Cross-examination rights in demand proceedings: refusal to allow it vitiated adjudication and required remand for fresh decision.

Denial of cross-examination of the key deponent who gave the statement forming the basis of the demand was held to violate natural justice. The demand rested mainly on the supplier's records and the Director's statement denying sale of caustic soda to the appellant, while the appellant's defence directly disputed that version. In those circumstances, the statement could not be used against the appellant without affording cross-examination, and the reasons for refusing it were found unsustainable. The adjudication was therefore vitiated, and the matter was remitted for cross-examination, filing of reply, and fresh adjudication.

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Issues: Whether denial of cross-examination of the key deponent, whose statement formed the basis of the demand, vitiated the adjudication for breach of natural justice.

Analysis: The demand was founded mainly on the records of the supplier and the statement of its Director denying sale of caustic soda to the appellant. The appellant's defence directly conflicted with that statement. In such a situation, the statement of the deponent could not be relied upon against the appellant without affording an opportunity of cross-examination. The reasons recorded for refusing cross-examination were found to be neither convincing nor legally sustainable.

Conclusion: Denial of cross-examination was unjustified and the adjudication stood vitiated for violation of natural justice. The matter was sent back for cross-examination, filing of reply, and fresh adjudication.

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