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CS Professional · Compliance Management, Audit and Due Diligence · Non-Compliances, Penalties and Adjudications

An adjudicating officer proposes to penalise Zenith Components Ltd and its CFO for a default. Before imposing the penalty, what must the officer do?

The adjudicating officer must give a reasonable opportunity of being heard to the company, the officer in default or any other person concerned before imposing any penalty. This is a mandatory natural justice requirement, and hearing only the company is not enough.

  1. AGive a reasonable opportunity of being heard to the company, the officer in default or any other person concernedCorrect
  2. BObtain prior approval of the Regional Director
  3. CHear only the company, since the officer in default is bound by its reply
  4. DRefer the matter to the Tribunal for a hearing

Explanation

Section 454(4) requires the adjudicating officer, before imposing any penalty, to give a reasonable opportunity of being heard to the company, the officer in default or any other person. Hearing only the company is wrong because the others are also affected.

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