Bank guarantee for tax deposit disputed; court rejects guarantee substitution, upholds cash deposit requirement to protect public revenue.

Court refused permission to substitute a bank guarantee for a cash deposit of Rs.60 crore in tax recovery proceedings, relying on established fiscal principles that prefer liquid cash over guarantees. The court declined to relax the usual deposit rule, noting a prior reduction in deposit and finding no basis for further concession. It emphasised Supreme Court authority that unconditional stays and interim relief by bank guarantee are inappropriate in public revenue matters because government functioning requires realisable funds and interim relief demands a clear balance of convenience and absence of prejudice to public interest. The bank guarantee request was therefore rejected.

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Issues: Whether the praecipe seeking modification of the interim order to permit a bank guarantee in lieu of the cash deposit of Rs. 60 Crores should be allowed.

Analysis: The matter involves interim fiscal relief where the existing interim order required a cash deposit. The request was to substitute a bank guarantee for the stipulated deposit. The established legal framework for fiscal disputes disfavors unconditional stays and substitution of liquid cash with bank guarantees because governmental revenue operations require realisable funds; interim relief by way of bank guarantees in public revenue matters is ordinarily inappropriate unless exceptional circumstances and the balance of convenience clearly favour such relief. The earlier order had already reduced the deposit amount for stated reasons, and no additional material was presented to justify further concession or to show that the balance of convenience now favours substitution with a bank guarantee.

Conclusion: The praecipe seeking permission to furnish a bank guarantee in lieu of the cash deposit is denied and the claim for modification is dismissed.

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