Police Aid – Free of Cost for Executing Orders of Section 14 SARFAESI Act
Bar Bulletin and the Judgment dated 2910.2026 of the High Court of Rajasthan at Jodhpur in D.B. Special Appeal Writ No.1107 / 2026 of Au Small Finance Bank Ltd Vs. The State of Rajasthan and others with connected matters.
No Police Charge for Execution of Orders under Section 14 SARFAESI Act
Mere fact that the underlying loan transaction is commercial in nature does not alter the character of statutory process of Section 14 SARFAESI Act
Police Assistance for execution of Section 14 SARFAESI Orders partakes character of a sovereign function of the State
Duty of the State to provide police assistance for execution of Orders under Section 14 SARFAESI Act without Charges As of now, this is one of the strongest recent Division Bench authorities available to banks challenging such demands. It is particularly useful in matters involving:
- SARFAESI possession proceedings,
- District Magistrate orders under Section 14,
- police deployment charges,
- recovery notices issued by State Police authorities,
- writ petitions challenging recovery of police assistance cost
the demand raised by the police authorities for police protection charges sought under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as “the SARFAESI Act”) has been upheld, and a direction has also been issued to levy the charges as per Rule 10 of the Rajasthan Police Rules, 2008.
- Section 14(1) of the SARFAESI Act, empowers the Chief Metropolitan Magistrate or the District Magistrate, upon a request being made by the secured creditor, to take possession of the secured assets and the documents relating thereto and forward the same to the secured creditor. Sub-section (2) of Section 14 further empowers the Chief Metropolitan Magistrate or the District Magistrate to take, or cause to be taken, such steps and to use, or cause to be used, such force as may be necessary for securing compliance with the provisions of sub-section (1). A conjoint reading of the aforesaid provisions makes it evident that the statute not only confers power upon the competent authority to facilitate the taking over of possession of the secured assets, but also casts a corresponding duty upon such authority to ensure the effective implementation of its directions in accordance with law. Therefore, for effectively implementing the orders passed under Section 14 of the Act of 2002, the police aid is required. Thus, the State Government is under an obligation to provide the same without any charges.
- The orders passed by the Chief Metropolitan Magistrate or the District Magistrate under Section 14 of the SARFAESI Act are statutory in nature as they bear the trappings of judicial orders, inasmuch as they are passed by a statutory authority in the exercise of powers conferred by law. The implementation of such orders, therefore, constitutes the discharge of a statutory obligation in furtherance of the legislative mandate. The effective implementation of such orders is essential to ensure the fulfillment of objects underlying the SARFAESI Act and that the statutory remedy provided to secured creditors is rendered meaningful and efficacious and for this purpose, if the police assistance is required then it is the duty of the State to provide the same without levy of any charges. The police assistance required in the present case cannot be equated with the police assistance sought for as mentioned in Section 46 of the Act of 2007, as the assistance required in the present case is to provide aid to the sovereign function for achieving the objectives enshrined under the SARFAESI Act, whereas the assistance required for maintaining law and order in the private functions can be granted on payment of cost as mentioned in Section 46 of the Act of 2007.
- It is also significant to note here that the SARFAESI Act does not prescribe any separate mechanism for the execution of orders passed under Section 14. In this backdrop, the specific conferment of power under sub-section (2) thereof to take such steps and employ such force as may be necessary assumes considerable significance. The said provision necessarily contemplates the assistance of the police and other relevant authorities, wherever required, to facilitate the implementation of such orders. Where police assistance is requisitioned for discharging this statutory obligation and implementing the directions of the competent authority, the same partakes of the character of a sovereign function of the State. Consequently, the cost of providing such assistance cannot be imposed upon the secured creditor merely because the proceedings arise out of a commercial transaction between the secured creditor and the borrower.
- In the present case, the police assistance sought by the appellant-petitioner was not for any independent private purpose, but for implementation of orders passed by the competent authority under Section 14 of the SARFAESI Act, with a view to advancing the statutory objectives of the said enactment. The State, being under an obligation to facilitate the effective implementation of such orders, cannot insist upon the payment of charges in absence of a clear statutory provision authorising the levy of such charges in the circumstances in question. The mere fact that the underlying loan transaction is commercial in nature does not alter the character of the statutory process through which possession of the secured assets is sought to be taken.
