# ORS v. · DIRECTOR OF EDUCATION DELHI & ORS

- **Citation:** [2009] 12 S.C.R. 631
- **Court:** Supreme Court of India
- **Decided:** 2009-08-07
- **Case number:** Civil Appeal No. 2700 of 2001
- **Bench:** S.B. Sinha, S.H. Kapadia, Cyriac Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ors-v-director-of-education-delhi-ors-25064
- **Pages:** 51

## Headnote

c
Education/Educational Institutions - Unaided recognized
schools -
Regulation of fees and funds collected from
students - Transfer of funds by the schools to the Societies/
trusts/other schools run by the same society - Direction by D
Director of Education (DOE) make such transfer in
accordance with r. 177 of Delhi School Education Rules -
Supreme Court by majority holding that DOE had power to
regulate fee structure of private unaided schools including
utilization of fee - Review Petition - Held: Per majority: E
Direction of DOE does not go beyond r. 177 - The direction
is only a gap-filling exercise - Transfer of funds from one
--1
institution to other under the same management is
permissible - Per minority: The direction of DOE is not
maintainable because it runs contra Constitution Bench
F
decisions of Supreme Court in TMA Pai, Islamic Academy
and P.A. lnamdar cases - The order of DOE was also without
jurisdiction - Delhi School Education Act, 1973 - s.24(3) -
Delhi School Education Rules, 1973 - r. 177.
Parents' Association had filed a writ petition against G
unaided recognized Schools interalia alleging that
transfer of funds by them to the societies/trusts/other
Schools run by the same society/trust was in violation of
631
H
632
SUPREME COURT REPORTS [2009] 12 S.C.R.
A Delhi School Education Act, 1973 and Rules framed
-
thereunder. Appellant also filed writ petition challenging
the order of Director of Education (DOE) dated 10.9.1997
whereby it was directed that fees and funds collected
from the students be utilized in accordance with Rule 177
B of Delhi School Education Rules, 1973. High Court
disposed of the writ petitions. High Court also appointed
a Committee (Duggal Committee) to look into justification
of increase in tuition fees etc. by the individual Schools.
c
Appellant filed appeal to this court challenging the
validity of High Court order as· regards order of DOE
dated 10.9.1997 and also challenging appointment of
Committee. In the meantime Committee submitted its
report. The same was also challenged by the appellant.
D
During pendency of the appeal, in terms of the report
of the Committee, DOE issued order dated 15.12.1999.
Clause 8 thereof directed that fees/funds collected from
students should be utilized strictly in accordance with
Rules 176 and 177 of the Rules. No amount should be
E transferred from the recognized unaided School Fund of
a school to the society or trust or any other institution.
This Court by the majority judgment held that DOE
had power to regulate the fee structure of private unaided
F
schools including utilization of fees u/r.177 (1) (b) and (c).
The Court also held that there was no conflict between
r. 177 and clause 8 of Order dated 15.12.1999.
The review petitions were filed on the grounds t!lat
since the fee fixation is governed by statutory rules, no
G directions could have been issued by this Court contrary
thereto; and that this court could not have gone into the
validity of order dated 15.12.1999 as the same was not
challenged in the appeal.
H
During pendency of the petition, in P.A. lnamdar Case
ACTION COMMITIEE, UN-AIDED PVT. SCHOOLS & 633
ORS. v. DIRECTOR OF EDUCATION
Constitution Bench of this Court clarifying TMA Pai case A
and Islamic Academy case, laid down the law relating to
fee structure.
Dismissing the petitions by majority, the Court
HELD:
B
Per S.H. Kapadia, J.
)
1. The Petitioner is correct in suggesting that if a
rider i.e. 'except under the management of the same c
society or trust' is added to Clause 8 of the Order dated
15.12.1999, then it would subserve the object underlying
Delhi School Education Act, 1973. The Act and Delhi
· School Education Rules, 1973 cannot come in the way
of the management to establish more schools. So long D
as there is a reasonable fee structure in existence and so
\
long as there is transfer of funds from one institution to
-
the other under the same management, there cannot be
any objection from the Department of Education (DOE)

## Text

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[2009] 12 S.C.R. 631
-
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS &
A
ORS.
v.
· DIRECTOR OF EDUCATION DELHI & ORS.
Review Petition (Civil) 1368 of 2004
In
B
Civil Appeal No. 2700 of 2001
AUGUST 7, 2009
>
[S.B. SINHA, S.H. KAPADIA AND CYRIAC
JOSEPH, JJ.]
c
Education/Educational Institutions - Unaided recognized
schools -
Regulation of fees and funds collected from
students - Transfer of funds by the schools to the Societies/
trusts/other schools run by the same society - Direction by D
Director of Education (DOE) make such transfer in
accordance with r. 177 of Delhi School Education Rules -
Supreme Court by majority holding that DOE had power to
regulate fee structure of private unaided schools including
utilization of fee - Review Petition - Held: Per majority: E
Direction of DOE does not go beyond r. 177 - The direction
is only a gap-filling exercise - Transfer of funds from one
--1
institution to other under the same management is
permissible - Per minority: The direction of DOE is not
maintainable because it runs contra Constitution Bench
F
decisions of Supreme Court in TMA Pai, Islamic Academy
and P.A. lnamdar cases - The order of DOE was also without
jurisdiction - Delhi School Education Act, 1973 - s.24(3) -
Delhi School Education Rules, 1973 - r. 177.
Parents' Association had filed a writ petition against G
unaided recognized Schools interalia alleging that
transfer of funds by them to the societies/trusts/other
Schools run by the same society/trust was in violation of
631
H
632
SUPREME COURT REPORTS [2009] 12 S.C.R.
A Delhi School Education Act, 1973 and Rules framed
-
thereunder. Appellant also filed writ petition challenging
the order of Director of Education (DOE) dated 10.9.1997
whereby it was directed that fees and funds collected
from the students be utilized in accordance with Rule 177
B of Delhi School Education Rules, 1973. High Court
disposed of the writ petitions. High Court also appointed
a Committee (Duggal Committee) to look into justification
of increase in tuition fees etc. by the individual Schools.
c
Appellant filed appeal to this court challenging the
validity of High Court order as· regards order of DOE
dated 10.9.1997 and also challenging appointment of
Committee. In the meantime Committee submitted its
report. The same was also challenged by the appellant.
D
During pendency of the appeal, in terms of the report
of the Committee, DOE issued order dated 15.12.1999.
Clause 8 thereof directed that fees/funds collected from
students should be utilized strictly in accordance with
Rules 176 and 177 of the Rules. No amount should be
E transferred from the recognized unaided School Fund of
a school to the society or trust or any other institution.
This Court by the majority judgment held that DOE
had power to regulate the fee structure of private unaided
F
schools including utilization of fees u/r.177 (1) (b) and (c).
The Court also held that there was no conflict between
r. 177 and clause 8 of Order dated 15.12.1999.
The review petitions were filed on the grounds t!lat
since the fee fixation is governed by statutory rules, no
G directions could have been issued by this Court contrary
thereto; and that this court could not have gone into the
validity of order dated 15.12.1999 as the same was not
challenged in the appeal.
H
During pendency of the petition, in P.A. lnamdar Case
ACTION COMMITIEE, UN-AIDED PVT. SCHOOLS & 633
ORS. v. DIRECTOR OF EDUCATION
Constitution Bench of this Court clarifying TMA Pai case A
and Islamic Academy case, laid down the law relating to
fee structure.
Dismissing the petitions by majority, the Court
HELD:
B
Per S.H. Kapadia, J.
)
1. The Petitioner is correct in suggesting that if a
rider i.e. 'except under the management of the same c
society or trust' is added to Clause 8 of the Order dated
15.12.1999, then it would subserve the object underlying
Delhi School Education Act, 1973. The Act and Delhi
· School Education Rules, 1973 cannot come in the way
of the management to establish more schools. So long D
as there is a reasonable fee structure in existence and so
\
long as there is transfer of funds from one institution to
-
the other under the same management, there cannot be
any objection from the Department of Education (DOE).
[Paras 19 and 20] (879-C-D]
E
2. It is not correct to say that Clause 8 of the Order
of DOE dated 15.12.1999 was never challenged and yet
'
the Court has gone into the validity thereof. It was argued
on behalf of the management that clause 8 of the Order
goes beyond Rule 177 and, therefore, this Court has F
discussed in the judgment under review, the difference
between accrual and application of income. (Para 21]
(679-F]
lt
3. It is not correct to plead that where the Act and the G
Rules thereunder operate, regulation of education would
J
be governed jlereby, and the Court cannot impose any
other or fur~her restrictions by traveling beyond the
scope, object and purport thereof. In this context it may
be noted that in T.M.A. Pai Foundation case and in Islamic
Academy case, the principles for fixing fee structure have H
..
634
SUPREME COURT REPORTS [2009] 12 S.C.R.
A been illustrated. However, they were not exhaustive.
They did not deal with determination of surplus and
appropriation of savings. In fact in the majority view of
the present matter, this Court has found that the above
topics are not dealt with by the Rules and therefore,
B clause 8 was found not to be beyond Rule 177 or in
conflict thereto as alleged. The Additional Directions
given in the Judgment of the Majority do not go beyond
Rule 177 but they are a part of gap-filling exercise and
discipline to be followed by the management. If
c reasonable fee structure is the test, then transparency
and accountability are equally important. In fact, as can
be seen from Reports of Duggal Committee and the
earlier Committee , excessive fees stood charged in some
cases despite the Rules, because proper Accounting
0
Discipline was not provided for in the Rules. Therefore,
the further Directions given are merely gap-fillers.
Ultimately, Rule 177 seeks transparency and
accountability and the further directions merely brings
about that transparency. [Para 22] [679-G-H; 680-A-E]
E
T. M.A. Pai Foundation and Ors. v. State of Karnataka
and Ors. 2003 (6) SCC 697; Islamic Academy of Education
and Anr. v. State of Kamataka and Ors. (2003) 6 SCC 697,
referred to.
F
Per Cyriac Joseph, J. (Concurring):
Though agreeing with the view of S.B. Sinha, J. that
any direction issued by the High Court or by the rule
-
making authority or any statutory authority must be in
•
conformity with the decision of this Court in the case of
G T.M.A. Pai Foundation as clarified by the decision of this
Court in the case of P.A. lnamdar, the judgment of S.H.
Kapadia, J. does not question or contradict such a legal
proposition. On the contrary, it is in recognition of the
above legal proposition that modification suggested on
H behalf of the review petitioners in respect of Clause 8 of
\
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS & 635
ORS. v. DIRECTOR OF EDUCATION
the order dated 15.12.1999 issued by the Director of
Education has been accepted. Hence, having regard to
the limited scope of a review petition and in view of the
submissions made by the parties the judgment rendered
by S.H. Kapadia, J. is concurred with. [Paras 2 and 3)
[680-G-H; 681-A-C]
P.A. lnamdar and Ors. v. State of Maharashtra and Ors.
2005 (6) sec 537 referred to.
S.8. Sinha, J. (Dissenting):
1. In Unni Krishnan case whereon High Court in its
order had placed reliance, it was held that no citizen has
any fundamental right to set up an educational institution.
Some guidelines had been issued. Those guidelines
indisputably have been held to be unconstitutional in
T.M.A. Pai Foundation and in P. A. lnamdar cases and,
thus, the directions contained in the order dated
15.12.1999 cannot be upheld. The Director of Education
moreover exercised its authority illegally and without
jurisdiction. [Para 21) [654-H; 655-A-B]
1.2. Sub-section (3) of Section 24 of Delhi School
Education Act, 1973 does not confer any power on the
Director to issue directions. The order dated 15.12.1999
is not a statutory order. Such a statutory order also could
not have been issued under the directions of the High
Court as the very premise on which such directions have
been issued does not survive any longer in view of the
decision of this Court in T.M.A. Pai Foundation case.
[Para 23 and 24) [656-D-F]
'
1.3. All regulations applicable to aided or unaided
recognised institutions, must be found in the statute a11d/
or the Rules. The Rules, require to be revisited by the
State in the light of the decision of this Court in P.A.
lnamdar case. [Para 26) [657-A-B]
A
B
c
D
E
F
G
H
636
SUPREME COURT REPORTS (2009] 12 S.C.R.
A
1.4. Rule 177 of Delhi School Education Rules, 1973
provides for utilisation of the fees realised by unaided
recognised schools. There is no regulation as regards
fee. Fee, of course, should not be such which would
amount to profiteering. So far as utilisation of savings
B from the fees collected by such school by its managing
committee is concerned, the same can be utilised for the
purpose of assistance of any other school or educational
institution under the management of the same society or
trust by which the first mentioned school is run. [Para 27)
C [657-8-C)
1.5. It is not correct to say that having regard to the
fact that the scheme for management of the school, as
contained in Section 5 of the Act, does not permit
utilisation of the fee collected by a managing committee
D of the school by another managing committee of another
school and, thus, the word 'management' should be
given a restricted meaning. Clause (c) of the proviso
appended to Rule 177(1) of the Rules itself raises a
distinction. It uses both the words "managing committee"
E and "management". They must be held to have different
meanings. [Para 28) [657 -D-E]
1.6. Clause (c) of the proviso appended to Rule
177(1) refers to the management of the same society or
F trust which means there may be more than one school
which is under the same management. If the word
"management" is substituted by the word the "managing
committee", the same would lead to an anomalous
situation. The very fact that grant of assistance to any
other school or educational institution, subject of course
G to the limitations provided for therein being permissible,
it, would not be correct to contend that the managing
committee of a school can under any circumstances
render any financial assistance to the managing
committee of another school. Such assistance can be
H
..
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS & 637
ORS. v. DIRECTOR OF EDUCATION
=(
rendered if both the schools are under the management
A
,J
of the same society or trust. [Para 28] [657-F-H; 658-A-B]
1.7. The authorities of all the schools, particularly,
unaided schools, may lay down its own fee criteria.
Imposition of regulation, however, only is permissible for B
the purpose of exercising of control over profiteering and
not earning of a profit which would include reasonable
.../
return of the investment made. [Para 29] [658-C-D]
k
1.8. It would, be incorrect to lay down any general
rule and enforce them on a private unaided institutions c
by way of gap-filing exercise and discipline or otherwise,
despite the fact that Rule 177 of the Rules occupies the
field. Such restrictions sought to be imposed, for all intent
,.
and purport, take away the autonomy regime of the
'
unaided schools which are applicable to these D
"\ l \.
institutions. [Para 29] [659-D-E]
. ,
1.9. The institutions, admittedly are entitled to earn
some profits and as such any direction contrary thereto
or inconsistent therewith by directing them to maintain
E
books ·of account on the principles applicable to nonbusiness organization/not-for-profit organization. Even
"'·
otherwise such directions run contrary to the ordinary
"
accounting principles and/or Income Tax Laws. [Para 29]
[659-F]
F
...
1.10. Any direction issued by the High Court, by the
rule making authority or any statutory authority must be
in conformity with the decision of this Court in T.M.A. Pai
Foundation as clarified by the decision of this Court in
P.A. lnamdar. [Para 31] [660-B]
G
....
T.M.A. Pai Foundation and Ors. v. State of Kamataka
and Ors. 2003 (6) SCC 697; P.A. lnamdar and Ors. v. State
of Maharashtra and Ors. 2005 (6) SCC 537, followed.
Krishnan Narula v. Jammu and Kashmir AIR 1967 SC
H
.,
638
SUPREME COURT REPORTS [2009] 12 S.C.R.
A 1368 Official Trustee of W.B. v. Stephen Court 2006 (14)
SCALE 285, referred to.
...
Arind Datar, "Privilege, Police Power and Res Extra
Commercium Glaring Conceptual Errors" 21(1) National Law
B School of India Review 133 (2009), referred to.
2. The judicial discipline mandates the Bench
comprising of two or three Judges to follow the
Constitution Bench decisions having regard to Article 141
of the Constitution of India. [Para 30) [659-H; 660-A]
,;(
.-
c
State of West Bengal v. Ashish Kumar Roy and Ors.
(2005) 10 sec 110 relied on.
3. The Government of NCT of Delhi has not amended
D the statutory rules on the basis of the recommendations
of the Duggal Committee. The court has only considered
herein the validity of the directions issued by the Director
'•' ..
of Education in terms of the order dated 15.12.1999.
While, thus, it will be open to the State to amend its rules,
E
the management of the schools shall also be at liberty to
challenge the validity thereof if and when such a question
arises. [Para 32) [660-C-D]
·'
Case Law Reference:
Judgment of S.H. Kapadia, J.
F
2003 (6) sec 697
referred to
Para 13
...
2003 (6) sec 697
referred to
Para 13
Judgment of Cyriac Joseph, J.
G
2005 (6) sec 537
referred to
Para 2
Judgment of S.B. Sinha, J.
,.
2003 (6) sec 697
followed Paras 21 and 29
2005 (6) sec 537
followed Paras 21 and 29
H
2009 (7) SCALE 34
referred to
Para 21
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS & 639
ORS. v. DIRECTOR OF EDUCATION
2006 (14) SCALE 285
referred to
Para 21
A
'"' ...
(2005) 10 sec 110
relied on
Para 30
CIVIL APPELLATE JURISDICTION: Review Petition (C)
1368 of 2004.
IN
B
Civil Appeal No(s). 2700 of 2001
I.
From the Judgment & Order dated 27.04.2004 of this
Court in C.A. No. 2700 of 2001.
c
WITH
R.P. (C) No. 1420 of 2004 in C.A. No. 2704 of 2001,
R.P. (C) No. 1421-1422 of 2004 in C.A. Nos. 2705-2706 of D
'\ 2001.
..
R.P. {C) No. 1423 of 2004 in C.A. No. 2703 of 2001,
R.P. {C) No. 1774 of 2004 in C.A. No. 2701 of 2001.
E
Soli J. Sorabjee, Salman Khurshid, Reetesh Singh,
Jhanavi Wona, Rasmi Khanna, Surya Kant, Romy Chacko,
"
Arpit Gupta, Ashok K. Mahajan, S. Wasim A. Qadri, Y.P.
"
Mahajan, D.S. Mahra, Asha G. Nair (for Anil Katiyar), Ashok
Agarwal, Rajender Pd. Saxena, for the appearing parties.
F
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. The Parliament enacted the Delhi
School Education Act, 1973 (for short "the Act") to provide for
better organization and development of school education in the G
,_
National Capital Territory of Delhi (NCT) and for matters
connected therewith or incidental thereto. The Act deals with
education at pre-primary stage, primary stage, secondary stage
and senior secondary stage.
H
640
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
2. The Act contains an interpretation clause defining a
large number of words mentioned therein including 'aided
"'· ..
school', 'minority school' and 'unaided minority school'.
Section 3 of the Act empowers an "Administrator" to
B regulate education in schools. Section 5 provides for the
scheme of management of every recognized school in terms
of the rules framed under the Act. It provides for the mode and
manner in which fees and other charges to be levied and
collected by the schools.
J
c
Section 18 provides for a 'school fund' known as the
"Recognised Unaided School Fund"; Sub-section (4) whereof
mandates that income derived by unaided schools by way of
fees shall be utilized for such educational purposes as may be
prescribed.
D
Section 24 provides for inspection of schools; sub-section
.,
(3) whereof reads as under:
..
"(3) The Director may give directions to the manager to
rectify any defect or deficiency found at the time of
E
inspection or otherwise in the working of the school."
Section 27 of the Act contains a penal provision. Rule
...
making power of the Administrator is specified in Section 28
"
thereof, clauses (r), (s), (u), (v) and (w) of Sub-section (2)
F whereof read as under:
"(2) In particular, and without prejudice to the generality of
the foregoing power, such rules may provide for all or any
of the following matters, namely:-
G
(r) fees and other charges which may be collected by an
aided school;
(s) the manner of inspection of recognised schools
H
(u) financial and other returns to be filed by the managing
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS & 641
ORS. v. DIRECTOR OF EDUCATION [S.S. SINHA, J.]
committee of recognised private schools, and the authority A
...
;.,
by which such returns shall be audited;
(v) educational purposes for which the income derived by
way of fees by recognised unaided schools shall be spent;
(w) manner of accounting and operation of school funds B
and other funds of a recognised private school;"
3. In exercise of the said rule making power, the
~
Government of National Capital Territory of Delhi framed rules
I •
known as the Delhi School Education Rules, 1973 (for short "the c
Rules").
Chapter XIII of the Rules is divided in three parts. Part A
deals with fees and other charges in aided schools, Part B
deals with fee concessions and Part C provides for pupils 'fund. D
'I
Chapter XIV deals with 'School fund'.
•
I may notice Rules 172, 173, 177(1), 177(2)(b), (c), (d), (e)
(3) and (4), which read as under:
"172. Trust or society not to collect fees, etc., schools to E
grant receipts for fees, etc., collected by it. -- (1) No fee,
•
contribution or other charge shall be collected from any
'
student by the trust or society running any Recognized
school; whether aided or not.
F
(2) Every fee, contribution or other charge collected from
any student by a Recognized school, whether aided or not,
shall be collected in its own name and a proper receipt
shall be granted by the school for every collection made
by it.
G
173. School Fund how to be maintained.-(1) Every
School Fund shall be kept deposited in a nationalized bank
or a scheduled bank or any post office in the name of the
school.
H
642
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
(2) Such part of the School Fund as may be approved by
the Administrator, or any officer authorized by him in this
"'
.-
behalf, may be kept in the form of Government securities.
(3) The Administrator may allow such part of the School
8
Fund as he may specify in the case of each school,
(depending upon the size and needs of the school) to be
kept as cash in hand.
(4) Every Recognised Unaided School Fund shall be kept
deposited in a nationalized bank or a scheduled bank or
..
c
in a post office in the name of the school, and such part of
the said Fund as may be specified by the Administrator
or any officer authorized by him in this behalf shall be kept
in the form of Government securities and as cash in hand
respectively :
D
Provided that in the case of an unaided minority
•
school, the proportion of such Fund which may be kept in
the form of Government securities or as cash in hand shall
be determined by the managing committee of such
E
school."
177. Fees realized by unaided recognized schools how
to be utilized -
(1)
Income derived by an unaided recognized school
F
by way of fees shall be utilised in the first instance,
for meeting the pay, allowances and other benefits
admissible to the employees of the school.
Provided that savings, if any, from the fees collected
G
by such school may be utiljsed by its managing
committee for meeting capital or contingent
expenditure of the school, or for one or more of the
following purposes, namely :-
(a)
***
***·
H
ACTION COMMITTEE, UN-AIDE.D PVT. SCHOOLS & 643 ·
ORS. v. DIRECTOR OF EDUCATION [S.B. SINHA, J.]
(b)
***
***
A
;.;,
or
'
.
(c)
,, assisting any other school or educational institution,
not being a college, under the management of the
B
same society or trust by which the first mentioned
school is run.
(2)
the savings referred to ii] sub-rule (1) shall be arrived
I-·
at after providing for the following, namely:-
,.
c
(a)
*** ***
***·
(b) ' the needed expansion of the school or any
expenditure of a development nature;
(c)
the expansion of the school building or for the D
'•
expansion or construction of any building· or
')
establishment of hostel or expansion of hostel ·
accommodation;
(d)
co-curricular activities of the students;
E
(e)
reasonable reserve fund not being less than
•
ten per cent, of such savings;
'
(3)
Funds collected for specific purposes, like sp_orts,
co-curricular activities, subscriptions for excursions
or subscriptions for magazines, arid annual
F
charges, by whatever name called, shall be spent
solely for the exclusive benefit of the students of the
concerned school and shall not be included in the
savings referred to in sub-rule (2).
G
(4)
The collections referred to in sub-rule (3) shall be
administered in the same manner as the monies,
standing to the credit of the Pupils Fund as~
administered."
H
644
SUPREME COURT REPORTS [2009J 12 S.C.R.
A
4. One Delhi Abibhavak Mahasangh filed a Writ Petition
impleading therein about thirty unaided recognised public
"'
schools, Union of India, Government of National Capital Territory
of Delhi and some other Government Departments to take
necessary steps to regulate admissions in the recognised
8
unaided private schools in Delhi in order to avoid and to check
demand of illegal money in the name of donations by the
schools at the time of admissions; to frame a policy or to make
necessary amendments in the law regulating recognition and
conditions thereof stipulating with regard to admission and
payment of fee etc. of the recognised unaided private schools.
..
c It was alleged that the private schools had been indulging in
large scale commercialization of education which had reached
an alarming situation on account of the failure of the
government to perform its statutory functions under the Act and
D the Rules besides failing to insist on schools to follow the
affiliation bye-laws and the bye-laws framed by the Central
Board of Secondary Education.
5. Indisputably, the Director of Education, Delhi issued an
order dated 10.09.1997, directing:
E
"1. No Registration Fee of more than Rs. 25/- (Rupees
Twenty Five) per student prior to admission shall be
realised.
F
2. No Admission Fee of more than Rs. 200/- (Rupees Two
Hundred) per student at the time of initial admission shall
be realised. Admission Fee shall not be realised again
from any student who is once given admission . The
Admission Fee realized from any student exceeding Rs.
200/- (Rupees Two Hundred) in the academic year 1997G
98 shall be refunded to the parents/students within 15 days
of the date of the issue of the direction.
3. No caution money/security of more than Rs. 500/-
(Rupees Five Hundred) per student shall be realized. The
H
caution money thus collected shall be kept deposited in a
ACTION COMMITTEE, U~~-AIDED PVT. SCHOOLS & 645
ORS. v. DIRECTOR OF EDUCATION [S.B. SINHA, J.]
-· "'
scheduled bank in the name of the concerned schools and A
shall be refunded to the school at the time of his/her leaving
the school along with bank interest thereon. The caution
money collected in the session 1997-98 exceeding Rs.
500/- shall be refunded to the parents/students within 15
days of the issue of the directions.
B
4. No separate science fee or computer fee shall be
realized from any student up to the secondary stage.
5. The fee structure of the school (excluding admission fee,
caution money, science fee and computer fee) shall be c
reviewed in a meeting having the proper representatives
of parents and the nominee of the Director of Education,
to consider the feasibility of reducing the fees and funds
keeping in view the actual financial requirement of the
"
school."
D
\
6. Several writ petitions were filed by the managements
of various Unaided Private Schools questioning the said
directions. The principal questions which fell for consideration
before the High Court were:
E
" ... whether unaided recognised schools are indulging in
..
"
commercialisation of education. Are the students and their
parents being exploited? If it is so, has the Government
power to issue the impugned order to control and check
menace of commercialisation and exploitation. The further
F
question is whether the Government has performed its
statutory functions as envisaged by the Act and the Rules.
If not, what directions are required to be issued."
7. The High Court took notice of the provisions of the Act G
'><,
and various Rules issued thereunder as also the background
under which the impugned order dated 10.09. 1997 was issued.
A Committee headed by Mr. J. Veera Raghvan, former
Secretary in the Ministry of Human Resource Development had
H
646
SUPREME COURT REPORTS [2009] 12 S.C.R.
A been constituted to study the fee structure of the private
"
.,
recognized unaided schools along with other charges, which
in turn noticed wide variations in the tuition fees charged by the
private institutions. It filed its report suggesting guidelines in
respect of disbursement of the funds.
B
The High Court noticed the recommendations of the
Committee for the year 1997-98 and the circulars which were
issued pursuant thereto.
..j
The High Court also referred to the decision of this Court
c in Unni Krishnan, J.P. v. State of A.P. [(1993) 1 SCC 645] to
opine that no citizen has a fundamental right to deal in
education. It furthermore referred to other decisions of this Court
wherein Rule 177 of the Rules came up for consideration.
D
It was held:
"(i) It is the obligation of the Administrator and or Director
of Education to prevent commercialisation and exploitation
in private unaided schools including schools run by
minorities.
E
(ii) The tuition fee and other charges are required to be
fixed in a validly constituted meeting giving opportunity to
the representatives of Parent Teachers Association and
Nominee of Director of Education of place their
F
viewpoints.
(iii) No permission from Director of Education is necessary
before or after fixing tuition fee. In case, however, such
fixing is found to be irrational and arbitrary there are ample
G
powers under the Act and Rules to issue directions to
school to rectify it before resorting to harsh measures. The
>
question of commercialisation of education and
exploitation of parents by individual schools ca.n be
authoritatively determined on thorough examination of
accounts and other records of each school.
H
ACTION COMMITIEE, UN-AIDED PVT. SCHOOLS & 647
ORS. v. DIRECTOR OF EDUCATION [S.B. SINHA, J.]
(iv) The Act and the Rules prohibit transfer of funds from A
the school to the society or from one school to another.
(v) The tuition fee cannot be fixed to recover capital
expenditure to be incurred on the properties of the society.
(vi) The inspection of the schools, audit of the accounts and B
compliance of the provisions of the Act and the Rules by
private recognised unaided schools could have prevented
~
the present state of affairs.
(vii) The authorities/Director of Education has failed in its c
obligation to get the accounts of private recognised
unaided schools audited from time to time.
(viii) The schools/societies can take voluntary donations
not connected with the admission of the ward.
D
)
(ix) On the peculiar facts of these petitions there is no per
se illegality in issue of the impugned circular dated 1oth
September 1997.
(x) An independent statutory Committee, by amendment E
of law, if necessary, deserves to be constituted to go into
_,
factual matters and adjudicate disputes which may arise
..
in future. in the matter of fixation of tuition fee and other
charges.
(xi) The Government should consider extending Act and
F
Rules with or without modifications to all schools from
Nursery onward."
8. The High Court directed the appointment of a
Committee comprising of Ms. Justice Santosh Duggal, a retired G
Judge of its Court as a Chairperson with power to nominate
two persons - one with the knowledge of Accounts and other
from the field of education in consultation with the Chief
Secretary of NCT of Delhi. The Duggal Committee in terms of
the said direction submitted its report to the respondent No. 1. H
648
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
9. During the pendency of appe~I before this Court,
•
pursuant to the report submitted by the Duggal Committee, the
Director of Education issued a notification on 15.12.1999, the
preamble whereof reads as under:
B
"Whereas by the judgment dated 30th October, 1998, in
C.W.P. No. 3723 of 1997 (Delhi Abhibhavak Magasangh
Vs Union of India, AIR 1999 Del 124), the Hon'ble High
Court of Delhi had considered the order No. DE.15/Act/
Spl.lncp/150/97/1293 -2093 dated 10th September, 1997
c
and had issued certain directions;
And whereas in pursuance of the aforesaid orders
of the Hon'ble High Court of Delhi, a committee was
constituted by the Govt. of NCT of Delhi vide notification
No. 323 dated 7th December, 1998 with (Ms.) Justice
D
(Retd.) Santosh Duggal as Chairperson to decide the
claims in fee like and other charges levied by individual
y
recognized unaided school for the period covered by the
orders referred to above and the report submitted by the
Committee has been considered by the Government of
E
NCT of Delhi;
And whereas the report submitted by the Committee,
after going through the accounts submitted by the schools,
..,
cites a number of irregularities and malpractices, relating
F
to collection and utilization of funds, indulged in by the
schools.
Now, therefore, I, S.C Poddar, Director of Education,
Govt. of NCT of Delhi hereby direct the managing
committees/manages of all recognized unaided schools in
G
the NCT of Delhi under sub-section (3) of section 24 read
with sub -section (4) and (5) of section 18 of the Delhi
School Education Act, 1973 read with rules 50, 51,177
and 180 of Delhi Schools Education Rules, 1973 and all
other powers enabling me in this behalf, as follows:
H
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS & 649
ORS. _v. DIRECTOR OF EDUCATION [S.B. SINHA, J.)
);
Direction Nos. 7 and 8 thereof, read as under:
A
"7. Development fee, not exceeding ten per cent, of the
total annual tuition fee may be charged for supplementing
the resources for purchase, upgradation and replacement
of furniture, fixtures and equipment. Development fee, if B
required to be charged, shall be treated as capital receipt
and shall be collected only if the school is maintaining a
Depreciation Reserve Fund, equivalent to the depreciation
~
charged in the revenue accounts and the collection under
this head alongwith and income generated from the c
investment made out of this fund, will be kept in a
separately maintained Development Fund Account.
8. 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 D
'T
whatsoever shall be transferred from the Recognized
\
unaided school fund of a school to the society or the trust
or any other institution."
10. The said appeals were disposed of by a judgment and
E
order dated 27.04.2004 since reported in (2004) 5 sec 583.
This Court took into consideration the cost of inflation
,.
between 15.12.1999 and 31.12.2003. In addition to the said
directions given by the Director of Education in its order dated
15.12.1999, other and further directions were also issued.
F
11. Indisputably, Unn1 Krishnan (supra), on the basis
whereof the judgment of the High Court rested, was overruled
by an Eleven-Judge Bench of this Court in T.M.A. Pai
Foundation and Others v. State of Karnataka and Others G
"'
[(2002) ~cc 481).
For clarification of TM.A. Pai Foundation (supra), another
Constitution Bench was constituted being Islamic Academy of
Education & Anr. v. State of Karnataka & Ors. [(2003) 6 SCC
H
650
SUPREME COURT REPORTS [2009] 12 S.C.R.
A 697]. Later on, a larger bench comprising of Seven-Judges of
•
this Court was again constituted for clarification of T.M.A. Pai
Foundation (supra) and Islamic Academy of Education (supra)
in P.A. lnamdar and Others v. State of Maharashtra and
Others, the decision whereof is reported in (2005) 6 SCC 537.
B
12. When judgment in the instant case was pronounced,
this Court did not have the benefit of the decision of this Court
in P.A. lnamdar (supra).
13. Review petitions were filed by the petitioners herein
c for review of the aforementioned judgment dated 27.04.2004.
14. Noticing that the correctness or otherwise of Islamic
Academy of Education (supra) had been referred to a larger
bench and with a view to maintain consistency as also having
D regard to the fact that the issues raised in the review
applications have far reaching implications, notices were
•
directed to be issued.
15. It is in the aforementioned backdrop, after the decision
E
of this Court in P.A. lnamdar (supra), this matter has been
placed before us.
16. Mr. Soli J. Sorabjee, Mr. Salman Khurshid, learned
'
senior counsels and Mr. Romy Chacko, learned counsel
appearing on behalf of the petitioners, in support of the Review
F Petitions, urged:
(i)
In view of the larger bench decision pf this Court in
P.A. lnamdar (supra), the directions issued by the
Director of Education which have been upheld by
G
this Court cannot be sustained as the schools and
in particular the minority schools have a greater
autonomy in laying down their own fee structure.
(ii)
Although collection of any amount for establishment
of the school by a trust or a society is forbidden,
H
the transfer of fund by one school to another school
..
ACTION COMMITTEE, UN-AIDED PVT. SCHOOLS & 651
ORS. v. DIRECTOR OF EDUCATION [S.B. SINHA, J.]
under the same management being permissible in
A
terms of Rule 177 of the Rules, the directions
prohibiting such transfer by the Director of
Education in its order dated 15.12.1999 must be
held to be illegal.
(iii)
The decision of T.M.A. Pai Foundation (supra) with
regard to construction of Article 19(1 )(g) of the
Constitution of India should be considered in its
correct perspective as there exists a distinction
between 'profit' and 'profiteering'.
B
c
(iv) · The status of a minority institution being on a higher
pedestal, as has been noticed in T.M.A. Pai
Foundation (supra), the impugned directions could ·
not have been issued by the Director of Education
which would affect the autonomy of the minority
D
institution ..
17." The· basis for issuing the directions by the High Court
was, as noticed hereinbefore, premised on Unni Krishnan
(supra). Unni Krishnan (supra) has since been overruled in
E
TM.A. Pai Foundation (supra) holding that the right of a citizen
of India to set up educational institutions is a fundamental right
It was furthermore held that the right of the minority to set up
educational institution, however, is not absolute being subject
F
to regulations. So far as the statutory provisions regulating the
facets of administration of an educational institution are
concerned, in case of unaided minority institutions, the
regulatory measure of control, however, should be minimum.
The conditions of recognition as also conditions of affiliation
although are required to be complied with but in the matter of
day to day management like appointment of staff, both teaching
G
and non-teaching, and in its administrative control, they should
have freedom from any external controlling agency. It was
furthermore held that fees to be charged by unaided institutions
cannot be regulated; however, no institution should charge
H
652
SUPREME COURT REPORTS [2009) 12 S.C.R.
A capitation fee.
18. Clarifying T.M.A. Pai Foundation (supra) and Islamic
Academy of Education (supra), it was held in P.A. lnamdar
(supra):
B
"26. These matters have been directed to be placed for
hearing before a Bench of seven Judges under Orders of
the Chief Justice of India pursuant to Order dated July 15,
2004 in P.A. lnamdar and Ors. v. State of Maharashtra
and Ors., (2004) 8 SCC 139 and Order dated July 29,
C
2004 in Pushpagiri Medical Society v. State of Kera/a and
Ors., (2004) 8 SCC 135. The aggrieved persons before
us are again classifiable in one class, that is, unaided
minority and non-minority institutions imparting professional
education. The issues arising for decision before us are
D
only three:
(i) the fixation of 'quota' of admissions/students in respect
of unaided professional institutions;
(ii) the holding of examinations for admissions to such
E
colleges, that is, who will hold the entrance tests; and
F
G
H
(iii) the fee structure.
27. In the light of the two orders of reference, referred to
hereinabove, we propose to confine our discussion to the
questions set out hereunder which, according to us, arise
for decision:-
(1) ***
***
(2) ***
***
(3) Whether Islamic Academy could have issued guidelines
in the matter of regulating the fee payable by the students
to the educational institutions?
ACTION COMMITIEE, UN-AIDED PVT. SCHOOLS & 653
ORS. v. DIRECTOR OF EDUCATION [S.B. SINHA, J.]
(4) Can the admission procedure and fee structure be
A
< +
regulated or taken over by the Committees ordered to be
constituted by Islamic Academy?
69. With regard to the ambit of the constitutional guarantee
of protection of educational rights of minorities under
B
Article 30, learned counsel submits that both religious and
linguistic minority, as held in Pai Foundation , are to be
determined at the State level. On this understanding of the
concept of 'minority', Article 30 has to be harmoniously
.lo
construed with Article 19(1)(g) and in the light of the
Directive Principles of the State Policy contained in the c
Articles 38, 41 and 46. Rights of minorities cannot be
placed higher than the general welfare of the students and
their right to take up professional education on the basis
of their merit.
D
·..:
109. And yet, before we do so, let us quote and reproduce
'
paragraphs 68, 69 and 70 from Pai Foundation to enable
JL
easy reference thereto as the core of controversy touching
the four questions which we are dealing with seems to have
originated therefrom ... "
E
Noticing in extenso paragraphs 68, 69 and 70 of T.M.A.
.(
Pai Foundation (supra), it was held:
)'
"129. In Pai Foundation, it has been very clearly held at
several places that unaided professional institutions should
F
be given greater autonomy in determination of admission
procedure and fee structure. State regulation should be
minimal and only with a view to maintain fairness and
transparency in admission procedure and to check
exploitation of the students by charging exorbitant money
G
:>(
or capitation fees."
As regards, regulation of fee, it was opined:
"139. To set up a reasonable fee structure is also a
H
654
SUPREME COURT REPORTS [2009] 12 S.C.R.
A
component of "the right to establish and administer an
institution" within the meaning of Article 30(1) of the
+
Constitution, as per the law declared in Pai Foundation.
Every institution is free to devise its own fee structure
subject to the limitation that there can be no profiteering
B
and no capitation fee can be charged directly or indirectly,
or in any form (Paras 56 to 58 and 161 [Answer to Q.5(c)]
of Pai Foundation are relevant in this regard)."
It was concluded:
c
"146. Non-minority unaided institutions can also be
subjected to similar restrictions which are found
reasonable and in the interest of the student community.
Professional education should be made accessible on the
criterion of merit and on non-exploitative terms to all
D
eligible students on a uniform basis.