The Supreme Court of India has set up a two-member committee to assess the financial standing of private schools in Uttar Pradesh. This decision comes in response to challenges raised against an Allahabad High Court directive mandating schools to refund or adjust 15% of excess fees collected during the COVID-19 pandemic (2020-21 session).

The committee, led by Justice (Retired) GP Mittal and Chartered Accountant Adhish Mehra, has been tasked with evaluating each school's financial condition before implementing the refund directive.

Background of the Case

A batch of 17 private schools had approached the Supreme Court against the Allahabad High Court’s blanket order, arguing that a generalized refund directive ignored the financial hardships they faced during the pandemic. The schools contended that many institutions operated without surplus funds, had to cut down on staff salaries, and suffered financial distress. The Supreme Court acknowledged this concern, with Chief Justice Sanjiv Khanna stating:

"The High Court order adopts a very broad brush approach; that is not possible. You have to go into each and every case."

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The apex court further clarified that while overcharging should be refunded, the financial viability of each institution must be considered before implementing any reimbursement directive.

The Supreme Court has entrusted the committee with the responsibility of thoroughly examining the financial records of the concerned schools. As per the court’s order:

"The issue requires examination of facts and accounts in each case. In these circumstances, we appoint a committee consisting of Justice GP Mittal of Delhi HC and Adhish Mehra CA to examine the accounts and submit a report as to the financial position of the schools in question during the relevant period."

The court also outlined specific measures for transparency and efficiency in the process:

• Schools must submit relevant financial documents, including balance sheets and IT returns, within three weeks.
• Parent associations will have the opportunity to present their case before the committee.
• The committee must complete its assessment within four months.
• Schools will bear the costs of the assessment—₹1 lakh per school for Justice Mittal and ₹75,000 per school for CA Mehra.
• The interim stay on the refund directive will continue until the committee submits its findings.

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High Court’s Decision and Precedent

The Allahabad High Court, in an earlier ruling, had directed private schools to refund 15% of the fees collected during the pandemic, citing a Supreme Court judgment in Indian School, Jodhpur vs. State of Rajasthan. The High Court held that charging full fees without providing full services amounts to profiteering and commercialization of education.

"In case any fee has been paid in excess of what has been determined by the Supreme Court in the Indian School case, it must be adjusted in the future fee structure for continuing students. For students who have passed out or left the school, the excess fee must be refunded within two months."

The ruling was a result of multiple petitions from parents across Uttar Pradesh who argued that certain facilities were not provided during the pandemic, making it unfair for schools to charge full fees.The Supreme Court’s decision to set up a committee highlights the complexity of the issue. On one hand, parents seek relief from fees charged during a period of minimal in-person schooling. On the other, private schools argue that they faced severe financial stress, with reduced staff salaries and operational difficulties.

The committee’s report will play a crucial role in determining whether schools should return a portion of the fees or if financial hardships justify the retention of fees collected during 2020-21. Until then, the Supreme Court’s interim stay on the refund order will remain in effect.

Case Details : INDEPENDENT SCHOOL FEDERATION OF INDIA vs. ADARSH BHUSHAN| SLP(C) No. 011388 - / 2023