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Implementation of the Seventh Pay Commission Recommendations on Private Unaided Recognised Schools, with retrospective effect from 1.1.2016- A Genuine Dilemma of Parents as well as Private Unaided Recognised Schools!!!!

Not very long ago, i.e. on 20.12.2017, to be more specific, almost all the prominent National Dailies’ headlines read, “A Breather of Relief for Parents: Delhi HC stays DoE’s Notification allowing fees hike of 15% by private unaided recognized schools, pursuant to seventh pay commission recommendations.”

Pursuant to the implementation of Seventh Pay Commission recommendations, on private unaided recognized schools, retrospectively w.e.f. 1.1.2016, the Department of Education, Delhi, has issued a Circular dated 17.10.2017, to all private unaided recognized schools in Delhi, to implement the Seventh Central Pay Commission’s recommendations, and permitting a hike of 15% in the tuition fees, for the FY 2017-18.

The said DoE Circular, has been stayed, for a while, by the Hon’ble Delhi High Court on a writ petition being filed by parents of students of ASN Public School, Mayur Vihar.

There is no denying that Schools are to be run for public good and not for private gain. The object has to be service to the Society and not to earn profit. And in granting such reliefs to parents, the third pillar of democracy, i.e. the Judiciary, has always been guided by this philosophy.

However, the subject matter presently under consideration, i.e. impact of the implementation of the Seventh Pay Commission recommendations in terms of increased salary burden on private unaided recognized schools, needs to be looked into from the schools’ perspective also.

The Government of India has issued Gazetted Notification dated 25.07.2016, giving effect to the recommendations of Seventh Central Pay Commission, making them applicable with effect from 01.01.20016. These recommendations were accepted in respect of teaching and non-teaching staff of the Government schools in Delhi.

Section 10 of Delhi Education Act, 1973 stipulates that the scales of pay and allowances, medical facilities, pension, gratuity, provident funds and other prescribed benefits of the employees of recognized private schools shall not be less than those of the employees of the corresponding status in school run by the appropriate authority. Because of this provision, it becomes the obligation of the private unaided schools as well to revise the pay scales of the teachers and other staff employed by them so as to bring them at par with the pay scales and allowances enjoyed by their counterparts in the Government schools.

Past trends on implementation of fifth and sixth pay commission recommendations, clearly show that salaries of staff in both Govt. as well as private schools had gone up by atleast 25%-30%. The impact of the seventh pay commission recommendations, is also the same. Payment of salaries of teachers in private unaided schools constitutes 80% of the total operating expenditure of the schools and the same is met only by the fee recovered from students.

Salaries of teachers, upon the implementation of the seventh pay commission’s recommendations, in schools have increased by 25%-30%. However, the fee hike has been restricted by the Department of Education, Delhi, to 15%, which itself is inadequate to meet the exigencies.

The most crucial aspect, in this whole dilemma, is the implementation of salary hike as per Seventh Pay Commission recommendations, with retrospective effect w.e.f. 1.1.2016. This retrospective application, has compelled the schools to recover the arrears of salary hike, also, from the students and but obviously, this has increased the burden of the schools as well as the students, manifold.

And this is not the first time, that this fiasco has taken place. Exactly the same confusion, unrest and litigations, had taken place, even at the time of implementation of fifth and sixth pay commission recommendations. But unfortunately, no-body has learnt anything from past experiences, and as a consequence, the history has repeated itself for the third time.

Way back in 1997, also, at the time of implementation of fifth pay commission recommendations, on private unaided recognized schools, the private schools hiked the fees in order to meet out the increased burden of salary hike, parents protested and all of this culminated into numerous litigations. Ultimately the Hon’ble Delhi High Court formed a Committee known as Justice Duggal Committee, to decide on merits, the individual claims of fees hike of schools. The said committee did give its comprehensive recommendations, which interestingly have become the subject matter of further litigations.

At the time of implementation of sixth pay commission recommendations, in 2008, the Government of NCT of Delhi, adopted a more pro-active approach and constituted a Committee under the Chairmanship of Shri S.L. Bansal (a retired I.A.S. Officer) on 17.10.2008. The objective of this Committee was to examine the implications of the sixth pay commission’s recommendations for the recognized unaided schools in Delhi and submit its recommendations. Based on the committee’s recommendations, the Department of Education, Delhi issued a Circular dated 11.2.2009, permitting the schools, a specified fees hike, based on their categorization, on the basis of fees charged by them.

This DoE’s order was again challenged in Delhi High Court, both by the parents as well as by the schools and the case was popularly known as “Delhi Abhibhavak Mahasangh & Ors. vs. Govt. of NCT of Delhi & Ors. and “The Action Committee of Unaided Pvt. Schools & Ors vs. the Director of Education & Ors.” The parents protested the specified fees hike, terming it as unduly high, whereas, the schools challenged the same, claiming it to be on the lower side.

In the said judgment, the Hon’ble Delhi High Court, had very comprehensively considered and analyzed the arguments and counter arguments of both the sides and had very beautifully summed up its judgment as under:

“62. With this, we revert back to the issues On Merits: The clear legal position which emerges from the combined reading of the judgments of the Supreme Court, directly on the issue of revising tuition fee by Delhi schools under the Delhi Education Act, and already stated in detail above, demonstrates that the schools cannot indulge in commercialization of education which would mean that the fee structure has to be kept within bound so as to avoid profiteering. At the same time, “reasonable surplus” is permissible as fund in the form of such surplus may be required for development of various activities in the schools for the benefit of students themselves. The guiding principle, in the process, is “to strike a balance between autonomy of such institution and measures to be taken in avoiding commercialization of education”. The autonomy of the schools can be ensured by giving first right to such schools to increase the fee. At the same time, quantum of fee to be charged by unaided schools is subject to Regulation by the DoE which power is specifically conferred upon the DoE by virtue of Section 17(3) of 1973 Act. This is specifically held by the Supreme Court in Modern School (supra) and Action Committee Unaided Private Schools and Anr. (supra). Normally, therefore, in the first instance, it is for the schools to fix their fee and/or increase the same which right is conferred upon the schools as recognized in TMA Pai (supra). The DoE can step in and interfere if hike in fee by a particular school is found to be excessive and perceived as “indulging in profiteering”. It would be a procedure to be resorted to routinely. However, validity of the orders dated 11.02.2009 passed by the DoE is to be judged in a different hue altogether. Situation arose because of the implementation of pay structure recommended by the 6th Pay Commission, which was to be done mid-session albeit from retrospective effect, i.e., with effect from 01.01.2006. All aided and unaided recognized schools in Delhi were under obligation to give increase to their teachers and staff members which resulted in substantial hike in pay package of the employees of these schools. Further, it happened across the board and it was not a situation specific to a particular school. As a result of this added financial burden whereas the schools wanted to increase the fee, PTAs on the other hand, maintained that some of the schools enjoyed robust financial health, which was sufficient to bear the additional monetary burden without hike in the fee to be charged from the students. This necessitated going into the records of each school. Therefore, in a situation like this where on the one hand, there was perceptible additional financial burden created on account of increase in the pay of the staff and on the other hand, the exercise demanded by the PTAs of going into the financial records of each schools was time consuming, the issuance of orders dated 11.02.2009 by the Government, as an interim measure, proposing to increase the tuition fee in the manner provided in the said order with a lid on the upper limit cannot be faulted with. It is moreso, when the proposed increase is not based on any whims of the DoE, but was preceded by the constitution of a Committee under the Chairmanship of Shri S.L. Bansal, a retired I.A.S. officer and the impugned orders were the result of the reports submitted by the said Committee after undertaking requisite exercise, albeit, of preliminary nature, but after giving hearing to all stakeholders. At this stage, while passing such an order, there could not have been any option, but to pass a general order for increase in fee.

63. We are of the opinion that in the aforesaid exceptional circumstance in which such an order came to be passed, it did not impinge upon the autonomy of the recognized aided or unaided private schools as well. We, therefore, uphold Para 7 of the impugned order, making it clear that was only an interim measure adopted by the Court. When we look into the matter in the aforesaid perspective, which according to us, is the only manner in which orders dated 11.02.2009 are to be viewed, we are clear in mind that the increase in fees stipulated in the said orders as ad-hoc measure is legal and valid. However, as clarified above, we hasten to add that it would only be treated as an interim measure and would be subject to scrutiny into the records of each school to see as to whether there was any necessity to increase the fee having regard to the financial position of the said schools. Outcome of such an exercise could result in higher hike in fee than stipulated in the orders dated 11.02.2009 or reducing the fee than what is permitted in the said orders.”

Therefore, the Hon’ble Delhi High Court, had upheld the validity of the Circular dated 11.2.2009, issued by the DoE, permitting a specified fees hike, pursuant to the implementation of sixth pay commission recommendations.

At present, the implementation of the seventh pay commission recommendations, on the private unaided recognized schools, with retrospective effect from 1.1.2016, again has started the long drawn litigation process, drawing parents, schools and the Department of Education, in the Court, and now, only time will tell, what will eventually happen.

The underlying philosophy of the entire regulatory exercise of the Hon’ble High Courts and the Department of Education, is to ensure that no recognized private un-aided school indulges in “commercialization of education” & “profiteering”. However, a blanket presumption that every private school is doing it, will also be wrong. Those private schools, which are genuinely abided by the philosophy of non-profiteering in letter & spirit & are committed towards the social objective of imparting education to general masses, should not be equated with those indulging in commercialization & profiteering.

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Hi there!! I am Mayank Mohanka, FCA, Founder Director in TaxAaram India Pvt Ltd & Senior Partner in M/s S M Mohanka & Associates. Philosophy of Life: There is one thing which is more powerful than your Nav Grahas & that is Your Will Power.. View Full Profile

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