LILAWATI VIDYA MANDIR SR. SECONDARY SCHOOL vs DIRECTORATE OF EDUCATION
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 23.01.2024
Pronounced on:07.02.2024
+ W.P.(C) 8794/2018
BLUEBELLS SCHOOL INTERNATIONAL KAILASH
…. Petitioner
Through: Mr. Kamal Gupta, Mr. Sparsh Aggarwal, Ms. Kriti Gupta and Mr. Manish Vashist, Advocates
versus
DIRECTORATE OF EDUCATION …. Respondent
Through: Mr. Santosh Kumar Tripathi, Standing Counsel (Civil) GNCTD for DoE with Mr. Utkarsh Singh, Adv.
Mr. Khagesh B. Jha & Ms. Shikha Sharma Bagga, Advocates for impleader
+ W.P.(C) 6419/2019
LILAWATI VIDYA MANDIR SR. SECONDARY SCHOOL
….. Petitioner
Through: Mr. Kamal Gupta, Mr. Sparsh Aggarwal, Ms. Kriti Gupta and Mr. Manish Vashist, Advocates
versus
DIRECTORATE OF EDUCATION …. Respondent
Through: Mr. Santosh Kumar Tripathi, Standing Counsel (Civil) GNCTD for DoE with Mr. Utkarsh Singh, Adv.
CORAM:
HON’BLE MR. JUSTICE C. HARI SHANKAR
O R D E R
% 07.02.2024
WP (C) 8794/2018
1. The petitioner Bluebells International School is a private unaided recognised school, established in 1957. Though the school has been constructed on land leased from the Government, there is no condition, either in the allotment letter allotting the land to the petitioner or in the lease deed whereunder the land was leased, requiring the petitioner to obtain prior permission from the Directorate of Education (DoE) before increasing its fee. The present writ petition asserts that the only liability of the petitioner, in that regard, is the requirement of intimating its fee structure to the DoE, as required by Section 17(3)1 of the Delhi School Education Act, 1973 (the DSE Act).
2. On 19 January 2016, a Division Bench of this Court held, in Justice For All v. GNCTD2 , that the DoE was required to ensure that all unaided recognised schools which had been allotted land by the Government or municipal bodies with a clause, in the letter of allotment or in the lease deed, requiring the school to obtain prior approval of the DoE before enhancing its fees (the land clause), duly adhered to this requirement and did not increase their fees without the prior approval of the DoE. This judgment was circulated by the DoE to the heads of all schools, and the managers of Private unaided recognised schools, vide Order dated 19 February 2016. On 16 April 2016, the DoE issued another Order, requiring all schools, allotted land by land owning agencies with the land clause, to submit their proposals for increase in tuition fee for the 2016-2017 academic session, if any, online through the website of the DoE, so as to obtain prior sanction before increasing the fee. This was to be done, at the latest, by 31 May 2016. The petitioner points out that this requirement did not apply to it, as it was not allotted land with any attendant land clause.
3. The mandate of schools located on land which was allotted or leased with an attendant land clause having to take prior approval from the DoE before hiking their fees was reiterated by this Court in order dated 31 May 2016 in Action Committee Unaided Recognised Private Schools v. Directorate of Education3. Citing the said decision, the DoE issued Order dated 3 June 2016, extending the time for filing online proposals for fee hike by unaided recognised schools till 31 July 2016.
4. On 19 November 2015, the 7th Central Pay Commission (the 7th CPC) submitted its recommendations regarding revision of pay scales of employees of the government and public sectors. The revision was made retrospectively applicable w.e.f. 1 January 2016. The recommendations were accepted by the Central Government. Consequent thereto, the Central Civil Services (Revised Pay) Rules, 2016 [the CCS (Revised Pay) Rules] were notified on 25 July 2016.
5. By Circular dated 19 August 2016, the DoE adopted the CCS (Revised Pay) Rules and, thereby, implemented the 7th CPC recommendations in respect of its employees.
6. This was followed, however, by a further Circular dated 6 January 2017, directing all private unaided schools not to hold any meeting of their Managing Committees for increase in fee for the 2017-2018 academic session pending any decision by the competent authority, as the decision regarding the manner of implementation of the 7th CPC recommendations in private unaided recognised schools was still under consideration.
7. A further clarificatory circular was issued by the DoE on 27 March 2017, clarifying that managing committees of unaided schools could take decisions regarding revision of fees in normal courses as per established procedure, but were restrained from taking any such decision for revision of fees consequent to implementation of the 7th CPC recommendations. It was further reiterated that schools which were located on land provided by the DDA/government with an attendant land clause which does not apply to the present petitioner would not be permitted to increase their fee without prior sanction of the DoE.
8. The Circulars dated 6 January 2017 and 27 March 2017 were challenged by the Action Committee Unaided Recognised Private Schools before this Court by way of W.P.(C) 2637/2017 (Action Committee Unaided Recognised Private Schools v. DoE). By an interim order dated 30 March 2017, a learned Single Judge of this Court opined that, prima facie, the unfettered right of the private unaided schools to notify the fee structure after taking into account the major expenditure to be incurred in a year before commencement of the academic session cannot be abridged or whittled down only on the ground that the decision with regard to a major head of expenditure, namely, the increase in salary due to the Seventh Pay Commission, shall be worked out by the Directorate of Education in a few days after commencement of the academic session. This Court, therefore, permitted the petitioner-schools before it to intimate the revised fee schedule to the DoE within two weeks from the date of implementation of the 7th CPC, in the event the DoE directed implementation of the 7th CPC in private unaided schools, and that the said intimation would be treated as having been filed on 30 March 2017.
9. On 31 March 2017, the petitioner-School, through its statutorily constituted Managing Committee, which included nominees of the DoE, decided the fee structure to be charged by it during the year 2017-2018. The DoE nominees did not object to the proposed fee structure, which was duly intimated to the DoE, as required by Section 17(3) of the DSE Act.
10. It was only on 17 October 2017 that the DoE came out with an order, containing the Guidelines for implementation of the 7th Central Pay Commissions Recommendations in Private Unaided Recognised Schools of Delhi. In respect of schools which did not have any land clause in the documents allotting land for their establishment, the Order stipulated thus:
1. General Instruction for ALL Private Unaided Recognized Schools, irrespective of land status:
(a) A fee hike is not mandatory for recognized unaided schools in the NCT of Delhi.
(b) All schools must, first of all, explore the possibility of utilizing the existing reserves to meet any shortfall in payment of salaries and allowances, as a consequence of increase in the salaries and allowances of employees.
(c) The schools should not consider the increase in fee to be the only source of augmenting their revenue. They should also venture upon other permissible measures for increasing revenue receipts.
(d) Interest on deposits made as a condition precedent to the recognition of the schools and as pledged in favour of the Government should also be utilized for payment of arrears in the present case.
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(f) Fees/funds collected from the parents/students shall be utilized strictly in accordance with rules 176 and 177 of the Delhi School Education Rules, 1973. No amount whatsoever shall be transferred from the recognized unaided School fund of a school to the society or the trust or any other institution.
(g) The tuition fee shall be so determined as to cover the standard cost of establishment including provisions for D.A., bonus, etc., and all terminal benefits as also the expenditure of revenue nature concerning the curricular activities. No fees in excess of the amount so determined or determinable shall be charged from the students/parents.
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(i) Every recognized unaided school covered by the Act, shall maintain the accounts on the principles of account applicable to non-business organisation/not-for-profit organization as per Generally Accepted Accounting Principles (GAAP). Such schools shall prepare their financial statement consisting of Balance Sheet, Profit & Loss Account and Receipt and Payment Account every year as per proforma prescribed by the department vide order No. F.DE-15/ACT-I/WPC-4109/Part/13/7905-7913 dated 16/04/2016.
(j) Every recognized unaided school covered by the act, shall file a statement of fees latest by 31st March every year before the ensuing session under section 17(3) of the Act as per proforma prescribed by the department vide order no. F./DE/PSB/2017/16604 dated 03/07/2017.
(k) Though, increase in tuition fee is not the only option to implement the recommendations of 7th Central Pay Commissions Recommendations, nevertheless, if the Managing Committee of the School after exploring exhausting all the possibilities as per the conditions mentioned above feels it necessary to increase the tuition fee, the managing committee of the school shall hold a meeting with the group of teachers and parents which would include at least one parent representative from each section of the school and will present the detailed budget of the school, financial statements of the previous year, requirements of funds for implementation of 7th Central Pay Commissions Recommendations, availability of cash/reserve fund/savings with the School Fund account etc as well as present the proposal for fee hike, if any with justification and with all the documents mentioned in Annexure A. Inputs would be solicited from the parents and teachers representatives. Either the managing committee can take their suggestions into consideration and revise their proposal, or record their dissent. Director of Educations nominee (DEs Nominee) to remain present in the meeting. The minutes and attendance sheet of this meeting, countersigned by DEs Nominee including details of parents invited for meeting along with photographs of the meetings shall be submitted by the School to the DDE (District) concerned.
It is hereby clarified that presentation of the proposal for increase in fee before the representatives of the parents comprising of each section shall not be construed as seeking the approval of the parents representatives in view of the judgment dated 12/08/2011 of Honble High court in WPC 7777/2009 titled as Delhi Abhibhavak Mahasangh Vs. GNCTD.
(l) For the purpose of increase in tuition fee w.e.f. 01/01/2016 in terms of mid-session increase, the approval of the undersigned is not required under sub-section (3) of section 17 of DSEAR, 1973 in light of the order dated 30.03.2017 of Honble High Court in WPC 2637/17 in the matter Action Committee Unaided Recognized Schools Vs Directorate of Education.
The relevant part of Honble High Court Order is as under:-
Keeping in view the importance and relevance of 31st March, 2017 in section 17(3) if the Act and to balance the equities, this Court directs that in the event the Seventh Pay Commission is directed to be implemented in private unaided schools by the respondent, then petitioner schools would have an option within two weeks from the date of implementation of the Seventh Pay Commission to intimate the revised fee schedule and the same shall be taken as having been filed on 30th March 2017.
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3. Procedure for Increase in Tuition Fees
I. For Schools running either on Private Land or on DDA/L&DO allotted land NOT having condition to seek prior sanction of Director (Education) before any fee hike.
a. After complying with the instructions strictly mentioned at Para (1), if any school still feels it necessary to hike the tuition fee, it shall present its case along with detailed financial statements indicating income and expenditure of each account before the managing committee of the school including DEs Nominees.
b. The school before placing the proposal of increase in tution fee, shall ensure the compliance of section 18(4), Rule 172, 173, 174, 175, 176 and 177 and other relevant provisions of Delhi School Education Act and Rules, 1973 and guidelines issued by the department from time to time, various judicial pronouncements, and ratio laid down by Honble Supreme Court in Modern School Case4 and Delhi High Court in the matter of Delhi Abhibhavak Mahasangh Vs DoE5 (WPC 7777/2009) as well.
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e. The managing committee including DEs nominees shall evaluate the proposal of the school for increase in fee taking into consideration the availability of funds/reserves/cash in hand/bank balances/surplus. In case, DEs nominee disagrees with the proposal of increase in tuition fee or agrees to a lesser increase in tuition fee against the proposal on the basis of the relevant provisions of Delhi School Education Act and Rules, 1973, instructions/guidelines issued from time to time and judicial pronouncement in this regard, he/she shall record his/her dissent note in writing citing the provisions and other reasons justifying lesser increase in fee or no increase in fee as the case may be, in the minutes of the meeting and only then sign the minutes of the meeting. DEs Nominee of the school shall forward the minutes of the meeting to Dy. Director of District concerned for information and record in all cases. DEs Nominee shall submit to the DDE concerned a statement of Managing Committee meeting(s) attended by him.
f. The managing committee of the school shall file the full statement of fee under Section 17(3) of DSEAR, 1973 to the DDE concerned in the proforma as circulated by the department vide order dated 03/07/2017.
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j. No other head of fee like annual fee, development fee, earmarked levies shall be increased by the school for implementation of 7th Pay Commissions Recommendations, as a corollary to increase in tuition fee.
11. On 30 November 2017, the School submitted a copy of its fee structure, in compliance with the requirement of implementation of the recommendations of the 7th CPC. The fee structure had been approved by the Schools Managing Committee, which included nominees of the DoE. It was also stated that the nominees of the DoE did not raise any objection to the proposed fee structure, which was unanimously approved. As a school which was not subject to any land clause, the petitioner, asserts that the writ petition was only required to intimate the DoE of its fee structure under Section 17(3) of the DSE Act, which was thus done.
12. On 13 April 2018, the DoE issued another Order, withdrawing the Order dated 17 October 2017 in respect of schools operating on land to which the land clause applied. The Order dated 13 April 2018 did not, therefore, apply to the petitioner, in respect of which the earlier Order dated 17 October 2017 continued to operate.
13. Parents of some of the students in the petitioner-School addressed a complaint dated 15 May 2018 to the School, alleging that the School had illegally increased its fee and demanded arrears without prior approval of the DoE, as required by the Order dated 13 April 2018 issued by the DoE. In the circumstances, the complaint sought, from the School, either an order from the DoE authorising increasing of fees and collection of arrears pursuant to the requirement of implementation of the 7th CPC recommendations or a rollback of the fee hike, discontinuation of collection of arrears and refund of the arrears already collected. The complaint was forwarded by the Deputy DoE to the School on the same day, i.e. 15 May 2018, seeking a response within three days.
14. The School, in its response dated 17 May 2018, pointed out that it was not subject to any land clause and had only increased its tuition fee, with arrears payable in three instalments, and that the increase in fee was in accordance with the DoE Order dated 17 October 2017.
15. The DoE issued Order dated 25 May 2018, ordering the School to immediately revert back the enhanced fees for the academic session 2018-2019 and charge fees in accordance with the quantum which was being charged during 2017-2018, as (i) no approval had been granted by the DoE for any increase in fees by the School pursuant to the 7th CPC and (ii) it appeared, prima facie, that the increase in fees by the School was on the higher side, and had to be examined in detail by the DoE.
16. The School responded on 13 June 2018, submitting that the revised fees charged by it during 2017-2018 were in accordance with the DoE Order dated 17 October 2017 and that, insofar as the 2018-2019 academic year was concerned, the Managing Committee of the school, in its meeting dated 13 March 2018, made a modest enhancement of fee by 10% to meet the financial liabilities in the 2018-2019 academic year towards increment, DA, consequential statutory liabilities and inflation. It was further pointed out that the proposed fee schedule for 2018-2019 was immediately forwarded to the DoE and that the parents were duly informed on 4 April 2018. As a school which was not situated on land to which any land clause applied, it was submitted that there was no requirement for the School to obtain prior approval of the DoE before increasing its fees to meet the financial implications of implementation of the 7th CPC recommendations.
17. Subsequently, vide letter dated 11 June 2018, the DoE sought certain documents from the school, which were provided on 15 June 2018. Thereafter, the School was informed vide letter dated 11 July 2018 of the DoE that a committee had been constituted to inspect the School, and that the inspection would be conducted on 17 July 2018. The inspection was duly conducted and all documents as sought were provided by the School to the Committee. No report of the inspection was ever supplied to the school.
18. The DoE, thereafter, required the school to provide for the documents, vide its letter dated 23 July 2018. Some of the said documents were provided on 26 July 2018, and the remaining were provided on 1 August 2018, along with the representation dated 30 July 2018.
19. On 1 August 2018, the following Order came to be passed by the DOE:
ORDER
WHEREAS, Blue Bells School International, Kailash, New Delhi is a Private Recognized School functioning under Directorate of Education, GNCT of Delhi and is required to function in accordance with the provisions as contained under Delhi School Education Act, 1973 and Rules made there under and also to follow the lawful instruction as issued by Directorate of Education from time to time.
AND WHEREAS, a complaint was received, from the office of the Dy. Chief Minister, Delhi, filed by parents of the students studying in Blue Bells School International, Kailash, New Delhi, especially in relation to the unauthorized fee hike and arrears on account of implementation of 7th CPC recommendations demanded by the school.
AND WHEREAS, the said complaint was forwarded to the school for their comments. On perusal of documents submitted & the reasons given by the school, regarding their fee hike under Section 17(3), it was observed that an opportunity of being heard may be awarded to the School. Accordingly, Principal of the said school was heard on 17.07.18 at the time of inspection of the said school.
AND WHEREAS, certain points have emerged during the analysis of the submission made by the school viz. the Manager of the school stated that the school is on DDA Land without imposing the condition for taking prior approval of Director of Education before hike in fees.
AND WHEREAS, the Chairman/Manager of the School was directed to furnish/produce some relevant documents/information to justify their claim for fee hike. The Inspection Committee has given sufficient opportunity keeping in view of Natural Justice vide letter No. DDE/SE/2018-2019/1675 dated 11/07/2018 and further vide letter No. DDE/SE/2018-2019/224 dated 23/07/2018, but all in vain.
AND WHEREAS, the Director Education has already issued the guidelines for implementation of 7th CPC recommendations in Private Unaided Recognized School of Delhi, vide order No. DE15(318)/PSB/201619786 dated 17.10.2017 irrespective of school land status.
In pursuance of the said order a Committee under the Chairpersonship of Dy. Director of Education (South-East) consisting of DDE (Zone-25), ADE(SE) and Account Officer (SE) has examined the fee statement of the school under Section 17(3) of DSEA, 1973 and observed as under-
1. As per clause 14 of order no.F.DE /15(56)/Act/2009/778 dated 11.02.2009, development fee, not exceeding 15% of the total annual tuition fees may be charged for supplementing the resources for purchase, upgradation and replacement of furniture, fixture and equipment. However, as per audited financial statements for FY 2014-15, 2015-16 and 2016-17 and its comparative analysis, it is noted that the school is utilizing the development fee for in contravention of aforesaid clause 14. The details of mis-utilization of development fund are as follows:
(Figures in Rs.)
Particulars
2014-15
2015-16
2016-17
Repairs of Furniture and fixtures
5,45,534
1,54,408
3,20,944
Building Repairs and Maintenance
16,38,039
73,60,715
13,05,773
Watch and Wards
10,15,196
–
–
Electrical Goods and Repairs
3,73,319
1,98,010
1,38,161
Computers Upkeep and Maintenance
13,71,179
1,91,318
20,45,844
Conservancy charges
32,95,365
–
–
Botanical and Science park activities
6,84,579
–
–
General Repairs and Maintenance
1,28,236
–
3,27,266
Multipurpose Hall Repair and replacement
–
–
1,40,545
Language Lab Equipments Maintenance
–
–
1,24,033
Academic Extension project expenses
3,28,896
–
–
Playground expenses
18,799
–
–
Genset Repairs
1,93,778
–
2,49,519
Library Books
1,36,638
16,991
1,36,755
Sports Material
13,398
1,75,340
97,511
Total
97,42,956
80,96,782
48,86,351
2. As per Rule 180 of DSER, 1973 school is, inter-alia, required to submit copy of receipts and payments account duly audited by chartered accountant. However, school has failed to submit receipts and payments account for FY 2014-15, 2015-16 and 2016-17.
3. It is noted that during FY 2016-17 school has purchased double desks and single desks amounting to Rs.23,43,634 and Rs.20,56,553/- respectively. The details of opening balance of double desks and single desks are not disclosed in the financial statements and it appears these are merged in the block of furniture and fixtures of the school. Further, there were no disposal/sale of furniture and fixtures during the year. As per school submission, as on 15.07.2018 there are 1930 students only. Considering the students strength of the school and the amount involved in purchase of desks, it is clear that school has not followed due propriety while utilizing school funds.
4. It is noted that the school is collecting transport fee from the students, but not shown in the financial statements of the school till FY 2015-16. As per Rule 175 of DSER, 1973 read with section 18(3) of DSEA, 1973 school is required to maintain its accounts so as to exhibit clearly the income accruing to school by way of fee, etc., and therefore, school is in contravention of aforesaid provisions of DSEA & R, 1973 and has been hiding its transport fee collections and related expenditures.
5. On comparison of audited financial statements for FY 2015-16 and 2016-17, differences in opening balance as on 01.04.2016 have been noted. The detail of differences are as follows:
Particulars
Balance as on 31.03.2016
Balance as on 01.04.2016
General Fund
-25,60,181.00
32,80,886.00
Depreciation Reserve Fund
5,17,05,360.00
5,53,51,574.00
Vehicle Replacement Fund
–
8,05,000.00
Current Liabilities for services
1,956.00
6,081.00
Fixed assets Gross value
7,01,40,559.00
7,90,46,661.00
Investments
1,30,39,638.00
1,41,24,748.00
Advances to staff
78,263.00
1,03,713.00
Advance to contractor
70,194.00
72,271.00
TDS Receivable
3,58,491.00
4,20,117.00
Bank Balances
42,78,598.00
43,01,460.00
Interest on bank FDRs
11,87,249.00
12,75,429.00
Deposits (other than bank)
5,91,416.00
6,96,416.00
6. School has proposed for expenditure on higher side in its statement of fee filed under 17(3).
a) Expenditure on fixtures in 2016-17 is nil, estimated expenditure in 2017-18 is Rs.320944/- but proposed expenditure for 2018-19 is Rs.48,38,500/-.
b) Expenditure on purchase of computers in 2016-17 was Rs. 28,73,000/-, in 2017-18 is Rs.50,00,000/- and proposed expenditure for 2018-19 is Rs.10,00,000/-. Computer is a capital asset and lasts for many years. So much expenditure incurred every year not appears to be correct.
c) Expenditure on Teaching Aid during 2016-17 was Rs.1,70,582/- whereas proposed expenditure during 2018-19 is Rs.38,00,000/- and Rs.1,80,000/- for upgradation of Teaching Aid Equipments.
d) Overhead expenditure incurred during 2016-17 is Rs.3,48,76,134/- whereas proposed expenditure during 2018-19 is Rs.5,48,03,790/- which is an increase of 41.33% and as such the same doesnt not appear to be correct.
7. The total funds available for the year 2017-18 amounts to Rs.20,16,52,361/- out of which cash outflow in the year 2017-18 is estimated to be Rs.17,61,95,435. This results in surplus of funds amounting to Rs.2,54,56,926/-. The details are as follows:
Particulars
Amount (Rs.)
Cash and Bank balances as on 31.03.17 as per audited Financial Statements.
86,29,460
Add: Investments as on 31.03.17 as per audited Financial Statements
1,41,87,811
Less: Fixed Deposits for CBSE Reserve Fund
7,63,858
Available Funds
2,20,53,413
Add: Fees for 2016-17 as per audited Financial Statements (we have assumed that the amount received in 2016-17 will at least accrue in 2017-18).
17,80,12,041
Add: Other income for 2016-17 as per audited Financial Statements (we have assumed that the amount received in 2016-17 will at least accrue in 2017-18)
15,86,907
Estimated availability of funds for 2017-18
20,16,52,361
Less: Provisional expenses for the session 2017-18 as per receipts and payments account submitted by school vide its letter dated 15.06.2018
17,61,95,435
Net Surplus
2,54,56,926
In view of the above examination, it is evident that the school is having sufficient funds to meet the financial implications for the financial year 2017-18 after meeting its expenditure.
After taking into consideration all the facts and circumstances of the case, the school authority is hereby directed not to increase fee under any head of fee for session 2017-18.
NOW THEREFORE, I, Juhi Aggarawl, Deputy Director of Education in exercise of power conferred upon Director of Education under Section 17(3) and further delegated to the under signed vide order No. DE. 15(318)/PSB/2016/19742 dated 13/10/2017 of Director (Education) and keeping in view of the interest of the parents of school, the Manager/HOS Blue Bells school International, Kailash, New Delhi is hereby directed under Section 24(3) of DSEAR, 1973 to comply with the following directions:
i. Not to increase any fee in pursuance to the proposed fee hike for the session 2017-18 on any account including implementation of 7th CPC and if the fees is already increased, the same shall be refunded to the parents or adjusted in the fee of subsequent months.
ii. To communicate through its website, notice board and circular about rejection of fee increase proposed by the School.
iii. The fee should be utilized as per letter and spirit of Rule 177 of the DSEAR, 1973 and the judgment of the Honble Supreme Court in the case of Modern School Vs Union of India (2004).
iv. To utilise the fee collected from students should be in accordance with the provisions of Rule 177 of the DSER, 1973 and orders and directions issued by this Directorate from time to time.
20. The present writ petition seeks a writ of certiorari, quashing the aforesaid order dated 1 August 2018.
Rival Submissions
21. I have heard Mr. Kamal Gupta, learned Counsel for the petitioner and Mr. Santosh Tripathi, learned Standing Counsel for the GNCTD/DoE, as well as Mr. Khagesh P. Jha, who was permitted to intervene on behalf of some of the parents, at length.
22. Mr. Gupta submits that the issue in controversy is covered by the decisions of this Court in Ramjas School v. D.O.E.6 and Mahavir Senior Model School v. D.O.E.7
23. In particular, Mr. Gupta advances the following submissions:
(i) The impugned order has been passed in clear violation of the principles of natural justice. No Show Cause Notice was ever issued to the School by the DoE, enumerating the proposed disallowances, and no opportunity to respond was, therefore, extended. In the circumstances, as the School was unaware of any adverse order in the offing, it could not even seek a Show Cause Notice or any opportunity of hearing.
(ii) In its counter-affidavits to the present writ petition, the DoE has sought to contend that the law did not require it to extend any opportunity of personal hearing before passing the impugned order. This is contrary to the decisions in Ramjas School and Mahabir Senior Model School.
(iii) There is no allegation, against the petitioner, of commercialisation of education or of profiteering. In the absence of any such specific allegation, the DoE lacked the jurisdiction to interfere with the manner in which the petitioner had fixed its fee for the coming year. Any such intervention would infract Article 19(1)(g) of the Constitution of India.
(iii) Every school was entitled to maintain a reasonable surplus, and the existence of a surplus did not indicate profiteering or commercialisation.
(iv) The DoE did not possess the jurisdiction to examine the sufficiency of the surplus available with the school or assess whether, in view of the surplus, the school was justified in increasing its fees or not.
(v) Rule 190(6)8 of the Delhi School Education Rules, 1973 (the DSE Rules) had also been infracted, as the report of the inspection of the School had not been provided to it. In the present case, the notice informing the School that it would be inspected was issued on 11 July 2018. The inspection took place on 17 July 2018. Thereafter, on 23 July 2018, the DoE wrote to the School, directing the School to forward information/documents, enumerated under 12 heads, for preparation of the inspection report. There was no further communication with the School prior to the issuance of the impugned order dated 1 August 2018, which, purportedly on the basis of the documents related to the School, arrived at the conclusion that it had a net surplus of ? 2,54,56,926/, which was sufficient to meet the financial implications for the academic year 2017-2018. This procedure was clearly contrary to Rule 190 of the DSE Rules.
Besides, Mr. Gupta has also sought to submit that there are factual inaccuracies or errors in the manner in which the impugned order calculates the surplus available with the School. However, I do not deem it necessary to examine that aspect, for reasons which would presently become apparent.
24. In the context of the above submissions, Mr. Gupta places reliance on the following passages from the judgment of this Court in Mahavir Senior Model School:
11. The present case brings forth a classic tussle between autonomy of private schools in fixation of fees and the extent of governmental control thereon, an issue which routinely engages this Court. DoE asserted that notwithstanding the status of private unaided school, no fee can be fixed without their prior permission. The schools on the other hand, contended that they enjoy freedom in management of their affairs, which includes fixation of the fees. In that light, what lays for consideration before this Court is whether in passing the impugned order, the DoE has acted in excess of its jurisdiction vested under DSEA and DSER or any other extant rules/regulations, thereby impinging upon the autonomy of petitioner Schools in determination of their fee structure for the Academic Year 2018-2019.
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Whether the proposed hike in fee by the schools amounts to profiteering or commercialisation
17. Even though there is no provision found under the DSEA that requires unaided schools to seek prior permission from DoE before fee hike, yet, DoE exercises regulatory control emanating from Sections 17(3) and 18(3) and (4) of DSEA and the DSER. However, while regulating the fee structure, DoE does not act as an appellate body. It is not vested with the power to analyse the correctness of discretion exercised by the school, but is entitled to ensure that the school does not indulge in commercialisation of education. The bounds of regulatory jurisdiction are limited and restricted, as expounded by the judicial precedents noted hereinafter.
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Understanding the impugned order : Unpacking the legal issues at stake
23. This brings us to the grounds of challenge to the impugned order. Schools have alleged breach of the principles of natural justice due to denial of opportunity to respond to the allegations. This principle of audi alteram partem is the cornerstone of procedural fairness and is vital to ensure a just and equitable outcome in any legal process. It has been contended that the impugned order was issued without prior notice of proposed disallowances. There is no convincing response to this contention. The court is of the view that purported inconsistencies mentioned in the impugned order should have been revealed to the schools before passing of the impugned order, giving them adequate opportunity to respond. Adherence to this principle would make the decision-making process fair, transparent and would preclude bias or prejudice from influencing the outcome of a case. Thus, DoE must ensure that the schools are provided all relevant material and information, including the basis for any objections or concerns raised by the regulatory authorities, while scrtunising the statement if fee. This would allow the schools to present their stand in a meaningful way. That said, in the opinion of the court, instead of remanding the matter back to DoE at this juncture, it would be appropriate to evaluate the validity of the impugned order on its own merits.
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29. Next, comes the issue of whether accumulation of surplus funds amounts to profiteering. Firstly, this allegation has been made for the first time before the court in response to the petition. Secondly, DoE’s accusation of commercialisation of education is premised on mere presence of sufficient funds to carry on the operation of the school. Thus, vital questions that emerge for consideration are : (a) whether mere availability of a surplus disqualifies the schools from increasing their fees; and (b) whether DoE has the power to determine the adequacy of funds available with the schools in absence of finding of profiteering. The answers to both of these questions must be given in the negative for reasons set out below.
30. DoE’s power to scrutinise the accounts and other records of private unaided schools finds its source in Section 17(3) of the DSEA (examined hereinabove) r/w Rule 180(3) of the DSER. Under Rule 180(3), accounts and other records maintained by an unaided private school shall be subject to examination by the auditors and inspecting officers authorised by the Director. The Act and Rules specify, in no uncertain terms, that DoE has the authority to seek and examine the accounts of schools. This regulatory power must however, be exercised within the precincts of the law explained in the aforenoted judicial precedents. Schools are entitled to maintain a reasonable surplus for expansion of the system and development of education. Increase in fee to generate funds for expansion and betterment of educational/infrastructural facilities, as is the case with the Senior School, is permissible in law. It is important for private unaided schools to maintain a surplus for the purpose of further development and honing of their educational facilities and services. The accumulation of surplus funds is essential for the long-term sustainability and growth of the school which enables them to invest in better infrastructure, equipment, and resources. Private unaided schools may need to invest in building or improving infrastructure, such as construction of new classrooms, libraries, laboratories, sports facilities or technology upgrades, such as new computers, tablets and software. These increments are generally sourced from the surplus funds and enable the school to stay up-to-date with the latest technologies and provide quality education to its students. Thus, the process of fixation of fee for any given academic year entails consideration of a multitude of factors such as salaries and remunerations to be paid to teaching and non-teaching staff, cost of running the establishment, investments, infrastructure as well as future plans for expansion and development of the institution. Since the unaided schools are entirely dependent on the fee collected by them, they would obviously like to earmark funds for specific purposes and therefore, planning and maintaining a surplus per se cannot be construed as commercialisation of education. It is only if such funds are being used purely for commercial gain, rather than for improvement and development of the school, can it be construed as a form of commercialisation of education.
31. In the present case, DoE has recomputed surplus available with schools and held that the same is sufficient to meet their needs and thus, denied them the right to increase the fee. This approach adopted by the DoE, in the opinion of the court, is incorrect and impermissible. Determination of what constitutes a reasonable surplus would depend on various factors such as the size of the school, the level of infrastructure and facilities provided, salaries of the staff and the overall financial position of the school. In their statement of fee, Senior School has incorporated a detailed chart of estimated expenses expected to be incurred in the Academic Session 2018-2019 as also the income generated by them. Therefore, there is transparency in their financial operations and they can be held accountable for utilisation of funds. They have mentioned that the management intends to restructure and revitalise the school plant at an estimated cost of Rs 12 crores, and have even entered into a contract with an architect for said purpose. Since the court would not like to sit in appeal over this issue, it has refrained from examining the veracity of the figures mentioned therein, yet considerable merit is found in Mr Gupta’s submission that Senior School, operative since 1983, would require funds for reconstruction and allied activities. DoE must remember that unaided schools possess autonomy in their administration, including, autonomy to envision and plan for its growth and expansion; they cannot impose their own subjective opinion of what is sufficient amount for schools to have in order to meet their aims and objectives. In the instant case, the audited balance sheets and material provided by the schools have been reworked without a valid explanation. The audited balance sheets of private unaided schools are important documents that reflect their financial position and performance. These documents provide a clear and transparent picture of school’s economic status and help in assessing whether the school has sufficient resources to meet its expenses and whether a fee hike is justified. DoE cannot act as an appellate body and reject the said financial documents, in absence of any evidence to show that the accounts were not prepared in accordance with applicable accounting standards or were rejected by the tax authorities. Pertinently, an objection qua format of return and documents submitted by the schools was raised by DoE; however, in response to said query, the schools had clarified that they are following the prescribed format. In the impugned order, there is no adverse remark on this issue. Therefore, the DoE has undertaken the exercise of reworking the balance sheets without disclosure of justifiable reasons, or a finding of profiteering or commercialisation of education. This exercise reflects DoE’s subjective opinion, without any objective criteria, making the entire exercise arbitrary and unreasonable. The right of unaided schools to determine fee to be charged from students cannot be faltered purely only on account of presence of reasonable surplus in their books of account. DoE could have examined the veracity of surplus figures presented by the schools, but in order to deny enhancement of fee, they must, on credible basis, determine that the school has indulged in commercialisation of education, profiteering or levying of capitation fee. The School Managing Committee had carefully undertaken the exercise of deciding the budget for academic year concerned and sans a finding of profiteering or commercialisation of education, the DoE has acted in excess of its powers and impinged upon the autonomy of schools, protected by law, in rejecting Senior School’s proposed fee hike.
(Emphasis supplied)
Mr. Gupta points out that, though the decision in Mahavir Senior Model School is under challenge in LPA, no interim orders have been passed therein.
25. Mr. Gupta also places reliance on para 117 and of the judgment of the Supreme Court in Indian School v. State of Rajasthan9:
117. As such, it is not open to the State Government to issue directions in respect of commercial or economic aspects of legitimate subsisting contracts/transactions between two private parties with which the State has no direct causal connection, in the guise of management of pandemic situation or to provide mitigation to one of the two private parties at the cost of the other. This is akin to rob Peter to pay Paul. It is a different matter, if as a policy, the State Government takes the responsibility to subsidise the school fees of students of private unaided schools, but cannot arrogate power to itself much less under Article 162 of the Constitution to issue impugned directions (to school management to collect reduced school fee for the concerned academic year). We have no hesitation in observing that the asservation of the State Government of existence of power to issue directions even in respect of economic aspects of legitimate subsisting contracts/transactions between two private parties, if accepted in respect of fee structure of private unaided schools, is fraught with undefined infinite risk and uncertainty for the State.
(Emphasis supplied)
26. The expression capitation fee, submits Mr. Gupta, now stands defined in clause (b) of Section 2 of the Right of Children to Free and Compulsory Education Act, 2009 (the RTE Act) as any kind of donation or contribution or payment other than the fee notified by the school. Simultaneously, Section 13(1) of the RTE Act proscribes all schools from, while admitting a child, collecting any capitation fee or subjecting the child or his or her parents or guardian to any screening procedure. There is no such allegation against the School; ergo, it cannot be alleged that the School is charging capitation fee.
27. Thus, submits Mr. Gupta, the impugned Order dated 1 August 2018 is liable to be set aside as having been issued in excess of the jurisdiction vested in the DoE, in violation of the principles of natural justice and in violation of Rule 190 of the DSE Rules.
Submissions of Mr. Tripathi and Mr. Jha
28. Mr. Tripathi sought to contend that the decision in Ramjas School is distinguishable on facts as, in the present case, the impugned Order emanates from a complaint received by parents. He places reliance on Section 18(4)10 of the DSE Act, apropos the specific finding, in the impugned Order, that the School was utilising development fee, collected by it, for purposes other than those for which development fee could be utilised.
29. Supplementing the submissions of Mr. Tripathi, Mr. Jha submits that there was no allegation against Ramjas School, akin to the allegations of misutilisation of development fee, non-reflection of transport fee collected from students in the financial statements of the school to the 2015-2016 Financial Year, which amounted to contravention of Rule 17511 of the DSE Rules read with Section 18(3) of the DSE Act and differences in the opening balance as on 1 April 2016, reflected from the audited financial statements of the School for the Financial Years 2015-2016 and 2016-2017, specifically levelled against the petitioner-School in the impugned Order dated 1 April 2018. He also submits that there was no compliance, by the School with the preconditions for increasing the fee mid-section, as contained in the DoE order dated 17 October 2017. Nor, submits Mr. Jha, was there compliance with General Instruction 1(b) in the DoE Order dated 17 October 2017 which required all schools to, first of all, explore the possibility of utilising existing reserves to meet any shortfall in payment of salaries and allowances, as a consequence of increase in the salaries and allowances of employees.
30. Mr. Jha submits that commercialisation and capitation fee are not incantations which have specifically to be alleged in so many words and that, if the allegations in the impugned Order amount to commercialisation of education or charging of capitation fee, that would suffice to justify the Order. He submits that the surplus reflected in the impugned Order is surplus generated out of unlawfully collected amounts.
31. Mr. Jha, therefore, echoes the submission of Mr. Tripathi that the present case cannot be analogised to Ramjas School or Mahavir Senior Model School.
Submissions of Mr. Kamal Gupta in rejoinder
32. Mr. Gupta, in rejoinder, reiterates that, in the absence of any specific finding of commercialisation of education or of charging of capitation fee, the DoE is not entitled to subject the manner in which the school works out the fees to be charged by it to its own subjective assessment. An increase of fee by a recognised unaided school, he submits, can be interdicted by the DoE only if there is profiteering or commercialisation of education. The DoE cannot interfere with the decision to increase fees on a mere finding of adequate surplus, absent any allegation of profiteering.
33. Apropos the discrepancies alleged in the impugned order, Mr. Gupta submits that such discrepancies are alleged in every such order, and cannot constitute the basis for the DoE to interfere with the decision of the school to increase its fees so as to meet the additional financial outlay resulting as a consequence of the requirement of having to implement the 7th CPC recommendations.
34. Mr. Gupta draws my attention to paras 85 and 86 of the decision in Ramjas School, which read thus:
85. Adverting, now, to the impugned Order, dated 18th July, 2017 itself, it is possible to compartmentalise the Order into three distinct sections. The impugned Order commences by noting the fact of issuance of the earlier Order, dated 26th December, 2016, the representation, by the petitioner-School, thereagainst, and grant of personal hearing to the petitioner-School. It proceeds, thereafter, to analyse the submissions made by the petitioner. This analysis is divided into three sections, the first of which is titled Financial discrepancies, the second other discrepancies, and the third, though untitled, dealing with the alleged surplus fund available with the petitioner-School. The first section sets out three financial discrepancies, which merely requires the petitioner to comply with the recommendations, made in that regard, and record its assurance, that it would do so. The second section, dealing with other discrepancies, too, records the submission, of the petitioner, that the discrepancies would be rectified, and contemplates compliance therewith, at the time of next fee increase proposal. The controversy, before this Court, is concerned, essentially, with the third section of the impugned Order, which alleges that the petitioner had, with it, a surplus fund of Rs. 1,18,42,701/-, and provides a tabular statement in that regard. Having observed thus, the impugned Order proceeds to record a finding that the school (was) having sufficient funds even after meeting all the budgeted expenditure for the financial year 2016-17. Thereafter, the impugned Order proceeds to issue certain directions, to the petitioner, to maintain separate funds for earmarked levies, avoid diversion thereof, and to maintain a separate development fund, before concluding thus:
And whereas, these recommendations along with relevant materials were put before The Director of Education for consideration and who after considering all the material on record has found that the school is having sufficient surplus funds to meet the financial implications for the financial year 2016-17 and the representation dated 03.02.2017 and subsequent submissions made thereafter in this regard find no merit in respect of sanction for increase in fee and hereby rejected on the basis of the above-mentioned observations.
Accordingly, it is hereby conveyed that the representations for fee hike of Ramjas School, Sector-IV, R.K. Puram, New Delhi-110022, has been rejected by the Director of Education.
(Emphasis supplied)
86. The concluding directions follow.
35. Mr. Gupta further submits that there is not even an allegation that the school is commercialising education. In this context, he invites attention to para 156 of the concurring judgment of S.B. Sinha, J., in Islamic Academy of Education v. State of Karnataka12, rendered by a Constitution Bench of the Supreme Court, in which it was opined, apropos the surplus which could be maintained by unaided schools, that reasonable surplus should ordinarily vary from 6% to 15%, as such surplus would be utilized for expansion of the system and development of education. Applying this principle, as the returns from the fee charged by the petitioner-School during one year was ? 18 crores, ? 2.7 crores, as 15% of the fees, would constitute a reasonable surplus whereas, as per the impugned Order, the surplus in the funds of the petitioner-School was only ? 2.55 crores. Even on facts, therefore, it could not be alleged that the petitioner was maintaining any surplus in excess of what was required by it to run its affairs.
36. From the decision in Ramjas School, Mr. Gupta emphasises the following passages:
15. The answers, of the Court, to the issues arising in the above case were enumerated, towards the conclusion of the majority opinion13 (authored by B.N. Kirpal, J., as he then was). While dealing with the issue of whether the statutory provisions, regulating facets of administration, like control over educational agencies, control over governing bodies, conditions of affiliation and appointment of staff, employees, teachers and principals, including their service conditions, and regulation of fees, etc., would interfere with the right of administration of unaided educational institutions, the Supreme Court held that fees to be charged by unaided institutions cannot be regulated but no institution should charge capitation fee. Similarly, while examining the sustainability of its earlier view, in J.P. Unnikrishnan14, the Supreme Court, while holding the scheme, framed by it in the said decision, to be unconstitutional, held, nevertheless, thus:
However, the principle that there should not be capitation fee or profiteering is correct. Reasonable surplus to meet cost of expansion and augmentation of facilities does not, however, amount to profiteering.
(Emphasis supplied)
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47. Vide the impugned Order No F. DE-15/ACT-I/WPC-4109/PART/13/831, dated 18th July, 2017, the DoE has rejected the representation, dated 30th January, 2017 supra, submitted by the petitioner, in response to the order, dated 26th December, 2016, issued by the DoE. The impugned Order is studiedly, and noticeably, silent regarding the submission, of the petitioner that, as a school, the allotment of land to which was not conditioned by any land clause, the entire exercise of auditing the petitioner’s accounts, inspecting its records and issuance of the Order dated 26th December, 2016, was vitiated ab initio. The impugned Order proceeds, instead, to justify the rejection of the proposal, of the petitioner, to increase its fees for the academic session 2016-2017, returning, in the process, the following findings:
(Findings are omitted as the entire Order is reproduced hereinafter)
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56. The petitioner assails the impugned Order, on the ground of competence as well as on merits. The petitioner has sought to contend that the DoE had no authority or the jurisdiction to sit in appeal over the proposal, by the petitioner, to increase its fees, save and except to the extent of ensuring that the petitioner did not indulge in charging of capitation fee, or in profiteering. The entire exercise of inspecting the petitioner’s premises, auditing the accounts, and passing, ultimately, of the Order dated 26th December, 2016 supra, it is sought to be submitted, was based on an erroneous assumption that the petitioner was covered by the Orders dated 16th April, 2016 supra and 15th July, 2016 supra, issued by the DoE. On merits, too, the petitioner has sought to contend that the increase in fee, on its part, was justified, and that, as an unaided recognised school, the petitioner was entitled to some degree of autonomy, regarding the fixation of its fees, which could not be made subject to approval by the DoE. In this context, the petitioner highlights the fact that there is no finding, by the DoE, against the petitioner, either in the Order dated 26th December, 2016, or in the impugned Order, dated 18th July, 2017, of the petitioner indulging in charging of capitation fee or profiteering.
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59. Detailed submissions have also been advanced, by the petitioner, both in writing as well as during the course of oral arguments by learned Senior Counsel, regarding the merits of the impugned Order, dated 18th July, 2017, and the manner in which the alleged surplus of Rs. 1,18,42,701/-, has been worked out. The petitioner points out, in this regard, that, inexplicably, the alleged surplus, with the petitioner, as per the DoE, fell, from the figure of Rs. 8,45,05,819/-, in the Order, dated 26th December, 2016 supra, to Rs. 1,18,42,701/-, in the impugned Order dated 18th July, 2017. This, even by itself, submits the petitioner, is manifest of the arbitrary manner in which the DoE was examining the proposal, of the petitioner, to increase its fees for the 2016-2017 academic session.
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67. Detailed submissions, justifying the manner in which the alleged surplus, with the petitioner-School, has been worked out, by the DoE, in the impugned Order, dated 18th July, 2017, have also been placed on record.
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77. In the opinion of this Court, therefore, there are no grey areas, insofar as the scope of the power, and authority, of the DoE, to interfere with the fixation of fees, by an unaided educational institution, is concerned. That the DoE does exercise some degree of control, cannot be gainsaid; after all, unaided educational institutions are not islands unto themselves. The regulatory power of the DoE, however, exists solely for the purpose of prevention of commercialisation of education, by such unaided institutions. This legal position is, in fact, expressly acknowledged in the Order dated 26th December, 2016, of the DoE itself, which clearly states, in the very third paragraph, that Directorate of Education has the authority to regulate the fee and other charges to prevent commercialisation of education. Commercialisation of education, according to the Supreme Court, would relate to cases where the institution either charges capitation fees, or indulges in profiteering. A conjoint and holistic reading of the authorities, cited hereinbefore, discloses that the Supreme Court has not conceptualised commercialisation of education, insofar as the concept applies to unaided educational institutions, as a specie different, or distinct, from charging of capitation fees, and profiteering. Rather, in the case of such institutions, commercialization of education constitutes a distinct genus, consisting of capitation fee and profiteering, as the two distinct species identified and isolated by the Supreme Court. In the case of unaided educational institutions, it is only where they are found to be charging capitation fees, or indulging in profiteering, that they could be held to be guilty of commercialising education, and not otherwise.
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79. The DoE has filed, with its counter-affidavit, a tabular statement, setting out the remarks, of the DoE, regarding the particulars of various heads of expenses of the petitioner. Note 6, in the said tabular statement, alleges that the accumulation, by the petitioner, of reserve of development fund by collecting development fee more than its requirement for purchase, upgradation and replacements of furniture and fixtures and equipment was nothing but the profiteering done by the school over the years. In the entire record before us, there is no other reference, to the petitioner indulging in profiteering. The afore-quoted reference to profiteering, too, figures in the remarks, filed by the DoE before this Court, regarding the various heads of expenses of the petitioner, and not in the impugned Order, dated 18th July, 2017, or the Order, dated 26th December, 2016, which it purported to uphold. There is no allegation, in either of the said Orders, to the effect that the petitioner indulged in charging of capitation fee, or in profiteering.
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85. Adverting, now, to the impugned Order, dated 18th July, 2017 itself, it is possible to compartmentalise the Order into three distinct sections. The impugned Order commences by noting the fact of issuance of the earlier Order, dated 26th December, 2016, the representation, by the petitioner-School, thereagainst, and grant of personal hearing to the petitioner-School. It proceeds, thereafter, to analyse the submissions made by the petitioner. This analysis is divided into three sections, the first of which is titled Financial discrepancies, the second other discrepancies, and the third, though untitled, dealing with the alleged surplus fund available with the petitioner-School. The first section sets out three financial discrepancies, which merely requires the petitioner to comply with the recommendations, made in that regard, and record its assurance, that it would do so. The second section, dealing with other discrepancies, too, records the submission, of the petitioner, that the discrepancies would be rectified, and contemplates compliance therewith, at the time of next fee increase proposal. The controversy, before this Court, is concerned, essentially, with the third section of the impugned Order, which alleges that the petitioner had, with it, a surplus fund of Rs. 1,18,42,701/-, and provides a tabular statement in that regard. Having observed thus, the impugned Order proceeds to record a finding that the school (was) having sufficient funds even after meeting all the budgeted expenditure for the financial year 2016-17. Thereafter, the impugned Order proceeds to issue certain directions, to the petitioner, to maintain separate funds for earmarked levies, avoid diversion thereof, and to maintain a separate development fund, before concluding thus:
And whereas, these recommendations along with relevant materials were put before The Director of Education for consideration and who after considering all the material on record has found that the school is having sufficient surplus funds to meet the financial implications for the financial year 2016-17 and the representation dated 03.02.2017 and subsequent submissions made thereafter in this regard find no merit in respect of sanction for increase in fee and hereby rejected on the basis of the above-mentioned observations.
Accordingly, it is hereby conveyed that the representations for fee hike of Ramjas School, Sector-IV, R.K. Puram, New Delhi-110022, has been rejected by the Director of Education.
(Emphasis supplied)
37. Mr. Gupta also cites the following passages from Mahavir Senior Model School:
Re : findings of surplus and availability of sufficient funds
26. The fundamental rationale for rejection of petitioners’ request is the existence of surplus and adequacy of funds at the schools’ disposal. This is discernible from the following extract of the impugned order :
After detailed examination of all the material-on-record and considering the clarification submitted by the school, it was finally evaluated/concluded that :
The total funds available for the year 2018-2019 amounting to INR 9,67,96,579 and INR 6,49,46,324 out of which cash outflow in the year 2018-2019 is estimated to be INR 7,48,15,500 and INR 78,03,236 in respect of Mahavir Senior Model School and Mahavir Junior Model School respectively. This results in net surplus of INR 2,19,81,079 and INR 5,71,43,088 for Mahavir Senior Model School and Mahavir Junior Model School respectively.
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Per the estimated expenses for Financial Year 2018-2019 submitted by Mahavir Senior Model School along with statement of fees under Section 17(3) of DSEA, 1973, the school had estimated the total expenditure during Financial Year 2018-2019 of INR 9,44,60,500 (including capital expenditure of INR 12,05,000 against development fee). This budgeted expense of Financial Year 2018-2019 has been adjusted with the amount of capital expenditure (to be incurred against development fund), provision of retirement benefits (considered separately in table above), and depreciation (non-cash expense), and net expense of INR 7,48,15,500 has been considered in table above. Further in respect of Mahavir Junior Model School, against the total expenditure of INR 1,14,21,270 reported in the provisional financial statements for Financial Year 2017-2018, net amount of INR 78,03,236 has been considered after the adjustment of provision of retirement benefits (considered separately in table above), provision for reserve fund (considered separately in table above) and depreciation (non-cash expense), as budgeted expenses for Financial Year 2018-2019 were not separately submitted by the school.
In view of the above examination of the statement of fee for Academic Session 2018-2019 and subsequent submissions and representations of the school, it is evident that the school has sufficient funds for meeting all the budgeted expenditure for the Financial Year 2018-2019.
(ii) The directions issued by the Directorate of Education vide Circular No. 1978 dated 16 Apr 2010 states All schools must, first of all, explore and exhaust the possibility of utilising the existing fund/reserves to meet any shortfall in payment of salary and allowances, as a consequence of increase in the salary and allowance of the employees. A part of the reserve fund which has not been utilised for years together may also be used to meet the shortfall before proposing a fee increase. The school has sufficient funds to carry on the operation of the school for the Academic Session 2018-2019 on the basis of existing fees structure[ .]
27. DoE has examined the adequacy of funds mentioned in the schools’ statements of fee by categorising them under several heads, and then concluded that there was a surplus of Rs 5,71,43,088 with the Junior School and Rs 2,19,81,079 with the Senior School. On the basis of these accumulated reserves, DoE has rejected the enhanced fee structure. Petitioner Schools have contested the basis of DoE’s calculations and both parties have submitted comparative charts of available funds. However, court need not inspect the arithmetic workings supporting the figures, which is purely factual in nature, and would confine its scrutiny to the conclusions set forth in the impugned order to determine if the same fall within the scope of DoE’s jurisdiction.
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30. DoE’s power to scrutinise the accounts and other records of private unaided schools finds its source in Section 17(3) of the DSEA (exami