1. The petitioners challenge various orders passed by the educational authorities on the ground that the impugned orders are arbitrary and discretionary.
2. Shortly stated the facts are that the petitioners are the trustees of the 'New Education High School Trust, petlad', a public trust registered under the Bombay Public Trusts Act, 1950. The trust is conducting a secondary school for girls in town of Petlad namely 'New Education Girls' High School'. One Mrs. S. P. Kothari was appointed as a Head-mistress of the said school on and from June 12, 196 for a period of one year on probation. The management of the School had made rules regarding the conditions of employment and service of teachers. The said rules divide the teachers in two categories, namely, permanent teachers and non-permanent teacher. Non-permanent teachers include temporary teachers and teachers on probation. Rule 11 of the Rules provides that service of non-permanent teachers may be terminated by the management at any time without assigning any reasons after giving one calendar month's notice or notice pay in lieu of the notice period. On August 3, 1966 two students studying in Standard XI of the School were driven out of their class by the Head-Mistress on the ground that they had not put on required dress. The guardians of the students intended to offer an explanation but the Head-mistress gave an insolent reply to them. On account of this the students of Standards X and XI of the School went on Strike. On August 4, 1966, the management intervened and persuaded the students to attend their classes. The Head-mistress refused to take their classes, unless and until the students apologised to her. The management received a complaint that one of the students was given a beating by the Head-Mistress. The management called for an explanation from the Head-Mistress but she did not give any satisfactory explanation. The management also noticed that the tuition given by the Head-Mistress in English was not satisfactory and she had taken casual leave of 61/2 days during the shot period of her service. A meeting of the trusted of the trust was called on August 7, 1966, whereat the Head-Mistress was also requested to remain present to give an explanation of her defaults. At the said meeting the trustees sought an explanation from the Head-Mistress for the aforesaid defects and misconducts. The Head-Mistress gave her explanation on all counts but the trustees found the same to be unsatisfactory. Thereafter a meeting of the trustees of the trust was held on August 21, 1966 and it was unanimously resolved to discharge the Head-Mistress by serving a legal notice of one month. The Head-Misterss had not served the school for a full term, and, therefore, no confidential report was maintained by the management. The Head-Mistress made an application to the Director of Education, Gujarat State, Ahmedabad, who is respondent No. 2 in the present petition. On 1st September, 1966, the Director of Education ordered the petitioners after hearing them that the vacant post of the Head-Mistress should not be filled up till other orders were made. On September 22, 1966, the Director of Education passed an order that the management should either pay to Mrs. Kothari compensation equal to the salary of the remaining part of one year or reinstate her in service and allow her to serve the period of probation. On October 1, 1966 the Educational Inspector, District Kaira, Nadiad, respondent No.3 herein, wrote a letter to the petitioners informing the petitioners that as per instructions from the Director of Education, Mrs. Kothari could not be discharged from service as per the provisions of the Grant-In-Aid Code (hereinafter referred to as the Code) and the Instructions should continue her till probation period or she be paid for the remaining period. The petitioners same representations to the authorities to reconsider the aforesaid order. The Inspector or Education informed the petitioners by his letter dated February 19, 1968 that if Mrs. Kothari was not paid the salary as per order dated October 1, 1966m the grant for the current year would not be paid. The petitioners thereafter field this petition in the Court on March 18, 1966. A notice was issued on the petition to the respondents as to why the petition should not be admitted. The representative of the petitioners had gone to the office of the Educational Inspector, District Kaira, where he was informed that the petitioners could take the amount of grant admissible to them subject to the condition that they deposited an amount of Rs.2992/-, being the amount of 12 months' salary allegedly payable by them to the Head-Mistress. The petitioners deposited the said amount with the authority. According to the petitioners, the effect of this procedure was that the respondents withheld the payment of Rupees 2992/- being the grant payable by the State, (which is the first respondent in the petition) to the petitioners. The petitioners say that the services of Mrs. Kothari were terminated according to her terms of employment and also in compliance with the provisions of Grant-In-Aid Rules. The petitioners say that the Government is dealing with the public funds while distributing the grant. In the circumstances at present prevailing in the country no educational institution can be maintained or rum without any aid from the State. It is, therefore, the duty of the government to grant aid to the institutions which cater to the educational needs of the community. The Grant-in-Aid to the schools is not a donation but a legitimate re-compensation for assistance rendered to the State by such institutions in discharging one of its primary obligation. The petitioners say that they had complied with the rules of the Grant-In-Ad Code, and there was a duty on the respondents to pay the grant to the institution. Although the payment of grant is at the discretion of the sanctioning authority, the discretion has to be exercised by the authority in a reasonable and bona fide manner and not arbitrarily or capriciously. The State Government has framed rules for the purpose of grants and the grant is receivable by an institution which complies with the said rules. The petitioners say that the orders dated September 22, 1966, October 1, 1966, February 19, 1968 and February 28, 1968 passed by the Educational Authorities are arbitrary, discriminatory and violative of the Rules of the Grant-In-Aid Code. The petitioners say that bill for the grant was already issued to them and, therefore, they were entitled to receive the amount. The aforesaid impugned orders thus interfered with the rights of the petitioners to receive the property and, therefore, are violative of Article 19(1)(g) of the Constitution of India.
3. Mr. P.G.Trivedi, Under-Secretary to the Government of Gujarat, Education and Labour Department, filed an affidavit on behalf of the respondents. It was stated that the petitioners had not complied with the provisions of Rules 69.1 and 69.2 of the Code and had not given Mrs. Kothari a reasonable opportunity to show cause against her alleged misconduct and therefore, the petitioners were not entitled to the full grant under the provisions of the Code. It is stated in the affidavit that no reasonable opportunity was given to Mrs. Kothari, inasmuch as she was not served with any written notice in respect of the charges levelled against her. Under the Rule 95 of the Code, the Director of Education is competent to withhold, reduce or withdraw the grant for breach of instructions or orders issued by the Department or of any infringement of the provisions of rules. The grant is payable to recognised secondly schools provided they abide by the rules and regulations governing the Code. The petitioners have not complied with the provisions of the code and, therefore, the impugned orders are legal and valid.
4. Rules regulating payments of grants by government are to be found in Grant-In-Aid Code. These rules are executive in nature and there is no dispute on this point. The question is whether the petitioners can claim any right under these executive rules. The general principle is that the executive rules confer no enforceable right. Now it is first necessary to consider the relevant executive rules relating to grant. By Notification No.GOC-1064/ C-Education and Labour Department dated April 2, 1964, Government of Gujarat has published for general public information revised Grant-In-Aid Code for secondary schools in the State of Gujarat. The said notification came into force from April 1,1964. These rules pertain to the recognition of secondary schools and the conditions to be fulfilled for obtaining grants from the Government. Chapter I gives definitions. In clause 10 it is stated that a secondary school is an Institution which follows syllabus approved by the Government for syllabus approved by the Government for secondary schools and leads to S.S.C. Examination. Such schools may start from standard V or from standard VIII. Clause 12 defines a Girls' Secondary School as a School in which girls form not less than 70 per cent of the pupils and in which due provision is made for instruction in special subjects suitable for the needs of girls. Chapter II of the Code provides for the procedure for starting a Secondary School. Rule 1.3 lays down the minimum requirements to be fulfilled for starting a Secondary School. The important minimum requirements are that the management of a school must be in hands of property constituted body registered under the Public Trust Act. If the body is not registered it must get registered within 3 months of the application. The management is required to provide for duly qualified staff and must undertake to charge scheduled rates to fees. Chapter III deals with recognition of schools. Secondary schools can be considered for recognition provided they conform to the rules set forth therein. Such recognition entitles the management: (i) to apply for grant-in-aid from public funds; (ii) to present pupils at public Examination; (iii) to present pupils as candidates for scholarship examinations and to admit scholarship holders; and (iv) other concessions given by Government to pupils from time to time. Under the provisions of Rule 3.3 any secondary school in seeking recognition shall satisfy the Department as regards the following conditions amongst others: (I) the school must follow the curriculum approved by the Department and use text books sanctioned or approved by the Department: (ii) admissions to various standards are according to the rules and instructions of the Department; (iii) promotions made at the end of academic year after examination must be according to rules approved by the Educational Inspector; (iv) the fee rates, the pay scales, allowances and other amenities must be in accordance with the instructions issued by the Department from time to time. The Director may ask the management to pay the staff through the Government treasury or a scheduled Bank; (v) the school has to adopt to undertake to adopt within the time specified by the Department the government Provident Fund Scheme and the rules regarding conditions of service approved by the Department; (vi) the school must undertake to make provision to the satisfaction of the Department that the general rules of discipline as laid down by Director of Education from time to time be duly observed by the school employees as well as by the pupils. Rule 3.4 requires that the school will have to abide by such orders relating to any of the above conditions or relating to the working of the School or its hostels, as may be issued by the Department either generally or in specific cases, from time to time. Rule 3.6 provides that the Schools shall produce and supply copies of such material documents, papers, etc., as may be required at the time of an inquiry by the Department Officers. The Department may retain such of the material produced by the School or the pupils as may be considered necessary. Under the provisions of R.5.1, recognised schools shall not teach a standard or standards higher than those for which it has been recognished without the previous permission of the Educational Inspector or Inspectress of Girls' Schools or Director of Technical Education. Under the provisions of R.5.2 additional Division of a standard already recognised shall not be opened unless permission is given an permission will not be given if adequate provision for additional accommodation, staff and equipment is not made. Provisions of Rule 9.1 and Rule 9.2 provide that if there is a change in the management or name of a school an application should be made to the Director of Education or to the other authorities mentioned therein and the previous permission of the authorities must be obtained. Chapter IV relates to admission of the pupils to the School. Rule 15.1 provides as to what should be the maximum number of pupils to be admitted in each class. The Educational Inspector is empowered to allow at his discretion admission at the most of four pupils in excess of the limits mentioned therein, when the relaxation is absolutely necessary, because the school is not in a position to open additional division for the small number of excess but has necessary accommodation for the additional pupils. Under the provisions of Rule 16 when a pupils is admitted, the parent or guardian should be supplied with a copy of the school rules. Rule 17 imposes a restriction on the management of the school not to make it obligatory on the pupils to purchase stationary through a particular agency or to purchase particular brand or make of stationery or to buy notes, questions and answers etc., printed by it or any other agency for private circulation but not on the sanctioned list of text books. A school cannot receive any contribution etc., in cash or kind from parents or guardians as conditions precedent to granting admission or any other benefit from the school nor can it make it obligatory on the pupils to contribute to any fund such as building fund, school day or Jubilee celebration fund, or farewell or birth day functions. Rule 23 prohibits admission of pupils to higher standards unless under certain circumstances. Chapter VI deals with examination and promotions. Under Rule 37.2 schools should frame and follow their own rules for promotion after getting them approved by the Educational Inspector. Exceptional promotions can be given only on the ground mentioned in Rule 38. Chapter VII provides for curriculum and text books. Rule 40.1 provides that the Department will from time to time, prepare and publish suitable curricula and syllabuses for the use of various types of secondary schools, which every school shall be required to follow. No school shall teach during school hours any subject/subjects which is/are not prescribed by the Department. The management of schools may, with the previous permission of the Director of Education, adopt variations, within the frame work of the Departmental currciula to suit local conditions. Rule 41.1 provides that the school shall not use text-books or atlases other than those sanctioned by the Government or by the director. Text-books once introduced shall not be changed before the expiry of at least three years without previous permission of the Director, and this is so because of Rule 41.2. Rules 42.1 and 42.2. provide that the religious instructions shall not be provided in any school which is maintained out of the State funds. Schools shall not use a school function or festival like a gathering, prize distribution, celebration in connection with a saint or a greatman etc., for preaching any religion or for other religious purpose. Chapter VIII deals with the health of the pupils and Rule 45.1 provides that routine medical examination of pupils should be held on admission to the school and thereafter at least every alternate year. Report of Medical inspection should be sent to parents or guardians. Chapter IX provides for fees and free studentships. Rule 47.1 provides that standard rates mentioned therein shall be the lowest for the tuition fees. Rule 47.3 provides that schools shall obtain specific sanction from the Educational Inspector for adopting fee rates higher than the standard rates. No school can charge fees at the rates lowest than the standard rates without the specific sanction of the Educational Inspector, and that is provided in Rule 47.4. Rule 47.2 and Rule 48.2 (v) relate to admission fees and the term fees. Normally there should be no large surplus left over from term fees and if, however a surplus of more than 20 per cent of the yearly collection is left over, the term fee should be reduced proportionately in the subsequent year. Rules 49.1 to 49.3 provide for free studentships. Chapter X relates to school terms, holidays, and school hours. Under the provisions of Rules 51.2 and 51.4 the schools have to observe 12 public holidays named thereunder during the year. The school has to send at the beginning of the year a list of holidays including the vacation to be observed by the school, to the Inspecting Officer concerned with the school. Chapter XI makes provisions for discipline of the school. Chapter XII relates to the maintenance of the staff. Under Rule 55.1 the teaching staff should be adequate and well qualified. The ratio between the number of teachers to the class will vary from 1.4 to 1.6. at least 50 per cent of the staff should be trained or qualified. Rule 55.2 provides for the clerical staff. Chapter XIII relates to the selection and appointment of staff. Rule 64.2 provides that there shall be a selection committee of at least three members, a representative of the management, the Head of the School, and an outside educationist nominated by the management for the selection of teaching staff. Under rules of this chapter employees of the school are divided in three classes, permanent, probationary and temporary. Chapter XIV deals with the termination of the employment and Rules 69.1 and 69.2 are as follows:
'69.1: The service of non-permanent employee cannot be terminated by the management at any time without giving one calendar month's notice or by paying salary (pay and allowances, if any) for the period of notice in lieu of notice. The notice should not, however, be given during vacation or so as to cover any part of the vacation or within the first fortnight after the vacation; or within the first fortnight after the vacation; or else rule for vacation pay will apply. As non-permanent staff is of two categories, temporary and probationary, it is clarified that temporary persons can be relieved without notice on completion of their period but probationers are to be given one month's notice during probationary period if their work or behavior is unsatisfactory. 69.2: Confidential report in case of probationers should be filled up at the end of each term. Unfavourable remark should be brought to the notice of the concerned teacher.'
Rule 69.3 provides the manner in which the services of a permanent employee can be terminated. When a permanent employee has to be dismissed the provisions of Rule 69.7 have to be followed. Rule 69.14 provides that if the management fails to pay any legitimate dues to its employees the department shall deduct, from the grant payable, an amount equal to the payment to be made to the employees concerned, and the Educational Inspector of the District shall disburse the amount to the employee concerned as instructed by the Director. Chapter XV deals with the conditions of service of the staff. Chapter XVII provides for the inspection of schools and Hostels by the department. Chapter XVIII provides that the recognised Educational institutions are eligible for the following grants which may be paid at the discretion of the sanctioning authority: (I) maintenance grant; (ii) equipment grant; (iii) building grant: and (iv) such other grants as may be sanctioned by the Director from time to time. Rule 84.2 provides that payment of grants to educational institution will be subject o the provision that the requisite budget grants are sanctioned by the State Legislature. Notice of the probable reduction in any year will be given after the budget grants are passed, and such reduction will continue in force until the notice is modified or cancelled. Rule 89.1 provides that the recognised schools desirous of Grant-in-Aid from the Department must apply in the form given in Appendix 1 (2) of the Code to the Educational Inspector of the District, at least six months before the commencement of the official year in which the school is to receive grant. Schools once taken on the list of aided schools will continue to get Grant-in-Aid from year to year so long as they continue to fulfil the conditions of recognition and to observe the other rules and instructions issued by the Department from time to time. There are provisions as to how the grant is to be assessed in respect of a particular school. Rule 93 provides that the Educational Inspector will intimate to the Management the amount of grant sanctioned for the school and the latter will forward a bill for the said amount. Grants will be liable to lapse if not claimed within one months of date of the intimation received from the Educational Inspector and in any case before 31st March of the year for which grant is sanctioned. Chapters XIX, XX and XXI make provisions respectively for the building grants, equipment grants and grants to hostels. Schedule 'A' to the code provides for the list of admissible and inadmissible items of expenditure for the purpose of grants. The aforesaid resume of the rules in the Code clearly indicates that the right of management of school has been materially and to a great extent abridged by the rules. The management of the school which have full power to manage the schools agreed to abridgment of their rights to manage in lieu (SC). It is true that the institutions who desire recognition and grant do so voluntarily but once a secondary school is recognised, the recognition entitles the management to apply for the Grant-in-Aid from the public funds, and under the provisions of Rule 89.1, the schools once taken on the list of aided schools continue to get grant in aid from year to year so long as they continue to fulfil the conditions of recognition and to observe the other rules and instructions issued by the Department from time to time. When the Government gives grant to the secondary institution it distributes public funds. The distribution of grant is governed by the provisions of the Code. These provisions have been made to achieve uniformity and certainly in the exercise of power and avoid discrimination. Schools which seek recognition and grant do so relying upon these rules. The managements of schools agree to abridgment of their rights to manage the institutions because they know that they are entitled to apply for grants from public funds and once taken on the list of aided schools they will continue to get the Grant-in-Aid from year to year so long as they continue to fulfil the conditions in respect of recognition or grant. The managements agree to all restrictions in respect of their right to manage the institutions because of the representations contained in the rules in the Grant-in-Aide Code, relating to the distribution of grants and on the expectation or belief that they shall on the fulfilment of the said conditions are entitled to grants in future. As representations are made by the Government by framing rules for distribution of grant, the management feel certain about the reception of grant from the Government in future without any discrimination. The rules relating to the distribution of grants as contained in the Code are in the nature of promises made by the Government to the management of the secondary schools, and because of these promises and assurances the managements agree to restrictions of their right to manage the institutions. The upper most idea of the Government in providing rules for recognition and grant is controlling of secondary education in the State. It is because of these promises or assurances given by the State as evidenced by the rules relating to grant that the secondary school managements agreed to the abridgment of their rights to manage the institutions. Thus the managements of the school agree to act to their prejudice because of the representations relating to the grants made by the Government. The managements of the secondary school act upon the promises the terms whereof are to be found in the rules contained in the Code and also agree to bind themselves to act in future as per the said rules. As between the management and the Government such promises and assurances would be enforceable because they are intended to be binding or intended to be acted upon. They are also binding to the Government because no term is implied to indicate that the Government is at liberty to revoke them. There is an obligation on the Government to give grants to the managements if the managements satisfy the conditions set out in the Code. The grants to be given by the Government depend upon the availability of the funds but it cannot mean that the Government can escape its obligation to pay the amount when the same is budgeted. Thus a right to entitle to receive grant arises in equity in favour of the managements of the Schools. The Court in such cases is not powerless and can in appropriate cases compel the obligation arising out of the representations made by the Government. To concede in such cases to the claim that the rules are executive and not enforceable would strike at the very root of law. It must be remembered that in our constitution the central and characteristic feature is the concept of rule of law i.e., the authority of law to test the administrative action by the standard of legality. The administrative or executive action that does not meet the standard will be set aside if the aggrieved person brings appropriate action in the Court. The rule of law rejects the conception that the Governmental action is placed in privileged position of immunity from the control by law. Such a notion is foreign to the basic constitutional concept. As between the managements of schools and the Government because of the representations of promises or assurances given by the Government as evidenced by the rules contained in the Code, a right to receive grant is one the fulfilment of the conditions thereto created in favour of the management of schools and it is the duty of the Court to enforce the said equitable right when it finds that the claim based on such rights is arbitrarily rejected. There are two decisions of the Supreme Court which lay down that the Courts have the power in appropriate cases to compel the performance of the obligations imposed by the executive or administrative instructions upon the departmental authorities. If a claim in equity arises in favour of person as a result of the representation made on behalf of the Government and the action taken by the person acting upon that representation, and acting upon the belief that the Government would carry out the representation made by it, the right in equity is enforceable. In Union of India v. Anglo Afghan Agencies etc., AIR 1968 SC 718, the facts were that the Textile Commissioner published a scheme called the Export Promotion Scheme providing incentives to exporters of woollen goods. By the Scheme as extended to exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woollen goods, and it was represented that the exporters will be entitled to import raw materials of the total amount equal to 100 per cent of the f.o.b. value of the exports. Anglo Afghan Agencies a firm had exported woollen goods of the value of Rs.5,03,471.73 NP. under the said Scheme. The firm was entitled to import raw materials of that volume but was granted a certificate for import for Rupees 1,99,459/-. The firm filed a writ petition in the High Court claiming that it was entitled to an import of raw materials of the total value of Rs.5,03,471.73 P. It claimed a writ or an order directing the Union of India and its Officers to issue a license permitting the import of wool-tops, raw wool materials of the total value of Rupees 5,03m471.73 P. It was argued before the Supreme Court that the export scheme was executive in character and it created no right in the exporter who exported their goods as per the scheme and imposed no obligation upon the Government to issue import certificate. The Court held that the export scheme was executive in character. It further held that the firm had acted upon the representation made in the export commercial scheme and had exported the goods. The firm acted upon the representation to its prejudice and a right was created in favour of the firm. The Court in such a case has the power to compel the performance of the obligation imposed by the scheme upon the departmental authorities. In its judgment at page 723, it was observed as under:
'(10) The defence of executive necessity was not relied upon in the present case in the affidavit filed on behalf of the Union of India. It was also not pleaded that representation in the Scheme was subject to an implied term that the Union of India will not be bound to grant the import certificate for the full value of the goods exported if they deem it inexpedient to grant the certificate. We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment. Under our constituted set-up no person may be deprived of his right or liberty except in due course of and by authority of law; if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law - common or statute - the Courts will be competent to, and indeed would be bound to, protect the rights of the aggrieved citizen.' Again the Court observed at page 728 in paragraph 23 as under:-- '(23) Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its failure conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen.'
The Supreme Court confirmed the order of the High Court directing the Textile Commissioner to issue to the firm import certificate for the total amount equal to 100 per cent of the f.o.b. value of the goods exported by them. In Century Spinning & . V. The Ulhasnagar Municipal Council, AIR 1971 SC 1921 , the facts were that the Government of Bombay issued a notification announcing its intention of constitute a Municipality for certain villages, including the Industrial Area. The State of Maharashtra thereafter published a notification to the same effect. Representations were then made by the manufacturer for excluding the Industrial Area from the Municipal District Area. The Government issued such a notification. The District Municipality then made a representation to the Government that the said proclamation excluding the area be withdrawn by the Government. The Municipality agreed to except the existing factories, in the Industrial Area from payment of octroi for a period of 7 years from the date of levy of octroi and for exempting new industrial units from payment of octroi for a similar period from the date of establishment. The Government acceded to the request of the Municipality to retain the industrial area within the local limits of the Municipality. The District Municipality passed a resolution to implement the agreement and it was resolved that the District Municipality agreed to give the said concession. The State of Maharashtra then enacted the Maharashtra Municipalities Act which repealed the Bombay District Municipal Act. A notification declaring the area of the former District Municipality as the area of the Municipality under the new Act was issued. The Municipality thereafter resolved to levy the octroi duty on all factories within its jurisdiction. The Government drew the attention of the Municipality and advised the Municipality to honour the exemptions which were agreed. The Municipality ignored that advice and levied the duty. One of the factory owners filed a writ petition in the High Court claiming a writ restraining the Municipality from levying and collecting the octroi duty. The writ application was rejected and the Company filed an appeal before the Supreme Court. The Supreme Court observed at page 1024 as under:
'10. . . . . . . . . . . . . . . . . . . . . . . . . . .
A representation that something will be done in the future may result in a contract, if another person to whom it is addressed acts upon it. A representation that something will be done in future is not a representation that it is true when made. But between a representation of a fact which is untrue and a representation of a fact which is untrue and a representation express or implied -- to do something in future, there is no clear antithesis. A representation that something will be done in future may involve an existing intention to act in future in the matter represented. If the representation is acted upon by another person it may, unless the statute governing the person making the representation provides otherwise, result in an agreement enforceable at law; if the statute requires that the agreement shall be in a certain form, no contract may result from the representation and acting therefor but the law is not powerless to raise in appropriate cases an equity against him to compel performance of the obligation arising out of his representation.
11. Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice. The obligation arising against an individual out of his representation amounting to a promise may be enforced ex contract by a person who acts upon the promise: when the law requires that a contract enforceable at law against a public body shall be in certain form or to be executed in the manner prescribed by statute, the obligation if the contract be not in that form may be enforced against it in appropriate cases in equity.'
Again at page 1025 at paragraph 12 the Court observed as under:
'12. If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted. A public cannot ordinarily be permitted. A public body is in our judgment, not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice'.
The aforesaid view which I have taken regarding the question of equitable right and the power of the Court to grant equitable relief in respect of Grant-In-Aid Rules in cases where the management of schools fulfil all conditions for obtaining grant is thus supported by the aforesaid two decisions of the Supreme Court.
5. In Revn. Fr. Joseph Valamangalam v. State of Kerala, AIR 1958 ker 290, the Manager of the school challenged the order of the Government by which in effect, grants earmarked for the salaries of the teachers employed in the grant aided schools which were thereto drawn and disbursed by the manner of the school concerned, were to be drawn and disbursed by the manager of the school concerned, were to be drawn and disbursed by the Head Master. It was held in that case that the rules were in nature of administrative instructions by Government to its Officers and, therefore, did not vest any statutory right in the manager of the School. The Court came to the conclusion that the petitioner in that case had no right and, therefore, there was no question of violation of Article 14 of the Constitution. The Court had not considered the question that the promises or assurances were given by the Government on the basis of which the management of the school had acted to its prejudice with the result that an equitable right was created in the management. Therefore, the said decision cannot be of any use in deciding the present case. In the recent decision in kumari Regina v. St. Aloysius High Elementary School, Civil Appeal No.500 of 1966, D/-16-3-1971 (reported in AIR 1971 SC 1920) the Supreme Court had to consider the question whether a teacher who was governed by the terms of his employment can take benefit of the Grant-In-Aid Rules. The Court held that the relation between the manager and the teacher employed by it were governed by the terms of the contract. The very fact that the school had obtained recognition and aid from the Educational Department would not mean that the relationship between the management and its employee had ceased to be governed by the terms of the contract of the employment. The rules in Grant-In-Aid Code were not regarded as statutory rules and had no effect of controlling the relations between the management and school and its teachers. The Court observed that the rules in Grant-In-Aid Code governed the terms on which the Government grants recognition and aid and the Government can enforce those rules upon the management. The enforcement of such rules is the matter between the Government and management and third party such as teachers aggrieved by some order of the management cannot derive from the rules any enforceable right against the management on the ground of a breach or non-compliance of any other rules. Thus the case is distinguishable on acts because in that case a third party wanted to get benefit under the rules which governed the relationship between the Government and the management in respect of Grant-In-Aid. It is true that in that case decision in Rev. Fr. Joseph, AIR 1958 Ker 290 (supra) and the decision of Andhra High Court in Moss v. Management of St. Patricks High school, Secunderabad, (1970) 2 Andh Wr 157, were cited wherein it was held that Grant-In-Aid Rules were executive instructions and, therefore, not legally enforceable in the Court of law. Now it is well established that a decision is an authority for what it actually decides. Every judgment must be read as applicable to the particular facts proved or assumed to be proved since the generally of expressions which may be found there are not intended to be exposition of the whole law but govern and qualify a particular fact of the case in which the expressions are to be found. The observations made in the judgment are required to be read in the light of the facts of the case. It is not a profitable task to extract a sentence from a judgment and to build upon it. See the decision of the supreme Court in State of Orissa v. Sudhansu Shekar Misra, AIR 1968 SC 647, 651. Keeping the aforesaid principle in mind it is clear that the Supreme Court in Kumari Regina's case, AIR 1971 SC 1920 was only considering the question whether a teacher who was governed by his terms of contract could rely upon the rules contained in Grant-In-Aid code. The Court categorically observed that the Grant-In-Aid Rules governed the terms on which the Government grants recognition and aid and the Government can enforce the rules upon the management. The enforcement of the rules is a matter between the management and the Government and the third party like a teacher aggrieved by some order of the management cannot derive benefit from the rules in enforcing a right against the management on the ground of breach or non-compliance of any of the rules. Thus the case does not lay down the proposition that executive rules cannot be enforced in cases where an equitable right is created thereunder.
6. Therefore, in the present case the petitioners on the proof of substantial compliance with the rules of the Code, are entitled to obtain grant although under the Code the grant has to be paid at the discretion of the sanctioning authority. The discretion has to be exercised by the authority in a reasonable and bona fide manner and not arbitrarily and capriciously. Even if the rules relating to the grants mere executive instructions one cannot forget that the Government is dealing with the public funds. We are not in ancient days when the grant made by the Government in aid to educational institutions was regarded as bounty. For disbursing grant the Government has framed rules and if the rules are not complied with, the claim of the petitioners to grant cannot be rejected.
7. Coming to the facts of the case, it must be borne in mind that the school management can terminate the services of a probationer teacher of his work of behaviour is found by it to be unsatisfactory. There are no provisions of giving notice either oral or written to the concerned teacher about his such defects. There is again no provision for holding an inquiry in case of a probationer teacher as in the case of a permanent teacher. Bearing this factor in mind, let us consider the facts of instant case. On the representation made by Mrs. Kothari, the Director of Education passed an order dated September 22, 1966 requiring the petitioners either to pay her compensation equal to the salary of the remaining part of one year or reinstate her in the service and allow her to serve the period of her probation. In pursuance of this order a letter dated February 19, 1968 was addressed to the petitioners by the Educational Inspector that if the instructions given in the aforesaid letter were not obeyed, the grant of the current year would not be paid to the institution. The reasons for the aforesaid orders are two fold. The first is that the petitioners had not complied with the provisions of Rule 69.2 of the Code. The second is that no written notice to show cause was served on Mrs. Kothari so that she could explain the charge against her. Now under the provisions of Rule 69.2 confidential report in case of probationer is required to be filled in at the end of each term. There is no dispute that the term in the secondary school begins in the middle of June and ends in the month of October. The said rule requires that unfavourable remarks made in the confidential report have to be brought to the notice of the concerned teacher. Under the said rule the institution which requires grant has to keep a confidential report which should be filled in at the end of the term i.e. after the school closes in the month of October. There is no duty cast upon the institution to fill in the confidential report at any time prior to that. Whatever unfavourable remarks have to be noted in the confidential report, have to be conveyed to the teacher concerned.
If Rule 69.1 is regarded as subject to Rule 69.2, it must mean that the services of a probationer teacher cannot be terminated by the School management for the reasons mentioned in Rule 69.1 during the period of the first term or the second term. In other words, the services of such a teacher can be terminated only after the end of the term and that too after giving one month's notice. To construe these rules in this manner is to give security of the period of service i.e., a probationer teacher cannot be relieved by the management even if the latter finds the services of the teacher unsatisfactory. Take an illustration -- a probationer teacher misbehaves with a girl student in the month of July or is incapable of teaching since the months of July and August, is the school management in such cases bound to retain such a teacher for the entire term? The answer in the affirmative would lead to evident startling results. The correct interpretation of the rules, therefore, is that two obligations are cast upon the management; (1) the confidential report of a teacher who serves during the entire term have to be maintained and (2) if there are unfavourable remarks the same should be communicated to the concerned. Rule 69.2 has no application in cases where the service of a teacher is terminated before the end of the term. The provisions of Rule 69.2 are not enacted to give any security of the period of service but they cast certain obligations on the management to obtain grant. In the present case Mrs. Kothari was appointed on probation as Head Mistress on June 12, 1966. The notice terminating the services of Mrs. Kothari was served on her on August 5, 1966. It is thus clear that action against Mrs. Kothari was taken before the end of the term and that being so there was no obligation on the petitioners to make any entry in the confidential report of Mrs. Kothari because she was relieved from the service before the end of the term.
Therefore, the conclusion of the Director of Education that the petitioners had committed breach of the provisions of Rule 69.2 is per se erroneous. There is no provision in the Code which requires that a written notice should be given requires that a written notice should be given to the non-permanent employee or a probationer to show cause why the service should not be terminated. It is true that no order should be passed against a person without giving a notice a hearing, but the said rule of natural justice has been complied with in the present case. The petitioners have stated that they had called upon Mrs. Kothari in the general meeting of the trustees held on August 7, 1966 and gave the notice of the charges against her. She was given an opportunity to explain her defects. She gave her explanation to the charges against her but the trustees did not find the explanation satisfactory. It is thus clear that Mrs. Kothari was given chance to represent her case. She was given reasonable opportunity to have her say in respect of the charges levelled against her. There are no prescribed rules of natural justice governing all cases. They vary according to the nature and circumstances of the case. The rules of natural justice require that the party against whom the allegation is made should be given a hearing. The authority must act in good faith and listen fairly and consider the explanations put forward before it. There is no rule of natural justice that a person against whom allegations are made must be served with a written notice pointing out the allegations made against him. In the present case Mrs. Kothari was given an opportunity to show cause before she was discharged from the service in respect of the allegations made against her. It is true that no written notice was given to her but it was not necessary to do so, it being not the rule of natural justice. Moreover looking to the fact that she was on probation, was entitled to be relieved on one month notice and that she was aware of all the charges no prejudice had been caused to her. The conclusions of the Director of Education that the rule of natural justice in not giving a written notice was violated cannot be sustained. In the present case. Mrs. Kothari was informed of the charges against her, she was given opportunity to state her case and there is no allegation that the trustees acted in bad faith. The consequence is that the Director of Education was in error in coming to the conclusion that the rule of natural justice was that a written notice of the charges ought to have been given to Mrs. Kothari and the same was violated.
It is no doubt true that power to withhold or reduce the grant is within the discretion of the Director of Education but the discretion is required to be exercised as per rules set out in the Code. The power to withhold the grant can be exercised by the Director of Education provided there is a breach of the provisions of the Code. The power of the Director of Education to withhold or reduce the grant depends upon the preliminary finding of fact, namely, whether the rules of Grant-In-Aid Code have been contravened. In the instant case the director of Education was satisfied that the order of withdrawal should be passed because the provisions of Rule 69.2 had not been complied and because rule of natural justice of giving written notice was not followed. Now the Director of Education has not, prima of Rule 69.2 and had not the real concept of the rule of natural justice. Thus the preliminary facts, on which the satisfaction of the director of Education was based were the result of misconstruction of the provision of the Code and misconception of the rule of natural justice. Thus the preliminary finding of facts on which the jurisdiction of the Director of Education to withhold or reduce the grant depended were erroneously arrived at and the error had resulted because of the misconstruction of the rule and misunderstanding of the rule of natural justice. No jurisdiction of authority to withdraw or reduce the grant can be assumed by the Director of Education by misconstruing the provisions of the Code or by misunderstanding the rule of natural justice. The Director of Education has to exercise his discretion to withhold or reduce or reduce the grant only if the rules in Grant-In-Aid Code are not complied with. If he does not act so. His action would be arbitrary.
Once the Government has chosen to frame rules for distribution of grant, the rules have to be respected. The Officers whose duties it is to distribute the grant or to pass any order concerning the grant have to follow the rules, and they cannot pass any orders in any given case in any manner they think fit. The Officers are governed by the rules of instructions and have to exercise their discretion in consonance with the rules in the Code. In the instant case the petitioners complied with the provisions of Rule 69.2 of the Code. The action of the petitioners of terminating the services of Mrs. Kothari was taken after giving proper opportunity to her to represent her case. The petitioners thus having complied with the provisions of the Code, the grant was receivable by them. The impugned orders passed by the Education Authorities were not in consonance with the provisions of the Code. The impugned orders are arbitrary and discriminatory. Discriminatory because admittedly other institutions who complied with the provisions of the Code were paid grant while the petitioners even though complied with the said rules was not paid the grant amount payable to it under the Rules. It is thus clear that the orders passed by the Educational Authorities dated September 22, 1966, October 1, 1966 and February 19, 1968 are arbitrary, discriminatory and hence, void as they contravene Article 14 of the Constitution.
8. The case of the petitioners is that the representative of the institution had gone to the Office of the their respondent on March 28, 1968 where he was informed that the institution could take the amount of grant admissible subject to the condition that the institution deposit Rs.2992 being the amount of 12 months' salary payable to the Head Mistress. The petitioners deposited the amount with the condition that the same should be kept with the department till the result of this petition. These averments of the petitioner are not denied by the respondents even though they had sufficient opportunity to do so. This petition was filed on March 19, 1968. On March 23, 1968, the Educational Inspector i.e. third respondent addressed a letter to the Principal of the School ordering that as per the directions of the Director of Education the bill of Rs.11415 being the amount of the grant for the year 1967-68 might not be cashed from the Sub-Treasury. Petlad, till Mrs. Kothari was paid her dues. It also directed that arrears of the salary to Mrs. Kothari be paid immediately, on the failure of which the institution would not be awarded the grant in the next year. It also directed the Principal of the School to remain present in his Office on March 26, 1968. It is thus clear that the deposit was required to be made by the petitioners under the threat of non-payment of grant. There is not power or authority in the Inspector of Education or the director of Education to demand such a deposit. The petitioners were thus required to deposit the amount without the authority of law. In the affidavit field by the State, it has been stated that the amount had been paid over to Mrs. Kothari. The petitioners had deposited the amount with the condition that the same should remain with the State till the decision of this petition. In spite of this specific condition the amount had been paid up to Mrs. Kothari. Thus the said action of the Officers is without any authority of law. The petitioners are deprived of the property without any authority of law because the officers had no authority to release the amount for payment to Mrs. Kothari. No person can be deprived of his property by any executive action which is not supported by law. Hence the petitioners are entitled to return of the amount deposited by them.
9. The result is that the orders of the Educational Officers dated September 22, 1966, October 1, 1966 and February 19, 1968 are illegal and void and the petitioners are entitled to the return of the amount of Rs.2992 deposited with the second respondent, as the respondents had no authority to take deposit or to appropriate the same. The rule issued on this petition is made accordingly absolute, with costs.
10. Rule made absolute.