Delhi High Court: A Single Judge Bench of Sanjeev Narula, J.* held that since the unaided schools were entirely dependent on the fee collected by them, they would obviously like to earmark funds for specific purposes and thus, planning and maintaining a surplus per se could not be construed as commercialization of education. Therefore, the Court further held that schools were entitled to maintain a reasonable surplus for expansion of the system and development of education and the same was permissible in law.
In the present case, Municipal Corporation of Delhi allotted land to Mahavira Foundation, a society constituted of members of the Jain community. They established Mahavir Sr. Model School (“Sr. School”) as an aided Senior Secondary Private School. Later, upon payment of requisite charges, its status was converted to unaided private school. Subsequently, the Delhi Development Authority in 1987 allotted a separate piece of land for the establishment of Mahavir Jr. Model School (“Jr. School”), another unaided private school. Both these schools functioned and administered their affairs entirely from the fees collected by them and were not dependent on any aid from the State. They had been accorded minority status since 2011 and were recognized under the provisions of the Delhi School Education Act, 1973 (“DSEA”) and functioned under the regulatory control of Directorate of Education (“DoE”).
After approving the budget for academic session 2018-19, the Managing Committee of the Sr. School, submitted a statement of fee to DoE in terms of Section 17(3) of DSEA, setting out class-wise fee structure for the said academic year. On receipt of the statement of fee and based on a complaint/representation received from few parents of the students studying in these schools, DoE sent an e-mail alleging that enhancement of fee by Sr. School was without prior sanction from DoE and thus, DoE passed an Order stating that Sr. School had been arbitrarily increasing fee under the garb of implementation of 7th Central Pay Commission in breach of the condition of prior sanction entailed in the land allotment letter. The school was directed to “roll back the fee hike in the school in light of the directions of the Department and refund the increased fee to the parents/guardians of the students, with immediate effect”. The Sr. School submitted that the enhanced fee structure was not motivated by 7th Central Pay Commission but was fixed keeping in mind the budgetary requirements and it was clarified that land allotment letter pertained only to Jr. School and the Sr. School, which was a separate entity, was not governed by the land clause.
Even after the scrutiny of the statement of the fee, DoE passed an Order directing the Sr. School to not increase fee/charges for the academic year 2017-18 and to refund/adjust the increased fee recovered from students against future fees.
Analysis, Law, and Decision
The Court noted that when it came to fixation of fee, DoE asserted its regulatory control relying on the provisions of DSEA and conditions accompanied with allotment of lands to schools, which was typically referred to as a ‘land clause’. The said clause, in the context of fee hike, implied incorporation of stipulations pertaining to proposed changes to the fee structure, making it obligatory to seek prior approval from DoE.
The Court opined that the land clause in the allotment letter applied exclusively to the Jr. School and did not impose any obligation on the Sr. School as the Sr. School had been in operation since 1983, which predated the issuance of the land allotment letter in 1987, thus evidencing that Sr. School was not governed by the land clause. The Court further noted that Section 17(3) of DSEA required that before commencement of each academic session, the manager of every recognized school, which included an unaided school, should file a full statement of fees to be levied by the school during the ensuing academic session and no unaided school was permitted to charge fee higher than the one set out in the statement of fee during that academic session, except with the prior approval of the Director. Thus, if there was no land clause, unaided schools were not mandated to obtain prior approval from the DoE for modifying their fee structure but were only expected to submit a statement of fees as per Section 17(3) of DSEA.
The Court opined that the language of the provision did not suggest obtaining prior approval for levying fee disclosed in the statement of fee and Section 17(3) of DSEA contemplated prior approval from DoE only if the school sought to impose fee in excess of the structure specified in statement of fees during an academic session, and not otherwise. Thus, the Court held that there was not any condition for private unaided schools to seek prior approval from DoE before modification of fee arrangement in Section 17(3) of DSEA.
The Court relied on Unni Krishnan, J.P. v. State of Andhra Pradesh, (1993) 1 SCC 645, TMA Pai Foundation v. State of Karnataka, (2002) 8 SCC 481 and Islamic Academy of Education v. State of Karnataka, (2003) 6 SCC 697 and noted that these judgments had extensively elucidated the interplay between self-governance of private unaided schools in their management and administration and the extent of governmental supervision that was permissible. The Court further relied on Modern School v. Union of India, (2004) 5 SCC 583, wherein the Supreme Court discussed width and scope of DoE’s jurisdiction in regulating the amount of fees charged by unaided schools and held that “unaided schools had the right to a reasonable surplus for the growth and advancement of the institution and DoE had the authority to regulate the fees and other charges to prevent commercialization of education and if a private unaided school was not involved in the commercialization of education, it should be allowed to decide its fee structure, and its autonomy under the DSEA should be respected and upheld”.
The Court noted that DoE had the authority to seek and examine the accounts of schools under Section 17(3) of the DSEA r/w Rule 180(3) of the DSER, but the Court opined that this regulatory power must, however, be exercised within the precincts of the law. Thus, the Court held that the DoE exceeded its jurisdiction by directing diversion of funds towards payments of salaries and allowances of concerned employees. The Court further held that “Schools were entitled to maintain a reasonable surplus for expansion of the system and development of education. Increase in fee to generate funds for expansion and betterment of educational/ infrastructural facilities, as was the case with the Sr. School, was permissible in law”. The Court further held that “the process of fixation of fee for any given academic year entailed consideration of a multitude of factors such as salaries and remunerations to be paid to teaching and non-teaching staff, cost of running the establishment, investments, infrastructure and future plans for expansion and development of the institution. Since the unaided schools were entirely dependent on the fee collected by them, they would obviously like to earmark funds for specific purposes and therefore, planning and maintaining a surplus per se could not be construed as commercialization of education”.
The Court disposed of the present petition and held that the Order passed by DoE was set aside and Mahavir Sr. Model School was entitled to increase their fee under Section 17(3) of DSEA.
[Mahavir Sr. Model School v. Directorate of Education, 2023 SCC OnLine Del 1587, decided on 15-3-2023]
Advocates who appeared in this case :
For the Petitioners: Advocate Kamal Gupta, Advocate Sparsh, Advocate Yash Yadav;
For the Respondent: Senior Counsel (Civil) Santosh Kumar Tripathi, ASC Rishikesh Kumar, Advocate Arun Panwar, Advocate Siddharth Krishna Dwivedi, Advocate Pradeep, Advocate Mahak Rankawat, Advocate Aditya S. Jadhav, Advocate Pradyuman Rao, Advocate Sheenu Priya, Advocate Muhammad Zaid.
*Judgment authored by: Justice Sanjeev Narula.