‘Can’t Levy SARFAESI Assistance Fees Beyond 2008 Rules’
JODHPUR: Rajasthan High Court has ruled that police cannot demand charges from banks for aiding in taking possession of secured assets under the SARFAESI Act based on executive circulars if such charges exceed rates prescribed under the Rajasthan Police Rules, 2008. The court directed police authorities to issue revised demands strictly in accordance with statutory rates and quashed demands raised solely on executive instructions.Justice Sameer Jain passed the judgement, uploaded Wednesday, while deciding a batch of writ petitions, with AU Small Finance Bank’s petition against state govt and others treated as the lead matter. The court said factual differences among the petitions would not affect its determination of the common question of law.The petitions arose from cases where borrowers defaulted on loans despite reminders and notices issued by banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), which allows lenders to recover non-performing assets without approaching a civil court.To obtain physical possession of secured properties, petitioner banks moved chief judicial magistrates under Section 14 of the Act seeking police assistance, leading to directions for deployment of police personnel during possession proceedings.The dispute surfaced after police demanded Rs 1.29 lakh for deploying one sub-inspector, one head constable and one constable in a matter involving an outstanding loan of about Rs 5.51 lakh. The demand relied on an ADGP (Welfare) circular dated Feb 3, 2026, prescribing rank-wise deployment charges, though the circular lacked statutory backing under the Rajasthan Police Act or Rules.Banks challenged the demand as arbitrary, arguing that police assistance in executing statutory orders could not be subjected to exorbitant charges without authority of law. The state contended that such assistance supported a commercial recovery exercise and could be billed as an additional service.The court held that any demand “based solely on executive circulars or instructions, in excess of the rates prescribed under Rule 10 of the Rules of 2008,” is “without authority of law” and was quashed.Disposing of the petitions, the court termed the demand “prima facie exorbitant and unreasonable” and said, “State is expected to take expeditious steps and measures to update and revise the statutory schedule of obsolete rates as prescribed under Rule 10 of the Rules of 2008 in accordance with law, so as to bring them into conformity with present-day administrative costs and salary expenditure of the police personnel”.
