Recovery Orders Based on Inquiry Are Unsustainable Without Disclosure of Relied-On Materials and a Hearing.

The petitioner, an empanelled contractor, carried out works under the Saubhagya Yojna. After completion of the work and a joint inspection, bills were submitted; the purchase order specified a 365-day defect-liability period.

Following an inquiry into alleged irregularities, including billing for unestablished connections and use of substandard materials, the respondents issued a recovery order for ₹18,83,540 on 10 December 2021.

The petitioner contended that the inquiry was conducted behind his back and that he was not given the inquiry materials or an opportunity to respond. The respondents acknowledged the request for reconsideration after disclosure of the relevant materials and a hearing.

Whether the recovery order could stand when the petitioner was not supplied the complaint and inquiry materials or given an opportunity to respond before the order was passed

Whether the matter should be remitted for reconsideration after disclosure of the relied-upon material and a personal hearing

A decision affecting a person’s rights must comply with the principles of natural justice and fair play; a person must have a reasonable opportunity to respond to the material relied upon against them. A quasi-judicial authority must give reasons for its decision, as reasoned decision-making promotes fairness, transparency, and judicial review (Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496).

The Court also referred to Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, concerning the need for a meaningful, rather than merely formal, opportunity to be heard.

The respondents did not establish that the petitioner had received the complaint, inquiry materials, or inquiry report on which the recovery was based. The petitioner therefore had no meaningful opportunity to answer the allegations before the recovery order was made.

Applying the principles of natural justice and fair decision-making, the Court held that the order was unsustainable; the respondents’ willingness to reconsider the matter supported remand rather than final determination of the underlying allegations.

The matter was remanded to respondents 2 and 3, who were directed to provide the complaint and relied-upon materials within seven days; the petitioner was to submit a detailed representation within seven days of receiving them. 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.