Sivasamy vs. The District Manager

Facts

The petitioner, a Supervisor at a TASMAC shop, was directed 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. 7,81,050/- 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, calculated as Rs. 4,60,820/-, along with 24% interest on the stock shortage amount, to be paid within three days. This order was treated as a charge-memo, requiring the petitioner to submit an explanation within three days, failing which disciplinary proceedings would be initiated. The petitioner filed a writ petition challenging this order.

Held

The Court held that the impugned order was in violation of Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC. This rule mandates that before imposing any punishment upon charges proved at an enquiry, the delinquent must be given an opportunity to make his representation against the punishment proposed. The Court found that this opportunity of personal hearing was not followed by the respondent. Instead, the respondent directly imposed the punishment, demanding payment of Rs. 4,60,820/- with GST and interest within three days, and treated the order as a charge-memo requiring an explanation within the same period. 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 as per the rules, affording an opportunity of hearing, and then initiate appropriate proceedings.

Key Issues

1. Whether the impugned order imposing a penalty of Rs. 4,60,820/- along with interest and GST on the petitioner, without providing an opportunity of personal hearing, is in violation of Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC? Petitioner's contention: The respondent violated Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC by directly imposing punishment and demanding payment within three days, without affording the petitioner an opportunity for personal hearing or to make a representation against the proposed punishment. The petitioner argued that the impugned order, which treated the demand as a charge-memo and required an explanation within three days, bypassed the mandatory procedural requirement of a prior hearing. Respondent's contention: The respondent argued that only a penalty was imposed, and the shortage amount was paid voluntarily by the petitioner. They contended that the penalty amount was to be paid as per prevailing Rules within three days, after which appropriate orders would be passed. The respondent asserted that the impugned order was a notice requiring payment and an explanation.