Supreme Court Directs Rajasthan Private Schools To Give 15% Deduction In Annual School Fees; No Student To Be Debarred For Non-Payment Of Fees

The Supreme Court has permitted the private unaided schools in Rajasthan to collect annual school fees from their students as fixed under the Rajasthan Schools (Regulation of Fee) Act 2016, for the academic year 2019-­20.

The bench comprising Justices AM Khanwilkar and Dinesh Maheshwari, however, directed the schools to provide deduction of 15 per cent on that amount in lieu of unutilised facilities by the students during the relevant period of academic year 2020­-21.

"The appellants (school Management of the concerned private unaided school) shall collect annual school fees from their students as fixed under the Act of 2016 for the academic year 2019­20, but by providing deduction of 15 per cent on that amount in lieu of unutilised facilities by the students during the relevant period of academic year 2020-­21", the Court ordered in the case Indian School, Jodhpur Vs. State Of Rajasthan and connected cases.

The Private School Managements had approached the Apex Court challenging the Government orders regarding deferment of collection of school fees including reduction of fees limited to 70 per cent of tuition fees by schools affiliated with the Central Board of Secondary Education and 60 per cent from the schools affiliated with Rajasthan Board of Secondary Education, in view of reduction of syllabus by the respective­ Boards due to aftermath of pandemic (lockdown) from March 2020. The High Court had upheld the Government order.

The following directions have been issued:

1. The amount so payable by the concerned students be paid in six equal monthly instalments before 05.08.2021 as noted in our order dated 08.02.2021.
2. Regardless of the above, it will be open to the appellants (concerned schools) to give further concession to their students or to evolve a different pattern for giving concession over and above those noted in clauses (i) and (ii) above.
3. The school Management shall not debar any student from attending either online classes or physical classes on account of non­payment of fees, arrears/outstanding fees including the installments, referred to above, and shall not withhold the results of the examinations of any student on that account.
4. If any individual request is made by the parent/ward finding it difficult to remit annual fees for the academic year 2020­21 in the above terms, the school Management to consider such representation on case ­to ­case basis sympathetically
5. The above arrangement will not affect collection of fees for the academic year 2021-­22, as is payable by the students of the concerned school as and when it becomes due and payable.
6. The school Management shall not withhold the name of any student/candidate for the ensuing Board examinations for Classes X and XII on the ground of non­payment of fee/arrears for the academic year 2020­21, if any, on obtaining undertaking of the concerned parents/students.

Background

In the wake of COVID-19 pandemic, the Rajasthan Government deferred the collection of school fees for 3 months by the private schools recognized by Primary and Secondary Education Departments (vide order dated 09th April). Subsequently, the above deferment of collection of fees was extended till the opening of the schools with the stipulation that the name of any student shall not be struck off for non-payment of school fees (vide order dated 07th July). These orders of the State Government were challenged by filing writ petitions before Rajasthan High Court. The single bench of the High Court disposed of (vide order dated 07th September) with the directions to the schools' management that:- Allow the students to continue their studies online, Allow them to deposit 70% of the tuition fees element from the total fees being charged for the year, 70% of the tuition fees to be deposited for the period from March 2020 in three instalments, and On non-payment of the said fees, student(s) may not be allowed to join online classes but they shall not be expelled from the school.

While the Writ Appeals were pending, the State Government vide order dated 28.10.2020 issued following directions:- Collection of school fees after opening of the schools to the tune of 70% of tuition fees by the schools affiliated with the CBSE & 60% from Rajasthan Board of Secondary Education affiliated schools with on the basis of reduction of syllabus by the respective Boards. Before opening of the schools, it was directed that the private schools which are conducting online classes shall be entitled to collect 60% of the tuition fees as "Capacity Building Fees" from the students who are availing the facility of online classes and that too after taking consent of the guardians. Such Capacity Building Fees shall be collected in equal monthly instalments The fees prescribed for the last academic session will not be enhanced. The private schools shall not recover the fees for the facilities which have not been provided by them such as laboratory facilities, sports facilities, extra co-curricular facilities etc.

The High Court issued several directions but observed that the private schools recognized by the Primary and Secondary Education Department shall be entitled to collect school fees from the parents of their students including the students of pre-primary classes in terms of the order passed by Government.

Before the Apex court, school management contended that none of the provisions of the Disaster Management Act, 2005 or the Rajasthan Epidemic Diseases Act, 2020 or Rajasthan Schools (Regulation of Fee) Act, authorizes the State Government to reduce the quantum of fees to be collected by the private schools. The bench made the following observations:

Directions issued inconsistent with 2016 Act

After analyzing the scheme of the Act of 2016, at least two aspects are amply clear. The first is that a firm mechanism has been specified under the Act of 2016 regarding determination of fee structure in the form of approval by the SLFC and, if required, adjudication by the DFRC and the Revision Committee. There is no express provision in the Act or Rules authorising the stated functionaries/authorities to modify the school fees once finalised in the manner provided by the Act of 2016. Whereas, the explicit mandate in the Act of 2016 is that, the fees so fixed by the concerned functionaries/authorities shall be binding on all concerned for three academic years. This is a clear indication of not altering the school fees unilaterally after it is fixed under the Act of 2016 in any manner for the specified period. If we may say so, it is in the nature of prohibition or a mandate to continue the same fee structure for at least three academic years, after it is fixed by the concerned authority under the Act. By its very nature, the direction given by the State Government is in conflict with the scheme of finalisation of fee structure under the Act of 2016 and 95 also the binding effect thereof for the specified period of three academic years on all concerned. Thus understood, the direction issued by the State Government in the form of order dated 28.10.2020 does not satisfy the twin tests of being consistent with the provisions of the Act; and also being necessary or expedient for carrying out the purposes of the Act, as the case may be.

State Government also cannot exercise power under Article 162 of the Constitution

It is one thing to say that the State may regulate the fee structure of private unaided schools to ensure that the school 101 Management does not indulge in profiteering and commercialisation, but in the guise of exercise of that power, it cannot transcend the line of regulation and impinge upon the autonomy of the school to fix and collect "just" and "permissible" school fees from its students. It is certainly not an essential commodity governed by the legislation such as Essential Commodities Act, 1955 empowering the State to fix tariff or price thereof. In light of consistent enunciation by this Court including the Constitution Bench, that determination of school fee structure (which includes reduction of fixed school fee for the relevant period) is the exclusive prerogative of the school Management running a private unaided school, it is not open to the Legislature to make a law touching upon that aspect except to provide statutory mechanism to regulate fees for ensuring that it does not result in profiteering and commercialization by the school Management. Ex consequenti, the State Government also cannot exercise power under Article 162 of the Constitution in that regard.

No power under DMA to issue order and directions in respect of school fee structure because of the pandemic situation

Having regard to the purport of the Act of 2005, it is unfathomable as to how the State Authorities established under the stated Act can arrogate unto themselves power to issue directions to private parties on economic aspects of legitimate subsisting contractual matters or transactions between them inter se. In any case, the impugned order has not been issued by the State Authority referred to in the Act of 2005. It is not enough to say that the same was issued under the directions of the Chief Minister of the State. For, the Chief Minister is only the Chairperson (Ex officio) of the State Disaster Management Authority established under Section 14 of the Act of 2005. Suffice it to observe that there is no provision in the Act of 2005 which concerns or governs the subject of interdicting the school fee structure fixed under the Act of 2016..The Act of 2005 is not a panacea for all difficulties much less not concerning disaster management [Section 2(e)] as such. As noted earlier, there is no express provision in the Act of 2005 which empowers the Director, Secondary Education (or the State Government) to issue order and directions in respect of school fee structure because of the pandemic situation.

Rajasthan Epidemic Diseases Act cannot be invoked to reduce school fees of private unaided schools

The measures enunciated in Section 4 of the Act of 2020 in no way deal with the "tariffs" of air, rail, road, hospital, temporary accommodation. It only enables the Authority to prohibit any usage or activities which the Government considers sufficient to spread or transmit epidemic diseases and for that purpose to inspect various places suspected of being infected with such diseases. Indeed, it can regulate or restrict the functioning of offices, Government and private and educational institutions in the State. That, however, would be only in respect of manner of its use and its timings including to observe standard operating procedures to ensure that epidemic diseases do not transmit or spread on account of activities carried out therein. That power to regulate cannot be invoked to control the tariffs, fees or cost of goods and services and in particular economic aspects of contractual matters between two private parties or so to say school fees of private unaided schools.

School Management cannot be heard to collect fees in respect of activities and facilities which are, in fact, not provided to or availed by its students due to circumstances beyond their control.

The court, even though held as above, observed that the same does not give licence to the school managements to be rigid and not be sensitive about aftermath of pandemic.

"The school Management supposedly engaged in doing charitable activity of imparting education, is expected to be responsive and alive to that situation and take necessary remedial measures to mitigate the hardship suffered by the students and their parents. It is for the school Management to reschedule payment of school fee in such a way that not even a single student is left out or denied opportunity of pursuing his/her education, so as to effectuate the adage "live and let live".

"In law, the school Management cannot be heard to collect fees in respect of activities and facilities which are, in fact, not provided to or availed by its students due to circumstances beyond their control. Demanding fees even in respect of overheads on such activities would be nothing short of indulging in profiteering and commercialisation. It is a well­known fact and judicial notice can also be taken that, due to complete lockdown the schools were not allowed to open for substantially long period during the academic year 2020­21. Resultantly, the school Management must have saved overheads and recurring cost on various items such as petrol/diesel, electricity, maintenance cost, water charges, 120 stationery charges, etc. Indeed, overheads and operational cost so saved would be nothing, but an amount undeservedly earned by the school without offering such facilities to the students during the relevant period. Being fee, the principle of quid pro quo must come into play. However, no accurate (factual) empirical data has been furnished by either side about the extent to which such saving has been or could have been made or benefit derived by the school Management. Without insisting for mathematical exactitude approach, we would assume that the school Management(s) must have saved around 15 per cent of the annual school fees fixed by the school/adjudicated by the Statutory Regulatory Authorities for the relevant period."

We would assume that at least 15 per cent of the annual school fees would be towards overheads/expenses saved by the school Management. Arguendo, this assumption is on the higher side than the actual savings by the school Management of private unaided schools, yet we are inclined to fix that percentage because the educational institutions are engaged in doing charitable activity of imparting and spreading education and not make money. That they must willingly and proactively do. Hence, collection of commensurate amount (15 per cent of the annual school fees for academic year 2020­2021), would be a case of profiteering and commercialisation by the school Management.

Case: Indian School, Jodhpur Vs. State Of Rajasthan [CA 1724 OF 2021]
Coram: Justices AM Khanwilkar and Dinesh Maheshwari
Citation: LL 2021 SC 240

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