Police personnel providing assistance to banks for property confiscation under the SARFAESI Act cannot bill lenders above the statutory rates set by state police rules, the Rajasthan High Court has ruled.
Justice Sameer Jain, while deciding a batch of writ petitions led by AU Small Finance Bank, held that police authorities cannot hike recovery charges through administrative instructions or departmental circulars. The judgment was pronounced on August 12 and made public on August 19.
Statutory Fee Schedule Restored
The high court set aside billing demands issued in excess of Rule 10 under the Rajasthan Police Rules, 2008. The court instructed authorities to issue revised statements of cost strictly following the fees mandated in the statutory schedule.
However, the bench clarified that the order operates on a prospective basis. Lenders will not be permitted to seek refunds or reopen earlier payments made under previous administrative circulars.
Origin Of The Controversy
The legal challenge arose after commercial banks encountered difficulties obtaining physical custody of secured assets from non-performing asset borrowers, despite issuing statutory notices under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. To take possession without filing civil suits, banks obtained magistrate orders directing local police to assist in the operations.
In one instance, police levied a charge of Rs 1.29 lakh to assign three officers—a sub-inspector, a head constable, and a constable—to assist in taking possession for a default amount of approximately Rs 5.51 lakh. The demand was based on an executive circular issued on February 3, 2026, by the Additional Director General of Police (Welfare).
The petitioning lenders argued that executive circulars could not impose financial obligations without statutory backing or modify police fees for executing court orders. State counsel contended that assisting commercial lenders in recovering mortgaged properties constituted a billable service aimed at protecting private financial interests.
Legal Framework And Prescribed Daily Rates
The high court acknowledged the state’s right to levy user fees for police assistance in private recovery matters. However, the bench ruled that such financial powers are bound by Section 46 of the Rajasthan Police Act, which requires fee schedules to be established through the formal rule-making process.
Under Rule 10 of the Rajasthan Police Rules, 2008, daily deployment charges are fixed at:
- Rs 536 per day for a constable
- Rs 644 per day for a head constable
- Rs 875 per day for a sub-inspector, assistant sub-inspector, or platoon commander
- Rs 1,010 per day for an inspector
The court stated that administrative directives cannot override statutory provisions and specified that any future revisions to deployment charges must be implemented through formal amendments to the rules.
