Delhi High Court Quashes Govt Orders Preventing Pvt Unaided Schools From Collecting Annual Charges, Development Fees During Lockdown

The Delhi High Court on Monday quashed two orders issued by the Delhi Government dated 18th April and 28th August 2020 restraining private schools from collecting Annual Charges and Development Fees from students amid covid 19 lockdown.

Justice Jayant Nath held thus:

"The impugned acts are prejudicial to the said Schools and would cause an unreasonable restriction in their functioning. In the above facts and circumstances, clearly the impugned orders dated 18.04.2020 and 28.08.2020 issued by the respondent to the extent that they forbid the petitioner/postpone collection of Annual Charges and Development Fees are illegal and ultra vires the powers of the respondent stipulated under the DSE Act and the Rules. The orders to that extent are quashed."

The petition, filed by Action Committee Unaided Recognized Private Schools. a registered association having 450 private unaided schools functioning in Delhi as members, sought quashing of orders dated 18th April and 28th August 2020 passed by the Directorate of Education stating that the same prevents private unaided recognized schools from collecting a part of fees i.e. Annual charges and development fees beyond the lockdown period and deferring it till physical openings of the school.

It was thus the grievance of the petitioner that the schools were not allowed to charge the full stated fees i.e. not allowed to charge the Annual Charges and Development Fees. Furthermore, it was the case of the petitioner that the respondent authority was curtailing their rights to fix their own fees and also to restrict the collection thereof to certain heads/amounts is illegal and without any authority or jurisdiction.

In view of this, the petitioner stated that the two orders issued by the education department were illegal, arbitrary and unconstitutional and without jurisdiction or authority.

On the other hand, it was the case of the respondent that the petitioner association cannot increase the fee without prior approval of Directorate (Education) as per the decision of the Supreme Court Modern School vs. Union of India & Ors., 2004 (5) SCC 583.

Furthermore, it was submitted that in view of the of acute financial pressure and stress on the general public owing to the Pandemic, the attempt of the petitioner to burden the parents by seeking to recover amounts presuming that normal physical functioning has resumed was harsh, unfair and unjust.

Relying on plethora of judgments on the subject, 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 commercialization of education by them.

"The power of the respondent DOE is for prevention of commercialization of education. Clearly in the absence of a finding of commercialization of education or exploitation the respondent cannot indefinitely cut down the established fees or restrain a said school from collecting a portion of the existing fees." The Court added.

Coming to the facts of the case, the Court observed that the order dated 18th April 2020 was issued for preventing levy of Annual Charges and Development Fees on the ostensible ground that there is a lockdown going on being an emergency like situation. However, the Bench 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 tantamounts to profiteering by the schools in question?

The Court while looking at the break-up of expenses related to Annual Charges and other sub heads, observed thus:

"Expenses like rents, taxes, travelling, conveyance, insurance charges, remuneration of auditors, repair and maintenance of building and maintenance of equipment, furniture and fixture are all expenses which will continue to be incurred by the schools irrespective of the physical shut down. In case, the said repairs and expenses are not done, it is bound to cause damage to the building, infrastructure and functioning of the schools. Further, it cannot be said that the school building is completely shut. The building would remain functional for administrative reasons and even, depending on facts and circumstances of the case, for conducting online classes, etc."

Observing that there was no finding recorded by the impugned orders that the collection of Annual Charges and Development Fees tantamounts to profiteering or collection of capitation fees by private unaided recognized schools, the Court held thus:

"A perusal of the impugned orders does not show that the entire body of private unaided recognized schools has indulged in profiteering or charging of capitation fees by seeking to collect Annual Charges and Development Fees in the stated facts and circumstances. As noted, the private recognized unaided schools are clearly dependent only on the fees collected to cover their salary, establishment and all other expenditure on the schools. Any regulations or order which seek to restrict or in-definitely postpone their powers to collect normal and usual fees as is sought to be done by the impugned orders is bound to create grave financial prejudice and harm to the schools."

Furthermore, the Court held:

"The respondent in the facts and circumstances has no power to indefinitely postpone the collection of Annual Charges and Development fees, as is sought to be done. The impugned acts are prejudicial to the said Schools and would cause an unreasonable restriction in their functioning. In the above facts and circumstances, clearly the impugned orders dated 18.04.2020 and 28.08.2020 issued by the respondent to the extent that they forbid the petitioner/postpone collection of Annual Charges and Development Fees are illegal and ultra vires the powers of the respondent stipulated under the DSE Act and the Rules. The orders to that extent are quashed."

While disposing of the petition the Court held that:

"The above directions 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 installments w.e.f. 10.06.2021."

Senior Advocate Shyam Divan along with Advocates Kamal Gupta, Nipun Jain and Sparsh Aggarwal appeared for the petitioner whereas Ramesh Singh, Standing Counsel alongwith ASC Gautam Narayan and Advocate Dacchita Shahi appeared on behalf of the respondent.

Title: Action Committee Unaided Recognized Private Schools v. Directorate of Education

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