Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal faces strict action for non-compliance, as Supreme Court directs closure and auction of secured assets.
In a significant decision, the Supreme Court of India has ordered the closure of Chaitanya Public School & Junior College, part of the Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal, over unpaid debts to Auxilo Finserve Pvt. Ltd. The apex court granted the secured creditor liberty to auction the premises, with police assistance, following repeated failures by the borrowers to honor debt repayment commitments.
The court, comprising Justices Dipankar Datta and Satish Chandra Sharma, delivered the judgment on April 22, 2026. The decision came after a series of unfulfilled promises by the petitioners to repay approximately Rs. 5.06 crore, as per notices issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act).
Despite multiple court directives, the petitioners continued to obstruct the process, trespassing on the secured asset and failing to cooperate with a court-appointed Administrator. The court's order includes a stern warning to the petitioners, emphasizing strict action for any future non-compliance.
The Supreme Court has directed the closure of the school effective May 1, 2026, and ordered the issuance of transfer certificates to students. The court further instructed the secured creditor to seek police assistance for a peaceful takeover and subsequent auction of the premises.
The school, not receiving government grants, has had its Administrator's appointment revoked. The court's decision not to proceed with contempt charges is contingent upon the petitioners' adherence to the orders.
This ruling underscores the judiciary's commitment to enforcing the rule of law, particularly in financial disputes involving secured creditors and educational institutions.
Bottom Line:
SARFAESI Act - Borrowers failing to repay debt despite multiple undertakings and promises - Court orders closure of educational institution located on secured asset and grants liberty to secured creditor for auction of asset with police assistance. Borrowers directed to issue transfer certificates to students, and warned of strict action for non-compliance.
Statutory provision(s): Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13(2), 13(4).
