Recovery orders based on undisclosed inquiry material violate natural justice and cannot stand.

The petitioner, an electrical contractor engaged to carry out work under the Saubhagya Scheme, challenged recovery orders dated 13 December 2021 and 30 April 2022 seeking recovery of ₹2,57,95,020.

The respondents based the recovery on an inquiry into alleged irregularities, including billing for unestablished connections and use of incorrect or substandard materials.

The petitioner contended that the work had been completed, inspected and handed over, and that neither the inquiry material nor the report had been supplied to it before the orders were made.

The respondents agreed to reconsider the matter after providing the material and hearing the petitioner.

1. Whether the recovery orders could stand when the petitioner had not been supplied the complaint and inquiry material or given an opportunity to respond before the orders were passed.

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

The Court applied the principles of natural justice and fair play, requiring a person affected by an adverse decision to receive a reasonable opportunity to answer the case against them.

Relying on Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, it stated that quasi-judicial authorities must give reasoned decisions, with reasons serving fairness, transparency and effective judicial review.

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

The recovery was founded on an inquiry alleging serious irregularities, but the respondents did not establish that the petitioner had received the complaint, relied-upon material or inquiry report, or had an opportunity to participate and respond.

The petitioner therefore could not effectively address the allegations before the adverse orders were made.

In those circumstances, the orders failed to meet the requirements of natural justice and fair play and were unsustainable.

The respondents’ willingness to reconsider the matter supported remand after disclosure and a personal hearing.

They were directed to supply the complaint and relied-upon material within seven days; the petitioner may file a detailed representation within seven days of receipt; the respondents must then provide a personal hearing and pass and communicate a fresh order within 30 days thereafter.

Any existing interim order was to continue until the authorities decide the matter.

The petition was disposed of accordingly.