Nearly Rs 50 lakh of the Achutha Menon Foundation was deposited in the BSNL Society.
The scamster-in-chief, the 73-year-old A R Gopinathan, a retired BSNL engineer, was jailed on March 9.
With the schools presently shut for summer holidays, Internet services are not required for academic activities. But connectivity is necessary for office-related work, admission procedures and communication purposes.
The District Congress Committee, responding to the action, said such hasty moves when the decision is still being heard by the court is a challenge to democracy.
KITE CEO K Anwar Sadath, in a circular issued to the schools, made it clear that the BSNL broadband connection provided to schools via KITE will not be renewed after March 31.
The students are admitted to a hospital in Mallapally.
The 100 Mbps internet connectivity would benefit 45,000 classrooms in 4,685 schools included in the Hi-Tech school project, with better ICT-enabled education.
The package has three elements -- to improve services, de-stress balance sheet and expansion of fibre network.
The incident occurred around 5pm and the venue was at the tower situated on the premises of the BSNL office in Kayamkulam.
The Centre has no plans for disinvestment of state-owned telecom player BSNL, Minister of State for Communications Devusinh Chauhan informed the Parliament on Wednesday.