Recovery based on undisclosed inquiry material violates natural justice and must be quashed.

The petitioner, an electrical contractor engaged for works under the Sobhagya Yojna, challenged a recovery order dated 10 December 2021 for ₹48,62,501.

The petitioner asserted that the work had been completed, jointly inspected, and handed over, and that the defect-liability period had expired.

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

The petitioner contended that the inquiry was conducted behind its back and that neither the relied-upon material nor the inquiry report had been supplied.

The respondents offered to reconsider the matter after providing an opportunity to respond and be heard.

Whether the recovery order could stand when it was passed without supplying the petitioner with the inquiry material or providing an effective opportunity to respond

Whether the matter should be remitted to the respondents 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 have a reasonable opportunity to explain and respond to the case against them.

Relying on Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, it reiterated that quasi-judicial authorities must give cogent reasons, which promote fairness, constrain arbitrary decision-making, and facilitate judicial review.

The Court also referred to Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, concerning the need for a meaningful—not merely formal—opportunity before an adverse order is made.

The respondents did not establish that the petitioner had been given the complaint, the material relied upon in the inquiry, or a copy of the inquiry report.

The recovery order was therefore made without enabling the petitioner to address the allegations on which it rested.

In those circumstances, the Court held that the order violated natural justice and fair play; the respondents’ proposal to reconsider the case supported remand rather than sustaining the order.

The respondents were directed to supply the complaint and relied-upon material within seven days; the petitioner was to submit a detailed representation within seven days of receiving those documents; and the respondents were then to provide a personal hearing, pass a fresh order, and communicate it within 30 days thereafter.

Any existing interim order was to continue until the authorities made their decision, and the petition was disposed of.