Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2017 Supreme(Online)(SC) 1566

SUPREME COURT
B.P. Jeevan Reddy, J
Rustom Kerawalla Foundation – Appellant
Versus
Deputy Director of Education – Respondent
Civil Appeal No.3696 of 2017 | Civil Appeal No.3698 of 2017 | Writ Petition Nos.1925 of 2009 | Writ Petition Nos.1919 of 2009 | T.P.(C) Nos.89 of 2013 | T.P.(C) Nos.90 of 2013

Advocates:
For the Appellants/Petitioners: Dr. Abhishek Manu Singhvi, Mr. Aspi Chinoy, Mr. Praveen Samdani
For the Respondents: Mr. Sunil Fernandes

The authority for fee regulation in educational institutions rests solely with the State Government, emphasizing compliance with statutory provisions to curb capitation fees and ensure fair practices in fee structuring.

Headnote:(A) Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987 - Sections 3, 4, and 6 - Educational institution seeking to charge fees beyond approved rates based on alleged expenditures - Appellants challenged orders disallowing claim for building rent of Rs.2.50 crores per annum while other expenses approved - Court found no jurisdiction for Respondent No.2 to set fees beyond prescribed limits and emphasized need for State Government’s approval in fee regulation. (Paras 2, 8, 23)

(B) Regulations and compliance - Court confirmed that any fee structure must adhere strictly to the guidelines laid out in the Act to prevent capitation fees and required approvals - Disallowed considerations that result in profit from public assets. (Paras 21, 23)

(C) Jurisdictional competence - Appellants argued against the authority of the Deputy Director to set fees but noted that Respondent No.2 acted within exploratory limits concerning capitation fees after complaints of excessive charges from parents. (Paras 7, 8)

(D) Reasonableness of rent claims - Court directed that any claims of rent for submissions must reflect genuine expenditures and were not to exceed statutory approved limits, considering public interest and preventing exploitation. (Paras 22, 23)

Facts of the case:
The case arose from petitions challenging decisions made by the Deputy Director regarding disallowed rent claims against excessive fee structures, initiated by parent complaints about high tuition fees.

Findings of Court:
Deputy Director’s decisions upheld regarding fee limitations and it was ruled that the case be remanded to the State Government for proper consideration on the premise of compliance with the legislation governing fee assessments.

Issues: The core issues encompassed the authority of the Deputy Director in fee regulation and legality of claimed rental expenses exceeding prescribed thresholds.

Ratio Decidendi: The court emphasized that responsibilities for regulating educational expenses must be guided by statutory mandates to avoid commercialization or capitation fees, maintaining a focus on public advantage and compliance with the established educational laws.

Result: Appeals disposed of with directions for State Government review.

Table of Content
1. writ petitions challenging fee structure and approvals. (Para 1 , 2 , 3)
2. concerns about scrutiny and accountability of school fees. (Para 4 , 5)
3. arguments on jurisdiction and competence of the education department. (Para 6 , 7 , 8)
4. claims of profiteering and mal-administration in school operations. (Para 9 , 10 , 11 , 12)
5. interpretation of educational aid and regulatory compliance for fees. (Para 13 , 14)
6. recent case law impacts on educational fee regulations. (Para 15 , 16 , 17)
7. legal interpretation of expenditure and revenue generation in education. (Para 18 , 19 , 20 , 21)
8. remand for reconsideration of fee structure and implications. (Para 22 , 23)
9. (Para 24 , 25)

1. Rustom Kerawalla Foundation (appellant in Civil Appeal No.3696 of 2017 and hereinafter referred to as the Foundation), runs a school named Vibgyor High School (appellant in Civil Appeal No.3698 of 2017 and hereinafter referred to as the School) in Mumbai. These appellants are questioning correctness of the common Judgment and Order dated 16.09.2011 passed by the High Court of Bombay in Writ Petition Nos.1925 of 2009 and 1919 of 2009 preferred by them. Along with these appeals, two transfer petitions, namely T.P.(C) Nos.89 and 90 of 2013 preferred by the Appellants are also listed before us.
These writ petitions challenged the orders dated 03.07.2009 and 04.09.2009 passed by the Deputy Director of Education, i.e. Respondent No.2 who had disallowed the expenses incurred by the School towards rent in respect of school building in the sum of Rs.2.50 crores per annum. While so disapproving, the amounts towards other expenses claimed by the school were accepted by Respondent No.2 as usual expenditure and the fees prescribed by the school to the extent of Rs.54,598/- for Primary Section and Rs.61,149/- for Secondary Section from the years 2008-2009 were approved.

2. The Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987 (hereinafter referred to as the Act) prohibits collection of capitation fee for admission of students to, and prosecution of any course of study, or for promotion to a higher standard or class. “Capitation Fee” is defined in the Act as, “any amount by whatever name called, whether in cash or kind, in excess of the prescribed or, as the case may be approved rates of fees regulated under S.4”. S.3, S.4, S.6 and S.7 of the Act are as under: -
“3 Demand or Collection of capitation fee prohibited -
(1) Notwithstanding anything contained in any law for the time being in force, no capitation fee shall be demanded or collected by or on behalf of any educational institution or by any person who is in charge of or is responsible for, the management of such institution.
(2) Notwithstanding anything contained in sub-section (1), the management may in good faith, demand or, collect or accept donations in cash or kind in prescribed manner, from benevolent persons or organisations or public trusts or any other association of persons, for opening of new educational institution or for development or expansion of educational facilities in the existing educational institutions or for creation of endowment fund for award of scholarships, prizes or the like, but while collecting or accepting such donations the management shall not reserve any seats in any educational institution run by it in consideration of such donations. All money and articles received in donation shall be accounted for in the institution and the money shall be deposited in the name of the institution in any scheduled or co - operative bank and shall be applied or expended for the purpose for which such donations are collected or accepted or shall be applied towards the objects of the institution :
Provided that, where in consideration of accepting such donations any seat is reserved for admission to any student in such institution such acceptance of donation shall be deemed to be collection of capitation fee.
(3) Where the State Government, on r

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2017 Supreme(Online)(SC) 1566

SUPREME COURTB.P. Jeevan Reddy, JRustom Kerawalla Foundation – AppellantVersusDeputy Director of Education – RespondentCivil Appeal No.3696 of 2017 | Civil Appeal No.3698 of 2017 | Writ Petition Nos.1925 of 2009 | Writ Petition Nos.1919 of 2009 | T.P.(C) Nos.89 of 2013 | T.P.(C) Nos.90 of 2013

The authority for fee regulation in educational institutions rests solely with the State Government, emphasizing compliance with statutory provisions to curb capitation fees and ensure fair practices in fee structuring.

Cases Referred (3)