Recovery orders based on undisclosed inquiry material violate natural justice and are unsustainable.

The petitioner, a registered electrical contractor, undertook work under the Sobhagya Scheme.

After the work was completed, a joint inspection was conducted and bills were submitted; the petitioner also asserted that a completion certificate had been issued.

About two and a half years later, the authorities ordered recovery of ₹91,00,968, based on an inquiry into alleged irregularities including bills for unestablished connections, non-use of prescribed materials, substandard materials, and duplicate billing.

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

1. Whether the recovery order could stand when it was made without supplying the petitioner with the material relied upon in the inquiry or giving him an opportunity to respond

2. 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, including the requirement that a person affected by an adverse decision be given a meaningful opportunity to answer 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 for their decisions and consider relevant grounds.

It also referred to Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, concerning the risk that a show-cause process may be an empty formality where the authority has already made up its mind.

The recovery order rested on an inquiry into alleged irregularities, but the petitioner had not been provided the complaint, the material relied upon, or the inquiry report before the order was made.

The respondents’ reply did not establish that these materials had been disclosed.

In those circumstances, the petitioner had no meaningful opportunity to address the allegations before the adverse recovery decision. The order therefore violated natural justice and fair play; reconsideration after disclosure and a hearing was the appropriate course.

They were directed to provide the complaint and inquiry material within seven days; the petitioner was to submit a detailed representation within seven days of receiving those documents. The respondents were then to give him a personal hearing, pass a fresh order, and communicate it within 30 days after receiving his response.

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