A division bench comprising Chief Justice A K Sikri and Justice Rakesh Kumar Jain sought the government's explanation by November 1 after hearing a plea by former Congress MLA Sukhpal Singh Khaira who alleged that the grant to the elite boarding school was given from the Punjab Nirman Funds.
Khaira, who lost the recent state Assembly elections from Bholath in Kapurthala district, demanded that the donation given to the school in Solan district of Himachal Pradesh be withdrawn.
He alleged that Badal had given the grant to the school in Himachal while ignoring government schools in Punjab which were in a "pitiable" condition.
The Government had justified the donation saying "the 174-year old educational institution is under the Government of India and has Secretary Human Resource Development as its Chairperson of Governing body with GOC-in-C Western Command as ex-officio member of the governing body."
The government said that institutions like Lawrence School belong to the nation and not to a particular state.