Supreme Court Strikes Down Notification Which Required Private Unaided Educational Institutions In Chandigarh To Publish Their Balance Sheets

The part of the notification was struck down by the bench of Justices AM Khanwilkar, AS Oka and JB Pardiwala while considering special leave petition assailing Punjab and Haryana High Court's order dated May 28, 2021 of upholding an April 2018 notification issued by the authority by exercising powers under Section 87 of Punjab Re- organisation Act, 1966.

The High Court had dismissed the said writ petition(s) opining that the appropriate authority was competent to issue such Government Order/Notification.

As per the impugned notification, private unaided educational institutions in Chandigarh as per "clause a" were required to inter alia publish their balance sheets/ income and expenditure account on their websites (clause a) and as per ("clause b") were not required to charge any kind of cost from the parents.

Furthermore petitioners had also challenged that part of the impugned Government Order/Notification, whereby the penalty amount was enhanced in respect of unaided institutions governed by the Punjab (Regulations of Fees of Unaided Educational Institutions) Act, 2016 within the Union Territory in terms of impugned Government Order/Notification.

To adjudicate on the challenge to the impugned notification's "clause a", the bench referred to the ratio of the judgement Lachmi Narain vs. Union of India 1976 (2) SCC 953.

In Lachmi Narain v Union of India, the 3 judge bench provision had dealt with provision similar to Section 87 of the 1966 Act and had while dealing with expression restrictions or modifications" observed that,

"Such a wide construction must be eschewed lest the very validity of the section becomes vulnerable on account of the vice of excessive delegation. Moreover, such a construction would be repugnant to the context and the content of the section, read as a whole, and the statutory limits and conditions attaching to the exercise of the power. We must, therefore, confine the scope of the words "restrictions and modifications" to alterations of such a character which keep the inbuilt policy, essence and substance of the enactment sought to be extended, intact, and introduce only such peripheral or insubstantial changes which are appropriate and necessary to adapt and adjust it to the local conditions of the Union Territory."

The bench in this regards said, "Reverting to the stipulation specified in clause (a), we have no manner of doubt that the same cannot be considered as peripheral and insubstantial change. For, it is a substantive matter. We say so because the Principal Act (2016 Act), which is extended in terms of the impugned Government Order/Notification, makes no provision regarding disclosure of income, expenditure, account and balance sheet on website of the unaided schools, including as applicable in the State of Punjab. It would be a different matter if the Parliament or the State Legislature, as the case may be, were to incorporate such condition in the enactment such as the 2016 Act. Had it been so incorporated, it would then be open to the unaided institutions to question the validity of such a provision, which could be tested by the Constitutional Court on the basis of doctrine of fairness, arbitrariness and other grounds available under Part III of the Constitution of India or otherwise."

Remarking that the change introduced was not peripheral or insubstantial, the Court said,

"Suffice it to observe that the change introduced vide the impugned Government Order/Notification in terms of clause (a) in the third proviso inserted by way of paragraph 6 thereof, is not a peripheral or insubstantial change. Hence, it is clearly outside the scope of the authority bestowed on the competent authority in terms of Section 87 of the 1966 Act. That stipulation, therefore, needs to be struck down being ultra vires."

Upholding "clause b" by which private unaided educational institutions in Chandigarh were not required to charge any kind of cost from the parents, Court said,

"In that, this stipulation merely prohibits the unaided institutions from charging any kind of cost from the parents. In our opinion, this is consistent with the legislative intent and mandate of the 2016 Act. In fact, it restates the inbuilt policy, essence and substance of the 2016 Act. Thus, it is in no way a substantial change as in the case of clause (a), referred to above. Be it noted that as per clause (c) of paragraph 6 of the impugned Government Order/Notification — validity whereof has not been challenged — the unaided institutions are obliged to disclose complete fee structure at the beginning of the academic year. The obligation of the unaided institutions in terms of clause (b) of the same paragraph is in reference to the disclosure of fee structure as per clause (c). In other words, the unaided institutions can charge only the disclosed fee structure amount from its students and no further. This provision, therefore, is appropriate and necessary for better administration of the unaided institutions to which the 2016 Act gets extended in terms of the impugned Government Order/Notification."

On the issue of enhancement of the amount of penalty, court said,

"Again, this is not a peripheral or insubstantial alteration or modification of Section 14. Inasmuch as, what should be the quantum of penalty amount or punishment, is a legislative policy. It must be left to the concerned legislature. It cannot be provided by way of an executive order, including in exercise of powers under Section 87 of the 1966 Act — being a substantial change to the regime predicated in Section 14 of the 2016 Act. Accordingly, paragraph 8 of the impugned Government Order/Notification also cannot stand the test of judicial scrutiny. Hence, the same needs to be struck down being unconstitutional and ultra vires."

Case Title: INDEPENDENT SCHOOLS' ASSOCIATION CHANDIGARH (REGD.) & ORS. v UNION OF INDIA & ORS.| 2022 LiveLaw (SC) 518 | CIVIL APPEAL NO(S).3877/2022

Headnotes

Punjab (Regulations of Fees of Unaided Educational Institutions) Act, 2016 - Government Order/Notification stipulation that unaided Educational Institution shall upload income, expenditure account and balance sheet on its website - Ultra vires- It is clearly outside the scope of the authority bestowed on the competent authority.

Punjab (Regulations of Fees of Unaided Educational Institutions) Act, 2016 - Government Order/Notification stipulation that prohibits the unaided institutions from charging any kind of cost from the parents - Consistent with the legislative intent and mandate of the 2016 Act - The unaided institutions can charge only the disclosed fee structure amount from its students and no further.

Punjab (Regulations of Fees of Unaided Educational Institutions) Act, 2016 - Government Order/Notification provision whereby penalty amount is enhanced in respect of unaided institutions - Unconstitutional and ultra vires - What should be the quantum of penalty amount or punishment, is a legislative policy. It must be left to the concerned legislature. It cannot be provided by way of an executive order.

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