In a landmark verdict, the Patna High Court has affirmed the constitutionality of Bihar's Private Schools (Fee Regulation) Act, 2019, dismissing the writ application filed by the Association of Independent Schools Bihar. 

While rejecting the writ application, the High Court stated that the government can regulate fees to prevent profiteering, and directed the state government to adopt the provisions of Rajasthan's Fees Regulation Act.

Notably, Fee Regulation Act, 2019, prohibits all private and unaided schools from increasing their fees above 7% of that collected in the previous academic year.

The division bench comprising Chief Justice K Vinod Chandran and Justice Rajiv Roy observed, “True, there are no guidelines prescribed insofar as assessing the various factors which would lead to the determination of reasonable fees, in the subject legislation, which was available in Section 8 of the Rajasthan Act, hedged in by additional factors as provided for in the Rules. The absence of guidelines cannot ipso facto result in invalidation of the Act framed, especially one in the nature of regulation aimed at ensuring that education is not commercialized and reduced to mere means of profiteering.”

“The State Government has been granted sufficient power to make rules under the subject enactment,which has not been made till date. It would be sufficient to direct the State Government to make rules, and till then, the factors for determining the fees to be adopted from the Rajasthan Act and the Rules, .... shall be followed,” the bench added.

The petitioner - Association of Independent Schools, Bihar - an Association of private schools in the State was aggrieved with the fee regulatory measure attempted by the State through a legislation as is evident from the Fee Regulation Act, 2019.

The petitioners sought for declaring Sections 3, 4 and 5 of the Fee Regulation Act ultra vires and also prayed for setting aside the letter dated 08.11.2019, issued by the Regional Deputy Director, Education Department, Patna, directing the private schools within the Patna division to ensure an increase of not more than 7% in the fee amount realized from the students, applicable from the last academic year.

With regard to the direction issued by the Regional Deputy Director, a status quo was directed to be maintained by another Division Bench by order dated 19.12.2019.

The Court at the outset stated, "The Fee Regulation Act, by virtue of the said direction has remained defunct and as of now, the challenge against the Regional Deputy Director's communication cannot survive as the direction itself has worked itself out. We would confine ourselves to the grounds raised of the provisions being ultra vires."

Senior Counsel Bindhyachal Singh argued that the imposition of a 7% limit on fee increases is inherently arbitrary. He highlighted the absence of clear guidelines for the Fee Regulatory Committee (FRC) in evaluating requests from private schools, suggesting that factors such as the rural or urban location of the school should be considered in determining fee amounts.

Singh contended that the FRC, lacking specific guidelines for fee fixation, possesses unchecked power, posing a risk of prejudicing private schools and jeopardizing the education of children, even when parents are willing to pay the stipulated fees. He criticized the legislative provision restricting annual increases to 7%, asserting that Sections 4(4) and 4(5) are inconsistent and create ambiguity.

Citing various decisions of the Supreme Court, Singh argued that the financial autonomy of educational institutions, particularly minority institutions, is indisputable. He emphasized that these decisions apply directly to the present case.

Singh asserted that the fee regulation infringes on Article 19(1)(g) of the Constitution of India. Apart from the absence of guidelines for the FRC, he pointed out the lack of an appellate remedy. Additionally, Singh referenced the Supreme Court's ruling in the State of Rajasthan v. Indian School case [LL 2021 SC 240], highlighting the encroachment on the Central Board of School Education's regulatory mechanism by the legislation in question.

Court's Observation

The Court was of the opinion that the issue was squarely covered by the judgment of the Supreme Court in Indian School (supra).

"The legislation which came up for consideration in Indian School (supra), if compared with the instant legislation, would resolve the grounds raised in this case," the Court added.

The Court observed that in Indian School (supra), the Rajasthan Schools (Regulation of Fee) Act, 2016 (Rajasthan Act) constituted a School Level Fee Committee (SLFC), which was an internal committee to be constituted within the school.

With that, the Court held that the fees regulation law of Bihar is almost like that of Rajasthan, which was upheld as constitutional by the Supreme Court in 2021.

The Court noted that the Rajasthan Act constituted a School Level Fee Committee (SLFC), which is an internal committee to be constituted within the school

The Court further noted that the proposal of the management regarding the fees to be levied was to be first submitted before the 'SLFC', at least six months before the commencement of the academic year, and the fees can be levied only by the approval of the 'SLFC' which will also have the authority to decide fees afresh.

However, in the subject legislation, challenged in the present case, the Court observed there was no 'SLFC' as had been constituted in the State of Rajasthan, which was an internal committee within the school.

In fact, in Indian School (supra) the Managements argued that having teachers in the committee would result in impeding proper administration since the nominated teachers could align with the parents; which argument was not accepted by the Court, the Court pointed out.

The Court asserted, “Juxtaposing the scheme of the present Act with that of the Rajasthan Act, it has to be found that there is no arbitrariness vitiating the procedure delineated in the subject Act. While the Rajasthan Act required the school to approach its internal committee, the 'SLFC', at the commencement of each year, whether there is an increase or not, in the subject enactment, there is an autonomy given to the management to increase the fees every year, restricting it to below 7% of that levied in the previous year.”

The Rajasthan Act, viewed in this perspective has two external authorities or independentCommittees constituted hierarchically, to determine on any approval or disapproval made by the internal committee of the school. In the legislation impugned here, only when the management of the school decides to hike the fees above 7% it has to approach the 'FRC' and an appeal is provided to a duly constituted Appellate Authority,” the Court added.

Moving ahead the Court pointed out that both the enactments thus provide two forums, in the hierarchy of original and appellate authorities, to oversee the decision of the school, that too early when the fees exceed 7% of the previous academic year in the State of Bihar and the School Level Fee Regulatory Committee, in the State of Rajasthan.

“Comparing the two enactments, when the internal committee's decision can be challenged before two authorities. As per the subject legislation, the decision of the school has to be with the approval of the independent committee constituted under the Act, and there is an appeal provided again to an independent Appellate Authority constituted by the State,” the Court added.

While observing that the State Government was granted sufficient power to make rules under the subject enactment, which has not been made till date, the Court said that it would be sufficient to direct the State Government to make rules, and till then, the factors for determining the fees to be adopted from the Rajasthan Act and the Rules shall be followed.

The Court held, “Respectfully following the judgment of the Hon'ble Supreme Court in Indian School (supra), we find the Fee Regulatory Act to be valid subject to the following: -

(i) the nomination of two guardian representatives by the Divisional Commissioner to the 'FRC' shall be of only parents of children not entitled to the beneficial provisions of the Right to Education Act, 2009. The term of the representatives of private schools and guardians shall be for a period of two years, and a guardian representative shall not be allowed to continue if the ward is not studying in any of the private unaided schools within the division. The nominated parents should have a basic education and some experience in finances;

(ii) one of the representatives of the managements nominated by the DivisionalCommissioner shall be from a minority institution, if there is one in the Division;

(iii) the 'FRC' and the appellate committee shall consider the factors as coming out from the Rajasthan Act and specified in paragraph 22 above, in determining the reasonable fees subject, however, to the State prescribing such conditions by Rules.

Finding absolutely no reason to set aside the enactment, the Court rejected the writ petition, with the above directions.

Appearance:

For the Petitioner/s : Mr. Bindhyachal Singh, Sr. Advocate Mr. Prashant Sinha, Advocate, Mr. Sanchit Singh, Advocate

For the Respondent/s : Mr. Binay Kr. Pandey, AC to GA-2

Case No.: Civil Writ Jurisdiction Case No.25418 of 2019

Case Title: Association of Independent Schools Bihar & Anr vs. The State of Bihar & Ors

LL Citation: 2024 LiveLaw (Pat) 20

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