2021 Supreme(SC) 260

SUPREME COURT OF INDIA
A.M. KHANWILKAR, DINESH MAHESHWARI, JJ.
INDIAN SCHOOL, JODHPUR & ANR. – APPELLANTS
VERSUS
STATE OF RAJASTHAN & ORS. – RESPONDENTS
CIVIL APPEAL NO. 1724 OF 2021 (ARISING OUT OF SLP (C) NO. 27881 OF 2019) WITH CIVIL APPEAL NOS. 1713-1722 OF 2021 (ARISING OUT OF SLP (CIVIL) NOS.27907-27916 OF 2019) CIVIL APPEAL NO. 1723 OF 2021 (ARISING OUT OF SLP (C) NO. 27987 OF 2019) CIVIL APPEAL NO. 1725 OF 2021 (ARISING OUT OF SLP (C) NO. 2942 OF 2020), CIVIL APPEAL NO. 1729 OF 2021 (ARISING OUT OF SLP (C) NO. 5470 OF 2020), CIVIL APPEAL NO. 1730 OF 2021, (ARISING OUT OF SLP (C) NO. 5589 OF 2020), CIVIL APPEAL NO. 1726 OF 2021, (ARISING OUT OF SLP (C) NO. 5902 OF 2020), CIVIL APPEAL NO. 1727-1728 OF 2021, (ARISING OUT OF SLP (C) NO. 6743-6744 OF 2021) (@ DIARY NO(S). 6803 OF 2020) AND CIVIL APPEAL NO. 1732 OF 2021 (ARISING OUT OF SLP (C) NO. 6745 OF 2021) (@ DIARY NO(S). 44 OF 2021) CIVIL APPEAL NO. 1731 OF 2021 (ARISING OUT OF SLP (C) NO. 431 OF 2021) CIVIL APPEAL NOS. 1733-1735 OF 2021 (ARISING OUT OF SLP (C) NOS. 577-579 OF 2021) CIVIL APPEAL NO. 1736 OF 2021 (ARISING OUT OF SLP (C) NO. 2494 OF 2021)
Decided on : 03-05-2021

IMPORTANT POINTS
(1) Director, Secondary Education has no authority to issue direction in respect of fee structure in respect of private unaided schools.
(2) It is for school Management to reschedule payment of school fee in such a way that not even a single student is left out or denied opportunity of pursuing his/her education, so as to effectuate the adage live and let live. Demanding fees even in respect of overheads on such activities would be nothing short of indulging in profiteering and commercialisation
(3) It is not open to State Government to issue directions in respect of commercial or economic aspects of legitimate subsisting contracts/transactions between two private parties with which State has no direct causal connection, in the guise of management of pandemic situation or to provide mitigation to one of two private parties at the cost of other.
(4) Determination of school fee structure which includes reduction of fixed school fee for relevant period is exclusive prerogative of school Management running a private unaided school, it is not open to Legislature to make a law touching upon that aspect except to provide statutory mechanism to regulate fees for ensuring that it does not result in profiteering and commercialisation by school Management.
(5) There is no express provision in Disaster Management Act, 2005 which empowers Director, Secondary Education or State Government to issue order and directions in respect of school fee structure because of pandemic situation.
(6) School Management shall not debar any student from attending either online classes or physical classes on account of non-payment of fees, arrears/outstanding fees including instalments, and shall not withhold results of examinations of any student on that account.

Headnote:

(A) Rajasthan Schools (Regulation of Fee) Act, 2016 – Sections 3, 4, 6 to 11, 15 and 16 – Rajasthan Schools (Regulation of Fee) Rules, 2017 – Rules 3, 4, 6 to 8 and 11 – Regulation of tuition fee – Reduction of Syllabus – Minority private unaided schools in State of Rajasthan – Act of 2016 applies to all schools within State of Rajasthan referred to in Section 2(t) including private schools as defined in Section 2(p) – Relevant factors for determination of reasonable school fees under Act of 2016 and Rules framed thereunder have been duly articulated and are based on objective parameters – Factors referred to in Section 8 and Rule 10 for determination of fee are founded on dictum of this Court in successive reported precedents, as relevant factors – Factor of location of school is certainly relevant for determination of fee as are other factors referred to in Section 8 and Rule 10 – Totality of effect of all specified factors is to be reckoned for determining school fees of concerned school for relevant period – Location of school is not the only factor that is to be taken into account – At the end, what is relevant is that institution is entitled to fix its own fee structure, which may include reasonable revenue surplus for the purpose of development of education and expansion of institution, as long as it does not entail in profiteering and commercialisation – Whether fee structure evolved by concerned school results in profiteering or otherwise is a matter which eventually would become final with determination/adjudication by Statutory Regulatory Committees constituted under Sections 7 and 10 of Act of 2016, namely, Divisional Fee Regulatory Committee (DFRC) and Revision Committee respectively. (Paras 21, 25 and 26)

(B) Constitution of India – Article 19(1)(g) – Rajasthan Schools (Regulation of Fee) Act, 2016 – Sections 3, 4, 6 to 11, 15 and 16 – Rajasthan Schools (Regulation of Fee) Rules, 2017 – Rules 3, 4, 6 to 8 and 11 – Regulation of tuition fee – Reduction of Syllabus – Minority private unaided schools in State of Rajasthan – Management has prerogative to submit its proposal regarding fee structure in given school – That proposal is submitted to SLFC set up under Section 4 of Act of 2016 – Mechanism provided in Section 6 onwards would primarily apply to private unaided schools – Dispensation envisaged under Section 6 of impugned Act of 2016 is not intended to undermine autonomy of school Management in matter of determination of fee structure itself – What it envisages is that school Management may determine its own fee structure, but may finalise or give effect to same after interacting with SLFC – It is open to SLFC to take a different view regarding school fees proposed by school Management and arrive at a different fee structure – If that counter proposal is acceptable to school Management, nothing further is required to be done and decision so taken by school Management would become binding for three academic years on all concerned – However, in case school Management disagrees with recommendations of SLFC, it is open to both sides, school Management as well as parents of wards, to take the matter to DFRC for adjudication on that aspect – Section 7 of Act of 2016 does not violate fundamental right guaranteed under Article 19(1)(g) of Constitution in respect of establishment of educational institution – Dispensation provided in Section 7 is to create an independent machinery for adjudication of question as to whether fee structure proposed/determined by school Management of the concerned school entails in profiteering, commercialisation or otherwise – Setting up of an independent final adjudicatory authority especially created for considering question as to whether fee structure proposed by school Management results in profiteering or otherwise, it does not impinge upon fundamental right of school Management guaranteed under Article 19(1)(g) of Constitution – Even Rule 11 is a relevant and reasonable provision and does not impact or abridge fundamental right under Article 19(1)(g) of Constitution – High Court rightly concluded that provisions of Act of 2016 as well as Rules of 2017 are intra vires Constitution of India and not violative of Articles 13(2) and 19(1)(g) of Constitution. (Paras 33, 35, 37, 38, 43, 50 and 52)

(C) Disaster Management Act, 2005 – Sections 2(e), 38 and 39 – Rajasthan Epidemic Diseases Act, 2020 – Section 18 – Corona Pandemic – Order issued by Director, Secondary Education, in wake of COVID19 pandemic, directing private schools recognised by Primary and Secondary Education Departments to defer collection of school fees for a period of three months – Challenge as to – Unprecedented situation has had evolved on account of complete lockdown due to pandemic – It had serious effect on individuals, entrepreneurs, industries and nation as a whole including in the matter of economy and purchasing capacity of one and all – A large number of people have lost their jobs and livelihood as aftermath of such economic upheaval – Parents who were under severe stress and even unable to manage their day-to-day affairs and the basic need of their family made fervent representation to school Management(s) across the State – A public discourse in that regard surfaced in media which impelled political dispensation to intervene – On directions of Chief Minister of State of Rajasthan, Department initially issued order dated 09.04.2020 merely to defer collection of school fees which restriction was extended by subsequent order dated 07.07.2020 – Such direction must be consistent with provisions of Act of 2016 and Rules framed thereunder – It cannot be in conflict with mandate of Act and Rules – Additionally, such directions must be necessitated due to expediency for carrying out purposes of Act and Rules or to give effect to applicable provisions – If direction issued by State Government does not qualify these parameters, it must follow that same has been issued in excess of power bestowed under Section 18 of Act of 2016 – As a matter of law, State Government had no power to interdict fee structure much less which has been finalised and fixed by concerned functionaries/authorities under Act of 2016 itself before expiry of statutory period as specified – As a result, Section 18 of Act of 2016 will be of no avail to respondents, in particular State Government to justify order dated 28.10.2020 – Director, Secondary Education had no authority whatsoever to issue direction in respect of fee structure determined under Act of 2016 including to reduce the same for academic year 2020-21 in respect of private unaided schools – Appellants are justified in assailing order dated 28.10.2020 issued by Director, Secondary Education and must succeed – However, that does not give licence to appellants to be rigid and not be sensitive about aftermath of pandemic – School Management supposedly engaged in doing charitable activity of imparting education, is expected to be responsive and alive to that situation and take necessary remedial measures to mitigate hardship suffered by students and their parents – It is for school Management to reschedule payment of school fee in such a way that not even a single student is left out or denied opportunity of pursuing his/her education, so as to effectuate the adage live and let live – In law, school Management cannot be heard to collect fees in respect of activities and facilities which are, in fact, not provided to or availed by its students due to circumstances beyond their control – Demanding fees even in respect of overheads on such activities would be nothing short of indulging in profiteering and commercialisation – Directions issued. (Paras 60, 86, 91, 93, 113, 114, 117 and 121)

(D) Constitution of India – Article 162 – Extent of executive power of State – Executive power of a State under Article 162 of Constitution extends to matters upon which legislature of State has competency to legislate and is not confined to matters over which legislation has already been passed – State Government cannot go against provisions of Constitution or any law – Subject of determination of fee structure and whether it entails in profiteering, is already covered by legislation in form of Act of 2016 and Rules framed thereunder – It is not as if there is no enactment covering that subject or any incidental aspects thereof – Act of 2016 which in itself is a self-contained code on said subject, not only provides for the manner in which concerned school ought to finalise its fee structure, but also declares that fee so finalised either by consensus or through adjudication mode shall be binding on all concerned for a period of three academic years – In any case, determination of fees including reduction thereof is exclusive prerogative of management of private unaided school – State can provide independent mechanism only to regulate that decision of School Management to the extent that it does not result in profiteering and commercialisation – Fact that in proceedings before High Court State Government had ratified impugned order, does not take the matter any further – There can be no ex post facto ratification by State Government in respect of subject on which it itself could not issue such direction in law. (Paras 94 and 96)

(E) Constitution of India – Article 162 – Extent of executive power of State – It is not open to State Government to issue directions in respect of commercial or economic aspects of legitimate subsisting contracts/transactions between two private parties with which State has no direct causal connection, in the guise of management of pandemic situation or to provide mitigation to one of two private parties at the cost of other – It is a different matter, if as a policy, State Government takes responsibility to subsidise school fees of students of private unaided schools, but cannot arrogate power to itself much less under Article 162 of Constitution to issue impugned directions to school Management to collect reduced school fee for concerned academic year – Asservation of State Government of existence of power to issue directions even in respect of economic aspects of legitimate subsisting contracts/transactions between two private parties, if accepted in respect of fee structure of private unaided schools, is fraught with undefined infinite risk and uncertainty for State – For, applying same logic State Government may have to assuage similar concerns in respect of other contractual matters or transactions between two private individuals in every aspect of life which may have bearing on right to life guaranteed under Constitution – That would not only open Pandora’s box, but also push State Government to entertain demands including to grant subsidy, from different quarters and sections of society in name of mitigating measures making it financially impossible and unwieldy for State and eventually burden honest tax payers who also deserve similar indulgence – Selective intervention of State in response to such demands may also suffer from vice of discrimination and also likely to impinge upon rights of private individual(s) – State cannot exercise executive power under Article 162 of Constitution to denude person offering service(s) or goods of his just claim to get fair compensation/cost from recipient of such service(s) or goods, whence State has no direct causal relationship therewith – Determination of school fee structure which includes reduction of fixed school fee for relevant period is exclusive prerogative of school Management running a private unaided school, it is not open to Legislature to make a law touching upon that aspect except to provide statutory mechanism to regulate fees for ensuring that it does not result in profiteering and commercialisation by school Management – Ex-consequenti, State Government also cannot exercise power under Article 162 of Constitution in that regard. (Paras 98 and 99)

(F) Disaster Management Act, 2005 – Sections 14, 23 and 38 – Rajasthan Schools (Regulation of Fee) Act, 2016 – Sections 3, 4, 6 to 11, 15 and 16 – Corona Pandemic Management – Mitigation measures – Scheme of Act of 2005 obligates State Authority to assuage concerns of persons arising from direct impact of disaster and to take mitigation measures to minimise impact of such disaster – There is no provision in Act of 2005 which concerns or governs subject of interdicting school fee structure fixed under Act of 2016 – Act of 2005 is not a panacea for all difficulties much less not concerning disaster management – There is no express provision in Act of 2005 which empowers Director, Secondary Education or State Government to issue order and directions in respect of school fee structure because of pandemic situation – However, as a one-time measure to do complete justice between parties, school Management of concerned private unaided school shall collect annual school fees from their students as fixed under Act of 2016 for academic year 2019-20, but by providing deduction of 15 per cent on that amount in lieu of unutilised facilities by students during relevant period of academic year 2020-21 – School Management shall not debar any student from attending either online classes or physical classes on account of non-payment of fees, arrears/outstanding fees including instalments, and shall not withhold results of examinations of any student on that account. (Paras 103, 110, 111, 112 and 117)

Facts of the case:

Appellants (Management(s) of private unaided schools in the State of Rajasthan) had assailed the validity of the Rajasthan Schools (Regulation of Fee) Act, 2016, in particular Sections 3, 4, 6 to 11, 15 and 16 and the Rules framed thereunder titled Rajasthan Schools (Regulation of Fee) Rules, 2017, in particular Rules 3, 4, 6 to 8 and 11 thereof being ultra vires the Constitution and abridge fundamental right guaranteed under Article 19(1)(g) of Constitution of India. In the second set of appeals, challenge is to orders passed by the State Authorities on 09.04.2020, 07.07.2020 and 28.10.2020 regarding deferment of collection of school fees including reduction of fees limited to 70 per cent of tuition fees by schools affiliated with the Central Board of Secondary Education and 60 per cent from the schools affiliated with Rajasthan Board of Secondary Education, in view of reduction of syllabus by respective Boards due to aftermath of pandemic (lockdown) from March 2020. Issues involved in all these appeals concern around 36,000 private unaided schools including 220 minority private unaided schools in the State of Rajasthan governed by provisions of the Act of 2016.

Findings of Court:

Educational institutions are engaged in doing charitable activity of imparting and spreading education and not make money. That they must willingly and proactively do. Hence, collection of commensurate amount (15 per cent of the annual school fees for academic year 20202021), would be a case of profiteering and commercialisation by the school Management.

Result : Appeals disposed of with directions.