The Delhi High Court was told on Thursday by the city government that private unaided schools do not have "absolute autonomy".
Justice Manmohan was told by the Delhi government that by way of the January 6 notification, it did not prescribe any criteria, but only asked the private schools to adopt criteria which were "fair, just and reasonable".
The private unaided schools have their autonomy but if they misuse it, the government will step in as they do not have absolute autonomy, it said.
The court was hearing pleas of Action Committee of Unaided Recognised Private Schools and Forum for Promotion of Quality Education seeking quashing the January 6 circular that scrapped 62 criteria, including management quota, for nursery admissions.
Deputy Chief Minister Manish Sisodia also attended the court proceedings. The hearing would continue on Friday also.
Hearing the case, the court also remarked that there is no consistency in a policy made by way of circulars or office orders which are passed without statutory backing, as there could be new circular every day, adding that as per law, the lt. governor should have issued the notification.
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The petitioners said the circular was "absolutely without jurisdiction" and should be quashed as it completely took away the autonomy of schools.
Delhi Chief Minister Arvind Kejriwal on January 6 said the decision to scrap the management quota was taken to bring in more transparency in the admission process. He said the existing provision of 25 percent seats for students from poor families will however remain in place.
Schools were however free to grant admission to children of their employees and could allocate points in their criteria.
Currently, the schools keep 20 percent or even more seats under the management quota, while 25 percent seats are reserved for economically weaker sections students. The remaining are open for the general category children.