'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]

"From the month beginning April, 2020 till the month following the one in which the schools reopen in the physical mode, all 145 schools will offer a minimum of 20 per cent reduction of fees across the board," the Bench comprising of Justice Sanjib Banerjee and Justice Moushumi Bhattacharya ordered.

The Bench further said that collection of non-essential charges for use of facilities, such as laboratory, extracurricular activities, etc., shall not be permissible during the months that the schools have not functioned in the physical mode.

It has also directed:

"There will no increase in fees during financial year 2020-21…Session fees traditionally charged periodically will be permissible, but again, subject to a maximum of 80 per cent of the quantum charged for the corresponding period in the financial year 2019-20."

(Further directions may be read at the end of this report)

The order was passed in a batch of writ petitions filed by the parents whose children are students at 145 private schools in the State, aggrieved by charging of full fees despite suspension of physical classes.

While allowing the petition, the Court observed that as a consequence of physical classes not being conducted over the last six months and more, though schools incur the fixed costs, but the variable costs must have come down. It thus observed,

"When it is obvious that the schools have incurred less expenditure over such a prolonged period of time and may continue to do so for some time longer, allowing the schools to charge at the usual rate would be to give a licence to unjust enrichment beyond the judicially demarcated limits."

During the course of hearing, the private schools had questioned the maintainability of a writ petition against them, while claiming that they are not a public authority under Article 12 of the Constitution.

Certain minority institutions had also argued that present proceedings amount to interreference with their Rights under Article 19 and Article 30(1) of the Constitution. They had further agitated an interim direction seeking furnishing of their audited books of accounts, as an infringement of privacy.

Dismissing these arguments, Justice Banerjee clarified that performance of a "public function" is a self-imposed restriction, which cannot preclude it from passing directions in an unprecedented situation, such as the present pandemic.

Justice Banerjee observed,

"In the ordinary, everyday situation, the remedy under Article 226 of the Constitution is confined to the public law domain and the words used in the provision must be read in the context of the company that they keep. In a breakdown scenario, however, the words in the provision give ample authority to travel beyond the public law domain, though extreme caution and circumspection must be exercised in treading into hitherto uncharted territories.

…The reading down of the several limbs of the provision in everyday use does not imply that in an unprecedented situation, or in a breakdown scenario, the full meaning of the width of the authority conferred by the provision may not be realised and injustice allowed to prosper with a superior court as a High Court folding its arms in impotent obeisance to the doctrine of self-restraint."

Having said that, he added,

"When a private body or person or any form of juristic entity takes upon itself the burden of imparting education it takes up a public duty and such public duty aspect of its functioning is open to judicial review in the usual course without even considering the much broader authority available under Article 226 of the Constitution."

In her concurring verdict, Justice Moushumi said,

"Writ courts not only have the power to issue the five writs but also to issue orders and directions having the force and effect of the five writs, separately or together, for enforcing the rights guaranteed under Part III of the Constitution."

She recalled the wide berth of the writ jurisdiction contemplated by the Supreme Court in Dwarka Nath v. Income Tax Officer, AIR 1966 SC 81, as an enabler for tailoring the reliefs to fit the shape and peculiarities of the case and stretching the parameters of the power "to reach injustice wherever it is found".

These "striking words", Justice Moushumi said,

"have resonated in recent decisions of the Supreme Court which held that the powers of the High Courts in exercise of its writ jurisdiction cannot be constricted by strict legal principles so as to immobilise the Court in upholding the rule of law."

Coming to the protection granted to minority institutions under Article 30(1), Justice Banerjee said,

"Without detracting from the extent of the right of religious and linguistic minorities reserved in respect of educational institutions under Article 30(1) of the Constitution, it goes without saying that even minority educational institutions need to adhere to certain fundamental norms, the most basic of them being that they cannot be run for the purpose of making profit. The essence of such basic requirement is that the fees charged must have some reasonable correlation with the facilities provided."

On the issue of infringement of their right to carry on any occupation under Article 19(1)(g) of the Constitution, Justice Banerjee said,

"Since schools cannot be run for business or commerce, the right under Article 19(1) of the Constitution may not be regarded as absolute and subject to reasonable restrictions… Private unaided schools must be left free to determine their fee structures, as long as there is no element of profit-making."

Justice Moushumi referred to the Supreme Court's verdict in the case of TMA Pai and recounted that despite recognizing the right of minority institutions to administer their affairs, the Court reprimanded them against profiteering and commercialising of education.

In this backdrop she said,

"In the case at hand, our aim is not to intermeddle in the internal affairs of these institutions or supplant the present governing bodies of these institutions with a court appointed agency; but to figure out a best-fit in a disparate set of schools and guardians and that also for a limited period of time, with the paramount interest of the students in mind."

As for privacy, Justice Banerjee said,

"every person is entitled to his accounts not being opened up to all and sundry unless mandated by law as in the case of public companies or some categories of trusts or societies. But the ordinary right of privacy is not so absolute as to deny a constitutional court the authority to assess whether a wholesome charge of unjust enrichment or profiteering is substantiated by calling for such accounts or by having the accounts evaluated by an expert."

Justice Moushumi clarified,

"The right to privacy, taken at its most obvious connotation, is the right of a person to draw his or her boundaries in terms of sharing of information. It is a pro-individual right where the person can choose the company he keeps and the time and the agency to disclose what he wishes to. It is a right aimed at preserving the spatial and intellectual integrity of an individual in matters of choice and acts as a springboard for the connected freedoms which are guaranteed under the Constitution."

She said that the argument against disclosing of accounts by the schools is not acceptable for two reasons:

1. "There is an unfounded apprehension that the court is trying to ferret information out to the detriment of the concerned schools. This is far from the court's intention. Even if it is assumed that the schools are being called upon to disclose their revenue surpluses, there should be a semblance of parity in the standards of assessment of relative financial strength. For assessing the financial position of a guardian, the concerned parent may be called upon to furnish income statements. The schools should also be required to do the same in order to fairly ascertain whether a refusal to provide further concessions to a parent is justifiable on the basis of facts."
2. "A comparative assessment of financial solvency is to facilitate the process of reaching a solution. The schools cannot be permitted to take an unreasonable position to put speed breakers in that path. As noticed in several decisions impacting minority institutions, Article 30(1) was contemplated by the framers to serve as a shield and not as a sword. After all, can these schools bypass the statutory requirement of filing their periodic audited financial numbers to the concerned authorities?"

Significantly, many schools had urged the Court to categorize the schools by their linguistic and religious minority status, the concessions already offered, the fee-instalment schemes proposed and the socio-economic profile of students.

Viewing this plea from the lens of equality under Article 14 of the Constitution, Justice Moushumi observed,

"Schools cannot be simplistically categorised according to the financial profile of the guardians and whether as such they need a fee-reduction for their wards. There are many parents who are diverting a substantial part of their disposable resources, at great personal sacrifice, to get their children admitted to high-end schools with superior educational infrastructure and amenities. Such guardians would greatly benefit from a relaxation in the quantum of fees under the current financially stressed times."

She admitted that at first, the Court was tempted to customise individual/special - fits due to the diversity of the demographic in this case. However, it refrained from doing so as "taking such a course would result in creating several classes and classifications of unintelligible differentiation based on arbitrary presumptions which would cause more injustice to those before us."

Further directions passed by the Bench are reiterated as follows:

• The minimum figure of 20 per cent reduction in the monthly tuition fees will be on the basis of the tuition fees charged for the corresponding month in the previous financial year.
• For the financial year 2020-21, a maximum of five per cent excess of revenue over expenditure will be permissible; the balance excess (without any mathematical precision) should be passed on by way of general concession or special concession in individual cases of extreme distress. If any school makes a loss as a consequence of following these directions, such loss can be made up in course of the next two financial years, 2021-22 and 2022-23, if normal physical functioning resumes by March 31, 2021.
• No amount towards the arrears on account of revision of pay to teachers or other employees can be passed on in the fees for financial year 2020-21. The amount on account of arrears may be recovered in 2021-22 and 2022-23, if normal physical functioning resumes by March 31, 2021.
• There will be no increase in salaries of teachers or of other employees during financial year 2020-21. If any individual school has given effect to a higher pay-scale, the difference must not be realised out of the school fees during the financial year 2020-21.
• Parents and guardians of students are requested not to avail of the reduction in schools fees, if their financial situation does not merit the reduction. However, if any set of guardians or parents obtains the benefit, no questions in such regard can be asked.
• In addition to the across-the-board reduction, every school will entertain applications from parents or guardians for further reduction or waiver or exemption or delayed or installment payments, as the case may be. Every application in such regard must be supported by the financial statements of the parents or guardians so as to justify the request. The financial statements should be certified by any qualified auditor and accompanied by a declaration by the applicant parent or guardian verifying the particulars to be true and correct.
• Each application will be considered on merit. Such applications have to be filed before the respective schools by November 15, 2020 and every application should be dealt with on an individual basis and a decision communicated to the applicant by December 31, 2020. Till the decision on the individual application is communicated and for a further period of two months thereafter, no coercive action should be taken against the relevant student. In other words, the student must be allowed every facility that a similarly placed other student would enjoy, including the name of such student being put forward for the board examinations, subject, however, to the fees payable to the board being tendered within time on behalf of the relevant student.
• When an application for further reduction or waiver or exemption or delayed payment of fees has been disposed of by the relevant school but the parents or guardians are aggrieved by the decision, an application may be filed, upon deposit of Rs.1000/-, to a committee for further adjudication of the request and to assess the decision communicated by the relevant school. Such application has to be filed within 10 days of the rejection, in full or part, of the request being communicated to the relevant parents or guardians.
• The committee referred to in the immediate preceding clause will be headed by Mr Tilok Bose, Senior Advocate as its chairperson and will be assisted by the Headmistress or Principal (the occupant of the higher of the two offices, if they are two) of Heritage School and Ms Priyanka Agarwal, Advocate for the parents in WPA 5890 of 2020. The committee will be empowered to engage an auditor or a firm of chartered accountants to assist the committee. The committee and the auditor appointed by the committee will look into the extent of reduction or exemption or the like sought and the feasibility thereof on the basis of the accounts of the relevant school for the financial year 2019- 20 and the financial figures for the first six months of the financial year 2020-21 as certified by the auditors of the relevant school. The two other members of the committee will assist the chairperson of the committee to arrive at an appropriate decision, but the chairperson will have the final say therein.
• The deposit obtained by the committee will be retained by the committee and Rs.800/- therefrom disbursed to the auditor or firm of chartered accountants for the first time the accounts of a particular school need to be assessed by the auditor or firm of chartered accountants. For every repeat exercise, meaning studying the accounts of the same school from the second time onwards, Rs.500/- per case will be paid to the auditors. The balance amount in the hands of the committee will be used for the purpose of secretarial and managerial services the committee may be required to obtain. Any ultimate surplus has to be made over to court for the same to be dealt with in accordance with law. No remuneration is provided for any of the members of the committee and the court hopes that the members nominated graciously accept this onerous task in the larger public interest.
• By November 30, 2020, the committee should indicate a dedicated e-mail account whereat the appeals against the decisions of the schools may be filed. The e-mail ID should be communicated to Advocate-on-record for the petitioner in the lead matter for it to be disseminated to all parents and guardians. The money required to be deposited will be tendered in cash to a secretary or manager as may be indicated by the committee. The application will be deemed complete only upon the grievance in writing being forwarded to the relevant e-mail account and the deposit being made. No application will be entertained without the deposit being tendered. Full accounts of the monies received and expenses incurred must be maintained and presented in court, when sought.
• All schools should have the accounts for the financial year 2019-20 ready and also the accounts for the period of April to September, 2020 ready to be furnished within two days of the demand therefor by the committee.
• Every application made before the committee must clearly indicate the name and other particulars of the student involved and furnish the e-mail ID of the school and its Principal or the like for the committee to communicate with the school.
• The committee must endeavour to dispose of every application within 45 days of the receipt thereof and the decision of the committee will be binding, subject to the relevant schools having a right to apply to this court in the present proceedings for the reconsideration thereof on cogent grounds. Till a dispute between the parents or guardians of a particular student and the relevant school is finally decided, no coercive action against the student may be taken by the school, whether to disallow the student from attending class in any form or taking any examination or for the candidature of such student being forwarded for any board examination (subject to the board's fees being tendered).
• The quantum of fees to be charged for every month will be indicated by the individual schools on any website and the notice-boards of the schools and informed to Advocate for the petitioner in WPA 5890 of 2020 for the same to be put up on a website that such petitioner must set up for this purpose. The fees payable for every month and the other periodic charges, like session fees, for the entire financial year 2020-21 should be indicated by the individual schools and put up on the website to be set up by the petitioner in WPA 5890 of 2020 by October 31, 2020.
• By November 30, 2020, the fees payable in terms of this order for the period up to November 30, 2020 should be tendered on behalf of all students of the 145 schools. To the extent the parents or guardians of the students apply for further reduction or waiver or exemption, they can pay the amount as possible by November 30, 2020 and copies of the applications for further reduction or the like should be deposited by such date.
• With effect from December 8, 2020 all schools will be entitled to disallow students whose fees have not been paid in full in terms of this order and those who have not applied for reduction or waiver or the like. However, schools should ensure that this extreme step is taken only after exercising due care and caution. xx. No student will be entitled to apply for a transfer certificate without the full quantum of fees in terms of this order being first discharged.
• For the purpose of clarity, it is reiterated that fees payable by students to boards for examinations or otherwise shall have to be paid in addition to the monthly fees and other charges in terms of this order and no waiver or reduction of the fees or charges payable to the boards may be sought or granted.
• There will be no refund of the fees already paid. However, to the extent fees have already been paid which are in excess of the directions contained herein, suitable adjustments will be made over the remaining months of the financial year, unless the parents agree in writing otherwise.
• The expenses incurred for developing the infrastructure of the schools should not be passed on to the students during the current financial year, though it will be open to recover the same from the students from financial year 2021-22 onwards, if the physical functioning resumes by March 31, 2021
• The cap of five per cent of the revenue over expenditure for the year 2020-21 will be subject to the exception that it may exceed the five per cent only if the general reduction afforded to the parents is not availed of by any of the parents and no student in financial distress has been denied additional concession despite being worthy.
• No unusual expense should be incurred during financial year 2020-21 and no development or infrastructure expense should be incurred unless absolutely unavoidable.
• These directions will continue till such time that physical functioning of the schools resumes in the normal course.
• The above directions for any form of concession will not apply to any of the 145 schools where the average monthly fee (calculated on an annual basis over the year from April, 2020 to March, 2021) is less than Rs 800/-. However, such schools may voluntarily take such measures as deemed fit. The exception carved out is perceived to be reasonable since the quantum of concession in such cases will be nominal and the elaborate exercise may be unnecessary as the extent of possible profit is unlikely to be significant. But the monthly fees payable in such cases must be put up on the notice-boards and websites as in the other cases and without exception.
• The other private unaided schools in the State should also abide by the directions mutatis mutandis, particularly since the matter has been heard extensively and as public interest litigation. However, only the disputes pertaining to the 145 schools included in WPA 5890 of 2020 may be referred to the committee constituted herein; and not the disputes pertaining to other private unaided schools in the State.

The Bench has clarified that this order shall not be used as a precedent for regulation of school fees in future and is only a one-time measure under the present extraordinary circumstances. Further, the Court has kept the proceedings pending, till the physical classes are resumed in the schools and the directions contained herein are worked out completely.

The matter is now listed for compliance on December 7, 2020.

Picture Courtesy:Telegraph India

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