Recovery based on undisclosed inquiry material violates natural justice and requires a fresh hearing.

The petitioner, an electrical contractor engaged for works under the Saubhagya Yojna, challenged a recovery order dated 9 December 2021 for ₹2,93,34,214.

The recovery followed an inquiry that allegedly found irregularities in bill clearances, connections and materials.

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

The respondents did not rebut the non-supply allegation and agreed to reconsider the matter after providing an opportunity to respond.

Whether the recovery order was sustainable when it was passed without supplying the complaint and inquiry material relied upon, or affording the petitioner an opportunity to respond.

Whether the appropriate relief was to quash the recovery order and remit the matter for reconsideration after disclosure and a hearing.

The principles of natural justice and fair play require a person affected by an adverse quasi-judicial decision to receive a reasonable opportunity to explain and respond to the material relied upon.

In Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, the Supreme Court held that quasi-judicial authorities must give cogent reasons, supporting fairness, accountability and effective judicial review.

In Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, the Supreme Court cautioned that a hearing process cannot be an empty formality where the authority has effectively predetermined the outcome.

No particular statutory provision was identified as the basis of the decision.

The respondents’ case relied on inquiry findings alleging serious irregularities, but the petitioner had not been supplied the complaint or material underlying those findings and had not been given an opportunity to participate or respond.

The respondents’ reply did not establish otherwise.

In those circumstances, the recovery order could not stand consistently with natural justice and fair play.

The Court therefore required disclosure of the relied-upon material and a meaningful opportunity to make representations and be heard before a fresh decision.

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

Any existing interim order was to continue until the authorities’ decision.