Full Judgment Text
NON-REPORTABLE
2026 INSC 408
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
I.A. No. 67814 of 2026
IN
SPECIAL LEAVE PETITION (C) No. 19540 OF 2025
CHAITANYA BAHUUDDESHIYA SHIKSHAN
PRASARAK MANDAL & ORS. …PETITIONERS
VERSUS
AUXILO FINSERVE PVT. LTD. & ORS. …RESPONDENTS
O R D E R
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1. I.A. No.67814 of 2026 dated 26 February, 2026 is an application for
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directions, filed by the respondents 1 and 2 . It is listed for consideration
together with the special leave petition. Prayers made in the application
for directions read as follows:
a) issue necessary directions to the Superintendent of Police, District
Signature Not Verified
Kolhapur to deploy sufficient police manpower in the School
Digitally signed by
JATINDER KAUR
Date: 2026.04.22
17:48:56 IST
Reason:
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secured creditor
premises, i.e. (CHAITANYA PUBLIC SCHOOL & JUNIOR COLLEGE)
enabling the Administrator to take over the administration of the
School effectively forthwith;
b) to direct closure of the School (CHAITANYA PUBLIC SCHOOL &
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JUNIOR COLLEGE ) after the ensuing final examinations enabling
the Respondents to take possession and auction the premises.
c) Call upon the Education Officer (Secondary) to provide an action
taken report with regard to non-compliances by the Petitioners of
the directions issued by this Hon’ble Court and the communications
sent by the Administrator;
d) Pass any other order/orders as this Hon'ble Court may deem fit and
proper in the facts and circumstances of the present case.
2. The special leave petition is directed against a judgment and order dated
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27 June, 2025 of the High Court of Bombay passed on an application
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for intervention (filed by the petitioners before us) in a writ petition
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under Article 226 of the Constitution of the secured creditor.
3. It is not in dispute that the petitioners had obtained financial assistance
from the secured creditor but had failed to clear their debt, resulting in
initiation of action under Section 13 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
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Act .
2
CHOOL
S
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impugned order
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Interim Application No. 12978 of 2024
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Writ Petition No. 10889 of 2024
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SARFAESI Act
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4. A notice under Section 13(2) of the SARFAESI Act was issued on 13
September 2021, demanding repayment of approximately Rs. 5.06
crore. This was followed by a series of unsuccessful promises,
submissions, and undertakings by the petitioners to repay the
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outstanding dues: a promise to repay vide letter dated 15 February
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2023; an undertaking dated 29 March 2023 before the Debts Recovery
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Tribunal; a Memorandum of Understanding dated 8 October 2024 and
a submission before the High Court to place on record a payment
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schedule (followed by a request for extension on 15 October 2024); and
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a further undertaking before the High Court on 18 December 2024.
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Additionally, by order dated 29 November 2024, the High Court directed
the petitioners to inform the parents of students studying in the S CHOOL
situated on the secured asset that academic activities would be
discontinued from the academic year 2025–26. This too was not complied
with.
5. After recording the aforesaid facts, the High Court proceeds to observe
in paragraphs 9 to 13 of the impugned order as follows:
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“9. On 2 May 2025, respondent Nos.1 and 2 handed over the
possession of the secured asset to the authorised officer of the
petitioners. A group of around 40 individuals trespassed the
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secured asset on 3 May, 2025. The possession of the secured
asset was once again handed over to the authorised officer of
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the petitioners pursuant to the order dated 15 May, 2025
passed by this Court. Again a group of around 40 individuals
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trespassed the secured asset. By order dated 19 June, 2025,
only by way of indulgence at the request of learned counsel for
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the applicants/intervenors this Court granted time till 24 June,
2025, to rectify the situation and restore the possession of the
secured asset to the petitioners.
10. Today, Mr. Vaidya, learned counsel for the
intervenors/applicants once again made a request that some
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time may be granted to them to deposit Rs.50 lakhs. We have
already observed that the conduct of the applicants/borrowers
has been far from satisfactory and by sheer use of strong arm
tactics showing utter disregard to the rule of law. In such view
of the matter, we direct the Senior Inspector of Police, Kurndwad
Police Station, Kolhapur to depute necessary police force to
assist respondent Nos.1 and 2 to take possession of the school
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on or before 3 July, 2025.
11. Considering the manner in which the property is trespassed,
we direct the In-charge of police station to depute two police
constables at the site of the secured assets for which the charges
will be paid by respondent Nos.1 and 2 for a period of two weeks
from the date when the repossession is taken and handed over
to the petitioners. It is open for the petitioners to post their
security guards at the secured asset once the possession is
taken. If any further attempt is made by the applicant or agent
claiming through them to trespass the secured asset will be
viewed seriously by this Court.
12. We hereby restrain the applicants/intervenors, their agents,
or any persons acting on their behalf from entering the secured
asset after it has been repossessed pursuant to this order.
13. The petition is disposed of in the aforesaid terms. The
Interim application is rejected. Liberty to the
applicants/intervenors to file appropriate proceedings for
restoration of the possession, if not already filed, is kept open.
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14. List the petition on 28 July 2025 under the caption ‘for
compliance’.”
6. During the partial court working days of 2025, a coordinate Bench by its
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order dated 4 July, 2025 while granting permission to the petitioners to
file the special leave petition issued notice, returnable in two weeks, and
stayed the operation of the impugned order in the meanwhile. The special
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leave petition was thereafter, inter alia , heard on 19 August, 2025 and
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23 September, 2025, when appropriate workable arrangements were
ordered to be worked out entirely bearing in mind the interest of the
students who were enrolled during the current academic session in the
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S CHOOL run by the petitioners. While the order dated 19 August, 2025
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did record the failure of the petitioners to honour the commitments given
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before the High Court, the order dated 23 September, 2025 required
the District Education Officer, Kolhapur, Maharashtra to appoint an
Administrator to assume charge of the S CHOOL and to remain in charge
till such time the special writ petition is disposed of.
7. It is complained in the application for directions that despite this Court
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having recorded in its previous order dated 19 August, 2025 that the
petitioners have taken the High Court as well as this Court for a ride,
they have not mended their ways. Reference is made to non-cooperation
on the part of the petitioners, which has prevented even the
Administrator from assuming charge.
8. Mr. Kilor, learned counsel appearing for the State of Maharashtra, does
not join issue with what the secured creditor complains about. According
to him, the petitioners have not made over to the Administrator, so
CHOOL
appointed, any of the relevant documents and records of the S as
directed earlier. He also echoes that the petitioners have time and again
defaulted in honouring their assurances given to the Court and are,
hence, in contempt.
9. Although, it has been alleged by the secured creditor and the State that
the petitioners have admitted students in the S CHOOL despite an order of
restraint passed by this Court earlier, we do not consider it necessary to
examine such allegation in view of the order proposed to be passed
hereunder.
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10. We have read the previous orders dated 4 July, 2025, 19 August, 2025
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and 23 September, 2025. Petitioners having acted in breach of the order
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dated 19 August, 2025, the order dated 23 September, 2025 recorded
that they were in contempt. However, without drawing up proceedings
for contempt, workable arrangements were ordered to ensure that the
interest of the students studying in the S CHOOL is not hindered at least
during the current academic session. Direction was, however, issued to
notify the parents of all such students that they may take steps for
enrolment of their wards in the 5 (five) schools, which are in close
CHOOL
proximity to the S run by the first petitioner, since the management
thereof were agreeable to admit such students.
11. We are informed that the final examination of all the students who were
pursuing studies in the S CHOOL during the last academic session has been
conducted; however, none of the students have been issued transfer
certificates. Mr. Kilor also informs us that by affixation of notice on the
notice board, the parents of the students were duly informed of the
CHOOL
imminent closure of the S and the options open to them that they
could avail.
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12. After 23 September, 2025, there has been no effective hearing of the
special leave petition, and, in the meanwhile, the petitioners, not having
permitted the Administrator to assume charge, seem to have shown
extreme lack of solicitude for the rule of law and aggravated the
contempt already committed by acting in wilful and deliberate
disobedience of the orders passed by this Court from time to time. This
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has necessitated firm steps to be taken against them, apart from the
aspect of contempt.
13. Since the final examinations have been conducted and the parents duly
informed, and enough indulgence has been shown to the petitioners, we
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CHOOL
now direct closure of the S with effect from the forenoon of 1 May,
2026, once and for all times to come. In the meanwhile, the petitioners
shall issue transfer certificates to all the students who wish to pursue
further studies by enrolling themselves in the 5 (five) nearby schools or
elsewhere.
14. Since the secured creditor has failed in its attempt to secure a purchaser
owing to alleged resistance offered / disturbances created by the
petitioners, we grant liberty to the secured creditor to approach the
Superintendent of Police, Kolhapur and the Station House Officer of the
jurisdictional Police Station for rendering adequate help, assistance,
support and cooperation to obtain peaceful and vacant possession of the
secured asset, i.e., building and its surroundings forming part of the
CHOOL
S . Upon obtaining such possession, it shall be open to the secured
creditor to take further steps for disposal of the secured asset by auction
sale. The Superintendent of Police and the Station House Officer shall
take all such steps that are necessary for implementation of this order
and ensure that the petitioners do not interfere in any manner in course
of taking possession.
15. The secured creditor had obtained a valuation report of the secured
asset, earlier. However, that was at a time when the petitioners were in
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possession thereof. In such view of the matter, we direct that after the
secured creditor is delivered vacant possession of the secured asset in
terms of this order, it shall be under an obligation to obtain a fresh
valuation report from a Government valuer and the reserve price to be
indicated for auction sale, when the secured asset is put up for sale once
again, shall be based on such valuation.
16. Since the S CHOOL does not receive government grants, the order
appointing the Administrator stands re-called. The administrative order
of appointment of the Administrator, in such peculiar circumstances as
noted above, may be withdrawn.
17. The special leave petition stands dismissed, with the aforesaid
observations/directions. The application for directions stands disposed of.
18. In view of the direction for closure of the S CHOOL and liberty granted to
the secured creditor, as above, we do not consider it necessary to draw
up proceedings for contempt against those in the management of the
S CHOOL at this stage. We express hope and trust that there shall be no
recurrence of any contumacious conduct on their part in future. However,
we make it abundantly clear that if there be any hindrance created by
them in course of compliance of this order, and it is brought to our notice
either by the State or the secured creditor, the same will be at their own
risk and peril. We do hereby warn them of strict action, the results
whereof may not be too palatable for them.
19. Petitioners shall bear the costs of this proceeding, quantified at Rs. 1
lakh, to be paid to the secured creditor within a month from date.
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20. Pending applications, if any, stand disposed of.
………..……………………………J.
(DIPANKAR DATTA)
…….……..…………………………J.
(SATISH CHANDRA SHARMA)
NEW DELHI;
APRIL 22, 2026.
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