Sehgal School of Competition v. Dalbir Singh

The case of Sehgal School of Competition v. Dalbir Singh highlights the growing competition amongst students to place in professional colleges and institutes. Due to this, coaching institutes that provide students with tuitions charge hefty sum and run a profitable business. However, sometimes the needs of the students are exploited by institutes not following the principles of fair trade and natural justice and practicing acts that put students’ needs on a backburner and therefore put them at a disadvantage. Charging fees in a lump sum is one of them. This prevents students from exploring their options and trying other places where they may feel that they’re getting their money’s worth. Safeguards need to be provided to ensure that coaching institutes do not become action houses that are just trying to sell seats and earn money. Commercialization of the education system should not interfere with the quality and fairness of trade of the same. The judgment of the District forum in this case clears any confusion regarding the same. This article makes an effort to trace the judgment and its relevance to society.

In the State Commission of Delhi

Name of the CaseSehgal School of Competition v. Dalbir Singh
CitationIII (2009) CPJ 33 (NC)
Year2008
PetitionerSehgal School of Competition
RespondentDalbir Singh
BenchJustice J.D. Kapoor (President) Rumnita Mittal (Member)  
Acts InvolvedConsumer Protection Act, 1986

Background of the Case

Every year, lacs of students sit down to crack national level examinations in India. A lot of hard work and perseverance are required for the same and many students enroll in coaching classes which promise to help them get into good colleges. However, more than helping students, sometimes these institutes charge for their services a huge amount of money at the beginning of the session. According to a report ASSOCHAM made in 2013. The total market of the private coaching industry, which was around Rs.1.54 lakh crore in 2013, was projected to cross Rs.2.6 lakh crore by the end of 2015. The private tuition industry reported a 35 percent growth from 2008-2013 The report notes that 87 percent of primary school students and up to 95 percent of high school students got private tutoring.[1] Before Sehgal School of Competition v. Dalbir Singh, coaching institutes had a tendency to write in their prospectus “Fee not refundable under any circumstance” or “seat once paid for is non- refundable.” This cannot be allowed as it is against the principle of equity and natural justice. A person who is provided with a service must be allowed a refund if he/she is unhappy with the institute, by the principle of fair trade. Forcing students to stay in an institute because they have paid for it even though they do not wish to avail of their services limits them from exercising their right to try other institutions of their choice. It is also often seen that an institute will hold on to the original certificate of leaving or migration certificate of a student without which they cannot take admission in another institute. These kinds of regulations go against public policy and fair trade. Since it has become a very common thing to see, cases regarding the same are increasing the consumer redressal courts of our country.

Facts of the Case

Dalbir Singh, the respondent, filed a case against the appellant Sehgal School of Competition v. Dalbir Singh in Janaki Puri, New Delhi District Forum. The complainant took admission to Sehgal School for Medical Entrance Examination for two years. Lump-sum fees of Rs. 18734/- was deposited on 7-7-2005 and 7-10-2005 in two installments, that is, the entire fee was deposited within six months.[2] However, mid-way through the coaching, the complainant felt that the coaching was biased towards engineering and not up to the mark for medical aspirants. He thought that things were eventually going to get better but they did not. He decided to not waste any more of his time and withdrew from the coaching institute. He demanded a refund for the balance fee of one year, which was not accepted by the institution. He then approached the district forum for redressal.

Issues

  • Whether the complainant should be refunded the balance fees for the remaining year.
  • Whether coaching institutes claiming that the condition imposed by them that ‘refundability/transferability of seat/fee is not possible under any circumstances’ holds any merit.

Petitioner’s Arguments

The petitioner argued that the student had voluntarily withdrawn from the institute and as such, there is no deficiency in the services provided by them. Regarding other students, the petitioner’s school has shown excellent results. Therefore, the complainant’s argument that coaching is not up to the mark does not stand. Moreover, while accepting money in lumpsum from the students, they are made aware of the fact that the fees are non- refundable and they have to pay for the two years of coaching together.

Judgment

The district forum directed the petitioner to refund half of the fees to Dalbir Singh to the tune of Rs. 18, 734. However, no compensation was made for mental agony, cost of litigation, and harassment which caused him to approach the district forum.  

The state commission held that “We have already taken a view which has been upheld by the National Commission and the same view was also taken by the Supreme court that no institute or coaching center shall charge lump sum fees for the whole duration or should refund the fees if service is deficient in the quality or coaching etc. or for which period the student does not attend coaching as any clause saying that fees once paid shall not be refunded are unconscionable and unfair and therefore not enforceable.”[3]

The district forum further held that they did not find any merit in the appeal by the petitioner and dismissed it. Since higher compensation was not asked for by the respondent, no order was passed for the same.

Related Cases

  • Nipun Nagar v. Symbiosis Institute of International Business, I (2009) CPJ 3 (NC)

Where it was held that it was unfair of the institute to not refund the 1 lakh rupee balance fees to the student. Also, if the student did not attend any classes, then only registration fees should be cut and the rest returned.

  • Homoeopathic Medical College & Hospital, Chandigarh v. Miss Gunita Virk, I (1996) CPJ 37 (NC)

Where it was held that the forum of Consumer Dispute Redressal under the Consumer Protection Act does not have the jurisdiction to declares rules given in prospectus of an institute as “unconscionable or illegal”.

  • Usmania Islamia Academy of Education v. State of Karnataka AIR 2003 Supreme Court 3724

Where it was held that an educational institute can only charge a prescribed fee for a single semester or year. If any institute feels that any particular student may leave mid-way, they can be asked to give a bond ensuring that that the fees of that semester or year may not be refunded by the student. However, all the fees for the course cannot be obtained in a lump sum.

  • Atam Parkash Khattar v. Commissioner & Secretary to Govt. of Haryana AIR 2010

Where it was held that educational institutions cannot be allowed to act like a business establishment which only works to make a profit. If a student decides not to stay in an institution, he/she may not be charged any fees for the same and the fees must be refunded accordingly.

Concepts Highlighted

When a student joins a coaching institute, it is not a simple trade. He is entrusting the institute to guide him in his career so that he has a fair chance to give the entrance examinations fully prepared. Since it is understood that self-studying for these exams is tough and may lead to lacking strategy, millions of children join coaching institutes hoping to go to their dream college with its help. As such when these institutes use a child’s vulnerability to prevent them from being a part of fair trade, it is a cumbersome situation. The principle of natural justice, that is, the rule against bias does not allow an unsatisfied customer to be forced to pay dues for services he has not received. The consumer forum gave this judgment to ensure that lumpsum fees are not charged or part of it refunded on discontinued service.

The education system is one where profit cannot be put before the children. As consumers, they have the right to good service and choose between the different institutes that provide similar services. Taking away from people their right to choose, especially when their future depends on such right is careless and unacceptable. The law, therefore, is on the side of the students.

Conclusion

Indian constitution promises equal opportunities without prejudice and free and compulsory education for all children before they reach age 14. The Kothari Commission (1964–66) endorsed the same. Those in the elite segment of society who feared their privileged status might be intruded however started to establish strategies to open schools and establishments for their children in the form of private tuitions. And over time private tuitions became the norm for children in higher secondary. Today, private tuitions are a business that is never out of student customers. Therefore, keeping these institutes in check is important. Educational institutions therefore cannot charge for the entire course upfront.

References


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