Rajasthan High Court To Decide If Police Can Levy Fees On Banks For SARFAESI Possession Assistance

The Rajasthan High Court is set to examine whether the Police Department can levy charges on banks for providing police assistance to recover secured assets under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

A Single Bench of Justice Sameer Jain on 6 July was hearing a petition filed by AU Small Finance Bank Ltd challenging the Rajasthan Police Department's levy of charges for providing police assistance in taking possession of secured assets under Section 14 of the SARFAESI Act. He observed:

“….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”

The Bank contended that when police provide assistance pursuant to orders passed by the Chief Judicial Magistrate or other competent authority under Section 14, they merely execute judicial directions and perform a statutory duty, for which no charges can be imposed unless specifically authorised by law.

The Bank further argued that neither Section 46 of the Rajasthan Police Act, 2007 nor Rule 10 of the Rajasthan Police Rules, 2008 empowers the authorities to recover charges for such police assistance.

Opposing the petition, the State argued that the amount collected was not a tax but a fee based on the principle of quid pro quo. It submitted that banks, being commercial entities, are liable to pay for specialised police services provided under an administrative circular.

During the hearing, the Bank sought permission to amend its petition to specifically challenge the circular that formed the basis for the levy of charges. The Court allowed the request and granted liberty to amend the writ petition, while directing the Bank to provide an advance copy of the amended petition to the respondents.

Observing that the matter raised significant legal issues, the Bench directed that a copy of the petition be supplied to the office of the Advocate General.

The case is listed to be heard next on 22 July 2026.

For Petitioner: Advocates Vijay Purohit, Hanuman Singh Gour, Pradeep Singh Rajpurohit and Arpit Mehta

For Respondent: Advocates Raj Singh Bhati, Paramvir Singh, Rituraj Singh Bhati, GC, Sandeep Soni and B.L Bhati, AAG