Private bank moves Rajasthan High Court against police fee for SARFAESI possession assistance

Jaipur: A private banking institution funded by private equity, has approached the Rajasthan High Court against the levy of charges by the Police Department for providing assistance in the recovery of secured assets under Section 14 of the SARFAESI Act, 2002, contending that such charges are not authorised by law.

The writ petition, filed under Article 226 of the Constitution, seeks to restrain the Police Department from demanding charges for deploying force to assist the Bank in taking physical possession of secured assets pursuant to an order under Section 14 of the SARFAESI Act. The matter is pending before Justice Sameer Jain, who observed that it raises substantial questions of law on the interplay between the SARFAESI Act, the Rajasthan Police Act, 2007, and the constitutional principles governing the levy of fees by State instrumentalities.

The Court observed:

“Moreover, this Court observes that the present petition involves an issue of high significance and raises substantial questions of law qua the interplay between the SARFAESI Act, the Rajasthan Police Act, and the constitutional principles governing the levy of fees by the State instrumentalities.”

Appearing for the Bank, Mr. Vijay Purohit submitted that under Section 14 of the SARFAESI Act, the Chief Judicial Magistrate or the competent authority issues directions for deployment of force to assist a secured creditor in taking physical possession of secured assets, and that the “force” contemplated therein is the police force. It was argued that when the police act pursuant to such directions, they perform a judicial function on behalf of the Court, and no charges are leviable for discharging such sovereign or judicial functions unless specifically authorised by law.

Reliance was placed on Section 46 of the Rajasthan Police Act, 2007, read with Rule 10 of the Rajasthan Police Rules, 2008, which enumerate the specific services for which the Police Department may levy prescribed charges. Learned counsel pointed out that assistance rendered pursuant to an order under Section 14 of the SARFAESI Act finds no mention among the specified services, and that the demand for charges beyond the statutorily prescribed parameters was arbitrary.

The Bank placed reliance on the Allahabad High Court’s decision in Gopal v. Amarjeet Singh, 2019 AHC 3878, as well as three orders of Coordinate Benches of this Court — the order dated Oct 30, 2025 in Tyger Home Finance Pvt. Ltd. v. State of Rajasthan & Ors. (S.B. Civil Writ Petition No. 14449/2025), the order in M/s S. Jhalani & Co. v. The District Collector And District Magistrate, Jaipur & Ors. (S.B. Civil Writ Petition No. 10189/2015), and an interim order dated Mar 10, 2026 in the Bank’s own earlier petition, AU Small Finance Bank Ltd. v. State of Rajasthan & Ors. (S.B. Civil Writ Petition No. 5468/2026). It was submitted that the State had not appealed against any of these decisions, and reliance was also placed on an order dated Feb 3, 2026 passed by the competent authority, A.G.C. Dr. Prakasha Mathur, determining the charges payable by the Bank.

Per contra, counsel appearing for the respondents opposed the petition, submitting that the demand for realisation of charges under Section 14 of the SARFAESI Act was within the four corners of the law. It was contended that the amount sought to be recovered was not a statutory tax but a fee grounded in the principle of quid pro quo, and that the Bank and similarly situated entities, being commercial and profit-making institutions rendering no charitable service, were legally bound to pay for the specialised services of the police force under a circular issued by the competent authority.

It was further submitted that since the amount demanded was a fee and not a tax, the embargo under Article 265 of the Constitution had no application and no separate statutory enactment was required to validate the recovery. As the underlying circular had not been separately challenged, it was argued, the judgments relied upon by the Bank remained distinguishable on facts.

To squarely challenge the foundational circular fixing the charges, counsel for the Bank sought permission to amend the writ petition by incorporating appropriate pleadings, disputing the respondents’ submissions in rejoinder. With the consent of both sides, the Court granted liberty to amend, directing the Bank to carry out the amendments and supply an advance copy of the amended petition to counsel for the respondents before the next date of hearing.

Considering the substantial questions of law involved, the Court directed that a copy of the writ petition be supplied to the office of the Advocate General, Mr. Rajendra Prasad, and listed the matter for Jul 22, 2026 in the supplementary cause list, after the name of the junior counsel to the Advocate General is reflected in the cause list for the respondents.

Title: Au Small Finance Bank Ltd v. State of Rajasthan

Case No.: S.B. Civil Writ Petition No. 12432/2026

Counsel for petitioner: Mr. Vijay Purohit, Mr. Hanuman Singh Gour, Mr. Pradeep Singh Rajpurohit, Mr. Arpit Mehta

Counsel for respondent: Mr. Raj Singh Bhati and Mr. Paramvir Singh for Mr. Rituraj Singh Bhati, GC; Mr. Sandeep Soni for Mr. B.L. Bhati, AAG