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Can’t Hike Tuition Fee For Installing AC: Delhi HC [Read Judgment]

Apoorva Mandhani
22 March 2017 5:46 AM GMT
Can’t Hike Tuition Fee For Installing AC: Delhi HC [Read Judgment]
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The High Court of Delhi on Monday ruled that schools cannot hike tuition fees for payment of electricity charges on the ground of installation of air conditioners.

Setting aside the 15% hike in fee levied by two schools, Justice V. Kameswar Rao observed, “The installation of air conditioning system cannot be termed to be connected with curricular activity and co-curricular activity. That apart the capital expenditure has to come through savings from the tuition. It is not the case of the petitioners that it is on account of savings that they have funded the air conditioning system. If that is so, the expenses incurred for electricity charges for running the air conditioning system cannot be by way of increase in tuition fee. It is immaterial if defraying of electrical bills is in the nature of revenue expense but still, cannot be qualified to be met by way of increase in tuition fee, at least in the facts of this case.”

The Court hence observed that capital expenditure, which includes the expenses for setting up an air conditioning system, needs to be derived from the savings made from the tuition fee. It further opined that even if electricity bills are assumed to be a revenue expense, they cannot be met by increasing the tuition fees.

The Court was hearing a Petition filed by two Schools, challenging an order passed in June, 2016 by the Directorate of Education (DoE). The DoE had declared the 15% fee hike as illegal. It had further directed the schools to abstain from charging a development fee for the session 2015-16, unless the amounts claimed under depreciation till 2014-15 are deposited by the Schools in separate account in a nationalized bank.

Challenging this decision, the schools had contended that the increase in the tuition fee was towards meeting the revenue expenditure and not the capital expenditure. They had claimed that since the AC was installed for academic purposes, the running cost for the same was a revenue expense, for the improvement of curricular facilities. It was further submitted that the “spirit of law” requires a school to maintain a single Account called the ‘Recognized Unaided School Fund’, which may also include other accounting heads, and hence, the direction to create a separate account was liable to be set aside.

The Court, however, upheld the order passed by the DoE, observing that the charges for the electricity bill can neither be included in tuition fees and overheads, nor be charged as an expense for co-curricular activities. It further rejected the argument that electricity charges can be claimed under annual charges, observing, “The same does not appeal to this court, more so when there is a finding in the impugned order (of DoE) that the schools have already increased annual charges in the session 2015-2016. The school could not have further claimed the electricity charges under the head annual charges.”

With regard to the maintenance of a separate Account, it observed, “From the perusal of the above directions, it is clear that schools are permitted to levy development fee only if they maintain Depreciation Reserve Fund equivalent to the depreciation charges in the revenue accounts and the collection under this head along with income generated from investments made out of this fund are kept in a separately maintained Development Fund Account… I agree with the submission of Mr. Narayan, that no prejudice is caused to the School if such an Account is maintained.”

Read the Judgment here.

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