Audit objection-based recovery demands require statutory adjudication where entitlement and limitation are disputed, not merits review under writ jurisdiction.

A recovery demand based on an audit objection, without prior full adjudication of entitlement to SHIS benefits, raised disputed questions on EOU status, utilisation of benefits, and limitation. The HC held that such factual and legal issues required examination of records by the competent authority and should not be decided on merits under Article 226 when a statutory mechanism for enquiry and appeal was available. Limitation also had to be assessed on the relevant facts rather than mechanically by dates alone. The writ petitions were not entertained on merits, and the petitioners were directed to raise objections before the original authority for fresh adjudication, with liberty to pursue the appellate remedy thereafter.

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Issues: Whether the writ petitions challenging the recovery demand issued on the basis of an audit objection should be entertained in the face of disputed facts and the availability of statutory adjudication, including the plea of limitation.

Analysis: The demand was issued pursuant to an audit objection and not after a full adjudication on the underlying entitlement to SHIS benefits. The dispute involved factual questions concerning the scheme, the petitioners' status as EOUs, utilisation of benefits, and the applicability of limitation. Such matters required examination of original records and evidence by the competent authority. In exercise of jurisdiction under Article 226 of the Constitution of India, the Court declined to undertake a merits review of an unadjudicated demand when an effective statutory mechanism existed for enquiry and appeal. The Court also held that limitation could not be decided mechanically on dates alone and had to be examined by the authority on the relevant facts.

Conclusion: The writ petitions were not entertained on merits and the petitioners were relegated to submit objections before the competent authority for fresh adjudication after notice and opportunity.

Final Conclusion: The impugned demand was treated as requiring statutory adjudication rather than final recovery, and the matter was sent back for decision by the original authority with liberty to pursue the appellate remedy thereafter.

Ratio Decidendi: Where a recovery demand is founded on an audit objection and raises disputed factual and legal questions, the High Court should not decide the merits under Article 226 and the parties must first exhaust the prescribed adjudicatory and appellate remedies.

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