Balaji vs. The District Manager

Facts

The petitioner, a Supervisor at TASMAC Shop No.4952, was directed by the respondent (District Manager, TASMAC) to close the shop due to the COVID-19 lockdown. Subsequently, the petitioner was instructed to shift liquor bottles to a marriage hall for safekeeping. In April 2020, the respondent informed the petitioner of a stock deficit of Rs. 2,47,890/- and directed payment of this amount along with interest and GST. The petitioner complied. Thereafter, the respondent issued an order demanding payment of 50% penalty (Rs. 1,46,256/-) along with 24% interest on the stock shortage amount within three days, treating the order as a charge-memo and threatening disciplinary action if no explanation was submitted. The petitioner filed a writ petition challenging this order.

Held

The Court held that the impugned order imposing a fine of Rs. 1,46,256/- with GST under Rule 2(c)(ii) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC was invalid. The Court found that Rule 6(n) mandates that a delinquent must be given an opportunity to make a representation against the proposed punishment before any punishment is imposed after charges are proved. This opportunity of personal hearing was not provided to the petitioner. The respondent directly imposed the punishment and directed payment within three days, failing which disciplinary action would be initiated. The Court reasoned that the respondent was supposed to provide an opportunity of hearing before passing any order of recovery. Therefore, the impugned order was set aside. The respondent was directed to issue a fresh show-cause notice to the petitioner and initiate appropriate proceedings after providing an opportunity of hearing.

Key Issues

1. Whether the impugned order imposing a penalty of Rs. 1,46,256/- along with interest and GST on the petitioner for stock shortage is valid, considering the procedural fairness required under Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC? (Question of law and fact) Petitioner's arguments: The petitioner contended that the respondent failed to provide an opportunity of personal hearing before imposing the penalty, which is mandated by Rule 6(n). The order directly imposed the recovery amount and treated it as a charge-memo without following due process. Respondent's arguments: The respondent argued that only a penalty was imposed, and the stock shortage amount was paid voluntarily by the petitioner. The respondent asserted that the penalty was imposed as per prevailing rules and that the petitioner was required to pay it within three days, after which appropriate orders would be considered. The respondent also stated that the petitioner was supposed to pay the penalty amount of the difference within three days in the TASMAC account.