Community Guilt? Madras High Court Reads Down TASMAC Circular Initiating Action Against All Employees Of Shop In Case Of Overpricing

Justice Bharatha Chakravarthy made it clear that a collective action could be taken only when there was prima facie material to show that all the employees had colluded and shared the profits among themselves. The court added that unless there was prima facie material, community liability could not be fastened merely based on the circular. Thus, the court deemed it fit to read down the circular to such an extent.

“Many times it is found that all the employees of the shop collude together and collect an extra amount and it has been shared among them, that is how the action is necessitated. There can be no quarrel over the proposition that in such a case, such a charge can be levied against all the employees of the Corporation that they all jointly indulged in the said activity and committed the misconduct. Therefore, unless there is a prima facie material pointing out the said event, merely based on the Circular fastening community liability action should not be taken. To that extent, the impugned Circular can be read down by this Court,” the court said.

The court was hearing a petition filed by the Tamil Nadu Tasmac Virpanaiyaalargal Nala Sangam through its State Secretary challenging the new circular. The Sangam argued that when there was already a circular holding the erring employee alone as responsible, the new circular alters the position and introduces a new rule of discipline and would thus fall under Entry 9 Schedule IV of the Industrial Dispute Act. The Sangam also argued that the TASMAC should have issued notice to the Sangam under Section 9A of the Act and in the absence of the same, the circular was liable to be quashed. It was further submitted that the concept of punishing on vicarious liability or joint liability was unknown to Indian Law and thus, the circular was fundamentally erroneous.

The Additional Advocate General, on the other hand, submitted that it was not framing any new rule and it would thus not fall under any Entry under IV Schedule of the Act. It was thus claimed that there was no violation of Section 9A of the Act. It was further submitted that even assuming there was a violation of Section 9A, the Sangam had an alternative remedy to raise an industrial dispute and thus, the court need not entertain the present petition. The locus of the Sangam was also challenged on the ground that the disciplinary enquiry is an individual matter and thus, the union could not be permitted to interdict the same.

Another individual also impleaded himself into the case and supported the circular stating that most often, the employees of a shop colluded with each other for extra money. He added that sometimes the QR code itself was tampered and thus, quashing the circular would only lead to greater violation of the customer's rights.

The court however observed that only based on prima facie material, collective action could be taken against all employees. The court also noted that when the circular applied to every workman in general, the trade union could be permitted to approach the court.

With respect to the private individual's submissions, the AAG informed the court that the State was in the process of digitizing the activities of the TASMAC. He added that once the computerization was done, the bottles could be scanned, and only the price of the bottle would be shown in the computerized billing system. The AAG assured the court that all the shops in the State would be digitized by March 2025 and it would be a foolproof system preventing shop supervisors, employees, or any other person from tampering with the products for a higher sum.

Thus, recording the submissions, the court disposed of the plea by upholding the circular but adding that action could be taken against all employees only upon prima facie materials.

Counsel for the Petitioner: Mr. S. Kumaraswamy

Counsel for the Respondent: Mr. J. Ravindran Additional Advocate General Assisted by Mr. K. Sathishkumar, Mr. K. Surendran Addl. Government Pleader, Mr. S. Muralidharan (Party in Person)

Case Title: State Secretary v Additional Chief Secretary and Others

Citation: 2025 LiveLaw (Mad) 21

Case No: W.P.No.33765 of 2024