Rajasthan High Court Overturns Order Directing Industrial Training Colleges Established Prior To 2018 To Furnish ₹50,000 Bank Guarantee

The Rajasthan High Court allowed 139 appeals by Industrial Training Institutes (ITIs) setting aside a single judge's order, ruling that ITIs governed under the Apprentices Rules, established/recognized prior to 2018 academic year were not required to furnish performance bank guarantee of Rs. 50,000 per unit.

The division bench of Justice Shree Chandrashekhar and Justice Chandra Shekhar Sharma was hearing a bunch of appeals filed by Industrial Training Institutes (ITI) imparting vocational training to students in different states, challenging the order of single judge. The single judge had held that Training Institutes running the vocational courses are liable to comply with the condition of furnishing bank guarantee whether such Training Institutes were established prior to 2018 or afterwards.

On September 4, 2024, a communication was issued to the ITIs asking them to furnish security deposits of Rs. 50,000 per unit through bank guarantee. The petitioners-appellants had approached the High Court challenging the demand of security deposit on the ground that only the ITIs which were established after 2018 were required to give the bank guarantees, and since the petitioners were established prior to 2018, such bank guarantee was not required from their end.

These writ petitions were dismissed by the single judge bench underscoring the observations in Guru Kripa Private ITI v State of Rajasthan & Anr, opining that it did not find any substance in the difference drawn by the petitioners between the ITIs established prior to and after 2018. Irrespective of the year of establishment all colleges were required to furnish the bank guarantee. It was ruled that the ITIs established or running from the Academic Year 2018 were required to furnish the security deposit as per the communication.

Hence, the ITIs moved the division bench in appeal on the ground that Guru Kripa Case was wrongly interpreted by the single judge.

After hearing the contentions, the division bench perused the Guru Kripa Case, and held that 3 directions were given by the High Court in the case:

i) Colleges covered during the period for the session 2014 to 2017 could not be compelled to give bank guarantees;

ii) ITIs which were established or already running from the session 2018 onwards were required to give bank guarantees;

iii)  Training Institutes established or running prior to 2018 are not required to furnish security deposit

In this light, the Court held that directions 1) and 3) were very clear about the fact that the ITIs established or running prior to 2018 were not required to furnish security deposit.

"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," the bench said. 

The bench referred to Supreme Court's 1957 decision Kanai Lal Sur v. Paramnidhi Sadhukhan where apex court had said when the material words are capable of two constructions, one of which is likely to defeat or impair the policy of the statute or notification whilst the other construction is likely to assist in achieving that policy, then the Court should prefer to adopt the latter construction.

It was held that the single judge was "swayed away" by some observations in the body of the Guru Kripa Case judgment, and had overlooked the clear finding in no. (iii). 

Accordingly, the special appeals were allowed, setting aside the order of the single judge.

Case Title: Shree Jagdish Bohra Pvt. ITI & Anr. v State of Rajasthan & Ors, and other connected petitions

Citation: 2025 LiveLaw (Raj) 184

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