Delhi High Court quashes orders forbidding private unaided schools from collecting Annual Charges, Development Fees till physical re-opening

The Delhi High Court on Monday quashed Delhi government's orders which had forbidden private unaided schools from collecting Annual Charges and Development Fees from students till physical re-opening of the schools (Action Committee of Inaided Private Recognised Schools vs DOE). .A single-judge Bench of Justice Jayant Nath held that the embargo was prejudicial to the schools and would cause an unreasonable restriction in their functioning..The Court acknowledged that the private recognized unaided schools were dependent only on the fees collected by them, observing that any order restricting powers to collect normal and usual fees will "create grave financial prejudice and harm to the schools". .The Court noted that admittedly, break-up of expenses related to Annual Charges and Developmental fees were those which would continue to be incurred by the schools irrespective of whether they were physically open or not. ."In my opinion, a bare perusal of the heads of expenses clearly demonstrates and shows that most of the expenses are not correlated or connected with the actual physical opening of the schools for the students. Expenses like rents, taxes, travelling, conveyance, insurance charges, remuneration of auditors, repair and maintenance of building and maintenance of equipment, furniture and fixture are all expenses which will continue to be incurred by the schools irrespective of the physical shut down. In case, the said repairs and expenses are not done, it is bound to cause damage to the building, infrastructure and functioning of the schools.Further, it cannot be said that the school building is completely shut. The building would remain functional for administrative reasons and even, depending on facts and circumstances of the case, for conducting online classes, etc," the Court said. .The judgement was passed in a writ petition by Action Committee of Unaided Private Recognised Schools (petitioner) against the orders passed by the Department of Education, Delhi government. .The petitioner broadly contended that the government order curtailed the rights of private unaided recognized schools to fix their own fees and the same was illegal, without any authority or jurisdiction and unconstitutional under Article 19(1)(g) of the Constitution of India..The DOE inter alia pleaded that the orders were necessary on account of acute financial pressure and stress on the general public owing to the COVID-19 Pandemic. .Schools being charitable institutions cannot indulge in profiteering, it was argued. .The Court, after considering the provisions of the Delhi School Education Act, 1973 and several case laws, reiterated that the scope of power and authority of the DOE to interfere with the fixation/collection of fees by unaided educational institutions is limited to the extent of prevention of commercialisation of education. ."It is to ensure that a recognized unaided school does not indulge in collection of capitation fees or profiteering. Generating a reasonable surplus to augment its facilities and for other such purposes is a legitimate act which cannot be faulted with," the Court explained. .Therefore, in the absence of a finding of commercialisation or exploitation, the Court held, DOE cannot indefinitely cut down the established fees or restrain a school from collecting a portion of the existing fees. .In present case, since there was no finding by the DOE that the collection of Annual Charges and Development Fees amounted to profiteering by private unaided recognized schools, the Court proceeded to quash the government order. .The petition was disposed of with a direction that the amount payable by concerned students would be paid in six monthly installments with effect from June 10..Senior Advocate Shyam Divan with Advocates Kamal Gupta, Nipun Jain, Sparsh Aggarwal appeared for the petitioner. .DOE was represented by Standing counsel Ramesh Singh, Additional Standing Counsel Gautam Narayan with Advocate Dacchita Shahi..[Read Judgement]