DELHI PUBLIC SCHOOL VASANT KUNJ AND ANR v. GOVT OF NCT OF DELHI AND ANR

Insofar as maintenance of their accounts is concerned, learned counsel for the petitioner schools have argued, that their schools have been set- up and are run either by a ‘society’ or a ‘trust’ working for a ‘charitable purpose’, as per the relevant statutes; and have been granted 2 (2002) 8 SCC 481 3 (2005) 6 SCC 537 4 (2003) 6 SCC 697 5 (2004) 5 SCC 583 6 (2008) 8 SCC 82 7 (2021) 10 SCC 517 8 1998 SCC OnLine Del 809 9 2011 SCC OnLine Del 3394 10 2019 SCC OnLine Del 7591 11 2020 SCC OnLine Del 1776 12 2023 SCC OnLine Del 1587 13 2024 SCC OnLine Del 1017 Signature Not Verified Signed By:VIKAS RAWAT Signing Date:22.05.2026 14:44 W.P.(C) 7481/2017 & connected matters ‘recognition’ in terms of Rule 50 of the DSE Rules; and that none of the schools is being run as a ‘for-profit institution’.

#9. It has been argued that since under section 2(15) of the Income-tax Act, 1961 (‘IT Act’) ‘charitable purpose’ is defined to include ‘education’, the societies and trusts that run the schools are entitled to certain exemptions under sections 11 and 12 of the IT Act. For this purpose, the books of accounts of the society or trust are prepared in-line with what is prescribed in section 12A(1)(b) of the IT Act read with Rule 17AA of the Income-tax Rules, 1962 (‘IT Rules’).

#10. It has been pointed-out furthermore, that schools are required to submit returns to the DoE in terms of Rule 180 of the DSE Rules, and the books of accounts of a school are prepared and audited on behalf of the Director of Education in terms of Rule 50(xviii) read with Rule 180 of the DSE Rules. This is done to enable the DoE to monitor the functioning of a school for purposes of continuing the ‘recognition’ of the school under the DSE Act. It has been submitted that this is different from the books of accounts of the society or trust (that has set-up the school) which are prepared under the IT Act, with the purpose of assessing the income of the society or trust for taxation. It has been submitted that though there is no conflict between the preparation of accounts under the DSE Act and under the IT Act, the purpose of submission of the school’s returns to the DoE is different from the purpose of submission of the society’s or trust’s returns to the Income Tax Department.

#11. In the above backdrop, learned counsel appearing for the petitioner schools have explained that the procedure adopted by the DoE in Signature Not Verified Signed By:VIKAS RAWAT Signing Date:22.05.2026 14:44 W.P.(C) 7481/2017 & connected matters scrutinising the fee-hike proposals submitted by private, un-aided, recognised schools is the following: 11.1. As a practice which is contrary to the law, the DoE compels schools to file their proposals seeking permission for increasing their fee for an ensuing academic session, even though there is no requirement in law for a school to seek prior approval for fee increase at the commencement of an academic session;

11.2. The DoE then engages a team of chartered accountants, who asks for documents and other relevant information from schools to justify the fee-hike;

11.3. Thereafter the DoE’s chartered accountants schedule meetings with the schools for discussions of their fee-hike proposals and prepare a report containing the chartered accountants’ recommendations, which report is submitted to the DoE; and 11.4. Invariably, the DoE adopts such report and rejects the fee-hike proposals made by the schools.

#12. It has been argued that the foregoing procedure adopted by the DoE is completely illegal, since it is contrary to the provisions of the DSE Act and the DSE Rules, apart from being violative of the principles of natural justice for the following reasons: 12.1. No show-cause notice or other written communication is issued to the schools before an order is passed by the DoE rejecting fee-hike proposals submitted by the schools;

12.2. No hearing is granted by the Director of Education, who passes the rejection order, at any stage; it being emphasised that the discussion held by the DoE’s chartered accountants with a school Signature Not Verified Signed By:VIKAS RAWAT Signing Date:22.05.2026 14:44 W.P.(C) 7481/2017 & connected matters while scrutinising the fee-hike proposal is not a substitute for a hearing by the Director who passes the rejection order; and 12.3. The rejection orders passed by the DoE are one-sided and unreasoned, so much so that typically they do not even record the submissions made by a school during the meetings with the DoE’s chartered accountants; and if at all any submissions are partly recorded, they are summarily rejected.

#13. In support of their submissions, learned counsel for the petitioner schools have placed reliance on the following judicial precedents: Kothari Filaments & Anr. vs. Commissioner of Customs (Port), Kolkata & Ors.;14 Reliance Industries Limited vs. Securities and Exchange Board of India & Ors.; 15 Automotive Tyre Manufacturers Association vs. Designated Authority & Ors.; 16 Bal Bharati Public School vs. Directorate of Education; 17 Ramjas School; and Mahavir Sr. Model School.

#14. It has also been pointed-out that though the judgment of the Supreme Court in Modern School and connected matters imposes a duty on the DoE to ensure that schools comply with the terms of allotment of land to them by the government, that ruling does not purport to confer on the DoE any additional powers beyond the powers vested in them under the DSE Act. The argument is that the powers of statutory bodies are derived, controlled and restricted by the statute which create them, and by the rules and regulations framed thereunder. In support of this