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The Supreme Court Bench of Justices AM Khanwilkar & Dinesh Maheshwari while upholding the validity of Rajasthan Schools (Regulation of Fee) Act , 2016 (“Act”) & Rajasthan Schools (Regulation of Fee) Rules, 2017 (“Rules’) have read down Section 4, 7 & 10 of the Act.

The Bench in the present matter has upheld the validity while adjudicating the appeals emanating from order dated August 14, 2019 passed by Rajasthan High Court at Jodhpur & order dated February 2, 2021 passed by Jaipur Bench in which the appellants (Management(s) of private unaided schools in the State of Rajasthan) assailed the validity of Section 3, 4, 6 to 11, 15 and 16 of the Act and Rules 3, 4, 6 to 8 and 11 thereof being ultra vires the Constitution and abridge the fundamental right guaranteed under Article 19(1)(g) of the Constitution of India.

Submissions of the Appellant

• Provisions are violative of the rights guaranteed under Article 19(1)(g) of the Constitution to carry on occupation of imparting education which includes autonomy to determine the school fees by the Managements of private unaided schools. It was urged that imposition of restriction in this regard would be arbitrary & unreasonable. 
• Impugned provisions inevitably limited the autonomy of the school Management of private unaided schools to the level of merely proposing the school fees to the School Level Fee Committee, in which the Management has only one representative as against eight others i.e., five parents, three teachers and one principal. 

“The parents who are members of the SLFC, would control the decision­ making process impacting the autonomy of the school Management in regard to determination of school fees, guaranteed under Article 19(1)(g) of the Constitution.”

• Act granted wide powers to the Divisional Fee Regulatory Committee & Revision Committee including power to issue summons, search, seizure and penalties as if the occupation of imparting education is akin to res extra commercium. The appellants contended that the activities of school level education were qualitatively different from that of professional level education. The determination of school fees, therefore, stood on a totally different footing than determination of fees for professional colleges for medicine etc & therefore the Act fell foul of the doctrine of proportionality. 
• The State Legislature could not enact law on the same subject as the legislative field regarding regulation of school fees was already occupied by the law made by the Parliament being the RTE Act & and the Rules framed thereunder. 

Observations of the Court 

The Court placed reliance on the Apex Court judgement in Modern Dental College and Research Centre v State of Madhya Pradesh & Ors & Association of Private Dental & Medical Colleges vs. State of M.P (2009 SCC Online MP 760) to observe that it was not open to argue that the Government cannot provide for external regulatory mechanism for determination of school fees or so to say fixation of “just” & “permissible” school fees at the initial stage itself.

Further the Bench while noting that the following provisions were not violative of Article 19(1)(g) of the Constitution observed the following: 

1. Section 6 of the Act, does not intend to under the autonomy of the school Management in the matter of determination of fee structure. 

“What it envisages is that the school Management may determine its own fee structure, but may finalise or give effect to the same after interacting with the SLFC. It is a broad ­based committee, consisting of representatives of the school Management as well as five parents from the Parent ­Teachers Association. This is merely a consultative process and democratisation of the decision ­making process by taking all the stakeholders on board.”

2. Section 8 of the Act & Rule 10 of the Rules, the Court observed that, what was relevant was that the institution should be entitled to fix its own fee structure which might include reasonable revenue surplus for the purpose of development of education and expansion of the institution, as long as it does not entail in profiteering and commercialisation. The usage of the expression, “determination” does not take away the autonomy of the school Management in determining its own fee structure. 

“Whether fee structure evolved by the concerned school results in profiteering or otherwise is a matter which eventually would become final with the determination/adjudication by the Statutory Regulatory Committees constituted under Sections 7 and 10 of the Act of 2016, namely, Divisional Fee Regulatory Committee (DFRC) and Revision Committee respectively, as the case may be. That adjudication, however, becomes necessary only if the SLFC were to disapprove the proposal of the school Management regarding fee structure determined by the school. Whereas, if the SLFC were to accept the proposal of the school Management regarding fee structure as it is, that would be the fees under the Act of 2016 for the relevant period and then there would be no need for the DFRC to adjudicate upon the fixation of fee in the concerned school.”

3. The Revision Committee is specified in Section 11 of the Act of 2016, makes it amply clear that the decision of the Revision Committee shall be final and conclusive and shall be binding on the parties for three academic years. Setting up of an independent final adjudicatory authority especially created for considering the question as to whether the fee structure proposed by the school Management results in profiteering or otherwise, it does not impinge upon the fundamental right of the school Management 
4. Section 15 deals with consequences of contravention of the provisions of the Act of 2016 or the Rules made thereunder by an individual. Whereas, Section 16 deals with consequences of violation by a management and persons responsible therefor. It is unfathomable as to how these provisions can have the propensity to violate the fundamental right of the school Management
5. Rule 6 of the Rules deals with the Duties & Functions of SLFC.

“We fail to understand as to how Rule 6 would come in the way or infringe the fundamental right of the school Management guaranteed under Article 19(1)(g) of the Constitution. This Rule gives additional powers to the SLFC for ensuring compliances of the provisions of the Act of 2016 and the Rules made thereunder including regarding determination of school fees.”

6. Rules 7 and 8 of the Rules of 2017 deal with meeting of the SLFC and procedure to refer proposals to DFRC and to file appeal and revision before the Statutory Regulatory Committees respectively.

“These Rules deal with purely procedural matters and are in line with the powers and functions of the concerned Committees. The Rules provide for the manner in which the proposal is to be submitted by the school Management and to be taken forward. These provisions in no way affect the fundamental right guaranteed under Article 19(1)(g) of the Constitution much less autonomy of the school Management to determine the fee structure itself in the first place including the administration of the school as such.”

Case Title: Indian School, Jodhpur & Anr. V. State Of Rajasthan & Ors.| Civil Appeal No. 1724 Of 2021