P.Sampathkumar vs. The Senior Divisional Manager

Facts

The petitioner, P. Sampathkumar, a Supervisor at a TASMAC shop, was directed by the second respondent (District Manager, TASMAC) to shift liquor stock to a marriage hall due to the COVID-19 lockdown. Subsequently, the petitioner was informed of a stock deficit of Rs. 6,41,630/- and directed to pay this amount along with interest and GST, which he did on April 16, 2020. Thereafter, the second respondent issued an impugned order on May 21, 2020, demanding a 50% penalty of Rs. 3,78,562/- along with 24% interest on the stock shortage amount, to be paid within three days, and treating the order as a charge-memo requiring 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 imposing a penalty of Rs. 3,78,562/- 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, the delinquent must be given an opportunity to make his representation against the proposed punishment. The authorities failed to provide this opportunity of personal hearing to the petitioner. Instead, they directly imposed the punishment and directed payment within three days, threatening disciplinary action if not complied with. The Court observed that the respondents issued a notice that directly imposed a recovery without hearing the petitioner. Therefore, as per the Rules, an opportunity of hearing was essential. The impugned order was set aside, and the respondents were directed to issue a fresh show-cause notice and initiate proceedings afresh after providing an opportunity of hearing to the petitioner.

Key Issues

1. Whether the impugned order imposing a penalty and interest on stock shortage, without providing a personal hearing, is in violation of Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC? Petitioner's Arguments: The petitioner contended that the impugned order was passed directly imposing punishment and demanding payment within three days, without affording him an opportunity of personal hearing as mandated by Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC. He argued that this procedural lapse vitiates the order. Respondents' Arguments: The respondents argued that only a penalty has been imposed and the shortage amount was paid by the petitioner voluntarily. They stated that the penalty amount was to be paid as per prevailing rules, and thereafter, appropriate orders would be considered. They did not explicitly address the procedural fairness argument regarding the personal hearing.