Pre-2018 Private ITIs Exempt from Mandatory Bank Guarantee: Rajasthan High Court Rules in Favor of Institutions

In a significant relief for vocational educators, a Division Bench of the High Court of Judicature for Rajasthan at Jodhpur has ruled that Industrial Training Institutes (ITIs) established or recognized prior to the 2018 academic session are exempt from the state’s mandatory requirement to furnish a Rs. 50,000 per-unit performance bank guarantee. The decision, led by Justice Shree Chandrashekhar and Justice Chandra Shekhar Sharma, reinforces the principle of judicial consistency and binds the state government to prior legal settlements.

Background of the Dispute

The dispute originated from a communication dated 4th September 2024, issued by the Director (Training) of the Directorate of Technical Education, Rajasthan. The order mandated that all recognized private ITIs deposit a performance bank guarantee of Rs. 50,000 per unit for a five-year duration, citing the need to safeguard the future of students in the event of mid-session institutional closures. Following a judgment by a Single Judge that upheld the state's directive, 139 affected training institutes filed special appeals, arguing that the court had misconstrued established precedents.

Arguments Presented

The Appellant Institutions: Represented by counsel, the training institutes contended that the Single Judge erred in interpreting the judgment of Guru Kripa Private ITI v. State of Rajasthan . They asserted that the Guru Kripa ruling explicitly distinguished between institutes established after 2018 and those already in operation, with the latter being exempt from the guarantee requirement. They emphasized that judicial discipline requires the court to follow its established coordinate bench decisions.

The State Government: The respondents argued that the policy decision was "pious" and justified to prevent bogus entrepreneurs from entering the vocational sector. They insisted that the bank guarantee is a necessity for the smooth functioning of colleges and that the Guru Kripa judgment did not grant a blanket exemption to older institutes, but rather mandated compliance from 2018 onwards for all entities.

Legal Analysis and Judicial Consistency

The High Court focused heavily on the doctrine of judicial discipline. In its analysis, the bench noted that a coordinate bench’s prior ruling—specifically the directions issued in Guru Kripa Private ITI —could not be circumvented.

The Court pointed out that the Guru Kripa verdict established clear directions: 1. Colleges covered during the 2014-2017 period could not be compelled to provide a bank guarantee. 2. Institutes running from the 2018 session onwards were required to comply with the guarantee requirement as per Government of India guidelines.

The bench held that the Single Judge had overlooked these directives, swayed instead by general observations rather than the operative mandates of the cited precedent.

Key Observations

The judgment stressed the importance of legal predictability: * "The persons who are likely to be affected by the decisions of the Court shall have a natural and reasonable expectation that the previous decisions of the Court rendered in identical facts shall be adhered to." * "The binding nature of a decision of the Court is an issue that also pertains to judicial discipline and propriety and requires that the decision of a co-ordinate Bench is followed by the other Courts of co-equal strength." * "Having regard to such indisputed facts, we have formed an opinion that the Training Institutes established/recognized prior to the year 2018 are not covered under the impugned communication dated 4th September 2024."

Final Decision

The High Court set aside the Single Judge’s order regarding the appellant-institutions, declaring that private ITIs established before the year 2018 are not governed by the state’s notification requesting a bank guarantee. This ruling provides crucial legal protection to long-standing vocational institutions, preventing the state from imposing retrospective financial burdens that were previously deemed inapplicable. The judgment serves as a stern reminder of the obligation of the judiciary to maintain consistency when dealing with identical legal questions.