Financial Hurdles for Schools: Jharkhand HC Scraps Mandatory RTE "Inspection Fees"

In a significant ruling for the private education sector, the High Court of Jharkhand has struck down provisions of the 2019 amendment to the state’s Right to Education (RTE) Rules, which imposed hefty non-refundable "inspection fees" and mandatory security deposits on private schools.

A division bench comprising Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan held that the state government acted beyond its statutory powers, as the RTE Act of 2009 lacks an enabling provision to levy such charges.

Case Background: The 2019 Regulatory Overhaul

The dispute originated from the Jharkhand Right of Children to Free and Compulsory Education (First Amendment) Rules, 2019 . Under these amended rules, private schools seeking recognition were required to pay non-refundable fees—ranging from ₹12,500 to ₹25,000—and maintain a mandatory ₹1,00,000 fixed deposit.

The Apex Association of Private Schools challenged these amendments, arguing that the regulations were not only exorbitant but also lacked any basis in the parent Act (the RTE Act, 2009). The state, conversely, defended the levies as necessary to curb "frivolous applications" and cover the costs of bureaucratic processing.

Arguments: Fee vs. Tax

The Petitioners contended that in the absence of an express authorizing clause within the 2009 Act, the state cannot levy what essentially functions as a "tax." They further argued that because the government is tasked with ensuring education, charging fees for mandatory recognition processes is a violation of the rule of law.

The state government argued that it has the power to frame rules for "carrying out the provisions of the Act," and that the fees were a legitimate administrative measure to ensure only serious institutions operated.

Legal Analysis and Precedents

Addressing the distinction between a "fee" and a "tax," the Court relied on the landmark principle that an executive order cannot impose a financial burden without legislative backing.

Citing * CIT Vs. MacDowell and Company Limited *, the Court reiterated that "Law in the context of Article 265 means an Act of the legislature and cannot comprise an executive order or rule without express statutory authority." The bench pointedly remarked that the inspection process serves the State’s duty to ensure compliance, not a service provided to the school, and thus, does not justify a "fee."

However, the Court upheld the government's power to prescribe infrastructure norms, including land area requirements and lease stipulations, viewing these as policy decisions to protect student interests.

Key Observations

The judgment delivered several pivotal observations:

• On the lack of authority: "In the absence of any power conferred under the Act to levy such inspection/application fee or security deposit, the prescription of the same by the State Government... cannot be sustained."
• On the nature of inspections: "The work of inspection being done by the respondents is... not a service being rendered to the applicants for recognition to run the schools and so a ‘fee’ cannot be collected for that purpose."
• On judicial review of policy: "[The scope of judicial review] is to scrutinize whether it: (i) violates the fundamental rights... (ii) is contrary to the provisions of the Constitution; (iii) is opposed to a statutory provision; or (iv) is manifestly arbitrary."

Court’s Decision: A Relief for Schools

The Court ordered the following: 1. Struck Down Fees: The clauses mandating inspection fees and the ₹1,00,000 security deposit are declared unconstitutional and void. 2. Infrastructure Upheld: Norms regarding land ownership, lease deeds (30-year minimum), and plot sizes for primary/middle schools remain in force. 3. Administrative Reform: The Court directed the State to amend the structure of the District Elementary Education Committee within 8 weeks, noting that the current 13-member list is "unwieldy" and effectively paralyzed by the lack of a quorum. 4. Grace Period: Private schools have been granted a six-month window to comply with the remaining valid norms, ensuring that students’ ongoing academic sessions are not disrupted by immediate derecognition.

This ruling provides much-needed relief to the private school sector in Jharkhand and puts a clear check on the state's power to impose administrative costs without explicit legislative authorization.