The main legal point established in the judgment is the necessity of strict compliance with the rules and the government's decision-making process for opening new schools or upgrading existing ones, emphasizing non-arbitrariness and adherence to the rule of law in government actions, especially in financial commitments.

JUDGMENT

D.K. JAIN, J. —

1. Leave granted.

2. Challenge in this Appeal by the State of Kerala is to the common judgment rendered by a Division Bench of the Kerala High Court in Writ Appeals No.545 and 546 of 2004, reversing the view of the learned Single Judge in regard to the upgradation of two aided schools in the State. By the impugned order, the Division Bench has directed the State to treat both the schools at par with the two other schools which had been upgraded in the past.

3. As noted above, both the respondent schools are aided schools. They made representations to the State (one of them pursuant to the direction of the High Court) praying for upgradation of the schools from primary to secondary level. However, the request was declined by the State authorities because of lack of funds. The validity of the said decision was questioned by the respondents in the High Court mainly on the ground that they had been discriminated against inasmuch as the privilege given to two similarly situated schools had been denied to them. The argument did not find favour with the learned Single Judge, who came to the conclusion that since the schools could be upgraded only as per the procedure laid in Chapter V of the Kerala Education Rules, 1959 (for short the Rules) no positive direction could be issued to the State to upgrade the schools by ignoring the statutory provisions, particularly when there was no challenge to the validity of the Rules. Learned Single Judge held that merely because two schools had been upgraded without following the Rules, no legal right had accrued in favour of the writ petitioners schools to have them upgraded without following the mandatory rules. The plea of financial constraints urged by the State was also found to be a valid ground for rejection of the representations. Aggrieved, the matter was carried in appeals to the Division Bench. Accepting the plea of discrimination, the Division Bench directed the State authorities to give same treatment to the respondents herein as was given to the two other schools. The State was, thus, directed to grant upgradation to the respondent schools.

4. It is this common judgment which is questioned in this appeal.

5. Learned counsel appearing for the appellant has submitted that upgradation of an aided and unaided school has to be strictly in accordance with the procedure prescribed in the Rules and since the case of the respondents did not fit in the criteria and the procedure contemplated in the Rules, direction for upgradation of the schools was unwarranted. It is urged that merely because two aided schools had been upgraded by relaxing the Rules, as a special case, because of the directions of the Court, it could not be said that the respondents had been discriminated against, particularly when a policy decision had been taken by the State that no aided school shall be upgraded till the financial position of the State improves. It is, thus, pleaded that the impugned direction is not only against the specific provisions, it will also put unbearable heavy financial burden on the State Exchequer if the same is required to be given effect to, which, as observed in Secretary, State of Karnataka & Ors. Vs. Umadevi & Ors. , may prove to be counter productive. It is also asserted that the impugned direction, in fact, amounts to amendment of the existing government policy by a judicial order, which is not permitted. In support, reliance is placed on a decision of this Court in Principal, Madhav Institute of Technology and Science Vs. Rajendra Singh Yadav & Ors. wherein a direction contrary to the government policy in vogue at the relevant time was disapproved. It is also pointed out that several special leave petitions, filed by the school managements against the decisions of the High Court declining to issue directions for upgradation of their schools have already been dismissed.

6. On the other hand, learned counsel for the respondents, while supporting the direction of the Di