IN THE HIGH COURT OF DELHI AT NEW DELHI

EXTRAORDINARY CIVIL JURISDICTION

W.P. (C) NO. 5873 OF 2019

IN THE MATTER OF:

GREENFIELDS PUBLIC SCHOOL ... PETITIONER

VERSUS

DIRECTORATE OF EDUCATION ... RESPONDENT

Next date of hearing:-

INDEX

Sl. Particulars Pg No
No.

1. Short Counter Affidavit on behalf of the Respondent

2.

3.

4. Memorandum of Appearance

5.
 FILED BY:

Santosh Kumar Tripathi

Standing Counsel (Civil)
Government of National Capital Territory of Delhi
423, Lawyers Chambers,
Delhi High Court, New Delh110001
Place: New Delhi M. No. 9818112250, 8285021263
Dated: Email Id: santoshtripathioffice@gmail.com
 IN THE HIGH COURT OF DELHI AT NEW DELHI
EXTRAORDINARY CIVIL JURISDICTION
W.P. (C) NO. 5873 OF 2019

IN THE MATTER OF:

GREENFIELDS PUBLIC SCHOOL ... PETITIONER

VERSUS

DIRECTORATE OF EDUCATION ... RESPONDENT

SHORT COUNTER AFFIDAVIT ON BEHALF OF THE

RESPONDENT/ DIRECTORATE OF EDUCATION

Most respectfully showeth:

I, ________________, d/o ________________________, aged about ___

years, presently working as
_________________________________________, Directorate of
Education, GNCTD of Delhi state that I am fully conversant with the
facts and circumstances of the present case and also competent to swear
upon this affidavit on behalf of the Respondent. I have carefully read and
understood all the contentions made in the subject Petition and in reply
thereto, I deny all the submissions, averments, allegations and
propositions of law contained therein, except those expressly admitted
hereinafter.
1. That the instant Affidavit is being filed while asserting to the
contents of instant petition in general with leave and liberty of this
Hon’ble Court to urge other additional grounds, based on the
documents filed/to be file on record by the Petitioner if so required,
at any stage subsequently.
2. It is submitted that the present petition is inter-alia filed by the
Petitioner School praying for quashing the Order dated 07.02.2019
passed by the Respondent /Directorate of Education against the
petitioner school wherein the proposal submitted by the
Petitioner /School for enhancement of fee for the Academic
Session 2017-18 was rejected.
3. It is submitted the Order dated 07.02.2019 was passed after a
thorough examination of all the financial statements and
documents put forth by the Petitioner School and consideration of
justifications/clarifications given by the Petitioner during the
hearing on 20.08.2018 and additional documents submitted
23.10.2018, the Petitioner’s proposal for fee enhancement for
session 2017-18 was rejected.
4. It is submitted that the examination of the entire records of the
Petitioner had brought to light various financial irregularities in the
accounts of the Petitioner and the act of the Petitioner to charge
unwarranted fee, or charging of fee under heads other than the
prescribed head, and accumulation of surplus funds thereof amount
to profiteering and commercialisation of education. The impugned
Order dated 07.02.2019 comprehensively brings in light the
various financial irregularities pertaining to the Petitioner School.
5. That out of the total available funds with the Petitioner School for
academic year 2017-18 amount to Rs. 26,16,59,994/- out of which
the cash out flow was estimated to be Rs. 24,16,44,833/-, the
School was noted to have sufficient surplus to the tune of Rs.
2,00,15,161/- to meet out the financial implication of 7 th CPC
salary and other expenses for the financial year 2017-18 and it was
held in the impugned order that there was no justification for a fee
hike for FY 2017-18.
6. That before asserting to the main contentions and grounds raised in
the instant writ, it is worth mentioning the relevant rule position
applicable in the issues raised by the petitioner:

6.1. Main provisions of DSEAR,1973

Sr. Section/Rule Provision

No. of DSEAR
1 Section 2 Section 2(e) “appropriate authority”
(e) means,— (i) ….
(ii) In the case of a school recognised or
to be recognised by the Delhi
Administration, the Administrator or
any other officer authorized by him in
this behalf;
(iii) ….
(iv) in the case of any other school, the
Administrator or any other officer
authorised by him in this behalf.
2 Section 2 (g) “Director” means the Director of
Education, Delhi, and includes any
other officer authorised by him to
perform all or any of the functions of
the Director under this Act;

3 Section 2(r) “private school” means a school which

is not run by the Central Government,
Administrator, a local authority or any
other authority designated or sponsored
by the Central Government,
Administrator or a local authority;

4 Section2(t) (t) “recognised school” means a school

recognised by the appropriate authority;

As per Section 2(g) of the act

“Director” means the Director of
Education, Delhi, and includes any
other officer authorized by him to
perform all or any of the functions of
the Director under this Act;

5 Section 4. Recognition of schools.—(1) The

appropriate authority may, on an
application made to it in the prescribed
form and in the prescribed manner,
recognize any private school:
6 Section As per section 17(3), The manager of
 17(3) every recognised school shall, before
the commencement of each academic
session, file with the director a full
statement of the fees to be levied by
such school during the ensuing
academic session, and except with the
prior approval of the Director, no such
school shall charge, during that
academic session, any fee in excess of
the fee specified by its manager in the
said statement.
7 Section 18 As per section 18 the provisions has
been made to maintain a school fund
which will be properly operated in
accordance with the Rules framed
therefore Director of Education will be
apprised of the fund position by the
School Managing Committee by means
of periodical returns.
8 Section This is a provision for inspection of
24(4). recognised schools by the Director to
whom the power is delegated by the
Administrator. The Director is
empowered to give necessary directions
to the manager or the school for the
efficient running of the institution.
9 Rule 50 As per Rule 50 of DSEAR, 1973 No
private school shall be recognised or
continued to be recognised by the
appropriate authority unless it fulfills
the conditions laid in the provisions of
the rule therein.
10 Rule 50 This rule provides that the school
(xviii) furnishes such reports and information
as may be required by the Director
from time to time and complies with
such instructions of the appropriate
authority or the Director as may be
issued to secure the continued
fulfilment of the condition of
recognition or the removal of
deficiencies in the working of the
school.
11 Rule 56 This Rule provides for suspension or
withdrawal of recognition for failure of
a school to fulfill the requirements of
the Rules or the Act, is not open to any
constitutional objection.
12 Rule 172. Rule 172 Provides that the Trust or
society not to collect fees, etc. schools
to grant receipts for fees, etc., collected
by it.
13 Rule 173 This rule provides how the School fund
is to be maintained
14 Rule 174 This rule provides how Withdrawal
from School Fund is to be done.
15 Rule 175 This rule provides how the Accounts of
the school is to be maintained.
16 Rule 176 This rules provides for Collections for
specific purposes to be spent for that
purpose Income derived from
collections for specific purposes shall
be spent only for such purpose.
17 Rule 177 This rules provides how Fees realised
by unaided recognised schools is to be
utilized
18 Rule 180 As per Rule 180 of DSEAR, 1973:
Unaided recognised schools to submit
returns.-
1. Every unaided recognised
private school shall submit
returns and documents in
accordance with Appendix II.
2. Every return of documents
referred to in sub-rule (1), shall
be submitted to the Director by
the 31st day of July of each year.
 3. The account and other records
maintained by an unaided private
school shall be subject to examination
by the auditors and inspecting officers
authorised by the Director in this behalf
and also by any officers authorised by
the Comptroller and Auditor General of
India.
19 Rule 190 This rule provides for inspection and
supervision of schools.

7. That the issue of fee hike by the private recognized schools has
already been settled by the judgement passed by the Division
Bench of the Hon’ble High Court of Delhi in Delhi Abhibhavak
Mahasangh v. G.N.C.T.D., ILR 2011 Supp (4) Del 247, Delhi
Abhibhavak Mahasangh v. Union of India AIR 1999 Del 124 and
Delhi Abhibhavak Mahasangh v. Union of India 96 (2002) DLT
629 (DB), and judgement passed by the Hon’ble Supreme Court of
India in the case of Modern School v. Union of India & Ors. (2004)
5 SCC 583 and Action Committee Unaided Private Schools v.
Director of Education (2009) 10 SCC 1. The Hon’ble Supreme
Court in Modern School’s Case (Supra) held that from reading
section 18(4) of the Act with rules 172, 173, 174, 175 and 177 of
the Delhi School Education Rules [“Rules”] on one hand and
section 17(3) of the DSEA, 1973 on the other hand, it is clear that
under the Act, the Director is authorized to regulate the fees and
 other charges. Under section 17(3) of the DSEA,1973, the private
unaided recognized school has to furnish a full statement of fees in
advance before the commencement of the academic session.
Reading section 17(3) with section 18(3) & (4) of the Act and the
rules quoted above, it is clear that the Director (Education) has the
authority to regulate the fees under section 17(3) of the Act,
including the quantum thereof.
8. It is submitted that the Respondent vide its order No. DE 15
(318)/PSB/2016/19786 dated 17.10.2017 issued Guidelines for
implementation of 7thCentral Pay Commission's recommendations
in private unaided recognized schools in Delhi and as per the
mandated of Hon’ble Supreme Court in Modern School’s Case
(Supra), it requires that the private unaided schools running on land
allotted by DDA/other govt. agencies with the condition in their
allotment letter to seek prior approval of Director (Education)
before any fee increase, to submit its online fee increase proposal
for the academic session 2017-2018 for which accordingly, vide
subsequent Circular no. 19849-19857 dated 23.10.2017, the fee
increase proposals were invited from all aforesaid schools on the
online module of DOE. That in response to the DoE's circular
dated 23.10.2017, the Petitioner School submitted its proposal for
enhancement of fee for the academic session 2017- 2018 in the
prescribed format including the impact on account of
implementation recommendations of 7th CPC with effect from
01.01.2016.
9. It is submitted that the Petitioner’s proposal for enhancement of fee
had gone through multiple rounds of scrutiny and was also
examined by a team of Charted Accountants. It is only after a
thorough analysis and examination of the record and consideration
of the clarifications/justifications given by the Petitioner for
proposal for fee hike, the impugned Order dated 07.02.2019 for the
academic session 2017-18 was passed by the respondent whereby
the Petitioner’s proposal for fee hike for FY 2017-18 was rejected.
10. That the present writ petition is liable to be dismissed as the
impugned order of the Respondent is just and proper and in terms
of the statutory provisions and the judgments passed by this
Hon’ble Court and the Hon’ble Supreme Court.
11. That as per the Petitioner’s financial statements, there is a net
surplus of Rs. 2,00,15,161/- and hence, there was no need of fee
increase for FY 2017-18. Moreover, it is an undisputed position
that the petitioner school is not facing the alleged financial crisis as
has been projected, rather on the contrary, there are more than
sufficient funds available with the Petitioner school for meeting its
monetary requirements and for offsetting its liability. It is also
pertinent to mention herein that the Petitioner’s fee proposal for the
previous year, i.e., 2016-17 was also rejected by the Respondent,
after a detailed scrutiny of financial statements. On
examination/evaluation of the financial statement/Fee hike
proposal of the petitioner for session 2017-18, the following fund
position regarding session 2016-17 was also taken into
consideration that :
i. Income as per audited financial statements of FY 2016-2017
has been considered with the assumption that the amount of
income during FY 2016-2017 will at least accrue during FY
2017-2018. Increased fee collected in FY 2016-2017 to be
adjusted/refunded to students during FY 2017-2018
amounting to Rs. 1,52,78,495.
ii. The Hon'ble Supreme Court in the matter of Modem School
held that development fees for supplementing the resources
for purchase, upgradation and replacements of furniture and
fixtures and equipment can by charged from students by the
recognized unaided schools not exceeding 15% of the total
annual tuition fee. Further, the Directorate's circular no.
1978 dated 16 Apr 2010 states:
"All schools must, first of all, explore and exhaust the
possibility of utilising the existing funds/reserves to meet
any shortfall in payment of salary and allowances, as a
consequence of increase in the salary and allowance of the
employees. Apart of the reserve fund which has not been
utilised for years together may also be used to meet the
shortfall before proposing a fee increase." Over a number of
years, the school has accumulated development fund and has
reflected the closing balance of I.NR 4,96,49,708 in its
audited financial statements of FY 2016-2017. Accordingly,
the accumulated reserve of development fund created by the
school by collecting development fee more than its
requirement for purchase, upgradation and replacements of
 furniture and fixtures and equipment has been considered as
free reserve available with the school for meeting the
financial implication of 7th CPC to be implemented by the
school. However, development fund equivalent to amount
collected in one year (FY 2016-2017) from students has
been considered for deriving the fund position of the school,
which is considered sufficient basis the spending pattern of
the school in past.
iii. Unclaimed caution money of INR 33,18,100 as declared by
the school to be treated as income during FY 2017-2018 has
been adjusted from the liability towards caution money as on
31 Mar 2017 of INR 58,79,100 (as per audited financial
statements of FY 2016-2017) and the net balance of INR
25,61,000 refundable to students has been considered for
deriving the net estimated available funds with the school for
FY2017-2018.
Thus, from above said fact, it is clear that the Petitioner school had
sufficient net surplus and therefore, the fee hike for the academic
session 2017-18 has been rightly rejected by the respondent
impugned order dated 07.02.2019. Hence, there are no merits in
the contentions raised in the instant Writ Petition and therefore,
deserves to be dismissed with heavy cost.
12. It is submitted that the present Writ Petition is required to be
dismissed on the ground that the Petitioner has not complied with
the provisions of Section 17 of the Delhi School Education Act,
1973 [“Act”] and Rules framed thereunder, which clearly
 prescribes that the school shall not levy any fee or collect any other
charges or receive any other payments except those specified by
the Director (Education).
13. It is submitted that the Petitioner is a private recognized school,
having been granted recognition by the Respondent, the Petitioner
is duty-bound to follow and function as per the guidelines,
instructions, orders, circulars issued by the Respondent from time
to time and to comply with the provisions of DSEAR, 1973. It is
submitted that being petitioner school being a private unaided
recognized school running on a land allotted by the DDA with the
covenant in the land allotment letter/ lease deed that no fee hike
can be done by it without the prior approval of Director
(Education).
14. It is submitted that the Hon’ble Supreme Court of India while
dealing with this issue for mandatory requirement for approval of
Director of Education for any fee hike in respect of such schools
(having such term requiring prior-approval in their land deed), had
given directions in addition to the direction given by the
Respondent, then, vide its order dated 15.12.1999, and in very clear
terms in Para 27(c) and in Para 28 of the Modern School’s case
judgment, the Directorate of Education had been directed by the
Hon’ble Supreme Court to ascertain the covenant of the allotment
letter in the following terms:

“27. In addition to the directions given by the Director of

Education vide order DE.15/Act/Duggal.Com/
203/99/23989- 24938 dated 15th December, 1999, we give
further directions as mentioned herein below:

(a)…..

(b)……

(c) It shall be the duty of the Director of Education to

ascertain whether terms of allotment of land by the
Government to the schools have been complied with. We are
shown a sample letter of allotment issued by the Delhi
Development Authority issued to some of the schools which
are recognized unaided schools. We reproduce herein
clauses 16 & 17 of the sample letter of allotment: "16. The
school shall not increase the rates of tuition fee without the
prior sanction of the Directorate of Education, Delhi Admn.
and shall follow the provisions of Delhi School Education
Act/Rules,1973 and other instructions issued from time to
time. 17. The Delhi Public School Society shall ensure that
percentage of freeship from the tuition fee as laid down
under rules by the Delhi Administration, from time to time
strictly complied. They will ensure admission to the student
belonging to weaker sections to the extent of 25% and grant
freeship to them."

“28. We are directing the Director of Education to look into

letters of allotment issued by the Government and ascertain
whether they have been complied-with by the schools. This
exercise shall be complied with within a period of three
 months from the date of communication of this judgment to
the Director of Education. If in a given case, the Director
finds non-compliance of the above terms, the Director shall
take appropriate steps in this regard.”

15. That the Petitioner’s proposal for enhancement of fee for the
academic session 2017-18 has been rejected by the Director of
Education vide Order dated 07.02.2019 in the light of the
evaluation based on the provisions of DSEA&R 1973, and the
guidelines, orders and circulars issued from time to time by the
DoE to give effect to the provisions of DSEA&R. The answering
Respondent, while deciding on the fee hike proposal of the
Petitioner, took into consideration the recommendations of the
team of Chartered Accountants engaged by the Respondent for
evaluation of the statement and accounts of the Petitioner school;
as is required by the aforesaid judgments of this Hon’ble Court and
of Supreme Court. Upon considering all the material on record, it
was evident that the Petitioner school had sufficient funds for
meeting all the financial implications and other expenses for the
financial year 2017-18. The order dated 07.02.2019 is just and
valid as the Petitioner school cannot be allowed to increase its fee
arbitrarily; thereby unreasonably and illegally burdening the
parents of the students despite having sufficient surplus/reserves.
The present writ petition is against the spirit and dicta of the
judgment of Hon`ble Supreme Court in the aforesaid case and thus
the present Writ Petition is liable to be dismissed on this ground
alone.
16. That in pursuance of the judgement of Hon`ble Supreme court of
India in the case of Modern School (supra), the Answering
Respondent vide an order bearing No. 1978 dated 16-04-2010 had
clarified that “the annual fee hike is not mandatory and all schools
must, first of all, explore and exhaust the possibility of utilizing the
existing funds/reserves to meet any shortfall in payment of salary
and allowances, as a consequence of increase in the salary and
allowances of the employees”.
17. It is submitted that the Respondent after meticulous examination of
the statements submitted by the Petitioner in light of the aforesaid
judgments of this Hon’ble Court and the Hon’ble Supreme Court,
found that the Petitioner/School had sufficient surplus/reserves and
there was no rhyme or reason for the School to unduly and
unreasonably burden the parents by increasing fee during 2017-18
and therefore the Answering Respondent well within its powers
and authority under the provisions of DSEAR, 1973 vide an Order
dated 07.02.2019 has inter-alia directed the Petitioner not to
increase any fee in pursuance to the proposal submitted by the
School on any account for the academic year 2017-18.
18. It is submitted that the Petitioner’s proposal for enhancement of fee
for the academic session 2017-18 had gone through multiple
rounds of scrutiny and was also examined by a team of Charted
Accountants. It is only after a thorough analysis and examination
of the record and consideration of the clarifications/justifications
given by the Petitioner for proposal for fee hike, the impugned
Order dated 07.02.2019 for the academic session 2017-18 had
 come to be passed whereby, the Petitioner’s proposal for fee hike
for FY 2017-18 was rejected after observing following
discrepancies and fund position as mentioned below:

18.1 Financial Discrepancies:

1- As per direction no. 2 included in the Public Notice dated 4 May
1997, "it islhe responsibility of the society who has established the.
school to raise such funds from their own sources or donations
from the other associations because the immovable property of the
school becomes the sole property of the society” Additionally,
Hon'ble High Court of Delhi in its judgement dated 30 Oct 1998 in
the case of Delhi Abibhavak Mahasangh concluded that "The
tuition fee cannot be fixed to recover capital expenditure to be
incurred on the properties of the society." Also, Clause (vii) (c) of
Order No. F.DE/15/Act/2K/243/KKK/ 883-1982 dated 10th Feb
2005 issued by this Directorate states "Capital expenditure cannot
constitute a component of the financial fee structure."
Accordingly, based on the aforementioned public notice and
Hon'ble High Court judgement, the cost relating to land arid
construction of the school building has to be met by the society,
being the property of the society and school funds i.e. fee collected
from students is not to be utilised for the same. The financial
statements of the school for FY 2016-2017 revealed that the school
has incurred expenditure on construction of building out of school
funds and has capitalised building totalling to INR 66,33,735 in FY
2016-2017, which is not in accordance with the aforementioned
provisions. Further, this capital expenditure was incurred on the
 building without complying the requirements prescribed in Rule
177 of DSER, 1973. Though the financial statements of the school
reflect opening block of building; adjustment in the fund position
of the school has been done to the extent of additions made in the
past three financial years (based of financial statements obtained
for evaluation of the fee increase proposal for FY2017-2018).
Thus, this "amount of INR 66,35,735 is hereby added to the fund
position of the school (enclosed in the later part of this order)
considering the same as funds available with the school and with
the direction to the school to recover this amount from the Society
within 30 days from the date of this order.
2- Directorate's Order no. F.DE-15/WPC-4109/Part 13/7914-7923
dated 15July 2016 instructed the "Schools not to increase any fee
until the sanction is conveyed to their proposal by Director of
Education". The school had increased its fees during FY 2016-
2017 without prior approval of the Directorate. Whereas, post
evaluation of fee increase proposal for FY 2016-2017 submitted by
the school, the fee increase proposal was rejected by DoE with the
direction that in case increased fee has already been charged from
the parents, the same shall be refunded/adjusted vide Order No.
F.DE-15/ACT-I/WPC-4109/PART/13/956 dated 13 0ct2017.
Based on the information provided by the school, the school
collected an additional sum of INR 1,52,78,495 on account of
increased fee for FY 2016-2017, out of which the school has
adjusted a sum of INR 1,40,31,536 from the fee collected from
students during FY 2017-2018. The balance amount of INR
 12,46,'959 is yet to be refunded to students/ adjusted from the fee
collected from students. While the school has refunded/ adjusted
only a part. of the excess fee during FY 2017 2018, the total
amount of increased fee of INR 1,52,78,495 collected from
students during FY 2016-2017 has been adjusted while deriving
the-fund position of the school for FY 2017-2018 (enclosed in. the
later part of this order) with the direction to the school to
immediately adjust/refund the amount to the students and submit
evidence of the same within 30 days from the date of this order.
The income budgeted for FY 2017-2018 has been considered based
on the audited financial statements of FY 2017-2018, which does
not include increased fee for deriving the fund position of the
school as on 31 Mar 2018.
3- As per the Directorate's Order No. DE 15/Act/Duggal.com/203/
99/23033/23980 dated 15 Dec 1999, the management is restrained
from transferring any amount from the recognized unaided school
fund to society or trust or any other institution. The Hon'ble
Supreme Court, also through its judgement on are view petition in
2009, restricted transfer of funds to the society. It was noted that
school had transferred funds amounting INR 10,00,058 to Regional
Provident Fund Commissioner, Delhi on 10 Jan 2017 on behalf of
Greenfields Public School Provident Fund Trust out of which INR
9,98,604 was outstanding to be received as on 31 Mar 2017. This
amount of INR 998 604 is hereby added to the fund position of the
school (enclosed in the later part of this order) considering the
same as funds available with the school and with the direction the
 school to recover this amount from the Greenfields Public School
Provident Fund Trust within 30 days from the date of this order or
adjust this amount from subsequent month's PF contribution to be
paid by the school to the Trust.
4- Order no. F.DE.ACT-i/WPC-4109/PART/13/896 dated 15 Sep
2017 issued to the school post evaluation of the proposal for
enhancement of fee for the FY 2016-2017 noted that there was no
formal process of bidding and obtaining quotations from
prospective parties for major contracts. Further, it was noted that
the school had entered into an agreement with M/s Litchi
Knowledge Centre Private Limited for provision of healthcare
services. It was noted that the expenditure incurred towards such
healthcare services increased by more than 5 times between FY
2013- 2014 to FY 2015-2016. It was also noted in the
aforementioned order that school's financial statements reflected a
liability of INR 17,04,156 towards M/s Litchi Knowledge Centre
Private Limited as on 31 March 2015; however, on cross-
validation, no such receivables were reflected in vendor's financial
statements. The expenditure incurred by the school towards
medical facilities during FY2013-2014 to FY2017-2018 is included
in table below:
Particulars FY FY FY FY FY
2013- 2014- 2015- 2016- 2017-
2014 2015 2016 2017 2018
(INR in (INR in (INR in (INR in (INR in
Lakhs) Lakhs) Lakhs) Lakhs) Lakhs)
Expenditure.. - 44,9.3 50.38 56.31 63.79
.
on Litchi
Knowledge
Centre Pvt.
Ltd.
Expenditure 8.44 7.26 0.30
on doctor
hired
by the school
directly
Total 8.44 52.19 50.68 56.31 63.79

On review of the expenditure reported by the School on healthcare

services, it appears unreasonable/ excessive as the school has the
responsibility of imparting education to students. The school did
not provide any supporting documents including vendor
confirmation, complete details of services provided, justification of
such high cost incurred, etc. to validate the authenticity of
transactions with M/s Litchi Knowledge Centre Private Limited.
However, expenditure of hiring of doctor of INR 8.44 lakhs per
annum (based on expense reported in FY 2013-2014) has been
considered in relation to the medical service provision for FY
2015-2016 and FY 2016-2017. Accordingly, net amount of INR
1,34,74,749 (INR 1,51,62,749 minus INR 8.44 lakhs*2) paid to
Litchi Knowledge Centre Pvt. Ltd. during FY 2013-2014 to FY
 2016-2017 is hereby added to the fund position of the school
(enclosed in the later part of this order) considering the same as
funds available with the school and with the direction to the school
to recover this amount from the Society within 30 days from the
date of this order. Further, expenditure of INR 63,79,145 budgeted
by the school in relation to services provided by M/s Litchi
Knowledge Centre Pvt. Ltd. has been considered only to the extent
of INR 8.44 lakhs towards hiring of doctor and remaining amount
of INR 55,35,145 has been adjusted from the budgeted expenses of
FY 2017-2018 while deriving the fund position of the school for
the FY 2017-2018. The school is also directed not to make any
further payment to this vendor.
5- Order no. F.DE.ACT-I/WPC-4109/PART/13/896 dated 15 Sep
2017 issued to the school post evaluation of the proposal for
enhancement of fee for FY 2016-2017 noted that the school had
purchased cars in the name of Founder Principal cum Manager of
the school instead of the school. The school was directed to submit
the details of cars purchased (as disclosed in the financial
statements of FY 2015-2016). Based on the fact that the school has
paid the cost of the vehicles, which are personal property of the
principal. Thus, the school has diverted school funds for creation of
capital assets of the principal. Accordingly, the cost of the cars is
required to be recovered, from the Principal. The school has not
reported historic purchase cost of assets in the fixed assets schedule
annexed to the audited financial statements of the school, rather has
reported written down value of the assets. However, the school
 provided details regarding cost of the vehicles purchased in the
name of the Principal cum Manager. Accordingly, the cost/of two
cars (Audi and Innova) amounting to INR 45.55.028 has been
included in the fund position of the school (enclosed in the later
part of this order) considering the same as funds available with the
school and with the direction to the school to recover this amount
from the Principal cum Manager of the School within 30 days from
the date of this order The school is further directed not to purchase
any asset other than its own name.
6- Order no FDE ACT-I/WPC-4109/PART/13/896 dated 15 Sep 2017
issued to the school post evaluation of the proposal for
enhancement of fee for the FY 2016-2017 noted that depreciation
had been reported as payment in the Receipt & Payment Account
by the school, while the same is a non-cash expense. On review of
the audited Receipt and Payment Accounts of the school for FY
2014-2015 and FY 2015-2016 it was noted that the school had
reported depredation of INR 36,14.875 and INR 38 95 970
respectively as payments made by the school. Thus, reporting of
non-cash expense in the nature of depreciation is deviation from
the generally accepted accounting principles and the same indicates
diversion/misappropriation amount of depreciation reported as
payment by the school in two financial years 75 10 845. has been
included in the fund position of the school (enclosed in the later
part of is order) considering the same as funds available with the
school and with the direction to the school to recover this amount
from the person responsible for diversion/misappropriation/Society
with 30 days from the date of this order. The school is further
directed not to report depreciation payment in any of the
subsequent Receipt and Payment Account. Further opening and
closing balances of cash and bank reported in the Receipt &
Payment Account of the school for FY 2014-2015, FY 2015-2016
and FY 2016-2017 were compared with the balances reported on
the face of the Balance Sheets of the respective financial years.
Differences were noted in some of the balances reported by the
school in its audited financial statements as under:

Financial Balance Receipt & Balance Difference

Year as on Payment Sheet (B-A)
Account (A) (B)
2014- 1 April 93,94,306 93,94,306 -
2015 2014
31 March 1,09,02,496 1,11,31,548* 2,29,052
2015
2015- 1 April 1,09,02,496 1,09,02,496* -
2016 2015
31 March 2,76,09,574 2,76,45,839 36,265
2016
2016- 1 April 2,76,45,839 2,76,45,839 -
2017 2016
31 March 1,82,03,052 1,82,03,052 -
2017
 In addition to the differences identified above between balances
reported in audited Receipt & Payment Accounts and audited
Balance Sheets, a difference of INR 2,29,052 was noted between
closing cash & bank balance reported in the audited Balance Sheet
as on 31Mar 2015 and opening cash &bank balance reported in the
audited Balance Sheet as on 31 Mar 2016 On account of the
differences noted in the audited financial statements of the school,
the financial statements of the school were found unreliable. The
school has been directed to perform a detailed reconciliation of the
cash and bank for the three years mentioned above identifying the
reasons for reporting depreciation as payment and differences
identified above and submit this reconciliation along with its
compliance report to the Directorate. The school is also directed to
strengthen its financial reporting process to ensure that such
discrepancies are appropriately addressed at the time of preparation
and audit of financial statements.
18.2 Other Discrepancies:
1- According to para 7.14 of the Accounting Standard 15 - 'Employee
Benefits' issued by the Institute of Chartered Accountants of India,
"Plan assets comprise:
(a) assets held by a long-term employee benefit fund; and
b) qualifying insurance policies."
The school was directed by the directorate through its Order No. F.
DE-15/ACT-l/WPC-4109/PART/13/896 dated 15 September 2017
to provide actuarial valuation of its gratuity and leave encashment
liabilities. The school has obtained an actuarial valuation of its
 liability towards retirement benefits (gratuity and leave
encashment) as on 31 March 2018 as under:

Head Balance as on 31 Mar 2018 (INR)

Gratuity 5,99,30,885
Leave Encashment 2,06,67,853
Total 8,05,98,738

However, the school has not deposited any amount with respect to
the above liabilities determined by the actuary in the investments
that qualify as 'Plan Assets' in accordance with Accounting
Standard 15. As FY 2017-2018 is the year of implementation of
salary scales recommended by 7th CPC, 10% of the liability
towards retirement benefits (i.e. INR 59,93,089 towards gratuity
and INR 20.66,785 towards leave encashment) as per actuarial
valuation has been considered while deriving the fund position of
the school (enclosed in the later part of this order) with the
instruction to the school to deposit the amount mentioned above
(i.e. 10% of the liability determined by the actuary) in the
investments that qualify as 'Plan Assets' within 30 days from the
date of this order and remaining amount within the next 9 years.

2- The school has prepared a Fixed Assets Register (FAR) that only
captures asset name, date of receipt, bill no., purchase cost and
quantity. The school should also include details such as supplier
name, invoice number, manufacturer's serial number, location,
 other costs incurred, depreciation, asset identification number, etc.
to facilitate identification of asset and documenting complete
details of assets at one place. During the personal hearing, school
mentioned that it will make recommended changes from FY 2018-
2019 onwards. The school is directed to update the FAR with
relevant details mentioned above. The above being a procedural
finding, no financial impact is warranted for deriving the fund
position of the school.
3- Clause 19 of Order No.F.DE. /15(56)/Act/2009/778 dated 11 Feb
2009 states the tuition fee shall be so determined as to cover the
standard cost of establishment including provisions for DA. bonus,
etc., and all terminal, benefits as also the expenditure of revenue
nature concerning the curricular activities."
Further, clause 21 of the aforesaid order states "No annual charges
shall be levied unless they are determined by the Managing
Committee to cover all revenue expenditure, not included in the
tuition fee and 'overheads' and expenses on play-grounds, sports
equipment: cultural and other co-curricular activities as distinct
from the curricular activities of the school.
Rule 176 - 'Collections for specific purposes to be spent for that
purpose of the DSER, 1973 states -income derived from
collections for specific purposes shall be spent only for such
purpose."
Para no 22 of Order No. F.DE./15(56)/ Act/2009/778 dated 11 Feb
2009 states "Earmarked levies will be calculated and collected on
'no-profit no loss' basis and spent only for the purpose for which
they are being charged." Sub-rule 3 of Rule 177 of DSER, 1973
states “Funds collected for specific purposes. Like sports. Co-
curricular activities. Subscriptions for excursions or subscription
for magazines, and annual charges, by whatever name called, shall
be spent solely for the exclusive benefit of the students of the
concerned school and shall not be included in the savings referred
to in sub-rule (2)." Further, Sub-Rule 4 of the said rule states "The
collections referred to in sub-rule (3) shall be administered in the
same manner as the monies standing to the credit of the Pupils
Fund as administered." Also, earmarked levies collected from
students are a form of restricted funds, which, according to
Guidance Note on Accounting by Schools issued by the Institute of
Chartered Accountants of India, are required to be credited to a
separate fund account when the amount is received and reflected
separately in the Balance Sheet. Further, the aforementioned
Guidance Note lays down the concept of fund based accounting for
restricted funds, whereby upon incurrence of expenditure, the same
Is charged to the Income and Expenditure Account ('Restricted
Funds' column) and a corresponding amount is transferred from the
concerned restricted fund account to the credit of the Income and
Expenditure Account ("Restricted Funds' column).
From the information provided by the school and taken on record,
it has been noted that:
i. The school charges earmarked levies in the form of transport
fee and computer/expert class fee from students; However,
the school has -not-maintained separate, fund accounts for
 these earmarked. levies and the school has been generating
surplus from earmarked levies, which has been utilised for
meeting other expenses of the school or has been incurring
losses (deficit), which has been met from other fees/income.
Details of calculation of surplus/deficit, based on breakup of
expenditure provided by the school for FY 2016-2017 is
given below:

Earmarked Income (INR) Expenses SurpIus/(Deficit)

Fee (INR) (INR)
A B C=A-B
Transport 2,79,43,200 2,74,86,552 4,56,648
Fee ^
Expert 89,38,095 2,49,53,821 (1,60,15,726)
Class Fee

ii. The school has not expenses stated in table above for
creating fund for replacement of vehicles, which should have
been done to ensure that the cost of vehicles is apportioned
to the students using the transport facility during the life of
the vehicles. On the basis of aforementioned orders,
earmarked levies are to be collected only from the user
students availing the service/facility. In other words, if any
service/facility has been extended to all the students of the
school, a separate charge should not be levied for the
service/facility as the same would get covered either under
 tuition fee (expenses on curricular activities) or annual
charges (expenses other than those covered under tuition
fee).
iii. The school is charging expert class fees from the students of
all classes. Thus, the fee charged from all students loses its
'character of earmarked levy, being a non-user based fees.
Thus, based on the nature of the expert class fees and details
provided by the school in relation to expenses incurred
against the same, the school should not charge such fee as
earmarked fee and should incur the expenses relating to
these from tuition fee. Thus, the deficit from earmarked
levies has been covered from other fees on account of which
fund balance of earmarked levies could not separate from the
total funds maintained by the school. Accordingly, total fees
(including earmarked fee) have been included in the
budgeted income and budgeted expenses (included those for
earmarked purposes) while deriving the fund position of the
school (enclosed in the later part of this order).
The school has thus been directed to maintain separate fund
account depicting clearly the amount collected, amount
utilised and balance amount for each earmarked levies.
collected from students. Unintentional surplus/deficit, if any.
from earmarked levies has to be utilized or adjusted against
earmarked fees collected from the users in the subsequent
year. Further, the school should evaluate costs incurred
against each earmarked levy and propose the revised fee
 structure for earmarked levies during subsequent proposal
for enhancement of fee ensuring that the proposed levies are
calculated on no-profit no-loss basis and not to include fee
collected from all students as earmarked levies.
4- As per the provisions of rule 107- 'Fixation of Pay' of DSER, 1973,
"(I) The initial pay of an employee on the first appointment shall be
fixed ordinarily at the minimum of the scale of pay. Provided that a
higher initial pay In the specified scale of pay. may be given to a
person by a appointing authority....
(2) The pay of an employee on promotion to higher grade or post
shall be determined by the same rules as are applicable to the
employee of government school."
It was noted that the gross salary and grade pay of the Principal of
the school (monthly Gross Salary of INR 3,02,454 for the month of
Jan 2018 after implementation of 7th CPC but no details of grade
pay provided by the school) was more than the salary and grade
pay as applicable to comparable staff in government schools. The
school explained that the Principal is working since long and has
got increments and promotions as per his experience and tenure of
services. However, the school has not produces service book of the
Principal is missing. The school should prepare a reconciliation of
gross salary (along with grade pay) with the salary on the date of
joining of the Principal and subsequent increments awarded to him
the compliance of the above will be examined at the time of
evaluation of proposal for enhancement of fee for subsequent
academic session.
5- Order No. F DE-15/ACT-I/WPC-4109/PART/13/896dated 15 September
2017 issued post evaluation of the proposal for enhancement of fee for
the academic year 2016-17 submitted by the school noted that the school
is running certain business activities like stationery and book shop on the
land allotted to the society towards running the school. it was further
noted that the shop is owned by one of the administrators of the school.
the school was directed to stop such practices. Also, the school was
directed to book the income out these activities in the books of accounts.
Rule 175 of Delhi School Education Rules, 1973 states “the accounts
with regard to the recognised unaided school fund shall be so maintained
as to exhibit, clearly the income accruing to the school by way of fees,
fines, income from building rent, interest, development fees, collections
for specific purposes, endowments, gifts, donations, contributions to
Pupil's Fund and other miscellaneous receipt".

It was noted that the school has let out part of the school building to
United Bank of India (UBI),M/s Alliance Educare (for running IGNOU
classes), M/s A.K. Confectioners and M/s Anusya Book Shoppe and was
charging minimal rent/maintenance charges. From the audited financial
statements of the school for FY 2016-2017, it was noted that the school
has reported income only in respect of rental income received by the
school from UBI. During personal hearing, the school submitted that the
charges collected from vendors using school premises were adjusted from
the expenses of the school and reduced expenses were reported in the
Income and Expenditure Account. The school provided following details
in respect of the income earned from the school building:
 Party Name Total Income Adjusted from Income
Earned (INR) Expenses (INR) Reported
(A) (B) in I&E A/c
(INR)
(A-B)
United Bank of 94,908 85,418
India-^
Alliance Educare 1,62,000 1,62,000
A.K. 72.000 72,000
Confectioners-
Anusya Book 36,000 36,000
Shoppe
Total 3,64,908 2,70,000 85,418

The school explained that total rent received from UBI during FY 2016-
2017 was INR 94,908 out of which INR 9,490 (10% of total income) was
paid to DDA as service charge, which was adjusted from the income
reported in the Income &Expenditure Account and net figure of INR
85,418 was reported as income.
The school did not provide appropriate justification for determination of
arm's length price in respect of space let-out to related parties. Also, the
school did not provide details of communication/ approval from DDA in
respect of letting out of school premises for commercial activities.
 On the basis of the above said observation, the school has thus been
directed to report income and expenses correctly in accordance with Rule
175 of DSER, 1973.
6- Direction no. 3 of the public notice dated 4 May 1997 published in the
Times of India states "No security/ deposit/ caution money be taken from
the students at the time of admission and if at all it is considered
necessary, it should be taken once and at the nominal rate of INR 500per
student in any case, and it should be returned to the students at the time of
leaving the school along with the interest at the bank rate."
Further, Clause 18 of Order no F.DE/15(56)/Act/2009/778 dated 11 Feb
2009 states "No caution money/security deposit of more than five
hundred rupees per student shall be charged. The caution money thus
collected shall be kept deposited In a scheduled bank in the name of the
concerned school and shall be returned to the student a( the time along
with the bank interest thereon irrespective of whether or not he/she
requests for refund.
DoE's order No. F. DE-16/ACT-I/WPC-4109/PART/13/896 dated 15
September 2017 issued to the school post evaluation of the proposal for
enhancement of fee for FY 2016 2017 noted that the school had not
followed proper accounting practices in relation to caution money as it
had not maintained separate bank account for deposit of caution money
students and had not transferred unclaimed caution money to income in
accordance with directions issued by DOE in this regard. It was noted
that the school is yet to open a separate bank account for deposit of
caution money Also, the school is not including interest earned on
caution money along with the refund money to the students leaving the
school. During personal hearing school mentioned that it will
adjust/refund caution money collected from students during FY 2018-
2019. Based on the discussion with the school during personal hearing,
the school should refund total caution money within FY 2018-19 and
should not collected it subsequently. The amount to be refunded to
studet5ns after adjusting the income recorded by the school during FY
2017-18 towards unclaimed caution money, as per the audited financial
statements for the FY 2017-18 submitted by the school, has been
considered while deriving the fund position of the school.

18.3 After detailed examination of all the material on record and

considering the clarification submitted by the school, it was finally
evaluated/concluded that:
i. The total funds available for the year 2017-18 amounting to
INR 26,16,59,994 out of which cash outflow in the year
2017-18 is estimated to be INR 24,16,59,994 this results in
net deficit of INR 2,00,15,161. The details are as follows:
Particular Amount
(INR)
Cash and Bank balance s on 31 march 2017 1,82,03,052
(as per audited financial statements of FY
2016-17)
Investments (Fixed Deposits) as on 31 1,45,74,864
March 2017 (as per audited financial
statements of FY 2016-17)
Total Liquid Funds available with the 27,77,916
school as on 31 march 2017
Add; Estimated fees and other incomes for 24,72,75,321
FY 2017-18 based on audited financial
statements of FY 2016-17 of the school
[refer note 1]
Add: Recover of cost of additions to 66,33,735
building from the society [Refer Financial
Finding No.1]
Add: Recovery of amount transferred to 9,98,604
Green Field Public School EPF Trust
[Refer financial finding No.3]
Add: Recovery of amount paid to litchi 1,34,74,749
knowledge Centre [Refer Financial finding
NO.4]
Add: Recovery from Society towards 25,61,000
purchase of costly Cars [Refer Financial
Finding No. 5]
Add: Recovery in respect of payment of 59,93,089
depreciation indicated in the audited
Receipt &Payment Account [Refer
Financial Finding No. 6]
Gross estimated available Funds for FY 31,32,26,198
2017-2018
Less: Development fund [Refer Note 2] 2,56,66,835
Less: Increased fee collected in FY 2016- 1,52,78,495
2017 to be adjusted/refunded to students
 during FY2017-2018 [Refer Financial
Finding No.2]
Less: Caution Money [Refer Note 3] 25,61,000
Less: Provision for Retirement Benefits - 59,93,089
Gratuity [Refer Other Finding No. 1]
Less: Provision for Retirement Benefits - 20,66,785
Leave Encashment [Refer Other Finding
No. 1]
Net estimated available Funds for FY 26,16,59,994
2017-2018
Less: Budgeted Expenses for FY2017-2018 22,17,33,191
[Refer Note 4]
Less: Arrears of salary as per 7th CPC for 1,99,11,642
the period Jan 2016 to March 2017 (As per
computation of salary per 7th CPC
submitted by the school)
Estimated surplus as on 31st March 2018 2,00,15,161

Notes:
1. Fee and income as per audited financial statements of FY 2016-
2017 has been considered with the assumption that the amount of
income during FY 2016-2017 will at least accrue during FY 2017-
2018.
2. The Hon'ble Supreme Court in the matter of Modem School held
that development fees for supplementing the resources for
purchase, upgradation and replacements of furniture and fixtures
 and equipment can by charged from students by the recognized
unaided schools not exceeding 15% of the total annual tuition fee.
Further, the Directorate's circular no. 1978 dated 16 Apr 2010
states:
"All schools must, first of all, explore and exhaust the possibility of
utilising the existing funds/reserves to meet any shortfall in
payment of salary and allowances, as a consequence of increase in
the salary and allowance of the employees. Apart of the reserve
fund which has not been utilised for years together may also be
used to meet the shortfall before proposing a fee increase." Over a
number of years, the school has accumulated development fund
and has reflected the closing balance of I.NR 4,96,49,708 in its
audited financial statements of FY 2016-2017. Accordingly, the
accumulated reserve of development fund created by the school by
collecting development fee more than its requirement for purchase,
upgradation and replacements of furniture and fixtures and
equipment has been considered as free reserve available with the
school for meeting the financial implication of 7 th CPC to be
implemented by the school. However, development fund
equivalent to amount collected in one year (FY 2016-2017) from
students has been considered for deriving the fund position of the
school, which is considered sufficient basis the spending pattern of
the school in past.
3. Unclaimed caution money of INR 33,18,100 as declared by the
school to be treated as income during FY 2017-2018 has been
adjusted from the liability towards caution money as on 31 Mar
 2017 of INR 58,79,100 (as per audited financial statements of FY
2016-2017) and the net balance of INR 25,61,000 refundable to
students has been considered for deriving the net estimated
available funds with the school for FY2017-2018.Also refer other
finding no. 6.
4. Per the Budgeted Receipt and Payment Account for FY 2017-
2018 submitted by the school along with proposal for fee increase,
the school had estimated the total expenditure during FY 2017-
2018 of INR 32 87 27 984 (including arrears for salary as per 7th
CPC, which is considered separately), which in some instances
was found to be unreasonable/ excessive. Based on the details
provided by the school and explanations of the school during
personal 22 17 33 191 (other than arrears for salary as per
computation as per 7th CPC of INR 1.99,11.642) were considered
in the budgeted expenses for FY 2017-2018 after adjustments for
expenses incurred on-actual basis submitted-by the school,
retirement benefits considered separately, medical expenses
budgeted towards Litchi Knowledge Centre Private Limited, fee
refundable, etc.
In view of the above exanimation, it is evident that the school does
have sufficient funds for meeting all the budgeted expenditure for
the financial year 2017-2018.
ii. Further discrepancies and observations:
a. The school has sufficient funds to carry on the operation of the
school for the academic session 2017-2018 on the basis of
existing fees structure and after considering existing
 funds/reserves. As per the Directorate's Order No.DE
15/Act/Duggal.com/203/99/23033/23980 dated 15 Dec1999, the
management of the private unaided recognized school is
restrained from transferring any amount from the recognized
unaided school fund to society or trust or any other institution,
however, the petitioner school has a recoverable balance of INR
9,98,604 from Greenfields Public School PF Trust. Thus, school
has been directed to recover this amount from Greenfields
Public School PF trust.
b. That as per direction no. 2of Public Notice dated 4 th May 1997,
it is the responsibility-of the society who has established the
school to raise funds from their own sources or donations
judgement dated 30 Oct 1998 in the case of Delhi Abibhavak
Mahasangh concluded that tuition fee cannot be fixed to recover
capital expenditure to be incurred on the properties of the
society thus, it is observed that the additions to the building
should not be met out of the fee collected from students and is
required to be recovered from the society.
c. As per point no. 22 of order No. F.DE./15(56)/Act/2009/778
dated 11 Feb 2009, user charges should be collected at ‘no
profit and no loss’ basis and should be used only for the purpose
which these are collected. The school has continued to charge
earmarked fee higher than the expenses incurred against science
and practical fees whereas the expenses incurred are more than
transport charges collected from students. The school has
utilised the surplus earned for meeting the establishment
 expenses and deficit on transport charges. Accordingly, the
school has been advised to maintain separate fund in respect of
each earmarked levy charged from the students in accordance
with the DSEA &R, 1973 and orders, circulars, etc. issued
thereunder. Surpluses/deficit 'under each earmarked levy
collected from the students should be adjusted for determining
the earmarked levy to be charged in the academic session 2018-
2019.Accordingly, the petitioner school has been advised to
maintain separate fund in respect of each earmarked levy
charged from the students in accordance with the DSEA &R,
1973 and orders, circulars, etc. issued thereunder.
Surpluses/deficit 'under each earmarked levy collected from the
students should be adjusted for determining the earmarked levy
to be charged in the academic session 2018-2019.
d. That as per Accounting Standard 15 - 'Employee Benefits'
issued by the Institute of Chartered Accountants of India states
"Accounting for defined benefit plans is complex because
actuarial assumptions are required to measure the obligation and
the expense and there is a possibility of actuarial gains and
losses." Further, the Accounting Standard defines Plan Assets
(the form of investments to be made against liability towards
retirement benefits) as:
(a) assets held by a long-term employee benefit fund; and
(b) qualifying insurance policies.
The school has thus been directed to ensure compliance with
Accounting Standard 15 by making the investment equivalent
 to the liability determined by the actuary (over a course of 10
years) in the mode specified under the said Accounting
Standard.
e. In the light of above evaluation which is based on the provisions
of DSEA, 1973, DSER, 1973, guidelines, orders and circulars
issued from time to time by the DoE, it was recommended by
the team of Chartered Accountants that along with certain
financial irregularities that were identified (appropriate financial
impact of which has been taken on the fund position of the
school) and certain procedural findings which were also noted
(appropriate instructions against which have been given in this
order), the funds available with the school for implementation
of recommendations of 7th CPC and to carry out its operations
for the academic session 2017-18 are sufficient. Accordingly,
the fee team of Chartered Accountants had recommended that
increase proposal of the school may be rejected.

Reply to Grounds :

19. Reply to Ground A to Q:

That while considering the question whether the Director of

Education has the authority to regulate the fee of Private Unaided
Schools, the Supreme Court in Modern School (supra) held that the
DoE is authorized to regulate the fees and other charges to prevent
commercialization of education and under Section 17(3) and 18(5) of
DSEA, the Director of Education has the authority to regulate the
fees. That in Delhi Abhibhavak Mahasangh V. UOI and Ors, WPC
No.7777 of 2009 ( DAM II):The Division Bench of this Hon’ble High
Court vide said judgment dated 12.08.2011 in DAM II held - “62.
With this, we revert back to the issues On Merits: The clear legal
position which emerges from the combined reading of the judgments
of the Supreme Court, directly on the issue of revising tuition fee by
Delhi schools under the Delhi Education Act, and already stated in
detail above, demonstrates that the schools cannot indulge in
commercialization of education which would mean that the fee
structure has to be kept within bound so as to avoid profiteering. At
the same time, "reasonable surplus" is permissible as fund in the
form of such surplus may be required for development of various
activities in the schools for the benefit of students themselves. The
guiding principle, in the process, is "to strike a balance between
autonomy of such institution and measures to be taken in avoiding
commercialization of education". The autonomy of the schools can be
ensured by giving first right to such schools to increase the fee. At the
same time, quantum of fee to be charged by unaided schools
is subject to regulation by the DoE which power is specifically
conferred upon the DoE by virtue of Section 17(3) of 1973 Act. This
is specifically held by the Supreme Court in Modern School (supra)
and Action Committee Unaided Private Schools and Anr (supra).
Normally, therefore, in the first instance, it is for the schools to fix
their fee and/or increase the same which right is conferred upon the
schools as recognized in TMA Pai (supra). The DoE can step in and
interfere if hike in fee by a particular school is found to be excessive
and perceived as "indulging in profiteering". It would be a procedure
to be resorted to routinely.That every school is required to file a
statement of fees every year before the ensuing academic year under
Section 17(3) of the DSEA, 1973 with the Director and in light of the
judgement of the Hon’ble Supreme Court in the judgement dated
27.04.2004 passed in Civil Appeal No. 2699 of 2001 titled Modern
School v. Union of India and Ors. holding conclusively that under
S.17(3), 18(4) read with Rule 172,173,175 and 177 of the
DSEAR,1973, the Director Education has authority to regulate the fee
and other charges to prevent the profiteering and commercialisation
of education. That every school is required to file a statement of fees
every year before the ensuing academic year under Section 17(3) of
the DSEA, 1973 with the Director Education and in light of the
judgement of the Hon’ble Supreme Court in the judgement dated
27.04.2004 passed in Civil Appeal No. 2699 of 2001 titled Modern
School v. Union of India and Ors. holding conclusively that under
S.17(3), 18(4) read with Rule 172,173,175 and 177 of the
DSEAR,1973, the Director (Education) has authority to regulate the
fee and other charges to prevent the profiteering and
commercialisation of education. The Respondent after examining the
documents submitted by the Petitioner found that the Petitioner
school has Net Surplus/reserve of Rs. 2,00,15,161/-for FY 2017-18
and there was no reason for the school to unduly and unreasonably
burden the parents by increasing fee during 2017-18. Therefore, the
Answering respondent, exercising powers under section 17 (3) the
DSEA, 1973 passed the impugned Order dated 07.02.2019 rejecting
the fee hike proposal being a detailed, comprehensive and well-
 reasoned order providing detailed explanation of the various financial
discrepancies found against the Petitioner along-with directions to
rectify such financial and other irregularities found against it. It is
pertinent to mention that the respondent provided the full opportunity
to the petitioner to put its claim for justification of the proposed fee
hike for session 2017-18 during course of hearing as can be seen from
the order dated 07.02.2019 its self. Thus there is no justification in
the allegation/ contentions of the petitioner that the principle of
justice has not been followed before passing the impugned order.
20.Reply to Ground R to Ground S:
The accumulation for any kind of surplus or capitalization of the
private unaided recognised school fee in any form is always
regarded as commercialization of education, therefore under the
mandate of this Hon’ble court as well as the supreme court, the
DoE has always been ensuring the promotion of cost base
education and preventing commercialization of education in any
form either by accumulation of the school fee under any head by
whatever name it is called or capitalization of tuition fees such as
construction of school building, purchase of vehicle for school staff
or school bus for school students, purchase of land, supporting any
other institution under different management or different name etc.
before meeting at first instance, pay allowances and other benefits
admissible to the employee of the school therefore, the scrutinizing
of statement of account of private unaided recognised schools have
been done by the respondent DoE within the parameters of statutes
and judicial mandate keeping in view to promote the quality and
cost based education. The Director of Education / Respondent has
the authority to regulate the fee of Private Unaided Schools, the
Supreme Court in Modern School (supra) held that the DoE is
authorized to regulate the fees and other charges to prevent
commercialization of education and under Section 17(3) and 18(5)
of DSEA, the Director of Education has the authority to regulate
the fees. It is submitted that on the pretext of insufficient funds
with the Petitioner school, it has impugned the DoE‘s Order dated
07.02.2019 wherein any increase in fees/charges for the Academic
Session 2017-18 was rejected, and by virtue of this present Petition
has sought the relief of effecting fee hike despite having surplus
funds to incur all the liabilities amounts to profiteering by the
school which is impermissible as per the law laid down by the
Hon’ble Supreme Court of India.
It is submitted that all the contentions raised in the corresponding
para’s regarding the order dated 17.10.2017, 13.04.2018 and
reliance place on judgment dated 15.03.2019 of Ld. Single Judge
of the Hon’ble High Court of Delhi in W.P.(C) No.4374/2017 and
WPC 13546/2018. The allegations raised against the respondent
regarding order dated 14.03.2019 are false, misleading and hence,
vehemently denied. Reply Regarding order dated 17.10.2017,
13.04.2018 and reply to the contentions raised by the petitioner
placing reliance on judgment dated 15.03.2019 of Ld. Single
Judge of the Hon’ble High Court of Delhi in WPC 4374/2017 are
as follows:
A. The recommendation of 7th Central Pay Commission came into
effect w.e.f 01.01.2016 which resulted increase in salary for the
Govt. employees. The recommendations of 7th CPC was adopted
by DoE vide its circular dated 14.10.2016 endorsing its
recommendations for the employees of Govt. schools.
implementation of 7th central pay commission recommendation
under central civil services (revised Pay Rules 2016) w.e.f
1.1.2016 .That in the order dated 17.10.2017, checks and balances
embedded to avoid delay in payment of salary as well as to protect
rights of children and their parents. However , after the order dated
17.10.2017, several complaints from all parts of Delhi were
received in the office of DoE wherein it was alleged that the said
notification dated 17.10.2017 has been issued in contravention of
Hon’ble Supreme Court mandate given in Modern School (supra)
and even further schools without complying with the general
instructions of the said order, had increased their Tuition Fee as per
their own whims and fancies. Therefore, the Answering Respondent
decided to keep the order in abeyance to examine the gravity of the
situation and after detailed deliberations, it was decided to hold the
collection of fee from the parents until the comprehensive audit of
account is completed and it is established that the school really
needs fee hike for implementation of 7 th Pay Commission. That
accordingly, with a view to avoid delay, inconvenience to the
schools and parents and to avoid untoward controversies
undermining the reputation of private schools, comprehensive audit
was ordered and withdrawn the order / Circular dated 17.10.17
 earlier issued by DoE and issued the impugned order dated
13.04.2018 wherein the order dated 17.10.17 has been withdraw and
further, following directions were issued to all concerned for strict
compliance:
1. The interim increase permitted vide this Directorate's Order
dated 17/10/2017, 03/11/2017 & 20/11/2017 to such schools is
hereby withdrawn from retrospective effect.

2. Online proposal made by such schools vide this Directorate's

Order dated 23/10/2017,03/11/2017 and 20/11/2017 for
increase in fee for the academic session 2017-18 on this
Directorate's website shall be treated as valid and the same shall
be decided after examining the financial accounts of the schools
as per the procedure laid down by the department.

B. The said circular was set aside by the Ld. Single Judge of the
Hon’ble High Court of Delhi vide judgement dated 15.03.2019 in
WPC 4374/2018; titled as Action committee Unaided Recognised
Private School V/s Directorate of Education & Anr. on the ground
that the interim fee hike permitted under circular dated 17.10.2017
was perfectly in order in view of the judgment of Division Bench of
This Hon’ble Court in Delhi Abhibhavak Mahasangh V/s GNCTD,
ILR 2011 Supp (4)Del247[“DAM-II”]; holding that the said fee
hike was not an act of fee increase by the school but a
dispensation by DoE itself, an accordingly no prior approval of
DoE was required; and in any event prior approval land clause did
not prohibited such an interim hike.
C. The reliance placed upon by the petitioner on the said
judgement passed by Ld. Single Judge in WPC 4374/2018 is
misconceived. In this regard, it is submitted that the DoE has
challenged the said impugned judgement dated 15.03.2019 of the
Ld. Single Judge in LPA 230/2019 ; titled as Directorate of
Education and Anr. V/s Action Committee Private Unaided
Recognised School inter-alia on the following grounds:
a. The Ld. Single Judge misdirected itself by quashing the Circular
dated 13.04.2018 of the DoE without going into and deciding the
legality and validity of the said Circular (especially when
submissions on said account was made and noted by the Ld. Single
Judge); instead has only looked into the validity and correctness of
provision of 17.10.2017 Circular permitting interim fee hike. This
is a fundamental flaw committed by the Ld. Single Judge
which clearly vitiates the present impugned judgment and
order on this account alone;
b. In the aforesaid regard, it was a specific case of the Appellant DoE
in LPA 230/2019 that:
i.) The schools had no enforceable legal right to the interim fee
hike otherwise granted by the Order/Circular dated 17.10.2017;
ii.) The Appellant in law, was entitled to issue a Circular of the
nature dated 13.04.2018, by retrospectively withdrawing the
earlier interim fee hike proposal, particularly on the ground that
the Appellant, who is undisputedly a creature of the statute had
no power vested in it to permit an interim fee hike across the
board; and
 iii.) Further on the ground that the said interim fee hike was not
serving the purpose for which it was intended, on the contrary,
was being misused;
c. Infact, the judgments of the Supreme Court in R.C. Tobacco
Pvt. Ltd. v. Union of India (2005) 7 SCC 725 [Para 24-25]. Shrijee
Sales Corporation v. Union of India (1997) 3 SCC 398 [Para 7],
Express Newspapers Pvt. Ltd. Union of India (1986) 1 SCC 133 [at
250-251) and Shree Sidhbali Steels Lid. v. State of UP (2011) 3
SCC 193 [Para 33), upholding the withdrawal of earlier
government decisions including retrospectively in similar
circumstances as well as Section 21 of the General Clauses Act,
were placed before the Ld. Single Judge by the Appellant in
support of their aforesaid case.
d. Even the aforesaid findings of the Ld. Single Judge uphold the
validity of the interim fee hike are unsustainable as:
i. Firstly, in the present case, interim fee hike under 17.10.2017
circular was confined to schools with prior approval land clauses.
In other words, the aspect of interim fee hike was intrinsically
intertwined with the prior approval clauses cases; and in Justice
For All v. GNCTD 2016 SCC Online Del 355 ("JFA-I”) the
Division Bench of this Hon'ble Court has in terms held that DAM-
II was not concerning prior approval land clause cases. Thus, the
said justification of the Ld. Single Judge flies in the face of
the said interpretation given in JFA-I to the judgment in DAM-II.
ii. Secondly, in DAM-II, the issue, raised in the present petition,
namely, that the Appellant did not have the power to allow interim
 fee hike muchless in the manner as done vide the aforesaid
circular of 17.10.2017 was not even raised;
iii. Thirdly, in DAM-II, the Division bench of this Hon'ble Court had
frowned upon such ad-hocism hike and that too across the board
and that too without even studying the proposals of individual
schools;
iv. Fourthly, DAM-II was dealing with a completely different
circumstances, namely, an earlier DoE circular dated 11.02.2009
under which even though a general/across the board fee hike was
provided but then the same was a final a fee hike and not a case of
interim fee hike. Accordingly, this Hon'ble Court in DAM-II did
not justify an interim hike of the present nature but treated a final
hike as an interim one.
v. Fifthly, in case of a final fee hike like the one done under
11.02.2009 circular, and that too across the board, the question of
preferring a Section 17 of DSEAR, 1973, proposal yet less
obtaining a prior approval in case of DDA Land Clause did not
arise.
e. Even otherwise, the said interim fee hike as contemplated in the
circular of 17.10.2017 could not have obviated the mandatory
requirement of prior approval in DDA Land Clause cases, even
though, the same was a dispensation by the DoE, as, the said
dispensation was merely an interim measures, subject to detailed
scrutiny and prior approval of the DoE once the accounts of the
schools had been scrutinized. This position is infact expressly
contemplated in diverse provisions of the said circular dated
 17.10.2017 itself, namely, clause II (d), II (g) etc. That apart, under
the provisions of the said circular the DoE had reserved in itself the
right to revisit the said interim hike, post- detailed scrutiny. Thus,
even on this account, the interim fee hike could not have been
treated as prior approval of DoE, yet less as mandated by the
Hon'ble Supreme Court in Modern School and the Division Bench
of this Court in JFA-I. Infact, it does not stand to reason that
once an approval has been given the same could have been
reviewed/revisited. Moreover, Rule 180 of the Delhi School
Education Rules, 1973 ["DSER") read with Appendix II,
contemplates a detailed exercise/scrutiny before grant of prior
sanction and indisputably, an interim fee hike, and that too across
the board, as provided in 17.10.2017 circular, did not fulfil the said
requirement, whereas, the subsequent detailed scrutiny as
contemplated in the very same circular did fulfil the said
requirement.
f. That apart, the prior approval land clause also prohibited an interim
fee hike, as the said hike, even though interim, was nevertheless a
case of increase in fees, and therefore clearly prohibited in terms of
the mandate of the Supreme Court in Modern School’s case (supra)
and the Division Bench judgment of this Hon'ble Court in JFA-I.
g. In the Modern School’s case, the Hon'ble Supreme Court passed
the direction in negative term, prohibiting increase of fees till prior
approval/sanctioned was granted by DoE. In other words, even
though the present interim fee hike was a dispensation by the DoE,
the same was not permissible till a fee hike approval as
 contemplated in law was granted by the DoE. On the other hand, in
JFA-I, the Division Bench of this Hon'ble Court, expressly directed
the Appellant to ensure compliance of the said land clause, which
was also binding on the DoE and accordingly, the DoE could not
have derogated out of the same.
h. Moreover, land clause was not a mere contractual issue. It is
submitted that not only the allotment of land with such clause of
prior approval are made pursuant to Nazul Land Rules, and that too
on the recommendation of the Appellant, but also, a Division
Bench of this Hon'ble Court in Social Jurists v. Government of
NCT of Delhi 140 (2007) DLT 698 (DB) has in terms recognised
such allotment condition, not only being a contractual condition
but also a statutory and a public law obligation.
D. It is pertinent to mention that the Judgment dated 15.03.2019
passed by Ld. Single Judge of Delhi High Court in WPC
4374/2018 has been challenged by the DoE in Hon’ble Division
bench of High Court of Delhi vide LPA 230/2019. The Division
bench of Hon’ble High Court of Delhi vide order dated
03.04.2019 in said LPA 230/2019 had directed that:
“Till the next date of hearing, none of the land clause school will
proceed to collect the amount constituting the interim fee hike in
terms of 17th October 2017 circular issued by the Appellant No. 1”.
The said interim order has been continued by the Hon’ble Court in
the subsequent date of hearing .Hence ,the reliance placed by the
petitioner on the judgement dated 15.03.2019 of 4374/2018 has no
merits. Further, the matter in said LPA 230/2019 is sub-judice
 before the division bench of the Hon’ble High Court of Delhi and
the Answering Respondent has good case and there are definite
chances that said LPA may be allowed in favour of the Answering
Respondent .
E. The Petitioner School in the instant Writ petition has sought to
unfairly and unlawfully resile from the said binding obligation,
which goes to the very root of its existence, by placing misplaced
reliance on judgment dated 15.03.2019 passed by a Ld. Single
Judge of this Hon’ble Court in W.P. (C) No. 4374 of 2018. Quite
apart from the fact that the said judgement is admittedly pending in
appeal in L.P.A.No.230 of 2019, more importantly and
fundamentally, it is pertinent to note that the lis in the said
proceedings emanates from, pertains to and consequently is
restricted to the adjudication of the issue as to whether the
Department of Education was justified in withdrawing the
permission granted for an interim fee hike vide circular dated 17 th
October 2017, which was subsequently modified and withdrawn
vide a circular dated 13th April 2018, in respect of schools which
had been allotted land by the DDA, which allotment inter alia
required obtaining prior permission of the Director of Education for
implementing a fee hike. The said proceeding does not pertain to a
challenge to the condition in a letter of allotment and also does not
lay a broad-based challenge to the imposition of such a condition in
general terms across the board.
From above said sub-para’s, it is quite clear that the petitioner
cannot increase fee without approval of Director of Education and
in the light of the evaluation of the financial statements and relevant
provisions of DSEA,1973, the Director of Education within its
powers under section 17 (3) of DSEA, 1973 can accept or reject the
proposal of fee hike submitted by the private unaided recognized
schools taking into consideration the final outcome from the
scrutiny of the financial position of the school.

The Respondent is guided only by the judgments of this Hon’ble

Court, of the Hon’ble Supreme Court and the Constitution, which
require that the profiteering and commercialisation of education
must be checked. The allegations made herein are unsubstantiated
and baseless, and are therefore denied in totem. It is denied that the
fee determination exercises suffer from any infirmity. The
impugned Order suffers from no faults or errors. That the issue of
fee hike by the private recognized schools has already been settled
by the judgement of this Hon’ble Court in Delhi Abhibhavak
Mahasangh v. G.N.C.T.D., ILR 2011 Supp (4) Del 247, Delhi
Abhibhavak Mahasangh v. Union of India AIR 1999 Del 124 and
Delhi Abhibhavak Mahasangh v. Union of India 96 (2002) DLT
629 (DB), and of Hon’ble Supreme Court in the case of Modern
School v. Union of India &Ors (2004) 5 SCC 583 and Action
Committee Unaided Private Schools v. Director of Education
(2009) 10 SCC 1. It has further held that from reading section 18(4)
of the Act with rules 172, 173, 174, 175 and 177 of the Delhi
School Education Rules on one hand and section 17(3) of the Act
 on the other hand, it is clear that under the Act, the Director
Education is authorized to regulate the fees and other charges. The
Order No. F.DE.15(117)/PSB/2019/1882-1886 dated 22.02.2019
vide which the Petitioner School’s Petitioner’s proposal for fee
enhancement for session 2017-18 was rejected is valid. The
impugned Order dated 22.02.2019 comprehensively brings in light
the various financial irregularities pertaining to the Petitioner
School.

21. That the accumulation of any kind of surplus contrary to the letter
and spirit of DSEA and the law laid down by the Hon’ble Supreme
Court or capitalization by a private unaided recognised school in
any form amounts to commercialization of education, therefore,
under the mandate of DSEA & DSER, 1973 and orders passed by
this Hon’ble Court and Hon’ble Supreme Court of India, the
Respondent has been doing its utmost to promote cost based
education and to prevent commercialization of education. That any
unreasonable, unjustified and exorbitant increase in fee to the
Petitioner school is not permissible as the same would amount to
unlawful profiteering and commercialisation of education.
Indisputably, the private unaided recognised schools are to be run
on no profit no loss basis and the parent society of these schools is
required to meet the extra financial burden on the school, and
provide financial aid to the school to meet any shortfall in
expenditure. Furthermore, schools seeking a hike in tuition fee on
the pretext of insufficiency of funds amounts to profiteering and
the same is impermissible as per the law laid down by the Hon’ble
 Supreme Court in T.M.A. Pai Foundation v. State of Karnataka
(2002) 8 SCC 481.

22. The impugned Order suffers from no such infirmity as has been
alleged herein. The impugned order has been passed after proper
scrutiny/evaluation of the fee hike proposal submitted by the
school. Proper hearing was also given to the school wherein the
contentions of the school were heard at length. Further a detailed
order (impugned order) has been passed by the department wherein
all the financial and other deficiencies were pointed out by the
department.
23. It is reiterated that the impugned Order is in complete conformity
with the principles of law enshrined in the Constitution and in
DSEA&R; it is also in line with the accountancy principles
applicable to Private Unaided Schools. It is denied that the
impugned Order is contrary to any judgment of this Hon’ble Court
or of the Hon’ble Supreme Court.
24. It is submitted that the Petitioner is deliberately trying to mislead
this Hon’ble Court by mischievously misinterpret the law and
misquote judgments of this Hon’ble Court. It is settled position of
law that under DSEA, the Respondent not only has the power but
also a duty to regulate fee structures of private schools in Delhi.
The said position of law has been reiterated by a catena of
judgments of this Hon’ble Court as well as by Hon’ble Supreme
Court.
25. That after an in-depth analysis of the fund position of the Petitioner
School, as well as, in view of the various financial discrepancies,
 the impugned order dated 07.02.2019 was passed by the
Respondent, whereby the fee hike proposal of the Petitioner School
for the year 2017-18 was rejected, while noting, the fact that the
School was found to have a net surplus of Rs. 2,00,15,161/-.
26. That in view of the foregoing submissions, it is respectfully prayed
that this Hon’ble High Court of Delhi may be pleased to dismissed
the instant Petition.
PRAYER :
In view of the submissions made and contentions raised by the
Answering Respondent / DoE in the aforesaid Paragraphs, it is most
respectfully submitted that the Hon’ble Court may be pleased to dismiss
present Writ Petition.

DEPONENT

VERIFICATION:

Verified at New Delhi on this the ____ day of July, 2023 that the contents
of the above affidavit are true and correct to the best of my knowledge
and belief and no part of it is false and nothing material has been
concealed therefrom.

DEPONENT