Delhi High Court
Ramjas School vs Directorate Of Education on 20 May, 2020
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Pronounced on: 20th May, 2020
+ W.P.(C) 9688/20 18 & CM APPLs. 37743/2018, 6445/2019,
9733/2019
RAMJAS SCHOOL ..... Petitioner
Through: Mr. Sunil Gupta, Sr. Adv. with Kamal
Gupta, Ms. Pragya Agarwal and Mr.
Yudhishter, Advocates.
versus
DIRECTORATE OF EDUCATION ..... Respondents
Through: Mr. Ramesh Singh, SC for GNCTD
with Mr. Santosh Kr. Tripathi and Mr.
Chirayu Jain, Advs for DOE
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
JUDGEMENT
% 20.05.2020
(Pronounced via Video-Conferencing)
1. To what extent can the Directorate of Education monitor the
fixation of fees, by a private unaided school, in a situation in which
the land, on which the school is located, has been allotted to the
society administering the school without any caveat requiring the
school to take prior approval, of the Directorate of Education, before
increasing its fees in any academic session?
2. The petitioner would contend that the Directorate of Education
(hereinafter referred to as "the DoE") is completely proscribed from
interfering with the manner in which a school, which is not governed
by any such 'land clause', fixes its fees, absent any element of
profiteering. According to the petitioner, the autonomy, available to a
private unaided school, in the management of its affairs, extends to the
fixation of its fees, and the DoE cannot arrogate, to itself, the best
discretion in that regard. Nor can the DoE, according to the petitioner,
opine that the surplus funds, available with a private unaided School,
were more than sufficient for the school to manage its affairs and that,
therefore, no justification, for increase of fees, by the school, existed.
Any such attempt, on the part of the DoE, submits the petitioner,
would amount to illegal trespass, by the DoE, into the area of
autonomy enjoyed by the school.
3. The DoE would contend, per contra, that the power, vested in
the DoE, to ensure that Schools do not indulge in commercialisation
of education, extends to interfering with the manner in which fees are
fixed by the school. Fixation of fees, by the school, in such a manner
as would result in collections grossly in excess of the expenses
incurred by the school, according to the DoE, may amount to
commercialisation of education by the school, and would justify
interference by the DoE. The DoE places reliance, in this regard, on
Rules 172 to 177 of the Delhi School Education Rules, 1973
(hereinafter referred to as "the DSE Rules") which, according to the
DoE, set out the manner in which fees, collected by a School, are to be
applied by it. In the event a School is found to be utilising the fees
collected by it, in a manner which does not subscribe to the scheme
contained in Rules 172 to 177 of the DSE Rules, the DoE would
contend that it has every right to interfere.
4. Reconciliation and resolution of these two extreme stances, and
arriving at the exact legal position would require me, in the first
instance, to set out, in some detail, the relevant facts.
Facts
5. On land which was allotted by the Land and Development
Office (L & DO), the petitioner-School (hereinafter referred to as "the
school") came to be established in 1974. It is not in dispute that there
was no clause, in any of the documents relating to allotment of land to
the petitioner, requiring prior approval of the DoE to be obtained,
before increase of fees, by the school. In other words, the petitioner-
School was not subject to any 'land clause'. It is also not in dispute
that the petitioner is a private unaided school, which receives no aid
from the DoE, or from any Governmental authority, and is, therefore,
dependent on the fees collected by it, to administer its affairs.
6. The affairs of the petitioner are, undoubtedly, subject to
regulatory control by the DoE, and governed by the provisions of the
Delhi School Education Act, 1973 (hereinafter referred to as "the DSE
Act") and the Delhi School Education Rules, 1973 (hereinafter
referred to as "the DSE Rules").
7. The petitioner-School stands recognised by the DoE. Section 17
of the DSE Act deals with fees and other charges to be collected by
Schools. Sub-sections (1) and (2), thereof, deal with aided schools and
are, therefore, not applicable to the petitioner. Sub-section (3), which
requires the filing of an annual statement of fees by every recognised
school, reads as under:
"(3) The manager of every recognised 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."
8. The petitioner has sought to impress, on the DoE as well as,
later, on this Court, the fact that the only requirement, regarding
submission of statement of fees, by an unaided school to the DoE, is
to be found in the afore-extracted sub-section (3) of Section 17 of the
DSE Act, which only requires the school to file, with the DoE, a full
statement of the fees to be levied by the school during the ensuing
academic session, before the commencement thereof. The only
proscription, contained in the said sub-section, is on a school charging
fees in excess of the amount specified in the said statement of fees,
which, though not entirely prohibited, would require prior approval of
the DoE. There can be no gainsaying that no other clause, requiring
prior approval of the DoE, before fixation of fees, or even increase
thereof, by an unaided recognised school, is to be found anywhere in
the DSE Act or in the DSE Rules.
9. Before proceeding further, it would be appropriate to briefly
chart out the evolution of the law, relating to fixation of fees, by
educational institutions which are, and which are not, subject to any
'land clause'.
10. The interlink, between allotment of land at concessional rates
for establishment of educational institutions, and the fees charged by
educational institutions established on such land, came up for
comment, by the Supreme Court, initially in U.O.I. v. Jain Sabha,
New Delhi1, in which the following observations were returned, in
para 11 of the report:
"Before parting with this case, we think it appropriate to
observe that it is high time the Government reviews the entire
policy relating to allotment of land to schools and other
charitable institutions. Where the public property is being
given to such institutions practically free, stringent conditions
have to be attached with respect to the user of the land and
the manner in which schools or other institutions established
thereon shall function. The conditions imposed should be
consistent with public interest and should always stipulate
that in case of violation of any of those conditions, the land
shall be resumed by the Government. Not only such
conditions should be stipulated but constant monitoring
should be done to ensure that those conditions are being
observed in practice. While we cannot say anything about the
particular school run by the respondent, it is common
knowledge that some of the schools are being run on totally
commercial lines. Huge amounts are being charged by way of
donations and fees. The question is whether there is any
justification for allotting land at throw-away prices to such
institutions. The allotment of land belonging to the people at
practically no price is meant for serving the public interest,
i.e., spread of education or other charitable purposes; it is
not meant to enable the allottees to make money or profiteer
with the aid of public property. We are sure that the
Government would take necessary measures in this behalf in
the light of the observations contained herein."
(Emphasis supplied)
1 (1997) 1 SCC 164, rendered by a bench of 2 Hon'ble Judges
11. Educational institutions established on land, sourced from the
land-owning agencies at reduced rates, therefore, constitute a category
sui generis. A clear distinction, between such institutions, and
institutions located on land purchased at commercial rates, therefore,
stands chalked out as far back as in 1997.
12. The locus classicus, insofar as autonomy of educational
institutions, in the statutory regime is, unquestionably, the judgement
of a Constitution Bench of 11 Hon'ble judges of the Supreme Court in
T. M. A. Pai Foundation v. State of Karnataka2. Criticising and
overruling its earlier judgement, rendered by a Constitution Bench of
5 Hon'ble Judges in J. P. Unnikrishnan v. State of A. P.3, the
Supreme Court, in T. M. A. Pai Foundation2, opined thus (in paras 35
and 36 of the report):
"35. It appears to us that the scheme framed by this Court
and thereafter followed by the Governments was one that
cannot be called a reasonable restriction under Article 19(6)
of the Constitution. Normally, the reason for establishing an
educational institution is to impart education. The institution
thus needs qualified and experienced teachers and proper
facilities and equipment, all of which require capital
investment. The teachers are required to be paid properly. As
pointed out above, the restrictions imposed by the scheme,
in Unni Krishnan case [(1993) 1 SCC 645] made it difficult,
if not impossible, for the educational institutions to run
efficiently. Thus, such restrictions cannot be said to be
reasonable restrictions.
36. The private unaided educational institutions impart
education, and that cannot be the reason to take away their
choice in matters, inter alia, of selection of students and
fixation of fees. Affiliation and recognition has to be available
2 (2002) 8 SCC 481
3 (1993) 1 SCC 645
to every institution that fulfils the conditions for grant of such
affiliation and recognition. The private institutions are right in
submitting that it is not open to the Court to insist that
statutory authorities should impose the terms of the scheme as
a condition for grant of affiliation or recognition; this
completely destroys the institutional autonomy and the very
objective of establishment of the institution.
13. T. M. A. Pai Foundation2, having observed thus, noted that
private educational institutions were "a necessity" and that the earlier
decision in J. P. Unnikrishnan3, insofar as it framed a scheme relating
to grant of admission and fixation of fee, was not correct.
14. T. M. A. Pai Foundation2 went on to address, in exhaustive
detail, the core issue arising before it, viz. the extent to which the
affairs of private educational institutions, aided as well as unaided, can
be regulated by the government. Absent profiteering, the Supreme
Court held that the right to establish and administer educational
institutions included, within it, the right "to set up a reasonable fee
structure". Such a "fee structure", it was observed, "must take into
consideration the need to generate funds to be utilised for the
betterment and growth of the educational institution, the betterment of
education in that institution and to provide facilities necessary for the
benefit of the students". In para 54 of the report, it was held that the
"fixing of a rigid fee structure" was an "unacceptable restriction" on
the right to establish an unaided educational institution, and could not,
therefore, be regarded as "permissible regulation". Thereafter, paras
55 to 57, 61, and 66, of the report went on to hold, thus:
"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 case [(1993)
1 SCC 645] 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
prerequisite. 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, 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 student
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
educational institution that does not seek or is not dependent
upon any funds from the Government.
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 "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.
*****
61. It is in the interest of the general public that more good
quality schools are established; autonomy and non-regulation
of the school administration in the right of appointment,
admission of the students and the fee to be charged will
ensure that more such institutions are established.
*****
66. In the case of private unaided educational institutions,
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."
(Emphasis supplied)
15. The answers, of the Court, to the issues arising in the above
case were enumerated, towards the conclusion of the majority opinion
(authored by B. N. Kirpal, J., as he then was). While dealing with the
issue of whether the statutory provisions, regulating facets of
administration, like control over educational agencies, control over
governing bodies, conditions of affiliation and appointment of staff,
employees, teachers and principals, including their service conditions,
and regulation of fees, etc., would interfere with the right of
administration of unaided educational institutions, the Supreme Court
held that "fees to be charged by unaided institutions cannot be
regulated but no institution should charge capitation fee". Similarly,
while examining the sustainability of its earlier view, in J. P.
Unnikrishnan3, the Supreme Court, while holding the scheme, framed
by it in the said decision, to be unconstitutional, held, nevertheless,
thus:
"However, the principle that there should not be capitation
fee or profiteering is correct. Reasonable surplus to meet cost
of expansion and augmentation of facilities does not,
however, amount to profiteering."
(Emphasis supplied)
16. T. M. A. Pai Foundation2, therefore, emphasised, in
unequivocal terms, the autonomy of private unaided educational
institution, to administer the affairs, free from governmental control,
inter alia, in the matter of fixation of their fee structure, subject to the
caveat that the institution could not charge capitation fee, or indulge in
profiteering. 'Profiteering' was also, in a sense, negatively defined,
by holding that "reasonable surplus to meet cost of expansion and
augmentation of facilities" would not amount to 'profiteering'.
17. 'Capitation fee', though not defined in T. M. A. Pai
Foundation2, refers, conceptually, to charging of a fee in excess of
that prescribed by statutory regulations. No such allegation having
been levelled against the petitioner, further reference to the concept of
'capitation fee' may conveniently be eschewed.
18. Marked disparity, in the manner in which T. M. A. Pai
Foundation2 was being interpreted, by the Union of India as well as
by various State Governments, necessitated reference, of the issue,
once again, to a Constitution Bench of the Supreme Court, comprising
five Hon'ble judges, which rendered its verdict, on 14th August, 2003,
in Islamic Academy of Education v. State of Karnataka4. Two
questions were framed, by the Supreme Court, as arising for its
consideration, of which the first - which, alone, is relevant for us -
was "whether the educational institutions are entitled to fix their own
fee structure". On this issue, it was opined by the majority, in Islamic
Academy of Education4, that the majority view, in T. M. A. Pai
4 (2003) 6 SCC 697
Foundation2 was "very clear". Para-7 of the report in Islamic
Academy of Education4 ruled, in this regard, inter alia, thus:
"So far as the first question is concerned, in our view the
majority judgment is very clear. There can be no fixing of a
rigid fee structure by the Government. Each institute must
have the freedom to fix its own fee structure taking into
consideration the need to generate funds to run the institution
and to provide facilities necessary for the benefit of the
students. They must also be able to generate surplus which
must be used for the betterment and growth of that
educational institution. In paragraph 56 of the judgment it has
been categorically laid down that the decision on the fees to
be charged must necessarily be left to the private educational
institutions that do not seek and which are not dependent
upon any funds from the Government. Each institute will be
entitled to have its own fee structure. The fee structure for
each institute must be fixed keeping in mind the infrastructure
and facilities available, the investments made, salaries paid to
the teachers and staff, future plans for expansion and/or
betterment of the institution etc. Of course there can be no
profiteering and capitation fees cannot be charged. It thus
needs to be emphasized that as per the majority judgment
imparting of education is essentially charitable in nature.
Thus the surplus/profit that can be generated must be only for
the benefit/use of that educational institution. Profits/surplus
cannot be diverted for any other use or purpose and cannot be
used for personal gain or for any other business or
enterprise."
(Underscoring supplied; italics in original)
19. Islamic Academy of Education4, therefore, while re-
emphasising the right of private educational institutions to determine
and maintain their fee structure, keeping in mind the benefit of the
institution and of the students for whom it is meant, also underscored
the requirement of a reasonable surplus, with such institutions, which
could be utilised towards advancement of the institution and
betterment of the students. Diversion of such surplus, to other
purposes was, however, proscribed. In the matter of determination of
the quantum of fees to be charged, Islamic Academy of Education4,
once again, stressed the necessity of preservation of institutional
autonomy, free from governmental interference, even while clarifying
that the quantum had to be fixed keeping in mind the infrastructure
and facilities available, investments made, salaries paid to the teachers
and staff, future plans for expansion and/or betterment of the students,
and other such considerations. The complete prohibition, on charging
of capitation fees, and profiteering, was, however, once again
underscored.
20. Significantly, the partially concurring judgement of Sinha, J., in
Islamic Academy of Education4 provided, for the first time, for a
definition of "profiteering", to which this judgement shall, presently,
advert.
21. This Court had, as far back as on 30th October, 1998,
emphasised the right of unaided educational institutions to fix, and
levy, their fees, without prior, or later, sanction, of the DoE or of any
other governmental authority, in Delhi Abhibhavak Mahasangh v.
U.O.I.5 (hereinafter referred to as "Delhi Abhibhavak Mahasangh-
I"). The said decision was carried, in appeal, to the Supreme Court,
and the judgement rendered therein (by a bench of three Hon'ble
Judges) came to be reported, subsequently, as Modern School v.
U.O.I.6. Three questions were framed, by the Supreme Court in the
5 AIR 1999 Del 124: 1998 SCC OnLine Del 809
6 (2004) 5 SCC 583
said decision, as arising for its consideration, the first of which
directly addresses the issue in controversy herein, and read thus:
"Whether the Director of Education has the authority to
regulate the quantum of fees charged by unaided schools
under Section 17(3) of the Delhi School Education Act,
1973?"
The issue, thus framed, acquires especial importance in view of the
stand, of the DoE, in the present case, that the impugned Order, dated
18th July, 2017, was issued in exercise of the powers conferred by
Section 17(3) of the DSE Act. In examining whether the DoE could,
or could not, do so, therefore, Modern School6 has, inevitably, to
serve as a guiding precedent.
22. As in the present case, the stand of the DoE, before this Court
in Delhi Abhibhavak Mahasangh-I5, as well as before the Supreme
Court in appeal thereagainst, in Modern School6, was that the fees,
charged by the schools, were excessive and disproportionate in
comparison to their requirement, and amounted to 'commercialisation
of education' by the schools. Modern School, as the appellant before
the Supreme Court, contended, per contra, that the Government has
no authority to regulate fees payable by students of unaided schools,
and that Section 17(3) of the DSE Act only required the management
of the unaided school to submit, to the DoE , a full statement of fees
leviable during the ensuing academic session. In this connection, the
contrast, between Section 17(1) and (2), and Section 17(3), was
sought to be highlighted, pointing out that, in the case of aided
schools, sub-sections (1) and (2) of Section 17 did permit regulatory
control by the Government in the matter of fixation of fees, whereas
unaided schools were excepted from such control, under sub-section
(3). In this scenario, "the first point for determination", as
encapsulated in para 13 of the decision in Modern School6 by the
Supreme Court, was "whether the Director of Education has the
authority to regulate the fees of unaided schools". This, precisely, is
the point that arises before this Court in the present litigation, as well.
23. Paras 14 and 15 of the report, which condensed, in a nutshell as
it were, the opinion of the Supreme Court, on this issue, and the
relevant portion, thereof, may be reproduced as under:
"14. At the outset, before analysing the provisions of the
1973 Act, we may state that it is now well settled by a catena
of decisions of this Court that in the matter of determination
of the fee structure unaided educational institutions exercise
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 commercialisation of education.
Hence, we have to strike a balance between autonomy of such
institutions and measures to be taken to prevent
commercialisation 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 the 1973 Act.
15. ... However, the 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. However, capitation fee and profiteering were
held to be forbidden. Subject to the above two prohibitory
parameters, this Court in T.M.A. Pai Foundation
case [(2002) 8 SCC 481] 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 T.M.A.
Pai Foundation case [(2002) 8 SCC 481] .
(Emphasis supplied)
24. The afore-extracted passages, from Modern School6, even
while re-emphasising the autonomy, possessed by unaided schools in
the matter of fixing of fees, reiterated that schools were entitled to
maintain a reasonable surplus - alternatively termed "reasonable
profits after providing for income and expenditure". So long as the
institution was not charging capitation fee, and was not 'profiteering',
the Supreme Court re-emphasised the principle that the DoE could not
tinker with the right of the institution to "reasonable profits after
providing for income and expenditure" or, expressed otherwise, "a
reasonable surplus".
25. It appears, however, that, even while so holding, the Supreme
Court was aware of the possibility of the DoE - or any other
Governmental authority - capitalising on the use of the word
"reasonable", as a means to override the autonomy, possessed by
unaided educational institutions, to fix their fees. Apparently
advisedly, therefore, the Supreme Court chose not to leave the
expression "reasonable", used in juxtaposition with "surplus" in the
context of Section 17(3) of the DSE Act, open-ended, but went on to
clarify, in para 17 of the report, thus:
"... 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 authorised
to regulate the fees and other charges to prevent
commercialisation 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 Sections 18(3) and (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."
(Italics and underscoring supplied)
The authority of the DoE, even under Section 17(3) of the DSE Act is
not, therefore, to sit in appeal over the exercise of discretion, by the
school, of the manner in which it is to fix its fees, but to ensure that, in
so doing, the school does not indulge in "commercialisation of
education". Absent such commercialisation, the autonomy, of an
unaided school, to fix its fees, under the DSE Act and the DSE Rules,
has to be accorded due respect.
26. The word "to", though monosyllabic and consisting of just two
letters, is, as used in the afore-extracted passage from the decision in
Modern School, of fundamental significance. The Supreme Court has
clarified that the authorisation, with the DoE, under Section 17 (3) of
the DSE Act, to regulate fees and other charges, charged by the
unaided school, is "to prevent commercialisation of education". The
word "to", etymologically, connotes motive and purpose. The DoE,
therefore, while exercising its jurisdiction under Section 17 (3) of the
DSE Act, has to keep in view the purpose, for which power has been
conferred, on it, to regulate the fee, charged by unaided schools,
which is prevention of commercialisation of education. Absent such
commercialisation, it may be stated at the cost of repetition, that the
DoE cannot arrogate, to itself, any authority to sit in appeal over, or
even to regulate, the fee charged by an unaided school.
27. The next decision of consequence is P. A. Inamdar v. State of
Maharashtra7, rendered by a bench of seven Hon'ble Judges, which
was constituted in order to reconcile certain perceived inconsistencies
between T. M. A. Pai Foundation2 and Islamic Academy of
Education4. It is not necessary to dwell, deep, into the said decision,
dealing essentially, as it were, with the right of minority educational
institutions to administer their affairs, in the context of Article 30(1)
of the Constitution of India; suffice it to note, however, that, even
while ceding the authority, of the State, to regulate the affairs of
minority educational institutions, the Supreme Court held, in para 121
of the report in P. A. Inamdar7, as under:
"Affiliation or recognition by the State or the Board or the
university competent to do so, cannot be denied solely on the
ground that the institution is a minority educational
institution. However, the urge or need for affiliation or
recognition brings in the concept of regulation by way of
laying down conditions consistent with the requirement of
ensuring merit, excellence of education and preventing
maladministration. For example, provisions can be made
indicating the quality of the teachers by prescribing the
minimum qualifications that they must possess and the
courses of studies and curricula. The existence of
infrastructure sufficient for its growth can be stipulated as a
prerequisite to the grant of recognition or affiliation.
However, there cannot be interference in the day-to-day
administration. The essential ingredients of the management,
including admission of students, recruiting of staff and the
7 (2005) 6 SCC 537
quantum of fee to be charged, cannot be regulated. (Para
55, Pai Foundation [(2002) 8 SCC 481] )
(Italics and underscoring supplied)
In the same vein, para 141 of the report holds that "every institution is
free to devise its own fee structure but the same can be regulated in
the interest of preventing profiteering", and that "no capitation fee can
be charged". The power to regulate is, therefore, not unbridled, but is
to be exercised in the interest of preventing profiteering. Similarly,
para 143 of the report opined that "even unaided minority institutions
can be subjected to regulatory measures with a view to curb
commercialisation of education, profiteering and exploitation of
students".
28. Also instructive, in this regard, is the decision, by a Bench of
three Hon'ble Judges of the Supreme Court, in Cochin University of
Science and Technology v. Thomas P. John8. This judgement is
significant, in that, in paras 11 and 12 of the report, the Supreme
Court opined that "the matter relating to the fixation of fee is a part of
the administration of an educational institution and it would impose a
heavy onus on such an institution to be called upon to justify the levy
of a fee with mathematical precision" and that "an educational
institution chalks out its own program year-wise on the basis of the
projected receipts and expenditure and for the court to interfere in
this purely administrative matter would be impinging excessively on
this right". While accepting that an educational institution does not
have a carte blanche to charge any fee that it chose, the Supreme
Court clarified, nevertheless, that "substantial autonomy must be left
8 (2008) 8 SCC 82
to it". Equally, it was emphasised, "the University had made its
budget estimates keeping in view the proposed receipts and if the fee
levied by it and accepted by the students was permitted to be cut down
midterm on the premise that the University had not been able to
explain each and every item to justify the levy, it would perhaps be
impossible for it to function effectively." The finding, of the High
Court, that the fixation of higher fee, by the University, for two years,
did not have any rational basis, was specifically disapproved by the
Supreme Court, which held that this cast, on the University, the onus
to explain the fixation of fees by it, the accurate discharging of which
would be difficult.
29. Qua unaided schools which are not situated on land to which
the 'land clause' applies, therefore, there is uniformity of judicial
opinion that the power of the DoE to regulate fees, while undeniable,
is limited to ensuring that the school does not indulge in profiteering
or charging capitation fees. Absent these two disabling infirmities,
the autonomy, of unaided educational institutions to fix their fees,
cannot be gainsaid.
Reverting to the facts
30. Consequent on the judgement, of the Supreme Court in Modern
School6, this Court, in its judgement, dated 19th January, 2016 in
Justice For All v. G.N.C.T.D.9, directed the DoE to ensure
compliance, by schools situated on land, allotted with the 'land
9 227 (2016) DLT 354 (DB) : 2016 SCC OnLine Del 355
clause', therewith. By way of implementation thereof, Order No F.
DE-15/Act-I/WPC-4109/13/6750, dated 19th February, 2016, was
issued by the DoE, informing the Heads of all Private unaided
recognised Schools, allotted land with the 'land clause', that they were
required to seek prior sanction of the DoE for increase in the tuition
fee. This was followed by Order No F. DE-15/Act-I/WPC-
4109/13/7914-7923, dated 16th April, 2016, directing all such schools,
located on land, allotted to them with the 'land clause', to submit
proposals, for prior sanction of the DoE, for the increase in tuition fee
for the academic session 2016-2017, latest by 31st May, 2016. The
opening paras of the aforesaid Order, dated 16 th April, 2016, may be
reproduced, thus:
"Government of National Capital Territory of Delhi
Directorate of Education
Old Secretariat, Delhi-110054
No. F. DE-15/ACT-I/WPC-4109/Part/13/7914-7923
Dated: 16-04-2016
ORDER
Whereas Hon'ble High Court of Delhi vide judgement
dated 19.01.2016 in the Writ Petition No 4109/2013 in the
matter of Justice for All versus GNCTD and others has
directed the Director of Education to ensure the compliance
of term, if any, in the letter of allotment regarding the
increase of the fee by all the recognised unaided schools
which are allotted land by DDA;
And whereas, vide order no F. DD-15/Act-I/WPC-
4109/13/6750 dated 19.02.2016, the Directorate of Education
informed all the HOSs/Managers of all Private Unaided
recognised Schools, allotted land by the land owning agencies
on the condition of seeking prior sanction of Director of
Education for increase in tuition fee/fee, about the aforesaid
directions of Hon'ble High Court of Delhi;
Now, therefore, all the HoSs/Managers of Private
Unaided recognised Schools, allotted land by the land owning
agencies on the condition of seeking prior sanction of
Director of Education for increase in fee, are directed to
submit the proposals, if any, for prior sanction of the Director
of Education for increase in tuition fee/fee for the academic
session 2016-17, online through website of the Directorate
and upload the returns and documents mentioned therein
latest by 31st May, 2016. Any incomplete proposal shall be
summarily rejected."
(Emphasis supplied)
For the sake of the record, it may be noted that the deadline of 31 st
May, 2016, stipulated in the aforesaid Order, dated 16 th April, 2016,
of the DoE, was extended till 31st July, 2016, vide subsequent Order
dated 3rd June, 2016, also by the DoE.
31. On 15th July, 2016, the DoE issued Order No F. DE-15/ACT-
I/WPC-4109/PART/13/10248-10255. The first four paragraphs of the
said Order, which are self-speaking in nature, may be reproduced
thus:
"Whereas this Directorate vide orders of even-number dated
16.04.2016 and No F. DE-15/ACT-I/WPC-5256/16/95 2-
9359 dated 03.06.2016 sought online proposals of fee
increase for prior sanction of the Director of Education, from
the Unaided Recognised Private Schools allotted land by the
land owning agencies on the condition of obtaining such prior
sanction for fee increase from the Director of Education, up
to 31st July, 2016;
And whereas many Private Unaided Recognised Schools have
submitted their online proposals till date which have been
scrutinised by this Directorate. On scrutiny of these proposals
and documents uploaded by these schools, some
discrepancies have been found in the uploaded documents
being 'Incomplete' or 'Illegible' or 'Not in Specified
Format';
And Whereas this Directorate has decided to carry out an
inspection of these schools under section 24 of the Delhi
School Education Act, 1973 read with rule 190 of the Delhi
School Education Rules, 1973 for the purposes of Scrutiny
and Verification of these proposals with the books of
accounts and other records maintained by the school by a
team of Chartered Accountants from the Empanelled firms of
this Directorate vide order of even number dated 3rd June,
2016;
Now, therefore, in terms of the rule 191 of the Delhi School
Education Rules, 1973 the Managers/HoS of the schools
mentioned in the list attached, are hereby given, advance
intimation of the proposal to carry out inspection tentatively
from 25th July, 2016 onwards."
(Emphasis supplied)
32. It is immediately apparent that neither of the above Orders
issued by the DoE, i.e., neither the 16th April, 2016 Order, nor the 15th
July, 2016 Order, applied to the petitioner, as the petitioner-School
was not situated on land, allotted with a 'land clause', requiring the
petitioner to obtain prior sanction of the DoE before increasing its
fees.
33. Vide communication dated 22nd April, 2016, the petitioner
wrote to the Deputy Director of Education, submitting its proposed
fee structure for the year 2016-2017, which involved an enhancement
of the fee being charged earlier. Approved revised budget estimates,
for the year 2015-2016, and budget estimates for the year 2016-2017,
were also annexed.
34. The said communication was, however, returned, by the DoE,
with the following note, dated 23rd April, 2016, appended thereon:
"R. I. O. With the remark that proposal for enhancement of
fee for the session 2016-17 has to be submitted online as per
the relevant circular dated 16/4/2016 on DoE website."
(Emphasis supplied)
Again, it is apparent that the Officer, who returned the letter, dated
22nd April, 2016, appending, thereon, the afore-extracted remark,
erred in treating the petitioner as covered by the Circular, dated 16th
April, 2016 supra, issued by the DoE, as the petitioner, not being a
school to which the 'land clause' applied, was not covered by the said
Circular.
35. Inspection, by the auditors of the DoE, consequent on the
aforesaid Orders, dated 16th April, 2016 and 15th July, 2016, of the
DoE, took place between 25th July, 2016 and 16th August, 2016.
36. Consequent on the aforesaid inspection, the Auditors team of
the DoE submitted a Report, dated 24th August, 2016. It was
specifically stated, in the said Report, that the team had interacted
with the parents of 67 students of the petitioner-School, but had found
no financial irregularities, or any element of commercialisation or
profiteering. Insofar as the proposed fee hike, for the 2016-2017
academic session was concerned, it was observed that no case,
warranting a refund of fee collected, was found to exist, as
(i) in some years, though excess fee had been collected, in
other years, the fee collected was found to be less than that
required by the petitioner-School,
(ii) any surplus, or deficit, in a particular financial year, was
adjusted from the General Fund and treated with the petitioner
for meeting future exigencies; this was found to be expedient,
(iii) overall, the proposed fee hike was reasonable and
desirable, to ensure financial health and adequacy of funds for
financial stability of the petitioner-School, except for the
proposed hike in Development Fee,
(iv) the total projected income for 2016-2017 was more than
the proposed fee hike, and the hike in fee, of ₹ 9.44 crores,
compared favourably with the actual income of ₹ 8.41 crores, in
the previous financial year,
(v) the estimated revenue expenditure, towards
establishment, administrative and educational activities of the
petitioner, for 2016-2017, of ₹9.66 crores, was realistic as, in
2015-2016, the petitioner had incurred actual expenses of ₹
8.17 crores, and
(vi) consequently, the fee hike, in respect of tuition fee and
activity fee, for 2016-2017, was justified, as the projected
income of ₹ 9.44 crores was matching with the projected
expenses of ₹9.66 crores, leaving a small budgeted gap of ₹
0.22 crores.
The Report, however, termed the proposed hike in Development Fee,
of ₹ 1.25 crores, to be unjustified, on the ground that there were
sufficient reserves, with the petitioner, to meet the projected
development expenditure of ₹ 4.14 crores. The said hike, therefore, it
was opined, did not appear to be necessary. Consequently, increased
development fee, if already collected, it was recommended, deserved
to be refunded.
37. On 26th December, 2016, the DoE issued Order No F. DE-
15/ACT-I/WPC-4109/PART/13/126-130, issuing certain directions to
the petitioner. The observations, on merits, as contained in the said
Order, would be referred to, immediately hereinafter, in précis;
however, it is necessary to reproduce the opening paras of the Order,
in extenso, thus:
" WHEREAS, Hon'ble High Court of Delhi vide
judgement dated 19.01.2016 in writ petition No 4109/2013 in
the matter of Justice for All versus GNCTD and others has
directed the Director of Education to ensure the compliance of
term, if any, in the letter of allotment regarding the increase
of the fee by all the recognised unaided schools which are
allotted land by DDA.
AND WHEREAS The Hon'ble Court while issuing the
aforesaid direction has observed that the issue regarding the
liability of Private unaided Schools situated on the land
allotted by DDA at concessional rates has been conclusively
decided by the Hon'ble Supreme Court in the judgement
dated 27.04.2004 passed in Civil Appeal No 2699 of 2001
titled Modern School V. Union of India and others were an
Hon'ble Supreme Court in Para-27 and 28 has held as under:
-
"27. ... (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...
28. We are directing the Director of Education to
look into the letters of allotment issued by the
Government and ascertain whether they (terms and
conditions of land allotment) have been complied with
by the schools...
... If in a given case, Director finds non-
compliance of the above terms, the Director shall take
appropriate steps in this regard."
AND WHEREAS, the Hon'ble Supreme Court in the
above said judgement also held that under section 17(3),
18(4) read with rule 173, 170, 175 and 177 of Delhi School
Education Rules 1973, Directorate of Education has the
authority to regulate the fee and other charges to prevent
commercialisation of education.
AND WHEREAS, this Directorate vide order No. F.
DE-15/ACT-I/WPC-5256/16/9352-9359 dated 16.04.2016,
sought online proposals of fee increase for prior sanction of
the Director of Education, from the Unaided Recognised
Private Schools, allotted land by the land owning agencies on
the condition of obtaining such prior sanction of fee increase
from the Director of Education up to 31.05.2016 and further
extended to 31.07.2016 vide this Directorate's order of even
number dated 03.06.2016. This date was further extended to
22.08.2016 vide this Directorate's order of even number
dated 03.08.2016 in compliance of Hon'ble High Court
judgement dated 29.07.2016 in the WPC No 6612/2016.
AND WHEREAS, in response to the above Ramjas
School, SECTOR-IV R. K. PURAM NEW DELHI submitted
the proposal for increase in fee for the academic session
2016-2017.
AND WHEREAS, the directorate or followed a very
rigourous and systematic process of evaluation of the
financial statements of the school, in order to a certain
whether the proposal of the increase in the academic year
2016-17 is justified or not.
AND WHEREAS, a special inspection of Ramjas
School, SECTOR-IV R. K. PURAM NEW DELHI, was
conducted under Rule 180 of Delhi School Education Rules,
1973, vide order No. De-15/Act-1/WPC-4109/Pt-2/13/10405
- 10412 dated 22.07.2016.
AND WHEREAS, in order to maintain maximum
transparency, it was decided vide circular No. DE-15/Act-
1/WPC-4109/Pt-2/13/11267-11274 dated 20.09.2016, to share
the report of special inspection with the school under Rule
190 (6) of Delhi School Education Rules, 1973. Accordingly
the report of special inspection was served upon the school
for comments.
AND WHEREAS, the comments of the school and
field inspection report were then examined and commented
upon by an independent team of accountants and financial
experts as a second level check to give expert inputs to the
Directorate and after taking into account the comments of the
school, the school has been found committing the following
financial irregularities and violations:"
The Order, thereafter, proceeds to set out the financial and other
irregularities/violations, allegedly committed by the petitioner, as per
the "independent team of accountants and financial experts",
constituted by the DoE "as a second level check". It recites, further,
that the findings, of the said "independent team of accountants and
financial experts" "were then analysed by a committee constituted by
the Director of Education vide Order No. DE-15/Act-1/WPC-4109/Pt-
2/13/11515-11519, dated 04.10.2016, comprising of senior officer and
accounts functionaries." The concluding paragraphs of the said Order,
based on the analysis thus conducted by the committee, "comprising
senior officer and accounts functionaries", constituted by the DoE, of
the findings of the "independent team of accountants and financial
experts", consequent on the "second level check", read thus:
" AND WHEREAS, the report of Ramjas School,
SECTOR-IV, R. K. PURAM NEW DELHI; was evaluated by
the said committee, in the light of the findings of special
inspection, Schools comments and evaluation and
recommendations by the independent team of accountants and
financial experts as a second level check as well as of the
provisions of DSEAR, guidelines and circular issued from
time to time by this Directorate and recommended that since
prima facie there are financial deficiencies/irregularities and
also funds are available with the school to carry on its
operations for the academic session 2016-17, the fee hike
proposal of the school may not be accepted.
AND WHEREAS, these recommendations along with
relevant materials were put before Director of Education for
consideration and who after considering all the material on
the record has not found the proposal of increase in the fee as
submitted by said school, fit for granting sanction and has
therefore rejected the same.
Accordingly, it is hereby conveyed that the proposal of
fee hike of Ramjas School, SECTOR-IV R. K. PURAM
NEW DELHI, has been rejected by the Director of Education.
Further, the management of said school is hereby directed
under section 24 (3) of DSEAR 1973 to comply with the
following directions:
1. Not to increase fee for the session 2016-17, if
any amount already charged in view of increase of fee
for the session 2016-17, the same shall be refunded to
the parents or adjusted in the fee of subsequent months
as per convenience of the parents.
2. To inform the parents about refusal of fee hike
by the Directorate of Education and publicize through
its website, notice board and circular to parents.
3. To rectify the deficiencies as listed above and
submit compliance report within 30 days to DDE
concerned.
4. In case of submission of any further proposal
for increase in fee for the next academic session, the
compliance of the above listed deficiencies/violations
duly rectified it must be attached along with the
proposal."
38. The petitioner represented, against the aforesaid Order, dated
26th December, 2016, of the DoE, vide communication, dated 30th
January, 2017, addressed to the Deputy Director of Education-I
(Public School Branch) in the office of the DoE. It was highlighted, in
the said representation, that land had not been allotted to the
petitioner, by the DDA, with any inbuilt 'land clause' and that,
therefore, the entire exercise of applying, on the petitioner, the Orders,
dated 16th April, 2016 supra and 15th July, 2016 supra, issued by the
DoE, as well as the consequent inspection of the petitioner,
submission of the report by the inspection team, and, finally, the
issuance of the aforesaid Order, dated 26th December, 2016, was, ab
initio, unjustified and null and void. The petitioner emphasised that it
was not subject to audit, by the DoE, as proposed in the aforesaid
Orders, dated 16th April, 2016 and 15th July, 2016, issued by the DoE,
and that it had been pressurised to submit itself thereto. The petitioner
emphasised that it was not required to obtain any prior approval, to
increase its fee. Besides, on merits, it was submitted that the Report,
dated 24th August, 2016, by the inspecting team, had found the
proposed increase in tuition fee and activity fee, by the petitioner, to
be justified. Reservations had been expressed, by the said Report, only
with respect to the increase in Development Fee, proposed by the
petitioner. It was submitted that the DoE did not have the jurisdiction
to regulate the Development Fee charged by unaided schools and that,
as held by this Court in its order dated 19th January, 2016 in WP (C)
4109/2013 (Justice for All v. G.N.C.T.D.10), unaided schools were
entitled to maintain reasonable surplus towards Development Fee.
Attention was also invited, in this context, to para 14 of Circular No F.
DE./15 (56) Act/2009/778, dated 11th February, 2009, issued by the
DoE, which allowed unaided schools to charge up to 15% of the total
10 227 (2016) DLT 354
annual tuition fee as Development Fee, for supplementing resources
for purchase, upgradation and the placement of furniture, fixtures and
equipment. The said para also clarified that such Development Fee
would be treated as capital receipt and that the school would be
required to maintain a Depreciation Reserve Fund equivalent to the
depreciation charged in the revenue accounts, and collection under the
head of Development Fee, along with income generated from the
investment made out of the said fund, was to be kept in a separately
maintained Development Fund Account. The petitioner submitted that
the petitioner-School was 50 years old, and its furniture and fixtures
had become totally outdated, requiring urgent upgradation and
replacement, so that the petitioner could remain at par with the
neighbouring schools. Finally, the representation highlighted the fact
that the petitioner was not indulging in any profiteering, and that all
expenses were incurred for the benefit of students alone.
39. The petitioner was granted an opportunity of personal hearing,
by the DoE, on the aforesaid representation, dated 30th January, 2017,
of the petitioner, directed against the Order, dated 26th December,
2016 supra, issued by the DoE. On the said occasion, the petitioner
submitted a further representation, dated 1st May, 2017, to the DoE, by
way of challenge to the Order, dated 26th December, 2016 supra. The
representation was generally reiterative of the representation dated
30th January, 2017; the petitioner, however, went further and
explained, with facts and figures, the justification for the proposed
increase, by it, of tuition fee and activity fee.
40. Vide the impugned Order No F. DE-15/ACT-I/WPC-
4109/PART/13/831, dated 18th July, 2017, the DoE has rejected the
representation, dated 30th January, 2017 supra, submitted by the
petitioner, in response to the order, dated 26th December, 2016, issued
by the DoE. The impugned Order is studiedly, and noticeably, silent
regarding the submission, of the petitioner that, as a school, the
allotment of land to which was not conditioned by any 'land clause',
the entire exercise of auditing the petitioner's accounts, inspecting its
records and issuance of the Order dated 26th December, 2016, was
vitiated ab initio. The impugned Order proceeds, instead, to justify the
rejection of the proposal, of the petitioner, to increase its fees for the
academic session 2016-2017, returning, in the process, the following
findings:
"And whereas, after going through the representations
dated 30.01.2017 and submissions made by the school during
the hearing held on.12.05.2017 as well as financial
statements/budget of the school available with this
Directorate, it emerges that:-
The school is having a surplus fund of Rs. 1,18,42,701/- as
per the following details :
Particulars Amount(Rs)
Cash and Bank. balances as on 37,33,902
31,03.16 as per audited Financial
Statements
Investment as on 31.03.16. as per 12,12,42,543
audited Financial
Statements
Total 12,49,76,445
Less: Development Fund as per 4,63,02,138
audited Financial Statements
Less: Depreciation Reserve' Fund: as 1,05,11,284
per audited Financial Statements
Less: Provision for Gratuity* 3,48,36,745
Less: Provision for Leave Encashment 98,52,301
Available Funds 2,34,63,977
Fees for 2015-16 as per financial 8,40,95,053
statement (We have assumed that. the
amount received In 2015-16 will at
least
accrue in 2016-17)
Other Income for 2015-16 as per 9,27,671
financial statement
Estimated availability of funds for 10,84,86,701
2016-17
Less: Budget expenses for the session 9,66,44.000
2016-17.as submitted
by school management (revenue)
Net Surplus * 1,18,42,701
*The school is 'hereby directed to make earmarked equivalent
investments against provision for Retirement Benefits with
LIC (or any other agency) within 90 days of the receipt of this
order, so as to protect the statutory labilities. And provisions
for gratuity and leave encashment should be based on
actuarial valuation.
And whereas, in view of the above examination, It is evident
that. The school is having sufficient surplus funds even after
meeting all the budgeted Expenditure for the financial year
2016-17.
And whereas, as per clause 22 of Order No. F.DE./15 (56)
/Act /2009/ 778 dated 11/02/2009, user charges should be
collected, on no profit and no loss basis and should be used
only for the purpose for which these are collected.
Accordingly, the school is advised to maintain separate fund
in respect of each earmarked levies charged from, students in
accordance with the DSEA & R, 1973 and orders, circulars,
etc. issued there under. If there are large surpluses under any
earmarked levy collected from the students, the same shall be
considered or adjusted for determining the earmarked levy to
be charged in the next academic session.
And whereas as per Clause No. 14 of Order No.
F.DE./15(56)/ACT/2009/778 dated 11.02.2009, '
Development Fee, not exceeding 15% of the total annual
tuition. fee, may be charged for supplementing the resources
for purchase, up-gradation and replacement of furniture,
fixture and equipment. Development Fee, if required to be
charged, shall be treated as capital receipt and shall be
collected, only if the school is maintaining depreciation
reserved fund, equivalent to the deprecation charged in the
revenue accounts and the collection under this head along
with and income generated from the investment made out of
this fund, will be kept in a separately maintained development
fund account.' Accordingly, school is advised to maintain
separate development fund and utilized the same strictly in
accordance with the DSEA & R, 1973 and orders, circulars,
etc., issued there under.
And whereas, these recommendations along with relevant
materials were put before Director of Education for
consideration and who after considering all the material on the
record has found that the school is having sufficient surplus
funds to meet the financial implications for the financial year
2016-17 and the representation dated 03.02.2017 and
subsequent submissions made thereafter in this regard find no
merit in respect of sanction for increase in fee and hereby
rejected on the basis of above mentioned observations.
Accordingly, It is, hereby conveyed that the representations
for fee hike of Ramjas School, Sector-IV, R.K, Puram, New
Delhi-110022, has been rejected by the, Director. of
Education, Further, the management of said school is hereby
directed under section 24(3) of DSEAR 1973 to comply with
the following directions:
1. Not to increase fee for the session 2016-17. If,
in case, increased fee has already been charged from
the parents, the same shall be refunded/ adjusted.
2. Compliance of all the instructions as mentioned
in the order dated 26.12.16 will be seen/examined
during the scrutiny of fee hike proposal for session
2017-18,if any.
3. In the light of Judgment of Modern School Vs
Union of India, the salaries and allowances shall come
out from the fees whereas, capital expenditure be a
charge on the savings. Therefore It ls to be ensured not
to include capital expenditure as a component of fee
structure to be submitted by the school under section
17(3) of DSEA&R, 1973.
4. The fee should be utilised as per letter and spirit
of Rule 177 of the DSEA &R, 1973 and the judgement
of the Hon'ble Supreme Court in the case of Modern
School Vs Union of India (2004)."
41. The petitioner has placed, on record, its audited financial
statement as on 31st March, 2016, in an attempt to demonstrate that
the manner in which the alleged surplus amount of ₹ 1.18 crores,
available with it, has been worked out in the impugned Order dated
18th July, 2017, is contrary thereto. This Court does not, however,
intend to enter into this exercise of balancing of accounts, for reasons
which will become apparent hereinafter.
42. On 17th October, 2017, Order No DE. 15 (318)/PSB/2016/
19786 was issued by the DoE, consequent on the recommendations, of
the 7th Central Pay Commission (CPC) being accepted and
implemented in the case of teachers. The 7th CPC recommendations
allowed teachers, and other staff, in schools, a considerable increase
in their salary and emoluments. The recommendations of the 7th CPC
came into effect from first January, 2016, retrospectively. The Order,
dated 17th October, 2017, purported to issue guidelines, in the matter
of implementation of the recommendations of the 7th CPC, insofar as
private unaided recognised schools in Delhi were concerned. As the
said Order does not constitute subject matter of challenge in the
present proceedings, it is not necessary to examine it in detail. The
petitioner refers to the Order, dated 17th October, 2017, only to
contend that, though private unaided schools, not encumbered by the
'land clause', were, under the aegis of the said Order, entitled to
increase their fee by up to 22.5%, in order to meet the additional
expenditure entailed as a consequence of the requirement of
implementation of the 7th CPC recommendations, the petitioner did
not do so, and absorbed the said additional expenditure within the
"minimal increase in fee" proposed by it for the years 2016-2017 and
2017-2018. This, contends the petitioner, establishes its bona fides.
43. For the sake of the record, it may be mentioned that, vide a
subsequent Order, dated 13th April, 2018, the DoE withdrew the
Order, dated 17th October, 2017, in the case of private schools running
on land, allotted by the DDA, with the condition of seeking prior
sanction of the DoE for increase in fee, i.e., with the 'land clause'.
That Order does not, however, concern us, as the petitioner-School is
not subject to the 'land clause'.
44. Various communications, from the DoE, to the petitioner,
followed, requiring the petitioner to clarify whether it had, or had not,
increased its fee for the year 2016-2017. The petitioner responded, on
27th July, 2018, informing that it had increased its fee, for the years
2016-2017 and 2017-2018, by 10%, as there was no clause, in the
lease deed, whereby land was allotted to the petitioner, requiring the
petitioner to obtain prior permission of the DoE, before increasing its
fees.
45. The petitioner invites, in this context, attention to Order No. F.
One (1)/DNWB/PB/2018/882, dated 6th August, 2018, issued by the
DoE, which merits reproduction, in extenso, thus:
"GOVERNMENT OF NATIONAL CAPITAL TERRITORY
OF DELHI
DIRECTORATE OF EDUCATION
DISTRICT NORTH WEST-B, FU-BLOCK, PITAMPURA,
DELHI-34
Ph. No. 011-27348917
E-mail address: [email protected]
No. F. 1(1)/DNWB/PB/2018/882 Dated:- 6/8/18
ORDER
Pursuant to the office order No. DE-15/ACT-I/WEC-
4109/Part/13/7914-23 dated 16.04.16 issued by the Director
of Education, which is in compliance to the Hon'ble High
Court of Delhi vide judgement dated 19.01.16 in the WP (C)
No 4109/2013 in the matter of Justice for All Vs GNCT of
Delhi & Ors and vide order No. DE/15/ACT-I/WPC-
4109/13/6750 dated 19.02.16 issued by Dte. of Education, all
the HOS/Manager(s) of Unaided Private Recognised Schools
under District North West (B) (running on the land allotted by
DDA/L&DO & Ors.), were directed to ensure compliance of
terms & conditions, if any, in the land allotment letter
regarding increase of fees by Recognised Unaided Private
Schools.
In compliance to the above directions, all the
HOSs/Managers of Private Unaided Recognised Schools
under District North West (B), allotted land by the land
owning agencies on the condition of seeking prior approval of
Director of Education for increase of fees, were directed not
to hike the fees without seeking the prior approval of Director
(Edn) and strictly follow the guidelines issued by the
Department to this effect in its true spirit, vide this office
order dated 16.04.16.
In spite of clear-cut directions issued by the DoE and
District, a number of complaints are being received from
different corners/forums against some Private Unaided
Recognised Schools under this district that the schools have
increased and charged the exorbitant hiked fees from its
students despite not having the prior approval of Director
(Edn), which is illegal.
The action on the part of the school authorities defying
the directions of DoE of charging hiked fees without seeking
the prior approval of the Competent Authority, has been
viewed seriously at the highest level.
Therefore, all the HOS/Manager(s) of Unaided Private
Recognised Schools under this district, running on the land
allotted by land owning agencies subject to the condition of
seeking prior approval of the Competent Authority for
increase in fees, are hereby directed to ensure that the school
has not hiked any fees under any head or under any name
from 2016-2017 till date, without explicit approval of
HQ/District office. In case, the school has hiked the fees
during any of the academic session i.e. w.e.f. 2016-17 till
2018-19 without obtaining the prior approval of the
Competent Authority, the HOSs of such schools are hereby
directed to immediately refund the same to the concerned
students without any further delay, in the first instance and
submit the explanation to this effect to the office of
undersigned latest within a week's time.
(SHASHI BALA SAINI)
DEPUTY DIRECTOR OF EDUCATION
DISST. NORTH WEST (B)"
(Emphasis supplied)
Thus, points out the writ petition, the DoE, as late as on 6th August,
2018, acknowledged the fact that prior approval, of the DoE, for
increasing fees, was required to be obtained only by schools, which
had been allotted land, by the land owning agency, incorporating a
condition to the said effect.
46. Aggrieved, the petitioner is before this Court, praying that a
writ of certiorari be issued, quashing the impugned Order, dated 18 th
July, 2017, issued by the DoE.
Rival Contentions
47. Submissions, on behalf of the petitioner, have been addressed
by Mr. Sunil Gupta, learned Senior Counsel, whereas the DoE has
been represented by Mr. Ramesh Singh, learned Senior Standing
Counsel (Civil). Detailed written submissions have also been filed, by
both sides, on more than one occasion.
48. The petitioner assails the impugned Order, on the ground of
competence as well as on merits. The petitioner has sought to contend
that the DoE had no authority or the jurisdiction to sit in appeal over
the proposal, by the petitioner, to increase its fees, save and except to
the extent of ensuring that the petitioner did not indulge in charging of
capitation fee, or in profiteering. The entire exercise of inspecting the
petitioner's premises, auditing the accounts, and passing, ultimately,
of the Order dated 26th December, 2016 supra, it is sought to be
submitted, was based on an erroneous assumption that the petitioner
was covered by the Orders dated 16th April, 2016 supra and 15th July,
2016 supra, issued by the DoE. On merits, too, the petitioner has
sought to contend that the increase in fee, on its part, was justified,
and that, as an unaided recognised school, the petitioner was entitled
to some degree of autonomy, regarding the fixation of its fees, which
could not be made subject to approval by the DoE. In this context, the
petitioner highlights the fact that there is no finding, by the DoE,
against the petitioner, either in the Order dated 26th December, 2016,
or in the impugned Order, dated 18th July, 2017, of the petitioner
indulging in charging of capitation fee or profiteering.
49. The petitioner has contended, further, that no copies, of the
report of the "independent team of accountants and financial experts",
which carried out a "second level check", into the Report, dated 22nd
July, 2016, of the special inspection committee, or of the subsequent
report, of the committee of "senior officer and accounts
functionaries", constituted, by the DoE, vide Order dated 4th October,
2016 supra, were ever provided to it. As such, it is submitted that the
Order, dated 26th December, 2016 - and, consequently, the impugned
Order dated 18th July, 2017, whereby the petitioner's representation
against the said Order was rejected - suffer from violation of the
principles of natural justice. In this context, the petitioner also
highlights the fact that the impugned Order, dated 18 th July, 2017,
does not address the issues raised by the petitioner in its various
representations, to the DoE, including the issue of jurisdiction, of the
DoE, to sit in appeal, over the enhancement of fees, by the petitioner,
in the first place.
50. Without prejudice, the petitioner points out that, except for
Development Fee, the Report, dated 22nd July, 2016, of the statutory
inspection team (appointed by the DoE itself, under Rule 180 of the
DSE Rules), that had inspected the petitioner's premises, found the
proposed hike in fee, by the petitioner-School, to be legitimate and
justified. Significantly, points out the petitioner, the Orders, dated 26th
December, 2016, and 18th July, 2017, do not find any particular fault
with the recommendations of the statutory inspection committee.
Development Fee, submits the petitioner, is outside the pale of the
regulatory jurisdiction of the DoE. That apart, it is contended that, as
per Modern School6, development fee is required to be 15% of the
tuition fee. If, therefore, the proposed increase in tuition fee was found
to be justified, so would, submits the petitioner, the proposed increase
in development fee.
51. Detailed submissions have also been advanced, by the
petitioner, both in writing as well as during the course of oral
arguments by learned Senior Counsel, regarding the merits of the
impugned Order, dated 18th July, 2017, and the manner in which the
alleged surplus of ₹ 1,18,42,701/-, has been worked out. The
petitioner points out, in this regard, that, inexplicably, the alleged
surplus, with the petitioner, as per the DoE, fell, from the figure of ₹
8,45,05,819/-, in the Order, dated 26th December, 2016 supra, to ₹
1,18,42,701/-, in the impugned Order dated 18th July, 2017. This,
even by itself, submits the petitioner, is manifest of the arbitrary
manner in which the DoE was examining the proposal, of the
petitioner, to increase its fees for the 2016-2017 academic session.
52. Maintenance of a reasonable surplus, to meet its expenses and
ensure proper upkeep of the school, it is submitted, was permissible,
as held in T. M. A. Pai Foundation2 as well as Islamic Academy of
Education4. The finding of surplus, with the school, therefore, it is
submitted, even if it were to be treated as correct on facts, could not
constitute a legitimate basis to reject the petitioner's proposal to
increase its fees for the oncoming academic session.
53. The respondent-DoE, in its counter affidavit, has, apart from
pleading laches and delay, placed reliance on Section 17 of the DSE
Act, contending that the said provision proscribes schools from
levying any fee, or collecting any charges or receiving any other
payments, except those specified by the DoE. (In fact, Mr. Ramesh
Singh commenced his arguments by contending that the present case
did not involve any issue of "prior approval", by the petitioner, for
increasing its fees, but was concerned with the exercise, undertaken
by the DoE, in accordance with Section 17(3) of the DSE Act.)
Further, the DoE refers to Section 18 of the DSE Act, and Rules 172
to 177 of the DSE Rules, read with the Circulars, issued by the DoE,
from time to time, which, according to the counter affidavit, permits
tuition fee to be charged only to govern the establishment cost and
curricular activity cost, with other costs being covered by "annual
charges". Development fee, it is pointed out, may be charged only for
purchase and replacement of furniture, fixtures and equipment. It is
further pointed out that, as per the DSE Act and DSE Rules,
earmarked levies were to be used only for the purposes for which they
were earmarked, and that, too, in a no-profit no-loss basis. Rule 177 of
the DSE Rules, contends the respondent, permits amounts leftover,
after utilising the fee, in the first instance, for making payment and
allowances and other benefits admissible to the employees, to be
utilised for other purposes. The DSE Rules, contends the respondent,
permits utilisation, of the leftover/incidental amount, towards capital
expenditure, but does not permit the school to charge fees or other
charges as a dedicated/earmarked amount towards incurring capital
expenditure. [The petitioner has sought to refute this contention by
relying on the decisions in Islamic Academy of Education4, Modern
School6 and Delhi Abhibhavak Mahasangh v. G.N.C.T.D.11
(hereinafter referred to as "Delhi Abhibhavak Mahasangh-II")
which, according to the petitioner, permit fixation of fees keeping in
mind capital expenditure of the school.] The DoE also places reliance
on the circular dated 16th April, 2016, which requires schools to
exhaust the possibility of utilising existing funds/reserves to meet any
shortfall in payment of salary and allowances, as a consequence of
increase of salary and allowances of employees.
54. Mr. Ramesh Singh, learned Senior Standing Counsel
appearing for the DoE contended that the petitioner, having itself
sought the prior approval of the DoE, in its communication dated 16 th
April, 2016 supra, wherewith the petitioner had submitted its
proposed enhancement of fee, it did not lie in the mouth of the
petitioner, now, to contend that, before enhancing their fees, prior
approval of the DoE was not required.
55. Reliance has also been placed, by the DoE, on the judgement of
the Supreme Court in Modern School6, which holds that
commercialisation of education is prohibited.
56. The DoE contends, further, that Section 18(4) of the DSE Act,
read with Rules 172 to 175, and 177 of the DSE Rules, as also Section
17(3) of the DSE Act, authorise the DoE to regulate the fees and other
11 ILR (2011) Supp (4) Delhi 247
charges of schools, to prevent commercialisation of education. This
power, contends the respondent, is relatable to Section 17(3) of the
DSE Act. While admitting, in para 32 of the counter affidavit, that the
DoE has the power and duty, under the DSE Act, and the DSE Rules,
to ensure that schools do not profiteer, and that there is no
commercialisation of education, the DoE goes on to state, in the same
para, that "it is respondent's administrative discretion as to when to
scrutinise the proposal of fee hike", which "may be triggered on the
basis of a complaint by an aggrieved parents/students or like in the
present case, may be carried out suo motu".
57. Insofar as the right, of the petitioner-School, to maintain a
reasonable surplus, was concerned, Mr. Singh submits that, while the
said right cannot be gainsaid, the surplus had to be incidental, and
reasonable, and not intentional, resulting in commercialisation of
education. The DoE, he submits, could not be asked to surrender its
right to regulate the proposed fee hike, even in the case of unaided
schools not governed by the 'land clause', so as to ensure that
education was not commercialised. In this context, Mr. Singh
submitted that
(i) utilisation of surplus had to be in accordance with Rule
177 of the DSE Rules and the guidelines of the DoE, which
required such surplus to be first charged towards payment of
salaries to the teachers and staff of the school, including the
arrears arising on account of implementation of the seventh
CPC recommendations,
(ii) earmarked funds could be utilised only for the purpose
for which they were earmarked, and could not be appropriated
to other heads, artificially created by the school,
(iii) capital expenditure could not be part of the fee structure
and
(iv) till the stage of its utilisation, development fee was also
regulated by the DoE; charging of exorbitant development fee
resulted in artificial surplus.
58. Dealing with the recommendations of the statutory inspection
team, the DoE submits that no mandate, had been given to the said
team, to give its recommendations. The recommendations of the said
Committee, as submitted, it is contended, were not in terms of Section
18 of the Act and Rules 172 to 177 of the DSE Rules. The DoE has
also sought to justify submitting the said report to second and third
level checks. Mr. Ramesh Singh submitted that the DoE had taken a
conscious decision to shelve the report, submitted by the Committee
appointed under Rule 180 of the DSE Rules, and had, on 6th
December, 2016, taken a decision to examine the matter with the
assistance of a Chartered Accountant.
59. Detailed submissions, justifying the manner in which the
alleged surplus, with the petitioner-School, has been worked out, by
the DoE, in the impugned Order, dated 18th July, 2017, have also been
placed on record.
60. Mr. Ramesh Singh also contended that the conduct of the
petitioner did not justify grant, of any relief, it, in exercise of the
equitable jurisdiction vested in this Court by Article 226 of the
Constitution of India, as the petitioner had, instead of challenging the
impugned Orders with due promptitude, endeavoured, instead, to
breach the Orders and to move this Court only when the DoE had, in
view of the said breach, threatened to withdraw recognition from the
petitioner-School. The show cause notice, threatening withdrawal of
recognition, he points out, had been issued on 21st August, 2018, and
the writ petition was filed on 30th August, 2018.
61. Courts, exhorts Mr. Singh, should, moreover, be slow to
interfere with decisions of regulatory bodies, relying, for the purpose,
on the decisions in G. L. Sultania v. S.E.B.I.12 and Kerala State
Electricity Board v. S. N. Govinda Prabhu & Bros.13.
Analysis
Legal position emerging from the decisions cited hereinabove re.
power of DoE to regulate fees of unaided schools not governed by any
'land clause'
62. The decisions, cited earlier in the course of this judgement,
make the position, regarding scope of interference, by the DoE, with
fixation of fees, by an unaided educational institution - specifically,
an unaided school - clear, beyond any shadow of doubt. I may hasten
to clarify, here, that we are concerned, in the present case, with a
school, located on land, the documents of allotment in respect whereof
do not contain any 'land clause', requiring prior approval, of the DoE,
12 (2007) 5 SCC 163
13 (1986) 4 SCC 198
to be obtained before fees are increased. The issue of whether schools,
encumbered by such a 'land clause' would require prior permission,
of the DoE, before increasing fees, in any academic session, is
presently in seisin before a Division Bench of this Court. The present
writ petition does not concern such schools. The petitioner is a school,
admittedly located on land, the documents of allotment in respect
whereof do not contain any clause, requiring prior approval to be
obtained, by the petitioner, from the DoE, before hiking its fees in any
academic session.
63. Nothing expressed in this judgement, therefore, should be read
as an opinion regarding schools which are subject to such a 'land
clause'.
64. T. M. A. Pai Foundation2 holds that there is no reason to take
away the choice, from private unaided educational institutions, in
matters, inter alia, of selection of students and fixation of fees, so
long as no profiteering took place. For this reason, it reversed the
earlier decision, in J. P. Unnikrishnan3, which framed a scheme
relating to grant of admission and fixation of fee, by unaided
educational institutions. The latitude, in the matter of fixation of fee,
by unaided educational institutions, was highlighted, in T. M. A. Pai
Foundation2, as being in the nature of a legal and practical necessity,
and any instance on fixing of a rigid fee structure, by such institutions,
as an "unacceptable restriction". Para 56 of the report clearly held
that, if the institution did not choose to seek any aid from the
Government, "it (had) to be left to the institution ... to determine the
scale of fee that it can charge from the students". This was reiterated,
towards the conclusion of the same para, by holding that "the decision
on the fee to be charged must necessarily be left to the private
educational institution that does not seek or is not dependent upon any
funds from the Government." Even so, it was held, "the Government
(could) provide regulations that will ensure excellence in education,
while forbidding the charging of capitation fee and profiteering by the
institution". "Profiteering", it was explained, was running of an
institution with the object of making of profit. Prohibition on
profiteering did not, however, it was clarified, inhibit the institution
from earning a reasonable revenue surplus. Autonomy and non-
regulation of the school administration, in respect of the fee to be
charged, it was opined, was in general public interest.
65. Islamic Academy of Education4 echoed the above view, by
emphasising the necessity of preservation of institutional autonomy of
unaided educational institutions. It was clarified, however, that the
"reasonable surplus", which the institution was at liberty to earn, had
necessarily to be utilised towards advancement of the institution and
betterment of the students, and could not be diverted to other
purposes.
66. Modern School6, once again, emphasised the autonomy
enjoyed by unaided educational institutions in the matter of
determination of their fee structure. Such institutions, it was held,
were entitled "to plan their investment and expenditure so as to
generate profit". "Commercialisation of education" was, however,
expressly proscribed. This was further clarified, in para 15 of the
report, by stating that, while unaided educational institutions were
"permitted to make reasonable profits after providing for investment
and expenditure", "capitation fee and profiteering were... forbidden".
The power of the DoE, to regulate fees of unaided educational
institutions, it was expressly stated, in para 17 of the report, was "to
prevent commercialisation of education". This decision, again,
indicates that, absent commercialisation of education, by way of
charging of capitation fee, or profiteering, regulation of the fee
structure of unaided educational institutions, by the DoE, was
impermissible.
67. P. A. Inamdar7 reiterated, yet again, the Pai2 principle, that
"the essential ingredients of management including ... the quantum of
fee to be charged, cannot be regulated", by the DoE, in respect of
unaided educational institutions. Para 141 of the report clarifies,
further, that "every institution is free to devise its own fee structure,
but the same can be regulated in the interest of preventing
profiteering", and "no capitation fee can be charged".
68. Cochin University of Science and Technology8, though it dealt
with higher educational institutions, held that an educational
institution "chalks out its own program year-wise on the basis of the
projected receipts and expenditures and for the court to interfere in
this purely administrative matter would be impinging excessively on
this right". The decision to fix fees, based on projected income and
expenditure was, therefore, recognised, by the Supreme Court, as a
"purely administrative matter", of the institution concerned, with
which even in judicial interference was disapproved.
69. In the opinion of this Court, therefore, there are no grey areas,
insofar as the scope of the power, and authority, of the DoE, to
interfere with the fixation of fees, by an unaided educational
institution, is concerned. That the DoE does exercise some degree of
control, cannot be gainsaid; after all, unaided educational institutions
are not islands unto themselves. The regulatory power of the DoE,
however, exists solely for the purpose of prevention of
commercialisation of education, by such unaided institutions. This
legal position is, in fact, expressly acknowledged in the Order dated
26th December, 2016, of the DoE itself, which clearly states, in the
very third paragraph, that "Directorate of Education has the authority
to regulate the fee and other charges to prevent commercialisation of
education". "Commercialisation of education", according to the
Supreme Court, would relate to cases where the institution either
charges capitation fees, or indulges in profiteering. A conjoint and
holistic reading of the authorities, cited hereinbefore, discloses that
the Supreme Court has not conceptualised "commercialisation of
education", insofar as the concept applies to unaided educational
institutions, as a specie different, or distinct, from charging of
capitation fees, and profiteering. Rather, in the case of such
institutions, "commercialization of education" constitutes a distinct
genus, consisting of capitation fee and profiteering, as the two distinct
species identified and isolated by the Supreme Court. In the case of
unaided educational institutions, it is only where they are found to be
charging capitation fees, or indulging in profiteering, that they could
be held to be guilty of commercialising education, and not otherwise.
70. What, then, is 'profiteering'? The definition of the expression
was accorded the imprimatur of the Supreme Court, for the first time,
through the concurring judgement of S. B. Sinha, J., in Islamic
Academy of Education4, which are adopted, with approval, the
definition of 'profiteering', as contained in Black's Law Dictionary,
being "taking advantage of unusual or exceptional circumstances to
make excessive profits". Having adopted, with approval, the said
definition, Sinha, J., went on to hold that statutory authorities could
exercise regulatory power, over an unaided educational institution,
"with a view to ensure that (the) educational institution is kept within
its bounds and does not indulge in profiteering or otherwise exploiting
its students financially".
71. The DoE has filed, with its counter-affidavit, a tabular
statement, setting out the remarks, of the DoE, regarding the
particulars of various heads of expenses of the petitioner. Note 6, in
the said tabular statement, alleges that the accumulation, by the
petitioner, of "reserve of development fund ... by collecting
development fee more than its requirement for purchase, upgradation
and replacements of furniture and fixtures and equipment" was
"nothing but the profiteering done by the school over the years". In
the entire record before us, there is no other reference, to the petitioner
indulging in "profiteering". The afore-quoted reference to
"profiteering", too, figures in the remarks, filed by the DoE before this
Court, regarding the various heads of expenses of the petitioner, and
not in the impugned Order, dated 18th July, 2017, or the Order, dated
26th December, 2016, which it purported to uphold. There is no
allegation, in either of the said Orders, to the effect that the petitioner
indulged in charging of capitation fee, or in profiteering.
The impugned Order, dated 18th July, 2017
72. The writ petition, before this Court, contains a single prayer,
i.e., to quash the Order, dated 18th July, 2017, of the DoE. It is no part
of the function of a writ court, to enter into general jurisprudential
discussions, divorced from the lis before it. Writ courts, it has been
held in V. K. Majotra v U.O.I.14, "would be well advised to decide the
petitions on the points raised in the petition", and this Court has no
intention, in the present case, to depart from this exordium.
73. Before adverting to the specifics of the impugned Order dated
18th July, 2017, I deem it appropriate to refer to the submission,
advanced by Mr. Ramesh Singh, to the effect that the issue of "prior
approval" was foreign to the dispute in the present case, in which the
DoE had merely exercised the jurisdiction vested, in it, by Section 17
(3) of the DSE Act. The submission, though ingenious, is, on its face,
an argument of desperation, which has merely to be urged to be
rejected. The very first paragraph, of the impugned Order, dated 18 th
July, 2017, refers to the preceding Order, dated 26th December, 2016,
of the DoE. The opening paras of the Order, dated 26 th December,
2016 - which have been reproduced, in extenso, in para 37 supra -
clearly indicate that the DoE was examining the proposal, of the
petitioner, for increasing its fees in the oncoming 2016-2017 academic
14 (2003) 8 SCC 40
session, under the impression that, by virtue of clause to the effect, in
the documents whereunder land was allotted to the petitioner, the
petitioner was required to obtain prior approval of the DoE, before
increasing its fees. The exercise was, therefore, clearly one, which
was being undertaken in compliance with a clause which, erroneously,
the DoE assumed to be existing, in the documents, whereby land was
allotted to the petitioner. Section 17(3) of the DSE Act, which deals
with an entirely different dispensation, and has nothing to do with the
enforcement of the "prior approval" clause, contained in land
allotment documents, never played any part of the deliberations in the
present case. The invocation, by Mr. Ramesh Singh, therefore, of
Section 17 (3) of the DSE Act, has necessarily to be regarded as an
afterthought, unsupported by the recitals in the Orders, dated 26 th
December, 2016, and 18th July, 2017, issued by the DoE. One is
reminded, inevitably, of the following passage, from Mohinder Singh
Gill v. Chief Election Commissioner15 which has, with the passage of
time, become locus classicus:
"The second equally relevant matter is that when a statutory
functionary makes an order based on certain grounds, its
validity must be judged by the reasons so mentioned and
cannot be supplemented by fresh reasons in the shape of
affidavit or otherwise. Otherwise, an order bad in the
beginning may, by the time it comes to court on account of a
challenge, get validated by additional grounds later brought
out. We may here draw attention to the observations of Bose,
J. in Commr. of Police, Bombay v. Gordhandas Bhanji, AIR
1952 SC 16:
"Public orders, publicly made, in exercise of a
statutory authority cannot be construed in the light of
explanations subsequently given by the officer making
the order of what he meant, or of what was in his
15 (1978) 1 SCC 405
mind, or what he intended to do. Public orders made
by public authorities are meant to have public effect
and are intended to affect the actings and conduct of
those to whom they are addressed and must be
construed objectively with reference to the language
used in the order itself."
Orders are not like old wine becoming better as they grow
older."
(Emphasis supplied)
74. Interestingly, the "directions", issued by the DoE vide the
impugned Order, dated 18th July, 2017 include, inter alia, a direction
"not to include capital expenditure as a component of fee structure to
be submitted by the school under section 17(3) of DSEAR, 1973."
This, additionally, serves to indicate that the impugned Order, dated
18th July, 2017, was not issued under Section 17(3) of the DSE Act.
75. The submission, of Mr. Ramesh Singh, to the effect that the
impugned Order was issued by the DoE in exercise of the powers
vested in it by Section 17(3) of the DSE Act is, therefore, rejected.
76. There is, accordingly, merit, in the submission of Mr. Sunil
Gupta, learned Senior Counsel, that the entire exercise conducted
against his client, in the present case was, ab initio, null and void,
being initiated on the basis of the Orders, dated 16th April, 2016
supra, and 15th July, 2016 supra, of the DoE, neither of which applied
to the petitioner, as the allotment of land, to the petitioner, was not
conditional on fulfilment, by the petitioner, of any 'land clause',
requiring the petitioner to obtain prior approval of the DoE before
increasing its fee for the ensuing academic session. Ex facie, the
entire exercise of subjecting the petitioner to audit and inspection,
resulting in the "shelved" report of the statutory committee
(constituted under Rule 180 of the DSE Rules), and the post mortem,
of the said report, first by the "independent team of accountants and
financial experts" and, thereafter, by the committee comprising
"senior officer and accounts functionaries" constituted by the DoE
vide order dated 4th October, 2016, followed by the issuance, by the
DoE, of the Orders dated 26th December, 2016 and 18th July, 2017
(the latter being impugned herein), owed its genesis to a
misconception that the petitioner was subject to a 'land clause' and,
therefore, stands vitiated ab initio. Even on this sole ground, the
present writ petition deserves to succeed.
77. Adverting, now, to the impugned Order, dated 18 th July, 2017
itself, it is possible to compartmentalise the Order into three distinct
sections. The impugned Order commences by noting the fact of
issuance of the earlier Order, dated 26th December, 2016, the
representation, by the petitioner-School, thereagainst, and grant of
personal hearing to the petitioner-School. It proceeds, thereafter, to
"analyse" the submissions made by the petitioner. This analysis is
divided into three sections, the first of which is titled "Financial
discrepancies", the second "other discrepancies", and the third, though
untitled, dealing with the alleged "surplus fund" available with the
petitioner-School. The first section sets out three "financial
discrepancies", which merely requires the petitioner to comply with
the recommendations, made in that regard, and record its assurance,
that it would do so. The second section, dealing with "other
discrepancies", too, records the submission, of the petitioner, that the
discrepancies would be rectified, and contemplates compliance
therewith, at the time of next fee increase proposal. The controversy,
before this Court, is concerned, essentially, with the third section of
the impugned Order, which alleges that the petitioner had, with it, "a
surplus fund of ₹ 1,18,42,701/-", and provides a tabular statement in
that regard. Having observed thus, the impugned Order proceeds to
record a finding that "the school (was) having sufficient funds even
after meeting all the budgeted expenditure for the financial year 2016-
17". Thereafter, the impugned Order proceeds to issue certain
directions, to the petitioner, to maintain separate funds for earmarked
levies, avoid diversion thereof, and to maintain a separate
development fund, before concluding thus:
" And whereas, these recommendations along with
relevant materials were put before The Director of Education
for consideration and who after considering all the material
on record has found that the school is having sufficient
surplus funds to meet the financial implications for the
financial year 2016-17 and the representation dated
03.02.2017 and subsequent submissions made thereafter in
this regard find no merit in respect of sanction for increase in
fee and hereby rejected on the basis of the above-mentioned
observations.
Accordingly, it is hereby conveyed that the
representations for fee hike of Ramjas School, Sector-IV, R.
K. Puram, New Delhi-110022, has been rejected by the
Director of Education."
(Emphasis supplied)
The concluding "directions" follow.
78. On the face of it, the DoE has, in issuing the impugned Order
dated 18th July, 2017, exceeded the jurisdiction vested in it. As
already noted hereinabove, there is no finding, in the impugned Order,
to the effect that the petitioner has charged capitation fee, or indulged
in profiteering. Neither, for that matter, does the impugned Order
accuse the petitioner of "commercializing" education. The sole
ground, on which the impugned Order rejects the petitioner's request
for permission to increase its fee during the 2016-2017 academic
session, is that the surplus allegedly available with the petitioner, of ₹
1,18,42,701/-, was sufficient to meet the petitioner's projected
expenses for 2016-2017. This, in the opinion of this Court, was an
exercise which the DoE was not competent, legally, to undertake.
Absent any charging of capitation fee, profiteering, or, therefore,
commercialization of education by the petitioner, the DoE could not
adjudicate on the sufficiency of the petitioner's available resources,
vis-à-vis its projected expenses. The quantum of fee to be charged is
an element, of its administrative functioning, over which the
autonomy, of the unaided educational institution which receives no
funds from the Government and survives on its fees for sustenance,
cannot be compromised. The DoE could not, therefore, have rejected
the petitioner's request for enhancement of its fees on the ground that
the moneys, allegedly available with it, were sufficient. The DoE,
thereby, sat in appeal over the subjective decision, of the petitioner,
regarding the quantum of fees that it proposed to charge; an exercise
which T. M. A. Foundation2, as well as all its sequelae, expressly
proscribe.
79. The ground for rejecting the petitioner's proposal, to increase
its fees during the 2016-2017 academic session is, therefore,
untenable in law.
80. The directions, contained in the impugned Order, dated 18th
July, 2017 are, consequently, equally untenable. As the rejection, by
the DoE, of the petitioner's proposal for increasing its fees, during the
2016-2017 academic session, has been found to be legally
unsustainable, the direction, in the impugned Order, to the petitioner,
not to increase its fees for the said academic session, is also incapable
of enforcement. The further direction, to the petitioner, to comply
with all instructions mentioned in the order dated 26th December,
2016, too, cannot sustain, as the Order, dated 26th December, 2016, is
premised on the assumption that the petitioner is subject to the 'land
clause'.
81. Direction 3, as contained in the impugned Order, dated 18 th
July, 2017, is in the form of an advisory, to be complied with in
futuro, at the time of submission, by the school, of its annual
statement of fees, under Section 17(3) of the DSE Act. The impugned
order having been issued on 18th July, 2017, this direction could
operate only in respect of the statement, under Section 17 (3), to be
submitted for the 2017-2018 academic session. Inasmuch as this Court
is, in the present proceedings, not examining the correctness, or
otherwise, of the statement of fees, submitted by the petitioner, under
Section 17(3) of the DSE Act, for the 2017-2018 academic session, no
opinion, regarding the said Direction, is expressed herein.
82. This Court also finds substance in the submission, of Mr. Sunil
Gupta, regarding infraction, by the DoE, of the principles of natural
justice. The Order, dated 26th December, 2016, of the DoE, is
completely silent, regarding the findings of the statutory inspection
committee, constituted under Rule 180 of the DSE Rules. For no
apparent reason, whatsoever, the DoE chose not to act on the said
report and, instead, invited comments from an "independent team of
accountants and financial experts as a second level check". The report,
and the findings, of this "independent team", consequent to the said
"second level check" were never shared with the petitioner; neither
was the petitioner co-opted in the said proceedings, or afforded any
opportunity by the said "independent team". The DoE, however,
apparently chose not to rest content even with the findings of the said
"independent team", but subjected those findings to further analysis
by a third committee, constituted vide Order dated 4th October, 2016,
"comprising of senior officer and accounts functionaries". The
justification for this "third level check" is, again, not forthcoming
from the record. Needless to say, the petitioner was not included in the
deliberations, even by this committee, or afforded any opportunity by
it. The findings of this "third" committee were also never shared with
the petitioner and, in fact, have not even been placed on record before
this Court. Adverse findings, arrived against the petitioner, following
such a procedure, cannot sustain the scrutiny of law for an instant.
There has been complete abandonment, by the DoE, of the most
fundamental principles of natural justice and fair play, while passing
the Order, dated 26th December, 2016 which has, as an inexorable
consequence, to perish.
83. This Court is constrained to note, here, a somewhat disquieting
feature of the present case. The recital of facts, hereinabove, can leave
no manner of doubt, regarding the misguided nature of the exercise,
conducted by the DoE against the petitioner, as the petitioner was not
allotted land, subject to any condition of having to obtain prior
approval, of the DoE, before enhancing its fees. The first error appears
to have been committed, by the DoE, while appending the note, on the
petitioner's representation dated 22nd April, 2016, requiring the
petitioner to submit its proposed fee enhancement, in accordance with
the Circular, dated 16th April, 2016, supra, of the DoE, without noting
the fact that the said Circular did not apply to the petitioner-school.
When, on 30th January, 2017, the petitioner brought, to the notice of
the Deputy Director of Education, the fact that the exercise, being
conducted against the petitioner, was misguided, as the petitioner was
not subject to any 'land clause' the DoE ought to have ceased the
persecution of the petitioner, at that very point. Instead, it is extremely
disturbing to note that, at all stages thereafter, the DoE has chosen to
ignore the fact that the petitioner was not subject to any 'land clause'
and that, therefore, the Orders, dated 16 April, 2016 supra, and 15th
July, 2016 supra, of the DoE, did not apply to it. The petitioner, for its
part, repeatedly brought, to the notice of the DoE - inter alia, vide
letter dated 1st May, 2017 and email dated 23rd July, 2018 - the fact
that no 'land clause' applied to it. The responses, by the DoE,
however, make no reference thereto. Astonishingly, the Order, dated
26th December, 2016 supra, as well as the impugned Order, dated 18th
July, 2017 supra, of the DoE, are also completely silent on this aspect.
84. In thus turning a blind eye to the fact that the petitioner had not
been allotted land with any accompanying 'land clause' and that,
therefore, the Orders, dated 16th April, 2016 and 15th July, 2016, of the
DoE, did not apply to it, the DoE has, this Court is constrained to
observe, been less than fair to the petitioner, and has compelled the
petitioner to undergo a needless litigative exercise. This Court
expresses its undisguised anguish, at the manner in which the DoE has
acted, in the present case, qua the petitioner, but forbears from saying
anything further.
85. In fact, in the face of the Order, dated 6th August, 2018
(extracted, in extenso, in para 45 supra), it can hardly lie in the mouth
of the DoE to contend that the impugned actions, against the
petitioner-School, were justified. The said Order expressly prohibits
hiking fees, from 2016-2017 till date, by "Unaided Private
Recognised Schools ... running on the land allotted by the land
owning agencies subject to the condition of seeking prior approval of
the Competent Authority for increase in fees". Admittedly, no such
condition attached to the allotment of land, to the petitioner. How,
therefore, the DoE is insisting that the petitioner could not have hiked
its fees, in 2016-2017, without the prior approval of the DoE, or
otherwise seeking to defend the impugned actions, is completely
inexplicable.
86. Apparently conscious of this glaring lacuna, in the acts of the
DoE in the present case, Mr. Ramesh Singh sought to salvage the
situation by abandoning, entirely, the issue of 'prior approval' and the
'land clause' by attempting to submit that the impugned exercise,
conducted by the DoE, was relatable, not to the land clause, but to
Section 17 of the DSE Act. This, however, as this Court as already
observed hereinabove, is a volte face which, at this late stage, cannot
be countenanced.
87. Even on merits, the reliance, by Mr. Ramesh Singh, on Section
17(3) of the DSE Act, is fundamentally misconceived, and is contrary
to the express wordings of the said provision itself. Sub-sections (1)
and (2) of Section 17, as already noted hereinbefore, concern aided
schools, and are not relevant. Section 17(3) of the DSE Act may, for
ready reference, be reproduced, thus, at the cost of repetition:
"(3) The manager of every recognised 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."
(Emphasis supplied)
Section 17(3), therefore, proscribes the charging, by a school, of fees
in excess of those specified by it in the statement, submitted by the
school to the DoE under the said sub-section. The sub-section does
not contemplate obtaining of any approval, of the Director, before
charging, by the school, of fees as per the statement of fees submitted
by it. In fact, the express subjection, of the charging of fees, by the
school, in excess of the fee specified in the statement submitted under
Section 17(3), excludes, by necessary implication, such subjection,
where the fee charged is within the figure contained in the said
statement. Prior approval of the Director is, therefore, required only if
the school desires to charge fees in excess of those contained in the
statement submitted under Section 17(3). Besides the fact that there is
no such allegation, against the petitioner, the invocation of Section
17(3), by the DoE, is clearly misguided, as the said sub-section does
not stipulate obtaining of prior approval of the DoE, as a precondition
before charging fees in accordance with the statement submitted by
the school under the said sub-section.
88. In the case of any unaided school, therefore, the DoE may, even
under Section 17(3), disapprove the increase of fees, if any, by the
school, if such increase results in commercialization of education, by
charging of capitation fees, or by profiteering. Even if, in the manner
in which the school has worked out the funds available with it, in its
statement of fees, the DoE finds any glaring error, resulting in the
school having any surplus with it, the proposal to enhance the fees can
be rejected, by the DoE only by returning a finding that, in view of the
said surplus, the increase of fees, as proposed by the school, would
amount to "profiteering" (as defined in Islamic Academy of
Education4). Sufficency of the amount available with the school
cannot constitute a ground to reject the proposed fee hike. If, for
example, therefore, the unaided school, in the statement of fees
submitted by it, claims to have suffered (hypothetically) a loss of ₹ x,
and intends, therefore, to enhance its fees to ₹ y, and the DoE, on
examining the statement, finds that, in fact, the school has not suffered
a loss, but has earned a profit of ₹ z, the DoE would have to go a step
further, and find, as a positive fact, that, in the face of the profit of ₹ z,
already being earned by the school, allowing it to hike its fees to ₹ y
would amount to "profiteering". Absent such a finding, the DoE
cannot direct the unaided school not to increase its fees. This for the
simple reason that earning of a reasonable surplus, by every unaided
school, is always permissible, and becomes illegal only where the
surplus earned, along with the differential increase on account of fee
hike, results in profiteering and, consequently, commercialization of
education. Having, therefore, found the school to, in fact, be in
possession of surplus funds, the DoE has to proceed a step further and
address the question - if, in the face of such existing surplus, the
school is allowed to hike its fees as proposed, would it amount to
profiteering? In the case of an unaided school, it is only where the
answer, to this poser, is in the affirmative, that the DoE can convey its
disapproval; not otherwise.
89. The reliance, by Mr. Ramesh Singh, on Section 18 of the DSE
Act, and Rules 172 to 176 of the DSE Rules, is also misconceived.
These provisions related to utilisation of the funds of the school, and
have nothing to do with submission by the school, of the statement of
the fees to be charged, by it, in the oncoming academic session.
Misutilisation of funds, by a School, may have its own repercussions;
that, however, is an issue foreign to the controversy, before this Court
in the present writ petition.
90. This Court has deliberately refrained from entering into the
merits, or correctness, of the finding, in the impugned Order dated 18th
July, 2017, to the effect that the petitioner had, with it, surplus funds
of ₹ 1,18,42,701/- as, in the opinion of this Court, it was not open to
the DoE to substitute its own view, regarding the sufficiency of the
funds available with the petitioner-School, over the estimation arrived
at by the petitioner itself, in the absence of any positive evidence of
commercialisation of education by the petitioner, by charging of
capitation fees or indulging in profiteering. Neither, in the opinion of
this Court, would be appropriate for it to embark on such an exercise.
The subjective satisfaction of an unaided educational institution,
regarding fixation of its fees, and maintenance of surplus, is to be
accorded due respect and, absent any element of profiteering, is not
amenable to review, either by the DoE, or by this Court.
91. In the case of an unaided educational institution, the DSE Act,
and the DSE Rules, do not contemplate obtaining of prior approval, of
the DoE, before enhancement of fees, by the unaided educational
institution. All that Section 17(3) requires, is for the school to submit,
to the DoE, the statement of the fees, which it intends to charge in the
ensuing academic session. It is only if the school intends to charge
fees in excess of the figure submitted to the DoE under Section 17(3),
that prior approval of the Director is required.
Conclusion
92. Resultantly, the impugned Order, dated 18th July, 2017, issued
by the DoE, is quashed and set aside, to the extent of Directions 1 and
2 therein, with consequential relief to the petitioner. It is clarified that,
in the case of an unaided school, which has not been allotted land, by
the land owing agency, subject to the condition that prior approval of
the DoE is required to be obtained before increasing its fees,
(i) the school would not be required to obtain any such prior
approval, before increasing its fees in any ensuing academic
session, and
(ii) the DoE would have the jurisdiction to interfere, with the
statement of fees submitted by such school under Section 17(3)
of the DSE Act, only by returning a positive finding that, in the
light of the existing financial position of the school, the
proposed increase in fee would result in profiteering, and,
thereby, in commercialization of education, and not otherwise.
93. The rejection, by the DoE, of the proposal, of the petitioner-
School, to increase its fees, during the 2016-2017 academic session,
is, therefore, held to be illegal. All actions taken against the petitioner,
consequent to the impugned Order, dated 18 th July, 2017, also stand
quashed.
93. The writ petition stands allowed, in the aforesaid terms, with no
orders as to costs.
94. Pending applications, if any, do not survive for consideration,
and are disposed of accordingly.
C. HARI SHANKAR, J.
MAY 20, 2020
HJ
