TMI Blog2009 (8) TMI 1190X X X X Extracts X X X X X X X X Extracts X X X X ..... be levied and collected by the schools. Section 18 provides for a school fund known as the Recognised Unaided School Fund ; Sub-section (4) whereof mandates that income derived by unaided schools by way of fees shall be utilized for such educational purposes as may be prescribed. Section 24 provides for inspection of schools; sub-section (3) whereof reads as under: (3) The Director may give directions to the manager to rectify any defect or deficiency found at the time of inspection or otherwise in the working of the school. Section 27 of the Act contains a penal provision. Rule making power of the Administrator is specified in Section 28 thereof, clauses (r), (s), (u), (v) and (w) of Sub-section (2) whereof read as under: (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:- r) fees and other charges which may be collected by an aided school; s) the manner of inspection of recognised schools u) financial and other returns to be filed by the managing committee of recognised private schools, and the authority by which such returns shall be audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y unaided recognized schools how to be utilized - (1) Income derived by an unaided recognized school by way of fees shall be utilised in the first instance, for meeting the pay, allowances and other benefits admissible to the employees of the school. Provided that savings, if any, from the fees collected by such school may be utilised by its managing committee for meeting capital or contingent expenditure of the school, or for one or more of the following purposes, namely :- a) *** ***; b) *** ***or c) assisting any other school or educational institution, not being a college, under the management of the same society or trust by which the first mentioned school is run. (2) the savings referred to in sub-rule (1) shall be arrived at after providing for the following, namely :- (a) *** *** ***; (b) the needed expansion of the school or any expenditure of a development nature; (c) the expansion of the school building or for the expansion or construction of any building or establishment of hostel or expansion of hostel accommodation; (d) co-curricular activities of the students; (e) reasonable reserve fund not being less than ten per cent, of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt deposited in a scheduled bank in the name of the concerned schools and shall be refunded to the school at the time of his/her leaving the school along with bank interest thereon. The caution money collected in the session 1997-98 exceeding ₹ 500/- shall be refunded to the parents/students within 15 days of the issue of the directions. 4. No separate science fee or computer fee shall berealized from any student up to the secondary stage. 5. The fee structure of the school (excluding admission fee, caution money, science fee and computer fee) shall be reviewed in a meeting having the proper representatives of parents and the nominee of the Director of Education, to consider the feasibility of reducing the fees and funds keeping in view the actual financial requirement of the school. 6. Several writ petitions were filed by the managements of various Unaided Private Schools questioning the said directions. The principal questions which fell for consideration before the High Court were: whether unaided recognised schools are indulging in commercialisation of education. Are the students and their parents being exploited? If it is so, has the Government power to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed to recover capital expenditure to be incurred on the properties of the society. (vi) The inspection of the schools, audit of the accounts and compliance of the provisions of the Act and the Rules by private recognised unaided schools could have prevented the present state of affiars. (vii) The authorities/Director of Education has failed in its obligation to get the accounts of private recognised unaided schools audited from time to time. (viii) The schools/societies can take voluntary donations not connected with the admission of the ward. (ix) On the peculiar facts of these petitions there is no per se illegality in issue of the impugned circular dated 10th September 1997. (x) An independent statutory Committee, by amendment of law, if necessary, deserves to be constituted to go into factual matters and adjudicate disputes which may arise in future in the matter of fixation of tuition fee and other charges. (xi) The Government should consider extending Act and Rules with or without modifications to all schools from Nursery onward. 8. The High Court directed the appointment of a Committee comprising of Ms. Justice Santosh Duggal, a retired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining a Depreciation Reserve Fund, equivalent to the depreciation charged in the revenue accounts and the collection under this head alongwith and income generated from the investment made out of this fund, will be kept in a separately maintained Development Fund Account. 8. 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. 10. The said appeals were disposed of by a judgment and order dated 27.04.2004 since reported in (2004) 5 SCC 583. This Court took into consideration the cost of inflation between 15.12.1999 and 31.12.2003. In addition to the said directions given by the Director of Education in its order dated 15.12.1999, other and further directions were also issued. 11. Indisputably, Unni Krishnan (supra), on the basis whereof the judgment of the High Court rested, was overruled by a n Eleven-Judge Bench of this Court in T.M.A. Pai Foundation and Others v. State of Karnataka and Others [(2002) 8 SCC 481]. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, as has been noticed in T.M.A. Pai Foundation (supra), the impugned directions could not have been issued by the Director of Education which would affect the autonomy of the minority institution. 17. The basis for issuing the directions by the High Court was, as noticed hereinbefore, premised on Unni Krishnan (supra). Unni Krishnan (supra) has since been overruled in T.M.A. Pai Foundation (supra) holding that the right of a citizen of India to set up educational institutions is a fundamental right. It was furthermore held that the right of the minority to set up educational institution, however, is not absolute being subject to regulations. So far as the statutory provisions regulating the facets of administration of an educational institution are concerned, in case of unaided minority institutions, the regulatory measure of control, however, should be minimum. The conditions of recognition as also conditions of affiliation although are required to be complied with but in the matter of day to day management like appointment of staff, both teaching and non-teaching, and in its administrative control, they should have freedom from any external controlling agency. It was furtherm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference thereto as the core of controversy touching the four questions which we are dealing with seems to have originated therefrom Noticing in extenso paragraphs 68, 69 and 70 of T.M.A. Pai Foundation (supra), it was held: 129. In Pai Foundation, it has been very clearly held at several places that unaided professional institutions should be given greater autonomy in determination of admission procedure and fee structure. State regulation should be minimal and only with a view to maintain fairness and transparency in admission procedure and to check exploitation of the students by charging exorbitant money or capitation fees. As regards, regulation of fee, it was opined: 139. To set up a reasonable fee structure is also a component of the right to establish and administer an institution within the meaning of Article 30(1) of the Constitution, as per the law declared in Pai Foundation. Every institution is free to devise its own fee structure subject to the limitation that there can be no profiteering and no capitation fee can be charged directly or indirectly, or in any form (Paras 56 to 58 and 161 [Answer to Q.5(c)] of Pai Foundation are relevant in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the principle laid down in Unni Krishnan (supra) which has been overruled in T.M.A. Pai Foundation (supra) cannot be made to apply directly or indirectly. It may be noticed that in Union of India Ors. v. M/s Martin Lottery Agencies Ltd. [2009 (7) SCALE 34], it is stated as under: The concept of res extra commercium may in future be required to be considered afresh having regard to its origin to Roman Law as also the concept thereof. Conceptually business may be carried out in respect of a property which is capable of being owned as contrasted to those which cannot be. Having regard to the changing concept of the right of property, which includes all types of properties capable of being owned including intellectual property, it is possible to hold that the restrictions which can be imposed in carrying on business in relation thereto must only be reasonable one within the meaning of Clause (6) of Article 19 of the Constitution of India. It is also of some interest to note that opinions in the academic field are being expressed that res extra commercium is an expression wrongly used in the last sixty years by this Court and other High Courts. No activity can be called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned, the same can be utilised for the purpose of assistance of any other school or educational institution under the management of the same society or trust by which the first mentioned school is run. 28. Submission of Mr. S. Wasim A. Qadri and Mr. Ashok Agarwal, learned counsel appearing on behalf of the respondents that having regard to the fact that the scheme for management of the school, as contained in Section 5 of the Act, does not permit utilisation of the fee collected by a managing committee of the school by another managing committee of another school and, thus, the word management should be given a restricted meaning, cannot be accepted. [See Official Trustee of W.B. v. Stephen Court 2006 (14) SCALE 285] Clause (c) of the proviso appended to Rule 177(1) of the Rules itself raises a distinction. It uses both the words managing committee and management . They must be held to have different meanings. Clause (c) of the proviso appended to Rule 177(1) refers to the management of the same society or trust which means there may be more than one school which is under the same management. If the word management is substituted by the word the managing committee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Article 30 (1) and in the interest of general public under Article 19(6) of the Constitution of India. It would, in my opinion, be incorrect to lay down any general rule and enforce them on a private unaided institutions by way of gap-filing exercise and discipline or otherwise, despite the fact that Rule 177 of the Rules occupies the field. Such restrictions sought to be imposed, for all intent and purport, take away the autonomy regime of the unaided schools which are applicable to these institutions in terms of the aforementioned Constitution Bench decisions. The institutions, in view of the aforementioned decisions of the larger bench, admittedly are entitled to earn some profits and as such any direction contrary thereto or inconsistent therewith by directing them to maintain books of account on the principles applicable to non-business organization/not-for-profit organization. Even otherwise such directions run contrary to the ordinary accounting principles and/or Income Tax Laws. 30. Contention of Mr. Chacko so far as extent of right of the minorities in establishing their institutions has never been raised before us in the main matter. The contention which did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may be noted that vide Order dated 10.9.1997, DoE found that in some cases surplus money was transferred to parent societies and other schools in violation of Rule 177. Accordingly, DoE directed that fees and funds collected from the parents be utilized in accordance with rule 177. 3. Rules 172, 175, 176 and 177 of the Delhi School Education Rules, 1973 are quoted hereinbelow: 172. Trust or society not to collect fees, etc., school to grant receipts for fees, etc., collected by it.-(1) No fee, contribution or other charge shall be collected from any student by the trust or society running any recognised school; whether aided or not. (2) Every fee, contribution or other charge collected from any student by a recognised school, whether aided or not, shall be collected in its own name and a proper receipt shall be granted by the school for every collection made by it. * * * 175. Accounts of the school how 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 maintained as to exhibit, clearly the income accruing to the school by way of fees, fines, income from building rent, interest, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llected from the parents shall be utilized strictly in accordance with rule 177 of the Rules. No amount whatsoever, shall be transferred from the Recognised Unaided School Fund of a school to the Society or the Trust, as the case may be, running that school nor shall any expenditure be incurred which is not beneficial to the students or the employees of that school. 5. On 30.10.1998, both the petitions referred to hereinabove were disposed by a common judgment by the Delhi High Court in the case of Delhi Abibhawak Mahasangh v. Union of India Ors. reported in 76 (1998) DLT 457. 6. Relevant paragraphs from the judgment of the Delhi High Court read as follows: 20. The background under which the impugned order were issued as discernable from government files may now be noticed. It seems that the government received complaints that number of public schools had arbitrarily increased fees and other charges without any justification. A special committee was constituted to conduct special inspections mainly to examine the justification of increasing the fees. The inspection was restricted to few prominent schools. To carry out the inspection 5 different teams comprising of offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al with school funds. Rule 172, interalia, prohibits Trust or Society running any recognised school to collect fee contribution or other charges from any student. Amounts have to be collected only by the School and kept in school fund as provided in Rule 173. Rule 176 provides that income derived from the collection for specific purposes shall be spent only for such purpose. Rule 177 states as to how the fee collected by unaided schools is to be utilised. It, interalia, stipulates that funds collected for specific purpose shall be spent solely for the exclusive benefit of the students. Since considerable emphasis was laid by the parties on Rule 177 it will be useful to reproduce the same as under:- 177. Fees realised by unaided recognised schools how to be utilised- (1) Income derived by an unaided recognised schools by way of fees shall be utilised in the first instance for meeting the pay, allowances and other benefits, admissible to the employees of the school. Provided that savings, if any from the fees collected by such school may be utilised, by its managing committee for meeting capital or contingent expenditure of the school, or for one or more or the following ed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In our view, these observations would not be diluted merely because the same were made in the context of exemption for payment of house tax under Section 115(4) of the Delhi Municipal Corporation Act, 1957. The Safdarjung Enclave Educational Society was running Green Field School recognised under the Act. 54. Assuming power to regulate fee etc. can be inferred from Section 24, a bare perusal of Section shows that it does not confer any general power on Director of Education. Reading of sub-section (3) and (4) of Section 24 shows that only specific directions in respect of a particular school in which a defect or deficiency may be found at the time of inspection or otherwise, can alone be issued. On failure to comply with any directions given under sub-section (3), the Director of Education, as contemplated by sub-section (4), can take suitable action including withdrawal of recognition etc. It was contended that assuming Section 24 could be applied, the 16 schools on inspection of which alleged defects and deficiencies were found then action against only those schools, after following the procedure laid down in the Act and the Rules, could alone be taken. We may also note anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... problem here is peculiar which necessitated issue of general order which per se cannot be held to be illegal in facts and circumstances of these cases. 62. In Mrs. Y. Theclamma Vs. Union of India and others, 1987 (2) SCC 516, the question that came up for consideration before the Supreme Court was whether Section 8(4) of the Delhi School Education Act which, inter alia, provided that no employee shall be suspended without the approval of the Director of Education would be applicable to the minority institutions or not. The case of the minority institutions was that it encroached upon their right under Article 30(1) of the Constitution. Relying upon the decision in the case of Frank Anthony Public School the Supreme Court held that the endeavor of the court in all cases has been to strike a balance between the Constitutional obligation to protect what is secured to the employees under Article 30(1) and the social necessity to protect the members of the staff against arbitrariness and victimisation. It was accordingly held that Section 8(4) cannot be said to have encroached upon the right of the minorities under Article 30(1). 66. In view of the aforesaid discussion our conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Education and a representative of the Parent Teachers Association and such other person as the Chairperson may deem fit. The terms and conditions including fees/honorarium payable and other facilities to be provided by the State Government to the Chairperson and other members of the Committee would be discussed by the Chief Secretary with the Chairperson and finalized within 10 days. As can be seen from the said judgment, the High Court directed that an independent Committee deserves to be appointed for the period covered by the impugned Order dated 10.9.1997 issued by DoE to look into the cases of individual Schools and decide whether increase of tuition fees and other charges would be justified or not. Accordingly, a Committee comprising of Justice Santosh Duggal, a retired Judge of the Delhi High Court was appointed as a Chairperson to look into the fee structure levied by individual schools. 7. Being aggrieved by the decision of the High Court to appoint Duggal Committee, the Action Committee, came to this Court by way of Special Leave Petition No. 19157/98 (Civil Appeal No. 2700/01). In the civil appeal, the Action Committee challenged the power of the High Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in addition to the tuition fee, schools were also charging fees under various other heads as well. The Report of the J. Veeraraghvan Committee on Fee Structure of the Delhi Private Schools (1997), has listed as many as 50 heads under which the fee was being collected in the schools in Delhi. Furthermore, there is also no uniformity, among schools in regard to the nomenclature used for different types of levies under other charges . In addition to this, items charged under the same head also differ from school to school. This has resulted in avoidable ambiguities and distortions in the fee structure which could become a vehicle for exploitation where the schools were so inclined. 4. There is a pronounced tendency since 1996-97, on the part of the schools, to generally under-state surplus/over-state the deficit. This was often sought to be achieved by resorting to over-provisioning under certain heads of expenditure such as gratuity, property tax etc.; diverting (even prior to determining the surplus) a part of the school revenue receipts to various funds usually created with the specific intention of temporarily parking the money in them; charging of depreciation without sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999. This was also during the pendency of the civil appeal filed by the Action Committee. Clause 8 of the Directions dated 15.12.1999 reads as follows: 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. 12. When the matter reached final hearing, three points were argued. The said three points are quoted hereinbelow: (a) Whether the Director of Education has the authority to regulate the quantum of fees charged by unaided schools under Section 17(3) of the Delhi School Education Act, 1973? (b) Whether the direction issued on 15-12-1999 by the Director of Education under Section 24(3) of the Delhi School Education Act, 1973 stating inter alia that no fees/funds collected from parents/students shall be transferred from the Recognised Unaided School Fund to the society or trust or any other institution, is in conflict with Rule 177 of the Delhi School Education Rules, 1973? (c) Whether managements of recognised un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mated income of the school derived from fees, estimated current operational expenses towards salaries and allowances payable to employees in terms of Rule 177(1). Such estimate will also indicate provision for donation, gratuity, reserve fund and other items under Rule 177(2) and savings thereafter, if any, in terms of the proviso to Rule 177(1). (c) It shall be the duty of the Director of Education to ascertain whether terms of allotment of land by the Government to the schools have been complied with. We are shown a sample letter of allotment issued by the Delhi Development Authority issued to some of the schools which are recognised unaided schools. We reproduce herein clauses 16 and 17 of the sample letter of allotment: 16. The school shall not increase the rates of tuition fee without the prior sanction of the Directorate of Education, Delhi Administration and shall follow the provisions of the Delhi School Education Act/Rules, 1973 and other instructions issued from time to time. 17. The Delhi Public School Society shall ensure that percentage of freeship from the tuition fee, as laid down under the rules by the Delhi Administration, is from time to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferred from the recognized unaided school fund of a school to the society or the trust or any other institution except under the management of the same society or trust 19. According to the learned counsel, if the suggested rider is added to clause 8 then it would subserve the object underlying the 1973 Act. 20. There is merit in the argument advanced on behalf of the Action Committee/Management. The 1973 Act and the Rules framed thereunder cannot come in the way of the Management to establish more schools. So long as there is a reasonable fee structure in existence and so long as there is transfer of funds from one institution to the other under the same management, there cannot be any objection from the Department of Education. 21. In the Review Petitions it is alleged that clause 8 of the Order of DoE dated 15.12.1999 was never challenged and yet the Court has gone into the validity thereof. There is no merit in this argument. It was argued on behalf of the Management before us that clause 8 of Order of DoE dated 15.12.1999 goes beyond Rule 177 and, therefore, this Court has discussed in the Judgment under Review vide para 21 the difference between accrual and ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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