Delhi High Court
Delhi Abibhavak Mahasangh vs Union Of India And Ors. on 16 January, 2002
Equivalent citations: 2002IIIAD(DELHI)713, AIR2002DELHI275, 96(2002)DLT629, 2002(62)DRJ818, AIR 2002 DELHI 275, (2002) 62 DRJ 818, (2002) 96 DLT 629, (2003) 1 ESC 47
Author: S.B. Sinha
Bench: S.B. Sinha, A.K. Sikri
JUDGMENT S.B. Sinha, C.J.
1. The afore-mentioned writ petitions have been filed, inter alia, questioning the right of various aided and unaided schools to fix tuition and other fees from students. The case of the petitioner is that lakhs of students studying in unaided recognized private schools in Delhi would be affected by the decision of this Hon'ble court on the vital question of law which have been raised by the petitioiner-association in these Public Interest Litigations. The petitioners state that the respondent schools are not entitled to hike fee w.e.f. 1.4.1999 without following the procedure as laid down by this Hon'ble Court in judgment dated 30th October 1998. It is also submitted that the respondent schools are required to consult the representatives of the parents before taking any decision about the fee hike but the same has not been done. It is alleged that in absence of any valid decision regarding fee hike, the respondent schools are entitled to charge fee from the students w.e.f. 1.4.1999 at the rates which were prevalent on 31st March 1997. It is submitted that the respondent-schools had with them large sums of surpluses even as on 31st March 1997 and that they were not justified in increasing any fee w.e.f. 1st April 1997 onwards. It is also the grievance of the petitioner that the respondent Nos. 1 and 2 have failed to perform their duties as they have not taken any action on the complaint of the petitioner against arbitrary fee hike by the respondent schools. The petitioners are also aggrieved by the fact that the respondent Nos. 1 and 2 have not so far constituted a statutory committee as contemplated by the judgment dated 30th October 1998 of this court for the purposes of adjudication of disputes pertaining to fee hike in future w.e.f. 1st April, 1999. Further grievance of the petitioner is that the respondent Nos. 1, 2 and 4 are required to examine the account and other records of all the unaided recognized private schools in Delhi under the provisions of Section 18(5) of Delhi School Education Act, 1973 read with Rules 170 and 180 of Delhi School Education Rules, 1973 but the same has not been done. The petitioners further allege that the Director of Education, in terms of provisions of Section 24 of Delhi School Education Act, 1973 was required to make inspection of the respondent schools each year but the same has never been done which tantamounts to failure on the respondent to perform statutory duties as imposed upon them under the provisions of law.
2. The impugned order is dated 15th December 1999, the correctness of which has been questioned in this petition. The relevant portion thereof, whereby and whereunder fee structure was evolved, reads thus:
"4. The tuition fee shall be reviewed in the light of the judgment of the Hon'ble High Court dated 30.10.1998 and shall not be raised beyond the amount, that prevailed on 31st March, 1999 for the remaining part of the current academic session and shall not be increased unless it is found by the Managing Committee of the school that the accumulated funds are not sufficient to bear the liabilities, if any, in discharge of its responsibilities, provided for under the Act and the Rules. 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. All fees charged in excess of the amount so determined or determinable shall be refunded to the students/parents within fifteen days of the issue of this order.
5. No annual charges shall be levied unless they are determined by the Managing Committee to be sufficient to cover all revenue expenditure, not included in the tuition fee and 'overheads' and expenses on play grounds, sports equipment, cultural and other co-curricular activities as distinct from the curricular activities of the School.
7. Development fee, not exceeding ten percent of the total annual tuition fee may be charged for supplementing the resources for purchase, up-gradation and replacement of furniture, fixtures and equipment. Development fee if 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 along with any income generated from the investment made out of this Fund, will be kept in a separately maintained Development Fund Account."
3. Mr. Ashok Aggrawal, the learned counsel appearing on behalf of the petitioners would submit that the unaided recognized private schools ought not to have been permitted by the Director of Education to charge development fee which would amount to permit these students to levy capital expenditure in tuition fees. Learned counsel would contend that the same would contravene the decision of this court in Delhi Abibhavak Mahansangh v. UOI, AIR 1999 Del 124 as in terms whereof, the unaided recognized private schools are prohibited from charging any amount on account of capital expenditure from the students. The learned counsel would next contend that Clause 7 of the impugned order dated 15th December 1999 is in violation of the report of the Justice Santosh Duggal Committee and in any event, the same is a nullity as it suffers from the vice of total non-application of mind.
4. Learned counsel for the respondents, on the other hand, would contend that levy of development fee is permissible in terms of provisions of the Delhi Education Act and the Rules framed there under.
5. The only question which arises for consideration in this application is as to whether the unaided schools can charge development fee up to 10 per cent of the total annual tuition fee.
6. In Delhi Abibhavak Mahasangh v. UOI, AIR 1999 Del 124, this court inter alia directed:
"51. For the examination of the rival contentions a close examination of the facts, figures and accounts of each schools was necessary. Neither this court is fully equipped nor it is possible for this court on the facts of the present case, to even otherwise undertake this exercise in respect of each individual school. Such an exercise has to be undertaken by authorities or by an independent Committee, which this court may appoint. With the large number of private unaided recognized schools in Delhi, such an exercise by itself may be a time consuming process. If a particular school, on examination of facts and figures is found to be indulging in the malpractice of increasing the fees and charges in the grab of the implementation of the 5th Pay Commission or otherwise is found to be indulging in commercialization the Government is not without power to take appropriate action under the Act and the Rules against such erring school. Presently, the question has also been raised as to the validity of exercise of power by issue of impugned general order directing all schools not to charge higher fee and charges in terms thereof and not restricting to schools, which were inspected."
It was further directed in para 65:
65. In view of the aforesaid discussion our conclusions may be summarized as under:
(v) The tuition fee cannot be fixed to recover capital expenditure to be incurred on the properties of the society.
(x) An independent statutory committee, by amendment 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."
7. From a perusal of the Division Bench judgment of this court, it appears that Justice Duggal was to be the Chairperson of the Committee for the purpose of determining the claims in fee hike and other charges levied by the individual recognized unaided schools for the period covered by the said order.
In her report, it is stated that:
17. With regard to its second term of reference;
the Committee notes that there was not only lack of uniformity but also avoidable ambiguities and distortions in the existing fee structure of the schools, more particularly under the heading "other charges", which could become a vehicle of exploitation where the schools were so inclined, the Committee, however, proposes that the levies charged by the schools should be classified under the following four broad categories:
The first category should comprise of the Registration Fee and all one-time charges, levied at the time of the admission of the student such as 'Admission Fee' and 'Caution Money'. It should, however, be made mandatory for the schools to refund the Caution Money, with interest thereon, at the time of the student leaving the school, without the same being claimed by the student/parents.
The Second category should comprise of 'Tuition fee'. This should be so fixed, as to cover the standard cost of establishing including provisions for D.A., bonus and all terminal benefits; as also all expenditure of revenue nature concerning the curricular activities. The pupil-teacher ratio and the ratio between the teaching and the non-teaching staff should be the main determinants while arriving at the standard cost.
The Third category should be that of 'Annual Charges' - an area, in need of maximum discipline. These charges should be so determined, as to be sufficient to cover all expenditure of a revenue nature not included in the second category, besides 'over-heads' and expense on playgrounds, sports equipments, gymnasium, cultural and other co-curricular activities as distinct from curricular activities of the schools.
The Fourth Category should consist of all 'earmarked' levies for the services rendered by the schools, to be recovered only from the 'user' students, in respect of the facilities availed of by the later. The income from the earmarked levies, should be spent only for the purpose, for which these are collected with the role of the schools, being confined to that of a catalyst or a facilitator, for managing the services on a 'no profit no loss' basis. All transactions relating to the 'earmarked' activities should form an integral part of the school accounts. [Paras 7.19 and 7.20]
18. Besides the above four categories, the schools could also levy a Development Fee, as a capital receipt, annually not exceeding 10% of the total annual Tuition Fee, for supplementing the resources for purchase, upgradation and replacement of furniture, fixtures and equipment, provided the school is maintaining a Depreciation Reserve Fund, equivalent to the depreciation charged in the revenue account. While these receipts should form part of the Capital Account of the school, the collection under this head along with any income generated from the investment made out of this fund, should however, be kept in a separate 'Development Fund Account'. [Para 7.21]"
8. In short, the following had been recommended by the Committee:
1. One time fee (registration fee and all one time charges)
2. Tuition fee (to cover standard cost of establishment including provisions for DA, bonus, and all terminal benefits + all expenditure of revenue nature concerning the curricular facilities like library, laboratories, science fee and computer fee up to class X and examination expenses).
3. Annual charges (cover expenditure of revenue nature not included in tuition fee + overheads and expenses on playgrounds, sports, equipment, gymnasium, cultural and other co-curricular activities)
4. Earmarked levies (for specific services to be charged only from the user student).
5. Development charges not exceeding 10% of the tuition fee (for supplementing the resources for purchase, upgradation, and replacement of furniture, fixtures, and equipment.)
9. It is also relevant to quote the observations made in the said report:
"7.19 With a view to overcoming these anomalies, as also for curbing the potential for any likely 'misuse' by the schools including those run by minorities, the Committee recommends that the levies charged should be classified under four broad categories as given below.
i) The first category should comprise of the Registration Fee and all 'One time charges" levied at the time of the admission of the student such as Admission Fee and Caution Money. While the Admission Fee should not be charged more than once during the entire stay of the student as stipulated under Section 16 of D.S.E. Act, 1973 read with Rules 135, 137 and 138 there under, it should be made mandatory for the schools to refund the Caution Money with interest thereon at the time of a student leaving the school without the same being claimed by the student/parents.
ii) The second category should comprise of 'Tuition Fee'. This should be so fixed, as to cover the standard cost of establishment including provision for D.A., bonus and all terminal benefits as mentioned under Section 10(1) of the Delhi School Education Act 1973; as also the all expenditure of revenue nature for the improvement of curricular facilities like Library, Laboratories, Science Fee and Computer Fee up to class X and examination expenses. The more important parameters for determining standard cost of establishment, inter-alia, could be the pupil-teacher ratio and the ratio of teaching and non-teaching staff in each school.
(iii) The third category should be that of 'Annual Charges' - an area in need of maximum discipline.
These charges should be so determined so as to be sufficient to cover all expenditure of revenue nature not included in (ii) above, 'over-heads', and expenses on play grounds, sports equipment, gymnasium, cultural and other co-curricular activities as distinct from curricular activity of the school.
(iv) The fourth category should consist of all 'earmarked levies' for services rendered by the schools, to be recovered only from the 'user' students, in respect of only those facilities availed of by them, such as Transport Fee, Swimming Pool Charges, Horse riding, Tennis, Mid-day meals etc. The income from the earmarked levies, should be spent only for the purpose for which these are collected, with the role of the school, being confined to that of a catalyst or a facilitator for managing the services on a 'no profit no loss' basis.
7.20 All transactions relating to the 'earmarked' activities should from an integral part of the school accounts. Further, to ensure that the Accounts for such services are self-balancing over a period, separate accounts should also be maintained by the school for each of the activity/services.
7.21 Provided a school is maintaining a depreciation reserve fund equivalent to the depreciation charged in the revenue accounts, schools could also levy, in addition to the above four categories, a Development fee annually, as a capital receipt not exceeding 10% of the total annual Tuition Fee for supplementing the resources for purchase, upgradation and replacement of furnitures, fixtures and equipment. At present, these are widely neglected items, notwithstanding the fact that a large number of schools were levying charges under the head 'Development Fund'.
The Committee recommended that:
6.26 The Committee observes that next to transferring a part of its revenue income, to various funds/reserves, even prior to determining Surplus/Deficit, charging of depreciation provided the most convenient and widely used tool for the schools to covertly under-state and surplus. Of the 142 schools studied over a 100 schools have resorted to charging depreciation as an item of expenditure, without simultaneously setting up any Depreciation Reserve Fund for replacing the depreciated assets at the appropriate time. It tantamounts to creating 'Secret Reserves' by the schools - a purely commercial practice. The Committee, however, takes note of the fact that in some of these cases the reserves had been utilized to create other Assets.
6.27 In the context of the charging of depreciation, the following observation of Hon'ble Supreme Court in the case of Safdarjung Enclave Education Society v. M.C.D. as in Civil Appeal No. 228/90 is very pertinent.
"Depreciation is not an expenditure, but is only a deduction @ certain percentage of the capital assets for arriving profit and gains of the business".
6.28 Instances also came to the notice of the Committee where assets not owned by the schools too had been depreciated and an equivalent amount transferred to the parent society. In an extreme case, a school paid license fee for use of building to the Society and also contributed to the Society towards the building fund and charged depreciation, which in turn was remitted to the society.
10. The Committee also prepared a format for determining the quantum of justified hike in the fees during 1997-98 for absorbing the impact of the Pay Commission.
11. The Committee redefined the surplus of various schools under their investigation by adding back certain items of expenditure/appropriations made by the schools in arriving at the given surplus. According to the report, the surplus would have the following constituents:
Surplus shown in the financial statements of the school plus depreciation plus transfers to various reserves and other funds plus expenditure not falling within the scope of existing rules and regulations.
12. The Committee thus wanted to strike a balance between the needs of the schools and burdens on the parents.
13. Whether the said recommendations are in tune with the provisions of the said Act, is the question involved in the petition.
14. The relevant provisions of the Delhi Education Act and the Rules read thus:
Section 18. School Fund - (1) In every aided school, there shall be a fund, to be called the "School Fund"
and there shall be credited thereto-
(a) any aid granted by Administrator,
(b) income accruing to the school by way of fees, charges or other payments, and
(c) any other contributions, endowments and the like.
(2) The School Fund and all other funds, including the Pupils' Fund established with the approval of the Administrator, shall be accounted for and operated in accordance with the rules made under this Act.
(3) In every recognized unaided school, there shall be a fund, to be called the "Recognised Unaided School Fund", and there shall be credited thereto income accruing to the school by way of-
(a) Fees,
(b) any charges and payment which may be realized by the school for other specific purposes, and
(c) any other contributions, endowments, gifts and the like.
(4)(a) Income derived by unaided schools by way of fees shall be utilized only for such educational purposes as may be prescribed; and
(b) Charges and payments realised and all other contributions, endowments and gifts received by the schools shall be utilized only for the specific purpose for which they were realized or received.
(5) The managing committee of every recognized private school shall file every year with the Director such duly audited financial and other returns as may be prescribed, and every such return shall be audited by such authority as may be prescribed."
"Rule 175. Accounts of the school how to be maintained.-
The accounts with regard to the School Fund or the Recognized Unaided School Fund, as the case may be, shall be so maintained as to exhibit clearly the income accruing to the school by way of fees, fines, income from building, rent, interest, development fees, collections for specific purposes, endowments, gifts, donations, contributions to Pupils' Fund and other miscellaneous receipts, and also, in the case of aided schools, the aid received from the Administrator."
15. There cannot, therefore, be any doubt whatsoever that the provisions of the aid act and Rules framed there under contemplate levy of Development Fee.
16. It is also not in dispute that in terms of the recommendations of Justice Duggal Committee, a Fee Anomaly Committee has been constituted by the Delhi Administration. Respondents No. 2 and 3 in their counter-affidavit stated:
"Para 8 as alleged is wrong and is denied. It is submitted that petitioner has made just general averments without any basis. As submitted in earlier paragraphs, the Government of NCT, Delhi has notified the constitution of Fee Anomaly Committee for the redressal of the grievances of the parents. Any parent who has any complaint on any of the issues with respect to charging fee etc. is free to make a complaint with facts and figures."
17. It is not in dispute that development fees are charged by unaided schools only as recognized government schools did not charge such fees nor aided government schools require the same. All recognized schools are governed by the management duly recognized by the Director of Education. In the scheme of management of recognized schools, parents are also nominated apart from the nominees who are selected from the teachers and by the Director of Education.
18. It is true that the schools are not permitted to run on a profit motive. But that does not mean that development fee cannot be charged at all. As indicated herein before, the provisions for such development fee find place in the Act and the Rules itself.
19. The impugned order has been passed having regard to the fact that earlier the building, furniture, equipment etc. was to be treated as book entry but there was no provision of utilization of the fund so generated as against the said depreciation.
20. The reason for such direction can be deciphered from the following example:
Value of a piece of furniture is Rs. 100/-. After five years, having regard to the amount of depreciation claimed, its value may become zero. By reason of inflation, the said furniture may cost Rs. 150/-.
21. By charging such development fee, the institution may raise a sum of Rs. 50/- and the rest i.e. the sum of Rs. 100/-, must be utilized from the depreciation fund.
22. We, therefore, do not find any incongruity, as was submitted by Mr. Aggarwal as regards maintenance of depreciation fund and development fund together. Furthermore, the development fund not only takes care of replacement of furniture but also providing of additional facilities etc. to the students.
23. The provisions of Section 18 mandate that the amount received for one purpose must be spent for that purpose alone. Rule 175, as noticed herein before, clearly mandates that the accounts, inter alia, with regard to the development fees must be separately maintained. Thus, by reason of the impugned order, a possible order, a possible misuse of the fund had been sought to be curbed. We, thus, fail to see any reason as to how the parents of the students of the unaided recognized schools have any grievance in relation thereto.
24. In this connection, it would be relevant to notice para 10 of the impugned order, which is in the following terms:
"10. In the event of any parent approaching the undersigned or the Deputy Director of Education with a complaint of violation of these directions, it shall be referred to the "Fee Anomaly Committee". The notification constituting the Fee Anomaly Committee district wise is being issued separately. The Committee will scrutinize and examine the returns and related documents of the recognized unaided private school and the amounts of utilization of funds, if any, done in violation of the Sub-section (4) of Section 18 of the Delhi School Education Act, 1973 read with Rules 50, 51 and 176 and 177 of the Delhi School Education Rules, 1973."
25. It is, therefore, clear that in the event of any complaint, the same may be made before the Fee Anomaly Committee which would be entitled to scrutinize and examine the returns and related documents of the recognized unaided private school and the accounts of utilization of funds, if any, done in violation of the Sub-section (4) of Section 18 of the Delhi School Education Act, 1973 read with the relevant rules.
26. It is, therefore, not correct to contend that the impugned order either suffers from total non-application of mind or contrary to or inconsistent with the recommendations of the Justice Duggal Committee.
27. The said Act seeks to regulate fixation of not only tuition fees by the management of the school but also other categories of fees. Each category of fees levied upon the students serves different purposes.
28. By reason of the impugned order, not only the schools have been authorized to collect development fees but thereby stringent measures have been taken to see proper utilization thereof. The right of the school to expend the money from the fund created for one purpose for other purposes has been curbed.
29. We do not see any justifiable ground to arrive at a conclusion that the impugned order violates the modalities of the statute or the directions issued by this court.
30. The submission of the learned counsel to the effect that in term of clause 5 of para 65 of the judgment of this court, the schools are not enrtitled to fix tutition fee in such a manner as to recover capital expenditure to be incurred on the properties of the society, is based on a misreading and misinterpretatin of the judgment. Having regard to the purport and object of the Act, it must be held that tutition fees and development fees stand on different footings.
31. Thus, when this court used the expression "tuition fees", the same must be held to have been used in terms of provision of the Delhi Education Act. The court had never put any embargo on levy of development fees which is otherwise chargeable in term of Sub-section (4) of Section 18 of the Act.
32. For the reason afore-mentioned, we are of the opinion that the impugned order which has been issued by respondents No.2 and 3 in exercise of their statutory powers, cannot be said to be so arbitrary warranting interference by the court in exercise of its jurisdiction under Article 226 of the Constitution of India. There is, thus, no merit in this application. As a matter of fact, by reason of the impugned order, possible misuse of the development fund has been curbed and an embargo had been placed on use of such development fund not only in the interest of the students but also in tune with the spirit and object of the Division Bench judgment in Delhi Abibhavak Mahasangh (supra).
33. Having regard to the fact that Delhi Administration has already constituted a Fee Anomaly Committee which has to consider the individual complaints against the defaulting schools, the individual grievances as raised in the other writ petitions by the petitioners may be raised before the said Committee which in terms of the afore- mentioned order dated 15th December 1999 would be entitled to deal therewith.
34. These writ petitions are disposed of with the afore-mentioned observations. However, having regard to the facts and circumstances of this case, there shall be no orders as to costs.