Pro rata distribution of funds from de-recognized school's bank accounts to satisfy statutory employee dues.

The petitioners, former teachers and employees of Shree Geeta Bhawan Model Secondary School (Respondent No. 1), sought payment of statutory dues and salary arrears in accordance with the 5th and 6th Pay Commissions

The school was de-recognized on March 30, 2015, and subsequently became non-operational, leading to the non-compliance of a prior court order dated January 8, 2016, which directed the payment of these dues

Several contempt petitions were filed alongside a writ petition seeking equal distribution of available school funds among all eligible employees to avoid discrimination

On May 20, 2024, the High Court directed the Department of Education (DoE) to formulate a plan for the disbursal of funds remaining in the de-recognized school’s bank accounts

1. Whether the Department of Education should be authorized to operate the bank accounts of a de-recognized school to ensure pro-rata distribution of statutory dues to employees

2. Whether the proposed pro-rata distribution plan submitted by the DoE constitutes a fair resolution for the non-payment of Pay Commission arrears

The court exercised its jurisdiction under Article 215 of the Constitution of India, 1950, and Sections 2 and 12 of the Contempt of Courts Act, 1971, to address the willful disobedience of judicial orders

It further invoked Article 226 of the Constitution to ensure equitable relief and parity in the treatment of employees regarding statutory salary benefits

The court relied on the administrative oversight of the Department of Education (DoE) under the Delhi School Education Act and Rules to facilitate the management of funds from a defunct, de-recognized entity to satisfy outstanding labor and service liabilities

The court observed that since the school had been non-operational for over a decade, traditional execution of the money decree was impractical

To ensure "some benefit would percolate down" to the petitioners, the court shifted the responsibility of fund management to the DoE

The DoE submitted an affidavit on January 5, 2026, which meticulously tabulated the claims of 22 teachers and employees and proposed a pro-rata distribution of the available limited funds

The court evaluated this suggestion as "fair" because it prevented discrimination and ensured that the remaining assets of the de-recognized school were exhausted in favor of the unpaid staff rather than remaining frozen

By directing banks to allow the DoE to operate the school’s accounts, the court removed the legal bottleneck preventing the realization of the petitioners' rights

It directed the banks mentioned in the order dated October 23, 2024, to permit the DoE to operate the school's accounts

The DoE was ordered to disburse the specified amounts to the 22 identified persons within eight weeks and communicate this order to the respective Branch Managers within two weeks. Consequently, the contempt and writ petitions were disposed of as no further orders were deemed necessary