The Delhi High Court has said that private schools in the national capital and recognized schools without government aid do not need prior permission or approval of the Directorate of Education (DoE) to increase their fees at the beginning of the academic session. These schools may increase their fees at the beginning of the academic session without prior approval from DoE, provided the proposed fee structure is announced before the commencement of the academic session. The court made it clear that the only statutory obligation of such schools is to submit complete details of the proposed fees to the Directorate of Education before the start of the session. This decision of the court has dealt a big blow to the Education Directorate.
Justice Anup Jairam Bhambhani, while delivering the verdict, said that under Section 17(3) of the Delhi School Education Act, 1973, such schools do not need to wait for the approval of the Directorate of Education before implementing the fee increase at the beginning of the academic year.
what did the court say
The Court held that ‘Under Section 17(3) of the DSE Act, a private, unaided, recognized school does not require any prior permission or sanction for increasing its fees at the commencement of the academic session, and the only statutory obligation on the school is to file its statement of proposed fees with the Directorate of Education before the commencement of the academic session’.
‘Prior permission is required only in cases where…’
The bench made it clear that prior permission is necessary only in a situation when a school wants to suddenly increase the gap in the middle of the ongoing academic session. The court said that if any school wants to increase the fees during the ongoing academic session, prior approval of DoE will be required. The court said that the role of DoE is regulatory and limited to ensuring that private schools do not indulge in profit making, commercialization of education or charging capitation fees.
Challenge was given in the High Court
The Delhi High Court gave this decision on several petitions led by Delhi Public School, Vasant Kunj, challenging several orders of DoE rejecting the proposal to increase fees.
The court further said that the present cases clearly demonstrate how a public authority can persist in a course of action that shows willful disregard for both the letter of the law and precedent. The court said that it is not the job of the DoE to decide or micro-manage how the financial affairs of a school are to be run.
Schools gave arguments in court
During the hearing, the schools had argued that the DoE was arbitrarily rejecting their fee hike proposals, which was impacting their financial autonomy and their right to run private educational institutions. He said that under the Delhi School Education Act and Rules, DoE can interfere in fixing fees only if it is found that a school is involved in profit making or commercialization.
The court accepted this. The court said that under the law, a private, unaided recognized school is not required to obtain prior approval for increasing fees, unless the proposed increase is during the ongoing academic session. The court further said that the result of profit making or commercialization can be given only after audit under Section 18(5) of the Act, based on the return filed under Rule 180 of the Delhi School Education Rules.
‘This is not the job of DoE…’
Justice Bhambhani also found that many of the allegations in the DoE order about profit making or commercialization were not based on concrete results. The court termed them as unnecessary statements arising out of DoE’s misunderstanding of the accounting rules applicable to schools. The court said that under the Delhi School Education Act and Rules, private unaided recognized schools get financial autonomy. It is not the job of the DoE to dictate or micro-manage how schools run their financial affairs.
The Court said, ‘Within the ambit of the DSE Act and the DSE Rules, as understood by the Court, a private, unaided, recognized school enjoys financial autonomy, and it is not the job of the DoE to dictate or micro-manage how the financial affairs of the school are run’. Along with this, the court also rejected the difference between schools running under DoE’s land clause and schools not running under such clause. The Court held that the land clause, which is usually a condition in the allotment letter, must operate within the framework of the Act and Rules and cannot exceed the statutory powers of the Education Department.
‘This cannot be called profiteering’
The Court further said that private unaided schools cannot be prevented from maintaining a reasonable surplus of funds for legitimate needs including future growth and development. The schools had argued that maintenance of such surplus funds could not be termed as ‘profiteering’ by the Directorate of Education, the Court also agreed with this argument.
The Court held that the availability of surplus funds with a private, unaided, recognized school, no matter how large, cannot be the sole basis for the Directorate of Education to infer that the school is engaged in commercialization or profiteering and thus object to the fee hike by the school. The aspect of commercialization or profiteering can be examined and determined only after a complete financial audit of a school is conducted by the Directorate of Education.
No permission to collect dues of previous academic session
But, the High Court refused to allow the schools to recover the dues of the previous academic session. The court said that some of the proposals are from 2016-17 and allowing recovery now will put a huge and unacceptable burden on parents and students. Therefore, the Court directed that the previous fee hike proposed by the schools will be applicable only from the next academic session starting from April 2027. The court made it clear that no school can demand or recover the dues of the previous academic session from the previous date.
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