Coercive recovery during a pending pre-deposit dispensation application was restrained, with conditional release of detained goods.

Coercive recovery should not proceed while an appeal and an application for dispensation of pre-deposit under the proviso to Section 35F remain pending, because initiating recovery on the footing that no stay has been granted is unjust and unreasonable in that situation. Interim protection against recovery and detention of goods may be granted, but it can be made conditional to safeguard revenue. Here, the relief was tied to execution of a bond and a restraint on alienation or further encumbrance of immovable properties, including plant and machinery. Coercive recovery was therefore restrained until disposal of the dispensation application, and the detained goods were ordered to be released subject to those conditions.

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Issues: Whether recovery proceedings could be continued while the appeal and the application for dispensation of pre-deposit were still pending, and whether interim protection against recovery and detention of goods could be granted subject to conditions.

Analysis: The appeal and the application under the proviso to Section 35F were pending, yet coercive recovery was initiated on the footing that no stay had been granted. The order treats such recovery as unjust and unreasonable during the pendency of the stay application, and holds that recovery should not proceed until the appellate authority finally disposes of that application. The relief is made conditional to safeguard the revenue by requiring a bond and a restraint against alienation or further encumbrance of immovable properties, including plant and machinery.

Conclusion: Coercive recovery was restrained until disposal of the pre-deposit dispensation application, and detained goods were ordered to be released subject to the stated conditions, in favour of the petitioner.

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