Recovery orders based on undisclosed inquiry material are unsustainable without a fair hearing.

The petitioner, an electrical contractor engaged for work under the Saubhagya Yojana, challenged a recovery order dated 10 December 2021 for Rs. 55,65,592.

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

The petitioner maintained that the recovery was based on an inquiry conducted behind his back and that neither the relied-upon material nor the inquiry report had been supplied.

The respondents agreed to reconsider the matter after providing the material and hearing the petitioner; the petitioner did not oppose reconsideration, but sought disclosure of the material and particulars of the alleged deficiencies.

1. Whether the recovery order could stand when it was passed without supplying the petitioner the complaint, inquiry material, or inquiry report, and without giving him an opportunity to respond.

2. What procedural directions were required for reconsideration of the recovery.

A decision affecting a person prejudicially must comply with the principles of natural justice and fair play.

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

The Court also referred to Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, concerning the risk that a show-cause process may become an empty formality where the decision-maker has effectively predetermined the outcome.

The judgment identifies no specific statutory provision as the basis for its decision.

The respondents’ allegations concerned the petitioner’s performance and formed the basis of a substantial recovery, but the petitioner had not been supplied the material relied upon in the inquiry or given an opportunity to answer it.

The respondents did not rebut that deficiency, and the recovery order was issued without the petitioner’s participation in the inquiry. Applying the principles of natural justice and fair play, the Court held the order procedurally unsustainable.

It did not determine whether the alleged irregularities occurred or whether recovery was justified on the merits; instead, it directed a fresh consideration after disclosure, response, and hearing.

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

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