TIRATH S. THAKUR, J. ( 1 ) ASSESSMENT under the Karnataka Agrl. IT Act, for asst. yrs. 1981-82 to 1985-86 were completed against the petitioner by the Agrl. ITO, Madiker. Aggrieved, the petitioner preferred appeals before the Dy. Commr. of Commercial Taxes, Mangalore, and secured ad interim orders of stay against the recovery of the amount subject to the petitioner depositing a part of the amount and securing the balance by way of bank guarantees. The appeals eventually failed and were dismissed by a common order of the Dy. Commissioner dt. 19th of March, 1990. Soon thereafter, the bank guarantees furnished by the petitioner were invoked and the balance amount of tax covered by the same collected. The order passed by the Dy. Commissioner was all the same challenged in appeals before the Karnataka Tribunal which too met the same fate and were dismissed by the Tribunal on 3rd of November, 1994. Revision petitions against the Tribunal's order have been filed before this Court which have been heard and reserved for orders. ( 2 ) IN the meantime, by a notice dt. 7th of June, 1996, the Asstt. Commr. of Agrl. IT, Virajpet, proposed to levy a penalty as provided under s. 42 (1) for the default committed by the petitioner in making the payment of the amount of tax determined. Objections were filed to the notice which were considered and rejected by the Asstt. Commr. of Agrl. IT by his order dt. 6th of march, 1997, and a penalty at the prescribed rate amounting to Rs. 7,65,578 levied. Aggrieved, the petitioner has questioned the said order in the present petitions. ( 3 ) I have heard Mr. Sarangan, learned senior counsel appearing for the petitioner/ company who argued that the impugned order levying the penalty was illegal for it overlooked the fact that there was in force an order of interim stay from the appellate authority in the face whereof the petitioner/company could not be deemed to have been in default so as to warrant the imposition of any penalty. He contended that the Act did not permit levy of a penalty except in cases where there was a default on the part of the assessee in making the payment of tax determined against an assessee who had the benefit of an order of stay in its favour, no matter the said order was subsequently vacated. He contended that the Act did not permit levy of a penalty except in cases where there was a default on the part of the assessee in making the payment of tax determined against an assessee who had the benefit of an order of stay in its favour, no matter the said order was subsequently vacated. ( 4 ) SEC. 41 of the Act provides that the amounts specified as payable in the notice of demand shall be paid by the assessee within the time at the place and to the person mentioned in the notice or if no time is mentioned, then on or before the first day of month following the date of service of the notice or order and any assessee failing to pay shall be deemed to be in default. Sec. 42 on the order hand covers cases where the assessee is in default in making the payment of the tax and provides that where an assessee is in default, the whole of the amount outstanding on the date of the default shall become immediately due and the persons liable to pay the same shall pay a penalty at the rates prescribed therein. In the instant case, it is not in dispute that notice of demand had been issued to the petitioner in respect of each one of the years of assessment calling upon it to remit the amount mentioned therein. In terms of the said notices, the petitioner was required to deposit the amount of tax on the dates that have been detailed in the impugned order as under : sl. No. Asst. yr. Amount due Due date Date of payment for payment 1. 1981-82 5,09,028 04-03-1989 26-3-1990 2. 1982-83 5,78,183 06-03-1989 26-3-1990 3. 1983-84 9,12,789 06-03-1989 26-3-1990 4. 1984-85 3,34,188 23-06-1989 26-3-1990 ( 5 ) 1985-86 5,66,212 19-06-1989 26-3-1990 it is also not disputed that during a fairly substantial part of the period between the due dates of payment and the 26th of March, 1990,. e. , the date when the bank guarantees were invoked there was an interim order of stay operating in favour of the petitioner. The question then is whether the stay of the recovery as ordered by the appellate authority could grant an immunity to the petitioner against the levy of penalty for the said intervening period after the orders were vacated and the appeals dismissed. The question then is whether the stay of the recovery as ordered by the appellate authority could grant an immunity to the petitioner against the levy of penalty for the said intervening period after the orders were vacated and the appeals dismissed. A similar question fell for consideration in Lalithadri Coffee Estate and ors. vs. Agrl. ITO and Ors. ILR1995 KAR 753 , [1995 ]213 ITR602 (KAR ), [1995 ]213 ITR602 (Karn ), 1995 (2 )Karlj570. Relying upon the judgment of the supreme Court in Haji Lal Mohd. Biri Works vs. State of U. P. AIR1973 sc 2226 , (1974 )3 SCC137 , [1974 ]1 SCR25 , [1973 ]32 STC496 (SC ) and the decision of a division Bench of this Court in Satischandra and Co. vs. Dy. CCT (1995) 96 STC 417 (Kar), the following conclusions were summarised by me : " (i) That the liability to pay penalty under s. 42 of the Karnataka Agrl. IT Act arises automatically on the failure of the assessee to pay the amount of tax determined within the period prescribed under s. 41 (1) of the said Act; (ii) That there is nothing in the language of s. 42 of the said Act which may prevent the imposition of the penalty because of the operation of an order of stay issued by a competent court; (iii) That the issue of an interim order of stay preventing recovery of the amount of tax determined against the assessee, does not disable the assessee concerned from making the payment of the amount so determined as a measure of abundant caution if he is otherwise keen to avoid the imposition of a liability by way of penalty; (iv) That in the absence of any provision making interest recoverable on the delayed payments of the tax by an assessee, the provision regarding imposition of penalty is in substance a provision for payment of interest on such delayed payment; (v) That an order of stay against the recovery of tax does not extinguish the liability but simply casts a cloud and postpones the same as long as the order of stay remains operative. " 5. The above decision provides a complete answer to the present writ petitions also, although mr. Sarangan, wanted this Court to refer these petitions to a Division Bench, as according to him the same required reconsideration. " 5. The above decision provides a complete answer to the present writ petitions also, although mr. Sarangan, wanted this Court to refer these petitions to a Division Bench, as according to him the same required reconsideration. I do not however, see any reason why the view taken by this court in the above decision can be said to have been rendered untenable requiring either a discordant note or a reference to the Division Bench. Following the said decision and for the detailed reasons set out therein, I have no hesitation in holding that the provisions of s. 42 are only compensatory in character and that upon the vacation of the interim order of stay secured by an assessee, it is rendered liable to pay interest at the stipulated rates as envisaged by s. 42 even for the period during which the stay order granted a temporary protection for it. The levy of interest even though termed as penalty under s. 42, by the respondent-Asstt. Commissioner, was, therefore, perfectly justified having regard to the fact that the service of the demand notices was not in dispute nor was it disputed that the payment of the balance amount of tax determined against the petitioner was received only on 26th March, 1996. There is no merit in these petitions, which are hereby dismissed in limine.