Rajasthan High Court: no police charges for banks taking SARFAESI possession
The Rajasthan High Court held that the state must provide police help to carry out SARFAESI possession orders without charging the lender, allowing appeals by AU Small Finance Bank.
Key points
- A Division Bench of the Rajasthan High Court at Jodhpur allowed appeals by AU Small Finance Bank on 29 October 2026.
- The court set aside a 12 August 2026 order that had told the bank to pay police charges under the Rajasthan Police Rules, 2008.
- The court held that police help for orders under Section 14 of the SARFAESI Act is a state duty and must be given free of charge.
Photo: Steven Bornholtz / Wikimedia Commons, CC BY-SA 4.0 (cropped). Representational image.
The Rajasthan High Court has held that the state government must provide police help to carry out possession orders under the SARFAESI Act without charging the lender for it. A Division Bench at Jodhpur allowed a batch of appeals filed by AU Small Finance Bank on 29 October 2026, setting aside an order of 12 August 2026 that had told the bank to pay for the police force.
What Happened
The SARFAESI Act lets banks and other secured lenders take over property pledged against an unpaid loan without going to a civil court. Under Section 14 of the Act, a Chief Metropolitan Magistrate or District Magistrate can order that the lender be given possession of such property, and the officers carrying out the order may use police help.
In the bank's cases, a single judge of the High Court had directed it to deposit charges at the rates set under Rule 10 of the Rajasthan Police Rules, 2008, for the additional police force needed to carry out Section 14 orders. The bank appealed.
The Division Bench held that police help requisitioned to carry out a Section 14 order is part of the state's statutory duty and "partakes of the character of a sovereign function of the State". It said the cost cannot be put on the lender merely because the underlying loan is a commercial transaction. Section 46 of the Rajasthan Police Act, 2007, which allows charges for extra police at certain private events and for public order, does not cover police help for Section 14 orders, the court held. It also relied on a similar ruling of the Allahabad High Court.
The court directed the state to provide the police force needed to carry out Section 14 orders "without levying any charges".
What It Means
In Rajasthan, lenders holding a Section 14 order can now ask for police help without paying the state for it, which the court said would serve the aims of the SARFAESI Act. For borrowers, the ruling does not change when a lender may take possession; it settles only who bears the cost of the police help. A borrower who believes a bank's recovery action is wrong can complain to the RBI at https://cms.rbi.org.in.
Source: High Court judgment
Sources & Citations
- High Court judgment — Rajasthan High Court