Delhi Government’s Power To Regulate Fees Of Unaided Schools Limited To Preventing Profiteering, Commercialisation: Delhi High Court

The Court was hearing three connected Letters Patent Appeals filed respectively by the Directorate of Education and certain students challenging the judgment of a Single Judge that had quashed DoE orders restraining unaided schools from increasing their fees.

A Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, while deciding the matter, held that “the DoE has the authority and power to regulate the fees to be charged by the unaided schools, however, such power or authority cannot travel beyond the measures to curb commercialisation, profiteering and indulgence in charging capitation fee.”

Sameer Vashisht, Standing Counsel, represented the GNCTD. Advocates Khagesh B. Jha and Kamal Gupta appeared for the respondents.

Background

The appeals arose from a common judgment passed by a Single Judge of the Delhi High Court allowing writ petitions filed by Bluebells International School and Lilawati Vidya Mandir, both privately managed, unaided schools.

The dispute stemmed from orders issued by the DoE directing these schools not to increase fees, including those relating to the implementation of the 7th Central Pay Commission, and to refund any excess fees already charged. The DoE justified its action by invoking Sections 17 and 18 of the DSEA, 1973 and Rule 177 of the Delhi School Education Rules, 1973 (DSER), asserting that it was empowered to regulate fee structures.

The Single Judge quashed the impugned DoE orders, holding that the Directorate’s powers did not extend to unaided schools unless there was evidence of profiteering or charging capitation fees. However, liberty was granted to the DoE to take fresh action under the Act after following due process.

The DoE and the student appellants challenged this decision, arguing that the judgment conflicted with the Supreme Court’s ruling in Modern School v. Union of India, which recognised the Directorate’s authority to regulate fees to prevent exploitation.

Court’s Observation

The Delhi High Court examined the statutory framework under Sections 17, 18, and 24 of the DSEA, 1973, read with Rules 172–179 of the DSER, 1973, and extensively referred to Supreme Court precedents including Modern School v. Union of India (2004), T.M.A. Pai Foundation v. State of Karnataka (2002), Islamic Academy of Education v. State of Karnataka (2003), and Modern Dental College & Research Centre v. State of M.P. (2016).

The Court, while citing these precedents, observed that the scheme of the DSEA, 1973, delineates a limited regulatory role for the DoE. While Sections 17(3) and 18(4) empower it to scrutinise fee statements and ensure proper utilisation of school income, such powers are only limited to “check that unaided schools do not utilize the profits/surplus for a purpose other than for the benefit of educational institution and that such fee structure must be fixed keeping in mind the infrastructure and other facilities available, salaries to be paid to the teachers and staff and future plans of expansion or betterment of the institution.”

Relying on Modern School, the Bench clarified that the power under Section 17(3) must be read in conjunction with the principle that private schools enjoy autonomy in fixing fees subject to the dual constraints of non-profiteering and prohibition of capitation fees.

“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. As a matter of fact, such an authority or power of the GNCTD under Section 17(3) of the DSEA, 1973, is to ensure that the fees being charged by schools do not result in profiteering or commercialisation of education or in charging of capitation fees,” the Bench observed.

The Court reiterated that while the DoE may intervene if schools misuse funds or violate statutory provisions, it cannot impose restrictions merely because the fees are revised. The Bench further relied on Modern Dental College, which upheld the Government’s authority to adopt regulatory measures to prevent exploitation by educational institutions:

“In order to see that the educational institutions are not indulging in commercialisation and exploitation, the Government is equipped with necessary powers to take regulatory measures and to ensure that these educational institutions keep playing vital and pivotal role to spread education and not to make money”, the Bench highlighted.

Applying these principles, the Court concluded that the DoE’s regulatory power was confined to ensuring that the surplus generated by schools is used only for educational purposes and not diverted for private gain.

Consequently, the Court endorsed the Single Judge’s finding that DoE’s interference in fee fixation was impermissible beyond this limited scope, while upholding its liberty to act afresh against any proven violation of the Act or Rules after due process.

Conclusion

The Division Bench dismissed the appeals filed by the Directorate of Education and the students, affirming the Single Judge’s judgment.

However, the Court clarified that the DoE remains competent to examine the fee statements of recognised unaided schools and to take appropriate action, including withdrawal of recognition, if violations of the statutory scheme are detected.

Cause Title: Rumana Through Father Hemant and Others v. Bluebells International School Kailash and Another (Neutral Citation: 2025:DHC:8955-DB)

Appearances

Appellants: Advocates Kamal Gupta, Tripti Gupta, Sparsh Aggarwal, Madhulika Singh, and Rakshita Mathur.

Respondents: Sameer Vashisht, Standing Counsel, GNCTD, with Advocates Abhinav Sharma, Khagesh B. Jha, Shikha Sharma Bagga, and others.

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