Recent judgements of the country’s apex court are being interpreted as a huge blow to the managements of one-five star schools which have sprung up all over the country. Dilip Thakore reports

Despite the unanimously welcomed exit of Union minister of human resource development Dr. Murli Manohar Joshi who was hell-bent on rewriting history and social science textbooks to suit his mofussil predilections and superstitions, from Shastri Bhavan, New Delhi, the year 2004 has begun badly for the managements of India’s estimated 7,500 ‘public’ (i.e private, expensive, one-five star) schools. Across the country, an ominous current of apprehension is snaking through the usually well-furbished boardrooms of India’s most well regarded secondary institutions of learning.

On January 20 the Delhi high court issued an order to the director of education of the Delhi state government to ensure that numerous privately promoted unaided schools in the national capital grant freeships and admit poor, under-privileged children equivalent to 25 percent of their enrollment into their classrooms, hitherto the exclusive preserve of the children of the capital’s rich and famous. In a historic judgement in a PIL (public interest litigation) caseSocial Jurist vs. Government of National Capital Territory of Delhi & Ors (CW No.3156 of 2002), the court ordered the Delhi Development Authority (DDA) to take “appropriate action” against 265 “recognised, private unaided” schools in the Delhi region which had been allotted land (by DDA) at concessional prices on condition they reserve a 25 percent freeships quota for disadvantaged children, for breach of that condition.

This was only the first of the setbacks experienced by the managements of Delhi’s top schools this year. On April 27 after hearing a PIL filed by the Delhi Abibhavak Mahasangh — a federation of parents associations — which alleged that 30 recognised schools in the capital had hiked their tuition fees unreasonably and were “indulging in large scale commercialisation of education”, a three-judge bench of the Supreme Court of India heard several batched appeals against the director of education, the state and municipal governments by unaided schools alleging interference relating to tuition fees and maintenance of financial statements and accounts.

In Modern School vs. Union of India & Ors a majority judgement of the apex court (Chief Justice V.N. Khare, S.H. Kapadia J with Justice S.B. Sinha dissenting) upheld the right of the director of education of the Delhi state government to regulate tuition fees chargeable by private unaided schools. The court also prohibited the transfer of fees, funds or surpluses of one school to another or to its parent trust or society though it permitted school managements to collect reasonable sums (upto 10-15 percent of tuition fees) for capital expenditure to be credited into a separate development fund.

These two judgements (the Delhi high court’s reservations judgement of January 20 was endorsed by the Supreme Court) are being interpreted as a huge blow, particularly to the managements of the growing number of one-five star schools which have recently sprung up all over the country. Though promoters and managers of the new generation of capital-intensive five star schools — some of which boast investments of Rs.50-100 crore — are putting forward a brave front and maintaining that the judgement is restricted to schools in the National Capital Territory of Delhi (i.e Delhi state government), they are well aware that most states of the Indian Union have enacted legislation similar to the interventionist Delhi School Education Act, 1973 which was exhaustively examined and upheld by the three-judge bench of the Supreme Court.

While acknowledging that “unaided educational institutions exercise a great autonomy as they, like any other citizen carrying on an occupation are entitled to a reasonable surplus for the development and expansion of the institution” as laid down in the historic 11-judge bench verdict of the Supreme Court in TMA Pai Foundation vs. State of Karnataka & Ors ((2002) 8 SCC 481), the majority judgement of the apex court in Modern School vs. Union of India & Ors delivered by Justice S.H. Kapadia on April 27, reiterated that “what is prohibited is the commercialisation of education”. And reasoning that hitherto in “none of the earlier cases this court has defined the concept of reasonable surplus”, Justice Kapadia speaking on his and Chief Justice Khare’s behalf, upheld the right of the director of education to examine the books of accounts of every private unaided school to ensure they don’t indulge in the commercialisation of education and to regulate their fee structures to ensure they earn only reasonable surpluses.

Though promoters and managers of private unaided schools across the country are apprehensive that the Supreme Court’s latest fiat in the Modern School Case is likely to give a new lease of life to dreaded “inspector raj” and a blank cheque to petty government officials to harass institutional managements, social activists (prompted by middle class parents) who have been protesting steep annual increases in tuition fees and the collection of ‘development funds’, deposits and donations, are convinced that inspector raj is the lesser evil. “The Supreme Court’s decision is a historic verdict and parents have won an important battle against exploitation. Most private schools are registered under the Societies Act 1861, which mandates that they have to be run on a no-profit basis. But totally contrary to the letter and spirit of the Act, they are intent upon making huge profits and are indulging in widespread exploitation and extortion. Our organisation has been fighting tooth and nail against them for not fulfilling their promise of admitting poor children and for charging exorbitant fees. Now finally with this court verdict our prayers have been answered,” says Ashok Aggarwal, a Delhi-based lawyer and convenor of Social Jurist, the petitioner in the Modern School Case.

There’s a similar lack of sympathy for the managements of elite private schools within the parents’ community in the national capital. “It’s quite ridiculous how private schools arbitrarily jack up their tuition fees year after year, throwing all norms of social justice to the winds. The managements of these schools are a mafia which has hapless parents and students at its mercy. They generate black money, don’t pay income tax and extract donations, all of which are illegal, anti-social practices,” adds Vijender Gupta, president of the Abhivavak Mahasangh, a Delhi-based parents’ organisation convened in 1997.

But even as Delhi’s middle class parental community is celebrating the Supreme Court’s judgement in the Modern School Case, there’s a possibility that their victory may be pyrrhic. Because while adjudicating this case, the court also upheld the Delhi high court’s order of January 20 directing the director of education to ensure that some 1,200 unaided schools which were allotted land at concessional prices fulfill their obligation to provide freeships to poor children upto 25 percent of the schools’ enrollment. Most parents are not only opposed to this directive of the courts, but may well have to pay higher fees to cross-subsidise the education of poor students admitted into their children’s schools.

Comments a senior counsel of the Supreme Court who spoke to EducationWorld on condition of anonymity: “Though Chief Justice Khare who retired in April was a disciplinarian who restored the reputation of the judiciary, he had too many obsolete socialist hang-ups. Thus in the Islamic Academy Case last year, he led a five-judge bench of the court in diluting the judgement of the 11-bench judgement of the Supreme Court in the historic TMA Pai Foundation Case of 2002 which restored the right of self-administration under Articles 30 and 19(i)(g) of the Constitution to unaided colleges of professional education. Now the majority judgement of a three-judge bench presided over by Khare in the Modern School Case deprives school administrations the right to self-governance and administration. Instead of passing strictures against the Central and state governments for perpetuating abysmal standards of teaching in government schools, the Supreme Court has approved inspector raj in well-managed private schools. Of course the Supreme Court judgement was quite right in upholding the Delhi high court’s orders in the Social Jurist Case which was a contractual matter. But even in this case the schools should have been given an option to pay the current value of the land allotted to them in lieu of admitting poor children on freeships.”

Undoubtedly there is some substance in this informed criticism of the “persistent socialist mindset” of the Supreme Court. The shackles imposed upon laudable private initiatives in school and professional education which were cut loose by the then liberal-reformist court presided over by Chief Justice B.N. Kirpal were swiftly reimposed by Khare in the Islamic Academy Case and most recently in the Modern School judgement. Regretably the court seems unaware of the ground reality that government officials and functionaries steeped in a time-hallowed tradition of venality are unlikely to provide the fair and just regulation of private schools mandated by the apex court.

Comments Mohina Dhar principal of the four-star CBSE-affiliated Amity International School, Delhi which has 3,000 students on its muster roll and runs the parallel Amitasha afternoon school for poor and under-privileged children: “Instead of levelling down the academic standards of private schools by foisting poor children upon them, why doesn’t government raise standards of teaching and improve the infrastructures of MCD (Municipal Corporation of Delhi) and government schools? It could invite corporate funding into them or do whatever. By trying to raise the poor, isn’t the government levelling down standards in private schools? Moreover how fair is this to the parents of unaided school children who are paying high fees so that their children can study in better environments?”

Also in the matter of regulating tuition fees — a power which has been conferred by the Supreme Court upon the director of education of state governments — unsurprisingly the dominant opinion in unaided schools is that institutional managements together with parents’ associations are the best judges of what are appropriate tuition fees. “Most of our parents appreciate that paying for quality education is an investment, not an expense. Therefore they understand that tuition fees have to be raised periodically if we are to provide contemporary education and maintain our infrastructure. This year we have raised our fees by 10 percent which is necessary because our entire curriculum is IT-based and each one of our 53 classrooms has at least one computer. This is a matter for parents and teachers to resolve. It’s too much to expect of government servants,” says R. Sandhu principal of Delhi’s CBSE-affiliated Khaitan Public School (est. 1995) which has an aggregate enrollment of 1,700 students instructed by 50 faculty.

Modern School Case reactions

The order is a wonderful judgement which provides justice to the downtrodden. It will help to bridge the schism between elite and deprived children. All children need special nurturing; why should only the progeny of the rich be provided with quality education? Many poor children have great talent and capacity to do well in life but they are not given good education opportunities. We have to give them a chance to flower. There has to be equality of opportunity for all and the Supreme Court order will hopefully be a catalyst – Rani Jethmalini, Supreme Court advocate

This order will check the rampant commercialisation of education in public schools. When the government allotted expensive land to these schools, a sub-clause was that they would reserve seats for poor children. But none of this has happened. On the contrary, public school fees have spiralled unchecked, while their commitment to their social obligations is zilch. On the other hand government schools are in bad shape. Our classrooms are pigeon holes, crammed with 70 students as against 35 advocated by the Delhi Education Code and teachers’ and principals’posts are lying vacant. So decongesting government schools will have a beneficial effect. It will provide room to more poor students and give the brighter ones a chance to study in a better environment – D.K. Tewari,secretary, Government School Teachers Association, Delhi

The Supreme Court order on reservation for poor children in public schools is a very welcome step as this will bring parity between the haves and the have-nots. Public schools have not only commercialised education by charging fees that have gone through the stratosphere, they are sitting on prime land which was given to them at throwaway prices. So it’s incumbent upon them to do some social good. Why should the government be expected to fulfill all philanthropic obligations? But the court’s order is not enough, there has to be strict implementation of it too – Kamini Jaiswal, SC advocate

Twenty-five percent of enrollment is too arbitrary and a large percentage to be reserved for underprivileged children. Private schools have a particular academic ambience that will be affected if the intake quality is diluted so drastically, and teachers will have to work doubly hard. This will impact the quality of education delivered. While private schools must recognise a social obligation towards the underprivileged, it cannot be done at the cost of the privileged. There could be other solutions like rich schools helping in the running of government institutions – Shruti Singh, principal, Mahanagar Girls College, Lucknow

While there is a broad consensus within the academic community that school managements which have been allotted public land at concessional prices on condition they reserve a quota for poor and disadvantaged children should be compelled to abide by their contractual obligation, informed opinion is alarmed by the implications of the other directives of the Supreme Court in the Modern School Case. There is widespread apprehension that devolution of power to regulate school fees upon the director of education or his equivalent in other states, is likely to provide a new impetus to licence-permit-quota raj which following the progressive liberalisation and deregulation of Indian industry during the past two decades has migrated to the education sector. Moreover the apex court’s majority ruling in the Modern School Case prohibiting the transfer of surplus funds from one institution to another or back to its parent trust or society, not only prompted a dissenting judgement from Justice S.B. Sinha, but has also caused considerable disquiet within the academic community.

In his brilliant dissenting judgement, Justice Sinha argued that micro-management of private unaided education institutions by government officials obliterates the distinction between aided government and unaided private institutions and flies in the face of the judgement of the full bench of the Supreme Court in the TMA Pai Foundation Case which empowered all citizens to “establish and administer education institutions of their choice”. Highlighting that rule 177 of the Delhi School Education Act (which exhaustively lists the purposes for which unaided school managements may deploy their fee and other incomes) plainly “provides that savings, if any from the fees collected by such school may be utilised by its managing committee for meeting capital or contingent expenditure of the school,” Justice Sinha ruled that “there is no reason that the expression ‘capital or contingent expenditure’ of the school should be given a narrow meaning, particularly having regard to the fact that clause (b) (of rule 177) thereof permits the managing committee to establish any other recognised school out of the saving from the fees collected by such school and clause (c) thereof permits rendition of assistance to any other school or educational institution under the management of the same society or trust by which the first mentioned school is run”.

It is submitted that Justice Sinha’s observations in the Modern School Case that all legislation pertaining to the administration of unaided private education institutions needs to be viewed through the prism of the Supreme Court’s 11-judge bench landmark judgement in the TMA Pai Foundation Case which overruled its own judgement in Unni Krishnan’s Case (1993) imposing numerous restrictions and caveats upon the managements of unaided education institutions, is the more correct interpretation of law.

“While there is some substance in the Supreme Court’s ruling that societies and trusts which are allotted government land at nominal or concessional price on condition they reserve a quota for poor children of the neighbourhood discharge their contractual obligation, the inconsistent judgements of the court in matters relating to the administration of non-government education institutions is confusing and harmful. Given the supply-demand imbalance and annual rush for admissions into elite private unaided schools, the judgement of the court in the Modern School Case conferring the power of regulating fees upon directors of education in state governments is plainly unenforceable and will intensify corruption in education which has assumed alarming proportions. It’s high time the judiciary reduced its faith in government and became acquainted with the principles of neo-liberalism or participative democracy and leaves decisions relating to fees and administration of non-government education institutions to their managements which should be encouraged to interact with PTAs and local communities,” says Dr. A.S. Seetharamu, professor of education at the Institute of Social and Economic Change (ISEC), Bangalore.

Knowledgeable educationists with hands-on experience of managing education institutions across the country echo these sentiments and warn against the dangers of investing government officials and departments with wide inspection and micro-management powers. “Though the Supreme Court’s judgement in the Modern School Case is confined to schools in Delhi, it will have a wider fallout across the country. But state governments should be wary of mandating reservation quotas for poor children in private schools. Undoubtedly there is a case for making provision for under-privileged children given the pathetic condition of government schools. Yet the number and percentage of such students to be admitted, and provision made for them should be left to the discretion of school managements so that academic standards are maintained. Moreover there is no need to mandate elaborate accounts in specified formats as mandated by the Delhi Education Act, as school accounts are audited and routinely submitted to the state government and the income tax authorities,” says Hanif Kanjer director of operations of the SSC-affiliated Rustomjee International School, Mumbai which has an enrollment of 4,300 students. An alumnus of the London School of Business who worked with Ernst & Young and Infosys Technologies for several years, Kanjer returned to India in 2002 to work in the education sector.

Likewise down South in Chennai S. Bhavanishankar, principal of the CBSE-afilliated Chettinad Vidyashram School who believes that the Supreme Court’s judgement in the Modern School Caseis of no relevance to schools in Tamil Nadu, nevertheless advises against legislation mandating quotas for under-privileged children in private unaided schools. “The decision to admit freeship children, and if so to what percentage of enrollment, should be left to the managements of unaided schools who are the best judges of their interests. Private education is expensive because of the hi-tech infrastructure and extra-curricular activities we offer our students. If governments are keen to ensure that under-privileged students study in private schools they should pay the stipulated fees on their behalf and private school managements are unlikely to object,” says Bhavanishankar.

Yet at bottom, the current of apprehension snaking through the boardrooms of private unaided schools across the country is not related to reserving reasonable quotas for under-privileged children (for whom for all their faults, private institutions tend to make better provision than publicly funded government schools) or to government servants such as the director of education regulating tuition fees. The dominant fear is of harassment and shake-downs by government officials on an on-going basis.

Modern School Case judgements excerpts

During the past two years the Supreme Court has delivered several landmark judgements relating to self administration and government regulation of privately promoted, financially independent or unaided education institutions.

In October 2002, in TMA Pai Foundation vs. State of Karnataka & Ors (( 2002) 8 SCC 481) an 11-judge bench of the apex court overruled its own judgement in Unni Krishnan’s Case (1993) and expanded the fundamental right of minorities to “establish and administer education institutions of their choice” to all citizens. Interpreting the word ‘administer’ liberally, the full bench held that private unaided education institutions are entitled to regulate their own admissions and devise their own fee structures subject to cavaets against “commercialisation of education” and profiteering.

Following widespread complaints from students of professional (engineering and medical) colleges that the ambit of the TMA Pai Foundation Case was too wide, in August 2003 in Islamic Academy of Education vs. State of Karnataka ((2003) 6 SCC 697) a five-judge bench of the Supreme Court ordered the setting up of committees headed by retired high court judges in every state to regulate admissions and tuition fees of all private unaided colleges of professional education.

And early this year responding to complaints that private, unaided schools in Delhi had failed to provide admission, quotas and freeships to poor children and that their tuition fees are exorbitant, a three-judge bench comprising Chief Justice V.N. Khare, S.H. Kapadia and S.B. Sinha JJ in a majority judgement (Justice Sinha dissenting) delivered on April 27, held that the director of education under the Delhi state government is entitled to regulate the fees of unaided schools as provided in the Delhi Education Act, 1973.

“It is now well settled by a catena of decisions of this court that in the matter of determination of the fee structure unaided educational institutions exercise a great autonomy as, they, like any other citizen carrying on an occupation are entitled to a reasonable surplus for development of education and expansion of the institution. Such institutions, it has been held, have to plan their investment and expenditure so as to generate profit. What is, however, prohibited is commercialisation of education. Hence, we have to strike a balance between autonomy of sub institutions and measures to be taken to prevent commercialisation of education. However in none of the earlier cases, this court has defined the concept of reasonable surplus, profit, income and yield, which are the terms used in the various provisions of Delhi Education Act, 1973 – Justice S.H. Kapadia

“The fee structure must be fixed keeping in mind the infrastructure and facilities available, investment made, salaries paid to teachers and staff, future plans for expansion and/or betterment of the institution subject to two restrictions, namely, non-profiteering and non-charging of capitation fees. It was held that surplus/profit can be generated but they shall be used to the benefit of that educational institution. It was held that profits/surplus cannot be diverted for any other use or purposes and cannot be used for personal gains or for other business or enterprise… ibid

“Therefore, capital expenditure cannot constitute a component of the financial fees structure as is submitted on behalf of the schools… In the light of the analysis mentioned above, we are directing the director to analyse such statements under s. 17(3) of the Act and to apply the above principles in each case… ibid

“In our view, on account of increased cost due to inflation, the management is entitled to create a Development Fund Account. For creating such development fund, the management is required to collect development fees. In the present case pursuant to the recommendation of Duggal Committee, development fees could be levied at the rate not exceeding 10 to 15 percent of total annual tuition fees…ibid

“There, necessarily has to be a difference in the administration of private unaided institutions and the government-aided institutions. In the latter case, the government will have greater say inter alia in fixing of fees but in the case of private unaided institutions, maximum autonomy in the day-to-day administration has to be with the private unaided institutions. Bureaucratic or governmental interference in the administration of such an institution will undermine its independence” – Justice S.B. Sinha (dissenting)

“The court held ( in the tma pai foundation case) that curtailment of income of such private schools is impermissible as it disables these schools from affording the best facilities because of lack of funds. It was suggested that if the lowering of standards from excellence to a level of mediocrity is to be avoided, the solution lies in the States not using their scanty resources to prop up institutions that are able to otherwise maintain themselves out of the fees charged, but in improving the facilities and infrastructure of state-run schools and in subsidising the fees payable by the students there… We are bound by the decisions of the larger benches of this court…ibid

“It may also not be necessary to issue direction as to how and in what manner the institutions should maintain their accounts. In the absence of any statutory provision governing the field, it is for the administration of the educational institution to determine the same having regard to the prevailing law like (the) Income Tax Act, 1961… I am, furthermore of the opinion, that as it is permissible in law, the excess income from an institution may be spent by the Society/ Trust to establish another school keeping in view of the fact that more and more educational institutions are required to be established, particularly in rural or semi-urban areas…ibid

It’s astonishing that after half a century of neta-babu raj characterised by the misuse of wide discretionary powers for personal benefit by government officials, the courts have not taken judicial notice of the corruption phenomenon which has earned post-independence India the infamous distinction of being repeatedly ranked among the ten most corrupt nations on planet earth by the Berlin-based NGO Transparency International which compiles an annual index ranking the world’s most graft-ridden countries. On the contrary they continue to naively invest discretionary powers in government servants — as in the Modern School Case — in the naive hope they will exercise them fairly and impartially.

Even more surprising than the naivete of the upper judiciary is the optimism of leading lights of the bar who should be more aware of the pervasive corruption in government departments. Ashok Aggarwal convenor of Social Jurist, the petitioner in the reservations case, is very confident that the director of education, Delhi will regulate fees chargeable by private, unaided schools in a fair and transparent manner. “Once the tripartite system of checks and balances is established between the schools, the government and the community or parents, things will fall into place. Fear will exist only if either of the three indulges in unfair play or dishonest means to achieve something. If all the three players work democratically, the system should work seamlessly with the bodies acting as watchdogs when the need arises,” he says.

Unfortunately such simplistic belief that government knows best is pervasive even within the community of educationists who should surely know better. “Even when land to establish unaided schools is purchased at market prices, several state governments mandate reservations for children from under-privileged sections of society as a condition of issuing a no-objection certificate. Therefore the 25 percent reservation for poor and slum children in Delhi schools is not a new development. Nor does the Supreme Court’s ruling that the director of education should regulate tuition fees of unaided schools disturb us in the Aditya Birla Management Corporation which runs 31 unaided schools across the country with 35,000 students in our classrooms. In all these institutions we maintain our books of account in an open and wholly transparent manner. The education activities of the Aditya Birla group are entirely not-for-profit and we subsidise these activities to the tune of Rs. 25 crore per year. Therefore we don’t have any problem with the directors of education or any other government functionaries examining our books of account and/ or regulating our fees in a fair and transparent manner,” says Dr. Shyam Ganguli who has a Ph D from Pittsburgh University and served as a senior master in The Doon School for almost a quarter century (1977-2001) prior to taking charge as director of the Aditya Birla group’s 31 education institutions which include BITS, Pilani.

Yet the moot point which is repeatedly fudged is whether the discretionary power with which the courts continue to invest government departments and officials will ever be exercised fairly and transparently and in the interests of the nation’s cruelly and continuously short-changed child citizens. Certainly the weight of evidence to the contrary is massive and Indian education suffers infrastructure, textbooks, admissions, teacher appointments, examination and petty inspector raj rackets on a massive scale. And it was to address this enduring problem of open, uninterrupted and continuous corruption in this critically important and sensitive sector of the economy that in 2002 in the historic TMA Pai Foundation vs. State of Karnataka, the 11-strong bench of the Supreme Court overruled its own 1993 judgement in Unni Krishnan’s Case and restored the fundamental right of all citizens to establish and administer — in a fair and transparent manner — education institutions of their choice.

Regretably in subsequent judgements perhaps because they are unable to shed their licence-and-control mindsets, several smaller benches of the apex court have passed judgements and orders which dilute the substance of the TMA Pai Foundation Case. This augurs ill for the overdue liberalisation and deregulation of Indian education.

Quite clearly, the double whammy inflicted by the Supreme Court upon the small minority of pace-setting private, unaided schools by imposing freeship quotas and diminishing their right to determine their own tuition fees is a retrograde development. Instead of pulling up Central, state and local government officials for tolerating and perpetuating the abysmal conditions and academic standards which are defining characteristics of government-run schools, disregarding its own ruling in the TMA Pai Foundation Case, the judiciary is ill-advisedly heaping powers of control and superintendence of well administered private unaided schools upon the very maladministrators who have destroyed the government school system. This bodes very ill for the future of the few islands of excellence within Indian education which could serve as development models for the reconstruction of government-run institutions.

With a new government having assumed office in New Delhi, one of its most urgent tasks is to undo the control and command structure created within the Union ministry of human resource development by the previous government. The new prime minister, Dr. Manmohan Singh was the author and architect of the landmark economic liberalisation and deregulation initiative of July 1991 which has since doubled annual economic growth rates. Now it is imperative that Indian education is revived and resuscitated by the magic of liberalisation and deregulation. The lives and livelihoods of 450 million citizens who are less than 18 years of age depend on it.

With Neeta Lal (Delhi); Vidya Pandit (Lucknow); Hemalatha Raghupathi (Chennai) & Gaver Chatterjee (Mumbai)

Also read: Supreme Court green light for licence-permit-quota-inspector raj in school education