MP HC Grants Interim Relief To Private Schools Ordered To Refund Allegedly Excessive Fees Levied In Violation Of 2017 Fee Regulation Rules

In a recent decision, the Madhya Pradesh High Court at Jabalpur granted an interim stay on orders mandating the refund of school fees collected by private institutions from the academic year 2017-18 onwards.

The case involves an appeal by St. Aloysius Senior Secondary School which challenged the orders of the district authorities directing them to refund fees collected in excess of permissible limits under the Madhya Pradesh Niji Vidyalaya (Fees Tatha Sambandhit Vishayon Ka Viniyaman) Adhiniyam, 2017 ("the Act").

Justice Sanjeev Sachdeva and Justice Vinay Saraf recognized the petitioners' concerns regarding the burden of filing an appeal under Section 11 of the Act, particularly given the lack of interim relief provisions within the appellate mechanism. The Court noted that "In cases where the petitioners have collected fees in excess of 10%, the fees should be refunded or adjusted in terms of the respective orders dated 05.07.2024 and 09.07.2024 and refund cheques be issued within a period of four weeks."

However, it granted an interim stay on the operation of orders dated 05.07.2024 and 09.07.2024, allowing the schools to continue their operations without immediate financial strain.

Background

The case involved the interpretation of Sections 5 and 10 of the Act, particularly concerning the permissible increase in school fees and the authority of the district and state committees to regulate such increases. According to Section 5, private school managements are allowed to increase fees by up to 10% of the previous year's fee without requiring prior approval.

In order to increase from 10% to 15% there is a requirement of approval by the District Committee and for any increase above 15%, the issue must be taken by the State Committee.

The petitioners contended that the increase in fee is within the permissible limit of 10%, with only a slight excess in a few cases. It was stated that during the pandemic years, schools were permitted to charge only tuition fees, and the comparison of fees for 2022-23 with those years' reduced fees led to the mistaken conclusion of excessive hikes.

In the orders dated July 5 and July 9, 2024, district authorities stated that the fee increases were between 30% and 40% and therefore ordered a refund of the fee amount collected from the academic year 2017-18 onwards.

The petitioners argued that this decision failed to consider the statute correctly and disregarded the findings of an enquiry report dated April 24, 2024, which determined that the fee increases were within the permissible limit and that no substantive issues were found in the complaints against the schools.

The petitioners claimed that Section 10 of the Act empowers the authorities to order a refund if fees are collected in excess of the permitted amount and it was applied erroneously in this case.

It was stated that the fee structure did not contravene Section 5 of the Act and that the penalty for non-compliance with Rule 3 of the Madhya Pradesh Niji Vidyalaya (Fees Tatha Sambandhit Vishayon Ka Viniyaman) Rules, 2020, was already paid. This rule requires schools to submit and upload fee structures and related information within a specified timeframe before the commencement of the academic session.

It was argued that the authorities wrongly interpreted the rule to justify a complete refund of the fees, rather than imposing a proportional penalty as given under the rules.

Case title: St. Aloysius Senior Secondary School Polipathar Jablapur And Another Vs The State Of Madhya Pradesh And Others

Citation: WA No. 1778 of 2024

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