Police Assistance Fees for SARFAESI Possession Restricted to Statutory Rates: Rajasthan HC

The Rajasthan High Court has decisively barred the State police from leveraging administrative circulars to impose exorbitant fees for assistance in asset recovery, ruling that any demand for service charges without explicit statutory backing is an illegal exercise of executive power. Striking down inflated demands based on internal circulars, the Bench affirmed that the State cannot bypass legislative rules to recover costs that have become 'obsolete' without formal amendments.

Justice Mukesh Rajpurohit adjudicated the matter, following the precedent set by a coordinate bench in a similar legal challenge. The dispute centered on the legality of high service charges demanded by police authorities for providing assistance during the execution of possession orders under Section 14 of the SARFAESI Act 2002.

State's Power to Levy Charges

The Rajasthan High Court emphasized that while the State has the power to levy charges for deploying police personnel, such power must be strictly governed by statute. The Bench noted that the enforcement mechanism under the SARFAESI Act 2002 facilitates the use of force under judicial orders, making police assistance a statutory direction.

The Bench explained that "...mere executive instructions, an administrative fiat, or internal circulars... cannot override, amend, or substitute statutory rules formulated by the State Legislature. If the rates prescribed under Rule 10 of the Rules of 2008 have become obsolete due to the passage of time and rising salary costs of police personnel, the sole remedy available to the State Government is to formally amend Rule 10 in accordance with law."

The Court has following directions:

"29. The respondent-police authorities are permitted to raise demands for police assistance under Section 14 of the SARFAESI Act, strictly in consonance with the provisions enshrined under Section 46 read with Section 2(m) of the Rajasthan Police Act, 2007, restricted exclusively to the rates as specified under Rule 10 of the Rajasthan Police Rules, 2008, and not otherwise.

• Any demand raised by the police authorities solely on the basis of executive circulars or instructions, including the circular dated 03.02.2026, in excess of the rates prescribed under Rule 10 of the Rules of 2008, is held to be without authority of law and the same is accordingly quashed and set aside. The respondents shall issue revised demand bills to the petitioners strictly adhering to the charges as prescribed under Rule 10 of the Rules of 2008.
• It is categorically and cautiously clarified that the present judgment shall operate with prospective effect on the principle of prospective overruling, and shall not entitle borrowers or banks to reopen or seek refunds of retrospective police charges already imposed and deposited under earlier circulars.

1. The State Government 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."

Background

The petitioner, a financial institution, approached the High Court challenging a demand notice dated October 15, 2025, issued by the police authorities. The bank argued that the police were demanding charges for executing an order under Section 14 of the SARFAESI Act 2002 that were significantly higher than those prescribed under Rule 10 of the Rajasthan Police Rules, 2008. The petitioner relied heavily on a previous decision of a Co-ordinate Bench in AU Small Finance Bank Ltd. vs. State of Rajasthan & Ors. ( "S.B. Civil Writ Petition No.12432/2026, vide order dated 12.08.2026": 2026 CaseBase(RAJ) 7179), which had already examined the statutory embargo under Section 46 of the Rajasthan Police Act, 2007.

The State contended that police deployment for private commercial recovery operates on a fee-for-service principle and that existing statutory rates were obsolete compared to modern salary expenditures. However, the Rajasthan High Court maintained that until a formal statutory amendment to the Rules is notified, no demand can exceed the rates specified in Rule 10. Consequently, the writ petition was disposed of by quashing the excess demand and directing the issuance of revised bills.

Case Details:
Case No.: S.B. Civil Writ Petition No. 23481/2025
Neutral Citation: 2026:RJ-JD:43494
Case Title: Au Small Finance Bank Ltd vs. The State Of Rajasthan & Ors.
Appearances:
For the Petitioner(s): Mr. Vijay Purohit
For the Respondent(s): Mr. Paramvir Singh

Source: 2026 CaseBase(RAJ) 20830