Delhi High Court
Lilawati Vidya Mandir Sr. Secondary ... vs Directorate Of Education on 7 February, 2024
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 23.01.2024
Pronounced on:07.02.2024
+ W.P.(C) 8794/2018
BLUEBELLS SCHOOL INTERNATIONAL KAILASH
.... Petitioner
Through: Mr. Kamal Gupta, Mr. Sparsh
Aggarwal, Ms. Kriti Gupta and Mr. Manish
Vashist, Advocates
versus
DIRECTORATE OF EDUCATION .... Respondent
Through: Mr. Santosh Kumar Tripathi,
Standing Counsel (Civil) GNCTD for DoE
with Mr. Utkarsh Singh, Adv.
Mr. Khagesh B. Jha & Ms. Shikha Sharma
Bagga, Advocates for impleader
+ W.P.(C) 6419/2019
LILAWATI VIDYA MANDIR SR. SECONDARY SCHOOL
..... Petitioner
Through: Mr. Kamal Gupta, Mr. Sparsh
Aggarwal, Ms. Kriti Gupta and Mr. Manish
Vashist, Advocates
versus
DIRECTORATE OF EDUCATION .... Respondent
Through: Mr. Santosh Kumar Tripathi,
Standing Counsel (Civil) GNCTD for DoE
with Mr. Utkarsh Singh, Adv.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
ORDER
% 07.02.2024
WP (C) 8794/2018
1. The petitioner Bluebells International School is a private
unaided recognised school, established in 1957. Though the school
has been constructed on land leased from the Government, there is no
condition, either in the allotment letter allotting the land to the
petitioner or in the lease deed whereunder the land was leased,
requiring the petitioner to obtain prior permission from the Directorate
of Education (DoE) before increasing its fee. The present writ petition
asserts that the only liability of the petitioner, in that regard, is the
requirement of intimating its fee structure to the DoE, as required by
Section 17(3)1 of the Delhi School Education Act, 1973 ("the DSE
Act").
2. On 19 January 2016, a Division Bench of this Court held, in
Justice For All v. GNCTD2 , that the DoE was required to ensure that
all unaided recognised schools which had been allotted land by the
Government or municipal bodies with a clause, in the letter of
allotment or in the lease deed, requiring the school to obtain prior
approval of the DoE before enhancing its fees ("the land clause"),
duly adhered to this requirement and did not increase their fees
1 17. Fees and other charges. -
(1) No aided school shall levy any fee or collect any other charge or receive any other
payment except those specified by the Director.
(2) Every aided school having different rates of fees or other charges or different funds shall
obtain prior approval of the prescribed authority before levying such fees or collecting such charges
or creating such funds.
(3) The manager of every 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.
2 227 (2016) DLT 354 (DB)
without the prior approval of the DoE. This judgment was circulated
by the DoE to the heads of all schools, and the managers of Private
unaided recognised schools, vide Order dated 19 February 2016. On
16 April 2016, the DoE issued another Order, requiring all schools,
allotted land by land owning agencies with the land clause, to submit
their proposals for increase in tuition fee for the 2016-2017 academic
session, if any, online through the website of the DoE, so as to obtain
prior sanction before increasing the fee. This was to be done, at the
latest, by 31 May 2016. The petitioner points out that this requirement
did not apply to it, as it was not allotted land with any attendant "land
clause".
3. The mandate of schools located on land which was allotted or
leased with an attendant "land clause" having to take prior approval
from the DoE before hiking their fees was reiterated by this Court in
order dated 31 May 2016 in Action Committee Unaided Recognised
Private Schools v. Directorate of Education3. Citing the said
decision, the DoE issued Order dated 3 June 2016, extending the time
for filing online proposals for fee hike by unaided recognised schools
till 31 July 2016.
4. On 19 November 2015, the 7th Central Pay Commission (the 7th
CPC) submitted its recommendations regarding revision of pay scales
of employees of the government and public sectors. The revision was
made retrospectively applicable w.e.f. 1 January 2016. The
recommendations were accepted by the Central Government.
3 WP (C) 5256/2016
Consequent thereto, the Central Civil Services (Revised Pay) Rules,
2016 ["the CCS (Revised Pay) Rules] were notified on 25 July 2016.
5. By Circular dated 19 August 2016, the DoE adopted the CCS
(Revised Pay) Rules and, thereby, implemented the 7th CPC
recommendations in respect of its employees.
6. This was followed, however, by a further Circular dated 6
January 2017, directing all private unaided schools not to hold any
meeting of their Managing Committees for increase in fee for the
2017-2018 academic session pending any decision by the competent
authority, as the decision regarding the manner of implementation of
the 7th CPC recommendations in private unaided recognised schools
was still under consideration.
7. A further clarificatory circular was issued by the DoE on 27
March 2017, clarifying that managing committees of unaided schools
could take decisions regarding revision of fees in normal courses as
per established procedure, but were restrained from taking any such
decision for revision of fees consequent to implementation of the 7th
CPC recommendations. It was further reiterated that schools which
were located on land provided by the DDA/government with an
attendant "land clause" - which does not apply to the present
petitioner - would not be permitted to increase their fee without prior
sanction of the DoE.
8. The Circulars dated 6 January 2017 and 27 March 2017 were
challenged by the Action Committee Unaided Recognised Private
Schools before this Court by way of W.P.(C) 2637/2017 (Action
Committee Unaided Recognised Private Schools v. DoE). By an
interim order dated 30 March 2017, a learned Single Judge of this
Court opined that, prima facie, "the unfettered right of the private
unaided schools to notify the fee structure after taking into account the
major expenditure to be incurred in a year before commencement of
the academic session cannot be abridged or whittled down only on the
ground that the decision with regard to a major head of expenditure,
namely, the increase in salary due to the Seventh Pay Commission,
shall be worked out by the Directorate of Education in a few days after
commencement of the academic session." This Court, therefore,
permitted the petitioner-schools before it to intimate the revised fee
schedule to the DoE within two weeks from the date of
implementation of the 7th CPC, in the event the DoE directed
implementation of the 7th CPC in private unaided schools, and that the
said intimation would be treated as having been filed on 30 March
2017.
9. On 31 March 2017, the petitioner-School, through its statutorily
constituted Managing Committee, which included nominees of the
DoE, decided the fee structure to be charged by it during the year
2017-2018. The DoE nominees did not object to the proposed fee
structure, which was duly intimated to the DoE, as required by Section
17(3) of the DSE Act.
10. It was only on 17 October 2017 that the DoE came out with an
order, containing the "Guidelines for implementation of the 7th Central
Pay Commission's Recommendations in Private Unaided Recognised
Schools of Delhi". In respect of schools which did not have any "land
clause" in the documents allotting land for their establishment, the
Order stipulated thus:
"1. General Instruction for ALL Private Unaided Recognized
Schools, irrespective of land status: -
(a) A fee hike is not mandatory for recognized unaided
schools in the NCT of Delhi.
(b) All schools must, first of all, explore the possibility
of utilizing the existing reserves to meet any shortfall in
payment of salaries and allowances, as a consequence of
increase in the salaries and allowances of employees.
(c) The schools should not consider the increase in fee
to be the only source of augmenting their revenue. They
should also venture upon other permissible measures for
increasing revenue receipts.
(d) Interest on deposits made as a condition precedent
to the recognition of the schools and as pledged in favour
of the Government should also be utilized for payment of
arrears in the present case.
*****
(f) Fees/funds collected from the parents/students shall
be utilized strictly in accordance with rules 176 and 177 of
the Delhi School Education Rules, 1973. No amount
whatsoever shall be transferred from the recognized
unaided School fund of a school to the society or the trust
or any other institution.
(g) The tuition fee shall be so determined as to cover
the standard cost of establishment including provisions for
D.A., bonus, etc., and all terminal benefits as also the
expenditure of revenue nature concerning the curricular
activities. No fees in excess of the amount so determined
or determinable shall be charged from the students/parents.
*****
(i) Every recognized unaided school covered by the
Act, shall maintain the accounts on the principles of
account applicable to non-business organisation/not-for-
profit organization as per Generally Accepted Accounting
Principles (GAAP). Such schools shall prepare their
financial statement consisting of Balance Sheet, Profit &
Loss Account and Receipt and Payment Account every year
as per proforma prescribed by the department vide order
No. F.DE-15/ACT-I/WPC-4109/Part/13/7905-7913 dated
16/04/2016.
(j) Every recognized unaided school covered by the
act, shall file a statement of fees latest by 31st March every
year before the ensuing session under section 17(3) of the
Act as per proforma prescribed by the department vide
order no. F./DE/PSB/2017/16604 dated 03/07/2017.
(k) Though, increase in tuition fee is not the only option
to implement the recommendations of 7th Central Pay
Commission's Recommendations, nevertheless, if the
Managing Committee of the School after exploring
exhausting all the possibilities as per the conditions
mentioned above feels it necessary to increase the tuition
fee, the managing committee of the school shall hold a
meeting with the group of teachers and parents which
would include at least one parent representative from each
section of the school and will present the detailed budget of
the school, financial statements of the previous year,
requirements of funds for implementation of 7th Central Pay
Commission's Recommendations, availability of
cash/reserve fund/savings with the School Fund account etc
as well as present the proposal for fee hike, if any with
justification and with all the documents mentioned in
Annexure A. Inputs would be solicited from the parents
and teachers' representatives. Either the managing
committee can take their suggestions into consideration and
revise their proposal, or record their dissent. Director of
Education's nominee (DE's Nominee) to remain present in
the meeting. The minutes and attendance sheet of this
meeting, countersigned by DE's Nominee including details
of parents invited for meeting along with photographs of
the meetings shall be submitted by the School to the DDE
(District) concerned.
It is hereby clarified that presentation of the proposal for
increase in fee before the representatives of the parents
comprising of each section shall not be construed as
seeking the approval of the parents representatives in view
of the judgment dated 12/08/2011 of Hon'ble High court in
WPC 7777/2009 titled as Delhi Abhibhavak Mahasangh
Vs. GNCTD.
(l) For the purpose of increase in tuition fee w.e.f.
01/01/2016 in terms of mid-session increase, the approval
of the undersigned is not required under sub-section (3) of
section 17 of DSEAR, 1973 in light of the order dated
30.03.2017 of Hon'ble High Court in WPC 2637/17 in the
matter Action Committee Unaided Recognized Schools Vs
Directorate of Education.
The relevant part of Hon'ble High Court Order is as under:-
"Keeping in view the importance and relevance of
31st March, 2017 in section 17(3) if the Act and to
balance the equities, this Court directs that in the
event the Seventh Pay Commission is directed to be
implemented in private unaided schools by the
respondent, then petitioner schools would have an
option within two weeks from the date of
implementation of the Seventh Pay Commission to
intimate the revised fee schedule and the same shall
be taken as having been filed on 30th March 2017."
*****
3. Procedure for Increase in Tuition Fees
I. For Schools running either on Private Land or on
DDA/L&DO allotted land NOT having condition to seek
prior sanction of Director (Education) before any fee
hike.
a. After complying with the instructions strictly
mentioned at Para (1), if any school still feels it necessary
to hike the tuition fee, it shall present its case along with
detailed financial statements indicating income and
expenditure of each account before the managing
committee of the school including DE's Nominees.
b. The school before placing the proposal of increase
in tution fee, shall ensure the compliance of section 18(4),
Rule 172, 173, 174, 175, 176 and 177 and other relevant
provisions of Delhi School Education Act and Rules, 1973
and guidelines issued by the department from time to time,
various judicial pronouncements, and ratio laid down by
Hon'ble Supreme Court in Modern School Case4 and Delhi
High Court in the matter of Delhi Abhibhavak Mahasangh
Vs DoE5 (WPC 7777/2009) as well.
******
e. The managing committee including DE's nominees
shall evaluate the proposal of the school for increase in fee
taking into consideration the availability of
funds/reserves/cash in hand/bank balances/surplus. In case,
DE's nominee disagrees with the proposal of increase in
tuition fee or agrees to a lesser increase in tuition fee
against the proposal on the basis of the relevant provisions
of Delhi School Education Act and Rules, 1973,
instructions/guidelines issued from time to time and
judicial pronouncement in this regard, he/she shall record
his/her dissent note in writing citing the provisions and
other reasons justifying lesser increase in fee or no increase
in fee as the case may be, in the minutes of the meeting and
only then sign the minutes of the meeting. DE's Nominee
of the school shall forward the minutes of the meeting to
Dy. Director of District concerned for information and
record in all cases. DE's Nominee shall submit to the DDE
concerned a statement of Managing Committee meeting(s)
attended by him.
f. The managing committee of the school shall file the
full statement of fee under Section 17(3) of DSEAR, 1973
to the DDE concerned in the proforma as circulated by the
department vide order dated 03/07/2017.
*****
j. No other head of fee like annual fee, development
fee, earmarked levies shall be increased by the school for
implementation of 7th Pay Commission's
Recommendations, as a corollary to increase in tuition fee."
4 Modern School v. U.O.I., (2004) 5 SCC 583
5 Delhi Abhibhavak Mahasangh v GNCTD, 2011 SCC OnLine Del 3394
11. On 30 November 2017, the School submitted a copy of its fee
structure, in compliance with the requirement of implementation of
the recommendations of the 7th CPC. The fee structure had been
approved by the School's Managing Committee, which included
nominees of the DoE. It was also stated that the nominees of the DoE
did not raise any objection to the proposed fee structure, which was
unanimously approved. As a school which was not subject to any
"land clause", the petitioner, asserts that the writ petition was only
required to intimate the DoE of its fee structure under Section 17(3) of
the DSE Act, which was thus done.
12. On 13 April 2018, the DoE issued another Order, withdrawing
the Order dated 17 October 2017 in respect of schools operating on
land to which the "land clause" applied. The Order dated 13 April
2018 did not, therefore, apply to the petitioner, in respect of which the
earlier Order dated 17 October 2017 continued to operate.
13. Parents of some of the students in the petitioner-School
addressed a complaint dated 15 May 2018 to the School, alleging that
the School had illegally increased its fee and demanded arrears
without prior approval of the DoE, as required by the Order dated 13
April 2018 issued by the DoE. In the circumstances, the complaint
sought, from the School, either an order from the DoE authorising
increasing of fees and collection of arrears pursuant to the requirement
of implementation of the 7th CPC recommendations or a rollback of
the fee hike, discontinuation of collection of arrears and refund of the
arrears already collected. The complaint was forwarded by the
Deputy DoE to the School on the same day, i.e. 15 May 2018, seeking
a response within three days.
14. The School, in its response dated 17 May 2018, pointed out that
it was not subject to any "land clause" and had only increased its
tuition fee, with arrears payable in three instalments, and that the
increase in fee was in accordance with the DoE Order dated 17
October 2017.
15. The DoE issued Order dated 25 May 2018, ordering the School
to immediately revert back the enhanced fees for the academic session
2018-2019 and charge fees in accordance with the quantum which
was being charged during 2017-2018, as (i) no approval had been
granted by the DoE for any increase in fees by the School pursuant to
the 7th CPC and (ii) it appeared, prima facie, that the increase in fees
by the School was on the higher side, and had to be examined in detail
by the DoE.
16. The School responded on 13 June 2018, submitting that the
revised fees charged by it during 2017-2018 were in accordance with
the DoE Order dated 17 October 2017 and that, insofar as the 2018-
2019 academic year was concerned, the Managing Committee of the
school, in its meeting dated 13 March 2018, made a modest
enhancement of fee by 10% to meet the financial liabilities in the
2018-2019 academic year towards increment, DA, consequential
statutory liabilities and inflation. It was further pointed out that the
proposed fee schedule for 2018-2019 was immediately forwarded to
the DoE and that the parents were duly informed on 4 April 2018. As
a school which was not situated on land to which any "land clause"
applied, it was submitted that there was no requirement for the School
to obtain prior approval of the DoE before increasing its fees to meet
the financial implications of implementation of the 7th CPC
recommendations.
17. Subsequently, vide letter dated 11 June 2018, the DoE sought
certain documents from the school, which were provided on 15 June
2018. Thereafter, the School was informed vide letter dated 11 July
2018 of the DoE that a committee had been constituted to inspect the
School, and that the inspection would be conducted on 17 July 2018.
The inspection was duly conducted and all documents as sought were
provided by the School to the Committee. No report of the inspection
was ever supplied to the school.
18. The DoE, thereafter, required the school to provide for the
documents, vide its letter dated 23 July 2018. Some of the said
documents were provided on 26 July 2018, and the remaining were
provided on 1 August 2018, along with the representation dated 30
July 2018.
19. On 1 August 2018, the following Order came to be passed by
the DOE:
"ORDER
WHEREAS, Blue Bells School International, Kailash, New Delhi
is a Private Recognized School functioning under Directorate of
Education, GNCT of Delhi and is required to function in
accordance with the provisions as contained under Delhi School
Education Act, 1973 and Rules made there under and also to
follow the lawful instruction as issued by Directorate of Education
from time to time.
AND WHEREAS, a complaint was received, from the office of the
Dy. Chief Minister, Delhi, filed by parents of the students studying
in Blue Bells School International, Kailash, New Delhi, especially
in relation to the unauthorized fee hike and arrears on account of
implementation of 7th CPC recommendations demanded by the
school.
AND WHEREAS, the said complaint was forwarded to the school
for their comments. On perusal of documents submitted & the
reasons given by the school, regarding their fee hike under Section
17(3), it was observed that an opportunity of being heard may be
awarded to the School. Accordingly, Principal of the said school
was heard on 17.07.18 at the time of inspection of the said school.
AND WHEREAS, certain points have emerged during the analysis
of the submission made by the school viz. the Manager of the
school stated that the school is on DDA Land without imposing the
condition for taking prior approval of Director of Education before
hike in fees.
AND WHEREAS, the Chairman/Manager of the School was
directed to furnish/produce some relevant documents/information
to justify their claim for fee hike. The Inspection Committee has
given sufficient opportunity keeping in view of "Natural Justice"
vide letter No. DDE/SE/2018-2019/1675 dated 11/07/2018 and
further vide letter No. DDE/SE/2018-2019/224 dated 23/07/2018,
but all in vain.
AND WHEREAS, the Director Education has already issued the
guidelines for implementation of 7th CPC recommendations in
Private Unaided Recognized School of Delhi, vide order No.
DE15(318)/PSB/201619786 dated 17.10.2017 irrespective of
school land status.
In pursuance of the said order a Committee under the
Chairpersonship of Dy. Director of Education (South-East)
consisting of DDE (Zone-25), ADE(SE) and Account Officer (SE)
has examined the fee statement of the school under Section 17(3)
of DSEA, 1973 and observed as under-
1. As per clause 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 fees may be charged for supplementing the
resources for purchase, upgradation and replacement of furniture,
fixture and equipment. However, as per audited financial
statements for FY 2014-15, 2015-16 and 2016-17 and its
comparative analysis, it is noted that the school is utilizing the
development fee for in contravention of aforesaid clause 14. The
details of mis-utilization of development fund are as follows:
(Figures in Rs.)
Particulars 2014 20 2016-17
-15 15-
Repairs of 5,45, 1,5 3,20,944
Furniture 534 4,4
fixtures
Building 16,38 73, 13,05,77
ce
Watch and 10,15 - -
Wards ,196
Electrical 3,73, 1,9 1,38,161
Goods and 319 8,0
Computer 13,71 1,9 20,45,84
Maintenan
ce
Conservan 32,95 - -
cy charges ,365
Botanical 6,84, - -
Science
park
activities
General 1,28, - 3,27,266
and
Maintenan
ce
Multipurp - - 1,40,545
ose Hall
Repair and
replaceme
nt
Language - - 1,24,033
Lab
Equipmen
ts
Maintenan
ce
Academic 3,28, - -
project
expenses
Playgroun 18,79 - -
Genset 1,93, - 2,49,519
Library 1,36, 16, 1,36,755
Books 638 99
Sports 13,39 1,7 97,511
Material 8 5,3
Total 97,42 80, 48,86,35
2. As per Rule 180 of DSER, 1973 school is, inter-alia,
required to submit copy of receipts and payments account duly
audited by chartered accountant. However, school has failed to
submit receipts and payments account for FY 2014-15, 2015-16
and 2016-17.
3. It is noted that during FY 2016-17 school has purchased
double desks and single desks amounting to Rs.23,43,634 and
Rs.20,56,553/- respectively. The details of opening balance of
double desks and single desks are not disclosed in the financial
statements and it appears these are merged in the block of furniture
and fixtures of the school. Further, there were no disposal/sale of
furniture and fixtures during the year. As per school submission, as
on 15.07.2018 there are 1930 students only. Considering the
student's strength of the school and the amount involved in
purchase of desks, it is clear that school has not followed due
propriety while utilizing school funds.
4. It is noted that the school is collecting transport fee from
the students, but not shown in the financial statements of the
school till FY 2015-16. As per Rule 175 of DSER, 1973 read with
section 18(3) of DSEA, 1973 school is required to maintain its
accounts so as to exhibit clearly the income accruing to school by
way of fee, etc., and therefore, school is in contravention of
aforesaid provisions of DSEA & R, 1973 and has been hiding its
transport fee collections and related expenditures.
5. On comparison of audited financial statements for FY
2015-16 and 2016-17, differences in opening balance as on
01.04.2016 have been noted. The detail of differences are as
follows:
Particulars Balance Balance
as on as on
31.03.201 01.04.201
General Fund - 32,80,886.
25,60,181 00
.00
Depreciation 5,17,05,3 5,53,51,57
Reserve Fund 60.00 4.00
Vehicle - 8,05,000.0
Fund
Current 1,956.00 6,081.00
Liabilities for
services
Fixed assets - 7,01,40,5 7,90,46,66
Gross value 59.00 1.00
Investments 1,30,39,6 1,41,24,74
38.00 8.00
Advances to staff 78,263.00 1,03,713.0
Advance to 70,194.00 72,271.00
contractor
TDS Receivable 3,58,491. 4,20,117.0
Bank Balances 42,78,598 43,01,460.
.00 00
Interest on bank 11,87,249 12,75,429.
FDRs .00 00
Deposits (other 5,91,416. 6,96,416.0
6. School has proposed for expenditure on higher side in its
statement of fee filed under 17(3).
a) Expenditure on fixtures in 2016-17 is nil, estimated
expenditure in 2017-18 is Rs.320944/- but proposed
expenditure for 2018-19 is Rs.48,38,500/-.
b) Expenditure on purchase of computers in 2016-17
was Rs. 28,73,000/-, in 2017-18 is Rs.50,00,000/- and
proposed expenditure for 2018-19 is Rs.10,00,000/-.
Computer is a capital asset and lasts for many years. So
much expenditure incurred every year not appears to be
correct.
c) Expenditure on Teaching Aid during 2016-17 was
Rs.1,70,582/- whereas proposed expenditure during 2018-
19 is Rs.38,00,000/- and Rs.1,80,000/- for upgradation of
Teaching Aid Equipments.
d) Overhead expenditure incurred during 2016-17 is
Rs.3,48,76,134/- whereas proposed expenditure during
2018-19 is Rs.5,48,03,790/- which is an increase of 41.33%
and as such the same doesn't not appear to be correct.
7. The total funds available for the year 2017-18 amounts to
Rs.20,16,52,361/- out of which cash outflow in the year 2017-18 is
estimated to be Rs.17,61,95,435. This results in surplus of funds
amounting to Rs.2,54,56,926/-. The details are as follows:
Particulars Amount (Rs.)
Cash and Bank balances as on 86,29,460
31.03.17 as per audited
Financial Statements.
Add: Investments as on 1,41,87,811
31.03.17 as per audited
Financial Statements
Less: Fixed Deposits for 7,63,858
CBSE Reserve Fund
Available Funds 2,20,53,413
Add: Fees for 2016-17 as per 17,80,12,041
audited Financial Statements
(we have assumed that the
amount received in 2016-17
will at least accrue in 2017-
18).
Add: Other income for 2016- 15,86,907
17 as per audited Financial
Statements (we have assumed
that the amount received in
2016-17 will at least accrue in
2017-18)
Estimated availability of funds 20,16,52,361
for 2017-18
Less: Provisional expenses for 17,61,95,435
the session 2017-18 as per
receipts and payments account
submitted by school vide its
letter dated 15.06.2018
Net Surplus 2,54,56,926
In view of the above examination, it is evident that the school is
having sufficient funds to meet the financial implications for the
financial year 2017-18 after meeting its expenditure.
After taking into consideration all the facts and circumstances of
the case, the school authority is hereby directed not to increase fee
under any head of fee for session 2017-18.
NOW THEREFORE, I, Juhi Aggarawl, Deputy Director of
Education in exercise of power conferred upon Director of
Education under Section 17(3) and further delegated to the under
signed vide order No. DE. 15(318)/PSB/2016/19742 dated
13/10/2017 of Director (Education) and keeping in view of the
interest of the parents of school, the Manager/HOS Blue Bells
school International, Kailash, New Delhi is hereby directed under
Section 24(3) of DSEAR, 1973 to comply with the following
directions:
i. Not to increase any fee in pursuance to the proposed
fee hike for the session 2017-18 on any account including
implementation of 7th CPC and if the fees is already
increased, the same shall be refunded to the parents or
adjusted in the fee of subsequent months.
ii. To communicate through its website, notice board
and circular about rejection of fee increase proposed by the
School.
iii. The fee should be utilized as per letter and spirit of
Rule 177 of the DSEAR, 1973 and the judgment of the
Hon'ble Supreme Court in the case of Modern School Vs
Union of India (2004).
iv. To utilise the fee collected from students should be
in accordance with the provisions of Rule 177 of the
DSER, 1973 and orders and directions issued by this
Directorate from time to time."
20. The present writ petition seeks a writ of certiorari, quashing the
aforesaid order dated 1 August 2018.
Rival Submissions
21. I have heard Mr. Kamal Gupta, learned Counsel for the
petitioner and Mr. Santosh Tripathi, learned Standing Counsel for the
GNCTD/DoE, as well as Mr. Khagesh P. Jha, who was permitted to
intervene on behalf of some of the parents, at length.
22. Mr. Gupta submits that the issue in controversy is covered by
the decisions of this Court in Ramjas School v. D.O.E.6 and Mahavir
Senior Model School v. D.O.E.7
23. In particular, Mr. Gupta advances the following submissions:
(i) The impugned order has been passed in clear violation of
the principles of natural justice. No Show Cause Notice was
ever issued to the School by the DoE, enumerating the proposed
disallowances, and no opportunity to respond was, therefore,
extended. In the circumstances, as the School was unaware of
any adverse order in the offing, it could not even seek a Show
Cause Notice or any opportunity of hearing.
6 2020 SCC OnLine Del 1776
7 2023 SCC OnLine Del 1587
(ii) In its counter-affidavits to the present writ petition, the
DoE has sought to contend that the law did not require it to
extend any opportunity of personal hearing before passing the
impugned order. This is contrary to the decisions in Ramjas
School and Mahabir Senior Model School.
(iii) There is no allegation, against the petitioner, of
commercialisation of education or of profiteering. In the
absence of any such specific allegation, the DoE lacked the
jurisdiction to interfere with the manner in which the petitioner
had fixed its fee for the coming year. Any such intervention
would infract Article 19(1)(g) of the Constitution of India.
(iii) Every school was entitled to maintain a reasonable
surplus, and the existence of a surplus did not indicate
profiteering or commercialisation.
(iv) The DoE did not possess the jurisdiction to examine the
sufficiency of the surplus available with the school or assess
whether, in view of the surplus, the school was justified in
increasing its fees or not.
(v) Rule 190(6)8 of the Delhi School Education Rules, 1973
("the DSE Rules") had also been infracted, as the report of the
8 190. Inspection and supervision of schools. -
inspection of the School had not been provided to it. In the
present case, the notice informing the School that it would be
inspected was issued on 11 July 2018. The inspection took
place on 17 July 2018. Thereafter, on 23 July 2018, the DoE
wrote to the School, directing the School to forward
information/documents, enumerated under 12 heads, for
preparation of the inspection report. There was no further
communication with the School prior to the issuance of the
impugned order dated 1 August 2018, which, purportedly on the
basis of the documents related to the School, arrived at the
conclusion that it had a net surplus of ₹ 2,54,56,926/-, which
was sufficient to meet the financial implications for the
academic year 2017-2018. This procedure was clearly contrary
to Rule 190 of the DSE Rules.
Besides, Mr. Gupta has also sought to submit that there are factual
inaccuracies or errors in the manner in which the impugned order
calculates the surplus available with the School. However, I do not
deem it necessary to examine that aspect, for reasons which would
presently become apparent.
24. In the context of the above submissions, Mr. Gupta places
reliance on the following passages from the judgment of this Court
in Mahavir Senior Model School:
"11. The present case brings forth a classic tussle between
(6) Every person, other than the Director, inspecting a school, shall, within 15 days from the
completion of the inspection, submitted to the Director, the report as to the results of the inspection,
autonomy of private schools in fixation of fees and the extent of
governmental control thereon, an issue which routinely engages
this Court. DoE asserted that notwithstanding the status of "private
unaided school", no fee can be fixed without their prior
permission. The schools on the other hand, contended that they
enjoy freedom in management of their affairs, which includes
fixation of the fees. In that light, what lays for consideration before
this Court is whether in passing the impugned order, the DoE has
acted in excess of its jurisdiction vested under DSEA and DSER or
any other extant rules/regulations, thereby impinging upon the
autonomy of petitioner Schools in determination of their fee
structure for the Academic Year 2018-2019.
*****
Whether the proposed hike in fee by the schools amounts to
profiteering or commercialisation
17. Even though there is no provision found under the DSEA
that requires unaided schools to seek prior permission from DoE
before fee hike, yet, DoE exercises regulatory control emanating
from Sections 17(3) and 18(3) and (4) of DSEA and the DSER.
However, while regulating the fee structure, DoE does not act as an
appellate body. It is not vested with the power to analyse the
correctness of discretion exercised by the school, but is entitled to
ensure that the school does not indulge in commercialisation of
education. The bounds of regulatory jurisdiction are limited and
restricted, as expounded by the judicial precedents noted
hereinafter.
*****
Understanding the impugned order : Unpacking the legal issues at
stake
23. This brings us to the grounds of challenge to the impugned
order. Schools have alleged breach of the principles of natural
justice due to denial of opportunity to respond to the allegations.
This principle of audi alteram partem is the cornerstone of
procedural fairness and is vital to ensure a just and equitable
outcome in any legal process. It has been contended that the
impugned order was issued without prior notice of proposed
disallowances. There is no convincing response to this contention.
The court is of the view that purported inconsistencies mentioned
in the impugned order should have been revealed to the schools
before passing of the impugned order, giving them adequate
opportunity to respond. Adherence to this principle would make
the decision-making process fair, transparent and would preclude
bias or prejudice from influencing the outcome of a case. Thus,
DoE must ensure that the schools are provided all relevant
material and information, including the basis for any objections or
concerns raised by the regulatory authorities, while scrtunising the
statement if fee. This would allow the schools to present their stand
in a meaningful way. That said, in the opinion of the court, instead
of remanding the matter back to DoE at this juncture, it would be
appropriate to evaluate the validity of the impugned order on its
own merits.
*****
29. Next, comes the issue of whether accumulation of surplus
funds amounts to profiteering. Firstly, this allegation has been
made for the first time before the court in response to the petition.
Secondly, DoE's accusation of "commercialisation of education" is
premised on mere presence of "sufficient funds to carry on the
operation of the school". Thus, vital questions that emerge for
consideration are : (a) whether mere availability of a surplus
disqualifies the schools from increasing their fees; and (b) whether
DoE has the power to determine the adequacy of funds available
with the schools in absence of finding of profiteering. The answers
to both of these questions must be given in the negative for reasons
set out below.
30. DoE's power to scrutinise the accounts and other records of
private unaided schools finds its source in Section 17(3) of the
DSEA (examined hereinabove) r/w Rule 180(3) of the DSER.
Under Rule 180(3), accounts and other records maintained by an
unaided private school shall be subject to examination by the
auditors and inspecting officers authorised by the Director. The
Act and Rules specify, in no uncertain terms, that DoE has the
authority to seek and examine the accounts of schools. This
regulatory power must however, be exercised within the precincts
of the law explained in the aforenoted judicial precedents. Schools
are entitled to maintain a reasonable surplus for expansion of the
system and development of education. Increase in fee to generate
funds for expansion and betterment of educational/infrastructural
facilities, as is the case with the Senior School, is permissible in
law. It is important for private unaided schools to maintain a
surplus for the purpose of further development and honing of their
educational facilities and services. The accumulation of surplus
funds is essential for the long-term sustainability and growth of the
school which enables them to invest in better infrastructure,
equipment, and resources. Private unaided schools may need to
invest in building or improving infrastructure, such as construction
of new classrooms, libraries, laboratories, sports facilities or
technology upgrades, such as new computers, tablets and software.
These increments are generally sourced from the surplus funds and
enable the school to stay up-to-date with the latest technologies
and provide quality education to its students. Thus, the process of
fixation of fee for any given academic year entails consideration of
a multitude of factors such as salaries and remunerations to be paid
to teaching and non-teaching staff, cost of running the
establishment, investments, infrastructure as well as future plans
for expansion and development of the institution. Since the
unaided schools are entirely dependent on the fee collected by
them, they would obviously like to earmark funds for specific
purposes and therefore, planning and maintaining a surplus per se
cannot be construed as commercialisation of education. It is only if
such funds are being used purely for commercial gain, rather than
for improvement and development of the school, can it be
construed as a form of commercialisation of education.
31. In the present case, DoE has recomputed surplus available
with schools and held that the same is sufficient to meet their needs
and thus, denied them the right to increase the fee. This approach
adopted by the DoE, in the opinion of the court, is incorrect and
impermissible. Determination of what constitutes a "reasonable"
surplus would depend on various factors such as the size of the
school, the level of infrastructure and facilities provided, salaries of
the staff and the overall financial position of the school. In their
statement of fee, Senior School has incorporated a detailed chart
of estimated expenses expected to be incurred in the Academic
Session 2018-2019 as also the income generated by them.
Therefore, there is transparency in their financial operations and
they can be held accountable for utilisation of funds. They have
mentioned that the management intends to restructure and
revitalise the school plant at an estimated cost of Rs 12 crores, and
have even entered into a contract with an architect for said
purpose. Since the court would not like to sit in appeal over this
issue, it has refrained from examining the veracity of the figures
mentioned therein, yet considerable merit is found in Mr Gupta's
submission that Senior School, operative since 1983, would require
funds for reconstruction and allied activities. DoE must remember
that unaided schools possess autonomy in their administration,
including, autonomy to envision and plan for its growth and
expansion; they cannot impose their own subjective opinion of
what is sufficient amount for schools to have in order to meet their
aims and objectives. In the instant case, the audited balance sheets
and material provided by the schools have been reworked without
a valid explanation. The audited balance sheets of private unaided
schools are important documents that reflect their financial
position and performance. These documents provide a clear and
transparent picture of school's economic status and help in
assessing whether the school has sufficient resources to meet its
expenses and whether a fee hike is justified. DoE cannot act as an
appellate body and reject the said financial documents, in absence
of any evidence to show that the accounts were not prepared in
accordance with applicable accounting standards or were rejected
by the tax authorities. Pertinently, an objection qua format of
return and documents submitted by the schools was raised by DoE;
however, in response to said query, the schools had clarified that
they are following the prescribed format. In the impugned order,
there is no adverse remark on this issue. Therefore, the DoE has
undertaken the exercise of reworking the balance sheets without
disclosure of justifiable reasons, or a finding of profiteering or
commercialisation of education. This exercise reflects DoE's
subjective opinion, without any objective criteria, making the
entire exercise arbitrary and unreasonable. The right of unaided
schools to determine fee to be charged from students cannot be
faltered purely only on account of presence of reasonable surplus
in their books of account. DoE could have examined the veracity of
surplus figures presented by the schools, but in order to deny
enhancement of fee, they must, on credible basis, determine that
the school has indulged in commercialisation of education,
profiteering or levying of capitation fee. The School Managing
Committee had carefully undertaken the exercise of deciding the
budget for academic year concerned and sans a finding of
profiteering or commercialisation of education, the DoE has acted
in excess of its powers and impinged upon the autonomy of
schools, protected by law, in rejecting Senior School's proposed
fee hike."
(Emphasis supplied)
Mr. Gupta points out that, though the decision in Mahavir Senior
Model School is under challenge in LPA, no interim orders have been
passed therein.
25. Mr. Gupta also places reliance on para 117 and of the judgment
of the Supreme Court in Indian School v. State of Rajasthan9:
"117. As such, it is not open to the State Government to issue
directions in respect of commercial or economic aspects of
legitimate subsisting contracts/transactions between two private
9 (2021) 10 SCC 517
parties with which the State has no direct causal connection, in the
guise of management of pandemic situation or to provide
"mitigation to one" of the two private parties "at the cost of the
other". This is akin to -- rob Peter to pay Paul. It is a different
matter, if as a policy, the State Government takes the responsibility
to subsidise the school fees of students of private unaided schools,
but cannot arrogate power to itself much less under Article 162 of
the Constitution to issue impugned directions (to school
management to collect reduced school fee for the concerned
academic year). We have no hesitation in observing that the
asservation of the State Government of existence of power to issue
directions even in respect of economic aspects of legitimate
subsisting contracts/transactions between two private parties, if
accepted in respect of fee structure of private unaided schools, is
fraught with undefined infinite risk and uncertainty for the State."
(Emphasis supplied)
26. The expression "capitation fee", submits Mr. Gupta, now stands
defined in clause (b) of Section 2 of the Right of Children to Free and
Compulsory Education Act, 2009 ("the RTE Act") as "any kind of
donation or contribution or payment other than the fee notified by the
school". Simultaneously, Section 13(1) of the RTE Act proscribes all
schools from, while admitting a child, collecting any capitation fee or
subjecting the child or his or her parents or guardian to any screening
procedure". There is no such allegation against the School; ergo, it
cannot be alleged that the School is charging capitation fee.
27. Thus, submits Mr. Gupta, the impugned Order dated 1 August
2018 is liable to be set aside as having been issued in excess of the
jurisdiction vested in the DoE, in violation of the principles of natural
justice and in violation of Rule 190 of the DSE Rules.
Submissions of Mr. Tripathi and Mr. Jha
28. Mr. Tripathi sought to contend that the decision in Ramjas
School is distinguishable on facts as, in the present case, the
impugned Order emanates from a complaint received by parents. He
places reliance on Section 18(4)10 of the DSE Act, apropos the
specific finding, in the impugned Order, that the School was utilising
development fee, collected by it, for purposes other than those for
which development fee could be utilised.
29. Supplementing the submissions of Mr. Tripathi, Mr. Jha submits
that there was no allegation against Ramjas School, akin to the
allegations of misutilisation of development fee, non-reflection of
transport fee collected from students in the financial statements of the
school to the 2015-2016 Financial Year, which amounted to
contravention of Rule 17511 of the DSE Rules read with Section 18(3)
of the DSE Act and differences in the opening balance as on 1 April
2016, reflected from the audited financial statements of the School for
the Financial Years 2015-2016 and 2016-2017, specifically levelled
against the petitioner-School in the impugned Order dated 1 April
2018. He also submits that there was no compliance, by the School
with the preconditions for increasing the fee mid-section, as contained
in the DoE order dated 17 October 2017. Nor, submits Mr. Jha, was
10 (4) (a) Income derived by unaided schools by way of fees shall be utilised only for such
educational purposes as may be prescribed; and
(b) charges and payments realised and all other contributions, endowments and gifts received
by the school shall be utilised only for the specific purpose for which they were realised or received.
11 175. Accounts of the school to be maintained. - The accounts with regard to the School Fund or the
Recognised Unaided School Fund, as the case may be, shall be so maintain as to Ex. clearly the income
accruing to the school by way of fees, fines, income from building, rent, interest, development fee is,
there compliance with General Instruction 1(b) in the DoE Order
dated 17 October 2017 which required all schools to, first of all,
explore the possibility of utilising existing reserves to meet any
shortfall in payment of salaries and allowances, as a consequence of
increase in the salaries and allowances of employees.
30. Mr. Jha submits that "commercialisation" and "capitation fee"
are not incantations which have specifically to be alleged in so many
words and that, if the allegations in the impugned Order amount to
commercialisation of education or charging of capitation fee, that
would suffice to justify the Order. He submits that the "surplus"
reflected in the impugned Order is surplus generated out of unlawfully
collected amounts.
31. Mr. Jha, therefore, echoes the submission of Mr. Tripathi that
the present case cannot be analogised to Ramjas School or Mahavir
Senior Model School.
Submissions of Mr. Kamal Gupta in rejoinder
32. Mr. Gupta, in rejoinder, reiterates that, in the absence of any
specific finding of commercialisation of education or of charging of
capitation fee, the DoE is not entitled to subject the manner in which
the school works out the fees to be charged by it to its own subjective
assessment. An increase of fee by a recognised unaided school, he
submits, can be interdicted by the DoE only if there is profiteering or
collections for specific purposes, endowments, gifts, donations, contributions to Pupils' Fund and other
miscellaneous receipts, and also, in the case of aided schools, the aid received from the Administrator.
commercialisation of education. The DoE cannot interfere with the
decision to increase fees on a mere finding of adequate surplus, absent
any allegation of profiteering.
33. Apropos the discrepancies alleged in the impugned order, Mr.
Gupta submits that such discrepancies are alleged in every such order,
and cannot constitute the basis for the DoE to interfere with the
decision of the school to increase its fees so as to meet the additional
financial outlay resulting as a consequence of the requirement of
having to implement the 7th CPC recommendations.
34. Mr. Gupta draws my attention to paras 85 and 86 of the
decision in Ramjas School, which read thus:
"85. Adverting, now, to the impugned Order, dated 18th 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 Rs.
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)
86. The concluding "directions" follow."
35. Mr. Gupta further submits that there is not even an allegation
that the school is commercialising education. In this context, he
invites attention to para 156 of the concurring judgment of S.B. Sinha,
J., in Islamic Academy of Education v. State of Karnataka12,
rendered by a Constitution Bench of the Supreme Court, in which it
was opined, apropos the surplus which could be maintained by
unaided schools, that "reasonable surplus should ordinarily vary from
6% to 15%, as such surplus would be utilized for expansion of the
system and development of education". Applying this principle, as
the returns from the fee charged by the petitioner-School during one
year was ₹ 18 crores, ₹ 2.7 crores, as 15% of the fees, would
constitute a reasonable surplus whereas, as per the impugned Order,
the surplus in the funds of the petitioner-School was only ₹ 2.55
crores. Even on facts, therefore, it could not be alleged that the
petitioner was maintaining any surplus in excess of what was required
by it to run its affairs.
36. From the decision in Ramjas School, Mr. Gupta emphasises the
following passages:
"15. The answers, of the Court, to the issues arising in the above
case were enumerated, towards the conclusion of the majority
opinion13 (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.
Unnikrishnan14, 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)
*****
47. 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
12 (2003) 6 SCC 697
13 Of the decision in T.M.A. Pai Foundation v. State of Karnataka, (2002) 8 SCC 481
14 J.P. Unnikrishnan v. State of A.P., (1993) 1 SCC 645
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:
(Findings are omitted as the entire Order is reproduced hereinafter)
*****
56. 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.
*****
59. 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 Rs. 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
Rs. 8,45,05,819/-, in the Order, dated 26th December, 2016 'supra,
to Rs. 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.
*****
67. 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.
*****
77. 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.
*****
79. 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.
*****
85. Adverting, now, to the impugned Order, dated 18th 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 Rs. 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)
37. Mr. Gupta also cites the following passages from
Mahavir Senior Model School:
"Re : findings of surplus and availability of sufficient funds
26. The fundamental rationale for rejection of petitioners' request is
the existence of surplus and adequacy of funds at the schools'
disposal. This is discernible from the following extract of the
impugned order :
"After detailed examination of all the material-on-record
and considering the clarification submitted by the school, it
was finally evaluated/concluded that :
The total funds available for the year 2018-2019
amounting to INR 9,67,96,579 and INR 6,49,46,324
out of which cash outflow in the year 2018-2019 is
estimated to be INR 7,48,15,500 and INR 78,03,236
in respect of Mahavir Senior Model School and
Mahavir Junior Model School respectively. This
results in net surplus of INR 2,19,81,079 and INR
5,71,43,088 for Mahavir Senior Model School and
Mahavir Junior Model School respectively.
*****
Per the estimated expenses for Financial Year 2018-
2019 submitted by Mahavir Senior Model School
along with statement of fees under Section 17(3) of
DSEA, 1973, the school had estimated the total
expenditure during Financial Year 2018-2019 of
INR 9,44,60,500 (including capital expenditure of
INR 12,05,000 against development fee). This
budgeted expense of Financial Year 2018-2019 has
been adjusted with the amount of capital
expenditure (to be incurred against development
fund), provision of retirement benefits (considered
separately in table above), and depreciation (non-
cash expense), and net expense of INR 7,48,15,500
has been considered in table above. Further in
respect of Mahavir Junior Model School, against the
total expenditure of INR 1,14,21,270 reported in the
provisional financial statements for Financial Year
2017-2018, net amount of INR 78,03,236 has been
considered after the adjustment of provision of
retirement benefits (considered separately in table
above), provision for reserve fund (considered
separately in table above) and depreciation (non-
cash expense), as budgeted expenses for Financial
Year 2018-2019 were not separately submitted by
the school.
In view of the above examination of the statement
of fee for Academic Session 2018-2019 and
subsequent submissions and representations of the
school, it is evident that the school has sufficient
funds for meeting all the budgeted expenditure for
the Financial Year 2018-2019.
(ii) The directions issued by the Directorate of
Education vide Circular No. 1978 dated 16 Apr 2010 states
'All schools must, first of all, explore and exhaust the
possibility of utilising the existing fund/reserves to meet
any shortfall in payment of salary and allowances, as a
consequence of increase in the salary and allowance of the
employees. A part of the reserve fund which has not been
utilised for years together may also be used to meet the
shortfall before proposing a fee increase'. The school has
sufficient funds to carry on the operation of the school for
the Academic Session 2018-2019 on the basis of existing
fees structure[....]"
27. DoE has examined the adequacy of funds mentioned in the
schools' statements of fee by categorising them under several
heads, and then concluded that there was a surplus of Rs
5,71,43,088 with the Junior School and Rs 2,19,81,079 with the
Senior School. On the basis of these accumulated reserves, DoE
has rejected the enhanced fee structure. Petitioner Schools have
contested the basis of DoE's calculations and both parties have
submitted comparative charts of available funds. However, court
need not inspect the arithmetic workings supporting the figures,
which is purely factual in nature, and would confine its scrutiny to
the conclusions set forth in the impugned order to determine if the
same fall within the scope of DoE's jurisdiction.
*****
30. DoE's power to scrutinise the accounts and other records of
private unaided schools finds its source in Section 17(3) of the
DSEA (examined hereinabove) r/w Rule 180(3) of the DSER.
Under Rule 180(3), accounts and other records maintained by an
unaided private school shall be subject to examination by the
auditors and inspecting officers authorised by the Director. The Act
and Rules specify, in no uncertain terms, that DoE has the
authority to seek and examine the accounts of schools. This
regulatory power must however, be exercised within the precincts
of the law explained in the aforenoted judicial precedents. Schools
are entitled to maintain a reasonable surplus for expansion of the
system and development of education. Increase in fee to generate
funds for expansion and betterment of educational/infrastructural
facilities, as is the case with the Senior School, is permissible in
law. It is important for private unaided schools to maintain a
surplus for the purpose of further development and honing of their
educational facilities and services. The accumulation of surplus
funds is essential for the long-term sustainability and growth of the
school which enables them to invest in better infrastructure,
equipment, and resources. Private unaided schools may need to
invest in building or improving infrastructure, such as construction
of new classrooms, libraries, laboratories, sports facilities or
technology upgrades, such as new computers, tablets and software.
These increments are generally sourced from the surplus funds and
enable the school to stay up-to-date with the latest technologies and
provide quality education to its students. Thus, the process of
fixation of fee for any given academic year entails consideration of
a multitude of factors such as salaries and remunerations to be paid
to teaching and non-teaching staff, cost of running the
establishment, investments, infrastructure as well as future plans
for expansion and development of the institution. Since the unaided
schools are entirely dependent on the fee collected by them, they
would obviously like to earmark funds for specific purposes and
therefore, planning and maintaining a surplus per se cannot be
construed as commercialisation of education. It is only if such
funds are being used purely for commercial gain, rather than for
improvement and development of the school, can it be construed as
a form of commercialisation of education."
38. Mr. Gupta also points out that, in both these matters, i.e.
Ramjas School and Mahavir Senior Model School, the Court took a
conscious decision not to remand the matter to the DoE. He would
exhort this Court to do likewise, in the present case.
Mr Jha, in surrejoinder
39. Mr. Jha, in surrejoinder, cites the following para from the
judgment of the Supreme Court in Modern Dental College &
Research Centre v. State of M.P.15 and from the judgment of the
Division Bench of this Court in St. Mark Senior Secondary Public
School v. DOE16:
From Modern Dental College
"15. Dealing with the challenge to the provisions relating to
fixation of fees viz. Sections 4(1), 4(8) and 9 of the Act in question,
the High Court recognised the right of these educational
institutions, as found in T.M.A. Pai Foundation, that decision on
the fee to be charged is to be left to private educational institutions.
Notwithstanding, the same judgment gives power to the State to
regulate the exercise of power of the educational institution to
ensure that there is no "profiteering" and Sections 4 and 9 of the
2007 Act were aimed at achieving that purpose only. In substance,
these provisions empower the Committee to satisfy itself that the
fee proposed by a private professional educational institution did
not amount to profiteering or commercialisation of education and
was based on the factors mentioned in Section 9(1) of the 2007
Act. The Court noted that these factors which were mentioned in
Section 9(1) were the relevant factors for fixation of fee as they
ensured fixation of such fee which would take into consideration
the nature of professional courses, the cost of land and building, the
available infrastructure, teaching, non-teaching staff and
equipment, the expenditure on administration and maintenance, as
well as a reasonable surplus required for growth and development
of the professional institutions. This was precisely the mandate
15 (2016) 7 SCC 353
16 2018 SCC OnLine Del 8977 (DB)
of T.M.A. Pai Foundation.
*****
40. It becomes necessary to point out that while treating the
managing of educational institution as an "occupation", the Court
was categorical that this activity could not be treated as "business"
or "profession". This right to carry on the occupation that education
is, the same is not put on a par with other occupations or business
activities or even other professions. It is a category apart which was
carved out by this Court in T.M.A. Pai Foundation. There was a
specific purpose for not doing so. Education is treated as a noble
"occupation" on "no profit no loss" basis. Thus, those who
establish and are managing the educational institutions are not
expected to indulge in profiteering or commercialising this noble
activity. Keeping this objective in mind, the Court did not give
complete freedom to the educational institutions in respect of right
to admit the students and also with regard to fixation of fee. As far
as admission of students is concerned, the Court was categorical
that such admissions have to be on the basis of merit when it comes
to higher education, particularly in professional institutions.
*****
48. The matter was then considered by a larger Bench of seven
Judges in P.A. Inamdar v. State of Maharashtra17 . It was held
that the two committees for monitoring admission procedure and
determining fee structure as per the judgment in Islamic Academy
of Education were permissible as regulatory measures aimed at
protecting the student community as a whole as also the minority
themselves in maintaining required standards of professional
education on non-exploitative terms. This did not violate Article
30(1) or Article 19(1)(g). It was observed that:
"145. ... Unless the admission procedure and
fixation of fees is regulated and controlled at the
initial stage, the evil of unfair practice of granting
admission on available seats guided by the paying
capacity of the candidates would be impossible to
curb."
(emphasis supplied)
On this ground, suggestion of the institutions to achieve the
purpose for which committees had been set up by post-audit checks
after the institutions adopted their own admission procedure and
fee structure, was rejected. The committees were, thus, allowed to
continue for regulating the admissions and the fee structure until a
17 (2005) 6 SCC 537
suitable legislation or regulations were framed by the States. It was
left to the Central Government and the State Governments to come
out with a detailed well-thought out legislation setting up a suitable
mechanism for regulating admission procedure and fee structure.
Para 68 in T.M.A. Pai Foundation case was explained by stating
that observations permitting the management to reserve certain
seats was meant for poorer and backward sections as per local
needs. It did not mean to ignore the merit. It was also held that
CET could be held, otherwise merit becomes casualty. There is,
thus, no bar to CET being held by a State agency when the law so
provides.
*****
71. We may again remind ourselves that though right to
establish and manage educational institution is treated as a right to
carry on "occupation", which is the fundamental right under
Article 19(1)(g), the Court in T.M.A. Pai Foundation had also
cautioned such educational institution not to indulge in profiteering
or commercialisation. That judgment also completely bars these
educational institutions from charging capitation fee. This is
considered by the appellants themselves that commercialisation
and exploitation is not permissible and the educational institutions
are supposed to run on "no profit, no loss basis". No doubt, it was
also recognised that the cost of education may vary from institution
to institution and in this respect many variable factors may have to
be taken into account while fixing the fee. It is also recognised that
the educational institutions may charge the fee that would take care
of various expenses incurred by these educational institutions plus
provision for the expansion of education for future generation. At
the same time, unreasonable demand cannot be made from the
present students and their parents. For this purpose, only a
"reasonable surplus" can be generated.
*****
75. To put it in a nutshell, though the fee can be fixed by the
educational institutions and it may vary from institution to
institution depending upon the quality of education provided by
each of such institutions, commercialisation is not permissible. In
order to see that the educational institutions are not indulging in
commercialisation and exploitation, the Government is equipped
with necessary powers to take regulatory measures and to ensure
that these educational institutions keep playing vital and pivotal
role to spread education and not to make money. So much so, the
Court was categorical in holding that when it comes to the notice of
the Government that a particular institution was charging fee or
other charges which are excessive, it has a right to issue directions
to such an institution to reduce the same.
*****
80. The judgment in P.A. Inamdar , though sought to review
the judgment in Islamic Academy of Education , left the
mechanism of having the Committees undisturbed. In para 129 of
the judgment in P.A. Inamdar , this Court observed that the State
regulation should be minimal and only to maintain fairness in
admission procedure and to check exploitation by charging
exorbitant money or capitation fees. In para 140, it has been held
that the charging of capital fee by unaided minority and non-
minority institutions for professional courses is just not
permissible. Similarly, profiteering is also not permissible. This
Court went on to observe that (SCC p. 605, para 140) it cannot shut
its eyes to the hard realities of commercialisation of education and
evil practices being adopted by many institutions to earn large
amounts for their private or selfish ends. In respect of Question 3
framed thereunder, which was with respect to the government
regulation in the case of private institutions, this Court, in para 141
of the judgment, answered 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. In
para 145, the suggestion for post-audit or checks is rejected if the
institutions adopt their own admission procedure and fee structure
since this Court was of the view that fixation of fees should be
regulated and controlled at the initial stage itself.
81. It is in the aforesaid context that we have to determine the
question as to whether the provisions relating to fixation of fee are
violative of Article 19(1)(g) of the Constitution or they are
regulatory in nature, which is permissible in view of clause (6) of
Article 19 of the Constitution, keeping in mind that the
Government has the power to regulate the fixation of fee in the
interest of preventing profiteering and further that fixation of fee
has to be regulated and controlled at the initial stage itself. When
we scan through Section 9 of the 2007 Act from the aforesaid
angle, we find that the parameters which are laid down therein that
have to be kept in mind while fixing the fee are in fact the ones
which have been enunciated in the judgments of this Court referred
to above. It is also significant to note that the Committee which is
set up for this purpose, namely, Admission and Fee Regulatory
Committee, is discharging only a regulatory function. The fee
which a particular educational institution seeks to charge from its
students has to be suggested by the said educational institution
itself. The Committee is empowered with a purpose to satisfy itself
that the fee proposed by the educational institution did not amount
to profiteering or commercialisation of education and was based on
intelligible factors mentioned in Section 9(1) of the 2007 Act. In
our view, therefore, it is only a regulatory measure and does not
take away the powers of the educational institution to fix their own
fee. We, thus, find that the analysis of these provisions by the High
Court in the impugned judgment [Assn. of Private Dental and
Medical Colleges v. State of M.P.18] , contained in para 42, is
perfectly in order, wherein it is observed as under:
"42. We are of the view that Sections 4(1) and 4(8)
of the 2007 Act have to be read with Section 9(1) of
the 2007 Act, which deals with factors which have
to be taken into consideration by the Committee
while determining the fee to be charged by a private
unaided professional educational institution. A
reading of sub-section (1) of Section 9 of the 2007
Act would show that the location of private unaided
professional educational institution, the nature of the
professional course, the cost of land and building,
the available infrastructure, teaching, non-teaching
staff and equipment, the expenditure on
administration and maintenance, a reasonable
surplus required for growth and development of the
professional institution and any other relevant
factor, have to be taken into consideration by the
Committee while determining the fees to be charged
by a private unaided professional educational
institution. Thus, all the cost components of the
particular private unaided professional educational
institution as well as the reasonable surplus required
for growth and development of the institution and all
other factors relevant for imparting professional
education have to be considered by the Committee
while determining the fee. Section 4(8) of the 2007
Act further provides that the Committee may require
a private aided or unaided professional educational
institution to furnish information that may be
necessary for enabling the Committee to determine
the fees that may be charged by the institution in
respect of each professional course. Each
professional educational institution, therefore, can
furnish information with regard to the fees that it
proposes to charge from the candidates seeking
admission taking into account all the cost
components, the reasonable surplus required for
18 2009 SCC OnLine MP 760
growth and development and other factors relevant
to impart professional education as mentioned in
Section 9(1) of the 2007 Act and the function of the
Committee is only to find out, after giving due
opportunity of being heard to the institution as
provided in Section 9(2) of the 2007 Act whether
the fees proposed by the institution to be charged to
the student are based on the factors mentioned in
Section 9(1) of the 2007 Act and did not amount to
profiteering and commercialisation of the education.
The word "determination" has been defined
in Black's Law Dictionary, Eighth Edn., to mean a
final decision by the Court or an administrative
agency. The Committee, therefore, while
determining the fee only gives the final approval to
the proposed fee to be charged after being satisfied
that it was based on the factors mentioned in Section
9(1) of the 2007 Act and there was no profiteering
or commercialisation of education. The expression
"fixation of fees" in Section 4(1) of the 2007 Act
means that the fee to be charged from candidates
seeking admission in the private professional
educational institution did not vary from student to
student and also remained fixed for a certain period
as mentioned in Section 4(8) of the 2007 Act. As
has been held by the Supreme Court in Peerless
General Finance and Investment Co. Ltd. v. RBI19,
the Court has to examine the substance of the
provisions of the law to find out whether provisions
of the law impose reasonable restrictions in the
interest of the general public. The provisions in
Sections 4(1), 4(8) and 9 of the 2007 Act in
substance empower the Committee to be only
satisfied that the fee proposed by a private
professional educational institution did not amount
to profiteering or commercialisation of education
and was based on the factors mentioned in Section
9(1) of the 2007 Act. The provisions of the 2007 Act
do not therefore, violate the right of private
professional educational institution to charge its own
fee."
82. Provisions relating to admission of students through
government test to be conducted by the State and the provisions
relating to fixation of fee by setting up a committee to oversee that
institutions are not charging a fee which amounts to capitation or
profiteering are reasonable restrictions and do not suffer from any
constitutional vice. The provisions of the Act and the Rules are,
therefore, in tune with the sentiments and directions contained
in P.A. Inamdar.
*****
87. Regulatory mechanism, or what is called regulatory
economics, is the order of the day. In the last 60-70 years,
economic policy of this country has travelled from laissez faire to
mixed economy to the present era of liberal economy with
regulatory regime. With the advent of mixed economy, there was
mushrooming of the public sector and some of the key industries
like aviation, insurance, railways, electricity/power,
telecommunication, etc. were monopolised by the State.
Licence/permit raj prevailed during this period with strict control of
the Government even in respect of those industries where private
sectors were allowed to operate. However, Indian economy
experienced major policy changes in early 90s on LPG Model i.e.
liberalisation, privatisation and globalisation. With the onset of
reforms to liberalise the Indian economy, in July 1991, a new
chapter has dawned for India. This period of economic transition
has had a tremendous impact on the overall economic development
of almost all major sectors of the economy."
From St Mark Sr Sec Public School
"13. The relevant portion of the Duggal Committee report relied
on by the parties reads as under: --
"7.19. With a view to overcoming these anomalies, as also
for curbing the potential for any likely 'misuse' by the
schools including those run by minorities, the Committee
recommends that the levies charged should be classified
under four broad categories as given below.
i) The first category should comprise of the
Registration Fee and all 'One time charges' levied at
the time of the admission of the student such as
Admission Fee and Caution Money. While the
Admission Fee should not be charged more than
once during the entire stay of the student as
stipulated under Section 16 of D.S.E. Act, 1973 read
with Rules 135, 137 and 138 thereunder, it should
be made mandatory for the schools to refund the
Caution Money with interest thereon at the time of a
student leaving the school without the same being
claimed by the student/parents.
ii) The second category should comprise of
'Tuition Fee'. This should be so fixed, as to cover
the standard cost of establishment including
provision for D.A., bonus and all terminal benefits
as mentioned under Section 10(1) of the Delhi
School Education Act 1973; as also the all
expenditure of revenue nature for the
improvement of curricular facilities like Library,
Laboratories, Science Fee and Computer Fee up
to class X and examination expenses. The more
important parameters for determining standard cost
of establishment, inter-alia, could be the pupil-
teacher ratio and the ratio of teaching and non-
teaching staff in each school.
iii) The third category should be that of 'Annual
Charges' - an area in need of maximum discipline.
These charges should be so determined so as to be
sufficient to cover all expenditure of revenue nature
not included in (ii) above, 'over-heads',
and expenses on play grounds, sports equipment,
gymnasium, cultural and other co-curricular
activities as distinct from curricular activity of
the school.
(iv) The fourth category should consist of all
'earmarked levies' for services rendered by the
schools, to be recovered only from the 'user'
students, in respect of only those facilities availed of
by them, such as Transport Fee, Swimming Pool
Charges, Horse riding, Tennis, Mid-day meals etc.
The income from the earmarked levies, should be
spent only for the purpose for which these are
collected, with the role of the school, being confined
to that of a catalyst or a facilitator for managing the
services on a 'no profit no loss' basis.
7.20 All transactions relating to the 'earmarked' activities should
from an integral part of the school accounts. Further, to ensure that
the Accounts for such services are self-balancing over a period,
separate accounts should also be maintained by the school for each
of the activity/services."
Analysis
40. The issue in controversy is, to my reckoning, directly covered
by the judgment of this Bench in Ramjas School and the judgment of
the coordinate Single Bench in Mahavir Senior Model School,
despite Mr. Tripathi's and Mr. Jha's valiant attempts to convince this
Court otherwise.
41. This would become apparent at a plain reading of the relevant
text from the impugned orders in Ramjas School, in Mahavir Senior
Model School and the present petition thus:
Impugned order in Ramjas School:
Financial discrepancies:-
S. Detail of discrepancy Submissions of Remarks
N the school
o.
1. As per DOE Order No. In future the The school
DE.15/Act/Duggal.com/203/99/ caution money has
23033-23980, dated 15/12/1999, will be refunded ensured to
Caution money collected from to the students comply the
the students, shall be kept along with the same in
deposited in a scheduled bank interest, as per the future.
and shall be returned to the guidelines of
student at the time of his/her DOE
leaving the school, along with
bank interest thereon. The
school is however not following
the above guideline. Instead, the
interest earned on the caution
money deposit is transferred to
Student Welfare fund.
2. As per the DOE order No. It is noted that in The school
DE/15/150/Act/2010/4854-69, future, we will has
dated 09/09/2010, in case of ex- follow the ensured to
students who have not been procedure as per comply the
refunded the caution money, the DOE guidelines. same in
schools shall inform them at future.
their last shown address in
writing to collect the said
amount within 30 days. After
the expiry of 30 days, the un-
refunded caution money
belonging to ex-students, shall
be reflected as the income for
the next financial year and it
shall not be shown as liability.
The school is however, not
following the above guideline.
The unrefunded caution money
of ex-students is kept in Caution
money account & reflected as a
liability up to three years.
Thereafter, the lapsed caution
money is transferred to Student
Welfare fund but it is never
treated as income.
3. Building and Land are not The building is Before
appearing in the assets of the appearing in the applying
books of accounts of the school consolidated for next fee
and school has informed that the Financial increase,
same is appearing in foundation Statements of the proposal
book, whereas related expenses Ramjas certified
are booked but income is not Foundation. statement
booked in the books of school. of incomes
of current
year is to
be added to
amount
recoverable
.
Other discrepancies
S. Detail of discrepancy Submissions of Remarks
No. the school
1. Original Receipt against the fee Once the audit Considered
collection are not preserved and is completed,
are destroyed after fee pay-in-slips
closing/completion of audit as we have all
except the receipts for caution records in the
money, admission fee and fee register and
registration fee. bank statements
2. Fixed Assets registers are not Fixed Assets There are
properly maintained and also register are no
not reconciled with the finance properly supporting
record. In many cases assets maintained and to
identification number and their identification substantiat
location are not mentioned. numbers are e this claim
duly mentioned. of school.
Complianc
e shall be
verified at
the time of
next fee
increase
proposal of
the school,
if any.
3. Purchase procedure through We are properly Complianc
tendering and their limitation if following the e shall be
any has not been found to be purchase verified at
formulated by the management. procedure the time of
through tenders next fee
only and will increase
further proposal of
strengthen the the school,
system in if any.
future.
4. Experience mentioned in The concerned Complianc
application form of appointment institutions are e shall be
are not supported by contacted, for verified at
documentary evidence and verification and the time of
school management are also not in future, the next fee
asking for the same. correspondence increase
will be proposal of
documented. the school,
if any.
5. School makes contracts on plain From FY 2016- Accepted
paper instead of judicial stamp 17 onwards, all by school.
paper. contracts will
be made on
judicial stamp
papers
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 ₹ 1,18,42,701/- as per the
following details:-
Particulars Amount (Rs.)
Cash and bank balances as on 37,33,902
31.03.2016 as per audited Financial
Statements
Investment as on 31.03.2016 as per 12,12,42,543
audited Financial Statements
Total 12,49,76,445
Less: Development Fund as per audited 4,63,02,138
Financial Statements
Less: Depreciation Reserve Fund as per 1,05,11,284
audited Financial Statements
Less: Provision for Gratuity* 3,48,36,745
Less: Provision for Leave Encashment* 98,62,301
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 2016- 10,84,86,701
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 liabilities. 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-
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,
197 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 a 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 alongwith 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.
Impugned Order in Mahavir Senior Model School-
And whereas, all the submissions made by the school are taken on
record and analyzed in accordance with the provisions of Delhi
School Education Act and Rules, 1973 and directions Issued there-
under.
S. Observations Submissions of the Remarks
No. school
1. As per the Order no The junior school Based on
15072-15871 dated 23- was established in representation
03-1999 "All pre- the year 1991 but this and submissions
primary schools being objection has been made by the
run by the registered taken by the office of school and
society/trust in Delhi as the directorate for the explanations
Branches of the first time. The provided during
recognized schools by applicant school the personal
the appropriate though now has hearing, the fund
authority in or outside prepared a combined position of the
the school premises shall fund statement of school has been
be deemed as one both Mahavir Senior updated and
institution for all Model School and enclosed in the
Purposes."Further As Mahavir Junior laterpart of this
per details available 92 Model School order.
out of 106 (i.e. 86.7%) showing correct
students admitted in figures of fund After going
Mahavir Senior model available as against through clause 15
school are from the the figures arrived by of land allotment
Mahavir Junior Model the respondent. letter issued by
School, However, DDA dated 02-
financial information Further, during 11-1987 in
including fee structure of personalhearing, the respect of
Mahavir Junior Model school management Mahavir Junior
School was not included explained that the Model School,
in the "statement of fees condition for seeking which states "The
U/s 173 of DSEA 1973" prior approval of school shall not
submitted to Directorate. Directorate before Increase the rates
Further, Separate Sets of increasing fee is of tuition fees
Books of accounts and mentioned in the land without prior
financial statements are allotment of Mahavir sanction of the
prepared by the school Junior Model School Director of the
instead of combined and not in the land Education Delhi
financial statements. allotment letter of Adrin and shall
Mahavir Senior follow the
Model School. Thus, provisions of
prior approval of Delhi school
Directorate for Mahavir Senior
increasing fee of Model School,
senior school would education
not be applicable Act/Rules, 1973
and other
instructions
issued from time
to time". It was
noted that the
junior school has
been increasing
fee without
seeking prior
approval of the
Directorate.
Accordingly,
Mahavir Junior
Model School is
hereby directed
refund/adjust to
the increased fee
collected from
students during
FY 2016-2017
(year since when
proposals were
required to be
submitted by the
schools having
the condition in
their land
allotment letter
for seeking prior
approval before
increasing fee)
and thereafter.
Further, Mahavir
Junior Model
School is directed
not to increase
any fee/charge
without prior
approval of the
Directorate.
2 As per Clause 2 of It is clarified that the Based on the
. Public Notice dated school has never explanation the
04.05.1997 "The school charged the building and submissions
shall not charge building fund from the by the school, the
fund from the students as students. It is pointed school is directed
it is sole responsibility of out that in case of to ensure
the society who has Mahavir Model compliance of
established the school to Senior School the Rule 177 of
raise such funds from building was DSER, 1973
their own sources of constructed by the before incurring
donation from the other society namely any capital
associations because the Mahavira foundation expenditure on
immovable property of in the year 1980 to the
the school becomes the 1983 and was handed building/infrastru
sole property of the over to the managing cture else the
society. Further, Rule committee of society should
177 of the DSEA& R Mahavir Senior bear the cost of
1973 mentions that the Model School to run construction of
school is not allowed to the school by the building.
make additions to the name and title of
building if it does not Mahavir Senior of
have enough surplus. Model School.
However, the school has The school started
planned for the functioning from the
construction of Mahavir academic session of
Senior Model School 1983. It is further
from the tuition fees, for pointed out that the
which the school has society and the
paid INR 4,53,000 to school are one as the
"Architects and site same entity. The
survey" during FY 2016- property constructed
17 and 2017-18. The by the society from
school has also proposed the funds generated
INR 12,79,04,645 for by it remains the
construction of the property of the
school building. School society and its
should prepare and reflected in the books
submit statement of accounts as such
showing computation of as on the asset side.
savings as per rule 177 On the other hand, if
of DSEA&R 1973 to the some portion/block
directorate, in case of no or facilities are
savings as per Rule 177 created by the school
the should not incur any under rule 177 sub
capital expenditure in clause 2 (b) & (C) of
building. the Delhi school
education Rules 1973
from the incidental
savings and the same
is reflected and
shown as an asset in
the Balance sheet of
the school under the
head Building or
library, laboratory
facilities or
Conference Hall or
by any other name
because the same has
been created to
provide facilities to
the students so they
are able to get the
necessary support in
their education
pursuits by way of
infrastructure.
The society as well
as the management
of the Applicant
school, have been
contemplating to
renovate and upgrade
the building which
was constructed in
the year 1982 and
make a modern
building which will
be fully compliant
with the present rules
and regulations of
authorities and
commensurate with
the requirements if
the present times.
The school has
submitted the
computation of the
saving from FY 1986
to 2018.
3 As per clause 18 of It may be noted out Based on the
. Order No. F.DE/15(56) here that: explanation of the
Act/2009/778 dated school that it will
11/2/2009, "The caution -There is no specific stop collecting
money thus collected fixed deposit or caution money
shall be kept deposited savings deposit in the and refund/adjust
in a scheduled bank in scheduled bank total caution
the name of the against the head of money to existing
concerned school and caution money. students during
shall be returned to the -The school is FY 2019-2020,
student at the time of maintaining ledger compliance shall
his/her leaving the accounts of caution be validated in
school along with the money and a register subsequent year.
bank interest thereon for this purpose with
irrespective of whether details of each
or not he/she requests student
for refund". However, -All the sums of
the school has not money of the school
deposited the caution are parked in the
money in scheduled savings/fixed
bank. The school should deposits a/c in
follow directions in this scheduled bank and
regard issued different the caution money is
orders of the directorate included in the
from time to time. deposits made by the
school in such
account.
-The school has
refunded the amount
due to each student at
the time of his/her
leaving and has kept
a chart ready with the
information of
amount returned to
each students
-Thus, the
requirement of
caution deposited
money to be in
scheduled bank is
being fully complied
with by the applicant
school. All the
caution money and
other funds are
deposited in
scheduled bank and
are in the name of the
school by way of
fixed deposits. It is
clear from the above
extract that in LPA
291/2017 in the
matter of St. Marks
Sr. Sec School, the
Hon'ble High Court
vide judgment dated
11.05 2018 has held
that it is not required
to have a separate
fixed deposit account
for each and every
Fund.
Further, during
personal hearing, the
school explained that
it will stop collecting
caution money from
students from FY
2019-2020. Also, the
caution money
collected from
existing students
against will be
adjusted in FY 2019-
2020.
. 15/ACT-I/WPC- requirement of explanation
4109/Part/13/7905-7913 returns in a particular provided by the
dated 16 April 2016 format is concerned, school that it has
"The Director hereby the same has always charged
specify that the format of been complied with depreciation at
return and documents to by the school. As far the rates
be submitted by schools as the rates of prescribed in the
under rule 180 read with depreciation are Guidance Note,
Appendix-II of the Delhi concerned, the school compliance shall
School Education Rules, is following the rates be validated in
1973 shall be as per as prescribed under subsequent year.
format specified by the the relevant
Institute of Chartered provisions of the
Accountants of India, Income Tax Act.
established under There is a very
Chartered Accountants marginal difference
Act, 1949 (38 of 1949) in between rates
Guidance Note prescribed by the
onAccounting by Income Tax Act and
Schools (2005) or as the rates
amended from time to recommended in
time by this Institute." Appendix-1 to the
Further, para 58(i) of the guidance note.
Guidance Note States "A
school should charge Further, during
depreciation according personal hearing the
to the written down explained that the
value method at rates school in its audited
recommended in financial statements
Appendix I to the for FY 2017-18 has
Guidance note." charged depreciation
at the rates
prescribed under
Guidance note 21.
5 Assets Purchased against The school building The contention of
. Development fund: was constructed in the school is
As per order No. the year 1994-1995 notin accordance
F.DE./15 (56)/Act from savings of the withprovisions of
2009/778 dated- school from the year a well settled
2/11/2009 1983 to the year issue of
"Development fee, not 1994-1995 and development
exceeding 15% of the interest earned on fund and its
total annual tuition fee savings and not from interpretation by
may be charged for development fund. the Hon'ble
supplementing the Supreme Court of
resources for purchase Please note that India. Capital
upgradation and boundary wall expenditure other
replacement of furniture, expense involves a than purchase,
fixtures and equipment. small amount of INR up-gradation
Development fee, if 76,695/- and was replacement of
required to be charged, spent on repairs of furniture, fixture
shall be treated as capital boundary walls the and equipment
receipt and shall be boundary was cannot be made
collected only if the already constructed from
school is maintaining a in the year 1982-83 development
Depreciation Reserve when the school fund. Thus, the
Fund, equivalent to the building was school is directed
depreciation charged in constructed. It to comply with
revenue accounts and the appears that this the directions
collection under this amount was issued by the
head along with and inadvertently and Director with
income generated from wrongly capitalised regard to correct
the investment made out and therefore appears utilisation of
of this fund, will be kept in Balance sheet, development
in a separately which can now be fund.
maintained Development rectified by writing it
Fund Account. off from the books of
However, the school has account.
purchased all the assets
out of development fund The library books are
except school bus (Tata the essential part of
DL-1PC-3702), which the school. Library
includes the following books being a capital
assets that does not asset cannot be
qualify to be purchased purchased from the
from the development tuition fee or from
fund. Accordingly, the the annual charges as
school has not complied per order dated
with the directions 15.12.1999. There is
above. no contradiction in
utilizing
Sr. Particul Amount development fund
N ars (Gross towards purchase of
o. Block) library books.
1 School 1,23,01, Library books are
Building 906 also not building
2 Constru 76,695 therefore cannot be
ction of provided and
Boundar therefore cannot be
y Wall provided by the
3 Library 6,69,265 society. Thus, library
Books books can only be
4. Vehicles 18,39,67 purchased from
development fund
and has to be treated
as capital assets and
capital expenditure.
The school vehicle
have been purchased
from time to time
and depreciated and
written-off after their
useful life is over.
The vehicles can
only be purchased
from development
fund and nowhere
else as provided in
the provisions of
order dated
15.12.1999 whereby
it has been specified
how to use
development fund
that is to supplement
resources for
purchase, up-
gradation and
replacement of
furniture, fixture and
equipment. Furniture,
fixture and
equipment have not
been defined and
have been construed
to include a large
number of assets,
which will be
required by the
school from time to
time and the framers
of law have kept the
list un-exhaustive so
that new assets can
be added as per the
requirements of the
school as per the
needs of the times
and purchases from
development fund.
6 It was observed that Library books, The school in its
. Library books, Science Science equipment's, response to this
equipment's teaching teaching Aids, observation and
Aids, Newspaper and Newspaper and observation no. 5
magazine, Educational magazine, above mentioned
Video and Audio CD Educational Audio, that library books
have been charged to and Audio CD are were/should be
standard cost of essential part of purchased from
Establishment. These are curricular activities development
not part of the of the school and fund, the school
establishment cost and thus have been has also charged
thus been excluded from charged to the library books
the computation of standard cost of againsttuitionfee.
tuition fee, but establishment. Thus, there is
considered part of inconsistency in
Annual charges Please note that the accounting of
items listed above are library books in
all in the nature of the accounting
curricular activities, records of the
except library books. schools. By the
All these items are very name,
consumables and Science
have a useful life of Equipment and
one year and teaching aids
therefore there is appear as capital
every justification expenditure and
that they should be must not be
charged against the charged as
tuition fees. The revenue expense
library books, as from tuition
explained in earlier fee.Also,
point are of capital newspapers and
nature and thus have magazines are not
to be charged from directly related to
the development curricular
fees. activities of the
school. The
The provision with school did not
regard to annual submit details
charges makes it and nature of
amply clear that educational video
annual charges will and audio CDs
cover all revenue regarding their
expenditure usage for
overheads and curricular
expenses on activities.
playground, sports
equipment, cultural Though the above
and other co- does not have any
curricular activities impact on the
as distinct from the fund position of
curricular activities the school as the
of the school. Thus, same could have
the above items are been apportioned
part of the curricular against annual
activities of the charges/develop
school. ment fund, the
school is directed
to comply with
Clause 19 of
Order No.
F.DE/15(56)/Act/
2009/778 dated
11 Feb 2009
which states "The
tuition fee shall
be so determined
as to cover the
standard cost of
establishment
including
provisions for
DA, bonus, etc.,
and all terminal
benefits as also
the expenditure of
revenue nature
concerning the
curricular
activities."
Thus, expense
only of revenue
nature resting to
establishment
expenses and
curricular
activities should
be charged
against tuition fee
and other
expenses should
be allocated
towards Annual
Charges in
accordance with
clause 21 of the
aforesaid order,
which states "No
annual charges
shall be levied
unless they are
determined by the
Managing
Committee to
cover all revenue
expenditure, not
included in the
tuition fee and
'overheads' and
expenses on play-
grounds, sports
equipment,
cultural and
other co-
curricular
activities as
distinct from the
curricular
activities of the
school."
7 As per the information The school has Considered.
. submitted, the school is furnished
collecting around 5 lakhs reconciliation of the
in a financial year as development fund
development fee from collected, utilised and
the students. However balance derived as on
the school has shown 31 March 2017. The
5.32 crores as opening reconciliation
balance as on 1 April statement clearly
2017, which seems to be establishes that there
inconsistent with the is no inconsistency
amount collected. The between the opening
school is required to balance shown as
provide the 5.32 crores as on
reconciliation of the 01.04.2017 with the
development fund amount collected.
collected, utilized and
balance derived as on
31stMarch 2017 along
with the subsequent
submission of "statement
of fees U/s 17(3) of
DSEA 1973"
8 High Pupil teacher ratio It is clarified that Based on the
. at Mahavir Junior Model Mahavir Junior explanation and
School as derived below: Model school has documents
Particulars Number some teachers on submitted by the
No. of 6 contractual basis. It school and taken
selection (all so happened that on on record, while
classes )(A) December 31st 2017, the school made
Teacher staff 5 the contract of some temporary
(B) of the teachers arrangement for a
Number of 235 expired and therefore couple of months,
students they left. This was a the school must
enrolled (C) temporary phase for ensure that such
Pupil: 47:1 only about two situation does not
Teacher months in the months occur on a
Ratio (D)= of January and regular/frequent
(C/B) February. From April basis and
1, 2018 the full adequate teaching
As per the details complement of staff staff is hired to
provided by the school is there. Even in the ensure that
there are 5 teachers intervening period of quality of
against 6 sections Jan & Feb 2018, we education is not
had parent compromised.
volunteers, teachers,
resource person and
trained coaches from
Sports Guru.
After detailed examination of all the material on record and
considering the clarification submitted by the school, it was finally
evaluated/concluded that:
The total funds available for the year 2018-2019 amounting to INR
9,67,96,579 and INR 6,49,46,324 out of which cash outflow in the
Signing Date:13.02.2024
15:50:32
year 2018-2019 is estimated to be INR 7,48,15,500 and INR
78,03,235 in respect of Mahavir Senior Model School and Mahavir
Junior Model School respectively. This results in net surplus of
INR 2,19,81,079 and INR 5,71,43,088 for Mahavir Senior Model
School and Mahavir Junior Model School respectively. The details
are as follows:
Particulars Amount (INR)
Mahavir Mahavir Total(C=A
Senior Junior +B)
Model Model
School (A) School (B)
Cash and Bank Balance 2,88,20,887 64,73,475 3,52,94,362
as on 31 March 2018 (as
per provisional financial
statements of FY 2017-
18)
Investments (Fixed 12,72,09,287 2,15,09,764 14,87,19,05
with LIC) as on 31
March 2018 (as per
provisional financial
statements of FY 2017-
18)
Total Liquid Funds 15,60,30,173 2,79,83,239 18,40,13,41
school as on 31 Mar
Add: Estimated Fees 8,71,75,117 1,75,11,126 10,46,86,24
FY 2018-19 based on
provisional financial
statement of FY 2017-
18 of the school (Refer#)
Add: Amount - 3,52,45,744 3,52,45,744
recoverable from
Mahavira Foundation
(Society) (as per
provisional financial
statement of FY 2017-
18 of the
school)(Refer*)
Gross Estimated 24,32,05,290 8,07,40,109 32,39,45,40
2018-19
Less: FDR Against 1,59,26,780 15,170 1,59,41,950
Specific Funds/Under
Lien(Refer^)
Less: Development 5,59,84,513 1,13,09,266 6,72,93,779
Fund balance as on 31
Mar 2018 (as per
provisional financial
statements of FY 2017-
18)
Less: Caution Money 10,81,491 9,56,000 20,37,491
balance as on 31 Mar
2018 (as per provisional
financial statements of
FY 2017-2018)
Less: Depreciation - - -
Reserve Fund (Refer~)
Less: Salary Reserve 1,41,50,000 16,50,000 1,58,00,000
(Refer**)
Less: Staff Requirement 5,92,65,927 18,63,349 6,11,29,276
Benefits-Gratuity &
Leave Encashment
(Refer^^)
Net Estimated 9,67,96,579 6,49,46,324 16,17,42,90
2018-2019
Less: Budgeted 7,48,15,500 78,03,236 8,26,18,736
Expenses for FY-2018-
2019 (Refer ##)
Estimated Surplus as 2,19,81,079 5,71,43,088 7,91,24,168
on 31 Mar 2019
#
Fee and income as per provisional financial statements of FY
2017-2018 submitted by the school has been considered with the
assumption that the amount of income during FY 2017- 2018 will
at least accrue during FY 2018-2019. However, interest income
from LIC & Income Tax have not been included in figures above,
being non-recurring incomes, while interest on bank account
&deposits against depreciation reserve have been included, being
available with the school for utilization.
*
As per the Directorate's Order No. DE
15/Act/Duggal.com/203/99/23033-23980 dated 15 Dec 1999, the
management is restrained from transferring any amount from the
recognized unaided school fund to society or trust or any other
institution. The Supreme Court also through its judgement on a
review petition in 2009 restricted transfer of funds to the society.
The provisional financial statements of Mahavir Junior Modes
School for FY 2017-2018 reflected a receivable balance of NR
3,52,45,744 from Mahavira Foundation (Parent Society), which the
school explained is a deposit with the Society against which
interest is earned by the school. This amount of INR 3,52, 45,744
is hereby added to the fund position of the school, considering
same as funds available with the school and with the direction to
the school to recover this amount from the Society.
^
Though the school represented that it has a combined liability
towards refund of fees to students as determined by Justice Anil
Dev Singh Committee together with interest thereon of INR 3.42
crores. However, the matter is sub-judice in the Hon'ble High
Court of Delhi, against which the school has deposited fixed
deposit with bank of INR 1.5 crores under lien with the Hon'ble
High Court of Delhi. Accordingly, only the amount of INR 1.5
crores kept under lien of The Hon'ble High Court of Delhi has
been considered. In addition, the Senior school has specific
earmarked funds totalling to INR 9,26,780 and the junior school
has specific funds of INR 15,170 which have also been considered.
Accordingly based on submissions by the school, the amount of
INR 1,59,41,950 has been adjusted while deriving the fund
position of the school.
~On evaluation of depreciation reserve, it was noted that the school
had charged depreciation on fixed assets and had transferred the
same to depreciation reserve on liabilities side of the Balance Sheet
of the school. Also, the school is charging development fund from
students for purchase, up-gradation and replacement of furniture,
fixture and equipment. Though Development, fund maintained by
the school (both Senior and Junior) as per provisional financial
statement for FY 2017-2018 has been adjusted for deriving the
fund position of the school, depreciation reserve (that is to be
created equivalent to the depreciation charged in the revenue
accounts as per clause 14 of Order No. F.DE./15
(56)/Act/2009/778 dated 11 Feb 2009) is more of an accounting
head for appropriate accounting treatment of depreciation in the
books of account of the school in accordance with Guidance Note
21 issued by the Institute of Chartered Accountants of India. Thus,
there is no financial impact of depreciation reserve on the fund
position of the school. Accordingly, it is not considered in table
above.
**The school has sufficient funds to create a salary reserve fund in
the form of Fixed Deposit in the joint account in the name of
Manager of the school and Deputy Director of Education (District
concerned) equivalent to 3 months salary of staff. Accordingly,
amount of INR 1.58 crores (INR 1,41,50,000 for senior school and
INR 16,50,000 for junior school, which is approximate to 3 months
salary expense of the schools) has been considered while deriving
the fund position of the school with the direction to the school to
submit fixed deposit with a scheduled bank equivalent to the
amount mentioned above in the joint names of the Manager of the
school and Deputy Director of Education.
^^Mahavir Senior Model School submitted actuarial valuation
reports in respect of its liability as on 31 Mar 2018 towards gratuity
and leave encashment totalling to INR 5,92,65,927. Further the
school budgeted an additional amount of INR 1,71,72,000 towards
retirement benefits during FY 2018-2019. In respect of the junior
school, actuarial valuation of the liability towards retirement
benefits has not yet been obtained. However, the junior school has
recorded provision towards retirement benefit as on 31 Mar 2018
of INR 47,51,312 and has budgeted an additional amount of INR
28,86,479 towards retirement benefits during FY 2018-2019.
Against the provisions created by the schools, only INR
1,81,25,883 and INR 18,63,349 have been secured by Senior
School and Junior School respectively towards the liability for staff
retirement benefits in 'plan-assets' as defined under Accounting
Standard-15 i.e. group gratuity scheme of LIC. Thus, based on the
available details, amount of liability determined by the actuary in
respect of Mahavir Senior Model School has been considered, as
the amount budgeted by the school for FY 2018-2019 towards
retirement benefits of INR 1.71 crores appears excessive. In respect
of Mahavir Junior Model School, in absence of actuarial valuation
of liability towards retirement benefits, the amount deposited with
LIC has been considered. Accordingly, Mahavir Junior Model
School is directed to get its liability towards retirement benefits
measured by an actuary match the provision towards the same in its
books of account and financial statements and deposit an amount
equivalent to the amount determined by the actuary within 30 days
from the date of this order. Mahavir Senior Model School is
directed to deposit the remaining balance of INR 4,11,40,044
towards group gratuity and leave encashment schemes with LIC (or
other insurer) to protect the statutory liabilities towards staff of the
school
##
Per the estimated expenses for FY 2018-2019 submitted by
Mahavir Senior Model School along with statement of Fees u/s
17(3) of DSEA, 1973, the school had estimated the total
expenditure during FY 2018-2019 of INR 9,44,60,500 (including
capital expenditure of INR 12,05,000 against development fee).
This budgeted expense of FY 2018-2019 has been adjusted with
the amount of capital expenditure (to be incurred against
development fund) provision of retirement benefits (considered
separately in table above) and depreciation (non- cash expense) and
net expense of INR 7,48,15,500 has been considered in table above
Further, in respect of Mahavir Junior Model school, against the
total expenditure of INR 1,14,21,270 reported in the provisional
financial statements for FY 2017-2018, net amount of INR
78,03,236 has been considered after the adjustment of provision of
retirement benefits (considered separately in table above),
provision for reserve fund (considered separately in table above)
and depreciation (non-cash expense), as budgeted expenses for FY
2018-2019 were not separately submitted by the school.
In view of the above examination of the statement of fee for
academic session 2018-2019 and subsequent submissions and
representations of the school, it is evident that the school has
sufficient funds for meeting all the budgeted expenditure for the
financial year 2018-2019.
ii. The directions issued by the Directorate of Education vide
circular no. 1978 dated 16 Apr 2010 states "All schools must, first
of all, explore and exhaust the possibility of utilising the existing
funds/ reserves to meet any shortfall in payment of salary and
allowances, as a consequence of increase in the salary and
allowance of the employees. A part of the reserve fund which has
not been utilised for years together may also be used to meet the
shortfall before proposing a fee increase." The school has
sufficient funds to carry on the operation of the school for the
academic session 2018-2019 on the basis of existing fees
structure."
42. In each of these cases, it is apparent that the order contains
various allegations of impropriety against the concerned school.
Ultimately, however, in each case, the decision that has been taken is
to prohibit the school from increasing its fees without the prior
permission of the DoE. Also, in each case, the said decision is
immediately preceded by the finding that the surplus in the accounts
of the school is sufficient to meet the additional financial outlay
following as a consequence of the requirement of the implementation
of the 7th CPC recommendations.
43. The issue before the Court is whether the DoE possessed the
jurisdiction to prohibit the school from increasing its fees and, if the
fees already stood increased, to direct the school to refund the fees
charged in excess of what the DoE considered to be the optimum fees
that the school could charge.
44. The issue is no longer res integra. This Court has, in Ramjas
School and Mahavir Senior Model School, examined the issue in
depth and has, after referring to various earlier judicial
pronouncements on the subject, arrived at the categorical conclusion
that the power of the DoE to regulate the affairs of an unaided
recognized school does not extend to regulating the manner in which
the school fixes its fees. So long as the school is not engaged in the
commercialization of education by charging of capitation fee or
profiteering, the DoE does not possess the jurisdiction to regulate the
fees which the school can charge.
45. Ramjas School considered the decisions of the Supreme Court
in T.M.A. Pai Foundation, Islamic Academy of Education, Modern
School, P.A. Inamdar and Cochin University of Science &
Technology v. Thomas P. John20. The relevant extracts from these
decisions, which chart the course of judicial thought on the issue
may be provided thus:
From T.M.A Pai
"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
20 (2008) 8 SCC 82
are required to be paid properly. As pointed out above, the
restrictions imposed by the scheme, in Unni Krishnan21 case 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 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.
*****
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 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
21 (1993) 1 SCC 645
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. The fear that if a private school is
allowed to charge fees commensurate with the fees affordable, the
degrees would be "purchasable" is an unfounded one since the
standards of education can be and are controllable through the
regulations relating to recognition, affiliation and common final
examinations.
*****
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."
From Islamic Academy of Education
"7. 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. As, at present, there are statutes/regulations
which govern the fixation of fees and as this Court has not yet
considered the validity of those statutes/regulations, we direct that
in order to give effect to the judgment in T.M.A. Pai case the
respective State Governments/concerned authority shall set up, in
each State, a committee headed by a retired High Court Judge who
shall be nominated by the Chief Justice of that State. The other
member, who shall be nominated by the Judge, should be a
Chartered Accountant of repute. A representative of the Medical
Council of India (in short "MCI") or the All India Council for
Technical Education (in short "AICTE"), depending on the type of
institution, shall also be a member. The Secretary of the State
Government in charge of Medical Education or Technical
Education, as the case may be, shall be a member and Secretary of
the Committee. The Committee should be free to nominate/co-opt
another independent person of repute, so that the total number of
members of the Committee shall not exceed five. Each educational
institute must place before this Committee, well in advance of the
academic year, its proposed fee structure. Along with the proposed
fee structure all relevant documents and books of accounts must
also be produced before the Committee for their scrutiny. The
Committee shall then decide whether the fees proposed by that
institute are justified and are not profiteering or charging capitation
fee. The Committee will be at liberty to approve the fee structure or
to propose some other fee which can be charged by the institute.
The fee fixed by the Committee shall be binding for a period of
three years, at the end of which period the institute would be at
liberty to apply for revision. Once fees are fixed by the Committee,
the institute cannot charge either directly or indirectly any other
amount over and above the amount fixed as fees. If any other
amount is charged, under any other head or guise e.g. donations,
the same would amount to charging of capitation fee. The
Governments/appropriate authorities should consider framing
appropriate regulations, if not already framed, whereunder if it is
found that an institution is charging capitation fees or profiteering
that institution can be appropriately penalised and also face the
prospect of losing its recognition/affiliation."
From Modern School
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. As far back as 1957, it has been held by this Court in the
case of State of Bombay v. R.M.D. Chamarbaugwala22 that
education is per se an activity that is charitable in nature. Imparting
of education is a State function. The State, however, having regard
to its financial constraints is not always in a position to perform its
duties. The function of imparting education has been to a large
extent taken over by the citizens themselves. In the case of Unni
Krishnan, J.P. v. State of A.P.23 looking to the above ground
realities, this Court formulated a self-financing mechanism/scheme
under which institutions were entitled to admit 50% students of
their choice as they were self-financed institutions, whereas rest of
the seats were to be filled in by the State. For admission of
students, a common entrance test was to be held. Provisions for
free seats and payment seats were made therein. The State and
various statutory authorities including the Medical Council of
India, University Grants Commission, etc. were directed to make
and/or amend regulations so as to bring them on a par with the said
Scheme. In the case of T.M.A. Pai Foundation the said scheme
formulated by this Court in the case of Unni Krishnan was held to
be an unreasonable restriction within the meaning of Article 19(6)
of the Constitution as it resulted in revenue shortfalls making it
difficult for the educational institutions. Consequently, all orders
and directions issued by the State in furtherance of the directions
in Unni Krishnan case were held to be unconstitutional. This
Court observed in the said judgment that the right to establish and
administer an institution included the right to admit students; right
to set up a reasonable fee structure; right to constitute a governing
body, right to appoint staff and right to take disciplinary
action. T.M.A. Pai Foundation case for the first time brought into
existence the concept of education as an "occupation", a term used
in Article 19(1)(g) of the Constitution. It was held by majority that
Articles 19(1)(g) and 26 confer rights on all citizens and religious
denominations respectively to establish and maintain educational
institutions. In addition, Article 30(1) gives the right to religious
and linguistic minorities to establish and administer educational
institution of their choice. However, the right to establish an
institution under Article 19(1)(g) is subject to reasonable restriction
22 AIR 1957 SC 699
23 (1993) 1 SCC 645
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 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.
From P.A Inamdar
"121. 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 quantum of fee to be charged, cannot be
regulated.
*****
141. Our answer to Question 3 is that every institution is free to
devise its own fee structure but the same can be regulated in the
interest of preventing profiteering. No capitation fee can be
charged.
142. Most vehement attack was laid by all the learned counsel
appearing for the petitioner applicants on that part of Islamic
Academy which has directed the constitution of two Committees
dealing with admissions and fee structure. Attention of the Court
was invited to paras 35, 37, 38, 45 and 161 (answer to Question 9)
of Pai Foundation wherein similar scheme framed in Unni
Krishnan was specifically struck down. Vide para 45, Chief Justice
Kirpal has clearly ruled that the decision in Unni Krishnan insofar
as it framed the scheme relating to the grant of admission and the
fixing of the fee, was not correct and to that extent the said decision
and the consequent directions given to UGC, AICTE, MCI, the
Central and the State Governments, etc. are overruled. Vide para
161, Pai Foundation upheld Unni Krishnan to the extent to which
it holds the right to primary education as a fundamental right, but
the scheme was overruled. However, the principle that there should
not be capitation fee or profiteering was upheld. Leverage was
allowed to educational institutions to generate reasonable surplus to
meet cost of expansion and augmentation of facilities which would
not amount to profiteering. It was submitted that Islamic
Academy has once again restored such Committees which were
done away with by Pai Foundation."
From Cochin University
"11. At the very outset, it must be observed that the dispute
pertains only to two years and as of today there appears to be no
difficulty, as the fee structure is now devised by committees set up
under the orders of the Supreme Court in the aftermath of the
judgment in T.M.A. Pai case. We are also of the opinion that the
matter relating to the fixation of a 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. The Supreme Court has laid down several
broad principles with regard to the fixation of fees and as of today,
those principles are being adopted by the committees set up for the
purpose.
12. It must be understood at the outset that an educational
institution chalks out its own programme yearwise 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. From this, however, it should not be
understood that the educational institution has a carte blanche to fix
any fee that it likes but substantial autonomy must be left to it. Mr
Rao has very candidly admitted that it was undoubtedly open to an
educational institution to fix its fee but subject to certain broad
principles. We have accordingly gone through the affidavits filed
by the appellant University and they reveal that the University had
set up the new course in the year 1995-1996 for which funds were
required for infrastructure development, the development of a
faculty, which would mean making provision for adequate salary
for the teaching and supporting staff so as to attract the best minds.
It has also been emphasised in the second affidavit that the fees had
been first increased and subsequently reduced as experience had
shown that the amount of US $5000 per year was excessive and left
out of consideration a large number of NRI students who could not
afford the fee and in order to make the course available to a larger
segment amongst this category, the fee had been reduced. We are
of the opinion that no contradiction or fault can be found with the
University in taking these two stances in the two affidavits as they
supplement each other and make out a justification for the initial
increase in the fee and subsequent downward revision."
46. Mahavir Senior Model Secondary School adopts the same
view. The following passages from the decision merit reproduction:
"17. Even though there is no provision found under the DSEA
that requires unaided schools to seek prior permission from DoE
before fee hike, yet, DoE exercises regulatory control emanating
from Sections 17(3) and 18(3) and (4) of DSEA and the DSER.
However, while regulating the fee structure, DoE does not act as an
appellate body. It is not vested with the power to analyse the
correctness of discretion exercised by the school, but is entitled to
ensure that the school does not indulge in commercialisation of
education. The bounds of regulatory jurisdiction are limited and
restricted, as expounded by the judicial precedents noted
hereinafter.
*****
22. The judgments discussed above have extensively elucidated
the interplay between self-governance of private unaided
educational institutions in their management and administration
and the extent of governmental supervision that is permissible.
However, this discussion would be deficient without reference to
the verdict in Modern School case [Modern School v. Union of
India, (2004) 5 SCC 583] which discusses the width and scope of
DoE's jurisdiction in regulating the amount of fees charged by
unaided schools. Therein, the Supreme Court emphasised that
unaided schools have the right to a reasonable surplus for the
growth and advancement of the institution and DoE has the
authority to regulate the fees and other charges to prevent
commercialisation of education. If a private unaided school is not
involved in the commercialisation of education, it should be
allowed to decide its fee structure, and its autonomy under the
DSEA should be respected and upheld.
*****
23. This brings us to the grounds of challenge to the impugned
order. Schools have alleged breach of the principles of natural
justice due to denial of opportunity to respond to the allegations.
This principle of audi alteram partem is the cornerstone of
procedural fairness and is vital to ensure a just and equitable
outcome in any legal process. It has been contended that the
impugned order was issued without prior notice of proposed
disallowances. There is no convincing response to this contention.
The court is of the view that purported inconsistencies mentioned
in the impugned order should have been revealed to the schools
before passing of the impugned order, giving them adequate
opportunity to respond. Adherence to this principle would make the
decision-making process fair, transparent and would preclude bias
or prejudice from influencing the outcome of a case. Thus, DoE
must ensure that the schools are provided all relevant material and
information, including the basis for any objections or concerns
raised by the regulatory authorities, while scrtunising the statement
if fee. This would allow the schools to present their stand in a
meaningful way. That said, in the opinion of the court, instead of
remanding the matter back to DoE at this juncture, it would be
appropriate to evaluate the validity of the impugned order on its
own merits.
*****
27. DoE has examined the adequacy of funds mentioned in the
schools' statements of fee by categorising them under several
heads, and then concluded that there was a surplus of Rs
5,71,43,088 with the Junior School and Rs 2,19,81,079 with the
Senior School. On the basis of these accumulated reserves, DoE
has rejected the enhanced fee structure. Petitioner Schools have
contested the basis of DoE's calculations and both parties have
submitted comparative charts of available funds. However, court
need not inspect the arithmetic workings supporting the figures,
which is purely factual in nature, and would confine its scrutiny to
the conclusions set forth in the impugned order to determine if the
same fall within the scope of DoE's jurisdiction.
*****
31. In the present case, DoE has recomputed surplus available
with schools and held that the same is sufficient to meet their needs
and thus, denied them the right to increase the fee. This approach
adopted by the DoE, in the opinion of the court, is incorrect and
impermissible. Determination of what constitutes a "reasonable"
surplus would depend on various factors such as the size of the
school, the level of infrastructure and facilities provided, salaries of
the staff and the overall financial position of the school. In their
statement of fee, Senior School has incorporated a detailed chart of
estimated expenses expected to be incurred in the Academic
Session 2018-2019 as also the income generated by them.
Therefore, there is transparency in their financial operations and
they can be held accountable for utilisation of funds. They have
mentioned that the management intends to restructure and revitalise
the school plant at an estimated cost of Rs 12 crores, and have even
entered into a contract with an architect for said purpose. Since the
court would not like to sit in appeal over this issue, it has refrained
from examining the veracity of the figures mentioned therein, yet
considerable merit is found in Mr Gupta's submission that Senior
School, operative since 1983, would require funds for
reconstruction and allied activities. DoE must remember that
unaided schools possess autonomy in their administration,
including, autonomy to envision and plan for its growth and
expansion; they cannot impose their own subjective opinion of
what is sufficient amount for schools to have in order to meet their
aims and objectives. In the instant case, the audited balance sheets
and material provided by the schools have been reworked without a
valid explanation. The audited balance sheets of private unaided
schools are important documents that reflect their financial position
and performance. These documents provide a clear and transparent
picture of school's economic status and help in assessing whether
the school has sufficient resources to meet its expenses and whether
a fee hike is justified. DoE cannot act as an appellate body and
reject the said financial documents, in absence of any evidence to
show that the accounts were not prepared in accordance with
applicable accounting standards or were rejected by the tax
authorities. Pertinently, an objection qua format of return and
documents submitted by the schools was raised by DoE; however,
in response to said query, the schools had clarified that they are
following the prescribed format. In the impugned order, there is no
adverse remark on this issue. Therefore, the DoE has undertaken
the exercise of reworking the balance sheets without disclosure of
justifiable reasons, or a finding of profiteering or
commercialisation of education. This exercise reflects DoE's
subjective opinion, without any objective criteria, making the entire
exercise arbitrary and unreasonable. The right of unaided schools to
determine fee to be charged from students cannot be faltered purely
only on account of presence of reasonable surplus in their books of
account. DoE could have examined the veracity of surplus figures
presented by the schools, but in order to deny enhancement of fee,
they must, on credible basis, determine that the school has indulged
in commercialisation of education, profiteering or levying of
capitation fee. The School Managing Committee had carefully
undertaken the exercise of deciding the budget for academic year
concerned and sans a finding of profiteering or commercialisation
of education, the DoE has acted in excess of its powers and
impinged upon the autonomy of schools, protected by law, in
rejecting Senior School's proposed fee hike."
47. Apropos unaided schools which are situated on land without
any attendant "land clause" in the Lease Deed or other document by
which the land was allotted to the school, the above decisions
uniformly hold that the DoE does not possess the jurisdiction to
regulate the fees of the school or arrive at its own subjective decision
that the surplus in the accounts of the school is sufficient to meet the
additional liabilities which it has to bear. Absent any finding of
charging of capitation fees or profiteering as would amount to
commercialization of education, the DoE cannot restrain the school
from increasing its fees.
48. Unaided schools, it must be borne in mind, survive on the fees
that they receive from parents. It would be facile to expect quality
education to be imparted by unaided schools if one has to be
tightfisted when it comes to the fees that they can legitimately charge
from parents.
49. The definitions of "capitation fees" and "profiteering" already
stand defined by statute or precedent. S.B. Sinha, J., in his concurring
judgment in Islamic Academy of Education adopted, with approval,
the definition of "profiteering", as contained in Black's Law
Dictionary, as "taking advantage of unusual or exceptional
circumstances to make excessive profits". "Capitation fees", for its
part, is defined in Section 2(e) of the RTE Act as "any kind of
donation or contribution or payment other than the fee notified by the
school".
50. There is no allegation, in the impugned order in the present
case, that the petitioner is engaged in charging of capitation fees or in
profiteering.
51. Mr. Jha sought to contend that, even if the words "capitation
fee" or "profiteering" are not specifically used in the impugned order,
if the allegations in the impugned order set out the ingredients of
capitation fee or profiteering, that would suffice to justify its issuance.
52. I am unable to agree with this submission. The Supreme Court
has repeated, not once but times without number, that the scope of
interference, by the DOE, with the fixation of fees by an unaided
recognized school is restricted to a case in which the school engages
in charging of capitation fee or in profiteering. These words cannot,
therefore, be regarded as mere incantations. They are specific
expressions, which have specific legal connotations. If the DoE is of
the view that an educational institution is charging capitation fee or is
indulging in profiteering, it has to specifically so allege. The absent
any such allegation, in those very words, the DoE would not possess
the jurisdiction to interfere with fixation of fees by the school
concerned.
53. That apart, in the present case, it is clear that there is no
allegation either of charging of capitation fee or of profiteering. There
is no allegation that the school was charging fees in excess of fees
notified by it. Exaction of capitation fee, in its essence, amounts
almost to corrupt practice. It involves a school, or an educational
institution, notifying the fees that it would charge in a manner, which
would be made known to public and, under the table so to speak,
taking excess amounts from the students or their parents or guardians.
There is no such allegation against the petitioner.
54. Nor is there any allegation that the petitioner was engaging in
profiteering. Indeed, insofar as the profit earned by the petitioner is
concerned, the impugned order merely alleges that the petitioner was
in possession of sufficient surplus to tide over the additional financial
burden that the 7th CPC had cast on it. There is no allegation that the
petitioner was taking advantage of any exceptional circumstances to
earn excessive profits.
55. There is, therefore, neither any overt nor any covert, allegation,
in the present case, of charging of capitation fee or of profiteering
against the petitioner.
56. The decisions that have been cited supra clearly indicate that
the concept of "commercialization of education" is circumscribed by
the consideration of capitation fee and profiteering. If, therefore,
there is no material to indicate that the school is charging capitation
fee or that the school is indulging in profiteering, it cannot be said that
the school is commercializing education.
57. The case, therefore, falls within the peripheries of the law laid
down by the Supreme Court in the decisions cited hereinabove and
incapsulated by this Court in its judgments in Ramjas School and
Mahavir Senior Model School.
58. There is also substance in the contention of Mr. Kamal Gupta
that the impugned Order has been passed in violation of the principles
of natural justice which, as per the judgments in Ramjas School and
Mahavir Senior Model School, were required to be scrupulously
followed before passing the impugned Order. The petitioner was
neither put to notice regarding the allegations contained in paras 1 to 7
of the impugned Order, nor given any opportunity to satisfy the DoE
that it was, in fact, required to increase its fees as it had proposed to
meet its additional financial outlay. As I have already held, the DoE
could not, even otherwise, have rejected the petitioner's proposed fee
hike on the ground that, in its view, the petitioner was in possession of
sufficient surplus to meet its needs.
59. It was also sought to be pointed out, by Mr. Jha, that the
impugned order contains other allegations against the petitioner such
as non-entry of transport allowance in its accounts, discrepancy
between its opening and closing balances, utilization of development
fee for the purposes other than those notified by the DoE. These are
not considerations on the basis of which the DoE could have
restrained the petitioner from raising its fees. As Mr. Kamal Gupta
correctly pointed out, such allegations are present in nearly every
order. A perusal of the order under challenge in Ramjas School and
Mahavir Senior Model School, reveals that, in those cases, too,
various financial discrepancies were alleged before coming down to
the meat of the matter, which was the purported "sufficiency" of the
surplus in the schools' accounts to meet additional financial burden
cast on it by the requirement of complying with the 7th CPC
recommendations.
60. Needless to say, given the limited remit of this Court in the
present case, I am not entering into the particulars or the merits or
demerits of the allegations contained in paras 1 to 7 of the impugned
order. The DoE shall be at liberty to proceed in accordance with law
with respect to the said allegations subject, of course, to ensuring that
no decision adverse to the petitioner would be taken without following
the requirement of the statute, rules and regulations and applicable
guidelines and adhering to the principles of natural justice and fair
play.
Conclusion
61. In view of the above, the impugned order, to the extent it
proscribes increase of fees by the petitioner-school, cannot sustain on
facts or in law. The impugned order dated 1 August 2018 is,
therefore, quashed and set aside to the said extent, with no order as to
costs.
W.P.(C) 6419/2019
62. The facts of this case are largely identical in so far as the legal
position is concerned with the facts of W.P.(C) 8794/2018. The
impugned order in this case reads thus :
"OFFICE OF THE DEPUTY DIRECTOR OF EDUCATION
DISTT. NORTH,
Lucknow Road, Timarpur, Delhi -110054
No. DDE(N)/Pr. Br./2019/188-192 Dated: 20/04/19
ORDER
WHEREAS, Lilawati Vidya Mandir Sr. Sec. School, Shakti
Nagar, Delhi-110007 is an Unaided Recognized School running
under jurisdiction of District North of Directorate of Education,
GNCT of Delhi, and is bound to comply with the provisions as
contained under Delhi School Education Act, 1973 and Delhi
School Education Rules, 1973 made there under and also to follow
the lawful Instruction as issued by Directorate of Education from
time to time.
AND WHEREAS, Each and every school is required to furnish full
statement of fee under Section 17(3) of DSEAR, 1973 and vide
order no. DE.15(318)/PSB/2016/19742 Dated 13-10-2017,
Director of Education in exercise of her powers conferred by sub
section (g) of section 2 of DSEAR, 1973 authorized "the Dy.
Director of Education (District) to exercise the powers and perform
the functions of the Director of Education GNCT of Delhi within
the meaning, extent and scope of Section 17(3) of DSEAR, 1973,
subject to the limitations and conditions as imposed under the
provisions of the aforesaid section in respect of regulating the fee
collected or to be collected by the Private Unaided Recognised
school from the parents by scrutinizing the full statement of fee
filed by the school under sub section (3) of Section 17 of the Act
and pass necessary directions to the schools with regard to
reduce/modify or refund the excess fee, in case of excess fee
charged by the school," as well as in compliance to order of the
Hon'ble Supreme Court in the case of Modern School in 2004.
AND WHEREAS, a complaint was filed by parents on 27/04/2017
that the School had increased the tuition fee of the said session.
AND WHEREAS, the said parents have also filed a writ petition
no. 10804/2017 to Hon'ble High Court of Delhi dated 20/11/2017.
Accordingly, it was decided to do the scrutiny of full fee statement
of fee filed by the school under section 17(3) of DSEAR, 1973 for
the year 2017-18.
AND WHEREAS, accordingly the Manager/HOS of Lilawati
Vidya Mandir Sr. Sec. School, Shakti Nagar, Delhi, school was
directed to produce on financial documents pertaining to the year
2017-18 vide office order dated 02-08-2018, 06-08-2018 and 23-
02-2019.
AND WHEREAS, keeping in view of the natural justice, the
Chairman/Manager of the School was provided an opportunity of
personal hearing and accordingly was directed vide order
No.198/VII to attend the office of Deputy Director Education, at
4:00 p.m. on 20/02/2019 and also, to furnish/produce
documents/information and clarifications on various issues noted
23/02/2019 and the School failed to attend the office of Deputy
Director Education, at 4:00 p.m. on 23/02/2019 and also, has not
submitted any documents and clarifications on the issues noted.
AND WHEREAS, the School failed to submit the documents/
clarification on the ibid issues noted and therefore, a Show cause
notice was issued on 23/03/2019 and subsequently, a reminder vide
no. 305 dated 03/04/2019 was also issued, asking the school
authorities to submit the clarifications for not submitting the
required documentary proofs in support of their stand. In its reply
to the reminder, the school finally submitted a reply vide letter no.
5594/LVM dated 15-04-2019 with some records and clarifications.
AND WHEREAS, the submissions of the School have been
evaluated that the documents and clarifications submitted by the
school is incomplete. Point wise analysis of School's reply has
been given under:
S. Requirements School's Remarks
N reply/submissi
o. on
Part A
1. Copy of Actuarial valuation Provision for School has not
report for Gratuity and leave gratuity and submitted
encashment, if any, taken by the leave actuarial report
School for FY 2012-13, 2013- encashment has for gratuity and
14, 2014-15, 2015-16, 2016-17, been made as leave encashment.
2017-18 and 2018-19; per central It seems that the
2. If any investments have been government provisions for the
made against the aforesaid service rules same have been
provisions with LIC (or any and investment made on
other agency)? against the fund management
has been estimate basis.
earmarked.
Further, School
The investments has not been
in form of maintaining
FDRs against investments
gratuity against such
amounting provisions with
Rs.1,56,25,852. LIC (or any other
agency).
3. Copy of Audited Financial Copy of audited Taken on record
Statements for the FY 2017-18 balance sheet
(complete set) along with for FY 2017-18
auditor's report; is enclosed.
4. Copy of budgeted receipts and Copy of budget Taken on record
payment account for FY 2018- estimates for
19 filed with the department at FY 2017-18 is
the time of submission of return enclosed.
filed under rule 180 of DSER,
1973;
5. Please provide reasonable Justification for Taken on record
justification for increase and
increase/decrease in proposed decrease of
expenditure for session 2018-19 expenditures is
vis-à-vis actual expenditure for enclosed.
session 2017-18.
6. Please provide reasonable
justification for
increase/decrease in proposed
income for session 2018-19 vis-
à-vis actual expenditure for
session 2017-18.
7. Please bring the copy of RC and Copy of It is not clear
invoice of car, buses registration from the
maintained/purchased by the certificate of submission of the
School during FY 2012-13, school vehicle School that how
2013-14, 2014-15, 2015-16, is enclosed. many buses and
2016-17, 2017-18 and 2018-19. cars are available
with the School.
School is directed
to submit the
complete required
details.
8. Please bring the copy of FDRs List of FDRs Accepted.
as on today. Also share the enclosed along
details of FDRs like maintained with
against which fund. corresponding
use.
Part (B)
1. Please define the process of Mode of Taken on record
payment of salaries. Whether payment of
payments are being made to salaries is
staff through cash mode or through bank
through banking; transfer in
respective
account of staff
members.
2. Whether School is making Payment Taken on record
payments to vendors in excess exceeding
of Rs. 20,000 in cash during the Rs.20000 in
year. If yes, what is the quantum cash has not
of such transactions; been made
during the year.
3. In the Income and Expenditure No clarification or
account, amount is debited in justification
the name of 'Contribution to submitted. School
Pupil Fund and Staff is directed to
Benevolence fund A/c. The submit proper
purpose and nature of such details with
expenditure need to be explanation.
submitted. The details of such
transaction are as follows:
S. Particul Amount
No. ars
1. FY 20,00,000
2012-13
2. FY 20,00,000
2013-14
3. FY 25,00,000
2014-15
4. FY 5,00,000
2015-16
5. FY 5,00,000
2016-17
Total 75,00,000
4. During FY 2012-13, School has School has It is not clear
purchased car amounting Rs. submitted RCs from the
18,01,694. School is to submit of 2 cars and 1 submission of the
the detail of car purchased such bus school that how
as copy of RC, copy of invoice, many buses and
user of such car, expenses cars are available
incurred for maintenance of with the School.
such car in FY 2012-13, 2013- Copy of invoice
14, 2014-15, 2015-16, 2016-17, of car purchased
2017-18 and 2018-19. not provided.
It is not clear who
is using the said
car.
5. School has donated Rs.37,100 No response. The school has
in FY 2013-14. The purpose of failed to submit
such donations along with copy any explanation
of receipts is to be provided. It for this
is to explain by School why this expenditure.
expenditure is to be considered
as eligible expenditure for
educational purposes.
6. During FY 2015-16 and 2016- No response The school has
17, school funds have been failed to submit
utilized for building amounting any explanation
Rs.13,78,982 and Rs.5,29,850. for this
School is to explain why this expenditure.
expenditure is not recovered As per clause 2 of
from the Society as the public notice
construction of building is the dated May 04,
responsibility of the society. 1997
"School should
not to charge
Building Fund
and Development
Charges when the
building is
complete or
otherwise, as it is
the responsibility
of society who
has established
the School to raise
such funds from
their own
resources or
donations from
other associations
because
immovable
property of the
School becomes
the property of the
Society. Thus, it is
clear that building
is the
responsibility of
the Society and
therefore, this
amount should be
recovered from
the Society."
7. School has incurred expenditure No clear School need to
for installation of Solar plant in response by the submit what cost
FY 2015-16 and 2016-17. The School. It has saving it earned
total amount expended is submitted the after such
Rs.73,08,894. School is to copy of 4 installation.
justify the reason for such huge invoices only.
expenditure
8. It is noted that the expenditures School has not No justification
incurred by the School are provided any for movement in
generally inconsistent as either justification for expenditures has
there was substantial increase or the expenditures been provided.
substantial decrease. School asked for such
need to provide complete as why there are
justification with proper inconsistent
documents for such increase or movement in
decrease in various expenditures the expenses of
mentioned in Table-C below: the School. It
has submitted
the copies of
bills.
Table-C (Figures in Rs.)
S. Particulars 2012- 2013- Increa 2014- Increase 2015- Increa 2016- Increa
No. 13 14 se/ 15 / 16 se/ 17 se/
(decre (decreas (decre (decre
ase) e) % ase) ase)
% % %
1 Teaching 4,34,47, 4,84,4 11% 5,16,8 7% 5,45,4 6% 5,52,80, 1%
2 Helping staff 15,31, 12,74, -17% 19,04, 49% 20,52, 8% 21,77,8 6%
3 Ministerial 26,13, 20,89, -20% 30,71, 47% 29,70, -3% 29,60,0 0%
4 Computer 40,28, 40,74, 1% 41,87, 3% 37,68, -10% 46,48,5 23%
5 Digital 33,16, 28,56, -14% 28,56, 0% 28,56, 0 30,76,1 8%
program fee
6 Functions 9,95,2 20,28, 104% 12,86, -37% 27,15, 111% 2,56,64 -91%
7 Contributions 20,00, 20,00, 0% 25,00, 25% 5,00,0 -80% 5,00,00 0%
staff
benevolence
fund
8 Security 11,18, 15,31, 37% 16,68, 9% 21,07, 26% 24,46,0 -16%
charges
9 Wages 10,40, 24,47, 135% 32,92, 35% 51,14, 55% 77,03,6 51%
workers/cont
ract staff
10 Sanitation 11,82, 19,71, 67% 28,85, 46% 25,43, -12% 23,68,8 -7%
Conservancy
11 Electricity 11,76, 13,92, 18% 15,96, 15% 21,06, 32% 7,81,11 -63%
12 Vehicle 6,38,0 6,71,9 5% 6,35,5 -5% 5,59,2 -12% 6,32,64 13%
Maintenance
13 Repair and 24,04, 24,45, 2% 47,99, 96% 49,45, 3% 92,55,1 87%
14 Whitewash 9,80,5 8,03,2 -18% 19,97, 149% 28,69, 44% 25,83,1 -10%
15 Canteen Day - - 0% - 0% 26,65, 0% 38,97,6 46%
Total 6,64,7 7,40,2 8,43,6 9,23,1 9,85,68,
AND WHEREAS, the statement of accounts submitted by the
school and other material correspondence available on record have
been carefully evaluated and detailed findings are as under:
Financial Irregularities:
1. As per clause 2 of public notice dated May 04, 1997
"School should not to charge Building Fund and Development
Charges when the building is complete or otherwise, as it is the
responsibility of society who has established the School to raise
such funds from their own resources or donations from other
associations because Immovable property of the School becomes
the property of the society. Therefore, the students should not be
burdened by way of collecting Building Fund or Development
Charges"
Moreover, as per Rule 177 of DSER, 1973 Income derived by an
unaided recognized Schools by way of fees shall be utilised at the
first instance, for meeting the pay, allowances and other benefits
admissible to the employees of the School. Provided that savings,
if any from the fees collected by such School may be utilised by its
management committee for meeting capital or contingent
expenditure of the School, or for one or more of the following
educational purposes, namely award of scholarships to students,
establishment of any other recognised School, or assisting any
other School or educational Institution, not being a college, under
the management of the same society or trust by which the first
mentioned School is run.
And, the savings referred to above shall be arrived at after
providing for the following:
i. Pension, gratuity and other specified retirement and
other benefits admissible to the employees of the School;
ii. The needed expansion of the School or any
expenditure of a developmental nature;
iii. The expansion of the School building or for the
expansion or construction of any building or
establishment of hostel or expansion of hostel
accommodation;
iv. Co-curricular activities of the students;
v. Reasonable reserve fund, not being less than ten
percent, of such savings.
Therefore, construction of building is the responsibility of the
Society and shall not be charged from the school's fund. Therefore,
School funds utilised for building amounting Rs. 78,86,032 during
FY 2016-17 is in contravention of public notice dated 04.05.1997
and Rule 177 of DSER, 1973. This amount has been considered as
part of fund available with the School with the direction to school
to recover this amount from the society.
Further, School funds have also been utilised for building
amounting Rs. 5,50,65,084 In FY 2017-18 in contravention of
aforesaid provisions. This amount is to be recovered from the
Society by School.
2. As per Para 99 of Guidance note on "Accounting by
school" issued by ICAI, relating to restricted fund, "Where the
fund is meant for meeting capital expenditure, upon Incurrence of
the expenditure, the relevant asset account is debited which is
depreciated as per the recommendations contained in this Guidance
Note. Thereafter, the concerned restricted fund account is treated as
deferred Income, to the extent of the cost of the asset, and is
transferred to the credit of the income and expenditure account in
proportion to the depreciation charged every year".
Taking cognisance from the above para, School should have
considered the Development fund utilisation account as deferred
income to the extent of cost of assets purchased out of
Development fund and have transferred the amount to the credit of
Income & Expenditure account in proportion to the depreciation
charged from this deferred Income account. However, it is noted
that School has not created 'Development Fund Utilization
Account' for the assets purchased out of the Development fund and
thus, has not transferred any amount from this utilisation account to
the credit of Income and Expenditure account in proportion of
depreciation charged during the year. Thus, the School has not
followed aforesaid para 99 of the Guidance Note-21: Accounting
by Schools as Issued by ICAI and may be instructed to follow the
same.
3. The school has made provisions for gratuity and leave
encashment on management estimation basis and not on actuarial
valuation basis, as required by Accounting Standard (AS) 15
Issued by ICAI. There could be an Impact on the financials of the
school, had the provisions been done actuarial valuation basis. In
the absence of the actuarial valuation report, the same could not be
quantified.
After detailed examination of all the material on record and
considering the clarification submitted by the School, it was finally
evaluated/concluded that:
I. The total funds available for the FY 2017-18 amounting to
Rs.23,72,57,471 out of which cash outflow in the FY 2017-18
is estimated to be Rs.14,86,71,332. This results in net surplus
of Rs. 8,85,86,139. The details are as follows:
Particulars Amount Remarks
Cash and Bank balances as 1,09,23,435
on 31.03.17 as per audited
Financial Statements
Add: Investments as on 14,71,11,538
31.03.17 as per audited
Financial Statements
Add: Amount recoverable 19,08,832
from society for building
construction
Less: Arrears for 7th CPC 1,16,87,834
as per audited balance
sheet for FY 2016-17
Less: Investment against 35,000
DDA
Less: Caution Money 23,75,750
balance as on 31.03.2017
Less: Investments against 3,71,87,586 Note 1
Provision for Gratuity and
Leave Encashment as on
31.03.2017
Less: Development Fund 1,44,82,845 Note 2
Available Funds 9,41,74,790
Add: Fees for FY 2016-17 14,21,07,563
as per audited Financial
Statements (we have
assumed that the amount
received in FY 2016-17
will at least accrue in FY
2017-18)
Add: Other income for FY 9,75,118
2016-17 as per audited
Financial Statements (we
have assumed that the
amount received in FY
2016-17 will at least accrue
in FY 2017-18)
Estimated availability of 23,72,57,471
funds for 2017-18
Less: Actual Expenses for 14,86,71,332 Note 3
the session 2017-18 as per
audited financial
statements submitted by
school vide its letter dated
15.04.2019 (including
capital expenditure)
Estimated Surplus 8,85,86,139
Note 1: The provisions for gratuity and leave encashment
has not been maintained as per the report of the actuary. However,
since the School has sufficient funds available with it, the actual
amount invested as per audited financial statements for the FY
2016-17 against these provisions have been considered. Further,
the School is directed to get the actuarial valuation of gratuity and
leave encashment and invest the aforesaid amount with LIC (or any
other agency) within 90 days from the date of order.
Note 2: The Supreme Court in the matter of Modern School held
that development fees for supplementing the resources for
purchase, upgradation and replacements of furniture and fixtures
and equipment can by charged from students by the recognized
unaided schools not exceeding 15% of the total annual tuition fee.
Further, the Directorate's circular no. 1978 dated 16 Apr 2010
states "All schools must, first of all, explore and exhaust the
possibility of utilising the existing funds/ reserves to meet any
shortfall in payment of salary and allowances, as a consequence of
increase in the salary and allowance of the employees. A part of the
reserve fund which has not been utilised for years together may
also be used to meet the shortfall before proposing a fee increase."
Over a number of years, the school has accumulated development
fund and has reflected the closing balance of Rs.7,13,17,041 in its
audited financial statements of FY 2016-2017. Accordingly, the
accumulated reserve of development fund created by the school by
collecting development fee more than its requirement for purchase,
upgradation and replacements of furniture and fixtures and
equipment has been considered as free reserve available with the
school for meeting the financial implication. However,
development fund equivalent to amount collected in FY 2016-
2017 amounting Rs. 1,44,82,845 from students has not been
considered as fund available with school.
Note 3: The total expenditure budgeted/proposed by the School
for FY 2017-18 was Rs. 15,38,30,000 which includes capital
expenditure of Rs. 1,51,30,000. Further, as per audited financial
statements for FY 2017-18 the actual total expenditure before
depreciation and additions to building comes to Rs. 14,86,71,332.
Since, FY 2017-18 has already been passed therefore actual
expenditure has been considered in the above table. The details of
outflow against actual expenditure are as follows:
(Figures in Rs.)
Particulars 2017-18
Salaries 9,54,26,227
School education expenses 1,47,99,501
Admin and General 1,20,57,086
Repairs and Maintenance 2,01,10,894
Other expenses 7,397
Total revenue expenditure 14,24,01,105
Less: Depreciation (1,13,45,214)
Sub-total (A) 13,10,55,891
Capital Expenses 7,26,80,525
Less: Addition in Building (5,50,65,084)
Sub-total (B) 1,76,15,441
Total Expenditure (A+ B) 14,86,71,332
In view of the above examination, it is evident that the school is
having sufficient funds to meet the final implications for the
financial year 2017-18 after meeting its expenditure and there was
no need to increase the fee for the year 2017-18.
After taking into consideration all the facts and circumstances of
the case, the school authority is hereby directed to comply with the
following directions under intimation to the undersigned.
1. Not to charge any increased fee in pursuance to the full fee
statement filed under section 17(3) of DSEAR, 1973 by school for
the academic session 2017-18 and if, the fee is already increased
and charged for the academic session 2017-18, the same shall be
refunded to the parents or adjusted in the fee of subsequent months.
2. To communicate the parents through its website, notice
board and circular about rejection of fee increase proposal of the
school by The Directorate of Education.
3. To ensure that the salaries and allowances shall come out
from the fees whereas capital expenditure will be a charge on the
savings in accordance with the principles laid down by Hon'ble
Supreme Court of Delhi in its Judgment of Modern School v/s
Union of India. Therefore, school not to include capital expenditure
as a component of fee structure to be submitted by the school under
section 17(3) of DSEA, 1973.
4. To utilise the fee collected from students in accordance
with the provisions of Rule 177 of the DSER, 1973 and orders and
directions issued by this Directorate from time to time.
5. To remove all the financial and other irregularities as listed
above and submit the compliance report within 30 days to the
D.D.E.
Non-compliance of this order or any direction herein shall be
viewed seriously and will be dealt with the provision of Section
24(4) of DSEA, 1973 and DSER, 1973.
Sd/-
20.04.2019
Neelam Yadav
DDE(NORTH)"
63. As in the case of the orders under challenge in Ramjas School,
Mahavir Senior Model School and Bluebells International School,
the above order also contains initial allegations against the petitioner/
school and follows up the allegations by a meticulous dissection of the
manner in which the petitioner has worked out the fees that it intends
to charge as well as analyzes of the accounts of the petitioner, with a
comparison of income against expenditure and profit against loss. The
conclusion is the same at which the DoE arrived in Ramjas School
and Mahavir Senior Model School and at which DoE has arrived in
the case of Bluebells International School which is that the "school is
having sufficient funds to meet the financial implications for the
financial year 2017-2018 after meeting its expenditure and there was
no need to increase the fee for the year 2017-2018."
64. As has already been noted by this Court in Ramjas School and
Mahavir Senior Model School and as already noted hereinabove, the
DoE did not possess the jurisdiction, absent any element of
commercialization of education by charging of capitation fee or
profiteering, to come to its own subjective decision regarding the
sufficiency of the funds available with the school to meet its financial
liabilities. Such a decision clearly impinges the autonomy that the
school enjoys - an exercise which stands castigated by the Supreme
Court from as far as back as T.M.A. Pai.
65. The reasoning in W.P.(C) 8794/2018, therefore, applies mutatis
mutandis to the present case.
Conclusion
66. The impugned order to the extent it proscribes increase of fees
by the petitioner - school is, therefore, quashed and set aside.
67. This, however, shall not inhibit the DoE from taking any
decision in respect of any perceived infraction by the school of the
provisions of the DSE Act or the DSE Rules, in accordance with law
as has been permitted in the case of Bluebell International School.
Overall Conclusion
68. Both the aforesaid writ petitions, therefore, stand allowed to the
extent indicated in paras 61 and para 66 supra with no orders as to
costs.
C. HARI SHANKAR, J.
FEBRUARY 7, 2024
yg/rb/dsn
