Unilateral stoppage of school functioning without prior statutory approval does not extinguish employee salary liabilities.

The petitioners, comprising teaching and non-teaching staff of Dayanand Adarsh Vidyalaya, Tilak Nagar, filed a batch of petitions seeking arrears of salary, implementation of the 7th Central Pay Commission (CPC), and retiral dues

The school management ceased all educational activities and stopped paying salaries from April 1, 2020, asserting that the institution had become financially unviable

Although the management applied for formal closure on July 17, 2019, the Directorate of Education (DoE) never granted prior approval

The school argued that the factual shutdown constituted a closure in substance, thereby limiting liability to the school’s depleted assets

Conversely, the petitioners contended that the shutdown was illegal and that liability should extend to the parent societies—Arya Samaj (Regd.), Tilak Nagar, and Delhi Arya Pratinidhi Sabha—which exercised real control over the institution

The Court applied Section 3 and Section 4 of the Delhi School Education Act (DSEA), 1973, which mandate that the closure of classes and financial stability are subject to statutory regulation

Rule 46 of the Delhi School Education Rules (DSER), 1973, was identified as the mandatory provision requiring "prior approval" of the Director for the closure of any recognized school

The Court clarified that Rule 55, regarding the lapse of recognition, does not legitimize an unauthorized shutdown

It relied on the Division Bench ruling in Manju Tomar & Ors. v. NCT and the Supreme Court’s affirmation in NDMC & Anr. v. Manju Tomar & Ors. (2024), which established that a closure de hors Rule 46 is illegal and cannot be used to shift the burden of staff salaries

Anjna Sharma v. Shishu Bharti Vidyalaya was cited to establish that a society remains liable for the accruals of its branches, even if one branch closes

The Court reasoned that "closure" is a statutory process, not a managerial declaration; therefore, a factual lock on the gate does not extinguish legal obligations

Under Rule 46, the insistence on prior approval is mandatory to protect students and staff, and the management cannot benefit from its own wrongful act of unilateral cessation

The Court rejected the "institutional collapse" defense, noting that under Section 10 of the DSEA, salary parity and financial stability are continuing conditions of recognition

Regarding the extension of liability, the Court observed that the DSEA does not view a school as an isolated shell but as an enterprise under a managing committee supervised by a trust or society

Applying the "real and effective control" test, the Court found that while the school is primarily liable, the entity that actually managed the funds and took the decision to stop the school must satisfy the dues

However, because the record presented an inconclusive picture of whether control rested with the local Arya Samaj or the Delhi Arya Pratinidhi Sabha, the Court delegated the factual determination of "effective control" to the DoE

(i) the DoE must determine within eight weeks which entity (Respondent Nos. 2, 6, or 7) exercised effective control and is thus liable alongside the school; (ii) a nominated officer shall compute petitioner-specific dues, including 7th CPC arrears and retiral benefits, with 6% simple interest per annum; (iii) for employees who neither resigned nor retired, salaries must continue to be paid until a lawful closure or termination occurs; and (iv) the DoE must pass a reasoned decision on the school's pending closure application within ten weeks, ensuring all employee dues are secured before granting approval.

The contempt petition was disposed of as the claims were merged into the writ proceedings