms. Punam Singh for Air Force Bal Bharti
School, Air Force Junior School and Air Force Nursery School.
Dr. A.M. Singhvi, Sr. Advocate and Mr. Rakesh Kumar Khanna,
Sr. Advocate with Mr. P.D. Gupta, Mr. Kamal Gupta, Mr.
Abhishek Gupta and Ms. Tripti Gupta Advocates in W.P.(C)
8147/2009.
Mr. S.D. Salwan with Mr. Mukul Talwar and Mr. Sradhananda
Mohapatra, Advocates in W.P. (C) 8614/2009.
Mr. Sanat Kumar, Advocate in W.P. (C) 8610/2009.
Mr. Romy Chacko with Mr. A. Qayamuddin, Advocates in WP
(C) 6952, 9228, 11139/2009.
Mr. J.S. Chhabra, Adv. for Doon Public School in W.P. (C)
7777/2009.
Mr. Alok Shankar, Advocate in W.P. (C) 1727/2010.
Counsel for the respondent: Ms. Avnish Ahlawat with
Ms. Latika Chaudhary and Mr. Nitesh Kumar Singh, Advocates
for the Director of Education.
Mr. Sudhir Nandrajog, Sr. Advocate with Mr. Gaurang Kanth,
Advocate and Mr. Rahul Kumar, Advocate for the respondent
No.5/CAG.
Mr. C.S. Sundaram, Sr. Advocate and Mr. Rakesh Kumar
Khanna, Sr. Advocate with Ms. Seema Rao and Mr. Pramod
Gupta, Advocates in W.P.(C) 7777/2009.
Mr. P.G. Gupta with Mr. Kamal Gupta, Mr. Abhishek Gupta and
Ms. Tripti Gupta, Advocate for R-1.
Mr. Sanjay K. Maria, Advocate for R-3 in W.P.(C) 1727/2010.
Mr. M. Qayam-ud-din, Adv. for R-6 in W.P. (C) 7777/2009.
Mr. Ravinder Agarwal with Mr. Girish Pande, Advocates for R-
4/UOI.
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 3 of 134
CORAM :-
HON‟BLE MR. JUSTICE A.K. SIKRI
HON‟BLE MR. JUSTICE SIDDHARTH MRIDUL
1. Whether Reporters of Local newspapers may be allowed
to see the Judgment?
2. To be referred to the Reporter or not?
3. Whether the Judgment should be reported in the Digest?
A.K. SIKRI, J.
1. Controversy has been triggered, prompting filing of all
these petitions, as a consequence of the decision of
Government of NCT of Delhi in revising the school fee
payable by the students studying in various private
recognized Schools in Delhi. This decision is contained in
order dated 11th February, 2009. Whereas, the parents‟
body representing the students studying in these schools
feel that enhancing the fee is unreasonable and without
any proper procedure which was required to be followed
as per the mandate of law and earlier judgment of this
Court as well as the Supreme Court, the Management of
these Schools feels otherwise. They are equally
dissatisfied with the impugned order dated 11th February,
2009 with a reason just opposite, as according to them,
its a meagre enhancement in the fee which fails to match
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 4 of 134
financial burden cast upon the schools as a result of the
revision in the pay scale of the Teachers and other staff of
the Schools consequent upon implementation of the
recommendations of the VIth Pay Commission. This
controversy remains the frontal one though in the process
few other important as well as peripheral and incident
issues have also been raised in different writ petitions
which would be taken note of while examining the
aforesaid central issue.
2. First step in this direction was taken by the parents
through the Association viz. Delhi Abhibhawak Sangh by
filing Writ Petition (C) 7777/2009. Therefore, this writ
petition was taken as lead matter, and we shall proceed to
take note of the facts from this writ petition. However,
wherever it is felt desirable to take note of some
additional facts from other writ petitions, we would be
mentioning those facts at the appropriate place.
Facts and issues raised in WP (C) No.7777 of 2009:
3. The petitioners in this case are Delhi Abhibhavak
Mahasangh, Social Jurist and Faith Academy Parents
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 5 of 134
Association. For the sake of brevity, we would refer to
these petitioners in this writ petition as DAM. It is not the
first time that the DAM has knocked the doors of this
Court on this issue by means of present writ petition filed
as a Public Interest Litigation. Rudiments of this problem
can be traced back to the year 1997 when WP(C) No.2723
of 1997 was filed by DAM in the representative capacity
on behalf of parents/students. DAM claims that it is the
parent body, fighting for the parents/students. Occasion
to file the aforesaid writ petition was also the hike in fee
and other charges announced by various unaided
recognized private schools in Delhi ranging from 40% to
400%. This hike was triggered as a result of
implementation of 5th Pay Commission‟s recommendations
warranting upward revision in the pay of school teachers
and other staff. In that writ petition, notices were issued
on 08.09.1997. Within two days thereafter, i.e. on
10.09.1997, the Delhi Government issued an order fixing
the maximum limits of registration fee, admission fee,
caution money, etc and also directing the schools to utilize
their accumulated reserves first to meet the salary
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 6 of 134
increases. That order provided that if the reserves were
not found sufficient, the fee could be increased to the
extent required after consultation with the representatives
of parents teacher associations. Promulgation that
Governmental order provoked many schools to file the
petitions challenging the validity thereof. All these writ
petitions were decided by a Division Bench of this Court on
30.10.1998 giving several directions to the Government of
NCT as well as schools. We take note of the main
directions given in the said order, which is reported as
Delhi Abibhavak Mahasangh v. Union of India and
others [AIR 1999 Delhi 124]. In the said judgment,
the Court, inter alia, directed as under:
“(i) It is the obligation of the Administrator and or
Director of Education to prevent commercialization and
exploitation in private unaided schools including schools
run by minorities.(ii) The tuition fee and other charges are required to be
fixed in a validly constituted meeting giving opportunity
to the representatives of Parent Teachers Association
and Nominee of Director of Education of place their
viewpoints.(iii) No permission from Director of Education is
necessary before or after fixing tuition fee. In case,
however, such fixing is found to be irrational and
arbitrary there are ample powers under the Act and
Rules to issue directions to school to rectify it before
resorting to harsh measures. The question ofW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 7 of 134
commercialization of education and exploitation of
parents by individual schools can be authoritatively
determined on thorough examination of accounts and
other records of each school.(iv) The Act and the Rules prohibit transfer of funds
from the school to the society or from one school to
another.(v) The tuition fee cannot be fixed to recover capital
expenditure to be incurred on the properties of the
society.(vi) The inspection of the schools, audit of the accounts
and compliance of the provisions of the Act and the
Rules by private recognized unaided schools could have
prevented the present state of affairs.(vii) The authorities/Director of Education has failed in
its obligation to get the accounts of private recognized
unaided schools audited from time to time.(viii) The schools/societies can take voluntary donations
not connected with the admission of the ward.(ix) On the peculiar facts of these petitions there is no
per se illegality in issue of the impugned circular dated
10th September 1997.(x) An independent statutory Committee, by
amendment of law, if necessary, deserves to be
constituted to go into factual matters and adjudicate
disputes which may arise in future in the matter of
fixation of tuition fee and other charges.(xi) The Government should consider extending Act and
Rules with or without modifications to all schools from
Nursery onward.”4. In addition to the aforesaid directions, the Court was also
pleased to appoint a Committee headed by Ms. Justice
Santosh Duggal (a former Judge of this Court) for the
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 8 of 134
period covered by Delhi Government‟s order dated10.09.1997 upto the start of academic session in the year
1999, to look into the cases of individual schools and
determine, on examination of record and accounts, etc. as
to whether increase of tuition fee charges on facts would
be justified or not? The precise terms on which the
aforesaid Committee was constituted and task assigned to
it can be traced in Paras 66-67 of the said judgment which
reads as under;
“66. Having bestowed our thoughtful consideration to
the submission of counsel for the parties and afore
noticed detail facts and circumstances, we are of the
view that an independent Committee deserves to be
appointed for the period covered by impugned order
dated 10th September, 1997 up to start of academic
session in the year 1999, to look into the cases of the
individual schools and determine, on examination of
record and accounts etc. Whether increase of tuition fee
and other charges, on facts would be justified or not.
Eliminating the element of commercialization and in light
of this decision the Committee would determine fee and
other charges payable by students of individual schools.
We do not think that it would be desirable at present to
permit any further increase than what has already been
permitted by order dated 11th December, 1997. We
would, therefore, extend the aforequoted order dated
11th December, 1997 till decision of cases of individual
schools by Committee appointed by this judgment.67. We, accordingly, appoint a Committee comprising of
Ms. Justice Santosh Duggal, a retired Judge of this court
as Chairperson with power to nominate two persons –one with the knowledge of Accounts and Second from
field of education in consultation with Chief Secretary of
NCT of Delhi to decide matters of fee and other chargesW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 9 of 134
livable by individual schools in terms of this
decision……………………..”5. The Committee started its work in right earnestness.
However, the grievance of the DAM is that it could not
complete the work entrusted to it because of non-
cooperation of many schools. The Committee submitted
its Report in 31.07.1999 to the Government. In this
Report, the Committee had made various factual
observations on the devices being used by the schools to
exploit the parents and command unwarranted hefty fees
and other charges. Out of 142 schools examined by it,
the Committee found that only in respect to two schools,
fee hike in 1997-98 was justified whereas qua remaining
140 schools it opined that fee hike was not justified or
partially justified. The petitioners also state that in the
Report the Committee found that 82 schools had violated
the interim orders dated 11.12.1997 passed by this Court
in WP (C) No.3723 of 1997. It also found that 22 schools
out of 27 schools who had collected money under the
head of tuition fee more than 40% in 1997-98 and had
further hiked their tuition fee in the year 1998-99. Armed
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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by these findings, a contempt petition, viz., Cont. Case(C) No.333 of 1999, was filed against as many as 82
erring schools by DAM which is still pending in the Court.
6. The aforesaid Report of Duggal Committee led to the
Government issuing an order on 15.12.1999 prescribing,
among other things, the manner of calculating the amount
of tuition fee and other charges under the specified heads
only.
7. Since the Division Bench of this Court by the said
judgment had repelled the challenge led by the schools
while issuing the aforesaid directions, the directions of this
Court was challenged by various schools in the Supreme
Court. These schools also challenged the aforesaid orders
dated 15.12.1999 issued by the Government of NCT of
Delhi. The Supreme Court decided all the
appeals/petitions vide judgment dated 27.04.2004
dismissing these appeals. The said judgment is reported
as Modern School v. Union of India (UOI) and Ors.
(2004) 5 SCC 583.
8. According to DAM even when the appeals of these schools
were dismissed and judgment of this Court attained
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 11 of 134
finality, the Government of NCT of Delhi miserably failedto take any action against the erring schools to ensure
that they roll back the hike in fees and other charges to a
level that is just, reasonable and devoid of an element of
commercialization. These unaided recognized private
schools kept on increasing fee every year which was done
again, on the commencement of Academic Year 2008-09,
i.e. from 01.04.2008.
9. Notwithstanding the aforesaid increase, in the mid-session
of this academic year, further increase in fee ranging
between 60% to 100% was done by these schools that
too with retrospective effect, i.e., from 01.01.2006. This
move on the part of the schools was the result of
implementation of 6th Pay Commission‟s
recommendations. This time, however, the Government
of NCT of Delhi took immediate step and issued
Notification dated 17.10.2008 whereby a Committee
under the Chairmanship of Shri S.L. Bansal (a retired
I.A.S. Officer) was constituted. The brief of this
Committee was to examine the implications of the 6th Pay
Commission‟s recommendations for the recognized
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 12 of 134
unaided schools in Delhi and submit its recommendationson the terms of reference spelt out below:
“(i) To hear the views of all the stakeholders.
(ii) To work out at least five categories of schools
on the basis of existing data.(iii) To recommend necessary measures to meet
the present requirement.(iv) To suggest suitable measures to meet the
past liability of arrears.(v) To suggest appropriate mechanism to deal
with the recommendations, like two years
child-care leave, etc.(vi) To suggest other related measures.”
10. The Committee was directed to give its Report within 30
days. Since very short time was available at the disposal
of the Committee, it sprung into action immediately and
invited various representations from both the sides. Even
Mr. Ashok Aggarwal, learned counsel was invited on behalf
of the DAM and Social Jurist (petitioners in this writ
petition). The Committee submitted its Report in January,
2009. Based on the recommendations and observations
contained in this Report, the Government of NCT of Delhi
issued the impugned orders dated 11.02.2009. By these
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 13 of 134
orders, the Government of NCT of Delhi permitted theunaided recognized private schools of Delhi to hike the
tuition fee and development fee with retrospective effect,
i.e., from 01.01.2006. The relevant Clauses of the orders
dated 11.02.2009 reads as under:
“2. All schools must, first of all, explore the
possibility of utilizing the existing reserves to meet
any shortfall in payment of salaries and allowances,
as a consequence of increase in the salaries and
allowances of the employees.3. If any school still feels it necessary to hike
the Tuition Fee, it shall present its case, along with
detailed financial statements indicating income and
expenditure on each account, to the Parent Teacher
Association to justify the need for any hike. Any
increase in Tuition Fee shall be effected only after
fulfilling this requirement and further subject to the
cap prescribed in Paragraph 4 below.4. All schools have been placed in 5 categories
based on their monthly Tuition Fee in present.
Increase in the Tuition Fee, as mentioned below, is
permitted with effect from 1st September, 2008 for
those schools who need to raise additional funding
for additional requirement on account of the
implementation of the 6th Central Pay Commission
recommendations:-Proposed
increase in
Existing Tuition
Categor Tuition Fee
Fee (per
y (maximum
month)
limit) (per
month)
1 Upto Rs.500/- Rs.100/-P.M. p.m. 2 Rs.501/- to Rs.200/-W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 14 of 134
Rs.1000/- p.m.
3 Rs.1001/- to Rs.300/-Rs.1500/- p.m. 4 Rs.1501/- to Rs.400/- Rs.2000/- p.m. 5 Above Rs.2000/- Rs.500/- p.m.5. There shall not be any further increase in the
Tuition Fee beyond the limit prescribed in para 4
hereinabove, till March 2010.6. The Parents shall be allowed to deposit the
arrears on account of the above Tuition Fee
effective from 1st September, 2008 by 31st March,
2009.7. The arrears for meeting the requirement of
salary etc. from 1st January, 2006 to 31st August
2008 as per 6th Central Pay Commission
recommendations will be paid by the parents
subject to the limitation prescribed below:-Arrears (2nd
(1st
FeeTotal (i) + (ii)
(per month)installment
installment
CategoryExisting
Arrears
Tuition(ii)
(i)
1 Upto Rs.1000/- Rs.1000/- Rs.2000/-
Rs.500/-
P.M.
2 Rs.501/- Rs.1250/- Rs.1250/- Rs.2500/-
to
Rs.1000/-3 Rs.1001/- Rs.1500/- Rs.1500/- Rs.3000/-
to
Rs.1500/-4 Rs.1501/- Rs.1750/- Rs.1750/- Rs.3500/-
to
Rs.2000/-5 Above Rs. Rs.2250/- Rs.2250/- Rs.4500/-
2000/-
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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The first installment may be deposited by 31st
March, 2009 and the second by 30th September,
2009. Schools, however, are at liberty to prescribe
late dates.”11. The DAM felt aggrieved, as according to it , not only the
increase in fees permitted by the aforesaid order was
abnormally higher and unreasonable, it was contrary to
the spirit behind the aforesaid judgments of this Court and
the Supreme Court as well. The petitioners requested the
Government of NCT of Delhi to supply the complete Report
of Bansal Committee which request was not heeded to.
Without wasting further time, the petitioners approached
this Court by means of present petition, which was filed on
19the March, 2009 questioning the validity of the
aforesaid orders on various grounds.
12. Notice in this petition was issued on 25.03.2009. The
Government had also constituted the Grievance
Committee by the impugned order, while issuing notice,
this Court further ordered that in the meantime if the
Grievance Committee received any specific complaints,
the same would be investigated and report would be
submitted to this Court. The Government of NCT of Delhi
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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was also directed to place on record the Report of theBansal Committee.
13. While cognizance of this petition was taken, counter attack
was spearheaded by various schools including associations
of these schools like the Forum of Minorities‟ School and
Action Committee of Unaided Private Schools, Association
of Public Schools (registered), Forum for Promotion of
Quality Education for All, etc. Petitions from all these
bodies started pouring in. They also challenged orders
dated 11.02.2009 issued by the Delhi Government taking
diametrically opposite stand. According to them, not only
hike in fee allowed by the aforesaid orders was
insufficient, but the Government did not even have the
right to fix such fee and impinge upon the autonomy of
these schools. They also moved application for the stay of
the operation of the said order and particularly the
constitution of the Grievance Committee.
14. These Miscellaneous Applications were heard together and
disposed of vide orders dated 28.05.2009. Since this
order gives a glimpse of the nature of challenge resorting
to by both the sides and the interim measures which were
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 17 of 134
directed while disposing of the Miscellaneous Applications,we would like to reproduce the said order in extenso:
“The matter regarding hike in the fees and
other charges, which can be fixed by the
private unaided schools, has been engaging
judicial attention from time to time. It is not
necessary to refer to the judgment of this
Court as well as of the Supreme Court on this
aspect. At this stage, suffice is to state that a
fresh controversy has triggered after the
Government of India issued Notification dated
29.02.2008 giving effect to the
recommendations of VIth Central Pay
Commission, making them applicable with
effect from 01.01.2006. These
recommendations were accepted in respect of
employees of the Government schools in
Delhi as well and Circular dated 12.09.2008
was issued revising their pay-scales. Section
10 of Delhi School Act, 1973 stipulates that
the scales of pay and allowances, medical
facilities, pension, gratuity, provident funds
and other prescribed benefits of the
employees of recognized private schools shall
not be less than those of the employees of
the corresponding status in school run by the
appropriate authority. Because of this
provision, it becomes the obligation of the
private unaided schools as well to revise the
pay scales of the teachers and other staff
employed by them so as to bring them at par
with the pay scales and allowances enjoyed
by their counterparts in the Government
schools. In view thereof, respondent No. 1
gave directions on 15.10.2008 to all unaided
recognized schools in Delhi to implement the
Vth Central Pay Commission‟s
recommendations. While these private
unaided schools carried out those orders, at
the same time they demanded hike in the
school fee to be charged from the students to
enable to bear the additional burden createdW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 18 of 134
because of upward revision of the pay scales.
In order to determine as to how much hike is
warranted, Government of NCT of Delhi
constituted a Committee under the
Chairmanship of Mr. S.L. Bansal, IAS (Retd.).
The Committee submitted its report making
various recommendations. Without
discussing the finer aspects of the said report,
we may only mention that this Report became
the basis of the orders dated 11.02.2009,
which was issued by the Govt. of NCT Delhi.
As per these orders, all schools have been
placed in five categories, based on their
present monthly tuition fee and they have
been permitted to increase the tuition fee
with effect from 01.09.2008 in the following
manner:limit
Fee (perin Tuition
Proposed
Category(maximu
Increase
Existingmonth)
month)
TuitionFee
per
m1. Upto Rs.500/- Rs.100/-
2. Rs. 501/- to Rs.200/- Rs.1000/- 3. Rs.1001/- to Rs.300/- Rs.1,500/- 4. Rs. 1,501/- to Rs.400/- Rs.2000/- 5. Above Rs.2000/- Rs.500/-Para 5 of this Order mandates that there shall
not be further increase in the tuition fee
beyond the aforesaid limit till March, 2010.
Para 7 of the said order also provides the
manner in which arrears are to be paid by the
parents.This Order also provides for Redressal of
grievances by a Grievance Redressal
Committee, which has been constituted with
the Director (Education) as the Chairperson,W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 19 of 134
two other members and one Chartered
Accountant. Any school or parent(s)
aggrieved from this order could approach the
said Grievance Redressal Committee within
30 days from the issuance of that order. In
such an eventuality, schools are required to
present the accounts before the Committee
on the basis of which Committee was to
resolve each grievance brought before it.Consequent thereto the respondent No. 1,
i.e., Directorate of Education issued a public
notice, which appeared in the newspapers on
16.04.2009. The aforesaid Order dated
11.02.2009 as well as public notice have led
to filing of these writ petitions.W.P.(C) No. 7777/2009 is filed by Delhi
Abhibhavak Mahasangh and others, in public
interest, and purports to represent parents of
the children studying in schools in Delhi. The
main contention in this petition is that fee
hike as permitted vide orders dated
11.02.2009 is not justified. This fee hike has
been challenged on various grounds. In
nutshell, the submission is that there should
not have been increase to the extent
permitted by the aforesaid orders and that
the hike, if required, could be only on case to
case basis, wherever found justified in
respect of a particular school. Thus, the
petitioners in this petition, feel aggrieved by
the hike in fee.Other writ petitions are filed by various
schools/association of schools, etc. They are
also aggrieved by the Order dated
11.02.2009 and the public notice issued by
the respondent No.1. Their submission is
that hike in fee, as allowed, is not sufficient to
take care of the impact of the pay revision
and implementation of VIth CPC‟s Report.
They want hike in fee almost to the extent of
50%.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 20 of 134
These two opposite views canvassed by the
parties would be gone into and considered at
the time of final hearing of the writ petitions.The learned counsel appearing for the schools
have pointed out that some of the clauses in
the public notice may adversely affect them
and the position would be irreversible even if
they ultimately succeed in the writ petitions
filed by them. Submissions made today
specifically relate to Para 6 of the public
notice, which reads as under:“(6) It has also been directed that the
Report Card of any child should not be
withheld at any cost. Further, no
school management shall force any
child to leave the school.”It is their submission that the aforesaid Para
is contrary to Rule 167 of the Delhi Education
Rules which permits the school to strike off
the name of a child who does not pay the
school fee. Various apprehensions are
expressed in case this para is allowed to
operate. Mr. Ashok Agarwal, leaned counsel
appearing for the petitioner in W.P.(C) No.
7777/2009 on the other hand submits that for
non-payment of enhanced fee, the schools
cannot be allowed to take coercive step and
force the child to leave the school and,
therefore, this para of public notice is
perfectly justified. His submission was that
the interest of the child should be paramount
and in the dispute between schools and
parents over the hike of fee, their studies
cannot be affected, more so when Right to
Education is treated as a fundamental right.We have given our due consideration to the
respective submissions. In view of the
narration of the facts and issues involved, as
mentioned above, the outcome of these writ
petitions may result in any of the followingW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 21 of 134
situations:a) Fee as increased vide orders
dated 11.02.2009 is found to be
justified and is maintained; orb) Accepting of the plea of the
schools and permitting them to
charge higher fee than allowed vide
orders dated 11.02.2009; orc) Plea of the parents as
advanced in their writ petition No.
7777/2009 is found to be justified
and is maintained.In the first and second eventualities
mentioned above, the parents will have to
pay at least the fee as per orders dated
11.02.2009. However, they may even have
to pay higher fee if the schools succeed. In
the 3rd eventuality, the fee payable by them
can be lesser than what is stipulated in orders
dated 11.02.2009. In this scenario, when
orders dated 11.02.2009 are issued by the
Government after considering the
recommendations of Ms. S.L. Bansal
Committee, we are of the opinion that the
schools should be allowed to charge the fee
as per the rates mentioned in orders dated
11.02.2009. This would be subject to the
final outcome of these writ petitions.Next question that arises for consideration is
as to what should be the consequences for
non-payment of the fee in terms of orders
dated 11.02.2009. As per Para 6 of public
notice, the report card of such a child is not
to be withheld. We find nothing wrong with
this provision. Insofar as the second part of
para 6 is concerned whereby school
managements are not permitted to force any
child to leave the school, in case enhanced
fee is not paid, we are of the opinion that this
provision needs some modifications andW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 22 of 134
according to us, the following arrangements,
during the pendency of these writ petitions,
would be fair and equitable and shall take
care of interest of all the sides:a) The parents would pay the
fee at the rates specified in orders
dated 11.02.2009 with effect from
the issuance of this order. This is
subject to the condition that in case
it is ultimately found that the fee
payable was less than what is
actually paid, the schools shall
refund excess amount paid by those
students along with interest @ 9%
per annum. The school
management shall file an affidavit of
undertaking in the Court to abide by
the condition. Parents shall also pay
arrears for the period with effect
from 01.09.2008 as provided in para
6.b) In case there is a default in
payment of fee in terms of (a)
above, schools shall be at liberty to
take recourse of Rule 167 of the
Delhi Education Rules.c) Insofar as arrears in terms of
Para 7 are concerned, the school
managements shall not neither force
the child to leave school nor take
any coercive steps against any child
for non-payment thereof.d) In respect of those students,
who are leaving the schools after
completing their education or even
pre-maturely of their own, the school
managements shall be permitted to
recover the arrears of fee as well.After giving adjustment of security
or other deposits lying with schools.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 23 of 134
However, this is subject to the
condition that in case it is ultimately
found that fee payable was less than
what is actually paid, schools shall
refund excess amount paid by those
students, along with interest @ 9%
per annum. The school
managements shall file an affidavit
of undertaking in this Court to abide
by this condition of refund.Ms. Avnish Ahlawat, learned counsel
appearing on behalf of the respondents,
clarifies that the development fee as
stipulated in Para 14 of the orders dated
11.02.2009 is payable with prospective effect,
i.e., 01.09.2008 wherever it is payable in
terms of this para.With the aforesaid observations, CMs stand
disposed of.”15. In the writ petition filed by the DAM, five grievances are
made, which can be briefly recapitulated as under:
1) Decision to increase the fees is not based on any
rationale or legal basis;
2) The Report of S.L. Bansal Committee is not made
public which should be done immediately (since
the Report of the said Committee was supplied to
the parties was made public, this grievance is
taken care of);
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 24 of 1343) Direction is sought for to constitute permanent
Tribunal so that Duggal Committee task be
completed and such Tribunal is able to take care
of these situations in future as well.
4) The hiked fee which has been and is being paid by
the parents/students should be refunded;
5) The Government should ensure auditing of
accounts as per Section 18(6) of Delhi School
Education Act (hereinafter referred to as „the Act‟)
read with Rule 170, Delhi Education Rules on
regular basis.
Arguments: DAM
16. In support of the aforesaid prayers made in this writ
petition, Mr. Ashok Aggarwal, learned counsel appearing
for the Delhi Abhibhawak Mahasangh (hereinafter referred
to as „DAM‟) extensively referred to the various
observations and directions of this Court in Modern
School (supra). He also sought to nourish his argument
by taking support from another Supreme Court case
entitled Action Committee Unaided Pvt. Schools &
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 25 of 134
Ors. Vs. Director of Education & Ors. [2009 (11)SCALE 77]. Based on the directions contained in these
judgments as well as provisions of the Act and Rules, his
submission was:
(i) There could not be a general order of increase
in fee on uniformity basis by all the schools, as
fee or charge could be raised depending upon
the financial health and finds at the disposal of
each school, after due examination thereof,
which was not done. He specifically referred to
Section 17(3) of the Act n this behalf.
(ii) There was no nexus between increase in fee
and the underlying object specifically
underlined by this Court in DAM-1, viz.:
(a) Reasonable fee structure; (b) No commercialization.(iii) Even the Bansal Committee had rejected the
provision in Part 9.1 of its Report and fee hike
was suggested on the basis of actual
requirement, subject to maximum of `500/-
and it was categorically mentioned that fee
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 26 of 134
hike was not the only source for the schoolswho were to tap other sources like other
profitable activities as well as development fee
already generated. However, while passing the
impugned order, the Government did not look
into these pivotal recommendations of the
Bansal Committee.
(iv) Effect of 6th Pay Commission‟s recommendation
was wrongly given inasmuch as,
(a) More school teachers were shown than
the actual teaching ;
(b) Creating false financial burden; and
(c) Three months‟ salary reserve was created
and burden thereof could not be shifted to
students by hiking fee.
17. Mr. Ajay Goel, learned counsel who appeared for the
applicant/impleader, Health Care Foundation in CM
8462/2009 in WP(C) No.7777/2009 supplemented the
aforesaid submissions of Mr. Aggarwal. His main attack
was on the deliberations of Bansal Committee and he
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 27 of 134
emphasized that this Committee has worked without anyaccounts expert; there was no adequate representation of
parents; in all six meetings were held, and only in the
sixth meeting all members were present; meetings were
held in the premises of schools thereby choosing wrong
venue, as schools were interested parties; only 99
responded out 1100 schools and only 43 requested for fee
hike and thus, there was no representative character
before the Committee; in the data that was asked for
profitability before or after Sixth Pay Commission was not
called for which was most relevant; for previous year‟s
financial position was not taken into consideration on the
presumption that the schools were working on „no profit,
no gain basis‟, which was clearly wrong and no control
was exercised by the Director of Education. Suggestions
are given by the applicant in this CM which are as under:
“1. The accounting and other records of such
recognized schools, for all these years, may
be independently audited to work out the
non-compliance of law by them to derive
undue benefit by such schools from
overcharging the fee and other funds. Such
schools should be made to pay back to the
students, the value of such benefit illegally
enjoyed by them, if any.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 28 of 1342. To order setting up of an independent
Regulatory Body which may be named as
“Delhi Education Regulatory Commission”,
which can regulate issues related with the
Delhi School Education Act, 1973 & the Delhi
School Education Rules, 1973 having
jurisdiction over all the schools including
aided schools, un-aided schools, other
recognized schools, Govt. schools. The role
of Directorate of Education may be restricted
to administration of Govt. schools and
Directorate may be made answerable before
the regulatory body as Manager of Govt.
Schools like Manager of any other school.The regulatory body may include Educationists, Advocates, CharteredAccountants and other professionals also.
3. To order the report of the Committee as void
an initio because of constitution of Committee
against the directions of notification, almost
non-representation of parents/students in the
Committee, holding of meetings by the
Committee in the premises of parties who are
otherwise interested in the matter.4. To ask for the explanation from the
Directorate of Education, who was supposed
to keep a check on the financial and other
aspects of recognized schools, for all these
years, for not able to ensure compliance with
the law and rules.”Arguments: Schools
18. On behalf of schools, arguments were addressed by
various counsels, viz.,
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 29 of 134(i) Mr. C.S. Sundaram, Sr. Advocate for the Action
Committee of Un-aided Private Schools & Ors. in WP
(C) No.8147/2009.
(ii) Mr. Rakesh Khanna, Sr. Advocate appeared in WP(C)
No.8147/2009 and WP (C) No.7777/2009.
(iii) Mr. S.D. Salwan and Mr. Mukul Talwar, learned
counsel appeared in WP (C) No.8614/2009 for Forum
for Promotion of Quality Education for All.
(iv) Ms. Rekha Palli, learned counsel appeared for the
applicant in CM No.9664 in WP(C) No.7777/2009.
(v) Mr. Romy Chacko, learned counsel appeared in WP
(C) No.9228/2009 & WP (C) No.11139/2009 for the
Forum of Minority Schools.
(vi) Mr. Sanat Kumar, learned counsel appeared in WP
(C) No.8610/2009 for Association of Public Schools
(Regd.)
19. Action Committee Unaided Private Schools (Redg.) boasts
of membership of about 250 recognized unaided private
schools. In its writ petition, in addition to the orders
dated 11.02.2009, it has also challenged the constitutional
validity of Section 17(3) of the Act to the extent that the
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 30 of 134
same does not permit the petitioners to determine theirown fee structure. It is their submission that on the
recommendation of 6th Pay Commission, the Government
had issued vide Circular dated 12.09.2008. All private
schools were also obliged to give the same pay scale as
amended by the Section 10 of 1973 Act. Therefore, on
15.10.2008, the Director of Education issued Circular
under Section 10(1) of the Act directing all the schools to
implement the said recommendations. Their submission is
that when these schools are obliged to pay the same pay
scales to their teachers and staff as are paid to the
Government teachers, it is their right to revise, enhance
and fix the fee and other charges payable by the students
as well. However, vide Notification dated 11.02.2009, the
Government of NCT of Delhi while allowing the increase in
existing fee by a particular amount has also restrained the
private schools from increasing fee without seeking
approval of PTA and they were also restrained from
increasing fee till March, 2010. They are also peeved at
the constitution of Grievance Redressal Committee. In
nutshell, their grievance is that schools should be allowed
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 31 of 134
to have the play in the joints without any shackles.Therefore, they have challenged the vires of Section 17
(3) of the 1973 Act as well as orders dated 11.02.2009
with a prayer for issuing appropriate direction that schools
are entitled to determine and charge the fee which is
payable by the students admitted by these schools.
20. Mr. Sundaram, learned Senior counsel in support of these
prayers submitted that by issuing the Circular dated
11.02.2009 ostensibly under the provisions of Section
17(3) of the 1973 Act, the respondent No.1 has usurped
the right of a private recognized unaided educational
institutions to determine their own fee structure. The
respondents have virtually taken up the task of
determining the quantum of fee that can be charged by
private recognized unaided educational institutions without
leaving any discretion or autonomy to them. The same is
not only illegal but also runs counter to the scheme of the
Constitution of India as interpreted by the Supreme Court.
The Delhi Government by issuing the impugned
circular/notification dated 11.02.2009 placing reliance on
Section 17(3) of 1973 Act has infringed the said right. On
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 32 of 134
facts also, the fee hike that has been permitted by theDelhi Government in impugned circular/notification dated
11.02.2009 is far less than required to meet the financial
liability of the private unaided recognized schools on
account of implementation of the recommendations of the
6th Central Pay Commission. Mr. Sundaram also relied
upon the same very judgment in DMA-1 and specifically
referred to direction no. (iii) in para 65 thereof:
“65. In view of the aforesaid discussion, our
conclusion may be summarized as under:i) ************* ii) *************(iii) No permission from Director of Education
is necessary before or after fixing tuition fee.
In case, however, such fixation is found to be
irrational and arbitrary, there are ample powers
under the Act and the Rules to issue directions to
schools to rectify it before resorting to harsh
measures. The question of commercialization of
education and exploitation of parents by individual
schools can be authoritatively determined on
through examination of accounts and other records
of each school.”(emphasis supplied)
21. He argued that freedom given to private schools was
specifically approved by the Supreme Court as well
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 33 of 134
Modern School (supra). The court while concurringwith the judgment of this Court was please to further
observe as under:
“14. At the outset, before analyzing the provisions
of 1973 Act, we may state that it is now well settled
by catena of decisions of this Court that in the
matter of determination of the fee structure the
unaided educational institutions exercises a great
autonomy as, they, like any other citizen carrying
on an occupation 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. However, in none of the earlier cases,
this Court has defined the concept of reasonable
surplus, profit, income and yield, which are the
terms used in the various provisions of 1973 Act.15…………. The institutions should be permitted to
make reasonable profits after providing for
investment and expenditure. However, capitation
fee and profiteering was held to be forbidden.
Subject to the above two prohibitory parameters,
this Court in TMA Pai Foundation’s case held that
fees to be charged by the unaided educational
institutions cannot be regulated. Therefore, the
issue before us is as to what constitutes reasonable
surplus in the context of the provisions of the 1973
Act.xxx xxx xxx
26. To sum up, the interpretation we have placed
on the provisions of the said 1973 Act is only to
bring in transparency, accountability, expenditureW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 34 of 134
management and utilization of savings for capital
expenditure/investment without infringement of
the autonomy of the institute in the matter of
fee fixation. It is also to prevent
commercialization of education to the extent
possible.”(emphasis supplied)
22. He, thus, submitted that it was specifically held that “No
permission from Director of Education is necessary
before or after fixing tuition fee.” Thus, the right to
determine their fee structure vests with the schools and
not the Government.
23. Mr. Sundaram also referred to the judgment of the
Supreme Court in the case of T.M.A. Pai Foundation Vs.
State of Karnataka (2002) 8 SCC 481 wherein the
Court considered a large number of issues touching upon
the right to establish educational institutions and matters
relating to the autonomy of private unaided educational
institutions with regard to admission of students and fee
to be charged. His submission was that from the
observations of the Supreme Court in the T.M.A. Pai
Foundation (supra), it was clear that right to establish
an educational institution is a fundamental right which
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 35 of 134
comprises the right to establish and administer. The sameincludes the right to admit students, to set up a
reasonable fee structure, etc. A private unaided
educational institution has the right to determine the fees
to be charged by it subject to the condition that
profiteering would not be permitted. The following
portions of the said judgment was referred to in support of
this argument:
“1. Is there a fundamental right to set up
educational institutions and if so, under which
provision?18. With regard to the establishment of educational
institutions, three Articles of the Constitution come
into play. Article 19(1)(g) gives the right to all the
citizens to practice any profession or to carry on
any occupation, trade or business; this right is
subject to restrictions that may be placed under
Article 19(6). Article 26 gives the right to every
religious denomination to establish and maintain an
institution for religious purposes, which would
include an educational institution. Article 19(1)(g)
and Article 26, therefore, confer rights on all
citizens and religious denominations to establish
and maintain educational institutions. There was no
serious dispute that the majority community as well
as linguistic and religious minorities would have a
right under Article 19(1)(g) and 26 to establish
educational institutions. In addition, Article 30(1),
in no uncertain terms, gives the right to the
religious and linguistic minorities to establish and
administer educational institutions of their choice.xxx xxx xxx
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 36 of 13445. In view of the discussion hereinabove, we hold
that the decision in Unni Krishnan’s case, insofar
as it framed the scheme relating to the grant of
admission and the fixing of the fee, was not correct,
and to that extent, the said decision and the
consequent direction given to UGC, AICTE, Medical
Council of India, Central and State Government,
etc., are overruled.”24. Mr. Sundaram also pointed out that in the case of T.M.A.
Pai (supra), question No. (3) framed by the Hon‟ble
Constitution Bench was as under:
“3. In case of private institutions (unaided), can
there be government regulations and, if so, to what
extent?”While considering the question No. (3), the Court was
pleased to observe as under:
“50. The right to establish and administer broadly
comprises of the following rights:-(a) to admit students:
(b) to set up a reasonable fee structure:
(c) to constitute a governing body;
(d) to appoint staff (teaching and non-teaching);
and(e) to take action if there is dereliction of duty on
the part of any employees.xxx xxx xxx
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 37 of 13454. The right to establish an educational institution
can be regulated; but such regulatory measures
must, in general, be to ensure the maintenance of
proper academic standards, atmosphere and
infrastructure (including qualified staff) and the
prevention of mal-administration by those in charge
of management. The fixing of a rigid fee structure,
dictating the formation and composition of a
government body, compulsory nomination of
teachers and staff for appointment or nominating
students for admissions would be unacceptable
restrictions.55. The Constitution recognizes the right of the
individual or religious denomination, or a religious
or linguistic minority to establish an educational
institution. If aid or financial assistance is not
sought, then such institution will be a private
unaided institution. Although, in Unni Krishnan’s
case, the Court emphasized the important role
played by private unaided institutions and the need
for private funding, in the scheme that was framed,
restrictions were placed on some of the important
ingredients relating to the functioning of an
educational institution. There can be no doubt that
in seeking affiliation or recognition, the Board or
the university or the affiliating or recognizing
authority can lay down conditions consistent with
the requirement to ensure the excellence of
education. It can, for instance, indicate the quality
of the teachers by prescribing the minimum
qualifications that they must possess, and the
courses of study and curricula. It can, for the same
reasons, also stipulate the existence of
infrastructure sufficient for its growth, as a pre-requisite. But the essence of a private educational
institution is the autonomy that the institution must
have in its management and administration. There,
necessarily, has to be a difference in the
administration of private unaided institutions and
the government-aided institutions. Whereas in the
latter case, the Government will have greater say in
the administration, including admissions and fixing
of fees, in the case of private unaided institutions,W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 38 of 134
maximum autonomy in the day-to-day
administration has to be with the private unaided
institutions. Bureaucratic or governmental
interference in the administration of such an
institution will undermine its independence. While
an educational institution is not a business, in order
to examine the degree of independence that can be
given to a recognized educational institution, like
any private entity that does not seek aid or
assistance from the Government, and that exists by
virtue of the funds generated by it, including its
loans or borrowings, it is important to note that the
essential ingredients of the management of the
private institution include the recruiting students
and staff, and the quantum of fee that is to be
charged.56. An educational institution is established for the
purpose of imparting education of the type made
available by the institution. Different courses of
study are usually taught by teachers who have to
be recruited as per qualifications that may be
prescribed. It is no secret that better working
conditions will attract better teachers. More
amenities will ensure that better students seek
admission to that institution. One cannot lose sight
of the fact that providing good amenities to the
students in the form of competent teaching faculty
and other infrastructure costs money. It has,
therefore, 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. One also cannot lose sight of the fact
that we live in a competitive world today, where
professional education is in demand. We have been
given to understand that a large number of
professional and other institutions have been
started by private parties who do not seek any
governmental aid. In a sense a prospective
students has various options open to him/her
where, therefore, normally economic forces have a
role to play. The decision on the fee to be charged
must necessarily be left to the private educationalW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 39 of 134
institution that does not seek or is not dependent
upon any funds from the government.xxx xxx xxx
62. There is a need for private enterprise in non-
professional college education as well. At present,
insufficient number of undergraduate colleges are
being and have been established, one of the
inhibiting factors being that there is a lack of
autonomy due to government regulations. It will
not be wrong to presume that the numbers of
professional colleges are growing at a faster rate
than the number of undergraduate and non-
professional colleges. While it is desirable that there
should be a sufficient number of professional
colleges, it should also be possible for private
unaided undergraduate colleges that are non-
technical in nature to have maximum autonomy
similar to a school.xxx xxx xxx
66. In the case of private unaided educational
institution, the authority granting recognition or
affiliation can certainly lay down conditions for the
grant of recognition or affiliation; these conditions
must pertain broadly to academic and educational
matters and welfare of students and teachers – but
how the private unaided institutions are to run is a
matter of administration to be taken care of by the
Management of those institutions.”25. Mr. Sundaram also submitted that following the judgment
in T.M.A. Pai Foundation (supra), the Supreme Court in
the case of Modern Dental College and Research
Centre Vs. State of M.P. (2009) 7 SCC 751 was
pleased to hold as under:
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 40 of 134
“27. In our view, it cannot be left to the unilateral
decision of the State Government to say that the
private institutions have failed to meet with the
triple tests mentioned in Inamdar’s case (supra),
because that will be giving unbridled, absolute and
unchecked power to the State Government. In our
prima facie opinion, the M.P. Niji Vyavsayik
Shikshan Sanstha (Pravesh Ka Viniyaman Avam
Shulk Ka Nirdharan) Adhiniyam, 2007 (for short
‘the Act of 2007’), appears to handover the entire
selection process to the State Government or the
agencies appointed by the State Government for
under-graduate, graduate and post-graduate
medical/dental colleges and fee fixation. This, in
our prima facie opinion, is contrary to, and
inconsistent with the observations (quoted above)
made by the 11 Judge Bench decision of this Court
in T.M.A. Pai’s case (supra), and hence the 2007
Act would become unconstitutional if it is read
literally. We have therefore to read down the 2007
Act and Rules to make them constitutional…………….”Again, according to the learned Senior Counsel, in the
case of Kathuria Public School Vs. Director of
Education and Anr.123 (2005) DLT 89 (DB), this
Court relying upon the case of T.M.A. Pai Foundation
(supra) was pleased to declare Section 8(2) and 8(4) of
1973 Act requiring private unaided recognized schools to
take prior approval of the Director of Education in the
matter of disciplinary action as ultra vires and
unconstitutional.
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 41 of 13426. Based on these judgments, his plea was that it is clear
that right to establish an educational institution is a
fundamental right which comprises the right to establish
and administer. The same includes the right to admit
students, to set up a reasonable fee structure, etc. A
private unaided educational institution has the right to
determine the fees to be charged by it subject to the
condition that profiteering would not be permitted. Nor
can the state prescribe a rigid fee structure or dictate the
formation and composition of a governing body,
compulsory nomination of teachers and staff for
appointment, etc.
27. After submitting that the aforesaid was the correct legal
position, Mr. Sundaram proceeded to argue that not only
Section 17(3) of the 1973 Act was ultra vires, as this
provision took away the aforesaid rights of these schools,
various clauses of orders dated 11.02.2009 were also
illegal and unconstitutional. His attack on the orders
dated 11.02.2009 can be summarized as under:
(i) That the Notification dated 11.02.2009 seeks to lay
down a mechanism for approval of the accounts of
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 42 of 134
the private schools before the PTA. Such a conceptis alien to the provisions of the 1973 Act. Clause 3
of the order dated 11.02.2009 requiring the
Managing Committee of a private unaided recognized
school to present its case before the PTA of the
school cannot be sourced to any provision of the
1973 Act and the Rules framed thereunder and thus,
is ultra vires the provisions of the 1973 Act and
Rules itself. Under the current provisions, a
Managing Committee of a private unaided recognized
school is required to submit its full statement of fee
to be levied during the ensuing academic session to
the Director of Education under Section 17 (3) of the
1973 Act. In case it seeks to increase the fee during
the academic session, it is required to seek the prior
approval of the Director of Education. No such role
of the PTA has been envisaged under the 1973 Act
and the Rules.
(ii) Clause 4 of the order dated 11.02.2009 casts an
upward limit on the fee that may be increased by the
Managing Committee of a private unaided recognized
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 43 of 134
school on the basis of different slabs/categorieslinked to the range of fee currently being charged by
the schools is arbitrary, illegal and is not based on
any scientific criteria apart from being an affront
upon the autonomy of the schools in the matte of
determination of fee. Each school has its own
liabilities arising out of the implementation of the
recommendations of the 5th Central Pay Commission
and the same cannot be determined in a straight
jacket formula and in such a uniform manner as has
been done by the respondents. The impact of the
Pay Commission‟s recommendations depends upon
several factors such as number of teachers, their
date of appointment, student-teacher ratio, facilities
being extended to students, inflation, grant of
increments (3% annually), employment of teachers
due to regular teachers going on child care leave,
transport allowance linked with DA, etc. None of
these factors have been taken into account by the
respondents.
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 44 of 134(iii) Clause 5 of the order dated 11.02.2009 whereby the
private unaided recognized schools have been
restrained from increasing the tuition fee beyond the
levels specified in Clause 4 of the said order till
Mach, 2010 is illegal being contrary to the provisions
of Section 17 (3) of the 1973 Act. It is submitted
that Section 17 (3) of the 1973 Act, a Managing
Committee of a private unaided recognized schools is
required to submit its full statement of fee to be
levied during the ensuing academic session to the
Director of Education. In case, it seeks to increase
the fee during the academic session, it is required to
seek the prior approval of the Director of Education.
The order dated 11.02.2009 itself states that the
same has been issued in the wake of the
implementation of the recommendations of the 5 th
Central Pay Commission. Hence, the same can be
stated to be an order permitting the schools to
increase the tuition fee under Section 17 (3) of the
1973 Act “during the academic session” after the
school has already submitted its full statement of fee
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 45 of 134
to be levied during the ensuring academic session tothe Director of Education. Thus, Clause 5 of the
order dated 11.02.2009 so far as the same prevents
the schools from raising its fee till March, 2010 is
illegal since the same takes away the rights of the
schools conferred under Section 17 (3) of the 1973
Act.
(iv) Clause 10 of the Order dated 11.02.2009 envisages
the establishment of a Grievance Redressal
Committee with regard to determination or increase
of fees. The same is arbitrary, illegal and ultra vires
the provisions of the 1973 Act and Rules and
impinges upon the autonomy of the schools. There
is no such provision under the 1973 Act or the Rules.
Section 17 (3) of 1973 Act requires permission of the
Director Education only when fee is sought to be
increased during midst of an academic session. For
the ensuing academic session, the management of a
school is only required to submit to the Director of
Education its full statement of fee to be levied during
the ensuing academic session. By the impugned
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 46 of 134
provision, the respondents have created a right infavour of parents whereby a n extra-judicial body
has been created to entertain their grievances
against a fee hike which under law is to be
determined solely by the managing committee of a
private unaided institution without any interference
from any quarter. Further, 1973 Act recognizes only
the Director of Education for the purposes of
consideration of annual statement of fee that is
submitted by the schools under Section 17 (3) of
1973 Act. The Grievance Redressal Committee is a
superimposition over and above the Director of
Education which is not recognized under 1973 Act.
(v) Clauses 11, 12, 13, 14 and 15 of the order dated
11.02.2009 whereby the respondents have
suggested to the schools to utilize interest on
deposits, development fee, etc. to meet the shortfall
in meeting the liabilities arising out of the
implementation of the recommendations of the VIth
Pay Commission are contrary to the provisions of
1973 Act and several judicial pronouncements made
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 47 of 134
in this regard. Schools have a right under Rule 177(1) to utilize the surplus for establishment of new
schools under the management of the same society,
award of scholarships, etc. The Delhi Government
cannot dictate to a private unaided recognized school
to utilize its surplus in a particular manner, i.e. to
meet the liabilities arising out of the VIth Central Pay
Commission. The provisions of 1973 Act and Rules
(Rules 172 to 178) specifically provide that income
derived from collections for specific purposes shall be
spent only for such purpose. Hence, the order dated
11.02.2009 in effect is asking the schools to do what
they are prohibited under law to do. In this regard,
it is also submitted by him that deposits and interest
on deposits are statutory requirement to be
maintained as a condition precedent for recognition
and continuance of such recognition. The Rules do
not permit utilization of any fund for any purposes
other than for which they were raised/collected.
Hence, the directions of the respondents in breach of
the Rules framed under 1973 Act. I was pointed out
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 48 of 134
that in fact para 23 of the said order, therespondents themselves have directed that the
fee/funds collected from students are to be utilized
strictly in accordance with Rules 176 and 177.
28. In conclusion, Mr. Sundaram emphasized that figures
made available under the provisions of Right to
Information Act show that salaries of teachers in
Government run schools have gone up by 40% to 76%
upon the implementation of the Pay Commission‟s
recommendations. The impact of the implementation of
Pay Commission recommendations upon private unaided
schools is also the same. Payment of salaries of teachers
in private unaided schools constitutes 80% of the total
financial liabilities of the schools and the same is met only
by the fee recovered from students. Salaries of teachers
upon the implementation of the Pay Commission‟s
recommendations in schools have increased by 50-60%.
However, the fee hike has been restricted by the
respondents to 20%, which is woefully inadequate to meet
the exigencies.
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 49 of 13429. Mr. Rakesh Khanna, who appeared for private respondents
in WP (C) Nos. 8147/2009 and 7777/2009 also submitted,
almost on the same lines as Mr. Sundaram did, contending
that Section 17 (3) of 1973 Act was ultra vires. In
addition, he made detailed arguments about the Duggal
Committee. In this behalf, his submission was that after
the constitution of Duggal Committee and submission of
its report, much water had flown. The issue in the present
cases arose as a result of implementation of the
recommendations of 6th Central Pay Commission and DAM
was not entitled to turn the clock back by starting all over
again from the stage of the Duggal Committee. This plea
of the DAM, he argued, was barred by constructive res
judicata. He referred to the judgments this Court in the
case of Delhi Abhibhavak Mahasangh Vs. Union of
India & Ors. [AIR 2002 Delhi 275] and that of
Supreme Court in the case of Direct Recruit Class II
Engineering Officers’ Association Vs. State of
Maharashtra and Others (1990) 2 SCC 715:
“37. The petitioner J.H. Bhatia was appointed
Deputy Engineer as a direct recruit in 1959 and wasW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 50 of 134
promoted as Executive Engineer in 1969. According
to his case, he was governed by the 1941 Rules
and was, therefore, entitled to a higher position in
the list of seniority. It has been contended by him
that he was entitled to the benefit of either the
1941 Rules or the provision relating to quota in
1960 Rules and in either event he would have been
eligible for promotion to the rank of Executive
Engineer three years earlier, that is, in 1966. On
account of this delay in his promotion he seriously
suffered by the further delay in his next promotion
as Superintending Engineer by a considerable
period. With reference to the criticism against the
1941 Rules in the judgment of Patwardharis case
the petitioner urged that the same should be
treated as passing remarks, fit to be ignored.
Alternatively he has adopted the arguments
addressed on behalf of the appellants challenging
the correctness of the decision in Patwardharis
case.”30. He, thus, argued that the question of fee hike should be
looked into by examining the financial burden which is
created by the recommendations of 6th Pay Commission.
He referred to pre-revised and revised pay scale of various
staff and teachers on the implementation of 6 th Pay
Commission and sought to demonstrate that the impact
was 38 to 66% increase in salaries to different schools
and the fee was not allowed to be raised commensurate to
the said hike in salaries.
31. Mr. Romy Chacko and Mr. M. Qayam-ud-din, learned
counsel who appeared for the Forum of Minorities Schools
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 51 of 134
and Faith Academy Schools (which is also a minorityschool) respectively carried the arguments further by
contending that the impugned actions of the Government
impinging upon their minority‟s rights thereby violating
the protection granted by these minority institutions under
Article 30 of the Constitution of India. Their arguments
were that Article 30 includes a right of administration and
as per Chapter XI of Delhi Education Rules, 1973 and
other provisions of the 1973 Act, the Notification dated
11.02.2009 cannot be slapped/imposed on the minority
unaided recognized schools, as it amounts to interference
in the administration of the Minority Institution as
guaranteed under Article 30 of the Constitution. Article 30
vis-à-vis „right of minority‟ is clearly interpreted by the
Supreme Court T.M.A. Pai (supra) wherein the
Constitution Bench (comprising of 11 Judges) has held
that the fee of the minority unaided recognized schools
cannot be regulated by the State. In the said case, 11
questions were framed and answered. Out of those 11
questions, question No. 5(C) was framed as under:
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 52 of 134
“Q.5(c) Whether the statutory Provisions which
regulate the facets of administration like control
over educational agencies, control over governing
bodies, conditions of affiliation including
recognition/withdrawal thereof, and appointment of
state employees, teachers and Principals including
their service conditions and regulation of fees, etc.
would interfere with the right of administration of
minorities?”32. The Court has answered the question and inter alia has
held as under:
“A. So far as the statutory provisions regulating the
facets administration is concerned, in case of an
unaided minority educational institution, the
regulatory measure of control should be minimal
and the conditions of recognition as well as
conditions of affiliation to an University or Board
have to be complied with,………. Regulations can be
framed governing service conditions for teaching
and other staff for whom aid is provided by the
State without interfering with overall administrative
control of Management over the staff,……..Fees to
be charged by unaided institutions cannot be
regulated but no institution should charge
capitation, etc.”33. The said position remains intact as it is reaffirmed by the
Supreme Court in Unaided Pvt. Schools and Ors.
(supra) and it is further, inter alia, held by majority view
as under:
“that any direction issued by the High Court, by the
rule making authority or any statutory authority
must be in conformity with the decision of this
Court in T.M.A. Pai Foundation (supra) as clarifiedW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 53 of 134
by the decision of this Court in P.A. Inamdar
(supra).”(As per Hon‟ble Mr. Justice S.B. Sinha)
34. The aforesaid view was agreed to by Hon‟ble Mr. Justice
Cyriac Joseph, in the following manner:
“2. Though I agree with the view of S.B. Sinha, J.
that any direction issued by the High Court or by
the rule making authority or any statutory authority
must be in conformity with the decision of this
Court in the case of T.M.A. Pai Foundation as
clarified by the decision of this Court in the case of
P.A. Inamdar, in my view, the judgment of S.H.
Kapadia, J. does not question or contradict such a
legal proposition. On the contrary, it is in
recognition of the above legal proposition………….”35. They submit that as per the latest legal settled preposition
of law, in the instant case, the Rule making authority
(Delhi Government or Union of India) or any statutory
authority (DOE Delhi) including this Court has to follow
the ratio laid down by the Supreme Court in T.M.A. Pai
(supra), as explained hereinabove while answering the
question No.5 (c) reproduced above. Thus, the effect is
this legal settled position of law, pursuant to the judgment
dated 07.08.2009 of the Supreme Court, the “Fees to be
charged by unaided minority institutions cannot be
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 54 of 134
regulated”. That in view of the aforesaid settled legalposition, the view taken in Modern School (supra)
cannot prevail upon and thus the fee of the minority
institutions cannot be regulated, as the Supreme Court
has categorically held in the aforesaid judgment dated
07.08.2009 while interpreting the effect of T.M.A. Pai
(supra):
“It also goes without saying that the judicial
discipline mandates the Bench comprising of two or
three Judges to follow the Constitution Bench
decisions having regard to Article 141 of the
Constitution of India. (See State of West Bengal v.
Ashish Kumar Roy and Ors. (2005) 10 SCC 110].”Arguments: Government of NCT of Delhi
36. On behalf of Government/Official respondents, matter was
argued by Ms. Avnish Ahlawat, Advocate. In endeavour to
get steer cleared and placating onslaught, Ms. Ahlawat
sought to justify the issuance of orders dated 11.02.2009.
Interestingly while doing so, she also took shelter behind
the same directions given by this Court in DAM-1 was well
as judgments of the Supreme Court in Modern School
(supra) and T.A.M. Pai (supra). Referring to various
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 55 of 134
observations in those judgments coupled with provisionsof the 1973 Act and Rules, her attempt was to
demonstrate that the Government was duly and
sufficiently armed with necessary powers to not only issue
orders dated 11.02.2009, but also to constitute the
Grievance Redressal Committee to ensure that the fee is
hiked reasonably and it commensurate with financial
impact levied by the implementation of VIth Pay
Commission. Since reliance is placed on the same
judgments and same material and the difference is only in
perception, the detailed submissions made by the learned
counsel for the Government in this behalf can be taken
note of while discussions the scope and ratio of the
aforesaid judgments.
Legal Provisions:
37. At this stage, it would be apt to reproduce the relevant
statutory provisions contained in 1973 Act and the Rules
which have bearing on the subject matter:
“Sections:
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 56 of 1342. (a) “Administrator” means the Administrator of
the Union Territory of Delhi appointed by the
President under article 239 of the Constitution;xxx xxx xxx
e) “appropriate authority” means :-
(i) in the case of a school recognized or to be
recognized by an authority designated or
sponsored by the Central Government, that
authority;(ii) in the case of a school recognized or to be
recognized by the Delhi
Administration, the Administrator or any
other officer authorized by him in this behalf;(iii) in the case: of a school recognized or to be
recognized Municipal Corporation of Delhi,
that Corporation;(iv) in the case of any other school, the
Administrator or any other officer authorized
by him in this behalf;xxx xxx xxx
g) “Director” means; the Director of Education,
Delhi, and includes any other officer authorized by
him to perform all or any of the functions of the
Director under the act;3. Power of Administrator to Regulate
Education in Schools- (1) The Administrator may
regulate education in all the schools in Delhi in
accordance with the provisions of this Act and the
rules made thereunder.(2) The Administrator may establish and maintain
any school in Delhi 0] may permit any person or
local authority to establish and maintain any schoolW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 57 of 134
ill Delhi, subject to compliance with the provisions
of this Act and the rules made thereunder.(3) On and from the commencement of this Act and
subject to the provisions of clause (1) of Article 30
of the Constitution, the establishment of a new
school or the opening of a higher class or the
closing down of an existing class in any existing
school in Delhi shall be subject to the provisions of
this Act and the rules made thereunder and any
school or higher class established or opened
otherwise than in accordance with the provisions of
this Act shall not be recognized by the appropriate
authority.(4) Recognition of schools- (1) The appropriate
authority may application made to it in the
prescribed form and in the prescribed manner,
recognize any private school:Provided that no school shall be recognized unless-
~’a) it has adequate funds to ensure its financial
stability and 1 payment of salary and allowances to
its employees;xxx xxx xxx
5. Scheme of management- (1) Notwithstanding
anything contained in any other law for the time
being in force or in any instrument having effect by
virtue of any such law, the managing committee of
every recognized school shall make, in accordance
with the rules made under this Act and with the
previous approval of the appropriate authority, a
scheme of management for such school:Provided that in the case of a recognized private
school which does not ” receive any aid, the
scheme of management shall apply with such
variations and modifications as may be prescribed:W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 58 of 134
Provided further that so much of this sub-section as
relates to the previous approval of the appropriate
authority, shall not apply to a scheme of
management for an unaided minority school.(2) a scheme may be made, in like manner, to add,
to vary or modify any scheme made under sub-
section (1).xxx xxx xxx
17. Fees and other charges- (1) No aided school
shall levy fee or collect any other charge or receive
any other payment except those specified by the
Director.(2) Every aided school having different rates of fees
or other charges or different funds shall obtain prior
approval of the prescribed authority before levying
such fees or collecting such charges or creating
such funds.(3) The manager of every recognized school, shall
before the commencement of each academic
session, file with the Director a full statement of the
fees to be levied by such school during the ensuing
academic session, and except with the prior
approval of the Director, no such school shall
charge, during that academic session, any fee in
excess of the fee specified by its manager in the
said statement.xxx xxx xxx
23. Delegation of powers- (1) The Administrator
may delegate all or any of his powers, duties and
functions under this Act to the Director or any other
officer.(2) Every person to whom any power is delegated
under sub-section (1), may exercise that power in
the same manner and with the same effect as if
such power had been conferred on him directly by
this Act and not by way of delegation.”W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 59 of 134
xxx xxx xxx28. Power to make rules- (1) ………….
(2) ……….
(r) fees and other charges which may be collected
by an aided school;(v) educational purposes for which the income
derived by way of fees by recognized unaided
schools shall be spent;(w) manner of accounting and operation of school
funds and other funds of a recognized private
school;Rules:
168. Receipt to be granted for collection of
fees and contributions – (1) A printed receipt, in
the form specified by the Director, shall be granted
to a student for ever fee or contribution collected
by the school.(2) The head of every aided school shall
authorize one or more of the employees of the
school to collect fees and contributions from the
students and the receipt referred to in sub-rule (1)
shall be given and signed by the person so
authorized.(3) Every employee collecting any fee or
contribution from a student shall, immediately after
such collection, enter the particulars of such
collection in the attendance register of the class.172. Trust or society not to collect fees, etc.
schools to grant receipts for fees, etc.,
collected by it – (1) No fee, contribution or other
charge shall be collected from any student by the
trust or society running any recognized school;
whether aided or not.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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(2) Every fee, contribution or other charge
collected from any student by a recognized school,
whether aided or not, shall be collected in its own
name and a proper receipt shall be granted by the
school for every collection made by it.173. School fund how to be maintained – (1)
Every School Fund shall be kept deposited in a
nationalized bank or a scheduled bank or any post
office in the name of the school.(2) Such part of the School Fund as may be
approved by the Administrator, or any officer
authorized by him in this behalf, may be kept in the
form the Government securities.(3) The Administrator may allow such part of the
School Fund as he may specify in the case of each
school, (depending upon the size and needs of the
school) to be kept as cash in hand.(4) Every Recognized Unaided School Fund shall
be kept deposited in a nationalized bank or a
scheduled bank or in a post office in the name of
the school, and such part of the said Fund as may
be specified by the Administrator or any officer
authorized by him in this behalf shall be kept in the
form of Government securities and as cash in hand
respectively:Provided that in the case of an unaided minority
school, the proposition of such Fund which may be
kept in the form of Government securities or as
cash in hand shall be determined by the managing
committee of such school.175. Accounts of the school how to be
maintained – The accounts with regard to the
School Fund or the Recognized Unaided School
Fund, as the case may be, shall be so maintained
as to exhibit, clearly the income accruing to the
school by way of fees, fines, income from building
rent, interest, development fees, collections forW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 61 of 134
specific purposes, endowments, gifts, donations,
contributions to Pupils‟ Fund and other
miscellaneous receipts, and also, in the case of
aided schools, the aid received from the
Administrator.176. Collections for specific purposes to be
spent for that purpose – Income derived from
collections for specific purposes shall be spent only
for such purpose.177. Fees realized by unaided recognized
schools how to be utilized- (1) Income derived
by an unaided recognized schools by way of fees
shall be utilized in the first instance, for meeting
the pay, allowances and other benefits admissible
to the employees of the school:Provided that savings, if any from the fees collected
by such school may be utilized by its managing
committee for meeting capital or contingent
expenditure of the school, or for one or more of the
following educational purposes, namely :-(a) award of scholarships to students;
(b) establishment of any other recognized
school, or(c) assisting any other school or
educational institution, not being a college,
under the management of the same society
or trust by which the first mentioned school is
run.“(2) The savings referred to in sub-rule (1)
shall be arrived at after providing for the
following, namely:-(a) pension, gratuity and other specified
retirement and other benefits admissible to
the employees of the school;(b) the needed expansion of the school or
any expenditure of a developmental nature;W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 62 of 134(c) the expansion of the school building or
for the expansion or construction of any
building or establishment of hostel or
expansion of hostel accommodation;(d) co-curricular activities of the students;
(e) reasonable reserve fund, not being less
than ten per cent, of such savings.180. Unaided recognized schools to submit
returns – (1) Every unaided recognized private
school shall submit returns and documents in
accordance with Appendix II.(2) Every return or documents referred to in sub-
rule (1), shall be submitted to the Director by the
31st day of July of each year.(3) The account and other records maintained by
an unaided private school shall be subject to
examination by the auditors and inspecting officers
authorized by the Director in this behalf and also by
any officers authorized by the Comptroller and
Auditor General of India.:Our Discussion/Deliberations:
38. The factual matrix taken note of above would clearly
reveal that it is a repeat situation of 1998 when similar fee
hike pursuant to implementation of 5th Pay Commission
had come under hammer from both quarters – parents on
the one side and the schools on the other side. That
situation was dealt with on judicial side by the judgment
of this Court in the case of DAM-1 and in this scenario,
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 63 of 134
naturally, discussion should start from that judgment tofind out the legal principles enunciated therein. Of course,
that judgment was the subject matter of challenge before
the Supreme Court which was decided in the case of
Modern School (supra) and matter culminated in the
decision rendered in Action Committee Unaided Pvt.
Schools & Ors. (supra). Thus in the process, those and
other judgments cited will also be pondered over by us.
39. A minute and in-depth analysis of the DAM-1 would bring
forth the following pertinent aspect:
(i) Section 17 of the Act which deals with fee and
charges gives different treatment to aided schools on
the one hand and unaided recognized schools on the
other hand. Whereas sub-sections (1) and (2) of
Section 17 do not allow the aided schools to collect
any other charge or receive any other payment
except those specified by the Director, this embargo
was not applicable to those recognized private
schools, which are unaided. The only duty cast by
sub-section (3) of Section 17 of the Act is that such
schools ARE required, before the commencement of
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each academic session, to file with the Director a fullstatement of the fees to be levied by such schools
during the ensuing academic session and thereafter
not to charge any fee in excess of the fee specified in
that statement during the academic session, without
prior approval of the Director. Thus, the Court
held that there was no requirement that the
unaided schools seek approval or subsequent
approval of Director of Education for
enhancement of tuition fee and other charges.
Rationale is simple. These unaided private schools
are required to generate their own funds and to meet
the cost of education, and therefore, need to be
given free hand, as the main source can only be the
funds collected from students which is the concept of
„self-financing education institution‟, and „cost based
educational institution‟.
(ii) At the same time, it is also to be borne in mind that
under the garb of increasing fee, these schools do
not indulge in commercialization. This was conceded
by the schools themselves, viz., commercialization
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9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 65 of 134
and exploitation was not permissible. No doubt,it was recognized that the cost of education may vary
from institution to institution and in this respect,
many variable factors may have to be taken into
account, educational institutions were supposed
to run on „no profit, no loss basis‟.
(iii) Thus, while giving leverage to the schools to fix the
fees and charges payable by the students coupled
with the duty that increase is not such which is
exploitative in nature and travels into the arena of
commercialization, the Court further held that the
Government is equipped with necessary powers
to take regulatory measures and check
commercialization. The Court referred to Rules
172 to 177 and in particular Rule 177 which
prescribes the method and manner in which fees
realized by unaided recognized schools are to be
utilized. The Court also took into consideration
provisions of Section 4 of the 1973 Act dealing with
grant of recognition by the Government, Section 3 of
the Act which empowers the administration to
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9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 66 of 134
regulate education in all the schools in Delhi inaccordance with the provisions of this Act and the
rules made thereunder as well as Section 24 of 1973
Act which deals with inspection of schools.
(iv) On the conjoint reading of these provisions, the
Court was categorical that the Government had a
requisite power to resort to regulatory
measures and control the activities of such
institutions to ensure that these education
institutions keep playing vital and pivotal role
to spread education and not to make money. In
this behalf, the Court went to the extent of observing
that if it comes to its notice that fee and other
charges are excessive, the Government can
issue directions to the schools to reduce the
same and if such direction is not complied with,
other steps like withdrawal of recognition or
takeover of the school can be taken. However,
before resorting to these extreme steps, the
Government could issue directions to the schools to
roll back if it was found that the fee and other
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 67 of 134
charges are only unreasonable and exorbitant andamount to commercialization. After referring to the
principle laid down in various judgments of the
Supreme Court on the interpretation of statute, the
legal position contained in Section 17 of 1973 Act
was some which reads as under:
“42……………………When these basic
principles are kept in view as also the
object of the Act there is no difficulty in
concluding that despite the fact that
Section 17(1) & (2) of the Act is not
applicable to the private recognized
unaided schools the government under
the Act and the Rules has ample power
to regulate fee and other charges to
prevent commercialization and
exploitation, before considering to take the
extreme step of withdrawal of recognition and
other harsh steps.43. The cardinal principle of law is that every
law is designated to further ends of justice.
The said purpose cannot be frustrated on
mere technologies while interpreting a
Statute. Its purpose and spirit as gathered
from the intendment has to be borne in mind.
These aspects are to be kept in mind for the
correct interpretation of the Statute and the
adjudication of rival submissions………………(emphasis supplied)”
xxx xxx xxx
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 68 of 13444. In view of the aforesaid legal
positions we have no difficulty in
rejecting the extreme proposition that
Directorate of Education has no power
to regulate the fee and other charges
levied by private recognized unaided
schools.45. ……………..We are also unable to
accept the contention that diversion of
funds as being objected by petitioners
and the administration, would
adversely affect the expansion of the
education or that the opening of the
new schools would be jeopardised. In
our view, higher amount of fee and charges
cannot be levied on the ground of so called
expansion requiring creation of funds. If
any amount is to be generated for such
a purpose it has to be under a separate
head and not compulsive and
involuntary payment under the garb of
increase in the fee and other charges.
Further, nobody stops the Society of
the Trust which may have set up the
school to generate its own funds
needed for expansion for opening of
new schools.(emphasis supplied)”
(v) While holding so, the Court specifically rejected the
contention of these schools that the stipulation in the
Circular issued by the Government to the effect that
the first accumulated amount shall be exhausted to
meet the additional burden as a result of revising the
pay structure, was illegal. It was also held that such
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9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 69 of 134
stipulation did not amount to diversion of funds forsome other purpose or that the expansion of
education would be adversely affected and opening
of new schools will be jeopardized. The Court also
specifically rejected the contention that provisions of
statute and Rules provided for a limited scope of
regulating and interfering with the use of amounts
collected by the schools. In the process, it was also
held that the Government can ensure that there
is no transfer of amounts from the schools to
the society in view of the provisions of Rules
and if any new schools are to be opened by the
society or educational institute exploited the
collection of money had to be in the nature of
voluntary donation and for the expansion of
education for future generation, unreasonable
demand cannot be made from the present
students and their parents.
(vi) The autonomy of the schools on the one hand and
regulatory power of the Act on the other hand not to
permit commercialization of education, is beautifully
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summarized in para 48 of the judgment, which readsas under:
“48. We have also no difficulty in accepting
the proposition that the expenses may have
to differ from school to school depending
upon the nature of activities in the schools. It
is not being suggested that if for
legitimate and reasonable activities to be
provided to the students, higher
expenses are to be incurred the burden
of it cannot be placed on the students.
Our approach in no manner adversely affects
the autonomy of unaided schools. We agree
that autonomy of such schools has to be
respected. But under the garb of autonomy
the commercialization of education cannot be
permitted. It cannot be said that because of
the autonomy of limit on charging any sum
from students can be fixed under any head
despite the expenditure under that head.(emphasis supplied)”
(vii) In such scenario, the next question which
automatically arose for consideration related to the
manner and nature of regulation in a particular case.
It is re-emphasized that the Court accepted the fact
that different schools may have to increase the fee
with different proposition depending upon the
financial burden on those schools and the actual cost
of education which these schools require to bear. It
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9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 71 of 134
was also emphasized that the quantum increasewould depend upon the funds already available with
these schools which were to be first utilized to meet
the additional financial burden created as a result of
revision in pay scale. The Court was, thus, conscious
of the fact that there was need to increase the fee,
but at the same time whether the parent bodies
were justified in their grievance that on the pretext
of revision in pay scale, the fee had been increased
abnormally. This dichotomy noticed in Para 50 of
the judgment is as under:
“50. There can be no doubt that the substantial
increase in the fee and charges leads to
considerable amount of discontentment amongst
a substantial number of parents as it affects
their pockets in these days of high inflation. The
argument of high inflation is also applicable
to schools who have to incur expenses. It
cannot be ignored that to meet the increased in
the expenses, the schools have necessarily to
generate funds by increasing the amount of fee
and charges. The present problem has arisen on
account of payments to be made as a result of
acceptance of the Vth Pay Commission. The
increased salaries to the school staff had to be
paid. According to schools the fee and charges
were increased to meet this additional burden.
According to the Parents’ Association, however,
the schools had huge accumulated amounts
wherefrom the additional burden on the schoolsW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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could easily be met and the schools were only
using the recommendations of Vth Pay
Commission as an excuse and under that garb
the fee has been increased manifold.(emphasis supplied)”
(viii) The Court was of the view that in order to find
out as to whether the fee increase was
reasonable or not a close examination of facts
and figures of each school is necessary.
However, the Court was neither fully equipped nor it
was possible for the Court to function and undertake
each individual school. In the opinion of the Court,
such an exercise was to be undertaken by the
authorities or by an independent committee.
The Court further opined that the matter could be
discussed by all concerned and fee increase even as
per the impugned order, whereas the schools be
given an opportunity to justify the levy of higher
charges. In Para 65 of the judgment, the Court
summarized the discussed in the following manner:
“65. In view of the aforesaid discussion our
conclusions may be summaries as under:-W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 73 of 134(i) It is the obligation of the Administrator
and or Director of Education to prevent
commercialization and exploitation in private
unaided schools including schools run by
minorities.(ii) The tuition fee and other charges are
required to be fixed in a validly constituted
meeting giving opportunity to the
representatives of Parent Teachers
Association and Nominee of Director of
Education of place their viewpoints.(iii) No permission from Director of Education
is necessary before or after fixing tuition fee.
In case, however, such fixing is found to be
irrational and arbitrary there are ample
powers under the Act and Rules to issue
directions to school to rectify it before
resorting to harsh measures. The question of
commercialization of education and
exploitation of parents by individual schools
can be authoritatively determined on
thorough examination of accounts and other
records of each school.(iv) The Act and the Rules prohibit transfer of
funds from the school to the society or from
one school to another.(v) The tuition fee cannot be fixed to recover
capital expenditure to be incurred on the
properties of the society.(vi) The inspection of the schools, audit of the
accounts and compliance of the provisions of
the Act and the Rules by private recognized
unaided schools could have prevented the
present state of affairs.(vii) The authorities/Director of Education has
failed in its obligation to get the accounts of
private recognized unaided schools audited
from time to time.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 74 of 134(viii) The schools/societies can take voluntary
donations not connected with the admission
of the ward.(ix) On the peculiar facts of these petitions
there is no per se illegality in issue of the
impugned circular dated 10th September
1997.(x) An independent statutory Committee, by
amendment of law, if necessary, deserves to
be constituted to go into factual matters and
adjudicate disputes which may arise in future
in the matter of fixation of tuition fee and
other charges.(xi) The Government should consider
extending Act and Rules with or without
modifications to all schools from Nursery
onward.Having bestowed our thoughtful consideration
to the submission of counsel for the parties
and afore noticed detail facts and
circumstances, we are of the view that an
independent Committee deserves to be
appointed for the period covered by
impugned order dated 10th September, 1997
up to start of academic session in the year
1999, to look into the cases of the individual
schools and determine, on examination of
record and accounts etc. Whether increase of
tuition fee and other charges, on facts would
be justified or not. Eliminating the element of
commercialization and in light of this decision
the Committee would determine fee and other
charges payable by students of individual
schools. We do not think that it would be
desirable at present to permit any further
increase than what has already been
permitted by order dated 11th December,
1997. We would, therefore, extend the
aforequoted order dated 11th December,
1997 till decision of cases of individualW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 75 of 134
schools by Committee appointed by this
judgment.”(ix) As, according to the Court, the position in respect of
each school warranted to be examined, a committee
comprising of Ms. Santosh Duggal ( a retired Judge
of this Court) as Chairperson with power to nominate
two persons in consultation with the Chief Secretary,
Government of NCT of Delhi – one with the
knowledge of accounts and second from the field of
education, was constituted by the Court “to decide
the matter of fee and other charges leviable by
individual school in terms of the said decision.”
40. Many schools and associations of unaided private schools
challenged this decision before the Supreme Court.
Singular and consolidated judgment in all these appeals
was pronounced by the Supreme Court on 27.04.2004 in
the case of Modern School (supra). It was a divided
verdict of the Bench of majority Judgment was authored
by Hon‟ble Mr. Justice S.H. Kapadia (as His Lordship then
was), the Hon‟ble Chief Justice Mr. V.N. Khare concurring
therewith. Hon‟ble Mr. Justice S.B. Sinha gave dissenting
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opinion. The majority view substantially upheld theaforesaid judgment of this Court. However, some
significant discussed, analyzed, touched upon and
emphasized in the said judgment need to be highlighted.
Therefore, we proceed to take note thereof hereafter.
41. The majority judgment starts by spelling out the issue
which were posed before the Court and were to be
answered. The Court noted:
“1. In this batch of civil appeals, following three
points arise for determination:–(a) Whether the Director of Education has the
authority to regulate the quantum of fees charged
by un-aided schools under section 17(3) of Delhi
School Education Act, 1973?(b) Whether the direction issued on 15th December,
1999 by the Director of Education under section
24(3) of the Delhi School Education Act, 1973
stating inter alia that no fees/funds collected from
parents/students shall be transferred from the
Recognized Un-aided Schools Fund to the society or
trust or any other institution, is in conflict with rule
177 of Delhi School Education Rules, 1973?(c) Whether managements of Recognized unaided
schools are entitled to set-up a Development Fund
Account under the provisions of the Delhi School
Education Act, 1973?”42. Insofar first question is concerned, the Court affirmed the
views of the Division Bench of this Court with the guiding
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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principle, viz., “hence we have to strike a balance betweenautonomy of such institutions and measures to be taken in
avoiding commercialization of education”. A the saem
time, the Court also observed that in none of the earlier
cases, the Apex Court had defined the concept of
“reasonable surplus, profit, income and yield, which are
the terms used in various provisions in 1973 Act”. For this
reason, the Court proceeded to make in-depth analysis of
the earlier judgments having aforesaid focus in mind. This
analysis is contained in para 15 and 16 of the judgment
which is worth a read:
“15. As far back as 1957, it has been held by this
Court in the case of State of Bombay v. R.M.D.Chamarbaugwala reported in [1957]1SCR874
that education is per se an activity that is charitable
in nature. Imparting of education is a State
function. The State, however, having regard to its
financial constraints is not always in a position to
perform its duties. The function of imparting
education has been to a large extent taken over by
the citizens themselves. In the case of Unni
Krishnan, J.P. v. State of A.P. (supra), looking
to the above ground realities, this Court formulated
a self-financing mechanism/scheme under which
institutions were entitled to admit 50% students of
their choice as they were self-financed institutions,
whereas rest of the seats were to be filled in by the
State. For admission of students, a common
entrance test was to be held. Provisions for free
seats and payment seats were made therein. TheW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 78 of 134
State and various statutory authorities including
Medical Council of India, University Grants
Commission etc. were directed to make end or
amend regulations so as to bring them on par with
the said Scheme. In the case of TMA Pai
Foundation v. State of Karnataka reported in
(2002)8SCC481a , the said scheme formulated by
this Court in the case of Unni Krishnan (supra)
was held to be an unreasonable restriction within
the meaning of Article 19(6) of the Constitution as
it resulted in revenue short-falls making it difficult
for the educational institutions. Consequently, all
orders and directions issued by the State in
furtherance of the directions in Unni Krishnan’s case
(supra) were held to be unconstitutional. This Court
observed in the said judgment that the right to
establish and administer an institution included the
right to admit students; right to set up a reasonable
fee structure; right to constitute a governing body,
right to appoint staff and right to take disciplinary
action. TMA Pai Foundation’s case for the first
time brought into existence the concept of
education as an “occupation”, a term used in Article
19(1)(g) of the Constitution. It was held by
majority that Articles 19(1)(g) and 26 confer rights
on all citizens and religious denominations
respectively to establish and maintain educational
institutions. In addition, Article 30(1) gives the
right to religious and linguistic minorities to
establish and administer educational institution of
their choice. However, right to establish an
institution under Article 19(1)(g) is subject to
reasonable restriction in terms of clause (6)
thereof. Similarly, the right conferred on minorities,
religious or linguistic, to establish and administer
educational institution of their own choice under
Article 30(1) is held to be subject to reasonable
regulations which inter alia may be framed having
regard to public interest and national interest. In
the said judgment, it was observed vide para 56
that economic forces have a role to play in the
matter of fee fixation. The institutions should be
permitted to make reasonable profits after
providing for investment and expenditure.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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However, capitation fee and profiteering was
held to be forbidden. Subject to the above two
prohibitory parameters, this Court in TMA Pai
Foundation’s case held that fees to be charged
by the unaided educational institutions cannot
be regulated. Therefore, the issue before us is as
to what constitutes reasonable surplus in the
context of the provisions of the 1973 Act. This issue
was not there before this Court in the TMA Pai
Foundation’s case.16. The judgment in TMA Pai Foundation’s case
was delivered on 31.10.2002. The Union of India,
State Governments and educational institutions
understood the majority judgment in that case in
different perspectives. It led to litigations in several
courts. Under the circumstances, a bench of five
Judges was constituted in the case of Islamic
Academy of Education v. State of Karnataka
reported in AIR2003SC3724 so that
doubts/anomalies, if any, could be clarified. One of
the issues which arose for determination concerned
determination of the fee structure in private
unaided professional educational institutions. It was
submitted on behalf of the managements that such
institutions had been given complete autonomy not
only as regards admission of students but also as
regards determination of their own fee structure. It
was submitted that these institutions were entitled
to fix their own fee structure which could include a
reasonable revenue surplus for the purpose of
development of education and expansion of the
institution. It was submitted that so long as there
was no profiteering, there could be no interference
by the Government. As against this, on behalf of
Union of India, State Governments and some of the
students, it was submitted, that the right to set-up
and administer an educational institution is not an
absolute right and it is subject to reasonable
restrictions. It was submitted that such a right is
subject to public and national interests. It was
contended that imparting education was a State
function but due to resource crunch, the States
were not in a position to establish sufficient numberW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 80 of 134
of educational institutions and consequently the
States were permitting private educational
institutions to perform State functions. It was
submitted that the Government had a statutory
right to fix the fees to ensure that there was no
profiteering. Both sides relied upon various
passages from the majority judgment in TMA Pai
Foundation‟s case. In view of rival submissions,
four questions were formulated. We are
concerned with first question, namely,
whether the educational institutions are
entitled to fix their own fee structure. It was
held that there could be no rigid fee structure.
Each institute must have freedom to fix its
own fee structure, after taking into account
the need to generate funds to run the
institution and to provide facilities necessary
for the benefit of the students. They must be
able to generate surplus which must be used
for betterment and growth of that educational
institution. The fee structure must be fixed
keeping in mind the infrastructure and
facilities available, investment made, salaries
paid to teachers and staff, future plans for
expansion and/or betterment of institution
subject to two restrictions, namely, non-
profiteering and non- charging of capitation
fees. It was held that surplus/profit can be
generated but they shall be used for the benefit of
that educational institution. It was held that
profits/surplus cannot be diverted for any other use
or purposes and cannot be used for personal gains
or for other business or enterprise. The Court
noticed that there were various statutes/regulations
which governed the fixation of fee and, therefore,
this Court directed the respective State
Governments to set up committee headed by a
retired High Court Judge to be nominated by the
Chief Justice of that State to approve the fee
structure or to propose some other fee which could
be charged by the institute.(emphasis supplied)”
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 81 of 13443. The Court, thus, analyzed the judgments of TMA Pai
Foundation (supra) and Islamic Academy of
Education (supra) by observing that it was held therein
that fee to be charged by unaided educational institutions
cannot be regulated except that capitation fee and
profiteering were forbidden. There could not be any rigid
fee structure and each institution must have freedom to
fix its own fee structure, after taking into account the
need to generate funds to run the institution and to
provide facilities necessary for the benefit of the students.
In the process, such educational institutions were even
empowered to generate surplus funds, which must be
used for betterment and growth of the educational
institutes with clear embargo that these profits/surplus
funds cannot be diverted for any other use or purpose and
cannot be used for personal gain or any business or
enterprise.
44. For fixing the fee structure, following considerations are to
be kept in mind:
(a) The infrastructure and facilities available;
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 82 of 134(b) Investment made, salaries paid to teachers and
staff;
(c) Future plans for expansion and/or betterment
of institution subject to two restrictions, viz.,
non-profiteering and non-charging of capitation
fees.
45. The majority view thereafter applied the aforesaid
principles in the context of 1973 Act and Rules framed
thereunder. It was emphasized that Rule 175 indicates
the accrual of income and Rule 177 indicates utilization of
that income and answered to the first question by holding
that the Director of Education was authorized to regulate
fee and other charges to prevent commercialization of
educational institutes in the following terms:
“17…………….Therefore, reading section 18(4) with
rules 172, 173, 174, 175 and 177 on one hand and
section 17(3) on the other hand, it is clear that
under the Act, the Director is authorized to
regulate the fees and other charges to prevent
commercialization of education. Under section
17(3), the school has to furnish a full statement of
fees in advance before the commencement of the
academic session. Reading section 17(3) with
section 18(3)&(4) of the Act and the rules quoted
above, it is clear that the Director has the authorityW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 83 of 134
to regulate the fees under section 17(3) of the Act.”(emphasis supplied)
46. While answering the second question, the Court held that
it was not permissible for the schools to transfer the funds
from recognized unaided school funds to the Society or
Trust or any other institution. Repelling the contention of
these private schools to the contrary, the Court gave the
following rationale:
“20. We do not find merit in the above arguments.
Before analyzing the rules herein, it may be pointed
out, that as of today, we have Generally Accepted
Accounting Principles (GAAP). As stated above,
commercialization of education has been a problem
area for the last several years. One of the methods
of eradicating commercialization of education in
schools is to insist on every school following
principles of accounting applicable to not-for-profit
organizations/ non- business organizations. Under
the Generally Accepted Accounting Principles,
expense is different from expenditure. All
operational expenses for the current accounting
year like salary and allowances payable to
employees, rent for the premises, payment of
property taxes are current revenue expenses.
These expenses entail benefits during the current
accounting period. Expenditure, on the other hand,
is for acquisition of an asset of an enduring nature
which gives benefits spread over many accounting
periods, like purchase of plant and machinery,
building etc. Therefore, there is a difference
between revenue expenses and capital expenditure.Lastly, we must keep in mind that accounting has a
linkage with law. Accounting operates within legalW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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framework. Therefore, banking, insurance and
electricity companies have their own form of
balance-sheets unlike balance-sheets prescribed for
companies under the Companies Act 1956.
Therefore, we have to look at the accounts of non-
business organizations like schools, hospitals etc. in
the light of the statute in question.”47. Substantial skill and dexterity of accounting and economic
principles, while analyzing the various provisions of Rules
of 1973 Act, is reflected in the discussion that followed in
Paras 21 to 23:
“21. In the light of the above observations, we are
required to analyze rules 172, 175, 176 and 177 of
1973 rules. The above rules indicate the manner in
which accounts are required to be maintained by
the schools. Under section 18(3) of the said Act
every Recognized school shall have a fund titled
“Recognized Unaided School Fund”. It is important
to bear in mind that in every non-business
organization, accounts are to be maintained on the
basis of what is known as ‘Fund Based System of
Accounting’. Such system brings about
transparency. Section 18(3) of the Act shows that
schools have to maintain Fund Based System of
Accounting. The said Fund. contemplated by
Section 18(3), shall consist of income by way of
fees, fine, rent, interest etc. Section 18(3) is to be
read with rule 175. Reading the two together, it is
clear that each item of income shall be accounted
for separately under the common head, namely,
Recognized Unaided School Fund. Further, rule 175
indicates accrual of income unlike rule 177 which
deals with utilization of income. Rule 177 does not
cover all the items of income mentioned in rule175. Rule 177 only deals with one item of income
for the school, namely, fees. Rule 177(1) shows
that salaries, allowances and benefits to theW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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employees shall constitute deduction from the
income in the first instance. That after such
deduction, surplus if any, shall be appropriated
towards, pension, gratuity, reserves and other
items of appropriations enumerated in rule 177(2)
and after such appropriation the balance (savings)
shall be utilized to meet capital expenditure of the
same school or to set up another school under the
same management. Therefore, rule 177 deals with
application of income and not with accrual of
income. Therefore, rule 177 shows that salaries and
allowances shall come out from the fees whereas
capital expenditure will be a charge on the savings.
Therefore, capital expenditure cannot constitute a
component of the financial fees structure as is
submitted on behalf of the schools. It also shows
that salaries and allowances are revenue expenses
incurred during the current year and, therefore,
they have to come out of the fees for the current
year whereas capital expenditure/capital
investments have to come from the savings, if any,
calculated in the manner indicated above. It is for
this reason that under Section 17(3) of the Act,
every school is required to file a statement of fees
which they would like to charge during the ensuing
academic year with the Director. In the light of the
analysis mentioned above, we are directing the
Director to analyze such statements under section
17(3) of the Act and to apply the above principles
in each case. This direction is required to be given
as we have gone through the balance- sheets and
profit and loss accounts of two schools and prima
facie, we find that schools are being run on profit
basis and that their accounts are being maintained
as if they are corporate bodies. Their accounts are
not maintained on the principles of accounting
applicable to non-business organizations/not-for-
profit organizations.22. As stated above, it was argued that clause 8 of
the order of Director was in conflict with rule 177.
We do not find any merit in this argument.W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 86 of 13423. Rule 177(1) refers to income derived by
unaided recognized school by way of fees and the
manner in which it shall be applied/utilized. Accrual
of income is indicated by rule 175, which states
that income accruing to the school by way of fees,
fine, rent, interest, development fees shall form
part of Recognized Unaided School Fund Account.
Therefore, each item of income has to be
separately accounted for. This is not being done in
the present case. Rule 177(1) further provides that
income from fees shall be utilized in the first
instance for paying salaries and other allowances to
the employees and from the balance the school
shall provide for pension, gratuity, expansion of the
same school, capital expenditure for development
of the same school, reserve fund etc. and the net
savings alone shall be applied for establishment of
any other recognized school under rule 177(1)(b).
Under accounting principles, there is a difference
between appropriation of surplus (income) on one
hand and transfer of funds on the other hand. In
the present case, rule 177(1) refers to
appropriation of savings whereas clause 8 of the
order of Director prohibits transfer of funds to any
other institution or society. This view is further
supported by rule 172 which states that no fee shall
be collected from the student by any trust or
society. That fees shall be collected from the
student only for the school and not for the trust or
the society. Therefore, one has to read rule 172
with rule 177. Under rule 175, fees collected from
the school have to be credited to Recognized
Unaided School Fund. Therefore, reading rules 172,
175 and 177, it is clear that appropriation of
savings (income) is different from transfer of fund.
Under clause 8, the management is restrained from
transferring any amount from Recognized Unaided
School Fund to the society or the trust or any other
institution, whereas rule 177(1) refers to
appropriation of savings (income) from revenue
account for meeting capital expenditure of the
school. In the circumstances, there is no conflict
between rule 177 and clause 8.”W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 87 of 13448. On the third issue formulated by the Court and noted
above, the majority opinion was that the management of
the schools was entitled to create Development Fund
Account. For creating such a Fund, it could collect
development fees as well. Concomitantly, the Court
addressed the question as to whether directions given by
the Government that development fund fee should not
exceed 10 – 15% of the total annual tuition fee, was
appropriate and valid which was to be charged to
supplement the resources for purchase, upgradation and
replacement of furniture, fixtures and equipments. The
Court was of the opinion that this direction was given with
the purpose of introducing a proper accounting practice to
be followed by non-business organizations/not-for-profit
organizations which was a correct practice being
introduced. The Court also held that taking into account
the cost of inflation between 15-12-1999 and 31-12-2003
that the ceiling charge of development fee not exceeding
15% of the total annual tuition fees was appropriate.
W.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
9228/2009,11139/2009, 10801/2009, 6952/2009, 1727/2010 Page 88 of 13449. After giving answers to the aforesaid three questions
formulated by it in the aforesaid manner, the majority
decision summed up the position as under:
“26. To sum up, the interpretation we have placed
on the provisions of the said 1973 Act is only to
bring in transparency, accountability, expenditure
management and utilization of savings for capital
expenditure/investment without infringement of the
autonomy of the institute in the matter of fee
fixation. It is also to prevent commercialization of
education to the extent possible.CONCLUSION:
27. In addition to the directions given by the
Director of Education vide order
DE.15/Act/Duggal.Com/ 203/99/23989- 24938
dated 15th December, 1999, we give further
directions as mentioned hereinbelow: —(a) Every recognized unaided school covered
by the Act shall maintain the accounts on the
principles of accounting applicable to non-
business organization/not- for-profit
organization;In this connection, we inter alia direct every
such school to prepare their financial statement
consisting of Balance-sheet, Profit & Loss
Account, and Receipt & Payment Account.(b) Every school is required to file a statement
of fees every year before the ensuing academic
session under section 17(3) of the said Act with
the Director. Such statement will indicate
estimated income of the school derived from
fees, estimated current operational expenses
towards salaries and allowances payable to
employees in terms of rule 177(1). Such
estimate will also indicate provision forW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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donation, gratuity, reserve fund and other
items under rule 177(2) and savings
thereafter, if any, in terms of the proviso to
rule 177(1);(c) It shall be the duty of the Director of
Education to ascertain whether terms of
allotment of land by the Government to the
schools have been complied with. We are
shown a sample letter of allotment issued by
the Delhi Development Authority issued to
some of the schools which are recognized
unaided schools. We reproduce herein clauses
16 & 17 of the sample letter of allotment:–“16. The school shall not increase the
rates of tuition fee without the prior
sanction of the Directorate of Education,
Delhi Admn. and shall follow the provisions
of Delhi School Education Act/Rules,1973
and other instructions issued from time to
time.17. The Delhi Public School Society shall
ensure that percentage of free ship from
the tuition fee as laid down under rules by
the Delhi Administration, from time to time
strictly complied. They will ensure
admission to the student belonging to
weaker sections to the extent of 25% and
grant free ship to them.”50. We would like to point out at this stage that after the
judgment of the Supreme Court in Modern School
(supra), Seven Judges Bench revisited the scope and
ambit of Islamic Academy of Education (supra) as
well as T.M.A. Pai Foundation (supra) in P.A. Inamdar
& Ors. Vs. State of Maharashtra and Others [(2005) 6
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SCC 537]. For clarifying three issues, matter was referredto the Seven Judges Bench in P.A. Inamdar (supra)
which are as under:
“(i) the fixation of „quota‟ of admissions/students
in respect of unaided professional institutions;(ii) the holding of examinations for admissions to
such colleges, that is, who will hold the
entrance tests; and(iii) the fee structure.”
51. Emboldened by the view which the Seven Judges Bench
had taken in P.A. Inamdar (supra), these private
schools as well as Action Committee, Unaided Private
Schools field Review Petition seeking review of the
judgment rendered in Modern School (supra). This
Review Petition has been decided by the Bench comprising
of Hon‟ble Mr. Justice S.B. Sinha, Hon‟ble Mr. Justice S.H.
Kapadia (as His Lordship then was) and Hon‟ble Mr.
Justice Cyriac Joseph. By majority of 2:1, the Review
Petition has been dismissed. Justice Sinha who rendered
the minority judgment stuck to his view. However,
Hon‟ble Mr. Justice Joseph agreed with Hon‟ble Mr. Justice
Kapadia, the author of majority view in Modern School
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(supra), in dismissing the review petition. The judgment
is reported as Action Committee Unaided Pvt. Schools
and Others Vs. Director Education and Others [2009
(11) SCALE 7. Reading of this judgment would disclose
that the Review Petitions raised the following contentions:
“(i) In view of the larger bench decision of this
Court in P.A. Inamdar (supra), the directions issued
by the Director of Education which have been
upheld by this Court cannot be sustained as the
schools and in particular the minority schools have
a greater autonomy in laying down their own fee
structure.
(ii) Although collection of any amount for
establishment of the school by a trust or a society
is forbidden, the transfer of fund by one school to
another school under the same management being
permissible in terms of Rule 177 of the Rules, the
directions prohibiting such transfer by the Director
of Education in its order dated 15.12.1999 must be
held to be illegal.
(iii) The decision of T.M.A. Pai Foundation (supra)
with regard to construction of Article 19(1)(g) of
the Constitution of India should be considered in its
correct perspective as there exists a distinction
between `profit’ and `profiteering’.
(iv) The status of a minority institution being on a
higher pedestal, as has been noticed in T.M.A. Pai
Foundation (supra), the impugned directions could
not have been issued by the Director of Education
which would affect the autonomy of the minority
institution.”
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From the aforesaid, it is clear that in Review Petition,
thus, the Court considered as to whether T.M.A. Pai
Foundation (supra) as clarified by P.A. Inamdar
(supra) had made any difference to the conclusions,
which were drawn by the Court in Modern School
(supra).
52. Hon‟ble Mr. Justice S.B. Sinha, who was in minority again,
took view that even if reasonable restrictions could be
imposed on citizen’s fundamental right contained in Article
19(1)(g) of the Constitution of India, that could be done
only by reason of a Legislative Act. However, the order
dated 15.12.1999 issued by the Government giving
various directions was not statutory orders. Furthermore,
such a statutory order also could not have been issued
under the directions of the High Court as the very premise
on which such directions had been issued did not survive
any longer in view of the decision in T.M.A. Pai
Foundation (supra). The minority, thus, held that all
the schools and particularly unaided schools may lay down
their own fee criteria. Imposition of regulation, however,
only is permissible for the purpose of exercising of control
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over profiteering and not earning of a profit which would
include reasonable return of the investment made.
53. On the other hand, Hon‟ble Mr. Justice S.H. Kapadia (now
Hon‟ble the Chief Justice of India) traced out the history of
this particular litigation right from filing of Public Interest
Litigation in the High Court by DAM, then extracted the
portion of the judgment of Division Bench rendered in
1998 including appointment of Duggal Committee, report
of Duggal Committee, filing of SLPs by the schools, etc.
against the Division Bench Judgment of this Court and
also orders dated 15.12.1999 issued by the Director of
Education in terms of the Report of Duggal Committee.
Thereafter, decision in Modern School (supra) is taken
note of on the three points argued before it. Thereafter,
the judgment proceeds with the filing of Review Petitions
and notes the argument of the Review Petitioner that the
majority view holding the Director of Education (in short
„DoE‟) had power to regulate the fee structure of private
unaided schools was not correct and no directions could
have been issued by the Court contrary to the statutory
Rules in the matter of fee fixation. It was also pointed out
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that the review petitioners had argued that the directions
issued vide orders dated 15.12.1999 by DoE were neither
the subject matter before Delhi High Court, nor the
subject matter of Special Leave Petition. The basic
grievance of the review petitioners in this behalf was that
Clause 8 of the orders dated 15.12.1999 issued by the
DoE was causing administrative difficulties which needed
clarification. Under Clause 8, DoE stipulated that “no
amount whatsoever shall be transferred from the
recognized unaided school fund of a school to the society
or the trust or any other institution”. It was argued by the
review petitioners that a rider needed to be introduced in
Clause 8 by mentioning “except under the management of
the same society or trust” to subserve the object
underlying the 1973 Act. Even the majority view found
merit in this particular argument in the following words:
“53 (20). There is merit in the argument
advanced on behalf of the Action
Committee/Management. The 1973 Act and the
Rules framed thereunder cannot come in the way of
the Management to establish more schools. So long
as there is a reasonable fee structure in existence
and so long as there is transfer of funds from one
institution to the other under the sameW.P.(C) Nos. 7777/2009, 8147/2009, 8610/2009, 8614/2009,
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management, there cannot be any objection from
the Department of Education.”
54. However, the contention that the order dated 15.12.1999
of DoE was never challenged and yet, the Court went on
validity thereof was rejected. The majority decision also
rejected the contention that whereas 1973 Act and Rules
thereunder operates, regulation of education would be
governed thereby and therefore, the Court cannot impose
any other or further restrictions. On this aspect, it was
observed that in T.M.A. Pai (supra) and Islamic
Academy of Education (supra), the principles for fixing
fee structure had been illustrated. However, they were
not exhaustive. They did not deal with determination of
surplus and appropriation of savings. In Modern School
(supra), it was categorically recorded in the majority
opinion that the above topics are not dealt with by the
1973 Rules and therefore, Clause 8 was found not to be
beyond Rule 177 or in conflict thereto as alleged by the
review petitioners. It was categorically ruled that
additional directions given in the judgment of majority
vide Para 27 do not go beyond Rule 177, but they are a
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part of gap-filling exercise and discipline needed to be
followed by the management. In this behalf, following
discussion needs to be extracted:
“55 (22)……………The Additional Directions given in
the Judgment of the Majority vide para 27 do not
go beyond Rule 177 but they are a part of gap-
filling exercise and discipline to be followed by
the management. For example: every school
shall prepare balance sheet and profit and loss
account. Such conditions do not supplant Rule
177. If reasonable fee structure is the test then
transparency and accountability are equally
important. In fact, as can be seen from Reports
of Duggal Committee and the earlier Committee,
excessive fees stood charged in some cases
despite the 1973 Rules because proper
Accounting Discipline was not provided for in
1973 Rules. Therefore, the Further Directions
given are merely gap-fillers. Ultimately, Rule
177 seeks transparency and accountability and
the Further Directions (in para 27) merely brings
about that transparency. Lastly, it may be noted
that the matter has come up to the Apex Court
from PIL. Hence there is no merit in the above
plea.
56 (23). Subject to the above clarification, review
petitions stand dismissed with no order as to
costs.”
55. Hon‟ble Mr. Justice Cyriac Joseph while agreeing with
Hon‟ble Mr. Justice S.K. Kapadia recorded his note as
under:
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“58. Though I agree with the view of S.B. Sinha,
J. that any direction issued by the High Court or by
the rule making authority or any statutory authority
must be in conformity with the decision of this
Court in the case of T.M.A. Pai Foundation as
clarified by the decision of this Court in the case of
P.A. Inamdar, in my view, the judgment of S.H.
Kapadia, J. does not question or contradict such a
legal proposition. On the contrary, it is in
recognition of the above legal proposition that
modification suggested by the learned Counsel for
the review petitioners in respect of Clause 8 of the
order dated 15.12.1999 issued by the Director of
Education has been accepted by S.H. Kapadia, J.”
56. A conjoint reading of the judgments of the Supreme Court
in Modern School (supra) as well as review petitions in
the case of Action Committee Unaided Pvt. Schools &
Ors. (supra) would clearly demonstrate that the three
points formulated are answered as under:
1) DoE has the Authority to regulate the quantum of
fee charged by unaided schools under Section
17(3) of the 1973 Act. It has to ensure that the
schools are not indulging in profiteering.
2) The direction of DoE that no fees/funds collected
from parents/students shall be transferred from
the Recognized Un-aided Schools Fund to the
society or trust or any other institution, was valid.
However, it could be transferred under the same
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society or trust, which aspect is clarified in the
review petition.
3) Recognized unaided schools were entitled to set
up Development Fund Account and could charge
the students for the same, but that should not
exceed 15% of the annual tuition fee.
57. Having distilled the legal principles laid down in the
aforesaid judgments and taken note of the statutory
provisions contained in 1973 Act and Rules framed
thereunder, we proceed to answer the issues which arise
for determination in these petitions. Various issues, which
were raised in different petitions need to be recapitulated.
These are:
(a) Whether the orders dated 11.02.2009
stipulating the increase in fee by the DoE, is
legal and valid?
Incidental questions here would be:
(i) Whether it was not permissible for the
DoE to pass a general order for increase
in fee, as the fee could be raised only
after examining the financial health and
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funds at the disposal of different schools
to ensure that the fee structure was
reasonable and the schools were not
indulging in commercialization?
(ii) Whether those orders of DoE impinge
upon the autonomy of the recognized
unaided private schools and it was the
right of the schools to revise, enhance
and fix the fee and the other charges
payable by the students?
(iii) Whether the impugned notification dated
11.02.2009 was illegal on the ground that
it had put a restriction on the private
schools from increasing fee without
seeking approval of PTA and further from
increasing further fee till March, 2010?
(b) Whether constitution of Grievance Redressal
Committee was illegal?
Incidental question here would be as to
whether it was necessary to constitute a
permanent Committee to go into the annual
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accounts of different schools each year and on
that basis allow the schools to increase fees, if
it becomes necessary.
(c) Whether the provisions of Section 17(3) of the
1973 Act are ultra vires?
(d) Whether Clause 11 to 15 of Notification dated
11.02.2009 asking the schools to utilize
interest on deposits, development fee, etc. to
meet the shortfall in meeting the liabilities
arising out of the implementation of the
recommendations of the 5th Pay Commission
are contrary to the provisions of 1973 Act?
(e) Whether the order dated 11.02.2009 of the
Government impinge upon the rights of
Minority Schools thereby violating the
protection granted to these minority
institutions under Article 30 of the Constitution
of India?
58. Since most of these issues are interrelated and
interdependent, we would like to discuss all these
questions cumulatively and not separately as this course
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of action would avoid repetition. However However, Since
vires of Section 17(3) of 1973 Act are challenged we
should first deal with this issues, Section 17(3) reads as
under:
Whether Section 17(3) – Ultra Vires:
“17. Fees and other charges- (1) No aided school
shall levy fee or collect any other charge or receive
any other payment except those specified by the
Director.
(2) Every aided school having different rates of fees
or other charges or different funds shall obtain prior
approval of the prescribed authority before levying
such fees or collecting such charges or creating
such funds.
(3) The manager of every recognized school, shall
before the commencement of each academic
session, file with the Director a full statement of the
fees to be levied by such school during the ensuing
academic session, and except with the prior
approval of the Director, no such school shall
charge, during that academic session, any fee in
excess of the fee specified by its manager in the
said statement.”
59. We have already noted above that in the case of Modern
School (supra), the Supreme Court has categorically
held that this regulatory provision empowers the DoE as
the Authority to regulate the quantum of fee charged by
unaided schools and it is further held that the provision is
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made to ensure that schools are not indulging in
profiteering. It is minimum restrained, which is required
and would be permissible as reasonable one. We would
do nothing more than produce following discussions from
Modern School (supra):
“14. At the outset, before analyzing the provisions of
1973 Act, we may state that it is now well settled by
catena of decisions of this Court that in the matter of
determination of the fee structure the unaided
educational institutions exercises a great autonomy
as, they, like any other citizen carrying on an
occupation 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. However, in none of
the earlier cases, this Court has defined the concept
of reasonable surplus, profit, income and yield,
which are the terms used in the various provisions of
1973 Act.
15. As far back as 1957, it has been held by this
Court in the case of State of Bombay v. R.M.D.
Chamarbaugwala reported in MANU/SC/0019/1957
: [1957]1SCR874 that education is per se an activity
that is charitable in nature. Imparting of education is
a State function. The State, however, having regard
to its financial constraints is not always in a position
to perform its duties. The function of imparting
education has been to a large extent taken over by
the citizens themselves. In the case of Unni
Krishnan, J.P. v. State of A.P. (supra), looking to
the above ground realities, this Court formulated a
self-financing mechanism/scheme under which
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institutions were entitled to admit 50% students of
their choice as they were self-financed institutions,
whereas rest of the seats were to be filled in by the
State. For admission of students, a common
entrance test was to be held. Provisions for free
seats and payment seats were made therein. The
State and various statutory authorities including
Medical Council of India, University Grants
Commission etc. were directed to make end or
amend regulations so as to bring them on par with
the said Scheme. In the case of TMA Pai
Foundation v. State of Karnataka reported in
MANU/SC/1050/2002 : (2002)8SCC481a , the said
scheme formulated by this Court in the case of Unni
Krishnan (supra) was held to be an unreasonable
restriction within the meaning of Article 19(6) of the
Constitution as it resulted in revenue short-falls
making it difficult for the educational institutions.
Consequently, all orders and directions issued by the
State in furtherance of the directions in Unni
Krishnan’s case (supra) were held to be
unconstitutional. This Court observed in the said
judgment that the right to establish and administer
an institution included the right to admit students;
right to set up a reasonable fee structure; right to
constitute a governing body, right to appoint staff
and right to take disciplinary action. TMA Pai
Foundation’s case for the first time brought into
existence the concept of education as an
“occupation”, a term used in Article 19(1)(g) of the
Constitution. It was held by majority that Articles
19(1)(g) and 26 confer rights on all citizens and
religious denominations respectively to establish and
maintain educational institutions. In addition, Article
30(1) gives the right to religious and linguistic
minorities to establish and administer educational
institution of their choice. However, right to establish
an institution under Article 19(1)(g) is subject to
reasonable restriction in terms of clause (6) thereof.
Similarly, the right conferred on minorities, religious
or linguistic, to establish and administer educational
institution of their own choice under Article 30(1) is
held to be subject to reasonable regulations which
inter alia may be framed having regard to public
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interest and national interest. In the said judgment,
it was observed vide para 56 that economic forces
have a role to play in the matter of fee fixation. The
institutions should be permitted to make reasonable
profits after providing for investment and
expenditure. However, capitation fee and
profiteering was held to be forbidden. Subject to the
above two prohibitory parameters, this Court in TMA
Pai Foundation’s case held that fees to be charged
by the unaided educational institutions cannot be
regulated. Therefore, the issue before us is as to
what constitutes reasonable surplus in the context of
the provisions of the 1973 Act. This issue was not
there before this Court in the TMA Pai
Foundation’s case.
16. The judgment in TMA Pai Foundation’s case
was delivered on 31.10.2002. The Union of India,
State Governments and educational institutions
understood the majority judgment in that case in
different perspectives. It led to litigations in several
courts. Under the circumstances, a bench of five
Judges was constituted in the case of Islamic
Academy of Education v. State of Karnataka
reported in MANU/SC/0580/2003 : AIR2003SC3724
so that doubts/anomalies, if any, could be clarified.
One of the issues which arose for determination
concerned determination of the fee structure in
private unaided professional educational institutions.
It was submitted on behalf of the managements that
such institutions had been given complete autonomy
not only as regards admission of students but also as
regards determination of their own fee structure. It
was submitted that these institutions were entitled to
fix their own fee structure which could include a
reasonable revenue surplus for the purpose of
development of education and expansion of the
institution. It was submitted that so long as there
was no profiteering, there could be no interference
by the Government. As against this, on behalf of
Union of India, State Governments and some of the
students, it was submitted, that the right to set-up
and administer an educational institution is not an
absolute right and it is subject to reasonable
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restrictions. It was submitted that such a right is
subject to public and national interests. It was
contended that imparting education was a State
function but due to resource crunch, the States were
not in a position to establish sufficient number of
educational institutions and consequently the States
were permitting private educational institutions to
perform State functions. It was submitted that the
Government had a statutory right to fix the fees to
ensure that there was no profiteering. Both sides
relied upon various passages from the majority
judgment in TMA Pai Foundation’s case. In view of
rival submissions, four questions were formulated.
We are concerned with first question, namely,
whether the educational institutions are entitled to
fix their own fee structure. It was held that there
could be no rigid fee structure. Each institute must
have freedom to fix its own fee structure, after
taking into account the need to generate funds to
run the institution and to provide facilities necessary
for the benefit of the students. They must be able to
generate surplus which must be used for betterment
and growth of that educational institution. The fee
structure must be fixed keeping in mind the
infrastructure and facilities available, investment
made, salaries paid to teachers and staff, future
plans for expansion and/or betterment of institution
subject to two restrictions, namely, non-profiteering
and non- charging of capitation fees. It was held that
surplus/profit can be generated but they shall be
used for the benefit of that educational institution. It
was held that profits/surplus cannot be diverted for
any other use or purposes and cannot be used for
personal gains or for other business or enterprise.
The Court noticed that there were various
statutes/regulations which governed the fixation of
fee and, therefore, this Court directed the respective
State Governments to set up committee headed by a
retired High Court Judge to be nominated by the
Chief Justice of that State to approve the fee
structure or to propose some other fee which could
be charged by the institute.
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17. In the light of the judgment of this Court in the
case of Islamic Academy of Education (supra) the
provisions of 1973 Act and the rules framed
thereunder may be seen. The object of the said Act
is to provide better organization and development of
school education in Delhi and for matters connected
thereto. Section 18(3) of the Act states that in every
recognized unaided school, there shall be a fund, to
be called as Recognized Unaided School Fund
consisting of income accruing to the school by way of
fees, charges and contributions. Section 18(4)(a)
states that income derived by unaided schools by
way of fees shall be utilized only for the educational
purposes as may be prescribed by the rules. Rule
172(1) states that no fee shall be collected from any
student by the trust/society running any recognized
school; whether aided or unaided. That under rule
172(2), every fee collected from any student by a
recognized school, whether aided or not, shall be
collected in the name of the school. Rule 173(4) inter
alia states that every Recognized Unaided School
Fund shall be deposited in a nationalized bank.
Under rule 175, the accounts of Recognized Unaided
School Fund shall clearly indicate the income
accruing to the school by way of fees, fine, income
from rent, income by way of interest, income by way
of development fees etc. Rule 177 refers to
utilization of fees realized by unaided recognized
school. Therefore, rule 175 indicates accrual of
income whereas rule 177 indicates utilization of that
income. Therefore, reading section 18(4) with rules
172, 173, 174, 175 and 177 on one hand and section
17(3) on the other hand, it is clear that under the
Act, the Director is authorized to regulate the fees
and other charges to prevent commercialization of
education. Under section 17(3), the school has to
furnish a full statement of fees in advance before the
commencement of the academic session. Reading
section 17(3) with section 18(3)&(4) of the Act and
the rules quoted above, it is clear that the Director
has the authority to regulate the fees under section
17(3) of the Act.”
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60. It would also be pertinent to point out at this stage the
judgment of the Madras High Court in the case of
Supreme Court in the case of Tamil Nadu Nursery
Matriculation Vs. The State Of Tamil Nadu (decided
on 09.04.2010 in W.P.(C) No.627 of 2010) has upheld
similar provision in the following manner:
“15. Having noted the submissions advanced by the
learned counsel appearing for the respective
petitioners, and of the learned Additional Advocate
General, we must note that the Apex Court was
concerned with the fees in the Medical and
Engineering colleges in the above referred to three
matters, and the fees collected by the private
schools were not the subject matter of those
proceedings. Yet, the counsel for both the parties
accept that the principles laid down in the above
referred to three judgments will be useful for
deciding the question of validity of the legislation in
this matter. Guidelines for examining the validity of
the legislation.
Now, as can be seen in T.M.A.Pai‟s case itself, the
Apex Court has observed that the Government can
provide regulations to control the charging of
capitation fee and profiteering. Question No.3 before
the Court was as to whether there can be
Government regulations, and if so, to what extent in
case of private institutions? What the Apex Court has
observed in paragraph-57 of the judgment is
instructive for our purpose. 57. We, however, wish
to emphasize one point, and that is that inasmuch as
the occupation of education is, in a sense, regarded
as charitable, the Government can provide
regulations that will ensure excellence in education,
while forbidding the charging of capitation fee and
profiteering by the institution. Since the object of
setting up an educational institution is by definition
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charitable , it is clear that an educational
institution cannot charge such a fee as is not
required for the purpose of fulfilling that object. To
put it differently, in the establishment of an
educational institution, the object should not be to
make a profit, inasmuch as education is essentially
charitable in nature. There can, however, be a
reasonable revenue surplus, which may be
generated by the educational institution for the
purpose of development of education and expansion
of the institution.
16 Again in paragraph-69 of the judgment, while
dealing with this issue, the Apex Court observed that
an appropriate machinery can be devised by the
State or University to ensure that no capitation fee is
charged and that there is no profiteering, though a
reasonable surplus for the furtherance of education
is permissible. Although the Apex Court overruled
the earlier judgment in Unnikrishnan vs. State of
Andhra Pradesh reported in 1993 (1) SCC 645, which
was to the extent of the scheme framed therein and
the directions to impose the same, part of the
judgment holding that primary education is a
fundamental right was held to be valid. Similarly, the
principle that there should not be capitation fee or
profiteering was also held to be correct.
17. Thereafter, when we come to the judgment in
Islamic Academy case, the first question framed by
the Apex Court was whether the educational
institutions are entitled to fix their own fee
structure? It is pertinent to note that this judgment
very much brought in a committee to regulate the
fees structure, which was to operate until the
Government/Appropriate Authorities consider
framing of appropriate regulations. It is also material
to note that in paragraph-20, the Apex Court has
held that the direction to set up Committee in the
States was passed under Article 142 of the
Constitution and was to remain in force till
appropriate legislation was enacted by Parliament.
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18. The judgment in P.A. Inamdar s case, though
sought to review the one in Islamic Academy case, it
left the mechanism of having the committees
undisturbed. In paragraph-129 of the judgment, the
Apex Court observed that the State regulation,
though minimal, should be to maintain fairness in
admission procedure and to check exploitation by
charging exorbitant money or capitation fees. In
paragraph-140 of the judgment, the Apex Court has
held that the charge of capitation fee by unaided
minority and non-minority institutions for
professional courses is just not permissible.
Similarly, profiteering is also not permissible. The
Apex Court observed that it cannot shut its eyes to
the hard realities of commercialization of education
and evil practices being adopted by many institutions
to earn large amounts for their private or selfish
ends. On question no.3, which was with respect to
Government regulation in the case of private
institutions, the Apex Court clearly answered in
paragraph-141 that every institution is free to devise
its own fee structure, but the same can be regulated
in the interest of preventing profiteering. No
capitation fee can be charged. In paragraph-145 of
the judgment, the Apex Court rejected the
suggestion for post-audit or checks if the institutions
adopt their own admission procedure and fee
structure, since the Apex Court was of the view that
admission procedure and fixation of fees should be
regulated and controlled at the initial stage itself.”
61. Special Leave Petition against the aforesaid judgment was
dismissed by the Supreme Court. After all Section 17(3)
of the Act gives freedom to the unaided recognized
schools to fix the fee at the commencement of each
academic session, file with the Director a full statement of
the fees as levied during the ensuing academic session.
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This would be necessary to the Government when we
recommend the regulatory role of the Director to ensure
that he fee charged is not unreasonable. Likewise, the
only other restriction is that during the academic session,
there should not be further increase without the prior
approval of the Director. Again, this provision is made to
check arbitrary increase in fee, time and again, after the
academic session has commenced. There may be
circumstances which may justify enhancement of fee even
during the academic session. However, the schools are
required to justify those circumstances for which prior
approval is mandated. According to us, this provision is in
tune with the legal principle stated by the Supreme Court
in so many judgments, viz., autonomy to the schools to
fix their fee on the one hand and conferring authority
upon the DoE to regulate the quantum of fee with limited
purpose to ensure that the schools are not indulging in
profiteering. The provision, thus, strikes a balance
between the rights of the schools on the one hand and
duty cast upon the DoE on the other hand. The only thing
what is required at that stage is to We, therefore, are of
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the opinion that Section 17(3) does not suffer from any
vires or arbitrariness and is not violative of Article 14 or
19(1)(g) of the Constitution of India.
62. With this, we revert back to the issues On Merits:
The clear legal position which emerges from the combined
reading of the judgments of the Supreme Court, directly
on the issue of revising tuition fee by Delhi schools under
the Delhi Education Act, and already stated in detail
above, demonstrates that the schools cannot indulge in
commercialization of education which would mean that the
fee structure has to be kept within bound so as to avoid
profiteering. At the same time, “reasonable surplus” is
permissible as fund in the form of such surplus may be
required for development of various activities in the
schools for the benefit of students themselves. The
guiding principle, in the process, is “to strike a balance
between autonomy of such institution and measures to be
taken in avoiding commercialization of education”. The
autonomy of the schools can be ensured by giving first
right to such schools to increase the fee. At the same
time, quantum of fee to be charged by unaided schools is
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subject to regulation by the DoE which power isspecifically conferred upon the DoE by virtue of Section
17(3) of 1973 Act. This is specifically held by the
Supreme Court in Modern School (supra) and Action
Committee Unaided Private Schools and Anr.
(supra). Normally, therefore, in the first instance, it is
for the schools to fix their fee and/or increase the same
which right is conferred upon the schools as recognized in
TMA Pai (supra). The DoE can step in and interfere if
hike in fee by a particular school is found to be excessive
and perceived as “indulging in profiteering”. It would be a
procedure to be resorted to routinely. However, validity
of the orders dated 11.02.2009 passed by the DoE is to be
judged in a different hue altogether. Situation arose
because of the implementation of pay structure
recommended by the 6th Pay Commission, which was to
be done mid-session albeit from retrospective effect, i.e.,
with effect from 01.01.2006. All aided and unaided
recognized schools in Delhi were under obligation to give
increase to their teachers and staff members which
resulted in substantial hike in pay package of the
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employees of these schools. Further, it happened across
the board and it was not a situation specific to a particular
school. As a result of this added financial burden whereas
the schools wanted to increase the fee, PTAs on the other
hand, maintained that some of the schools enjoyed robust
financial health, which was sufficient to bear the
additional monetary burden without hike in the fee to be
charged from the students. This necessitated going into
the records of each school. Therefore, in a situation like
this where on the one hand, there was perceptible
additional financial burden created on account of increase
in the pay of the staff and on the other hand, the exercise
demanded by the PTAs of going into the financial records
of each schools was time consuming, the issuance of
orders dated 11.02.2009 by the Government, as an
interim measure, proposing to increase the tuition fee in
the manner provided in the said order with a lid on the
upper limit cannot be faulted with. It is moreso, when the
proposed increase is not based on any whims of the DoE,
but was preceded by the constitution of a Committee
under the Chairmanship of Shri S.L. Bansal, a retired
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I.A.S. officer and the impugned orders were the result of
the reports submitted by the said Committee after
undertaking requisite exercise, albeit, of preliminary
nature, but after giving hearing to all stakeholders. At
this stage, while passing such an order, there could not
have been any option, but to pass a general order for
increase in fee.
63. We are of the opinion that in the aforesaid exceptional
circumstance in which such an order came to be passed, it
did not impinge upon the autonomy of the recognized
aided or unaided private schools as well. We, therefore,
uphold Para 7 of the impugned order, making it clear that
was only an interim measure adopted by the Court. When
we look into the matter in the aforesaid perspective, which
according to us, is the only manner in which orders dated
11.02.2009 are to be viewed, we are clear in mind that
the increase in fees stipulated in the said orders as ad-hoc
measure is legal and valid. However, as clarified above,
we hasten to add that it would only be treated as an
interim measure and would be subject to scrutiny into the
records of each school to see as to whether there was any
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necessity to increase the fee having regard to the financial
position of the said schools. Outcome of such an exercise
could result in higher hike in fee than stipulated in the
orders dated 11.02.2009 or reducing the fee than what is
permitted in the said orders.
64. At the same time, we again point out that the orders
dated 11.02.2009 were issued under exceptional
circumstances. We, therefore, clarify that in the normal
course when the fee is to be fixed at the start of academic
session, no permission from DoE is necessary before or
after fixing tuition fee. Of course, once the requirement of
Section 17 (3) of the Act is fulfilled, it would be open to
the DoE to see whether such fixation is valid or it is
irrational or arbitrary. The position in sub-para (iii) of
Para 65 of DAM-1 is reiterated in this behalf.
65. At this stage, we would like to examine some other
Clauses of the orders dated 11.02.2009, validity whereof
have been challenged by the schools. Notification dated
11.02.2009 while allowing the increase in existing fee as
specified therein also restrains the private schools from
increasing fee without seeking approval of PTA (see
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clause – 3). To our mind, this clause is clearly illegal and
is not supported by any statutory or legal provisions. On
the contrary, when as per Section 17(3) of the Act even
the permission of the DoE is not required, asking the
schools to be at the mercy of PTAs for making further
increase would clearly be contrary to the said provision.
We, thus, hold that this clause is not valid.
66. Likewise, we are of the opinion that even the requirement
of seeking approval of the school accounts by PTA would
not hold water and is not legally valid.
67. With regard to other Clauses, the directions contained in
Interim order dated 28.05.2009 shall prevail.
Minority Educational Institutions:
68. No doubt, in TMA Pai while answering Question No.5 (C),
the Supreme Court held that “fees to be charged by
unaided institutions cannot be regulated” but also added
“but no institution should charge capitation, etc.” Further
in the case of Modern School (supra) itself which
discussed the fee issue of schools in Delhi with reference
to Delhi School Education Act and Rules categorically held
that even the minorities would not be entitled to indulge in
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commercial exploitation and the mechanism of regulation
at the hands of Department of Education would apply. We
cannot accept the argument of the learned counsel
appearing for the minorities schools that the view taken in
Modern School cannot prevail in view of TMA Pai. It is
stated at the cost of repetition that while taking the
aforesaid view in Modern School, the Supreme Court
took into consideration TMA Pai Foundation as well.
This legal position was reiterated in Action Committee
Unaided Pvt. Schools & Ors. judgments.
69. The reasons given by us holding para 7 of the notification
dated 11.02.2009 to be valid would prompt us to further
hold that such an order would be applicable to the
minority schools as well and does not impinge upon their
minority rights. It is for the reason that the principle laid
down by the Apex Court to the effect that schools are not
to be converted into commercial ventures and are not to
resort to profiteering is applicable to minority schools as
well.
Re: Grievance Redressal Committee:
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70. The next question that we have to address at this stage as
whether constitution of Grievance Redressal Committee by
the aforesaid Notification dated 11.02.2009 was illegal.
The contention of schools in this behalf is that
establishment of such a committee is arbitrary, illegal and
ultra vires. The provisions of 1973 Act and Rules impinge
upon the autonomy of schools. As already pointed out
above, the exceptional circumstances under which orders
dated 11.02.2009 came to be passed providing an interim
measure for fixation of fee which is found to be justified.
The objection of constitution of Grievance Redressal
Committee was to receive complains from either side. If
such an increase in respect of particular school is not
justified and downward or upwards revision is necessary.
In such a scenario, one may not find fault with the step
taken by the Government in establishing the Grievance
Redressal Committee. After all, the DoE is empowered to
discharge this function and if such a Committee is
constituted with Director of Education as Chairperson, two
other members and one Chartered Accountant to achieve
the aforesaid purpose, in principle that may not be wrong.
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Having said so, we are constrained to state in this behalf
that such ad hoc approach by the Government or DoE may
not be proper and is not a lasting solution to the problem
at hand, viz., continuing tussle and conflict between the
managements of the school, clamouring for higher hike in
the fee on the one hand and the PTAs, grieving each time
with schools announcing increase in students‟ fee and
raising a voice that such an increase is not predicated
based on any rationale or legal basis. This grievance of
the PTA becomes stronger when we notice that the
Government is failing to discharge its duty of ensuring
auditing of accounts regularly as provided under Section
18(6) of the 1973 Act read with Rule 170 of Rules.
Further, as noted above, the Supreme Court has
emphasized and emphatically reemphasized, time and
again, that the schools are not to indulge in profiteering;
the fees/funds collected from parents/students are not to
be transferred from the recognized schools to the societies
or trust or any other institutions; schools are not
supposed to charge more than 15% of the annual tuition
fee for the purposes of “development fund”. All these
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aspects can be monitored and looked into only when there
is continuous monitoring and regular auditing of the
accounts of the schools, which is the statutory duty of the
Government as well.
71. We are informed that Grievance Redressal Committee had
received 58 complaints. Out of these, three were
withdrawn and others have been considered a necessary
order be passed. However, we get the feeling that the
Redressal Committee could not do substantial job as the
only focus of this Committee was to see as to whether fee
fixed by orders dated 10.02.2009 was proper or it needs
revision (upward or downward) by certain schools. The
complaints of the parents which are brought forward by
means of writ petitions, whether having been dealt with
and could not be dealt with because of limited powers
given to the said Redressal Committee.
Similarly, as would be pointed out at a later stage,
even CAG has not performed its task.
Need of Regulatory Mechanism:
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72. History of the litigation on this aspect, in this city, which
has been outlined in this judgment and which was
triggered by the 1st petition filed by DAM way back in
1997 amply demonstrates that adhocism in this behalf is
not a suitable answer, much less a lasting solution. In
DAM-1, this Court had constituted Duggal Committee.
Though the said Committee undertook the task with all
earnestness, sincerity and patience, for various reasons
beyond the control of the Committee, it could not be
completed and brought to the logical end. Further, in
spite of the suggestions made by the Duggal Committee,
further task in this behalf was not undertaken and no
sincere efforts were made by the Government to ensure
regular audit of the accounts of these schools. The result
is that we are confronted with same situational and other
roadblocks. Even this time, the Government chose to
resort to adhocism by appointing S.L. Bansal Committee,
assigning it a task which could only take care of shorter
measure and then constituting a Grievance Redressal
Committee contrary to legal provisions.
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73. What should be the appropriate measure required to be
adopted in the scenario is the poser that states at one and
all. According to us, solution lies in establishing a
permanent regulatory body/mechanism.
74. Regulatory mechanism, or what is called regulatory
economics is the order of the day. In last 60-70 years,
economic policy of this country has travelled from laisse
faire to mixed economy to the present era of liberal
economy with regulatory regime. With the advent of
mixed economy, there was mushroom of public sector and
some of the key industries like Aviation, Insurance,
Railways, Electricity/Power, Telecommunication, etc. were
monopolized by the State. License/permit raj prevailed
during this period with strict control of the Government
even in respect of those industries where private sectors
were allowed to operate. However, Indian economy
experienced major policy changes in early 90s on LPG
Model, i.e., Liberalization, Privatization and Globalization.
With the onset of reforms to liberalize the Indian economy
in July of 1991, a new chapter has dawned for India. This
period of economic transition has had a tremendous
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impact on the overall economic development of almost all
major sectors of the economy.
75. When we have liberal economy which is regulated by the
market forces (that is why it is also termed as market
economy), prices of goods and services in such an
economy are determined in a free price system set up by
supply and demand. This is often contrasted with a
planned economy, in which a Central Government
determines the price of goods and services using a fixed
price system. Market economies are also contrasted with
mixed economy where the price system is not entirely free
but under some Government control or heavily regulated,
which is sometimes combined with State led economic
planning that is not extensive enough to constitute a
planned economy.
76. With the advent of globalization and liberalization, though
the market economy is restored, at the same time, it is
also felt that market economies should not exist in pure
form. Some regulation of the various industries is
required rather than allowing self-regulation by market
forces. This intervention through Regulatory bodies,
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particularly in pricing, is considered necessary for the
welfare of the society and the economists point out that
such Regulatory economy does not rob the character of a
market economy which still remains a market economy.
Justification for Regulatory bodies even in such industries
managed by private sector lies in the welfare of people.
Regulatory measures are felt necessary to promote basic
well-being for individuals in need. It is because of this
reason that we find Regulatory bodies in all vital industries
like, Insurance, Electricity & Power, Telecommunications,
etc.
77. Thus, it is felt that in a any welfare economy even for
private industries, there is a need for Regulatory body,
such a Regulatory framework for education sector
becomes all the more necessary. It would be more so
when, unlike other industries, commercialization of
education is not permitted and mandate of the
Constitution of India backed by various judgments of the
Apex Court is that profiteering in the education is to be
avoided.
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78. The concept of welfare of the Society would apply more
vigorously in the field of education. Even otherwise for
economist, education as an economic activity, favourably
compared to those of other economic concerns like
agriculture and industry, has its own inputs and outputs;
and is thus analyzed in terms of the basic economic tools
like the laws of return, principle of equimarginal utility and
the public finance. Guided by these principles, the State
is supposed to invest in education upto a point where the
socio-economic returns to education equal to those from
other State expenditures, whereas the individual is guided
in his decision to pay for a type of education by the
possibility of returns accruable to him. All these
considerations make out a case for setting up of a stable
Regulatory mechanism.
79. The case at hand, however, demonstrates that because of
the adhocism, we have not found a permanent solution.
Result is that both the sides, viz., schools on the one hand
and parents on the other hand are unhappy with the
prevailing situation. Whereas some of the schools feel
that they have not been allowed to increase the fee
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substantially to cover even the expenses, parents bodies
on the other hand, have the grievance that hike of fee in
certain schools is much more than justified. Such a
problem would not arise if provisions of the School
Education Act as well as the Rules are strictly adhered to
by the schools, particularly, relating to the preparation of
accounts, etc. and the increase in fee, if at all, based on
the financial health of the schools. It would not arise if
the DoE along with Comptroller and Auditor General
discharge their duties sincerely undertaking the scrutiny of
accounts and records to find out as to whether increase in
fees is justified or not. Whether it is because of the
reason that it is huge and onerous task for which DoE has
no appropriate infrastructure and for any other reasons,
fact remains that the DoE has not performed its task quite
well giving rise to such situations. If a Regulatory body is
established either by appropriate amendments in the Delhi
School Education Act or by making a separate legislation
or by administrative orders issued under the existing
provisions, if so permissible, that may solve the problem
once for all.
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80. We, therefore, recommend that the Government should
consider this aspect. If necessary, an expert Committee
be constituted which can go into feasibility of establishing
a Regulatory body for unaided/aided and recognized
private schools in Delhi and recommend the changes that
are required to be made in the existing law or to suggest
separate legislation if that is required.
81. The Central Government may even consider the feasibility
of formulating „National Policy on Fee‟.
82. If and when such measures are adopted that may provide
lasting solution to the problem. However, even when the
Government is willing this process is likely to take
substantial time. In the integerrum, neither the deserving
schools who need to increase fee but are not permitted,
nor the poor parents who may be coughing out much
more fee than what is justified and charged by certain
schools cannot be left in lurch. Since we have held that
fee hike in the orders dated 11.02.2009 is to be construed
as an interim measure, to resolve the matter finally, this
exercise is to be completed and taken to its logical end.
We are, therefore, of the opinion that for this purpose, a
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Committee be constituted in the same manner in which
this Court had earlier appointed Justice Santosh Duggal
(Retired). Accordingly, we appoint a Committee of Three
Members, which shall comprise of Justice Anil Dev Singh,
retired Chief Justice, Rajasthan High Court. He will be
assisted by Shri J.S. Kochar, Chartered Accountant (Cell
No.9810047401 and another Member can be from the
field of Education, who shall be nominated by the Chief
Secretary, Govt. of NCT, Delhi. All the schools shall render
full cooperation to the Committee in order to enable the
Committee to undertake its job effectively and speedily.
This Committee will be for the period covered by the
impugned order dated 11.02.2009 and specifically looking
into the aspect as to how much fee increase was required
by each individual schools on the implementation of the
recommendation of VIth Pay Commission, i.e., it would
examine the records and accounts, etc. of these schools
and taking into consideration the funds available, etc. at
the disposal of schools at that time and the principles laid
down by the Supreme Court in Modern School and
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Action Committee Unaided Pvt. Schools as explained
in this judgment.
83. We reiterate that the fee hike contained in orders dated
11.02.2009 was by way of interim measure. There is a
need to inspect and audit accounts of the schools to find
out the funds to meet the increased obligation cast by the
implementation of VIth Pay Commission and on this basis,
to determine in respect of these schools as to how much
hike in fee, if at all, is required. On the basis of this
exercise, if it is found that the increase in fee proposed,
orders dated 11.02.2009 is more the same shall be slided
down and excess amount paid by the students shall be
refunded along with interest @ 9%. On the other hand, if
a particular school is able to make out a case for higher
increase, then it would be permissible for such schools to
recover from the students over and above what is charged
in terms of Notification dated 11.02.2009.
84. One more aspect needs to be stated at this juncture. On
17.03.2011, the Comptroller and Auditor General of India
(CAG) filed its report after auditing and inspecting the
accounts of as many as 25 out 1211 privately
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administered unaided schools in Delhi. It covers the
period from April, 2006 to March, 2009. Report states
that the audit has been conducted in accordance with
Rules 170 and 180(3) of the Delhi Education Rules. This
report comprising of five chapters, starts with an
„Introduction‟ outlining the scope, objectives and
methodology of audit. The audit involved examination of
records in compliance with the Delhi School Education Act
and Rules framed thereunder by the Education
Department 25 unaided private schools. Chapter 2 covers
monitoring of the functioning of the schools by the DoE.
Chapter 3 discusses the maintenance of accounts by the
schools and their certification in conformity with the
applicable laws, rules and executive directions. Chapter 4
contains observations on collection of fees and other
charges and application of the funds by the schools. In
Chapter 5, CAG assessed the compliance by schools with
the instructions of the High Court regarding admission of
the students from economically weaker sections.
85. In this Report, CAG has adversely commented upon the
functioning of the schools in respect of certain aspects. It
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is, inter alia, stated that schools did not follow the
accounting standard and the applicable legislation while
preparing their final account; many schools levied excess
tuition fee and other charges without linking the
admissible expenses to be covered; certain schools
transferred the additional financial burden on account of
implementation of 6th Pay Commission recommendations
to the students instead of utilization their free reserves
first; they collected enhanced development fee even
though the available development and specified fund was
not exhausted; some schools were not even paying their
teachers‟ salary and allowances on part with the
Government teachers, etc.
86. During the arguments, various counsels appearing for
these schools refuted those remarks and they had their
own version while alleging that CAG had not carried out its
function properly. The report of CAG is furnished to these
schools by the DoE/Government and show cause notices
had already been issued Schools are responding to the
said show cause notices. Since it is for the Government to
take further steps after giving proper hearing to the
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schools on the said report, we are eschewing any further
discussion thereupon.
87. However, what we want to highlight is that in all these
years CAG has inspected only 25 schools, that too under
pressure, which is one of the reasons given by us to have
the need for a Regulator. Other aspect which becomes
discernible is the non-performance of the obligations on
the part of the DoE have also been severely criticized in
the Report. In the executive summary, it is, inter alia,
stated in this behalf as under:
“We observed non-submission or delayed submission of
Fee Statements as well as the Annual Returns by the
schools. Many schools submitted the Fee Statements
after the completion of the academic year; even the
quantum of fee hike was not specified in the Statement.
There was no evidence of scrutiny of the Annual Accounts
and other returns to ascertain that the receipts and
expenditure of the schools were in consonance with the
projected budget estimates of the schools and any fee
hike was not unreasonable. Inspection of the schools by
the Directorate was inadequate. The DoE made only 10
visits in 25 schools during 2006-09 against 75, envisaged
in the Act. The Department did not fulfil its obligation to
get the accounts of the unaided recognized schools duly
audited, though provided in the Act. Due to weak
governance by the DoE, the schools continued to enhance
the fees despite having surplus funds. A proper system
should be put in place whereby all returns received from
schools are scrutinized to ascertain that the provisions of
the Act and Rules have been complied with.
xxx xxx xxx
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We feel that the DoE should have a role in appointment of
statutory auditors for the private schools so that
compliance with the provisions of DSE Act & Rules is
ensured. Institute of Chartered Accounts of India may be
consulted for regulating the professional conduct of the
statutory auditors.
xxx xxx xxx
The Government may evolve a comprehensive fee
structure clearly defining each component and fixing an
upper limit for fees to be collected.”
88. The abdication of the role assigned to DoE and the weak
monitoring also provides justification for introducing
regulatory mechanism. We can only hope that the
Government will bestow serious consideration to this
suggestion.
89. Writ petitions are disposed of in the aforesaid terms
without any orders as to costs.
(A.K. SIKRI)
JUDGE
(SIDDHARTH MRIDUL)
JUDGE
AUGUST 12, 2011
pmc
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