SHC rules, over 5pc school fee hike illegal

Court says school managements’ claim that their business method is based on open market principle of ‘you get what you pay for’ is ‘shameful in respect of noble profession of imparting education’

Parents and students on Friday won the legal battle against a private school management’s act of increasing tuition fees by up to 14 percent as the Sindh High Court ruled that schools “shall only increase tuition fees by no more than five percent per annum” if they had registered themselves for a mandatory period of three years.

The court made clear that in case a school did not register anew after the passing of three years, fees “shall not be increased” by the school.

A division bench, comprising Chief Justice Sajjad Ali Shah and Justice Zulfiqar Ahmed Khan, observed that private schools which had increased their tuition fees by over five percent per annum for the last three years from the date of their registration or re-registration would be not permitted to increase the fees until their fresh registration, whereupon fee enhancement be regulated in strict compliance with sub-rule (7) (3) of the Rule 2002.

It said it was painful to note that no statement had been provided by the education department as to its receipt of each year’s audited accounts report from private schools and its enforcement of the restricted five percent increase in the tuition fees. It directed the education department to strictly act in accordance with the law, ensure compliance with the rules and regulations and submit quarterly reports to the court in respect of such audits and the five percent fee increase rule.

The judgment came on petitions of some 400 parents and students, who had challenged the increase in tuition fees by a private school in violation of the Sindh Private Education Institution (Regulation and Control) Ordinance and its rules. They submitted that their children were studying in the private school situated in North Nazimabad in primary and secondary sections and the school administration in violation of the Sindh Private Institution Ordinance 2001 had increased the tuition fees by 14 percent.

They contended that the private education institution could only increase tuition fees by up to five percent in the last fee schedule subject to proper justification and prior approval of the registration authority. They asked the court to direct the school administration to act strictly in accordance with the law and direct the education department to take action against the school administration for the 14 percent increase in tuition fees in violation of the rules.

The petitioners said private educational institutions were taking ransom from the parents by routinely jacking up the school fees as and when they deemed convenient, and the government regulatory mechanism, which was education department, had not come forward to check this malpractice and had already failed to perform it legal and constitutional obligations.

The school management vehemently challenged the vires of legislation under which schools were barred from escalating their fees from five percent within an academic year. It contended that if the school management was bound by the government to limit the fee level, then it would be tantamount to compromising on quality-oriented investment and expenditure, and as a result educational quality would gradually suffer.

The school management argued that impugned legislation conferred unreasonable powers on the government and education department to interfere in the business of the education institution and was liable to be struck down. It was said in the petition that despite alleged high fees charged by the private schools like the petitioner’s school, hundreds of children were on their waiting lists for admission at any given time.

The school management’s counsel said that impugned legislation conferred invasive powers on the registration authority to interfere and effectively take over the management and control of private school managements, which amounted to effective nationalisation of private institutions by the state.

The counsel submitted that Sub Rule 3 of Rule 7 of the Sindh Private Education Institutions (Regulation and Control) Rules 2002 was discriminatory as no such prices had been fixed for other social sectors, including health and entertainment; therefore, that law was liable to be set aside.

The counsel for the parents and students challenged the assertion of the school management and submitted that rules adequately provided a mechanism for increasing tuition fees in a dynamic fashion and the same was not comparable with any other social sector.

The counsel also alleged that parents and students who challenged the school management’s act faced discrimination at the hands of the school management and such students were made “untouchables”.

The division bench observed that present controversy which was driving contesting parents and schools away from each other with every passing day had not come by surprise as it could be seen that there was an increasing trend of schools having once established a branch speedily proceeding to open a series and group of branches in various parts of the city, province or throughout the country. It said there appeared to be lack of enforcement of regulations as provided by the legislature.

The court observed that the school management seemed to be funneling the funds received from one (milking) branch of the school to set up new branches with the defense that it had been done in the interest of the better utilisation of funds and to reach a level of a desired number of students so that the school could operate with stability.  The bench further said that this argument sounds too familiar and is repeated umpteen times when negotiating the number of franchise of fast food restaurants – and the business term for such profiteering is called the economy of scales.

“This EoS seems to be an outcome of utter commercial-mindedness of private school owners and criminal failure of the regulators to force schools from taking profits from one school and investing them into another.”

The court said it was pertinent to mention that under the Indian school management laws, schools were barred from shipping profits from one branch of school to other branches or to new business ventures of the owners as the idea behind such policy was that even if profits were made by the school they were re-invested in the same school for making infrastructure better therein and by bringing more experienced teaching staff rather than milking the parents and using profits to create a chain or group of schools or colleges, a practice which was quit common in our country.

The court noted in its judgment that the school managements whenever posed with the question of increasing fees always responded by saying that the fees charged were commensurate with the facilities provided by the school and to maintain the standard of education imparted by them.

The bench said they claimed that their business method was based on the open market principle of “you get what you pay for”, which, it said, was “a shameful admission in respect of noble profession of imparting of education”.

The court dismissed the school administration’s petition regarding the fee increase mechanism law, observing that grievance of schools is not about the mechanism of such increases; rather, it is about the quantum of five percent increase in the fee, thus the question is about to determining this percentile which requires taking into consideration many factors like the cost of doing business, minimum salaries payable and taxes, which require consideration of the fact which is beyond the scope of writ jurisdiction.

Regarding the arbitrary increase in fees by the private schools, the SHC observed that it was evident from the forgoing discussion that the current mechanism provided for in the form of the ordinance and rules, though looked glossy, kept at loggerheads parents and schools and vice versa and was a clear depiction of the fact that private schools were not following the mechanism.

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