Holding

Clause (a) of the third proviso and paragraph 8 are ultra vires and struck down, while clause (b) is valid and upheld.

Summary

The Union, exercising powers under Section 87 of the Punjab Reorganisation Act, 1966, issued a notification on 13 April 2018 extending the Punjab (Regulation of Fees of Unaided Educational Institutions) Act, 2016 to the Union Territory of Chandigarh. The notification inserted a third proviso requiring unaided schools to upload their income‑expenditure accounts on their website (clause a) and to prohibit any cost from parents (clause b), and also amended the penalty amounts in Section 14 via paragraph 8. The Independent Schools’ Association Chandigarh challenged clauses (a) and (b) and paragraph 8 as beyond the authority conferred by Section 87. The Supreme Court, applying the test laid down in Lachmi Narain v. Union of India, held that clause (a) and paragraph 8 constitute substantial modifications of the principal Act and are ultra vires, whereas clause (b) merely restates the Act’s policy and is permissible. Accordingly, the Court struck down clause (a) and paragraph 8 but upheld clause (b), partly allowing the appeals.

Issues considered

Whether clause (a) of the third proviso inserted by the 2018 notification amounts to a peripheral or insubstantial change permissible under Section 87 of the Punjab Reorganisation Act, 1966.
Whether clause (b) of the same proviso is ultra vires the power conferred by Section 87.
Whether paragraph 8 of the notification, which alters the penalty amounts under Section 14 of the 2016 Act, is a substantial modification beyond the scope of Section 87.

Legislation cited

Subjects

Section 87Punjab Reorganisation Actunaided educational institutionsfee regulationultra viresdelegation of powersconstitutional lawgovernment notificationpenalty amendmentwebsite disclosureLachmi Narain doctrine

Judgment

[2022] 4 S.C.R. 773 773

INDEPENDENT SCHOOLS’ ASSOCIATION A
CHANDIGARH (REGD.) & ORS.
v.
UNION OF INDIA & ORS.
(Civil Appeal No(s). 3877/2022) B
MAY 11, 2022
[A. M. KHANWILKAR, ABHAY S. OKA AND
J. B. PARDIWALA, JJ.]
Punjab Reorganisation Act, 1966 – s.87 – Power to extend
C
enactments to Chandigarh – Punjab (Regulation of Fees of Unaided
Educational Institutions) Act, 2016 – 2016 Act extended vide
impugned notification issued by appropriate authority in exercise
of powers u/s.87 – Notification assailed – Writ petition(s) dismissed
by High Court – Challenge before Supreme Court is to Clauses (a)
and (b) of the proviso inserted in terms of the impugned Order/ D
Notification by way of paragraph 6 thereof; validity of paragraph
8 also questioned – Held: The entire issue needs to be decided
keeping in mind the exposition of Supreme Court in Lachmi Narain
vs. Union of India wherein expression ‘restrictions or modifications’
occurring in s.87 has been interpreted– Accordingly, stipulation
E
specified in clause (a) cannot be considered as peripheral and
insubstantial change – For, it is a substantive matter because the
Principal Act (2016 Act) extended in terms of the impugned
Government Order/Notification, makes no provision regarding
disclosure of income, expenditure, account and balance sheet on
website of the unaided schools, including as applicable in the State F
of Punjab – Hence, change introduced vide the impugned
Government Order/Notification in terms of clause (a) in the third
proviso inserted by way of paragraph 6 thereof is outside the scope
of the authority bestowed on the competent authority in terms of
s.87, 1966 Act – That stipulation, therefore, needs to be struck down
G
being ultra vires – Further, paragraph 8 of the impugned Government
Order/Notification also needs to be struck down being
unconstitutional and ultra vires – However, stipulation in clause (b)
merely prohibits the unaided institutions from charging any kind of
cost from the parents – This is consistent with the legislative intent
H
773
774 SUPREME COURT REPORTS [2022] 4 S.C.R.

A and mandate of the 2016 Act, in fact, it restates the inbuilt policy,
essence and substance of the 2016 Act – Thus, it is in no way a
substantial change – Challenge to clause (b) rejected.
Words & Phrases – ‘restrictions or modifications’ occurring
in s.87, 1966 Act – Interpretation of – Discussed – Punjab
B Reorganisation Act, 1966 – s.87.
Lachmi Narain v. Union of India (1976) 2 SCC 953 :
[1976] 2 SCR 785 – relied on.
Case Law Reference

C [1976] 2 SCR 785 relied on Para 8
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3877
of 2022.
From the Judgment and Order dated 28.05.2021 of the High Court
of Punjab and Haryana at Chandigarh in Civil Writ Petition No. 7706 of
D 2020 (O&M).
With
Civil Appeal No. 3878 of 2022
Avi Singh, Manohar Pratap, Karan Dhalla, Ajit Kumar Ekka, Advs.
E for the Appellants.
K. M. Nataraj, Jayant K. Sud, Ms. Aishwarya Bhati, ASGs,
Ms. Swarupama Chaturvedi, Ritwiz Rishabh, Harish Pandey, Raghvendra
S. Srivastva, Arvind Kumar Sharma, S. K. Singhania, Bhuvan Mishra,
Varun Chugh, Ms. Swati Ghildiyal, Kartik Jasra, Randeep Sachdeva,
F Ms. Ruchi Kohli, Adit Khorana, Ms. Deepa Dutta, Ms. Shreya Jain, S.
Rustam Singh Chauhan, Ms. Deepabali Dutta, Ms. Preeti Rani, Gurmeet
Singh Makker, Chandra Prakash, Rajive Bhalla, Sumeir Anuja, Jai Surya
Jain, Yajur Bhalla, Deepak Samota, Ashish Vajpayee, Shubham Bhalla,
Advs. for the Respondents.

G The following Order of the Court was passed:
ORDER
1. Leave granted.
2. These appeals take exception to the judgment and order dated
28.05.2021 passed by the High Court of Punjab & Haryana at Chandigarh
H
INDEPENDENT SCHOOLS’ ASSOCIATION 775
CHANDIGARH (REGD.) & ORS. v. UNION OF INDIA & ORS.

in Civil Writ Petition Nos.7706/2020 (O&M) and 7761/2020(O&M) A
respectively.
3. The appellants had assailed the Notification dated 13.04.2018
issued by the appropriate authority in exercise of powers under Section
87 of Punjab Re-organisation Act, 1966, (for short, ‘the 1966 Act’), by
way of writ petition(s) under Article 226 of the Constitution of India. B
4. The High Court has dismissed the said writ petition(s) opining
that the appropriate authority was competent to issue such Government
Order/Notification.
5. Before this Court, the limited challenge is to Clauses (a) and
(b) of the proviso, which have been inserted in terms of the impugned C
Order/Notification by way of paragraph 6 thereof. Paragraph 6 of the
impugned Order/Notification reads thus:
“6. In section 5, after this proviso shall be inserted, namely:-
“Provided further that every Unaided Educational Institution shall- D
(a) upload income, expenditure account and balance sheet on
its website;
(b) not charge any kind of cost from the parents;
(c) disclose complete free structure at the beginning of the
academic year in the Booklet issued, alongwith the admission E
form, by the schools and also be posted in its website;
(d) not raise the fee any time during the academic session.”
(emphasis supplied)
6. In addition, the appellants have questioned the validity of F
paragraph 8 of the impugned Order/Notification, which reads thus:
“8. In section 14:-
(a) in sub-section(1) for the words, “thirty thousand rupees”,
“rupees fifty thousand” and “rupees one lac”, the words “sixty
G
thousand rupees”, “one lakh rupees” and “two lakh rupees”
shall respectively be substituted;
(b) in sub-section(2) for the words, “sixty thousand rupees”,
“rupees one lac”, the words “one lakh twenty thousand
H
776 SUPREME COURT REPORTS [2022] 4 S.C.R.

A rupees”, “two lakh rupees” and “four lakh rupees” shall
respectively be substituted.”
7. We have heard learned counsel for the parties.
8. The entire issue needs to be answered, keeping in mind the
exposition of this Court in ‘Lachmi Narain vs. Union of India’ reported
B in 1976 (2) SCC 953.
9. The three-Judge Bench of this Court has had an occasion to
deal with the provision similar to Section 87 of the 1966 Act. The
expression ‘restrictions or modifications’ occurring in Section 871 has
been interpreted by this Court in following words:
C
“61. ……….. Such a wide construction must be eschewed lest
the very validity of the section becomes vulnerable on account of
the vice of excessive delegation. Moreover, such a construction
would be repugnant to the context and the content of the section,
read as a whole, and the statutory limits and conditions attaching
D to the exercise of the power. We must, therefore, confine the
scope of the words “restrictions and modifications” to alterations
of such a character which keep the inbuilt policy, essence and
substance of the enactment sought to be extended, intact, and
introduce only such peripheral or insubstantial changes which are
E appropriate and necessary to adapt and adjust it to the local
conditions of the Union Territory.”
(emphasis supplied)
10. The challenge in the present appeals is required to be decided
on the basis of the principles stated in this judgment.
F
11. The question is: whether clause (a) of the third proviso inserted
in terms of paragraph 6 of the impugned Government Order/Notification
dated 13.04.2018 can be regarded as peripheral or insubstantial change
to the provisions of the Punjab (Regulations of Fees of Unaided
Educational Institutions) Act, 2016 (for short, ‘the 2016 Act’), which
G

1
Section 87 in the Punjab Reorganisation Act, 1966:
87. Power to extend enactments to Chandigarh. The Central Government may,
by notification in the Official Gazette, extend with such restrictions or modifications
as it thinks fit, to the Union territory of Chandigarh any enactment which is in force in
H a State at the date of the notification.
INDEPENDENT SCHOOLS’ ASSOCIATION 777
CHANDIGARH (REGD.) & ORS. v. UNION OF INDIA & ORS.

have been extended vide impugned notification issued in exercise of A
powers under Section 87 of the 1966 Act?
12. Reverting to the stipulation specified in clause (a), we have no
manner of doubt that the same cannot be considered as peripheral and
insubstantial change. For, it is a substantive matter. We say so because
the Principal Act (2016 Act), which is extended in terms of the impugned B
Government Order/Notification, makes no provision regarding disclosure
of income, expenditure, account and balance sheet on website of the
unaided schools, including as applicable in the State of Punjab. It would
be a different matter if the Parliament or the State Legislature, as the
case may be, were to incorporate such condition in the enactment such
as the 2016 Act. Had it been so incorporated, it would then be open to C
the unaided institutions to question the validity of such a provision, which
could be tested by the Constitutional Court on the basis of doctrine of
fairness, arbitrariness and other grounds available under Part III of the
Constitution of India or otherwise.
13. Suffice it to observe that the change introduced vide the D
impugned Government Order/Notification in terms of clause (a) in the
third proviso inserted by way of paragraph 6 thereof, is not a peripheral
or insubstantial change. Hence, it is clearly outside the scope of the
authority bestowed on the competent authority in terms of Section 87 of
the 1966 Act. That stipulation, therefore, needs to be struck down being E
ultra vires.
14. Reverting to clause (b), we find that the challenge to clause
(b), is tenuous. In that, this stipulation merely prohibits the unaided
institutions from charging any kind of cost from the parents. In our
opinion, this is consistent with the legislative intent and mandate of the F
2016 Act. In fact, it restates the inbuilt policy, essence and substance of
the 2016 Act. Thus, it is in no way a substantial change as in the case of
clause (a), referred to above. Be it noted that as per clause (c) of
paragraph 6 of the impugned Government Order/Notification — validity
whereof has not been challenged — the unaided institutions are obliged
to disclose complete fee structure at the beginning of the academic year. G
The obligation of the unaided institutions in terms of clause (b) of the
same paragraph is in reference to the disclosure of fee structure as per
clause (c). In other words, the unaided institutions can charge only the
disclosed fee structure amount from its students and no further. This
provision, therefore, is appropriate and necessary for better administration H
778 SUPREME COURT REPORTS [2022] 4 S.C.R.

A of the unaided institutions to which the 2016 Act gets extended in terms
of the impugned Government Order/Notification.
15. Accordingly, challenge to clause (b) of the third proviso inserted
by virtue of Government Order/Notification by way of paragraph 6,
cannot be countenanced and is rejected.
B 16. That takes us to the challenge to paragraph 8 of the impugned
Government Order/Notification, whereby the penalty amount is enhanced
in respect of unaided institutions governed by the 2016 Act within the
Union Territory in terms of impugned Government Order/Notification.
Again, this is not a peripheral or insubstantial alteration or modification
C of Section 14. Inasmuch as, what should be the quantum of penalty
amount or punishment, is a legislative policy. It must be left to the
concerned legislature. It cannot be provided by way of an executive
order, including in exercise of powers under Section 87 of the 1966 Act
— being a substantial change to the regime predicated in Section 14 of
the 2016 Act.
D 17. Accordingly, paragraph 8 of the impugned Government Order/
Notification also cannot stand the test of judicial scrutiny. Hence, the
same needs to be struck down being unconstitutional and ultra vires.
18. No other issue has been raised before us, including about the
validity of the provisions of the 2016 Act. Concededly, it has already
E been recorded in the order passed on the earlier occasion that the
appellants would be confining their argument to the limited aspects dealt
with in this order.
19. We make it clear that we may not be understood to have
expressed any opinion either way on the issues that may have to be
F dealt with by the High Court in the pending proceedings relating to the
challenge to the provisions of the 2016 Act.
20. Lastly, we expunge the observations made against the writ
petitioner in Writ Petition No.7761/2020 (filed before the High Court), in
paragraph 34 of the impugned judgment.
G 21. Accordingly, the appeals are partly allowed in the above terms.
22. No orders as to the costs.
23. Pending application(s), if any, shall stand disposed of.

Divya Pandey Appeals partly allowed.
H (Assisted by : Deepak Panwar, LCRA)