Recovery orders based on undisclosed inquiry materials violate natural justice.

The petitioner, an electrical contractor engaged under the Saubhagya Yojna, claimed that its work had been jointly inspected, completed, and certified, and that the defect-liability period had expired.

The respondents later ordered recovery of ₹53,64,920, alleging irregularities including bills for unestablished connections, use of non-prescribed or substandard materials, and duplicate billing.

The petitioner challenged the recovery order dated 13 December 2021, contending that the inquiry had been conducted behind its back and that it had not been given the relied-upon material or an opportunity to respond.

The respondents stated that they were willing to reconsider the matter after providing an opportunity of hearing.

Whether the recovery order could stand when the petitioner had not been supplied the inquiry material or report and had not been given an opportunity to respond.

Whether the matter should be remanded for reconsideration after disclosure of the relied-upon material and a hearing.

The Court relied on the principles of natural justice and fair play, requiring a person affected by an adverse decision to receive a reasonable opportunity to explain and respond to the material relied upon.

In Kranti Associates (P) Ltd. v. Masood Ahmed Khan, (2010) 9 SCC 496, the Supreme Court held that quasi-judicial authorities must give clear, cogent reasons, and that reasoned decision-making is integral to fairness and judicial review.

The Court 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 did not rebut the petitioner’s assertion that the complaint, inquiry material, and inquiry report had not been provided; the petitioner had received only the recovery order.

Because the recovery was based on an inquiry whose material the petitioner had not been able to examine or answer, the process denied a meaningful opportunity to be heard.

The respondents’ stated willingness to reconsider the matter supported remand rather than determination of the recovery allegations on their merits.

It remanded the matter to respondents 2 and 3, directing them to provide the complaint and relied-upon material within seven days; the petitioner must submit a detailed representation within seven days of receiving those documents. The respondents must then grant a personal hearing, pass a fresh order, and communicate it within 30 days thereafter.

Any existing interim order was to continue until the authorities made their decision.

The petition was disposed of.