In a significant decision, the Rajasthan High Court's division bench of Justice Shree Chandrashekhar and Justice Chandra Shekhar Sharma allowed 139 special appeals filed by various Industrial Training Institutes (ITIs), overturning a previous ruling by a single judge. The Court declared that ITIs established or recognized before the academic year 2018 are not required to furnish a performance bank guarantee of ₹50,000 per unit.
"The direction nos.(i) and (iii) in Guru Kripa Private ITI are clear and unambiguous. Therefore, having regard to such indisputed facts, we have formed an opinion that the Training Institutes established/recognized prior to the year 2018 are not covered under the impugned communication dated 4th September 2018,"
— Division Bench of Rajasthan High Court
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The appeals were filed by ITIs running vocational courses across Rajasthan. They challenged a communication dated September 4, 2024, that mandated a bank guarantee of ₹50,000 per unit. The single judge had earlier ruled that this requirement applied uniformly to all ITIs, regardless of their year of establishment.
However, the ITIs argued that this obligation was meant only for those established after 2018. Their petition cited the Guru Kripa Private ITI v. State of Rajasthan case, asserting that earlier institutions were not subject to this financial requirement.
The single judge rejected this interpretation, dismissing the writ petitions. The judge believed there was no significant difference between ITIs established before or after 2018 concerning the bank guarantee condition.
“The single judge appears to have been swayed away by some observations in the body of the Guru Kripa judgment,”
— Rajasthan High Court observed
Upon appeal, the division bench carefully reviewed the Guru Kripa case and highlighted three directions:
- ITIs from the 2014 to 2017 academic sessions could not be compelled to provide bank guarantees.
- ITIs established or running from 2018 onwards were required to furnish bank guarantees.
- ITIs established prior to 2018 were not under any such obligation.
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The Court clarified that the first and third directions clearly exempt pre-2018 ITIs from the bank guarantee requirement. It noted that the single judge had overlooked these key conclusions and misapplied the ruling of Guru Kripa.
The division bench also referred to a landmark Supreme Court decision in Kanai Lal Sur v. Paramnidhi Sadhukhan (1957), emphasizing that when two interpretations are possible, courts should favor the one that aligns with the intent and policy of the law.
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"When the material words are capable of two constructions, one likely to impair and one likely to support the policy of the statute, the Court should prefer the one that supports it,"
— Supreme Court in Kanai Lal Sur v. Paramnidhi Sadhukhan (1957)
In conclusion, the division bench set aside the earlier ruling by the single judge and allowed the appeals, providing much-needed relief to ITIs that have been operating since before 2018.
Case Title: Shree Jagdish Bohra Pvt. ITI & Anr. v State of Rajasthan & Ors. and other connected petitions
