Supreme Court Declines Stay On Calcutta High Court Direction To Reduce Private School Fees By 20%

The Supreme Court on Wednesday refused to stay the directions passed by the Calcutta High Court whereby private schools were asked to reduce their fees by a minimum of 20% and to not hike fee for the financial year 2020-21.

The apex court also left untouched the High Court direction that schools should not charge for non-essential services(such as laboratory, craft, sporting facilities or extracurricular activities) which the students are not availing on account of lack of physical functioning. The HC had also said that for the present financial year, only a maximum of five per cent excess of revenue over expenditure will be permissible for schools.

At the same time, the SC stayed the operation of the directions numbers 8 to 16 contained in paragraph 61 of the High Court judgment delivered on October 13. As per these directions, the HC ordered for the constitution of a committee to audit the accounts of the school, directed schools to consider applications of parents for further reduction or waiver of fees based on audited financial statements etc.

A bench comprising Justices Ashok Bhushan, R Subhash Reddy and M R Shah issued notice on a batch of petitions challenging the HC directions after observing that the matter required to be heard at length.

The HC judgment was pronounced by a division bench comprising Justices Sanjib Banerjee and Moushumi Bhattacharya observing that "allowing the schools to charge at the usual rate would be to give a licence to unjust enrichment beyond the judicially demarcated limits."

The HC further observed that the schools have incurred less expenditure due to the lockdown.

'It Is Obvious That Schools Have Incurred Less Expenditure Over A Prolonged Period Of Time': Calcutta HC Orders Min 20% Reduction In Private School Fees [Read Order]

Assailing the HC order, Senior Advocate Dr Abhishek Manu Singhvi submitted before the Supreme Court that the High Court transgressed its powers under Article 226 of the Constitution by directing private schools to reduce their fees.

"High Court cannot act like a super-regulatory authority", he submitted.

He also took exception to the HC forming a committee to audit the accounts of the schools. The HC included the lawyer of the petitioner in the committee, Dr. Singhvi pointed out.

Singhvi argued that as per the judgments in T M A Pai, P A Inamdar and Islamic Education Society cases, the courts cannot regulate the fees of private educational institutions. 

The HC order has in effect nullified the circular issued by the Government of West Bengal which permitted schools to charge proportionate fees for their services; however, the Court has not struck down the circular or found any unconstitutionality in it, Singhvi submitted.

Senior Advocate Kapil Sibal, appearing for another petitioner-school, submitted that the HC could not passed a blanket general order without taking into account the different situations of each and every school. There was no factual materials before the Court to order a blanket slashing down of fees by 20%.

The bench however expressed disinclination to interfere with the fee reduction.

"At the time of TMA Pai, there was no COVID", Justice M R Shah told Singhvi when the latter referred to the precedent.

"How can you charge for sporting facilities, lab charges etc when there is no physical school?", Justice Shah further observed.

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