R.Ganesan vs. The District Manager

Facts

The petitioner, R. Ganesan, a Supervisor at TASMAC Shop No. 5018, Karur District, was directed by the respondent, the District Manager of TASMAC, Karur, 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. 11,05,300/- and directed payment of this amount along with interest and GST. The petitioner complied. Thereafter, the respondent issued an impugned order dated 21.05.2020, imposing a penalty of Rs. 6,52,127/- (50% of the stock shortage amount) along with 24% interest and GST, demanding payment within three days and treating the order as a charge-memo, requiring an explanation within the same period. The petitioner filed a writ petition challenging this order.

Held

The Court held that the respondent authority failed to comply with Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC, which mandates providing the delinquent an opportunity to make a representation against the proposed punishment after charges are proved in an enquiry. The respondent directly imposed a recovery of Rs. 6,52,127/- without affording the petitioner a personal hearing. The Court reasoned that the impugned order, which directly imposed a penalty and recovery without the mandatory opportunity of hearing, was unsustainable. 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. The ratio is that statutory rules mandating an opportunity of hearing before imposing penalties must be strictly followed.

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 and directing recovery of stock shortage amount, as stipulated by Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC? Contentions: Petitioner: Argued that the respondent failed to provide a personal hearing before imposing the penalty and recovery, directly issuing an order demanding payment within three days and treating it as a charge-memo, thereby violating Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC. Respondent: Contended that only a penalty was imposed, and the shortage amount was paid voluntarily by the petitioner. They argued that the penalty was to be paid within three days as per prevailing Rules, after which appropriate orders would be passed.