Recovery orders based on undisclosed inquiry material violate natural justice and must be reconsidered.

The petitioner, an electrical contractor engaged to carry out work under the Saubhagya Yojana, stated that the work was completed, jointly inspected, and followed by submission of bills; a completion certificate was also issued.

After the defect-liability period, the authorities ordered recovery of ₹22,13,604 based on an inquiry into alleged irregularities, including billing for unestablished connections and use of incorrect or substandard materials.

The petitioner challenged the recovery orders dated 10 and 13 December 2021, contending that the inquiry material and report had not been supplied and that he had no opportunity to respond.

The respondents accepted that the matter could be reconsidered after providing an opportunity of hearing.

1. Whether the recovery orders could stand when they were made without supplying the inquiry material and report to the petitioner or providing him an opportunity to respond

2. Whether the matter should be remitted for reconsideration after disclosure of the relied-upon material, a hearing, and a reasoned fresh decision

The Court relied on the principles of natural justice and fair play, which require a person facing an adverse decision to have a meaningful opportunity to answer the case against them, including access to the material relied upon.

It applied Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, for the rule that administrative and quasi-judicial decisions affecting a person prejudicially must give reasons, both to ensure fairness and to enable judicial review.

It also referred to Techno Prints v. Chhattisgarh Textbook Corporation, 2025 SCC OnLine SC 343, concerning the need for a genuine, effective opportunity of hearing rather than a mere formality.

The recovery was founded on allegations arising from an inquiry, but the petitioner had not been supplied the complaint, inquiry report, or other material relied upon, nor given an opportunity to answer the allegations.

In those circumstances, the Court held that the recovery orders did not meet the requirements of natural justice and fair play.

The respondents’ willingness to reconsider the matter supported remand rather than a final determination of the underlying allegations.

The respondents were directed to provide the complaint and relied-upon material within seven days; the petitioner was to submit a detailed representation within seven days of receiving those documents; and the respondents were then to grant a personal hearing and issue and communicate a fresh order within 30 days thereafter.

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