Sustained statutory penalty remains recoverable despite release of bank guarantee; stay of recovery was not justified.

A sustained statutory penalty remains recoverable from the liable party even if the department released the security bank guarantee. The court held that release of the guarantee did not extinguish the penalty liability or justify a stay of recovery proceedings. Any loss alleged from the improper release of security had to be pursued in appropriate proceedings against the responsible parties, rather than by blocking recovery. The court also noted that the release of the bank guarantee without proper security warranted departmental enquiry and further action if necessary, while recovery of the sustained penalty could proceed.

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Issues: Whether the petitioner was entitled to stay of recovery proceedings for penalty levied under section 29-A of the Kerala General Sales Tax Act, 1963 merely because the bank guarantee furnished for security was released by the department.

Analysis: Penalty had already been sustained in appeal and in the Tribunal, and therefore the liability stood against the petitioner. The release of the bank guarantee furnished for security did not extinguish the recoverability of the penalty from the petitioner. If the petitioner claimed loss because the department released the bank guarantee, the remedy lay in appropriate proceedings against the concerned parties and not in blocking recovery. At the same time, the release of the bank guarantee without proper security called for departmental enquiry and action if warranted.

Conclusion: The petitioner was not entitled to stay against recovery proceedings, and recovery of the sustained penalty could proceed.

Final Conclusion: The writ petition failed on the prayer for stay, though the department was directed to enquire into the release of the bank guarantee and take appropriate action if necessary.

Ratio Decidendi: A sustained statutory penalty remains recoverable from the person liable notwithstanding the department's release of a security bank guarantee, and such release does not by itself justify stay of recovery proceedings.

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