M.Prem Anand vs. The Senior Divisional Manager

Facts

The petitioner, a Supervisor at a TASMAC shop, was directed by the second respondent (District Manager) 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. 1,93,680/- 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 an additional 50% penalty with 24% interest on the stock shortage amount, calculated as Rs. 1,14,272/-, to be paid within three days, treating the order as a charge memo and requiring an explanation within the same period. The petitioner filed a writ petition challenging this order.

Held

The Court held that the impugned order imposing a fine of Rs. 1,14,272/- with GST under Rule 2(c)(ii) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC was in violation of Rule 6(n) of the said Code. Rule 6(n) 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 proposed punishment. The Court found that this opportunity of personal hearing was not followed by the authorities, who directly imposed the punishment and directed payment within three days. The Court reasoned that when the Rule explicitly requires an opportunity of hearing before passing any order of recovery, the respondents failed to provide this opportunity. Consequently, the impugned order was set aside. The Court directed the respondents to issue a fresh show-cause notice to the petitioner, provide an opportunity of hearing, and then initiate appropriate proceedings.

Key Issues

1. Whether the impugned order imposing a penalty of Rs. 1,14,272/- along with interest on the stock shortage amount, without providing an opportunity of personal hearing to the petitioner, 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 without affording him a personal hearing, which is a mandatory procedural requirement under Rule 6(n) of the Code of Prevention and Detection of Fraudulent Acts in TASMAC. He argued that the authorities directly imposed the penalty and directed payment within three days, failing which disciplinary proceedings would be initiated, thus violating his right to natural justice. Respondents' arguments: The respondents argued that only a penalty had been imposed, and the shortage amount was paid voluntarily by the petitioner. They stated that the penalty amount was to be paid as per prevailing rules, and thereafter, appropriate orders would be passed. They did not explicitly address the procedural violation of not providing a personal hearing.