Delhi Govt’s Directorate of Education Can Regulate Private School Fees Only to Curb Profiteering | Restrictive Fee Control Not Permitted | Delhi High Court
Isabella Mariam
The High Court of Delhi, Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela held that the Delhi Government’s Directorate of Education (DoE) may regulate the fee structure of unaided private schools solely to prevent profiteering, commercialization of education, and collection of capitation fees. The Bench clarified that the government cannot impose blanket controls or dictate fee increases in such institutions. Dismissing the appeals filed by students and the DoE, the Court upheld the Single Judge’s finding that regulatory intervention is permissible only within statutory limits, while allowing the Directorate to act afresh after providing due hearing to the schools.
The appeals arose from a common judgment dated 7 February 2024 delivered by a single judge in writ petitions filed by Bluebells School International, Kailash, and Lilawati Vidya Mandir Senior Secondary School. Both institutions, privately managed and unaided, had challenged orders issued by the Directorate of Education, Government of NCT of Delhi, which restrained them from increasing school fees for the academic session 2017-2018. The orders further directed refund or adjustment of any excess fees collected and required compliance with Rule 177 of the Delhi School Education Rules, 1973, concerning utilisation of school funds.
The DoE’s order dated 1 August 2018 directed Bluebells International School not to increase any fees, including those based on implementation of the Seventh Central Pay Commission recommendations, and mandated refunds for any increased amounts. Similarly, Lilawati Vidya Mandir was directed through an order dated 20 April 2019 to refrain from fee increases and to rectify alleged financial irregularities. Both schools contended that the DoE lacked jurisdiction under the Delhi School Education Act, 1973 (DSEA, 1973) to control fee structures of unaided institutions that are neither government-aided nor operating on government-allotted land.
The learned Single Judge quashed the impugned orders, holding that the DoE’s powers under Sections 17 and 18 of the DSEA, 1973, do not extend to regulating fee fixation in unaided schools, except to prevent profiteering and capitation. However, the Single Judge allowed the DoE to proceed afresh, subject to statutory requirements and adherence to principles of natural justice. The appeals were filed by the Directorate of Education and by intervening parents represented through the appellant Rumana and others.
The appellants argued that the Single Judge erred by limiting the DoE’s regulatory powers, asserting that under Sections 17(3), 18(3), and 18(4) of the DSEA, read with relevant rules, the Director is expressly empowered to regulate school fees. The DoE’s counsel relied on Supreme Court judgements in Modern School v. Union of India (2004) 5 SCC 583 and Modern Dental College & Research Centre v. State of M.P. (2016) 7 SCC 353, arguing that the DoE’s authority is supported by precedent and aimed at ensuring that schools do not engage in profiteering.
Conversely, the respondent schools maintained that their management autonomy under Article 19(1)(g) of the Constitution permits fee determination within reasonable limits, subject only to restrictions against profiteering or capitation. They also urged that the matter not be remanded, asserting that reopening a decade-old fee issue would be unjustified.
The Court stated that “the Hon’ble Supreme Court in the said case, after reviewing the entire law regarding the extent of power of the Government to regulate the fees to be charged by unaided schools, has clearly concluded that such regulation is permissible, however, only to the extent of checking profiteering, commercialization and charging of capitation fee.” It added that paragraph 17 of the Modern School judgment could not be read in isolation and must be construed in conjunction with paragraph 16, which permits regulatory intervention solely to prevent commercial exploitation.
The Bench stated that “we are unable to agree with the submissions made by learned counsel representing the appellants that Modern School gives unbridled power or authority to the State to regulate the fees chargeable by unaided schools.” It further clarified that the DoE’s power under Section 17(3) is confined to ensuring that profits and surpluses generated by schools are used for the institution’s benefit and not diverted for personal or commercial purposes.
Referring to Modern Dental College, the Bench recorded that “in order to see that educational institutions are not indulging in commercialization and exploitation, the Government is equipped with necessary powers to take regulatory measures and to ensure that these educational institutions keep playing a vital and pivotal role to spread education and not to make money.”
The Court observed that “the extent of such authority or power of the DoE is limited to ensure that profiteering, commercialisation and exploitation of education is kept under check so as not to permit the schools to earn profits and also to check that surplus is not used for a purpose other than education.” The Division Bench concurred with the Single Judge’s view that “the scope of interference of DoE with the fixation of fees charged by an unaided recognised school is restricted to a case in which the school engages in charging of capitation fee or indulges in profiteering.”
It stated that “if on examination of the statement of fees to be filed by the schools, the DoE finds that the spending of the amount collected by the schools is not as per the provisions of DSEA, 1973 or the Rules made thereunder, appropriate action is permissible.”
The Bench stated: “Having held that the DoE is well within its authority and power available to it under Sections 17, 18 and 24 of the DSEA, 1973 and the rules framed thereunder to curb profiteering and commercialisation and indulgence in charging capitation fee and also to ensure that money, including the fees being received by the schools is spent only for the purposes of education, if we accede to the prayer made by learned counsel for the respondent/schools of not remitting the matter back to the DoE, we will be curtailing the authority of the DoE which is otherwise statutorily available to the DoE.”
“It will be open to the DoE to proceed afresh in accordance with law, of course after giving opportunity of hearing to the schools, to determine as to whether there has been any infraction of the provisions of DSEA, 1973 and DSER, 1973 by the schools.” The Bench concluded that the appeals “fail and are hereby dismissed along with pending applications,” and held that there would be “no order as to costs.”
Advocates Representing the Parties:
For the Appellants (LPA 213/2024): Mr. Khagesh B. Jha, Ms. Shikha Sharma Bagga, Mr. Ankit Mann, Ms. Jyoti Shokeen, and Ms. Amisha Dhariwan.
For the Appellants (LPA 316/2024 & LPA 669/2024): Mr. Sameer Vashisht, Standing Counsel, GNCTD, with Mr. Abhinav Sharma, Panel Counsel, GNCTD, and Ms. Harshita Nathrani.
For the Respondents: Mr. Kamal Gupta, Ms. Tripti Gupta, Sparsh Aggarwal, Ms. Madhulika Singh, and Ms. Rakshita Mathur.
Case Title: Rumana & Ors. v. Bluebells International School Kailash & Anr. (with connected appeals)
Neutral Citation: 2025: DHC:8955-DB
Case Number: LPA 213/2024, LPA 316/2024, and LPA 669/2024
Bench: Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela
