Chandrasekaran vs. The District Manager

Facts

The petitioner, a Supervisor at a TASMAC shop, was directed by the respondent (District Manager, TASMAC) to shift liquor stock to a marriage hall due to the COVID-19 lockdown. Subsequently, the respondent informed the petitioner of a stock deficit of Rs. 14,31,830/- and directed payment of this amount along with interest and GST, which the petitioner paid. The respondent then issued an impugned order demanding a 50% penalty of Rs. 8,44,780/- with 24% interest on the stock shortage amount, to be paid within three days, treating it as a charge-memo and requiring an explanation within the same period, failing which disciplinary proceedings would be initiated. The petitioner filed a writ petition challenging this order.

Held

The Court held that the respondent authority failed to follow the mandatory procedure stipulated in Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC, which requires an opportunity of personal hearing to be given to the delinquent before imposing any punishment after charges are proved. The respondent directly imposed a recovery of Rs. 8,44,780/- without hearing the petitioner, treating the notice as a show-cause notice wherein the penalty was already decided. Therefore, the impugned order, which directly imposed punishment without affording the required opportunity of hearing, was set aside. The Court directed the respondent to issue a fresh show-cause notice to the petitioner as per the Rules and provide an opportunity of hearing before initiating appropriate proceedings.

Key Issues

1. Whether the respondent authority followed the mandatory procedure of providing an opportunity of personal hearing to the petitioner before imposing a penalty under Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC. 2. Whether the impugned order imposing a penalty of Rs. 8,44,780/- along with interest and treating it as a charge-memo, without affording a personal hearing, is sustainable in law. Petitioner's arguments: The petitioner contended that the respondent failed to provide a personal hearing as mandated by Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC before imposing the penalty. The impugned order directly imposed the penalty and demanded payment within three days, treating it as a charge-memo, which violates the principles of natural justice. Respondent's arguments: The respondent argued that only a penalty was imposed and the shortage amount was paid voluntarily by the petitioner. The penalty amount was to be paid within three days, after which the respondent would consider and pass appropriate orders. The respondent relied on prevailing Rules for imposing the penalty.