Interim injunction in municipal tax dispute continued on triable issues, with protection conditioned on an additional deposit.

Interim injunction against recovery of the impugned municipal tax demand was continued because the dispute over revised property tax and rateable value raised substantial triable issues, including the effect of prior assessment orders, earlier part-deposits, the stage of completion and occupation of the building, and the components used in enhancing valuation. Applying the settled principles for interim relief, the Court found that the plaintiff needed only a prima facie substantial issue for trial, not a conclusive case, and that the balance of convenience and risk of irreparable injury favoured protection pending adjudication. Continuation of relief was made conditional on an additional deposit of Rs. 35 lakhs within the time allowed, failing which the injunction would stand vacated.

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Issues: Whether the plaintiff was entitled to continue the ad interim injunction restraining recovery of the impugned municipal tax demand, on the basis of a prima facie case, balance of convenience and irreparable injury.

Analysis: The dispute concerned revision of property tax and rateable value under the municipal law, including the effect of prior assessment orders, part deposits made under earlier court orders, the stage of completion and occupation of the hotel building, and the basis on which the municipal authority had included various components while enhancing the valuation. The Court held that these matters raised serious and bona fide triable questions. On the accepted principles governing interim relief, the plaintiff was not required to establish a conclusive case at this stage, but only to show a substantial issue for trial. In view of the existing admissions, earlier deposits, and the potential hardship of enforcing the entire demand before adjudication, the balance of convenience and the risk of irreparable injury favoured continuation of protection.

Conclusion: The plaintiff was entitled to continuation of the ad interim injunction, subject to depositing an additional sum of Rs. 35 lakhs within the time granted, failing which the injunction would stand vacated.

Final Conclusion: Interim protection against recovery of the impugned tax demand was maintained pending trial, while safeguarding the revenue by requiring an additional deposit.

Ratio Decidendi: Interim injunction may be continued where the dispute raises substantial triable issues and the equities favour protection against coercive recovery pending adjudication, especially where prior deposits have already been made.

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