W.P.(C) 11757/2023 $~13 * IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 13th August, 2026 # CNR No. DLHC010350592023 + W.P.(C) 11757/2023 & CM APPL. 45929/2023 MAHINDRA MSTC RECYCLING PRIVATE LIMITED & ANR. .....Petitioners Through: Mr. Rajshekhar Rao, Sr. Advocate with Ms. Divya Chaturvedi, Mr. Saransh Shaw, Ms. Srishti Rai, Mr. Chandan Kumar and Ms. Khyati Chhabra, Advocates. versus GOVERNMENT OF NCT OF DELHI & ORS. .....Respondents Through: Mr. Sameer Vashisht and Mr. Ms. Harshita Nathrani, Advocates for GNCTD. CORAM: HON'BLE MR. JUSTICE AMIT BANSAL AMIT BANSAL, J. (Oral) 1. The present writ petition has been filed seeking setting aside of the order dated 25th August, 2023 (‘impugned order’) passed by the respondent no.2/Transport Department, Government of NCT of Delhi (‘GNCTD’), in terms of which the respondent no.2/Transport Department has blacklisted the petitioner no.1, with immediate effect, from its panel of Registered Vehicle Scrapping Facilities (‘RVSFs’) for scrapping “end-of-life vehicles” plying in Delhi. 2. The facts relevant for adjudication of the present writ petition are set Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 out hereinafter. 3. Petitioner no.1 is an RVSF within the meaning of the Motor Vehicle (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021 (‘RVSF Rules’). The petitioner no.2 is the Managing Director of the petitioner no.1. 4. A vehicle bearing Registration No. DL9CL9658, registered in the name of one Mr. Kashish Chibber, was impounded by the Enforcement Branch, Transport Department, GNCTD on 27th June, 2023 and handed over to the petitioners. 5. Upon a request for release of the said vehicle, the competent authority approved the request, subject to submission of an undertaking that the vehicle will be transferred to some other State within one month. When the owner approached the petitioners for release of the vehicle, it was found that the vehicle had already been scrapped. 6. Accordingly, the respondents issued a show cause notice dated 24th July, 2023 to the petitioners, raising the following two contentions: i. That the scrapping of the vehicle without consent of the registered owner was contrary to Rules 10 (1) (i) and (v) of the RVSF Rules, and; ii. That scrapping before the lapse of three months from impounding was contrary to the order issued by the respondents on 12th July. 2023. 7. The petitioners replied to the show cause notice stating that Rules 10 (1) (i) and (v) of the RVSF Rules are not applicable to vehicles which are handed over to a scrapping agency after impounding by an Enforcement Agency. It was also contended that the communication dated 12th July, 2023 Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 was received by the petitioners only on 18th July, 2023, by which time the vehicle in question had already been scrapped, i.e., on 14th July, 2023. 8. The respondents thereafter issued the impugned order dated 25th August, 2023, the operative part of which is extracted below: “Therefore, keeping in view of facts and circumstance in the said case Competent Authority has decided to blacklist the RVSF M/s Mahindra MSTC Recycling Pvt. Ltd. from the panel of Transport Department, GNCTD i.e panel of voluntarily attached RVSFs for the purpose of scrapping related activities of End of Life vehicles plying in the jurisdiction of Delhi. Additionally, Competent Authority has also decided to blacklist the M/s Mahindra MSTC Recycling Pvt. Ltd from scrapping Delhi Registered End of Life vehicles with immediate effect.” 9. The petitioners have challenged the aforesaid impugned order in the present writ petition. While issuing notice in the present writ petition on 5th September, 2023, this Court had granted an interim stay of the impugned order, which is still continuing. 10. Mr. Sameer Vashisht, Standing Counsel appearing on behalf of the respondents submits that in the present case, the petitioners have scrapped the vehicle before the expiry of 90 days from the date of the vehicle being impounded. He submits that a meeting was convened by the respondents with all RVSFs, wherein it was decided that a vehicle will not be scrapped before a period of 90 days from the date of impounding. Minutes of the aforesaid meeting were circulated to all RVSFs on 12th July, 2023. 11. Mr. Rajshekhar Rao, Senior Advocate appearing on behalf of the petitioners submits that the petitioners scrapped the vehicle in terms of the RVSF Rules. He further submits that the petitioner no.1 was not present in the said meeting and this fact has been stated on affidavit in the rejoinder. The minutes of the meeting were received after the vehicle had already been Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 scrapped on 14th July, 2023. 12. I have heard the counsel for the parties and examined the record. 13. In the present case, the show cause notice issued on 24th July, 2023 invokes Rules 10 (1) (i) and (v) of the RVSF Rules, 2021, which are set out below: - “10. Scrapping Procedure. - (1) The scrapping of vehicles shall be carried out by a Registered Scrapper in respect of all End-of-Life Vehicles, by the following procedure, namely: - (i) the registered owner or the authorised representative shall hand over the vehicle together with an application as per Form-2 in two originals to the Registered Scrapper or the designated Collection Centre for deposit and further treatment of the vehicle. xxx (v) the Registered Scrapper shall require, along with the Form-2, the following applicable original documents from the owner or the authorised representative, - (a) original Certificate of Registration; (b) authorisation from the registered owner; (c) in case of inheritance, the death certificate of the registered owner accompanied with any proof of succession; (d) certificate or order confirming the sale of the vehicle in a public auction in his favour duly signed by the person authorised to conduct the auction; and (e) an undertaking, as per para 4 of Form-2 from the owner or representative, indicating that vehicle has no pending criminal record or litigation and there are no pending dues on the vehicle.” 14. A perusal of the aforesaid Rules makes it clear that Rules 10 (1) (i) and (v) of the RVSF Rules would not apply in cases where the subject vehicles have been handed over to a scrapping agency after being impounded by an enforcement agency. The said rules would be applicable when the registered owner of a vehicle has applied for the scrapping of the vehicle of their own volition. 15. The show cause notice also places reliance on the minutes of meeting Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 held on 4th July, 2023, which were circulated on 12th July, 2023. It is the case of the respondents that in the said meeting, it was communicated to all RVSFs that a vehicle will not be scrapped before a period of 90 days from the date of impounding. 16. As noted above, it is the contention of the petitioners that the petitioner no.1 was not a part of the RVSFs attending the meeting on 4th July, 2023 and the aforesaid communication was received by the petitioners on 18th July, 2023 after the vehicle had already been scrapped on 14th July, 2023. Therefore, the petitioners could not have been aware of the decision taken by the respondents that the vehicle could not be scrapped before a period of 90 days from the date of impounding. 17. Clearly, the show cause notice as well as the impugned order proceeds on an entirely erroneous basis. As noted above, Rules 10 (1) (i) and (v) of the RVSF Rules are not applicable in the present case. Further, the requirement of a 90-day waiting period finds no basis in the RVSF Rules and stems only from the meeting minutes that were received after the vehicle had already been scrapped. 18. A perusal of the show cause notice also reveals that there is no mention about any blacklisting action contemplated against the petitioners. 19. The law with regard to blacklisting/debarment of an entity has been elucidated by the Supreme Court in various judgments. The Supreme Court in Gorkha Security Services v. GNCTD1 has made the following observations with regard to blacklisting of persons from government contracts: - 1 2014 (9) SCC 105. Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 “Necessity of serving show-cause notice as a requisite of the principles of natural justice 16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting, many civil and/or evil consequences follow. It is described as “civil death” of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts. *** *** *** Contents of the show-cause notice 21. The central issue, however, pertains to the requirement of stating the action which is proposed to be taken. The fundamental purpose behind the serving of show-cause notice is to make the noticee understand the precise case set up against him which he has to meet. This would require the statement of imputations detailing out the alleged breaches and defaults he has committed, so that he gets an opportunity to rebut the same. Another requirement, according to us, is the nature of action which is proposed to be taken for such a breach. That should also be stated so that the noticee is able to point out that proposed action is not warranted in the given case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action. 22. The High Court has simply stated that the purpose of show- cause notice is primarily to enable the noticee to meet the grounds on which the action is proposed against him. No doubt, the High Court is justified to this extent. However, it is equally important to mention as to what would be the consequence if the noticee docs not satisfactorily meet the grounds on which an action is proposed. To put it otherwise, we are of the opinion that in order to fulfil the requirements of principles of natural justice, a show-cause notice should meet the following two requirements viz: (i) The material/grounds to be stated which according to the Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 department necessitates an action; (ii) Particular penalty/action which is proposed to be taken. It is this second requirement which the High Court has failed to omit. We may hasten to add that even if it is not specifically mentioned in the show-cause notice but it can clearly and safely be discerned from the reading thereof, that would be sufficient to meet this requirement. (emphasis supplied) 20. The aforesaid judgment was followed by the Supreme Court in UMC Technologies Pvt. Ltd. v. Food Corporation of India & Anr.2. 21. In light of the aforesaid judgments of the Supreme Court, it is no longer res integra that prior to blacklisting a person from government tenders, a Show Cause Notice has to be given to the entity to enable it to put forth its defence. The Show Cause Notice must clearly state the intention to blacklist the entity so that it can put forth its defence. It has further been observed that decisions of blacklisting entail grave consequences on the entity being blacklisted and therefore, issuance of a valid Show Cause Notice is critical. 22. A perusal of the impugned order in the present case shows that the blacklisting of the petitioners is for an indefinite period of time. 23. It is well settled that blacklisting against a contractor cannot be permanent. Reference in this regard may be made to the judgment of Kulja Industries Ltd. v. Chief General Manager3. In the said case, the Supreme Court quashed the order permanently blacklisting the petitioner therein by holding that debarment can never be permanent. The relevant extracts from the said judgment are set out below: “25. Suffice it to say that “debarment” is recognised and often used as an effective method for disciplining deviant suppliers/contractors who may 2 (2021) 2 SCC 551. 3 (2014) 14 SCC 731 Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05 Signature Not Verified W.P.(C) 11757/2023 have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the “debarment” is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor.” 26. In the case at hand according to the respondent BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the officials of the respondent Corporation. Even so permanent debarment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable especially when (a) the appellant is supplying bulk of its manufactured products to the respondent BSNL, and (b) the excess amount received by it has already been paid back.” (emphasis supplied) 24. When the facts of the present case are analysed in light of the abovesaid legal position, it is clear that the respondents have proceeded to blacklist the petitioners without the issuance of a Show Cause Notice indicating the intention of the respondents to blacklist the petitioners. The aforesaid Show Cause Notice dated 24th July, 2023, does not suggest that an action of blacklisting is contemplated against the petitioners. Further, the blacklisting of the petitioners in the impugned order is for an unspecified period of time, which is impermissible. 25. In view of the above discussion, this Court finds that the impugned order is completely unjust, arbitrary and in violation of settled principles of law. Accordingly, the same is hereby quashed. 26. The writ petition stands disposed of in the aforesaid terms. 27. Pending application stands disposed of. AMIT BANSAL, J AUGUST 13, 2026/Vivek/- CORRECTED AND UPLOADED ON 19.08.2026 Signed By:DHARMENDER SINGH Signing Date:19.08.2026 19:19:05