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Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal & Ors. v. Auxilo Finserve Pvt. Ltd. & Ors.

Special Leave Petition (Civil) · 2026 INSC 408Decided 22 Apr 2026
SLP(C) No.-019540 - 2025
Justice Dipankar Datta · Justice Satish Chandra Sharma

Background

A trust running Chaitanya Public School and Junior College had taken financial assistance from Auxilo Finserve (a secured creditor) but defaulted on roughly Rs. 5.06 crore, leading to SARFAESI enforcement action against the school premises. Despite repeated undertakings before the Debts Recovery Tribunal, the Bombay High Court, and the Supreme Court to repay or hand over possession, the trust's management repeatedly failed to comply: possession handed to the creditor's authorised officer was twice retaken by groups of trespassers, and the trust obstructed a court-appointed Administrator from taking charge of the school.

Decision Breakdown

The Supreme Court found that the petitioners had persistently and wilfully disobeyed multiple court orders (dated 4th July, 19th August and 23rd September 2025), effectively taking both the High Court and the Supreme Court "for a ride," and had already been recorded as being in contempt. Rather than initiating formal contempt proceedings, the Court opted for decisive final directions: it ordered closure of the school with effect from 1st May 2026, directed the trust to issue transfer certificates so students could enroll in five nearby schools, granted the secured creditor liberty to seek police assistance to obtain peaceful possession of the property for auction, and directed a fresh government valuation before any sale (since the earlier valuation was taken while the trust was still in wrongful possession). The special leave petition was dismissed with these directions, the earlier order appointing an Administrator was recalled (since the school received no government grants), and the petitioners were warned of strict action and ordered to pay Rs. 1 lakh in costs to the secured creditor.

Lesson Learnt

Courts will ultimately enforce their orders decisively against parties who repeatedly break promises and undertakings made to the court: persistent non-compliance with a lender's lawful security-enforcement action, especially when it harms third parties like students, can result in the court bypassing lengthy contempt proceedings in favour of direct, final remedial directions including police-assisted repossession.

Official source (sci.gov.in)View Judgment (PDF)

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