Recovery based on undisclosed inquiry material violates natural justice and cannot stand.

The petitioner, an electrical contractor engaged for works under the Saubhagya Yojna, challenged a recovery order dated 10 December 2021 for ₹39,95,102.

The petitioner alleged that the work had been completed, the site handed over, and the defect-liability period expired before recovery was ordered; it also contended that the inquiry underlying recovery was conducted without notice or disclosure of the relied-upon material.

The respondents alleged irregularities including billing for connections not established, use of non-prescribed or substandard materials, and duplicate billing.

During the proceedings, the respondents offered to reconsider the matter after providing the relevant material and hearing the petitioner.

1. Whether the recovery order could stand when the petitioner had not been provided the inquiry material or a meaningful opportunity to respond before it was passed

2. Whether the matter should be remanded for reconsideration after disclosure of the relied-upon material and a hearing

The Court applied the principles of natural justice and fair play, requiring a person affected by an adverse quasi-judicial decision to receive a reasonable opportunity to respond to the case against them.

It relied on Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, for the principles that adverse decisions should be reasoned and that reasons support fairness, accountability, and judicial review.

It also referred to Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, concerning the inadequacy of a merely formal opportunity to respond where the decision-making process is unfair or predetermined.

The recovery was based on an inquiry into alleged irregularities, but the respondents did not establish that the petitioner had received the complaint, the material relied upon, or the inquiry report before the recovery order was made.

The Court therefore found that the petitioner had not received a meaningful opportunity to answer the allegations, rendering the order inconsistent with natural justice and fair play.

The respondents’ proposal to reconsider the matter supported remand rather than the Court determining the underlying allegations itself.

They were directed to provide the complaint and relied-upon inquiry material within seven days; the petitioner was to submit a detailed representation within seven days of receiving those documents.

The respondents were then to grant a personal hearing, pass a fresh order, and communicate it within 30 days thereafter.

Any existing interim order was to continue until the authorities decided the matter, and the petition was disposed of.