15 % of the annual school fees for 2020-21 would be a case of profiteering & commercialization: SC

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 well-known 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 2020­-21 (Para.115).

INDIAN SCHOOL, JODHPUR & ANR. V/S STATE OF RAJASTHAN & ORS.

WITH

CIVIL APPEAL NOS. 1713­1722 OF 2021

(ARISING OUT OF SLP (CIVIL) NOS.27907­27916 OF 2019)

CIVIL APPEAL NO. 1723 OF 2021

(ARISING OUT OF SLP (C) NO. 27987 OF 2019)

CIVIL APPEAL NO. 1725 OF 2021

(ARISING OUT OF SLP (C) NO. 2942 OF 2020)

CIVIL APPEAL NO. 1729 OF 2021

(ARISING OUT OF SLP (C) NO. 5470 OF 2020)

CIVIL APPEAL NO. 1730 OF 2021

(ARISING OUT OF SLP (C) NO. 5589 OF 2020)

CIVIL APPEAL NO. 1726 OF 2021

(ARISING OUT OF SLP (C) NO. 5902 OF 2020)

CIVIL APPEAL NO. 1727­1728 OF 2021

(ARISING OUT OF SLP (C) NO. 6743­6744 OF 2021)

(@ DIARY NO(S). 6803 OF 2020)

AND

CIVIL APPEAL NO. 1732 OF 2021

(ARISING OUT OF SLP (C) NO. 6745 OF 2021)

(@ DIARY NO(S). 44 OF 2021)

CIVIL APPEAL NO. 1731 OF 2021

(ARISING OUT OF SLP (C) NO. 431 OF 2021)

CIVIL APPEAL NOS. 1733­1735 OF 2021

(ARISING OUT OF SLP (C) NOS. 577­579 OF 2021)

CIVIL APPEAL NO. 1736 OF 2021

(ARISING OUT OF SLP (C) NO. 2494 OF 2021)

3 May, 2021

The Hon’ble Supreme Court consisting of Justice A. M. Khanwilkar and Justice Dinesh Maheshwari held in this case that 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 commercialization. It is a well-known fact and judicial notice can also be taken that; due to complete lockdown the schools were not allowed to open for a substantially long period during the academic year 2020­21. A detailed note has been made after hearing the arguments of both the parties.

In the first set of appeals, six appeals emanate from common judgment and order dated 14.08.2019 passed by the High Court of Judicature for Rajasthan at Jodhpur and two other appeals against the judgment and order dated 11.02.2020 of the Jaipur Bench of the same High Court, which followed the earlier decision of the Jodhpur seat referred to above. In these matters, the appellants (Management(s) of private unaided schools in the State of Rajasthan) had assailed the validity of the Rajasthan Schools (Regulation of Fee) Act, 20163 , in particular Sections 3, 4, 6 to 11, 15 and 16 and the Rules framed thereunder titled Rajasthan Schools (Regulation of Fee) Rules, 20174 , in particular Rules 3, 4, 6 to 8 and 11 thereof being ultra vires the Constitution and abridge the fundamental right guaranteed under Article 19(1)(g) of the Constitution of India. In the second set of appeals, four appeals, also filed by the Management(s) of private unaided schools in the State of Rajasthan, emanate from the common judgment and order dated 18.12.2020 of the same High Court. The issues involved in all these appeals concern around 36,000 private unaided schools including 220 minority private unaided schools in the State of Rajasthan governed by the provisions of the Act of 2016 referred to above. Accordingly, all these appeals were clubbed and heard analogously. However, as aforesaid, two broad issues would arise for our consideration.

Looking upon the background of this case, 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.

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. After looking at the facts the following issues were noticed by the court

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.” (Para 5-11)

After hearing the arguments of Mr. PallavShishodia, learned senior counsel for the appellants, and Dr. Manish Singhvi and Mr. DevadattKamat, learned senior counsel for the State of Rajasthan. The court stated that “we have no hesitation in observing that although the High Court was right in its conclusion, it has disposed of the challenge to the validity of different provisions of the impugned Act of 2016 and the Rules framed thereunder in a summary manner. We agree that merely adverting to the decisions of this Court was not enough. The High Court should have then analysed the challenge to the respective provisions and also the overall scheme of the Act of 2016. Ordinarily, we would have relegated the parties before the High Court for reconsideration of the entire matter afresh. However, considering the nature of issues raised and the concerns expressed by the parties, we proceed to address the challenge to the relevant provisions of the Act of 2016 in this judgment itself.” (Para 17)

After making further observations in similar case laws like Pramati Educational and Cultural Trust (Registered) & Ors. vs. Union of India & Ors, the court stated that “the State Government cannot invoke Article 162 on this issue. It has been observed that determination of school fee structure including reduction of fixed school fee is the exclusive domain of the school Management, it is not open to the Legislature to make a law on that subject except to provide statutory mechanism to regulate fees for ensuring that it does not result in commercialization and profiteering by the schools.” (Para 63)

Further ado the court stated that “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 well-known 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 2020­-21. 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 on a mathematical exactitude approach, we would assume that the school Management(s) must have saved around 15 percent of the annual school fees fixed by the school/adjudicated by the Statutory Regulatory Authorities for the relevant period. At this stage, we must advert to the stand taken by the learned counsel for the appellants that the appellants would be content with the interim order passed by this Court on 08.02.2021, being confirmed as a final order (Para 112-118)

With clearly stating that “ No power under Disaster Management Act in respect of Schools Fee Structure due to Pandemic, and Schools Cannot Collect Fees with respect to facilities not availed by Students”, concluding the court held that, “ In view of the above, (a) we dispose of the first set of appeals challenging the validity of the Act of 2016 and the Rules framed thereunder with observations and the conclusion recorded in paragraph 52 above by reading down Sections 4, 7 and 10 of the Act and direct that henceforth the same be applied in conformity with the law declared in this judgment. (b) The second set of appeals, however, are allowed in the above terms including mentioned in paragraph 117. The impugned judgment and order of the High Court dated 18.12.2020 is quashed and set aside. Instead, the intra ­court appeals preferred by the appellants questioning the decision of the learned Single Judge and the writ petitions filed before the High Court to assail the impugned order dated 28.10.2020, shall stand disposed of in terms of this judgment.(c) The contempt petition(s) pending before the High Court in connection with the subject matter of these appeals also stand disposed of. No order as to costs.” (Para 119-122)

With all pending applications, if any, also stand disposed of.

View/Download Judgment - INDIAN SCHOOL, JODHPUR & ANR. V/S STATE OF RAJASTHAN & ORS.

Aaron Varughese