Extreme Lack Of Solicitude For Rule Of Law: Supreme Court Orders Closure Of School For Taking Possession Under SARFAESI Act
The Court ordered the school’s closure effective May 1, 2026 and mandated a police-assisted handover of the secured asset.
Justice Dipankar Datta, Justice Satish Chandra Sharma, Supreme Court
The Supreme Court has directed permanent closure of Chaitanya Public School & Junior College, Kolhapur and has authorised the use of police force to secure possession for a creditor. The Court observed that while it had previously prioritised the welfare of students, the repeated failure of the educational trust to honor financial undertakings and its active obstruction of court-appointed administrators necessitated a decisive termination of the litigation.
By ordering the school’s closure effective May 1, 2026, the Bench noted that an institutional debt recovery under the SARFAESI Act cannot be indefinitely stalled by borrowers who demonstrate an "extreme lack of solicitude for the rule of law".
Justice Dipankar Datta and Justice Satish Chandra Sharma noting that the petitioners had "taken the High Court as well as this Court for a ride" by failing to comply with multiple payment schedules and undertakings, observed, “…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 has necessitated firm steps to be taken against them, apart from the aspect of contempt”.
Advocate Samir Arunkumar Vaidya appeared for the petitioner and Advocate Varad Kilor appeared for the respondent.
The dispute originated when Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal defaulted on financial assistance of approximately Rs. 5.06 crore obtained from Auxilo Finserve Pvt. Ltd., leading to the issuance of a Section 13(2) notice under the SARFAESI Act in September 2021.
Despite numerous undertakings before the Debts Recovery Tribunal and the High Court, including a Memorandum of Understanding in 2024, the petitioners failed to clear the debt. Tensions escalated when the secured asset was allegedly trespassed upon by groups associated with the petitioners after possession had been legally transferred.
The petitioners challenged a Bombay High Court order dated June 27, 2025 that had directed police assistance for the creditor and restrained the petitioners from entering the premises. The Supreme Court initially granted a stay in July 04, 2025 to protect students during the academic session and later ordered the appointment of an Administrator to oversee the school.
However, the petitioners allegedly refused to cooperate with the Administrator or provide necessary records, prompting the current application for directions from the secured creditor.
The Court noting the "wilful and deliberate disobedience" of its previous orders, held that the petitioners had not only defaulted on financial obligations but had actively hindered the judicial process and the administration of the school.
“Since the final examinations have been conducted and the parents duly informed, and enough indulgence has been shown to the petitioners, we now direct closure of the SCHOOL with effect from the forenoon of 1 st 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”, the Bench noted.
The Superintendent of Police, Kolhapur, is directed to provide adequate assistance to the secured creditor to obtain vacant possession of the building. Furthermore, the creditor must obtain a fresh valuation from a Government valuer before proceeding with an auction sale. The petitioners were also saddled with costs of ₹1 lakh.
Cause Title: Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal & Ors. v. Auxilo Finserve Pvt. Ltd. & Ors. (Neutral Citation: 2026 INSC 408)
Appearances:
Petitioners: Samir Arunkumar Vaidya, Anand Dilip Landge, AOR, Sangeeta Nenwani, Revati Pravin Kharde, Shreenivas Patil, Rahul Prakash Pathak, Advocates.
Respondents: Arjun Garg, AOR, Amruta Arjun Garg, Aakash Nandolia, Arushi Kulshrestha, Muskan Bensla, Mrinmoyee Das, Varad Kilor, Siddharth Dharmadhikari, Aaditya Aniruddha Pande, AOR, Shrirang B. Varma, Advocates.