Punjab puts on hold excess fee recovery from pvt schools

Schools argued that 5% ceiling clause is unsupported by any disclosed study, material, economic assessment or consideration of actual expenditure incurred by unaided schools and amounts to unreasonable restriction upon autonomy of schools

Two months after initiating a slew of measures to rein in schools charging exorbitant fee from students, the Punjab government assured the high court on September 22 that it would not implement the decision for retrospective excess fee recovery from private schools till the October 30 hearing.

The undertaking was given during hearing of a clutch of petitions filed by schools’ associations challenging provisions of Punjab Regulation of Fee of Un-aided Educational Institutions (Amendment) Act, 2026. (HT)

The undertaking was given during the hearing of a clutch of petitions filed by schools’ associations – Federation of Private Schools, Punjab, and Independent Schools Association, Chandigarh (members schools in Punjab), challenging the provisions of the Punjab Regulation of Fee of Un-aided Educational Institutions (Amendment) Act, 2026. Among other measures, the law mandated recovery of excess fee charged by private schools and the same had to be refunded to the students.

Initially, the government had come out with an ordinance and incorporated these amendments in the 2016 law in a notification on July 13. However, the move was challenged in the high court and when petitions from these associations were taken up by the high court on August 4, the state government assured the court that the excess fee recovery clause won’t be put into effect for now. However, in a special session, the government got the law passed in the assembly on August 10 and a formal notification came on September 9.

The amended law imposes an absolute 5% ceiling upon annual fee enhancement, irrespective of the actual costs incurred by an unaided educational institution. It further subjects any proposed enhancement beyond 5% to prior approval of the regulatory body and a compulsory forensic audit. The amendment Act also introduces a retrospective refund obligation in respect of fee charged and collected during the three years; enhances penalties substantially; imposes an additional fine of ₹10,000 per day; and provides for possible withdrawal of recognition and/or affiliation.

During the discussion in the state assembly, chief minister Bhagwant Mann had said the law will cover around 7,800 private schools in the state, directly benefiting around 32 lakh students. The ceiling on fee charged will cover not only the tuition fee but also mandatory charges and funds collected by schools. Fee included- all amounts charged, which include tuition fee, development fee, annual charges, activity charges, smart class or technology charges, transportation charges (where not separately contracted), laboratory and library charges, examination charges, and any other funds.

“The bill will pave the way for stronger protection of students and parents against excessive and opaque fee collection. The government will also conduct forensic audits of private schools to identify excess collections and ensure that the additional amount is refunded to parents,” Mann said. Under the new law, violations will attract fines of ₹50,000 for the first offence, ₹1 lakh for the second and cancellation of affiliation for a third offence, Mann had told the assembly.

Arguments from schools

The schools have argued that the 5% ceiling clause is unsupported by any disclosed study, material, economic assessment or consideration of the actual expenditure incurred by unaided schools and amounts to an unreasonable restriction upon the autonomy of the schools.

“Section 5-B, introduced in the law, retrospectively requires a refund of fee where cumulative enhancement over 36 months (three years) exceeds 15%, although such fee had been lawfully fixed, notified, charged and collected under the statutory regime prevailing at the relevant time. The provision consequently unsettles concluded academic transactions and imposes a financial liability upon schools after the education for the relevant period has already been imparted and the amounts received have been utilised towards salaries, infrastructure and other institutional expenditure,” the petitioners have argued.

The plea further added that the law does not prescribe the qualifications of the auditor, procedure, parameters, time-frame, cost or safeguards governing such audits. The provisions concerning uniforms and textbooks are also vague and excessively burdensome, the plea said adding that the enhanced penalty regime, including penalties increased by up to 150% and the additional fine of ₹10,000 per day, is assailed as “disproportionate”.

Further power to withdraw affiliation is specifically challenged on the ground that the state regulatory body cannot withdraw affiliation granted by bodies such as CBSE/CISCE. Hence, this provision lies beyond the legislative competence of the state, senior advocates Rajiv Atma Ram and Ashish Chopra, appearing in two different petitions, had argued.

The high court bench of Justice Suvir Sehgal and Justice Rajesh Gaur while seeking a response by October 30, noted the assurance of senior advocate Chanchal K Singla, who appeared for the state, that “implementation of the recovery with retrospective effect shall not be made till the next date of hearing”.