Instead of KeyUp(), use KeyPress() event to capture your keyboard presses. Then set e.Handled = true:
private void txtSchoolName_KeyPress(object sender, KeyEventArgs e)
{
string str;
Class2 cls = new Class2();
if (_lang == "te")
{
e.Handled = true;
str = cls.TeluguText(txtSchoolName.Text);
txtSchoolName.Text = str;
txtSchoolName.SelectionStart = txtSchoolName.Text.Length;
}