Rajasthan High Court: police must help banks take possession under SARFAESI free of charge
The Rajasthan High Court held on 29 October 2026 that the state must provide police force, without charge, to enforce possession orders under Section 14 of the SARFAESI Act.
Key points
- A division bench of the Rajasthan High Court at Jodhpur allowed appeals filed by AU Small Finance Bank against the State of Rajasthan.
- The court set aside a single-judge order of 12 August 2026 that had told the bank to pay police charges under the Rajasthan Police Rules, 2008.
- The court held that police help to carry out Section 14 SARFAESI possession orders is a duty of the state, and directed it to be given free.
Photo: Joe Mabel / Wikimedia Commons, CC BY-SA 4.0 (cropped). Representational image.
The Rajasthan High Court has held that the state must provide police force, without charging the lender, when a bank needs help to take possession of a defaulting borrower's secured property under the SARFAESI Act. A division bench at Jodhpur delivered the judgment on 29 October 2026 in a batch of appeals filed by AU Small Finance Bank against the State of Rajasthan and its police.
What Happened
The SARFAESI Act lets banks recover bad loans by taking over the property pledged as security. Under Section 14, a Chief Judicial Magistrate or District Magistrate can order that possession be handed to the lender, using force if needed. The bank had asked for police help to carry out such orders. A single judge of the High Court, by an order of 12 August 2026, had refused relief and directed the bank to deposit charges for additional police force at the rates set under Rule 10 of the Rajasthan Police Rules, 2008.
The division bench set that order aside. It held that police help sought to carry out a Section 14 order is a statutory duty of the state and partakes of a sovereign function, so its cost cannot be put on the lender merely because the underlying loan is a commercial transaction. The court held that Section 46 of the Rajasthan Police Act, 2007, which allows charges for additional police in certain cases, does not cover such deployments. It relied on a 2024 ruling of the Allahabad High Court that the magistrate, not the lender, is obliged to get a possession order carried out. The court directed the state to provide the police force needed, without levying any charges.
What It Means
In Rajasthan, lenders enforcing a Section 14 order will not have to pay the police for help in taking possession, according to the judgment. The court said an efficient recovery mechanism would give banks confidence to lend with greater assurance and help the smooth flow of credit. For borrowers whose loans have turned bad, the ruling does not change the steps under the SARFAESI Act; it settles who bears the cost of police help once a magistrate has ordered possession of the property.
Source: High Court judgment
Sources & Citations
- High Court judgment — Rajasthan High Court