LexMODERN SCHOOL versus UNION OF INDIA AND ORS.
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A B MODERN SCHOOL v. UNION OF INDIA AND ORS. APRIL 27, 2004 [V.N. KHARE, CJ., S.B. SINHAANDS.H. KAPADIA, JJ.] Constitution of India, 1950-Article 19(/)(g)-Unaided educational institutions-Determination of fee structure-Autonomy-Exercise of-Held: C Such institutions exercise a great autonomy since they are entitled to a reasonable surplus for development of education and expansion of institution- However, commercialization of education is 'prohibited Delhi School Education Act, 1973: Section 17(3) and Section 18(3) and (4)-Unaided Schools- D Regulation of quantum of fees charged-Held: Reading Sections 18(3) and (4) with rules 172, 173, 174, 175 and 177 on one hand and Section 17(3) . on the other hand, Director is authorized to regulate fee and other charges under Section 17(3) of the Act to prevent commercialization of education- Delhi School Education Rules, 1973-Rules 172, 173, 174, 175 and 177. E Section 24(3)-Transfer of fees/funds collected by unaided schools to society/ trust-Order of Director prohibiting the transfer-Held: On reading Rules 172, 175 and 177 it is clear that appropriation of savings (income) is different from transfer of fund-By Order of Director, management restrained from transferring any amount from the fund to society/trust-Rule 177(/) F refers to appropriation of savings (income) from revenue account for meeting capiial expenditure of the school-Hence, there is no conflict between Rule 177 and the Order of Director-Delhi School Education Rules, 197 3- Rules 172, 175 and 177. Section 24(3)-Recognized unaided schools-Setting up of Development . G Fund Account-Entitlement of-Held: On account of increased cost due to inflation, Management entitled to. create Development Fund Account-For creation of such fund, management permitted to charge development fee not exceeding 15% of the total tuition fee. There was a fee hike in various schools in Delhi. Delhi Abibhavak II 668 r. MODERN SCHOOL v. U.0.1. 669 Mahasangh - a federation of parents filed public interest litigation before A the High Court impleading thirty unaided recognized public schools in Delhi on the ground that these schools are indulging in large scale commercialization ·or education since there was excess of income over expenditure under head tuition fee, the huge amount collected remained unspent and there is transfer of funds by the said schools to society/trust or B any other institution. Government appointed an inspection team which submitted a report High Court found irregularities in the management of accounts and directed that the tuition fees be utilized for payment of salaries of teachers and employees and also utilization of surplus under specific head of tuition C fees. It held that the Delhi School Education Act, 1973, and Delhi School Education Rules, 1973, framed thereunder prohibited transfer of funds from school to society/trust or to other schools run by same society/trust and appointed a Committee to examine economics of each of the recogniud unaided schools in Delhi. Aggrieved unaided recognized schools and action committee of unaided D private schools filed appeals in this Court. During pendency of the appeals, the Committee submitted its report. Director of Education accepted the same and issued directions under Section 23(4) read with Sections 18(4) and (S) of the Act to the effect that the Director of Education has authority to regulate quantum of fees charges by unaided schools; that fees/funds collected from E parents/students would not be transferred from the recognized unaided school fund to society or trust; and that the management is entitled to create Development Fund Account for which it is required to collect development fee not exceeding 10% of the total tuition fee. These directions are subject matter of the present appeals. Appellants-schools contended that the Government has no authority to regulate the fees payable by the students of unaided schools as indicated by Section 17(3) of the Act; that under Rule 177(1) income derived by unaided schools from fees shall be utilized firstly to meet salaries of employees and F the balance could be utilized to establish any other school or to assist any G other school or institution under the same management and as such the same being permitted by the legislature, the Director had no authority under clause (8) of the Order to restrain the school from transferring the funds from the Reco
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