Education Not Commercial Activity: Telangana High Court In Arbitration Dispute Over SVIT, Bolton School

Education should not be treated as a mere commercial activity driven solely by management interests, the Telangana High Court has observed, emphasising that disputes over control of institutions must not be carried on at the cost of students, teachers, and academic functioning.

The observation came while the Court was dealing with a dispute between Mahbub College Society and Venkat Narayana Educational Society (VNES) over the management of institutions including the Swami Vivekananda Institute of Technology (SVIT) and Bolton School.

A division bench of Justice Moushumi Bhattacharya and Justice Gadi Praveen Kumar observed, “The Constitution of India, through its fundamental rights and directive principles, guarantees access to health and education, recognizing them as essential pillars for human dignity, and in today's society their effective realization is vital for social progress, equality, and the overall development of the Nation. Therefore, education should not be treated as a mere commercial activity driven by management interests alone.”

The court further observed, “Educational institutions exist for the benefit of students and society, and prolonged disputes over administration and control create uncertainty that ultimately affects the welfare of the students, teachers and academic functioning. Such disputes ought not to be carried on at the cost of students, whose education and future should not suffer due to conflicts between managements.”

Rejecting a plea by VNES to restrain Mahbub College Society from approaching statutory and regulatory authorities in relation to the management and operation of the institutions, the Court observed that such reliefs fall outside the limited scope of Section 9 of the Arbitration and Conciliation Act, 1996.

The bench noted, “It is not in dispute that statutory approvals and affiliations stand in the name of Mahbub College. Any intervention preventing it from approaching regulatory authorities may jeopardize compliances and adversely affect students, staff and third parties. Such a restraint would go far beyond the scope of Section 9 of the Act and would amount to enforcing disputed contractual rights at an interlocutory stage.”

The dispute arises out of an agreement dated August 27, 2015 between Mahbub College Society and VNES for joint management of educational institutions in Secunderabad, including SVIT and Bolton School.

The record shows that disputes between the parties centred on financial dealings and alleged breaches of their agreement. Matters escalated when Mahbub College issued a termination notice on October 3, 2024, triggering a series of proceedings across multiple forums.

In response, VNES moved the civil court under Section 9 of the Arbitration and Conciliation Act, seeking interim protection. Its pleas included suspension of the termination notice, a bar on interference in the administration of the institutions, and a direction restraining Mahbub College from approaching statutory authorities.

The City Civil Court at Secunderabad, by its order dated April 2, 2025, referred the parties to arbitration. It granted a limited injunction to ensure that the functioning and administration of the institutions were not disrupted. At the same time, it declined to stay the termination notice or to impose wider restrictions on Mahbub College's engagement with regulatory authorities.

Both sides challenged this order before the High Court. Mahbub College assailed the grant of injunction, while VNES sought expansion of reliefs, including restraint on communications with statutory authorities.

The High Court found no reason to interfere with the approach of the trial court and observed that Section 9 is a limited protective remedy intended to preserve the subject matter of arbitration and cannot be used to adjudicate contractual disputes such as the validity of termination or to enforce disputed rights at an interim stage.

The court clarified that it was not holding that such disputes cannot be examined by courts; rather, it emphasised that issues relating to termination, contractual rights, and obligations fall within the domain of the arbitral tribunal.

The bench noted that statutory and regulatory authorities perform public functions, and a pending private dispute cannot be used to block a party from engaging with them.

It therefore allowed the limited interim protection to continue so that the functioning of the institutions remains undisturbed.

For Petitioner (Mahbub College Society): Senior Counsel Amith Kumar, Advocates D. Srinivas Prasad assisted by Shalini Shravanthi

For Respondent (Venkat Narayana Educational Society): Senior Counsel Sunil B. Ganu, Advocate K.V. Rusheek Reddy.