Initially, the Khalsa Boys Primary School started with 130 students and a small staff, receiving 95% of its funding from the NDMC. Over time, the school building deteriorated, prompting the DSGMC to propose relocating the school to Mata Sundari College. However, this move was met with resistance from the school's staff, who filed writ petitions against the proposed relocation. Despite an ex-parte stay order from the High Court, the DSGMC demolished significant portions of the school, rendering it non-functional.

Following the demolition, the NDMC ceased grant-aid, arguing that the new location fell outside its jurisdiction. In response, staff members sought relief through writ petitions, ultimately leading to a series of court rulings.

The High Court of Delhi directed the NDMC to reassess the situation, ultimately ruling that it could not grant ex-post facto approval for the school's closure. Subsequently, a Division Bench ordered the NDMC to cover the salaries and benefits of the school's staff and to seek reimbursement from the DSGMC, which had closed the school without appropriate authorization.

In its appeal, the DSGMC contended that the NDMC and its Education Director were primarily responsible for addressing the surplus staff created by the school's closure, citing Rule 47 of the Delhi Education Rules. However, the court found this argument unconvincing, as the closure lacked the necessary approval mandated by Rule 46, which requires justification and prior consent for closing a recognized school.

The NDMC, while challenging the requirement to fund staff salaries, had already disbursed the principal amounts owed to the employees. The only outstanding issue was the interest on these payments. The NDMC expressed concern that any attempt to seek reimbursement from the DSGMC might face limitations due to the passage of time. However, the court clarified that the NDMC’s right to reimbursement remained intact, as the issue was explicitly left open in previous rulings.

Ultimately, the Supreme Court dismissed the appeals from both the DSGMC and the NDMC, reiterating the obligations stemming from the closure of the school. The DSGMC was mandated to ensure the payment of salaries and benefits to the staff, while the NDMC was entitled to seek reimbursement for its expenditures. This case serves as a critical reminder of the legal responsibilities governing educational institutions and the importance of adhering to proper protocols in administrative actions.

The resolution of this dispute not only highlights the challenges faced by educational institutions in urban settings but also underscores the role of judicial oversight in ensuring compliance with educational regulations.