In battle over fee hike regulation, Delhi HC rules in favour of private schools, limi
In battle over fee hike regulation, Delhi HC rules in favour of private schools, limits govt’s power
M.U.H
23/05/202625
New Delhi: The Delhi High Court has ruled that private schools in the capital do not need prior approval from the government’s Directorate of Education (DoE) to increase fees, provided the fee structure is fixed before the start of a fresh academic year.
Delivered on Friday by Justice Anup Bhambani, the judgment came on a batch of over 100 petitions filed by various schools, led by Delhi Public School, Vasant Kunj, which had challenged several DoE orders rejecting fee-hike proposals submitted by private unaided schools.
The court, however, added that the DoE’s permission would be required if a school wanted to increase the fee mid-session.
The judgment addresses a long-standing conflict over the legality of fee regulation imposed by the DoE and clarifies the limits of regulatory intervention in private unaided schools over fee hikes.
It is likely to end the continuing tension between private schools and the government over the extent of autonomy for schools and state regulation in the education sector.
The case arose from a batch of petitions filed by private unaided schools challenging repeated rejections of their fee hike proposals by the DoE. The schools argued that the regulatory authority had acted arbitrarily and beyond its statutory powers under the Delhi School Education Act, 1973 (DSE Act).
At the core of the dispute was a fundamental legal question: whether private unaided schools have the autonomy to determine their own fee structures or whether the state possesses overriding powers to regulate such decisions.
Balancing autonomy and accountability
The high court approached this issue by examining both the statutory scheme under the DSE Act and long-standing judicial precedents laid down by the Supreme Court.
It underscored that while private unaided schools enjoy a significant degree of autonomy, such autonomy is not absolute and operates within regulatory limits. It clarified that the DoE’s role is confined to preventing practices such as profiteering or commercialisation of education.
Within this limited framework, regulatory intervention is permissible only to address such abuses. However, beyond these boundaries, the state (DoE) cannot impose rigid controls or adopt a pre-approval mechanism that effectively restricts the schools’ discretion in determining their fee structure.
It reiterated that intervention by the DoE is permissible only when there is evidence that a school is charging excessive fees amounting to profiteering.
Violation of principles of natural justice
The judgment also strongly criticised the DoE for procedural lapses. One of the key findings was that the rejection of fee hike proposals violated the principles of natural justice.
The court noted that schools were not provided with proper show-cause notices, were denied meaningful hearings and were not furnished with recommendations for fee fixation relied upon by the authorities. The court observed that such actions rendered the DoE’s orders arbitrary and legally unsustainable.
In addition to procedural concerns, the court also addressed issues related to financial and accounting practices adopted by DoE while assessing the finances of schools.
The court observed that the DoE treated funds lying in contingency reserves, development funds, depreciation reserves, and similar heads as “funds available” with a school, and relied on this interpretation to reject fee-hike proposals.
The court clarified that these funds serve “designated purposes” under Rule 177 of the DSE Rules and cannot be diverted or treated as surplus for general expenses.
It further emphasised that accounting practices must conform to established standards, including Generally Accepted Accounting Principles (GAAP) and accrual-based accounting as prescribed by the Institute of Chartered Accountants of India (ICAI), and criticised approaches that are “violative of settled accounting principles and practices” and otherwise incorrect in law.
‘Land clause’
Another key issue in the judgment concerned a “land clause” that applies to schools allotted land by government authorities.
The DoE argued that such schools were subject to stricter regulatory control, including mandatory prior approval for fee hikes. The court rejected this argument, holding that such clauses are contractual in nature and cannot override statutory provisions.
The DSE Act remains the governing framework and any contractual obligations must be interpreted in harmony with the statute.
Ultimately, the court concluded that the actions of the DoE were ultra vires the law, exceeded its statutory mandate, and were inconsistent with binding judicial precedents.
The court set aside the impugned orders and reaffirmed that private unaided schools have the primary authority to determine their fee structure, subject only to limited regulatory intervention.
At the same time, the judgment recognises the role of the state in addressing concerns of profiteering and protecting the interests of stakeholders within the educational framework.
The decision not only resolves the present dispute but also clarifies the legal position governing the regulation of private unaided educational institutions in India
