Schools are free to pursue appropriate legal action to recover unpaid fees from students, according to the Supreme Court.

In response to a petition seeking clarification of the Supreme Court’s order prohibiting schools from barring any student from attending classes due to non­payment of fees, the Court on Wednesday allowed School Managements to take appropriate legal action to recover outstanding fees from students who have defaulted.

A bench consisting of Justice AM Khanwilkar and Justice CT Ravikumar has left it to the School Management to sympathetically examine any requests for indulgence made by parents or wards for legitimate grounds.

The order was issued in response to a miscellaneous application filed by a student seeking clarification that the Supreme Court’s orders issued through its order dated 3rd May 2021 did not prohibit schools from taking coercive action against students who failed to pay the instalments as per the agreement set forth in that judgement.

Progressive Schools Association submitted the current complaint as part of a group of appeals challenging a Rajasthan government order that allowed CBSE schools in the state to collect just 70% of the annual school fee and state board schools to collect only 60%.

The appeals were heard in May by a Bench led by Justice Khanwilkar, who authorised the schools to collect annual tuition fees after deducting 15% for overheads and operational costs. Fees could be paid in six monthly instalments, according to the Court. The Supreme Court, in an order dated October 1, 2021, clarified that the spirit of the earlier judgment’s direction was to give the concerned parent/ward time to pay the fees as specified, including by way of instalments, and that the same does not and did not exempt the parent or ward from paying the amount specified in the judgement in any way.

The School Management has correctly pointed out to the Bench that the last day for paying the instalments referred to in the earlier ruling has now passed, notwithstanding the fact that some parents are still in arrears and have defaulted.

Further instructions in the May 3 decision

The Supreme Court ruled on May 3, 2021, that private schools charging students fees for activities and facilities that they were unable to use owing to the lockdown amounted to “profiteering” and “commercialization.”

The Supreme Court, taking judicial notice of the fact that classes were held online during the previous academic year, concluded that institutions must have saved money on overhead and operational costs. According to the Court, schools must have saved at least 15% in this manner, and as a result, they must provide a reduction in annual school fees to that extent. The institutions “must gladly and proactively” lower fees to that extent, according to the Court.

Title of the case: Progressive Schools Association vs State of Rajasthan & Anr

Citation : LL 2021 SC 543

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