The cases will be registered under the Orissa Public Demands Recovery (OPDR) Act, 1962, to recover the money provided to the ineligible beneficiaries, officials said.
"The cases would be registered against the persons, who did not return funds despite repeated reminders," Block Development Officer of Hinjili, Manoj Swain, said.
The Tehsildar would register the cases against the ineligible beneficiaries, he said.
Hinjili happens to be the home constituency of chief minister Naveen Patnaik.
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"While 11 of them have already refunded the money, 21 others are yet to return it despite several notices," the BDO said.
He said they had no scope to identify the ineligible persons under the IAY as they had submitted the undertaking at the time of allotment. Moreover, they did not show their own houses at the time of inspection by the block staff, he added.
The district administration had cancelled the work orders of 13 beneficiaries to construct houses under the special IAY in Kukudakhandi block's Rohigaon village in August last year.
The block administration had also recovered the funds released to the beneficiaries, the sources said.
The special IAY was allotted in 2014-15 to the persons, whose houses were damaged in the cyclone Phailin, which hit the district on October 13, 2013.