SC orders 20pc reduction in private school fees over Rs5,000

Updated December 13, 2018

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Chief Justice of Pakistan Mian Saqib Nisar expresses displeasure over 'incorrect' audit report submitted by school. ─ File photo
Chief Justice of Pakistan Mian Saqib Nisar expresses displeasure over 'incorrect' audit report submitted by school. ─ File photo

The Supreme Court on Thursday ordered a 20 per cent decrease in fees charged by upscale private schools, and ordered them to return half the fees they had charged for summer vacations. The order is applicable to private schools across the country whose fees are in excess of Rs5,000.

The court, while hearing a case pertaining to exorbitant fees charged by private schools, had in October ordered the institutes to furnish their respective audit reports, and formed a committee to find an amicable solution to the issue of exorbitant fees being collected from parents.

The audit reports for Beaconhouse School System, The City School, Lahore Grammar School, Roots School System, Bayview Academy and 15 other schools, which were submitted before the court today, mentioned that the directors and top officials of the schools had received Rs62 million in salaries in 2017. A total of Rs512m was spent on employees' salaries in one year, while Rs5.2 billion was spent in five years, the report said, adding that various facilities were also provided.

The chief justice, commenting on the large amounts, wondered, "Have these schools bought uranium mines or gold mines?"

"Each director gets a salary of Rs8.3m each month," Justice Nisar said. He observed that the LGS audit report appeared to be incorrect, and expressed his displeasure with the auditor, saying they should be caught and handed over to the Federal Board of Revenue (FBR).

"Children are not getting relief of even Rs2 ... You have taken advantage of citizens to mint money," the chief justice asserted. "If children are unable to pay these fees, they cannot get admission to these schools."

"Private school owners have opened schools in rented bungalows and earn huge amounts off each room," the chief justice observed.

"No school had its fees approved by any regulator," Faisal Siddiqui, the counsel for students' parents, told the court.

Justice Ijazul Ahsan noted that the schools had provided incorrect figures in their audit reports. "Look at how directors are receiving Rs8.3m in salaries," he said.

"If you try ripping up or even eating Rs8.3m, it will be never ending," the chief justice commented.

BSS counsel Shahid Hamid argued that Beaconhouse had paid Rs764m in taxes. He also told the court that Punjab had about 54,000 private schools.

"You may have paid a lot of taxes, but the students are not getting any benefit from them," Justice Ahsan responded. "They will only be benefited when the fees are lowered."

"If childrens' education is being affected, then the court will play the role of a parent," Justice Nisar asserted.

The FBR chairman and FIA director general were summoned to court immediately.

The chief justice remarked that the FBR should check the tax record for the last seven years and, addressing the BSS lawyer, said that he would not let them close down their schools.

"We will take action against anyone who tries to shut their school down," he warned.

The secretary Law and Justice told the court that certain schools had increased their fees by 63pc in five years.

The court was told by Ayesha Hamid, a lawyer for the schools, that all were ready to reduce their fees by 8 per cent, to which the top judge responded that the decrease was much too small.

Justice Ijaz noted that if there is an 8pc increase in school fees annually, there would be a 32pc increase in four years.

"You people say you are making up for the shortcomings of government schools," he said, "But actually, you have established a monopoly."

"All schools should be consulted over whether they are ready to decrease their fees by 20pc," Justice Ahsan suggested.

"The fees should be reduced by 20pc and the schools should also return the summer fees," Justice Nisar asserted.

"We will decide in the future how much you can increase your fees," the chief justice said, deciding that a 5pc fee increase annually was appropriate. He added that a regulator could later see whether the fee increase needed to be set any higher.

The court subsequently ordered a 20pc reduction in the fees of all private schools, and directed them to return 50pc of the fees they had charged for summer vacations.

Additionally, the court passed the order that private schools can only increase their fees by 5pc each year, and ruled that no private school would be shut.

The court directed FIA to freeze the accounts of LGS, and FBR to scrutinise its tax records and to seize the details of its accounts. Additionally, the court said that an audit should be conducted of 21 other private schools.

The case was adjourned until Dec 26.