Increase in school fee for expansion permissible: Delhi High Court

The Delhi High Court Wednesday ruled that since private unaided schools are entirely dependent on the fee collected by them, earmarking of funds for a specific purpose as well as planning and maintaining a surplus by them cannot be construed as commercialisation of education.

A single judge bench of Justice Sanjeev Narula highlighted the importance of private unaided schools to maintain a surplus for the purpose of further development and honing of their educational facilities and services.

The court observed that these surplus funds are essential for the school’s long-term sustainability and growth which enables them to invest in better infrastructure, equipment, and resources.

It said that an increase in school fee to generate funds for expansion and betterment of educational/ infrastructural facilities is “permissible in law”.

“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,” the HC said.

The court, however, also said that under the Delhi School Education Act, 1973 (DSEA) and rules DoE has the authority to seek and examine the accounts of schools but their regulatory power must be exercised within the “precincts of the law”.

The observations were made while setting aside an order passed by DoE of January 25, 2019, rejecting the proposed fee hike of two schools. The court allowed Mahavir Sr. Model School to increase its fee in terms of 2018 statement of fees submitted to DoE and also allowed Mahavir Jr. Model School to enhance their fee structure in accordance with law.

“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… 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,” the HC observed adding DoE cannot act as an appellate body if there is no evidence to show that schools’ accounts were not prepared in accordance with applicable accounting standards or were rejected by the tax authorities. The HC observed that “there needs to be a collaborative effort between private unaided schools and the regulatory authorities to maintain a balance between the right to charge fees and the need for regulatory control to ensure the quality and affordability of education”.