The Supreme Court of India directed the permanent closure of a private school in Kolhapur after repeated loan defaults and non-compliance with court directions. The court also cleared the way for the secured creditor to take possession and auction the property.
Background of the Case
The dispute arose from financial assistance taken by the petitioners, Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal, from a secured creditor, Auxilo Finserve Pvt. Ltd. The borrowers failed to repay dues of around ₹5.06 crore, triggering proceedings under the SARFAESI Act.
Despite multiple assurances, including undertakings before the High Court and the Debts Recovery Tribunal, the dues remained unpaid. The Bombay High Court had earlier allowed steps for repossession of the school property and directed police assistance after repeated resistance by the borrowers.
The matter eventually reached the Supreme Court through a Special Leave Petition.
During hearings, the bench of Justice Dipankar Datta and Justice Satish Chandra Sharma took note of the petitioners’ conduct. The court recorded that the borrowers had repeatedly failed to honour commitments and had obstructed the implementation of earlier orders.
“The petitioners have shown extreme lack of regard for the rule of law,” the bench observed, noting deliberate non-compliance and interference with court directions.
The court also pointed out that even after being given opportunities and workable arrangements to protect students’ interests, the petitioners did not cooperate with the appointed Administrator or hand over necessary records.
Importantly, the court focused on ensuring that students were not adversely affected. It noted that final examinations had already been conducted and parents had been informed about alternative school options.
Bringing the prolonged dispute to an end, the Supreme Court ordered that the school be closed permanently from May 1, 2026.
“The SCHOOL shall stand closed once and for all,” the bench directed, while instructing the management to issue transfer certificates to students so they could seek admission elsewhere.
The court further granted liberty to the secured creditor to take peaceful possession of the property with police assistance and proceed with auction of the asset. Authorities, including the Superintendent of Police, were directed to ensure smooth implementation without interference.
Additionally, the court mandated a fresh valuation of the property before auction and dismissed the Special Leave Petition. Costs of ₹1 lakh were imposed on the petitioners, payable to the creditor.
Case Details
Case Title: Chaitanya Bahuuddeshiya Shikshan Prasarak Mandal & Ors. vs Auxilo Finserve Pvt. Ltd. & Ors.
Case Number: I.A. No. 67814 of 2026 in SLP (C) No. 19540 of 2025
Judges: Justice Dipankar Datta, Justice Satish Chandra Sharma
Decision Date: April 22, 2026
