Police Cannot Charge Lender for SARFAESI Aid: Raj HC

Police Act Cannot Justify Charging Lenders for SARFAESI Possession Help: Rajasthan High Court Quashes SP's Demand

Published: 1 November 2026 · NyayVidhan

The Rajasthan High Court at Jaipur quashed a Superintendent of Police's letter demanding expenses from a housing finance company for police help in taking possession of a secured asset under Section 14 of the SARFAESI Act (para 14). Following Tyger Home Finance and the Division Bench in AU Small Finance Bank, it held that the Act has no provision for charging such expenses, so the demand was without jurisdiction, and that the Police Act and its rules could not be invoked (para 13).

Key holdings

A Section 14 order gives the secured creditor a right to take possession as the Magistrate directs (para 9).

The Magistrate may direct police assistance, and under Section 14(1-A) a subordinate officer may be directed to take possession (paras 10, 13).

The Act has no provision for charging any amount for expenses, so the Superintendent of Police's demand was without jurisdiction (para 13).

The Police Act and its rules cannot be invoked where powers are exercised under the SARFAESI Act (para 13).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

The petitioner, a housing finance company, said the borrowers had defaulted, so it took measures under Section 13 of the SARFAESI Act, 2002 and applied under Section 14 (para 2). On 6 March 2024 the District Magistrate, Sikar, allowed the application and directed the Superintendent of Police, Sikar, to provide police assistance for taking possession (para 3). The petitioner said no assistance followed and that on 27 March 2026 the Superintendent of Police demanded expenses, though the 2024 order contained no such direction (paras 1, 4-5). The police raised an alternative remedy under the Act and claimed a right to demand expenses under the Police Act, rules and circulars (paras 6-7).

Court's Findings

The Court held that a Magistrate's order under Section 14 for taking possession of a secured asset creates a right in the secured creditor to take possession as directed (para 9), and that Section 14 allows the Magistrate to direct police assistance for that purpose (para 10). It noted that a co-ordinate Bench in Tyger Home Finance had found no provision in Section 14 authorising a Magistrate to make the secured creditor deposit police expenses, and had set aside such a direction (para 11). It also noted the Division Bench judgment in AU Small Finance Bank of 29 October 2026, which quashed a Single Judge's order requiring a bank to deposit charges under Rule 10 of the Rajasthan Police Rules, 2008 and directed the State to provide police force without levying charges (para 12). Agreeing, the Court held that under Section 14(1-A) the Magistrate may direct a subordinate officer to take possession, that the Act has no provision for charging any amount for expenses, and that the police demand was therefore without jurisdiction. Where powers are exercised under the SARFAESI Act, the Police Act and its rules cannot be invoked (para 13).

Legal Principle

A Magistrate's order under Section 14 of the SARFAESI Act may direct police assistance to the secured creditor, but the Act has no provision for charging expenses for it. A police demand for such expenses is without jurisdiction, and the Police Act and its rules cannot be invoked where powers are exercised under the Act (paras 10, 13).

NyayVidhan's view · Practice note

Why It Matters

Secured creditors asked by the police to pay expenses before help is given under a Section 14 order can cite this ruling, which followed Tyger Home Finance and the Division Bench in AU Small Finance Bank and held such a demand without jurisdiction (paras 11-13). Its added point is that the Police Act and its rules cannot justify the demand when the police act under the SARFAESI Act (para 13). The order does not separately deal with the objection that the Act offers an alternative remedy (paras 6, 9-14). On the police's duty in such cases, see also AU Small Finance Bank v. Balraj Singh, where the police were directed to restore a bank's SARFAESI possession within 15 days.

Editorial comment by the NyayVidhan Editorial Desk. It is not part of the Court's judgment and is not legal advice.

Precedents Relied Upon

Tyger Home Finance Private Limited v. State of Rajasthan & Ors. S.B. Civil Writ Petition No. 14449/2025, decided on 30.10.2025
Followed Discussed at ¶ 11, 13
Co-ordinate Bench order, quoted by the Court, holding that no provision of Section 14 of the SARFAESI Act authorises the Magistrate to direct the secured creditor to deposit expenses of police assistance, and setting aside such a direction (para 11). The Court took the same view and held the police demand without jurisdiction (para 13).
AU Small Finance Bank Ltd. v. The State of Rajasthan & Ors. D.B. Special Appeal Writ No. 1107/2026, decided on 29.10.2026
Followed Discussed at ¶ 12, 13
Division Bench judgment at the Principal Seat, Jodhpur, cited by the petitioner's counsel, quashing a Single Judge's order that required a bank to deposit charges under Rule 10 of the Rajasthan Police Rules, 2008 and directing the State to provide additional police force for Section 14 orders without levying charges (para 12). The Court took the same view (para 13).