Educational Institutions Not Service Providers, Students Not Consumers: Uttarakhand State Commission Reiterates

The Uttarakhand State Consumer Disputes Redressal Commission, comprising Kumkum Rani (President) and B.S. Manral (Member), has held that educational institutions are not “service providers” and students are not “consumers” within the meaning of the Consumer Protection Act. Allowing an appeal filed by Kasiga School, the Commission set aside the District Consum-er Commission's order directing refund of a security deposit and dismissed the consumer complaint as not maintainable. Brief FactsThe complainant, Arvind Soni, admitted his son to Class XI at Kasiga School (Opposite Party) in April 2018 and deposited Rs.1,50,000 as a security deposit. The school authorities assured him that the said amount would be refunded upon issuance of the transfer certificate and a no-dues certificate after completion of the student's schooling.The student successfully completed his Class XII education during the 2019–2020 academic session, and the school issued a transfer certificate clearly stating that all dues had been cleared. Despite this, and even after repeated requests, the school failed to refund the security deposit.Aggrieved, the complainant approached the District Consumer Disputes Redressal Com-mission, Haridwar, alleging deficiency in service and unfair trade practice. The District Commission allowed the complaint and directed the school to refund ₹1,49,000 with interest at 6% per annum from the date of filing of the complaint, along with ₹5,000 each towards compensation and litigation costs. Challenging this order dated 26.11.2022, Kasiga School filed an appeal before the Uttarak-hand State Consumer Commission. Arguments by the PartiesThe Opposite Party, Kasiga School, contended that the Consumer Commission lacked jurisdiction, being an educational institution, it does not qualify as a service provider and a student is not a “consumer” under the Consumer Protection Act. The counsel further argued that at the time the student left the institution, an amount of Rs.1,29,949.33 was outstanding in his account and, after adjusting this sum against the security deposit of Rs.1,50,000, only Rs.20,050.67 remained refundable, which the school claimed it was always willing to pay. The Opposite Party also argued that, in view of Clause 15 of the agreement, any disputes or differences arising out of the contract were required to be referred to arbitration.Observations & DecisionThe State Commission set aside the findings of the District Commission and accepted the contentions of the appellant school. It held that an educational institution does not qualify as a “service provider” and a student is not a “consumer” within the meaning of the Con-sumer Protection Act. Relying on binding precedents of the Supreme Court and the National Consumer Commis-sion including Bihar School Examination Board v. Suresh Prasad Sinha, Maharshi Daya-nand University v. Surjeet Kaur, and Anupama College of Engineering v. Gulshan Kumar, the Commission reiterated that educational activities relating to admission, fees, examina-tions, and institutional administration are not commercial services and therefore fall outside the scope of consumer law. Consequently, no consumer–service provider relationship ex-isted between the parties, rendering the complaint not maintainable. The Commission also rejected the complainant's contention that the alleged outstanding amount had already been paid, noting that there was neither any such pleading in the com-plaint nor documentary evidence to substantiate the claim. With respect to the arbitration clause, the Commission clarified that the Consumer Protec-tion Act provides an additional remedy and its jurisdiction is not barred by the Arbitration and Conciliation Act. However, this did not affect the question of maintainability, as the dispute itself did not fall within consumer jurisdiction. Accordingly, the Commission allowed the appeal, set aside the District Commission's order, and dismissed the consumer complaint. Case Title: Manager, Kasiga School vs Arvind Soni SC/5/A/295/2022Click Here To Read/Download Order

Educational Institutions Not Service Providers, Students Not Consumers: Uttarakhand State Commission Reiterates

Muhammed Razik

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