Power of state to regulate profiteering by schools’ does not violate latter’s right u/Article 19(1)(g)- SC

The Apex Court held that the act of State, wherein it regulates the profit-making measures of educational institutions, does not violate the management’s fundamental right enshrined under Article 19(1)(g) of the Constitution of India i.e. right to carry on a trade or profession.

The bench delivered this judgment in the case of Indian School, Jodhpur v State of Rajasthan wherein it upheld the constitutional validity of the Rajasthan Schools (Regulation of Fee) Act, 2016.

In the alleged Act, the legislature provided that the fees of private unaided schools must be determined by a committee, School Level Fees Committee. The act also provides for the members who would constitute this committee. The act basically lays down parameters which could check whether the fee structure of such schools bears elements of profiteering or not.

In the instant case, a group of private schools filed a petition and challenged the provisions of this Act. They contended that the provisions mentioned under this Act took away the autonomy of private schools.

They also filed appeal against a government order which directed the CBSE schools and State Board schools to collect 70% and 60%, respectively, of the annual school fee on account of pandemic.

The bench dismissed the contention of schools’ and stated that the formation of committee and establishing regulatory commissions to monitor the fees structure does not violate the freedom provided under Article 19(1)(g).

The bench also held that the provisions of Act which mandates upon maintenance of books of accounts and which gives power to the Committee to make reasonable inquiry into such books of accounts do not violate right under Article 19(1)(g).

The bench observed that the regular check by the Committee would ensure collection of adequate fees and profits. The bench stated that the profit-making is valid unless it becomes commercialisation.

The bench also highlighted that the Committee would ensure whether a particular amount of fee structure is being collected for an essential service or not.

The bench, however, partly allowed the appeals and allowed the schools to collect 85% of the annual school fee. The bench directed the schools’ to not debar a student from attending the online/physical classes on account of non-payment of fees.

The bench also allowed six monthly instalments for the payment of fees.