The Rajasthan High Court has clarified that secured creditors under the SARFAESI Act cannot be compelled to deposit funds for police assistance when enforcing possession of secured assets. This ruling reinforces the statutory framework that places enforcement responsibility on the state machinery without imposing financial burdens on lenders.
Background & Facts
The Dispute
The petitioner, Tyger Capital Private Limited (formerly Adani Capital Private Limited), is a secured creditor that had extended a loan to Respondents No. 1 and 2, Shankar Lal Ameta and Rekha Ameta, secured by immovable property located at Patta No. 11304, Village Karda, District Udaipur. Upon default, the petitioner initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). After issuing notices and taking possession under Section 13(4), the petitioner filed an application under Section 14 of the SARFAESI Act before the Chief Judicial Magistrate, Udaipur, seeking assistance to take physical possession of the secured asset.
Key Facts
- The outstanding loan amount due to the petitioner is Rs. 9,90,000
- On 16.04.2025, the learned Magistrate passed an order directing the petitioner to obtain police assistance for taking possession of the secured asset
- The Magistrate’s order further mandated the petitioner to deposit Rs. 6,34,383 as expenses for such police assistance
- Police authorities, by letter dated 27.02.2025 (Annexure-3), had also demanded the same deposit amount
- The petitioner challenged this condition as unauthorized and financially disproportionate to the debt amount
Procedural History
- Date of loan default: Not specified in judgment, but implied prior to issuance of SARFAESI notices
- Date of possession notice under Section 13(4): Not specified
- Date of Section 14 application: Not specified, but filed before Chief Judicial Magistrate, Udaipur
- 16.04.2025: Impugned order passed by Chief Judicial Magistrate directing deposit of Rs. 6,34,383 for police assistance
- 27.02.2025: Police letter demanding deposit of Rs. 6,34,383 issued
- 2026: Writ Petition No. 6232/2026 filed before the High Court of Judicature for Rajasthan at Jodhpur
- 23.03.2026: Judgment delivered by Hon’ble Mr. Justice Sanjeet Purohit
Relief Sought
The petitioner sought deletion of the condition requiring deposit of Rs. 6,34,383 for police assistance under the impugned order dated 16.04.2025, arguing that such a condition has no basis in the SARFAESI Act.
The Legal Issue
The central question was whether Section 14 of the SARFAESI Act permits a Magistrate to impose a condition requiring a secured creditor to deposit expenses for police assistance in taking possession of secured assets.
Arguments Presented
For the Petitioner
The petitioner’s counsel contended that Section 14 of the SARFAESI Act is a procedural mechanism enabling a secured creditor to seek assistance from the District Magistrate or Chief Judicial Magistrate to take possession of secured assets. The provision does not authorize any financial condition, deposit, or cost-shifting to the creditor. Reliance was placed on two precedents: PNB Housing Finance Ltd. v. State of U.P. & Ors. (Allahabad HC, 14.11.2024) and Valeed Ahmed & Anr. v. The Commissioner of Police, Jodhpur & Ors. (Rajasthan HC, 19.04.2022), both of which held that imposing financial obligations on secured creditors under Section 14 is ultra vires the statute.
For the Respondent
The respondents opposed the petition but did not cite any statutory provision or judicial precedent supporting the Magistrate’s condition. Their opposition was based on general assertions of procedural necessity, without substantiating the legal authority for the deposit requirement.
The Court's Analysis
The Court undertook a strict textual interpretation of Section 14 of the SARFAESI Act, which states that a secured creditor may apply to the Magistrate for assistance in taking possession of secured assets, and the Magistrate shall, if satisfied, take such steps as may be necessary to assist the creditor. The Court observed that the provision is silent on any financial obligation, deposit, or reimbursement mechanism.
"Evidently, there is no provision under Section 14 of the SARFAESI Act which authorizes learned Magistrate to direct secured creditor to deposit any expenses towards securing police assistance in taking possession of secured assets."
The Court emphasized that the SARFAESI Act was enacted to ensure expeditious enforcement of security interests without judicial delays or financial barriers. Imposing a deposit requirement effectively transforms the Magistrate’s role from facilitator to gatekeeper, contrary to the legislative intent. The Court further noted that police assistance under Section 14 is a statutory duty, not a service for which fees can be levied on the creditor. The reliance on PNB Housing and Valeed Ahmed was accepted as consistent with the statutory scheme and binding on coordinate benches.
The Verdict
The petitioner succeeded. The Court set aside the condition in the impugned order dated 16.04.2025 requiring deposit of Rs. 6,34,383 for police assistance. The petitioner is directed to move an execution application before the concerned police authorities to enforce the Magistrate’s order for possession, and the police are directed to comply with the order at the earliest. The writ petition is disposed of with no order as to costs.
What This Means For Similar Cases
Police Assistance Is a Statutory Duty, Not a Paid Service
- Secured creditors are not liable to pay any fees, deposits, or reimbursements to police for executing possession orders under Section 14 SARFAESI Act
- Any demand by police or Magistrate for such deposits is legally invalid and can be challenged via writ petition
- Practitioners should immediately object to such conditions in Section 14 applications and cite Tyger Capital and Valeed Ahmed
Magistrates Cannot Add Conditions Not Found in the Statute
- Judicial officers must strictly adhere to the text of Section 14 SARFAESI Act and cannot create procedural hurdles
- Conditions such as deposit of money, furnishing of security, or prior clearance are ultra vires and subject to quashing
- This ruling reinforces the principle that statutory enforcement mechanisms must remain accessible and unimpeded by judicial overreach
