'Institutions Can't Be Permitted To Indulge In Profiteering': Punjab & Haryana High Court Upholds GO Directing Private Schools In Chandigarh To Publish Balance Sheets On Their Websites

A Division Bench comprising of Justices Jaswant Singh and Sant Parkash has held,

"if the financial statement of the private institutions is uploaded on the website of the institutes, the same will ensure in maintaining transparency and will be an aid in achieving the goal of ensuring that no Institute is indulging in profiteering and charging of capitation fee."

It also rejected the arguments set forth by the Independent Schools Association, Chandigarh and the Kabir Education Society— which had challenged the notification vide two separate writ petitions— that disclosing of the financial details on the website will amount to unwarranted invasion of privacy of schools.

The Bench observed,

"The right of privacy is primarily for the individuals. Though the right of privacy is also available to artificial entities but since the field of education is an charitable occupation, we do not find any reason to hold that uploading of the financial statements on the websites of the private educational institutions in any manner will breach the right of privacy. This is being held while keeping in mind the fact that the benefits of uploading will outweigh the alleged difficulties to be faced by the institutes."

It added that many institutions now a days are indulged in profiteering by charging of capitation fees. However, the same often goes unchecked since Government departments cannot be expected to unearth the truth beneath the financial statements that are usually prepared by professionals.

Therefore, it opined,

"If the financial statements of the Institutes are uploaded on the website of the Institutions, the parents of the students will be able to look into financial statements of the institutes. There is high probability that various parents may have an expertise in the field of accounting which will help the administration in ensuring that no Institute/ School indulges in profiteering or charging of capitation fees."

Reliance was placed on the case of TMA Pai Foundation v. State of Karnataka, 2002 (8) SCC 481 and Indian Christian Medical College Vellore Association v. Union of India, 2020 (8) SCC 705, where it was held that educational institutions rights under Article 19(1)(g) and Article 30 of the Constitution do not come in the way of securing transparency.

The Central Government, vide the impugned notification, had extended the Punjab Regulation of Fee of Unaided Educational Institution Act, 2016 to the Union Territory of Chandigarh with certain modifications (including publication of balance sheets).

The said notification was issued in exercise of powers under Section 87 of the Punjab Re-organisation Act, 1966 which provides—Centre may extend with such restrictions or modifications as it thinks fit, to the Union territory of Chandigarh any enactment which is in force in a State at the date of the notification.

The Petitioners challenged the validity of this provision, alleging that it gives un-guided & un-canalized power to the executive, as there are no guidelines or circumstances described whereunder such power can be exercised.

The Division Bench noted that "restrictions and modifications" to be made while extending enactments by the Central Government has been considered by the Supreme Court in In re: Delhi law Act (1951 S.C.R. 747) while dealing with Section 7 of the Delhi laws Act, 1912 which is similar to Section 87 herein.

In the said case, the Top Court had opined,

"The word "restriction" does not present much difficulty. It connotes limitation imposed upon a particular provision as to restrain its application or limit its scope. It does not by any means involve any change in the principle. It seems to me that in the context, and used along with the word "restriction", the word "modification" has been employed also in a cognate sense and it does not involve any material or substantial alteration. The dictionary meaning of the expression "to modify" is to "tone down" or "to soften the rigidity of the thing" or "to make partial changes without any radical alteration""

The Division Bench also noted that the plain language in Section 87 makes it abundantly clear that the power to make modifications/restrictions has been left to the wisdom and discretion of the Central Government which cannot not be curtailed or whittled down in any manner.

"Section 87 empowers the Central Government to extend any legislation to Chandigarh, at any point of time, which is in force in any part of India. Since the Legislation is always overburdened and in order to render support such like powers as provided under Section 87 of the 1966 Act, have been granted to the Executive."

It however clarified that the restrictions or modifications under the provision do not give un-canalized power to the Government as asserted by the Petitioner.

Instead, such restrictions/ modifications have to be incidental, ancillary or subservient in nature and the modifications and restrictions ought not to change the object to be achieved by the Parent Act.

It finally held,

"The modifications carried out by the Central Government while adapting 2016 Act of State of Punjab, to the Union Territory of Chandigarh are not adversarial modifications/ additions but are meant to ensure balance between the competing interest of the students, the institution and the requirement and desire of the society for accessible quality education. The modifications/additions carried out by the Central Government do not in any manner infringe upon the autonomy or day-to-day functioning of the Institution or in any manner prescribe rigid fee structure. The modifications/additions only facilitate in ensuring the goal of transparency."

Case Title: Independent Schools' Association Chandigarh & Ors. v. Union of India & Ors.

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