Case: MAXIMUS ARC LIMITED Vs. M/S. SRI DEVI KARUMARIAMMAN EDUCATIONAL TRUST AND ANOTHER

1. Leave granted. 2. The 1st respondent, which is an educational trust running a medical college and an engineering college, had availed loans from the Central Bank of India and Bank of India. It had mortgaged certain properties as security for repayment of the loans received. As far as the Bank of India is concerned, it assigned the debt owed to it to the appellant herein. The appellant invoked the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and prayed that since the Trust had failed to discharge its duties, it be restrained from admitting students for the academic year 2019-2020, because that would affect the value of the property and also delay the sale of the property. It was also contended that the future of the students itself would be in jeopardy if they are admitted and later on the properties (colleges) were ordered to be sold. 3. The Single Judge vide order dated 10th May 2019, passed an order of interim injunction restraining the 1st respondent from admitting students from the academic year 2019-2020 and also directed the University, i.e., Respondent No. 2 herein, to initiate steps for disaffiliation of the two colleges. Aggrieved by the said order, the 1st respondent filed Letters Patent Appeal (LPA), which has been allowed, the interim order has been set aside and the matter has been remitted to the Single Judge for deciding the writ petition on merits. 4. True it is, that the ad-interim order was passed without having the reply of the Trust on record but the fact remains that the Trust has placed its view by filing the LPA and all it wanted to say has been said in the LPA. Be that as it may, we are clearly of the view that the Division Bench erred in permitting the Trust to admit the students to the colleges. We cannot lose sight of the fact that if in the near future the colleges are ordered to be sold, then the entire future of the students would be put in jeopardy and they will have nowhere to go. These are private colleges and obviously they may be charging high fees from the students. There is no way that the amount paid by the students/their parents could be refunded to them when the colleges are said to owe huge amounts to the secured creditors.

Decision:
1[ds]4. True it is, that the ad-interim order was passed without having the reply of the Trust on record but the fact remains that the Trust has placed its view by filing the LPA and all it wanted to say has been said in the LPA. Be that as it may, we are clearly of the view that the Division Bench erred in permitting the Trust to admit the students to the colleges. We cannot lose sight of the fact that if in the near future the colleges are ordered to be sold, then the entire future of the students would be put in jeopardy and they will have nowhere to go. These are private colleges and obviously they may be charging high fees from the students. There is no way that the amount paid by the students/their parents could be refunded to them when the colleges are said to owe huge amounts to the secured creditors.