Recovery of alleged dues requires prior notice and compliance with natural justice.

The petitioner was an employee of the Odisha State Warehousing Corporation and retired on attaining the age of superannuation on 30 September 2016.

Subsequently, by order dated 6 January 2018, the Managing Director directed recovery of ₹23,88,921 from the petitioner’s retiral dues.

The petitioner challenged the order under Articles 226 and 227 of the Constitution, contending that no show-cause notice or opportunity of hearing had been granted before the adverse recovery order was passed.

The Corporation defended the order on the ground that it had been issued on the basis of a communication from the Orissa State Civil Supply Corporation recommending recovery for alleged misappropriation by the petitioner.

The Court found no document in the counter-affidavit establishing that any show-cause notice had been issued before the impugned order.

Whether an order directing recovery of ₹23,88,921 from the petitioner’s retiral dues could be passed without issuing a show-cause notice and providing an opportunity of hearing?

Whether the impugned recovery order was legally sustainable when it was based on a recommendation regarding alleged misappropriation but was issued without compliance with the principles of natural justice?

The Court applied the principles of natural justice, particularly audi alteram partem, to administrative action having civil or adverse consequences. Relying on Maneka Gandhi v. Union of India, the Court held that a person prejudicially affected by administrative action must ordinarily be given a fair opportunity of hearing, even where the governing statute or rules are silent.

State of Orissa v. Binapani Dei was relied upon for the rule that an administrative order involving civil consequences must disclose the case and evidence against the affected person and provide an opportunity to respond; failure to do so renders the order legally unsustainable.

The Court also referred to State Bank of India v. Rajesh Agarwal, Dushyant Mainali v. Diwan Singh Bora and Krishnadatt Awasthy v. State of M.P., which reaffirm that no person may be condemned unheard and that audi alteram partem safeguards against arbitrary decision-making.

The direction to recover ₹23,88,921 from the petitioner’s retiral dues adversely affected his civil and financial rights and therefore attracted the requirements of natural justice.

Although the Corporation asserted that the recovery was based on a recommendation concerning alleged misappropriation, the Court found no material demonstrating that the petitioner had been issued a show-cause notice or given an opportunity to contest the allegation before the order was passed.

Since the impugned order was issued solely on the basis of the recommendation and without prior hearing, it violated the audi alteram partem rule and could not be sustained.

The Court therefore considered it unnecessary to finally determine the petitioner’s substantive liability and left that question open for reconsideration in accordance with law.

The Corporation was permitted to re-determine the petitioner’s liability in accordance with law, after following the principles of natural justice.

The writ petition was consequently disposed of.