Educational institutions cannot have their management taken over unless there is substantial proof that their operations have been mortgaged.

JUDGMENT : 24'h February, 2026 THE APPELLATE TRIBUNAL:

1. Instant appeal has been preferred against the order and Judgment dated 9.11.2021 passed by the Learned DRT- III, Kolkata in I.A. 3018 of 2021 arising out of S.A. 560 of 2021 whereby the Learned DRT allowed the I.A. and directed the parties to maintain status quo with a further direction to withdraw the impugned notice published on 28.10.2021.

2. Appellants are the opposite party in the S.A. 560 of 2021 filed by the Respondents under Section 17 of the SARFAESI Act.

3. Respondents herein filed a Securitization Application under Section 17 of the SARFAESI Act, 2002 (hereinafter referred to as the ‘Act’) challenging the Notice under Section 13 (4) read with Section 15 of the Act dated 22.10.2021 and also Notice of taking over management of business of Respondents as published in ‘Times of India’ dated 28.10.2021 with relief for restraining the Appellants from taking over management. It is alleged that the Respondents are a Charitable Trust running an Educational Institution in the name and title of Camellia College & Engineering and Technology. The suit and proceedings against Charitable Trust are governed by Section 92 of the C.P.C. Appellants, in order to take over the Management of the Institution, has to prove that the Board of Trustees has committed serious irregularities in the management of the Trust before seeking change in the appointment of Administrator. Running of the College does not come within business of the Charitable Trust. Business of the college was not mortgaged or hypothecated or any charge was created in favour of the Bank. About 1100 students are enrolled in the Academic Session for the courses in the College. Admission process is also continuing. Goodwill of the College will suffer adversely if the Administrator will take over charge of the business of the College.

4. Term Loan of Rs.8.50 crore was sanctioned by the Appellants on 5.11.2012. Separate loans were also given to other organization under the name and style of Multiple Educational and Manpower Development Trust and Camellia Educare Services. Respondents have already paid an amount of Rs.30.00 crore. Appellants have not filed any reply to the S.A.

5. It is further stated that notice dated 28.10.2021 could not be issued by the Authorised Signatory for the Bank involving the general public which may adversely affect the reputation of the College. Earlier C.S. No. 99 of 2018 was filed before the Hon’ble High Court at Calcutta under Section 92 of the C.P.C. which was dismissed. Order was challenged in Appeal No. A.P.O. 276 of 2018 before the Division Bench. This appeal was also dismissed. But the suit is pending for adjudication. According to the directive issued by the All India Council for Technical Education, there is a procedure for appointment of the management of the College.

6. Appellants herein although did not file any reply to the I.A. and S.A. but challenged the maintainability of the I.A. It is submitted that an earlier S.A. 360 of 2017 was filed by the Appellant which was dismissed on 5.2.2021 and the Respondents were allowed to take action in accordance with law. Appellants, Secured Creditor, can take action under Section 13 (4) (b) of the Act to take over possession of the secured assets. Section 15 of the Act also empowers the Respondents for taking over the management.

7. It is further contented that the Secured Creditors are not disturbing the constitution of the Trust or functioning of the Trust. Only purpose of t