WP(C) 2952/2006 BEFORE HON’BLE MR JUSTICEI.A. ANSARI JUDGMENT & ORDER The petitioner No. 1 herein is a society formed by the guardians of the students of the Delhi Public School (in short, ’DPS’), Numaligarh, represented b y petitioner No. 2, who is its president, the petitioner No. 3 being a guardian, whose son studies in the DPS, Numaligarh, which is situated inside the area of the Numaligarh Refineries Limited (hereinafter referred to as ’NRL’) at a dista nce of about 25 kilometers from Golaghat town. 2. The case of the petitioners is, in brief, thus: (i) The DPS, NRL, was established, in the year 1997, with the object of impartin g quality education to the wards of the employees of the NRL, the school being a ffiliated to the Central Board of Secondary Education (in short, ’CBSE’), and it is an unaided private school in the State of Assam. Though established, initia lly, to impart education, as indicated hereinbefore, to the wards of the employe es working in NRL, the school was thrown upon to the general public so that they could get their children enrolled in the school, which, now, has about 750 stud ents. Out of these students, about 250 students are children of the employees o f the NRL and of other similar organizations and around 500 students are outside rs, whose parents do not work in NRL. Most of the students, who are not childre n of the employees of NRL, are from Golaghat and Bokakhat townships in the distr ict of Golaghat. In the year 1997, the fee structure of the DPS, NRL, was as un der: Admission fee (one time) - Rs. 2,500. 00 Caution Money deposit (refundable) - Rs. 3,000.00 Development fund - Rs. 2,500.00 p.a. Activity charges - Rs. 1,000.00 p.a. Computer fee - Rs. 400.00 p.a. Library Fee - Rs. 150.00 p.a. Examination fee - Rs. 600.00 p.a. Tuition Fee - Rs. 350 00 p.m. (ii) In the year 1999, the Development fund was hiked from Rs. 2,500/- t o Rs. 3,500/- per annum, the Activity charges were hiked from Rs. 1,000/- to Rs. 1,500/- per annum and Examination fee was hiked from Rs. 600/- to Rs. 800/- p er month. (iii) In the year 2000, vide letter, dated 01.03.2004, the tuition fees of the school for day scholars was hiked by 20% and the development fund was hik ed to Rs. 6,000/- from Rs. 3,500/-. The fee structure of the DPS, NRL, for t he year 2000, was restructured and fixed as under: Development fund - Rs. 6,000. 00 p.a. Activity charges - Rs. 1,500.00 p. a. Computer fee - Rs. 600.00 p.a. Library Fee - Rs. 400.00 p.a. Stationary fee - Rs. 800.00 p.a. School Magazine fee - Rs. 150.00 p.a. Scholastic & GK Testing fee - Rs. 250.00 p.a. Science Laboratory Fee - Rs. 1,800.00 p.a. (For Class XI & XII) Tuition Fee (For Class Nursery - Rs. 7,080.00 p.a. To Class X @ Rs. 590/-) Tuition Fee (For Class XI & XII - Rs. 7,800.00 p.a. @ Rs. 590/-) (iv) By a Circular, dated 24.03.2006, the DPS, NRL, informed the parents/guardia ns of the students of the school that, with effect from the academic year 2006-2 007, the tuition fees for all students would undergo an upward revision by Rs. 1 50/-, per month, and the development fee would be revised by Rs. 4,000/-, per an num, the hike in the fee structure being about 66% in Development fees and 25% i n the tuition fees. This hike in the fee structure, in DPS, NRL, was resisted b y the petitioner association. The association got in touch with the Principal o f the DPS, NRL, and conveyed the concern of the guardians of the students, but t he Principal informed them that it was not within his capacity or power to reduc e the hike in the fees and asked the representatives of the association to take up the matter with the Pro Vice Chairman of the DPS, NRL. The petitioners accor dingly submitted a letter, dated 12.04.2006, to the Pro Vice Chairman, containin g therein the grievances of the association against the huge hike in the fee str ucture. A meeting, in this regard, was held, on 13.04.2006, between the petitio ners and the Pro Vice Chairman of the DPS, NRL, and, in the meeting, even the Pr o Vice Chairman expressed his inability to reduce the fee structure and contende d that the hike in the fees was due to rise in the salary of the teachers, wages and related expenditures, etc. (v) Though the representatives of the association sought for justification for t he hike in the fees, no justification could be offered by the Pro Vice Chairman. The DPS parents’ association, again, made a representation to the Pro Vice Cha irman, on 19.04.2006, informing him that they would defer payment of fees until all the relevant facts, relating to, and in justification of, the hike in fees, are made known to them. There was, however, no response to the letters given by the petitioners despite the directions given by the High Court, in Maharishi Vi dhya Mandir Guardians’ Action Committee & Another vs. State of Assam & others, r eported in 2001 (1) GLT 408, to the unaided schools, in Assam. The petitioners submitted a representation, in this regard, to the Deputy Commissioner, Golaghat , on 16.05.2006, requesting him to take appropriate action, in this regard. By their letter, dated 30.05.2006, the Guardians association, again, made a repres entation to the Principal, DPS, NRL, requesting him to allow them to pay, till t he dispute was resolved, the school fees as per the old rates before the hike in the fee structure had taken place. (vi) The further grievance of the petitioners is that there is serious discrimin ation meted out to the students, whose parents are not employees of NRL inasmuch as the DPS, NRL, maintains two distinct fee structures, one for the children of the employees of the NRL, and the other for those children, whose parents are n ot employees of the NRL. Apart from the discriminatory rates of fees, which are imposed on the children of those, who are not employees of the NRL, the childre n of the employees of the NRL do not pay development fees at all. This apart, w hile the cars, carrying the students of the employees of NRL, are allowed to go up to the school main gate, the vehicles, carrying the children of those, who ar e not employees of NRL, and the school bus from Golaghat town is not allowed to go up to the school main gate and, hence, the bus has to be parked at a distance of about 100-150 meters away and, as a result thereof, the students of the juni or school, who are of the age group of 4 to 10 years, are to carry heavy school bags throughout the year including the rainy season. Aggrieved by such discrimi natory treatment, meted out to them and because of variety of other reasons, whi ch have been mentioned above, the petitioners have filed this writ petition, und er Article 226 of the Constitution of India, seeking issuance of appropriate dir ection(s) to the respondents including a direction to the respondents not to giv e effect to the Circular, dated 24.03.2006, aforementioned. 3. I have heard Mr. N. Dutta, learned Senior counsel, appearing on behalf o f the writ petitioners, and Mr. A. D. Choudhury, learned Standing counsel, Educa tion Department, Government of Assam, appearing on behalf of respondent No. 1. I have also heard Mr. A. K. Bhattacharjee, learned Senior counsel, appearing on behalf of respondent Nos. 2, 3, 4 and 5, and Mr. H. K. Barman, learned Governmen t counsel, appearing for respondent No. 6. 4. While considering the present writ petition, it needs to be noted that t he DPS, NRL, does not associate the parents of the students in the management of the school affairs. The entire management of the school, including fixing of t he fee structure, is in the hands of the NRL authorities and this is what has be en mainly objected to by the writ petitioners. It is also noteworthy, in this r egard, that the State Government has enacted the Assam Non-Government Educationa l Institutions (Regulation and Management) Act, 2006 (hereinafter referred to as the ’2006 Act’), which has been gazetted and brought into force with effect fro m 12.01.2007. A non-government educational institution means, according to Sect ion 2(g) of the 2006 Act, a school or junior college established and run by an i ndividual or association of individuals or any non-government organization or so ciety or trust except the schools established and maintained by minorities under clause (1) of Article 30 of the Constitution of India and impart education at P rimary, Middle, Secondary and Higher Secondary Level without receiving any grant s-in-aid from the State Government excluding, of course, the educational institu tions run or aided by the Central Government or the State Government. 5. There is, however, no dispute that the DPS, NRL, falls within the expres sion, ’non-government educational institution’, within the meaning of Section 2( g) of the 2006 Act. One may also pause here and take note of the definition of the existing non-government educational institutions, which, according to Sectio n 2(c) of the 2006 Act, means the non-government educational institutions, which were in existence on the date of commencement of the 2006 Act. What, now, need s to be carefully noted is that, at the time of hearing of this writ petition, t he State respondents have produced a copy of the Gazette Notification, dated 01. 08.2011, whereby the 2006 Act has been brought into force with effect from 12.01 .2007. 6. In fact, it is not in dispute before this Court that the DPS, NRL, falls within the existing non-government educational institution and it is, therefore , required to be managed and run in terms of the provisions of the 2006 Act. Wh at may, however, be noted is that while Section 4 of the 2006 Act mandates prior permission for establishment and registration of the non-government educational institutions, Section 6 relates to registration and administrative recognition of the existing non-government educational institutions in terms of the statutor y provisions of the 2006 Act. 7. It could not be submitted, on behalf of the DPS, NRL, at the time of hea ring of this case, if the school is registered and have administrative recogniti on as provided in Section 6 of the 2006 Act. This apart, Section 12 of the 2006 Act provides for constitution of Managing Committee of non-government education al institutions. Clause (c) of sub-Section (1) of Section 12 of the 2006 Act pr ovides that two representatives to be elected or selected by the guardians from amongst themselves in a meeting to be convened by the school authority in this b ehalf. 8. With the coming into force of the 2006 Act, with effect from 12.01.2007, there ought to have been included in the Managing Committee of the school, in q uestion, two representatives of the guardians of the students of the DPS, NRL, i n terms of Section 12 thereof. This has, admittedly, not been done. It is, how ever, submitted, on behalf of the DPS, NRL, that the DPS, NRL, will soon constit ute a Managing Committee in terms of the requirements of the 2006 Act. The cons titution of the Managing Committee requires, in terms of Section 14 of the 2006 Act, approval and acceptance thereof by the Director, Secondary Education, Gover nment of Assam. 9. With the enforcement of the 2006 Act, therefore, the Managing Committee of the DPS, NRL, has to be constituted in terms of the provisions of Section 12 and this would require inclusion of two representatives of the guardians, who ar e to be selected or elected in the manner as indicated above. This apart, the c onstitution of the Managing Committee would be valid and able to function legall y only on approval having been accorded, in this regard, by the Director, Second ary Education, Assam. 10. It has been pointed out by the petitioners, and could not be disputed by the respondents, that there are two distinct fee structures for the students, o ne meant for the wards of the employees of the NRL Ltd., and the other for the w ards of those, who are not employees of the NRL. Coming to the allegation of di scriminatory treatment, so meted out to the students of the DPS, whose parents/ guardians are not employees of the NRL, it needs to be mentioned that during the course of hearing of this writ petition, Mr. A. K. Bhattacharyya, learned Senio r counsel, appearing for the DPS, NRL, produced a copy of the instructions, date d 11.05.2011, received by him from the Pro-Vice Chairman, DPS, NRL, which indica tes that the Local Managing Committee of the DPS, NRL, has agreed to either not to take Development Fee from anybody, or to take the same from all students irre spective of the fact whether the student is a child of an employee of NRL or of an outsider. 11. Considering the fact that the respondent school agrees not to charge dev elopment fees from anybody unless it decides to charge development fees from eve ryone, this Court restrains itself, at this stage, from making any adverse comme nts on the conduct of NRL authorities so far as the dual fee structure is concer ned. What must, one, however, has to bear in mind is that the development fees cannot, in the light of the decision, in Modern School vs. Union of India and Or s., reported in (2004) 5 SCC 583, be arbitrarily fixed and in no event, it can e xceed 15% of the total annual tuition fee. 12. The relevant observations, made in Modern School (supra), read as under: 25. 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 cas e, pursuant to the recommendation of the Duggal Committee, development fees coul d be levied at a rate not exceeding 10% to 15% of total annual tuition fee. Dire ction No. 7 further states that development fees not exceeding 10% to 15% of tot al annual tuition fee shall be charged for supplementing the resources for purch ase, upgradation and replacement of furniture, fixtures and equipments. It furth er states that development fees shall be treated as capital receipt and shall be collected only if the school maintains a depreciation reserve fund. In our view , Direction No. 7 is appropriate. If one goes through the Report of the Duggal Committee, one finds absence of non-creation of specified earmarked fund. On goi ng through the Report of the Duggal Committee, one finds further that depreciati on has been charged without creating a corresponding fund. Therefore, Direction No. 7 seeks to introduce a proper accounting practice to be followed by non-bus iness organisations/ not-for-profit organisations. With this correct practice be ing introduced, development fees for supplementing the resources for purchase, u pgradation and replacements of furniture and fixtures and equipments is justifie d. Taking into account the cost of inflation between 15-12-1999 and 31-12-2003 w e are of the view that the management of recognised unaided schools should be pe rmitted to charge development fee not exceeding 15% of the total annual tuition fee. [Emphasis added] 13. Contrary to what the Supreme Court has held, in Modern School (supra), that Educational Institution should not charge development fee exceeding 15% of the total annual tuition fee, the development fee charged under the impugned cir cular, in the present case, is, admittedly, far exceeding 15% of the Tuition Fee , which is wholly illegal. 14. Coupled with the above Sub Section (1) of section 14 of the act provide s that the Managing Committee, constituted under the 2006 Act, shall frame a sch eme of management for the institution containing the salary structures and other conditions of service of the employees and the fee structures in all levels of education amongst other things and shall submit the same to the Director for con sideration, acceptance and record. 15. Sub section (2) of section 14 provides that no levy of any kind of fee s hall be made or imposed by the institution in excess of their fees, as fixed in the scheme of Management, except with the prior approval of the Directors. Sub section (3) of section 14 further provides that the Director may approve or disa pprove the proposed increase of the fee. However, the Director may approve the increase in fees if he is of the opinion that such an increase is necessary due to increase in the facilities provided in the institution and may disapprove for reasons to be recorded in writing. 16. It may be further pointed out that under Section 24 of the 2006 Act, any school, if found running in the State without being registered, is liable to be closed down. 17. In view of the fact that in exercise of the power conferred by sub-Secti on (1) of Section 31 of the 2006 Act, the State of Assam has enacted the Assam N on-Government Educational Institution (Regulation and Management) Rules, 2007 (h ereinafter referred to as the ’2007 Rules’), with effect from 29.10.2007 and, un der the provision of Rule 16 of the 2007 Rules, each and every non-Governmental institution shall prepare and submit to the Director a scheme of Management for approval of the same under Section 14 of the Act, dealing, amongst others, provi sions for students fee structure indicating rate of admission fee, tuition fee, game fee, library fee, festival fee, development fee, other fees per student cla ss-wise, it logically follows that even the Management of the school owes the st atutory obligation to constitute, as indicated above, a Management Committee in terms of the provisions of Section 12 of the 2006 Act and submit the scheme of m anagement, which the school may so prepare, to the Director, Secondary Education , for his approval, as required by Section 15 of the 2006 Act. 18. While considering the present writ petition, it also needs to be noted t hat that, in TMA Pai Fondation and ors. Vs. State of Karnataka and ors., reporte d in (2002) Vol. 8 SCC 481, the Supreme Court has clearly pointed out per majori ty that though the fees to be charged must necessarily be left to the private ed ucational institutions, the objective of such educational institutions must not be to earn profit inasmuch as education is essentially charitable in nature. Th e relevant observations, made in TMA Pai Foundation (supra), read as under: 53. With regard to the core components of the rights under Articles 19 and 26(a ), it must be held that while the State has the right to prescribe qualification s necessary for admission, private unaided colleges have the right to admit stud ents of their choice, subject to an objective and rational procedure of selectio n and the compliance with conditions, if any, requiring admission of a small per centage of students belonging to weaker sections of the society by granting them free-ships or scholarships, if not granted by the Government. Furthermore, in s etting up a reasonable fee structure, the element of profiteering is not as yet accepted in Indian conditions. The fee structure must take into consideration th e need to generate funds to be utilized for the betterment and growth of the edu cational institution, the betterment of education in that institution and to pro vide facilities necessary for the benefit of the students. In any event, a priva te institution will have the right to constitute its own governing body, for whi ch qualifications may be prescribed by the State or the university concerned. It will, however, be objectionable if the State retains the power to nominate spec ific individuals on governing bodies. Nomination by the State, which could be on a political basis, will be an inhibiting factor for private enterprise to embar k upon the occupation of establishing and administering educational institutions . For the same reasons, nomination of teachers either directly by the department or through a service commission will be an unreasonable inroad and an unreasona ble restriction on the autonomy of the private unaided educational institution. 54. *** *** *** 55. *** *** *** 56. An educational institution is established for the purpose of imparting educa tion of the type made available by the institution. Different courses of study a re usually taught by teachers who have to be recruited as per qualifications tha t may be prescribed. It is no secret that better working conditions will attract better teachers. More amenities will ensure that better students seek admission to that institution. One cannot lose sight of the fact that providing good amen ities to the students in the form of competent teaching faculty and other infras tructure costs money. It has, therefore, to be left to the institution, if it ch ooses not to seek any aid from the Government, to determine the scale of fee tha t it can charge from the students. One also cannot lose sight of the fact that w e live in a competitive world today, where professional education is in demand. We have been given to understand that a large number of professional and other i nstitutions have been started by private parties who do not seek any governmenta l aid. In a sense, a prospective student has various options open to him/her whe re, therefore, normally economic forces have a role to play. The decision on the fee to be charged must necessarily be left to the private educational instituti on that does not seek or is not dependent upon any funds from the Government. 57. We, however, wish to emphasize one point, and that is that inasmuch as the o ccupation of education is, in a sense, regarded as charitable, the Government ca n provide regulations that will ensure excellence in education, while forbidding the charging of capitation fee and profiteering by the institution. Since the o bject of setting up an educational institution is by definition charitable , it is clear that an educational institution cannot charge such a fee as is not req uired for the purpose of fulfilling that object. To put it differently, in the e stablishment of an educational institution, the object should not be to make a p rofit, inasmuch as education is essentially charitable in nature. There can, how ever, be a reasonable revenue surplus, which may be generated by the educational institution for the purpose of development of education and expansion of the in stitution. [Emphasis added] 19. What surfaces from the above discussion is that the management of the DP S, NRL, ought to get the school registered in terms of the provisions of the 200 6 Act. Its Managing Committee has to be constituted in accordance with the prov isions of the 2006 Act by including, therein, amongst others, two representative s of the guardians of the students of the said schools. The DPS, NRL, is also u nder obligation not to run the school for the purpose of earning profit and they cannot, in the light of what have been discussed above, impose development fees exceeding 15% of the total annual tuition fee. 20. Having realized what the school, in question, ought to do, Mr. A. K. Bha ttacharjee, learned Senior counsel, has submitted that the authorities of the DP S, NRL, would take all necessary steps not only for registration of the school, but also for constitution of the Managing Committee of