The Rajasthan High Court will examine an important legal issue of whether the Police Department can charge banks for providing police assistance during the recovery of secured assets under Section 14 of the SARFAESI Act, 2002.
The matter came before Justice Sameer Jain on July 6 while hearing a petition filed by AU Small Finance Bank Ltd.
AU Small Finance Bank Challenges Police Charges
AU Small Finance Bank has challenged the Rajasthan Police Department’s decision to collect charges for providing police assistance when banks take possession of secured assets under the SARFAESI Act.
The bank argued that when police officers provide assistance based on an order passed by the Chief Judicial Magistrate or another competent authority under Section 14 of the SARFAESI Act, they are simply carrying out a legal and statutory duty. Therefore, the police cannot charge any fee unless there is a specific law allowing them to do so.
Bank Says No Legal Provision Allows Such Fees
The bank further argued that neither Section 46 of the Rajasthan Police Act, 2007 nor Rule 10 of the Rajasthan Police Rules, 2008 gives the Police Department the authority to collect charges for providing such assistance during SARFAESI proceedings.
According to the bank, the police are only implementing court orders and should not demand payment for performing their official duties.
State Government Defends the Charges
The Rajasthan Government opposed the petition and argued that the amount collected is not a tax but a service fee. The State said the fee is based on the principle of “quid pro quo,” meaning payment is made in return for a specific service.
The government also argued that banks are commercial organisations and should pay for specialised police services provided under an administrative circular.
Court Allows Amendment to Petition
During the hearing, AU Small Finance Bank requested permission to amend its petition so that it could directly challenge the government circular on the basis of which the police are collecting the charges.
The High Court allowed the request and directed the bank to submit the amended petition to the respondents.
Court Calls the Issue Important
Justice Sameer Jain observed that the case involves important legal questions regarding the relationship between the SARFAESI Act, the Rajasthan Police Act, and the constitutional principles governing the collection of fees by government authorities.
Considering the significance of the issue, the Court directed that a copy of the petition be sent to the office of the Advocate General. The next hearing in the case has been scheduled for July 22, 2026.
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