Educational Institutions Not Service Providers, Students Not Consumers: Uttarakhand State Commission Sets Aside Refund Order
Pranav B Prem
The Uttarakhand State Consumer Disputes Redressal Commission, Dehradun, comprising Ms. Kumkum Rani (President) and Mr. B.S. Manral (Member), has reiterated that educational institutions are not “service providers” and students are not “consumers” within the meaning of the Consumer Protection Act, and consequently dismissed a consumer complaint filed against Kasiga School as not maintainable.
The appeal was filed by the Manager, Kasiga School, challenging the order dated 26.11.2022 passed by the District Consumer Disputes Redressal Commission, Haridwar, in Consumer Complaint No. 41 of 2022. The District Commission had directed the school to refund ₹1,49,000 towards balance security deposit along with interest at 6% per annum from the date of filing of the complaint, besides ₹5,000 each towards compensation and litigation expenses.
The complainant, Arvind Soni, had admitted his son to Class XI at Kasiga School in April 2018 and deposited ₹1,50,000 as security deposit. It was alleged that the school authorities had assured refund of the said amount upon issuance of the transfer certificate and no-dues certificate. The student completed Class XII during the academic session 2019–2020, and the transfer certificate mentioned that all dues had been cleared. Despite repeated requests and a legal notice, the security deposit was not refunded, leading to the filing of a consumer complaint alleging deficiency in service and unfair trade practice.
In its written statement before the District Commission, the school relied upon the agreement dated 03.04.2018 executed between the parties. Clause 4 of the agreement provided that any arrears in the student’s account would be adjusted from the security deposit. The school contended that an amount of ₹1,29,949.33 was outstanding towards the student’s imprest account at the time of leaving, and after adjustment, only ₹20,050.67 remained refundable, which it claimed it was always willing to pay. It was further argued that in view of Clause 15 of the agreement, disputes were to be referred to arbitration.
The State Commission first dealt with the complainant’s submission that the outstanding amount had already been paid. It noted that there was neither any pleading in the complaint to that effect nor any documentary evidence to substantiate such payment. The Commission held that the plea was baseless.
With regard to the arbitration clause, the Commission observed that the Consumer Protection Act provides an additional remedy and does not exclude jurisdiction merely because an arbitration clause exists, relying upon decisions of the National Commission. However, this aspect did not determine the question of maintainability.
On the core issue of jurisdiction, the State Commission examined whether the school could be termed a “service provider” and the student a “consumer”. Referring to Bihar School Examination Board v. Suresh Prasad Sinha, the Commission reproduced the Supreme Court’s observation that when an examination board conducts examinations in discharge of its statutory function, it does not offer its “services” to candidates, and a student does not hire or avail of any service for consideration. The Court had held that the examination fee is not consideration for any service but a charge for participation in the examination.
The Commission also relied upon Maharshi Dayanand University v. Surjeet Kaur, wherein the Supreme Court held that a student is neither a consumer nor is the university rendering any service, and that entertaining such complaints does not conform to law. Further reliance was placed on Anupama College of Engineering v. Gulshan Kumar, where the Supreme Court held that educational institutions are not providing any kind of service in matters of admission and fees and such disputes cannot be entertained by Consumer Fora.
The State Commission also referred to the decision of the National Commission in Director of Xavier Institute of Management & Entrepreneurship v. Sujay Ghose, which, following a Larger Bench ruling in Manu Solanki v. Vinayak Mission University, held that educational matters do not come within the purview of the Consumer Protection Act. In light of the settled legal position, the Commission held that the son of the complainant, being a student, was neither a consumer nor could the school be termed a service provider. It concluded that the dispute could not be brought before the Consumer Fora.
Finding the order of the District Commission to be unjustified and contrary to law, the State Commission allowed the appeal, set aside the order dated 26.11.2022, and dismissed the consumer complaint as not maintainable. It further directed that the amount deposited by the appellant before the State Commission be released in its favour.
Cause Title: Manager, Kasiga School vs Arvind Soni
Case No: SC/5/A/295/2022
Coram: Ms. Kumkum Rani (President) and Mr. B.S. Manral (Member)
