Refund Of School Fees Charged During COVID : Supreme Court Forms Committee To Assess Financial Status Of Private Schools In UP

The Supreme Court today (March 18) constituted a two-member committee led by Justice(Retired) GP Mittal to examine the financial status of private schools which challenged the Allahabad High Court's direction to adjust/refund 15% of excess fees charged during the pandemic period. 

The bench of CJI Sanjiv Khanna and Justices Sanjay Kumar and KV Viswanathan was hearing the challenge to the Allahabad High Court order which directed private schools to either adjust or reimburse 15% of fees paid by parents for the Covid-struck period of 2020-2021. The present challenge has been made by a batch of around 17 private schools. 

During the hearing, the CJI noted that a 'broad brush approach' has been taken by the High Court without considering the facts and financial circumstances of each of the private schools. 

He said, "The High Court order adopts a very broad brush approach, that is not possible ,you have to go into each and every case." 

"We are with you that if there is overcharging, then the school has to repay, but in case the school is not doing well then ..." he added. 

The Court noted that the main contention of the private schools is that during the pandemic period, some schools lacked surplus expenditure, had to reduce staff and teachers' salaries and faced a lot of human resource losses. In such circumstances, the High Court's direction had to be applied considering the financial accounts and borrowings of each of the schools. 

The bench proceeded to constitute a two-member committee comprising Justice GP Mittal, former judge of Delhi High Court and Chartered Accountant Adhish Mehra. The Committee is required to look into the facts of each case and determine the financial situation of each school independently.

Previously in May , 2023, the Court while issuing notice in the plea had directed all the contesting schools to file an affidavit indicating whether there was any reduction in salary to staff and teachers and whether the day-to-day operation expenditures had come down. Affidavits have been filed. The Court also directed them to file a copy of the balance sheet of the accounts for 1.4.2018-31.3.22. 

In the said order, the Court also stayed the direction of the impugned judgment to the extent it directed refund of the fees.

Today, the bench passed the following order, with the relevant portion as under: 

" The issue requires examination of facts and accounts in each case. In these circumstances, we appoint a committee consisting of Justice GP Mittal of Delhi HC and Adish Mehra CA to examine the accounts and submit a report as to the financial position of the schools in question during the relevant period." 

"The Court will take into consideration the direction given in the order dated 15.5.23, the schools shall furnish the requisite bills to the committee within a period of 3 weeks from today."

"The relevant school associations/parents will furnish the copy and be heard, the committee will be entitled to ask to furnish other details including IT returns......the committee will be paid a sum of Rs 1 Lac per school (Justice Mittal) and Rs.75000 Rs (CA Mehra) per school. The schools will pay the said amounts. The aforesaid exercise will be completed within 4 months from today. Interim order to continue" 

Sr Advocate Hufeza Ahmadi appeared for few of the private schools. 

Before The High Court 

The Allahabad High Court bench of Chief Justice Rajesh Bindal and Justice J. J. Munir had directed the private schools to adjust/pay back the excess money (15% of the total fee) that was charged from students during the COVID Pandemic period (2020-21 session).

The High Court passed these directions while hearing  a bunch of petitions filed by aggrieved parents from all over the State seeking regulation of fees in all government and private schools in Uttar Pradesh. The grievance raised by the petitioners was that certain facilities were not provided during the COVID-19 pandemic hence they are not liable to pay for that.

The High Court relied upon the decision of the Apex Court in Indian School, Jodhpur Vs. State Of Rajasthan wherein it was held that private schools demanding fees without providing any services amounts to profiteering and commercialization of education.

Taking note of the Apex Court's judgment and referring to the directions issued therein, the High Court, in its order, directed the private school that in case any fee has been paid in excess of what has been determined by the Supreme Court in the Indian School case (supra) judgment, in the case of the students still studying, the same may be adjusted in the fee to be paid in future.

In the case of students who have passed out or left the school, the Court has ordered that the amount may be calculated and returned to those students. As per the court's order, this exercise has to be done within two months.

In other words, as per the order of the High Court, all the schools will have to calculate 15% of the total fees charged during the year 2020-21 and adjust the same in the academic next session.

As far as the students who have left the schools are concerned, 15% of the said fees will have to be refunded to them.

Case Details : INDEPENDENT SCHOOL FEDERATION OF INDIA vs. ADARSH BHUSHAN| SLP(C) No. 011388 - / 2023