Jodhpur (RJ), Aug 20 Police authorities assisting banks in confiscating assets under the SARFAESI Act can levy charges only at the rates prescribed by the law and cannot enhance them through administrative circulars, the Rajasthan High Court has held.
Justice Sameer Jain made the observation while deciding a large batch of writ petitions on charges demanded by the police while enforcing orders to take physical possession of secured properties. The AU Small Finance Bank was treated as the lead petitioner.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is a law that allows banks and financial institutions to recover bad loans without going to court. It lets lenders seize and sell secured properties to recover their money.
The order was delivered by Justice Sameer Jain on August 12 and uploaded on the court's website on August 19.
The high court quashed the charges levied in excess of the rates prescribed under Rule 10 of the Rajasthan Police Rules, 2008, and directed the authorities to issue fresh bills in line with the statutory schedule.
It also clarified that the judgment would operate prospectively and would not permit banks to seek reopening or refund of police charges already imposed and deposited under earlier circulars.
The litigation arose after borrowers defaulted on loans and their accounts were classified as Non-Performing Assets. Following the issuance of statutory notices and other measures, the banks approached the respective magistrates because they could not obtain physical possession of the secured properties.
The magistrates ordered police deployment to assist in the confiscations.
The controversy arose after police demanded Rs 1.29 lakh to deploy three personnel -- one sub-inspector, one head constable and one constable -- in a case involving an outstanding loan of approximately Rs 5.51 lakh. The demand was raised under a February 3, 2026 circular issued by the Additional Director General of Police (Welfare).
The bank argued that the demand had no statutory foundation and that police could not impose charges to carry out functions pursuant to judicial or statutory directions through an executive instruction.
The state opposed the petitions, maintaining that recovery of private mortgaged property served the commercial interests of banks and that deployment of additional police force constituted a chargeable service.
The high court accepted the state's position that police deployment for private recovery could attract user charges, but held that the power to levy those charges remained strictly controlled by law.
Section 46 of the Rajasthan Police Act, read with the statutory definition of "prescribed", requires the applicable rates to be fixed through the prescribed legal framework.
The court noted that Rule 10 specifically prescribed the rates of Rs 536 per day for a constable, Rs 644 for a head constable, Rs 875 for an SI/ASI/PC and Rs 1,010 for an inspector. Administrative instructions could not be used to override these rates, it said.
The court also ruled that any revision in these prices should be brought about through amendment of rules.
