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Delhi High Court Quashes Government Orders Restraining Private Unaided Schools From Collecting Annual Charges and Development Fees During Lockdown

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Facts of the Case 

In this case, a writ petition was filed by the Petitioner seeking to quash the orders dated 18.04.2020 and 28.08.2020 passed by the Respondent. The Petitioner was a registered association with approximately 450 private unaided schools functioning in Delhi as its members. Further, it was stated that earlier because of the pandemic the Central Government had declared a Lockdown in the entire country during the last week of March 2020, and accordingly, the schools were also closed down physically. But the schools were directed and encouraged to take up online teaching and learning so that there was no discontinuity in imparting education to the school children. Furthermore, on 17.4.2020, the Respondent passed an order under the Disaster Management Act 2005, Section 17(3) of the Delhi School Education Act, and Rule 43 of the Delhi School Education Rules. This order directed the schools that they should not charge any fees except tuition fees from the parents, till further orders. 

In addition to this, a new impugned order was also passed on 18.04.2020. Now, this order was passed in supersession of the earlier order dated 17.04.2020. As per the new order, the Annual and Development charges were to be collected after the Lockdown. Further, it was pointed out by the Petitioner that there was a distinction between the lifting of Lockdown and the physical re-opening of the schools. Thereby, it was stated that the Central Government had issued various Notifications that pertained to the lifting of the Lockdown, firstly, w.e.f. 1.6.2020. And because of this lifting of the Lockdown, the right of private unaided recognized schools to collect Annual Charges and Development Fees was again revived as per the circular dated 18.4.2020. Hence, various schools started charging Annual Fees and Development Charges. But on 28.08.2020, the Respondent came up with the second impugned order. In this order, it was clarified that other than the tuition fees no other amount can be charged by the private un-aided recognized schools. And accordingly, the Petitioners were also not allowed to charge the full stated fees i.e., not allowed to charge the Annual Charges and Development Fees. Hence, the Petitioner was not satisfied and filed the instant petition.

Petitioner’s Arguments

Firstly, the Learned Counsel of the Petitioner contended that the impugned actions of the Respondent were illegal and unconstitutional. Besides, it was stated that the Respondent passed this order without any authority or jurisdiction as it had limited jurisdiction to regulate the fees, i.e., to only prevent commercialization and profiteering. And consequently, the fundamental rights of the private unaided educational institutions under Article 19(1)(g) of the Constitution cannot be trampled in this case also. The Learned Counsel of the Petitioner further pleaded that the Department of Education instead of seeking to regulate the fees to prevent commercialization and profiteering was being influenced by the dictates of the political establishment. The Department had been rendered as a mere convener of the Government Policies aimed at pleasing the larger vote banks of the constituency of the parents not keeping in mind the larger goals of expansion and development of education. It was further also pointed out that by the Petitioner that there was another direction issued by the Respondent, which said that no fee should be increased by any school during the year 2020-21. This direction was also considered as illegal and ultra vires the powers of the Respondent. 

Respondent’s Arguments

The Learned Counsel of the Respondent firstly urged that the present petition deserved to be dismissed as the Lockdown was still in operation and, therefore, the circular dated 18.4.2020 read with circular dated 28.8.2020 continues to be in operation. Besides this, it was pleaded by the Respondents that the members of the Petitioner association cannot increase the fee without prior approval of Directorate (Education) as mandated by the Supreme Court in Modern School vs. Union of India & Ors., 2004 (5) SCC 583.  Moreover, it was the power of the Regulatory Authority to check that there was no commercialization of education in any private unaided recognized school. Hence, the Respondent was authentically authorized to issue directions to private unaided recognized schools in this regard. And because of this, the schools were bound to comply with the provisions of the ‘DSE Act’ and ‘the Rules’ and to follow the orders, notifications, and circulars issued by the Respondent. It was further pleaded that on the account of acute financial pressure and stress on the general public owing to the Pandemic, this attempt of the Petitioner to burden the parents by seeking to recover amounts presuming that normal physical functioning was harsh, unfair, and unjust. 

Moreover, the Learned Counsel pleaded that the schools being charitable institutions cannot indulge in profiteering. And therefore, such institutions were expected to extend maximum support in such an emergent situation. Moreover, the educational institutions were bound to ensure that the students were not harassed by charging any increased Tuition Fee or any other fee under a new head. But some of the schools were, inter alia, indulging in malpractices that were inhuman in view of the outbreak of Covid-19. Also, various examples were sighted by the Respondent regarding the alleged illegal acts of some of the schools.

 Furthermore, it was urged that the rationale behind the impugned order dated 18.4.2020 was to ameliorate to the extent possible the financial constraints being faced by parents and to obviate the possibility of a child being denied education due to the incapability of parents to defray the school fees. Moreover, during Lockdown only online teaching facilities were being provided and it was expedient to permit charging of Tuition Fee only to enable the schools to defray expenses towards salary and allowances to the teachers and the staff. 

Also, via the scrutinization of the fee statements filed by private unaided recognized schools, it was found that in most cases the expenditure on salary and establishment was approximately 40-60 % of the tuition fee charged by the school, and in some cases, it was up to 70% of the tuition fee charged by the school. Hence, it was expedient for the Schools to continue charging Tuition Fee-only, as same would enable the schools to continue imparting education to students in such unprecedented situation caused by the COVID-19 Pandemic,

Court’s Observations

Relying on the facts and circumstances of the case, the Court observed that the department of education has the power to fix and collect fees by such unaided educational institutions only for the purpose to prevent the commercialization of education by them.  And thus, apparently in the absence of a finding of commercialization of education or exploitation, the Court noted that the Respondent cannot indefinitely cut down the established fees or restrain a said school from collecting a portion of the existing fees. Further,  the Court perceived that the order dated 18th April 2020 was issued for preventing levy of Annual Charges and Development Fees on the ostensible ground that there was a lockdown going on being an emergency-like situation. However, the Court went ahead to deliberate on the question as to whether the act of charging the usual Development Fees or Annual Charges in the present facts was equivalent to profiteering by the schools in question? The Court while scrutinizing the breakup of expenses related to Annual Charges and other subheads, observed that the Expenses like rents, taxes, subheads conveyance, insurance charges, remuneration of auditors, repair and maintenance of the building, and maintenance of equipment, furniture, and fixtures were all expenses that will continue to be incurred by the schools irrespective of the physical shut down. And if the said repairs and expenses were not done, it was bound to cause damage to the building, infrastructure, and functioning of the schools. Moreover, it cannot be assumed that the school building was completely shut. The building remained functional for administrative reasons and even, depending on facts and circumstances of the case, for conducting online classes, etc. Reliance was made on a plethora of judgments. 

Further, it was apparent that the private recognized unaided schools were dependent only on the fees collected to cover their salary, establishment, and all other expenditure on the schools. Any regulations or orders which restricted or indefinitely postpone their powers to collect normal and usual fees as was sought to be done by the impugned orders were bound to create grave financial prejudice and harm to the schools.

Moreover, the Respondent had no power to indefinitely postpone the collection of Annual Charges and Development fees.  Thereby, the impugned acts were prejudicial to the said Schools and would cause an unreasonable restriction in their functioning.

Court’s Decision 

In the perusal of the above-mentioned observations, the Court declared that the impugned orders dated 18.04.2020 and 28.08.2020 issued by the Respondent to the extent that they forbid the Petitioner/to postpone collection of annual Charges and Development Fees were illegal and ultra vires the powers of the Respondent stipulated under the DSE Act and the Rules. Thus, the orders to the extent were quashed. Further, the Court held that the concerned directions were given in paras (i) to (vii) will apply to the petitioner schools mutatis mutandis. However, clause (ii) has to be modified. The amount payable by concerned students will be paid in six monthly instalments w.e.f. 10.06.2021.

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