Recovery orders based on undisclosed inquiry material violate the principles of natural justice.

The petitioner, an electrical contractor engaged in work under the Saubhagya Scheme, challenged recovery orders dated 13 December 2021 and 30 April 2022 seeking ₹80,38,241.

The petitioner contended that the work had been completed, inspected, and handed over, and that the recovery followed an inquiry conducted without supplying the underlying material or giving the petitioner an opportunity to respond.

The respondents alleged irregularities, including bills cleared without establishing connections, use of incorrect or substandard materials, and duplicate billing.

They agreed to reconsider the matter after providing the relevant material and hearing the petitioner.

Whether the recovery orders could stand when the petitioner had not been supplied the material relied upon in the inquiry or given an effective opportunity to respond.

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, requiring a person affected by an adverse decision to have a reasonable opportunity to respond to the case against them.

It relied on Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, for the principles that quasi-judicial authorities must give cogent reasons and that reasoned decisions support fairness and judicial review.

It 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’ reply did not establish that the inquiry material had been supplied to the petitioner, and the inquiry report itself had not been provided.

The recovery orders were therefore made without enabling the petitioner to address the allegations and evidence underlying the recovery.

In light of the respondents’ proposal to reconsider the matter, the Court directed disclosure of the relevant material and a fresh decision after receiving the petitioner’s representation and hearing them.

It remanded the matter to respondents 2 and 3, directing them to provide the complaint and inquiry material within seven days; the petitioner may submit a detailed representation within seven days of receipt; and the respondents must provide a personal hearing and communicate a fresh order within 30 days after receiving the response.

Any existing interim order was to continue until the authorities decide the matter, and the petition was disposed of.