Art.19(1)(g)| Fee Revision Committee Can Verify Expenditure But Can't Sit In Management's Chair To Determine Fee Structure Of Self-Financed School: Gujarat HC

The Gujarat High Court has recently cautioned the Fee Revisional Committee ('FRC') that it should keep in mind the fundamental rights of the Self-Financed Schools under Article 19(1)(g) to run and charge fees as they deem fit. While the FRC must see that such fee does not amount to profiteering by schools, it cannot 'sit in the chair of the Management' to determine the fee structure because each school has its own unique method of imparting education, Justice Bhargav Karia said. "Therefore, according to the FRC, if the expenditure is not for the purpose of imparting education, then necessary verification be undertaken and then to arrive at the conclusion by assigning reasons for the same that such expenditures would not be necessary for education to justify the fees proposed by the Self Financed School would not result into the "profiteering" and "capitation fee" or "charging exorbitant fees" and the FRC is supposed to apply the principles which are laid down by the Apex Court vis-a-vis "profiteering" as per the definition of "profiteering" prescribed under section 2(r) of the Act,2017." The Bench was hearing numerous SCAs filed by the schools challenging the orders passed by the FRC under the Gujarat Self-Financed Schools Act, 2017 and the Rules of 2017. Earlier, the constitutional validity of the Act was challenged before the High Court. The Division Bench had affirmed that under Section 19(6), the State had a right to enact such provisions and the same was not violative of Art 14 and 19(1)(g). The Petitioners chiefly contested that the right to determine the fees was the prerogative of the school and the only jurisdiction of the FRC was to verify whether the fee amounted to profiteering or not. Reliance was placed on TMA Pai Foundation and Ors vs State of Karnataka and Ors where the Apex Court had affirmed, inter alia, that the fixing of a rigid fee structure by a government body is unacceptable.A few schools drew Court's attention to several heads such as 'Future Development Cost,' 'Rent', 'Depreciation', 'Term fees and admission fees', 'Interest on Loan', 'Curriculum Expense' and so on which were either disallowed by the FRC or modified. For instance, the FRC allowed 2.5% of the actual interest expenses borne by the school on the ground that the parents cannot be burdened. 'Curriculum Expenses' charged by the schools were disallowed even as the schools submitted that huge amount of innovation, training, and time is required for the same. The schools had also raised individual issues such as disallowance of expenses on snacks, inclusion of RTE students in total number of students which affected the average expenditure per student, disallowance of maintenance issues, disallowance of field trip expenses and so on. The State submitted that these issues were largely questions of facts and the Court should not use its extraordinary jurisdiction to analyse the views of FRC and the perceptions of the Petitioners on each issue. Thus, the petition was not maintainable. Further, it was argued that under Sections 2(g) r/w 2(h)(iii), 2(r), 3, 8(v), 10, 11 of the Act, 2017, the FRC had determined the fee keeping in mind the statement of objects and reasons of the Act. Merely claims of providing better educational facilities was not enough to justify the various expenses to increase the fee, it said. The High Court, while referring to TMA Pai, explained thus: "the Apex Court has laid down that fees to be charged by educational institution should be so reasonable so as to generate reasonable surplus for the purpose of development of education and expansion only without there being any profiteering or charging capitation fee or exorbitant fees resulting in accumulation of wealth with the management of such institution." The Bench further relied on Islamic Academy of Education and Anr v/s State of Karnataka and Ors to state that determination of fees involves several factors such as infrastructure, age of institution, investment made, future plan of expansion etc. The FRC could investigate into these expenditures to verify but could not determine the reasonableness of the expenditure as per Sec 8(2)(b) of the Act. Sec 10 also prescribed several kinds of factors mentioned above to determine the fee structure. The High Court then discussed the heads raised by the Petitioners to determine whether the disallowance of the expenses by the FRC was appropriate or not. Subsequently, it noted that the FRC had not given reasoned orders while disallowing expenditure. Thus, the orders of the FRC were quashed and the matters were remanded back to the FRC to decide the fee proposals afresh within 12 weeks. Meanwhile, the schools were permitted to continue charging the fee as earlier. Case No.: C/SCA/2356/2021 Case Title: AMBE PUBLIC SCHOOL v/s STATE OF GUJARATCitation: 2022 LiveLaw (Guj) 309 Click Here To Read/Download Judgment

Art.19(1)(g)| Fee Revision Committee Can Verify Expenditure But Can't Sit In Management's Chair To Determine Fee Structure Of Self-Financed School: Gujarat HC

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