(1) [Any registered company or a registered trust] or a registered society or a local authority desirous of establishing a new school or up-grading the existing school shall have to deposit the amount as [specified in Schedule C as fixed deposit in any Bank. However, before issuing the Letter of Intent, the said amount shall be deposited jointly in the name of the management and the concerned District Education Officer (Secondary) by way of National Saving Certificate or Fixed Deposit in any Nationalized Bank as security deposit towards creating an endowment fund; and pledge, such Certificate or Fixed Deposit with the concerned District Education Officer. Such Certificate or Deposit shall be made for a period of minimum three years subject to the condition of further renewal.]
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(2) The endowment fund may, with the prior permission of the State Government and subject to the provisions of section 5, be utilized for meeting the liability in the form of legal dues, if any, of the management.