K.Selvakumar 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 and demanded payment of Rs. 2,74,350/- along with interest and GST, which the petitioner paid. Thereafter, the respondent issued an order demanding an additional 50% penalty with 24% interest, calculated as Rs. 1,61,867/-, to be paid within three days, treating the order as a charge memo and requiring an explanation. The petitioner filed a writ petition challenging this order.

Held

The Court held that the impugned order imposing a fine of Rs. 1,61,867/- with GST under Rule 2(c)(ii) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC was unsustainable. The Court found that Rule 6(n) of the said Code mandates that before imposing any punishment upon charges proved at an enquiry, the delinquent must be given an opportunity to make a representation against the proposed punishment. This opportunity of personal hearing was not followed by the respondent. The respondent directly imposed the punishment and directed payment within three days, failing which disciplinary action would be initiated. The Court reasoned that as per the rules, an opportunity of hearing must be given before passing any order of recovery. Therefore, the impugned order, which directly imposed a recovery without hearing the petitioner, was set aside. The respondent was directed to issue a fresh show-cause notice and provide an opportunity of hearing before initiating appropriate proceedings.

Key Issues

1. Whether the impugned order imposing a penalty of Rs. 1,61,867/- along with interest and GST on the petitioner for stock shortage, without providing an opportunity of personal hearing, is violative of Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC? Petitioner's contention: The respondent erred in directly imposing the penalty and treating the order as a charge memo without affording the petitioner a personal hearing, which is mandated by Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC. The petitioner had already paid the stock shortage amount, and the subsequent penalty imposition without due process is illegal. Respondent's contention: The respondent argued that only a penalty has been imposed, and the shortage amount was paid voluntarily by the petitioner. The penalty was imposed as per prevailing rules, and the petitioner was required to pay it within three days, after which the respondent would consider appropriate orders.