Holding

A law cannot retrospectively defeat a statutory right to grant‑in‑aid arrears created under the 1982 Education Act and the 1988 Grant‑in‑Aid Act, and therefore Act 34/95 cannot set aside the Single Judge’s order directing payment of those arrears.

Summary

The G.V.K. Girls High School, admitted to grant‑in‑aid under the Andhra Pradesh Education Act, 1982, sought payment of arrears for the period 1 September 1985 to 31 October 1989 after a statutory committee under the 1988 Act cleared its case. The High Court Single Judge ordered the arrears to be paid, quashing a 1994 government order that denied them. The State then enacted the Educational Institutions Grant‑in‑Aid (Regulation) Supplementary Provisions Act, 1995 (Act 34/95) with retrospective effect, attempting to bar payment of any arrears arising from court orders or government orders. The Division Bench upheld the Single Judge’s order, holding that the 1995 Act could not override the statutory right created by the 1982 and 1988 Acts. On appeal, the Supreme Court affirmed that the legislature cannot retrospectively extinguish a right that was vested under earlier statutes and that Act 34/95 does not remove the basis of the Single Judge’s judgment. Consequently, the arrears must be released to the school and the appeal was dismissed.

Issues considered

Whether the Andhra Pradesh Educational Institutions Grant‑in‑Aid (Regulation) Supplementary Provisions Act, 1995 can retrospectively deny arrears of grant‑in‑aid that were payable under the 1982 Education Act and the 1988 Grant‑in‑Aid Act after a statutory committee had cleared the school.
Whether legislation can nullify a judicial decree granting arrears when the right to such arrears flows from earlier statutes and a statutory committee’s recommendation.
Whether Act 34/95 removes the statutory basis of the High Court Single Judge’s judgment.
Interpretation of the retrospective effect of the 1988 Act and of G.O. 326 (dated 17‑Oct‑1989) concerning the word “now” and the entitlement to arrears.

Subjects

grant‑in‑aidarrearsretrospective legislationstatutory rightlegislative overreacheducation lawAndhra Pradesh

Judgment

GOVERNMENT OF ANDHRA PRADESH AND ORS. A
v.
G.V.K. GIRLS HIGH .SCHOOL

AUGUST 7, 2000

[M. JAGANNADHA RAO AND K.G. BALAKRISHNAN, JJ.] B

Education :

A.P. Education Act, 1982 (Act 1182)-Section 46(2)-Payment of arrears
of Grant-in-aid to Schools-Statutory Committee formed under Act 22188
retrospectively effective from 22.7.85 looked into complaints against aided
c
schools-Payment of arrears cleared by G.O. 326 dated 17.10.89 but still
remained unpaid-Single Judge allowed writ petition directing payment of
arrears-Act 34195 retrospectively effective from 17.10.89 was passed denying
payment of arrears claimed under any Court order or decree-Division Bench
upheld order of Single Judge as Act 34195 could not set aside the same-On D
appeal-Held, a statutory right to receive the arrears from 22. 7.85 was created
under G.O. 326 as Act 22188 was retrospectively effecting from 22.7.85-Act
22188 and G.O. 326 were meant for settlement of arrears and no fresh
entitlement to grant-in-aid was created through them-Right to arrears flows
from the statutes and recommendations of the committee and not from any
E
G.0.-Act 34195 being retrmpectively effective from 17.10.95 cannot go
beyond that date, moreover the rights created by Act 1182 and 22188 were not
affected-Judgment of Single Judge was correctly upheld by Division Bench-
A.P. Act 22188-Sections 1(3) and 3(2)-A.P. Educational Institutions Grant-
in-aid (Regulation) Supplementary Provisions Act, 1995-Section 2.
F
Administrative law-Post-Judgment Legislation-Held, Legislature
cannot overmle a judgment by passing a law unless it removes the basis of
the legal rights upon which the judgment is based, with retrospective effect
provided there is no violation of any constitutional provision-AP. Educational
Institutions Grant-in-aid (Regulation) Supplementary Provisions Act, 1995
(Acts 34195 ). G

The respondent school was admitted to grant-in-aid in G.O. 347
(Ed.) dated 1.8.86 under A.P. Education Act, 1982. A statutory·committee
was appointed under Act 22/88 to look into complaints against various
schools which cleared the respondent-school under G.O. 326 dated 17.10.89. H
171
172 SUPREME COURT REPORTS (20001 SUPP. 2 S.C.R.
A However, certain arrears of Grant-in-aid for a period 1.9.85 to 31.10.89
remained unpaid. A writ petition was filed in the High Court during the
pendency of which G.O. 130 (Ed.) dated 25.4.94 was issued which refused
payment of arrears. Single Judge quashed this G.O. and allowed the writ
petition. Later on the State passed A.P. Educational Institutions Grant-in-
Aid (Regulation) Supplementary Provisions Act, 1995 with retrospective
B
effect from 17.10.89 which permitted denial of arrears of grant-in-aid if
claimed under any judgment, decree or order of court or other authority
or any order issued by Government. Division Bench while dismissing the
writ appeal of the appellant~ held that such a legislation could not set aside
the judgment of the Single Judge. Hence this appeal.
c
Dismissing th¥1ppeal, the Court

HELD : 1. After complaints were received, the grant was kept in
abeyance and the cases of the respondent and others were inquired into
D under Section 46(2) of the A.P. Education Act, 1982 (A.P. Act 1 of 1982)
by a statutory committee under Act 22/88 and the right to receive grant-
in-aid for the back years i.e. from 22.7.85 was declared under G.O. 326
dated 17.10.89. Section 3(2) of Act 22/88 directs release of grant-in-aid
from the date upon which the school satisfies the eligibility conditions.
Section 1(3) of the Act 22/88 made it retrospective from 22.7.85. Hence it
E is as if the Committee constituted under Act 22/88 was there from 1985.
Once the Committee gave its clearance, the decision would he effective
from 22.7.1985 in respect of all the back years from dates anterior .to the
passing of Act 22/88, and the school would be entitled to release of grant-
in-aid from the date on which it satisfies the conditions for receiving grant-
F in-aid [182-F-H; 183-A-B]

2. Section 3 of Act 22/88 does not expressly say that the
recommendation will be retro-active but from the language of Section 3(2)
and Section 1(3) of Act 22/88 says that the Act "be deemed to have into
force on the 22nd July, 1985", the right is retrospectively affirmed for the
G
back years. The Committee's recommendations as to compliance with
conditions during various years from 1985 though made after 1988 were
to be treated as in existence from various dates after 22.7.1985 and if the
institution satisfied the conditions of Act 111982 and also conditions laid
down in other GOs in the previous years, the Committee's recommendation
H in favour of any school would be retroactive and will apply to those back
GOVT. OF A.P. v. G.V.K. GIRLS HIGH SCHOOL 173
years. The right to arrears is affirmed by Section 3 is also clear from A
Section 5 relates to an adverse recommendation of the Committee and
requires refund of amounts already paid in such cases. Act 22/88 provided
for payment of arrears or for refund of amounts paid which was the
purpose in making the provisions retrospective w.e.f. 22.7.1985. These
provisions of the Act, clearly conferred a statutory right on the writ B
petitioners to receive the grant-in-aid right from 22. 7.85 onwards in the
various years in which they satisfied the conditions. The right to arrears
thus flows from the statutes and the Committee's recommendations and
not from any Government orders. The right stems from Act 1/82 and Act
22/88 and the findings of the Committee. [183-C-F]
c
3. G.O. 326 dated 17.10.1989 never meant that these schools are
identified as entitled to grant-in-aid for the first time in 1989. This is clear
frQm the fact that like Section 3 of Act 22/88, this G.O. also speaks of
arrears. If indeed the previous orders relating to admission to grant-in-
aid were intended to be given a go bye then the Government would not
have referred to the question of payment of arrears in this G.O. The word D
"now" is used in this G.O. only to identify those schools etc. referred to
in its Annexure and as cleared by the Committee and was not intended
to create a new prospective right to receive grant-in-aid after 1989. Such
identification would therefore clearly relate back to 22.7.85 which was the
date from which Act 22/88 became retrospective. [184-B-D] E
4. Act 34/95 was published in Gazette after the judgment of the
Single Judge. But it come into force on 17.10.89, the date of G.O. 326
which said that the orders for arrears would be passed separately. Act 34/
95 removed the rights created by Government orders and not the right
created by Act 1/82 and Act 22/88. If any Government Order had F
conferred any right to the institutions enumerated in the Annexure to G.O.
326 dated 17.10.89 read with G.O. 178 dated 23.7.90, it was only those
rights that were intended to be removed retrospectively by Section 2 of Act
34/95. The legislature while enacting Section 2 of Act 34/95 failed to
remove the rights conferred by the Principal Act 1/82 and Act 22/88 read G
with the Committee's declaratory findings. Further, the Act 34/95 being
retrospective only from 17.10.89, does not go beyond that date into the
back years. [184-E; 185-D-E]

5. Section 2 of the Act 34/95 purports to nullify the effect of the
judgment of the Single Judge. It is well settled that the legislature cannot H
174 SUPREME COURT REPORTS (2000) SUPP. 2 S.C.R.
A overrule a judgment by passing a law to that effect unless it removes the
basis of the legal rights upon which the judgment is based, with retrospective
effect and provided that there is no violation of any constitutional
provision in such withdrawal of right retrospectively. The rights created
by Act 1/82 and Act 22/88 read with the Committee's recommendations
have not been nullified by Act 34/95, the judgment of the Single Judge
B
remains effective. The basis of the judgment has not been removed. The
rights flowing from the Acts were not touched and only rights flowing
from Government orders were taken away retrospectively. It is necessary
to give effect to the judgment of the Single Judge and the writ appeal was
rightly dismissed. [185-H; 186-A-C]
c
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2422of1997.

From the Judgment and Order dated 6.8.96 of the Andhra Pradesh High
Court in W.A. No. 1745 of 1995.

D K. Amreshwari, G. Venkatesh and Anil Kumar Tandale for the Appellants.

B. Kanta Rao and Ms. Sudha Gupta for the Respondent.

The Judgment of the Court was delivered by
E M. JAGANNADHA RAO, J. This is an appeal by the State of Andhra
Pradesh against the judgment of the Division Bench of the High Court of
Andhra Pradesh in Writ Appeal No. 1745 of 1995 dated 6.8.1996 affirming
the judgment of the learned Single Judge of that Court in Writ Petition 15879/
90 dated 27.7.1995.
F
The following are the facts:

The respondent-school was admitted to grant-in-aid in G0.347 (Ed.)
dated 1.8.86 w.e.f. 1.9.85 to 29.2.86 under. AP.Act I/82. On the ground that
there were some complaints against various schools, Government appointed a
G Committee on 24.2.88 under G0.220 and this was made a statutory Committee
by Andhra Pradesh Act 22/88. The Committee cleared the respondent-School
but still the arrears for the period 1.9.85 to 31.10.89 for the Head Mistress and
from 1.3.86 to 31.10.89 for the staff were not paid. Hence, the present writ
petition was filed. After the Writ petition was filed, G0.138 (Ed.) dated 25.4.94
H was issued refusing to pay these arrears.
GOVT. OF A.P. v. G.V.K. GIRLS HIGH SCHOOL [M. JAGANNADHA RAO, JJ 175
The learned Single Judge allowed the Writ petition holding that the A
respondent-school was entitled to payment of 'arrears' of grant-in-aid and
quashed G.O.No.138 dated 25.4.94. Then the State came forward with a
legislation,- after the said judgment, - by way of Andhra Pradesh Act 34/95
(published in the Gazette on 20.9.95) with retrospective effect from 17.10.89
which permitted denial of 'arrears' of grant-in-aid whenever such arrears were
B
claimed under "any judgment, decree or order of Court or other authority or
any order issued by Government". In the Writ Appeal, the State relied upon
the said legislation to get over the judgment dated 27. 7.95 of the learned Single
Judge directing arrears of grant-in-aid to be paid but the Division Bench held
that the legislature could not set aside the judgment of the High Court by Act
34/95. The judgment was confirmed and the Writ Appeal was dismissed. It is c
against the said judgment that this appeal is preferred by the State. During the
pendency of this appeal stay of the High Court's order was refused.

For appreciating the points raised in this appeal, it is necessary to refer
to the provisions of the three statutes and the various government orders
dealing with grant-in-aid to schools in the State of Andhra Pradesh
D
chronologically in so far as they are relevant for the case before us.

Andhra Pradesh Al·t 1182

The Andhra Pradesh Education Act ( A.P. Act I of 1982) deals with
'grant-in-aid' Chapter VIII (sections 42 to 47). Section 42 states that the E
Government shall, within the limits of its economic capacity, set apart a sum
of money annually for being given as grant-in-aid to local authority and private
institutions recognised for the aforesaid purpose. Section 43 deals with the
authorities which may sanction the grant, (section 44 has been omitted in
1983 ), section 45 deals with the manner of submitting applications for sanction F
of grant and the conditions to be fulfilled on such sanction. Sub-clause (I) of
section 46 gives power to Government to withhold, reduce or withdraw grant,
notwithstanding anything in the Chapter, on inquiry, (i) on the ground of non-
availability of funds or (ii) because of the conduct and efficiency and the
financial condition of such institution. The section provides opportunity to be
given. Sub-clause (2) of section 46 states that, without prejudice to the
G
generality of the provisions of sub-section (I) or any other provisions of the
Act, the Government may, after making necessary inquiry, withhold, reduce
or withdraw any grant if the management of the Institution is guilty of various
acts specified in the sub-clause. Section 47 deals with the manner of utilisation
of funds and movable property of private institution. H
176 SUPREME COURT REPORTS [2000) SUPP. 2 S.C.R.
A G0.238 (Ed).dated 27.5.86 and G0.347 (Ed.)dated 1.8.86

Government issued G.0.238(Ed.) dated 27.5.86 stating that all schools
which were validly opened on or after 1.4.1977 and which had completed 5
years in respect of boys' schools and 3 years in respect of girls' schools etc.
are to be admitted to grant-in-aid. As already stated, the respondent-school was
B admitted to grant-in-aid as per G.0.347 (Ed.) dated 1.8.86 with effect from
1.9.85 to 29.2.86 as permitted by Act I/82.

Complaints and G0.220 dated 24.2.88 appointing Committee.

C On 24.2.88, Government issued G.O. 220 stating that Government had
received various complaints against several schools which were receiving
grant-in-aid even though they did not satisfy the necessary conditions.

It was further stated that the Government had, therefore, constituted a
High Level Committee in G.O. No.220 (Ed.) dated 24.2.88 to look into every
D case of grant-in-aid and make specific recommendations.

Andhra Pradesh Act 22188: Statutory Committee to inquire into complaints:

Soon after 24.2.88, the Government felt that a GO was not sufficient to
enable the making of inquiries into complaints and that legislation was
E necessary. It, therefore,came forward with the Andhra Pradesh Private
Educational Institutions Grant-in-Aid (Regulation) Act, I 988(AP Act 22 of
1988) which was published in the Gazette on 29.8.88 and under sub-clause
(3) of Section I this Act was given e.ffectfrom 22.7.1985. Section 3 of the Act
reads as follows:
F
"Section 3( I): Regulation of grant-in-aid to private educational
institutions:

Notwithstanding anything contained in G.O. Ms.No.238, Educa-
tion (SSE) Department, dated the 27th May, 1986 and GO.Ms. No.424,
G Education (CE) Department, dated the 19th September, 1985, -

(a) no private educational institution other than a college established
after the Ist April, 1977 land existing on the !st September, 1985 and
no private college established after the !st April, 1977 and existing
on the Ist March, 1985 shall be entitled to receive any grant-in-aid
H
GOVT. OF A.P. v. G.V.K. GIRLS HIGH SCHOOL [M. JAGANNADHA RAO,J.] 177
unless the Committee constituted in GO.Rt.No.220, Education (SSE- A
I) Department, dated the 24th February, 1988 recommends that it may
be admitted to grant-in-aid; and

(b) no private educational institution other than a College which has
been established after the 1st September, 1985 and no private college
which has been established after the 1st March, 1985 shall be entitled B
to receive any grant-in-aid.

(2) A private educational institution referred to in clause (a) of sub-
section (1) in favour of which the Committee recommends the release
of grant-in-aid shall be entitled to such grant only from the date it C
satisfies all the conditions for admission to grant-in-aid specified in
the Andhra Pradesh Education Act, 1982 and the Rules made
thereunder, the grants-in-aid Code and the orders and other instructions
issued by the Government from time to time in this behalf."

Section 4 of the Act refers to release of grant-in-aid in respect of certain D
additional sections and posts. Section 5 refers to seeking refund of grant-in-
aid if the Committee in G.0.220(ed.) dated 24.2.88 determines that the
institution wrongly received aid. Section 6 said the Act will have effect
notwithstanding anything in any law, judgment etc. Section 7 deals with
validation. Section 8 repeals the Ordinance of 1988.
E
G0.124 (Ed.) dated 27.1.89 & G0.326 (Ed.) dated 17.10.89: The Committee
rejects complaints against several schools including respondent-School:

Under a G.O. 124 (Ed.) dated 27.1.89 a Committee was constituted as
stated in the above Act 22/88. It appears that the Committee met and conducted F
inquiries into complaints and gave various recommendations. G.O. 326 (Ed.)
dated 17 .10.89 was thereafter issued stating that the Committee had
recommended release of grant-in-aid to 59 secondary schools and other
specified elementary, oriental schools, sections whose names are enumerated
in the Annexure - "subject to various conditions" (i) to (vi) and that Rs.63 lakhs
was being sanctioned to these schools enumerated in the Annexure to this G.O. G
for the period 1.11.89 to 29.2.90. But para 12 of the GO is important and stated
as follows:

"Regarding payment of arrears to the schools now admitted to
grant-in-aid, orders will be issued separately."
H
178 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A A point has been raised as to whether this para is an admission that arrears
are due and will be paid. As to the meaning of the word 'now' used in this
order, there is again some controversy and we shall explain it a little later.

The Writ petition for arrears and the G0.138 (Ed.) dated 25.4.94 re.fusing
arrears:
B
As the arrears of grant-in-aid were not released, the Ist respondent filed
W.P.15879/90, seeking release of the arrears for the period 1.9.85 to 31.10.89
for the Headmistress and for 1.3.86 to 31.10.89 for the other staff.

As already stated, during the pendency of the Writ petition Government
c issued a specific order G0.138 (Ed.) dated 25.4.94 refusing to pay the arrears.
In the said GO, Government referred to para 12 ofG0.326(Ed.) dated 17.10.89
as set out above and said that in that para Government had not made any
commitment to pay arrears. It stated:

D "It will be seen from the Government Order cited that the
Government have not made any specific commitment with regard to
the arrears."

Government then said that after examining the matter in detail in the light of
"the right of the schools for grant-in-aid or arrears therein" and also the
E 'present .financial position' of the State Government and taking into account
the fact that there will be the extra expense of about 4.5 crores, if arrears are
to be paid, the Government decided "not pay arrears". The validity of this GO
was, therefore, gone into by the learned Single Judge.

F Learned Single Judge directs arrears to be paid:

Before the learned Single Judge, apart from relying on sections 42 to
45 of AP Act 1/82 and the retrospectivity given to AP Act 22/88, and the
various GOs, the respondent school relied also upon the above para 12 to
contend that the entitlement of the schools for arrears prior to 17.10.89 was
G re-affirmed in this G0.326 but that what the GO meant in para 12 was that
the further order contemplated therein was only for working out the mode of
payment. The Government, on the other hand, contended before the learned
Single Judge that in this para 12 of GO 326 Government had identified these
schools as eligible to receive grant-in-aid 'afresh' and it was not a case of re-
H affirmation of a previous eligibility. Of course, question is whether this
GOVT. OF A.P. v. G.VK. GIRLS HIGH SCHOOL [M. JAGANNADHA RAO, J.] 179
contention of the Government can fit into the GO if para 12 refers to payment A
of arrears. Respondent-school contends that if it was a fresh admission to
... grant-in-aid, there was indeed no need at all to refer to any arrears. We shall
revert to this aspect again.

The learned Single Judge had, therefore, to go into the validity of GO
138 dated 25.4.94 denying arrears: (By that date AP Act 34/95 had not been
B
passed). The learned Judge allowed the Writ petition on 27.7.1995 and directed
payment of arrears and declared G0.138 (Ed.) dated 25.4.94 as inoperative,
stating that under sections 42, 43 and 45 of the Act 1/82,
the statute conferred a right to receive the grant-in-aid and that initially
grant-in-aid was released in favour of the petitioner for the period 1.9.85 to c
26.2.86 as stated in G0.347 (Ed.) dated 1.8.86, that later on in view of
complaints against various schools, Government appointed a Committee in
G0.220 dated 24.2.1988, the Committee cleared the case of the writ petitioner,
along with other schools in G0.326 dated 17.10.89 and while the Committee
was inquiring into the matter, the right to 'arrears' remained in abeyance
D
till the writ petitioner was cleared by the Committee, that once the favourable
recommendation by the Committee was given, it was nothing out a
retro-active declaration of the right to receive the grant-in-aid from 29.2.86.
Learned Judge also held that in para 12 of the GO. 326 dated 17.10.89,
the Government had agreed to pay the arrears and, therefore, they could
not have issued G0.138 dated 25.4.94 refusing to release the arrears E
because of 'present financial position' ( i.e. in 1994). The writ petition was
allowed.

Act 34195 says arrears need not be paid as per judgment or Government order:
F
We have already stated that after the above judgment of the learned
Single Judge, the Legislature passed Andhra Pradesh Educational Institutions
Grant-in-Aid (Regulation) Supplementary Provision Act, 1995 (Act 34/95). It
was published in the Gazette on 20.9.95. It was given retrospective effect from
17.10.89. It contains only two sections. There is a long preamble setting out
the gist of the various Gos.set out above. Section I deals with retrospectively G
and section 2 of this Act, declares that arrears payable by virtue of "any
judgment or decree of Court or other authority or any order issued by
Government" need not be paid even if it had become payable to the schools
enumerated in GO 326 dated 17.10.89 read with GO 178 dated 23.07.90. We
have extracted section 2 lower down in this judgment.
H
180 , SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.
A Division Bench says Acr.34195 canno/ overnde judgmen/ of learned Single
Judge: .,

It 'was this Act 34195 that was relied upon by the Governmenl before
IQe Division Bench in the Writ Appeal to deny the arrears. The Division Bench,
as arr11edy stated, held that once the rights of the respondent for release of
B grant-in-aid guN:iystaUised by way of a judgment, the Legislature could not
have set aside the judgment by passing a law _and therefore, notwithstanding
the new law, the State was bound.to honour the judgment of the learned Single
Jqdge. The Writ Appeal was disllii~sed However, the Bench did not go into
the qne~tion wh~ther Act 34195 removed the basi.s of the judgment of the
C !_earned Single Judge with retrospective effect.

Poinrs arising in rhis appeal:
In this appeal, we have heitrd learned Senior counsel for the Slate of
Andhra Pradesh Smt. K.Amareswari and learned counsel for the respondent
Sri B. Kanta Rao.
D
"The following points arise for consideration:

(I} whether the State can successfully rely on AP.Act 34195 to deny the
arrears of grant-in-aid if the arrears had become payable under Act 1/82 and
Act 22/88, and once the Committee appointed under Act 22/88 had c/eared the
E school?

' (2) Whether, in· the facts of the case, the arrears of the grant-in-aid could
be denied by Legislation even after the right to the same was declared by the
. le"'.Iled Single Judge of the High Court?

F Poinr 1:
We have noticed that the period for.which the dispute between the parties
survives is regarding 'arrears for the period from 1.9.85 to 31.10.89 so far a5
the post of Head-Mistress of this school is concerned and for 1.3.86to31.10.89
so far as the staff is concerned. <---- ,_

G We shall first refer to the effect of Act 1/82 on the facts of this case.
Sections 42 to 45 of Act 1/82 contain the main provisions as to admission
to grant-in-aid. In· other words, ·in respect of the schools which satisfy
the prescribed eligibility conditions as prescribed in the GOs, a statu;ory
right to receive grant-in-aid is clearly created by sections 42 to 45 of the said
H Act.
GOVT. OF A.P. v. G.V.K. GIRLS HIGH SCHOOL [M. JAGANNADHA RAO, J.] 181
No doubt, section 46 of Act 1/1982 permits withholding or reduction or A
withdrawal of the grant-in-aid. We have already referred to the gist of this
provision but now we shall extract the same:

"S.46 - Power of Government to withhold, reduce or withdraw grant:
(1) Notwithstanding anything in this Chapter, the Government may,
after such enquiry as they may deem fit, withhold, reduce or withdraw B
any grant payable to an educational institution having regard to the
funds at the disposal of the Government or the conduct and efficiency
and the financial condition of such institution, after giving an
opportunity to the manager of the institution concerned of making a
representation against such withholding, reduction or withdrawal. C
(2) Without prejudice to the generality of the provisions of sub-
section (I) or any other provision of this Act, the Government may,
after such enquiry as they may deem fit, withhold, reduce or withdraw
any grant payable to any educational institution if the manager of the
institution concerned, - D
(i) fails to fulfil or any of the conditions of grant;

(ii) denies admission to any citizen on grounds only of religion,
race, caste, language or any of them;
E
(iii) allows any employee of the institution to take part in any
agitation intended to bring or attempt to bring into hatred or contempt,
or intended to excite or attempt to excite disaffection towards the
Government established by law in India;

(iv) directly or indirectly encourages any propaganda or practice F
of wounding the religious feelings of any class of citizens of India
or insulting the religion or the religious beliefs of that class;

(v) is guilty of falsification of registers, of misuse of funds for
purposes other than those for which they are collected;
G
(vi) fails to remedy within such reasonable time as may be
specified by the competent authority, the defects in the maintenance
of accounts pointed out by the auditors; or

(vii) fails to restore, within the time specified by the competent
authority, an employee whose services have been wrongfully dispensed H
182 SUPREME COURT REPORTS [2000] SUPP. 2 S.C.R.

A With or fails to ·pay him any arrears of salary or other benefits when
directed to do so by the competent authority.

(3) Subject to the other provisions of this Act, every order passed
under this section shall be final and shall not be questioned in any
--
court of law."
B
It will be seen that the power mentioned in the first part of clause (l)(a) could
be exercised after inquiry by the State having regard to the funds at the disposal
of the Government. Under the second part of clause (l)(a), this power could
be exercised based upon conduct and efficiency or financial position of the
C institution also after giving opportunity. Under clause (2) of section 46, the
power could be exercised if the manager had committed certain irregularities
as found in 'Ill inquiry where the manager is heard. It is clear that when
Government appointed a Committee to go into complaints, it was exercising
the option under section 46(2). So far as section 46(1) is concerned, there are
no proceedings issued under section 46( I) and no inquiry conducted under that
D provision.

Right to arrears flows from Act 1182 and Act 22188 and Committee's report
and is not created by any Government orders:

It is not in dispute that after Act 1/82, the respondent-school was
E admitted to grant-in-aid under the said Act in GO 347(Ed.) dated 1.8.86
because the school satisfied the conditions in GO 238(Ed.) dated 27.5.86.

Now, after complaints were received, the grant was kept in abeyance and
the cases of the respondent and others were inquired into under section 46(2).
F Initially, the Government constituted a Committee in GO 220 dated 24.2.88.
Later by Act 22/88, the Committee was given statutory status to go into
complaints. It will be noticed that the right to receive grant-in-aid for the back
years i.e. from 22.7.85 was declared under Act 22/88, contingent upon the
recommendation of the Committee. This is clear from section 3(2). It states
that if the Committee recommends favourably, then the grant is to be released
G in favour of an institution, ''.from the date upon which it sati~fies all the
conditions for admission to grant in aid specified in the Andhra Pradesh
Education Act, 1982 and the Rules made thereunder, or the grant in aid code
or orders or other instructions issued by the Government from time to time".
This clause, in our view, therefore directs release of grant-in-aid from the date
H upon which the school satisfies the eligibility conditions. As already stated
GOVT OF A.P. v. G.V.K. GIRLS HIGH SCHOOL [M. JAGANNADHA RAO, J.] 183
sub-clause (3) of section 1 made Act 22/88 retrospective from 22.7.85. Hence A
it is as if the Committee constituted under Act 22/88 was there from 1985. In
our view, once the Committee gave its clearance, the decision would therefore
be effective.from 22.7.1985 in respect of all the back years from dates anterior
to the passing of Act 22/88, and the school would be entitled to release of
grant-in-aid from the date on which it satisfies the conditions for receiving
B
grant-in-aid.

It is contended for the State of Andhra Pradesh that section 3(2) is only
prospective. It is true section 3 does not expressly say that the recommendation
will be retro-active but from the language of section 3(2) referred to above and
also because sub-section 3 of section 1 says that the Act "be deemed to have C
come into force on the 22nd July, 1985", in our view, the right is retrospectively
affirmed for the back years. In other words, the Committee's recommendations
as to compliance with conditions during various years from 1985 though made
after 1988 were to be treated as in existence from various dates after 22. 7 .1985
and if the institution satisfied the conditions of the Act 1/1982 and also
D
conditions laid down in other GOs in the previous years, the Committee's
recommendation in favour of any school would be retroactive and will apply
to those back years. That the right to arrears is affirmed by section 3 is also
clear from section 5 which relates to an adverse recommendation of the
Committee. In cases where the Committee accepted complaints, section 5
requires refund of amounts already paid. Thus, Act 22/88 provided for E
payment of arrears or for refund of amounts paid. That was the purpose in
making the provisions of that Act retrospective w.e.f. 22.7.1985. In our view,
these provisions of the Act, therefore, clearly conferred a statutory right on the
writ petitioners to receive the grant-in-aid right from 22.7.85 onwards in the
various years in which they satisfied the conditions. The right to arrears thus
F
flows from the statutes and the Committee's recommendations and not from
any Government orders. In other words, the basic right to receive arrears does
not stem from any Government order in respect of the schools enumerated in
GO 326(Ed.) dated 17.10.89 read with GO 178(Ed.) dated 23.7.90. The right
stems from Act 1/82 and Act 22/88 and the findings of the Committee. This
aspect becomes important when we come to deal with Act 34/95 and as to G
whether it has removed the basis of the judgment of the learned Single Judge.

We next come to para 12 of GO 326 dated 17.10.89. This GO contained
a list of 59 schools like the respondent wherein it was stated that the Committee
had given favourable recommendation in favour of the writ petitioner and other H
184 SUPREME COURT REPORTS (2000] SUPP. 2 S.C.R.
A institutions. The GO stated that these institutions would be entitled for rele:oise
of grant-in-aid w.e.f. 1.11.89 to 29.2.90 for the year 1989-90. It, however,
contained a note in para 12 as follows:

"Regarding payment of arrears to the school now admitted to grant-
in-aid, orders will be issued separately.
B
In our view, the word "now" used in this GO does not mean that these schools
are identified as entitled to grant-in-aid for the first time in 1989 in this GO
326. This is clear from the fact that like section 3 of Act 22/88, this GO also
speaks of arrears. If indeed the previous orders relating to admission to grant-
in-aid were intended to be given a go-bye as contended before us for the State,
c the Government would not have referred to the question of payment of arrears
in this GO 326. Therefore, the word "now" in our view, is used only to identify
those schools etc referred to in Annexure to the G0.326 and as cleared by the
Committee and was not intended to create a new prospective right to receive
grant-in-aid after 1989. Such identification would therefore clearly relate back
D to 22.7.85 which was the date from which Act 22/88 became retrospective.

Act 34195: does not retrospectively remove the rights created by Act 1182 read
with Act 22188 read with the recommendation:

Now we shall finally come to section 2 of Act 34/95. The said Act was
E published in Gazette on 20.9.1995 after the judgment of the learned Single
Judge. But it came into force from 17.10.89, the date of GO 326 which said
in para 12 that the orders for arrears would be passed separately. Section 2 of
this Act of 1995 reads as follows:

"Section 2: No arrears of grant-in-aid payable:
F
Notwithstanding anything contained in any judgment, decree or
order of any Court or other authority, or any order issued by the
Government or any authority subordinate to the Government, no
arrears of grant-in-aid shall or shall even be deemed to be payable to
any private educational institution admitted to grant-in-aid in pursuance
G
of G0.326 (Ed.) dated 17.10.89 and GO.No.178 (Ed.) dated 23.7.90
for the period between Ist September, 1985 and 31st October, 1989
and accordingly:-

(a) no suit or other proceeding shall be maintained or continued in
H any Court against the Government or any person or authority
GOVT. OF A.P. v. G.V.K. GIRLS HIGH SCHOOL[M. JAGANNADHARAO, J.] 185
whatsoever for the payment of any arrears of grant-in-aid for the said A .
period; and

(b) no Court shall enforce any decree or order directing the payment
of any arrears of grant-in-aid."

The opening part of section 2 refer to the judgment or decree or order of any B
Court. The second part deals with orders of other authority, or any order of
Government or Subordinate authority. The second part deals with rights
created by Government orders.

We shall first consider the second part of section 2 as to whether the Act
removes retrospectively the right created by Act 1/82 and Act 22/88. For that c
purpose, we come back to the language of section 2 of Act 34/95.

In our view, what is removed by the Act 34/95 is the right created by
the Government orders and not the rights created by Act 1/82 and Act 22/88.
If any Government order had conferred any right to the institutions enumerated D
in the Annexure to GO 326 dated 17.10.89 read with GO 178 dated 23.7.90,
it was only those rights that were intended to be removed retrospectively by
section 2 from 17.10.89. In other words, the legislature while enacting section
2 of Act 34/95 failed to remove the rights conferred by the Principal Act II
82 and Act 22/88 read with the Committee's declaratory findings. Further, the
Act 34/95 being retrospective only from 17.10.89, it does not go beyond that E
date into the back years.

So far as the first part of section 2 read with section 46 of Act 1/82, the
State has also not placed any material before Court to sustain the order of
denial of arrears for want of funds. What budgetary allocations were made in
F
tile concerned years were never placed before Court. There is also no proof
of any inquiry as required by the first part of section 46(1) of Act 1/82. Thus,
under the first and second parts of section 2 of Act 34/95, there is no removal
of the statutory right created by Act U82 and Act 22/88, read with the
recommendations of the Committee. Point 1 is decided accordingly.
G
Point 2:

Act :;4195 cannot set aside the judgment of the learned Single Judge

Now secti,bn 2 of the Act 34/95 also purports to nullify the effect of the
judgment of the learned Single Judge. It is well settled that the legislature H
186 SUPREME COURT REPORTS (2000) SUPP. 2 S.C.R.
A cannot overrule a judgment by passing a law to that effect unless it removes
the basis of the legal rights upon which the judgment is based, with retrospective
effect and provided there is no violation of any constitutional provision in such
withdrawal of rights retrospectively.

In the present case, we are not going into the question whether any
B provision of the Constitution is violated while passing Act 34/95 denying
arrears of grant-in-aid retrospectively. However, in our view, inasmuch as the
rights created by Act l/82 and Act 22/88 read with the Committee's
recommendations have not been nullified by Act 34/95, the judgment of the
learned Single Judge remains effective. The basis of the judgment has not been
c removed. We have already shown that the rights flowing from the Acts were
not touched. Only rights flowing from Government orders were taken away
retrospectively. It is therefore necessary to give effect to the judgment of the
learned Single Judge. The writ appeal was rightly dismissed.

For the above reasons, which are somewhat different from the reasons
D given by the Division Bench, we dismiss this Civil Appeal. The arrears of the
grant-in-aid as declared above as per Act I/82 and Act 22/88 and also as
directed by the learned Single Judge shall now be released in favour of the
writ petitioner. There will be no order as to costs.

A.Q. Appeal dismissed.