1 2025:CGHC:34374-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 3753 of 2025 M/s Laxmi Enterprises Registered Office At Sai Nivas, Near Rani Sati Mandir, Chakradharpur, Jharkhand, Represented Through Power Of Attorney Holder, Shri Vikash Kumar Saw, S/o Late Bhagwan Das Saw, Aged About 45 Years. ... Petitioner(s) versus 1 Union Of India Through Ministry Of Railway 256-A, Raisina Road, Rajpath Area, Central Secretariat, New Delhi, 110001. 2 Regional Head East Coast Regional Office- Unit No. 1122-1132, 11th Floor, D L F Cyver, Infocity Road, Chandaka Industrial, Bhubaneshwar Odisha. 3 General Manager, Rites Ltd., Project Unit Office- In Of Job Enclave, The Weiters. 2nd And 3rd Floor, Rajkishore Nagar, Seepat Road Bilaspur C.G. ... Respondent(s) For Petitioner : Mr. H.S. Ahluwalia, Advocate For Respondent/ UOI : Mr. R.K. Mishra, DSGI Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Bibhu Datta Guru, Judge Judgment on Board Per Ramesh Sinha, Chief Justice 21.07.2025 1. By the present writ petition, the petitioner is challenging the order dated 26.06.2025 (Annexure-P/1) whereby, the JYOTI SHARMA Digitally signed by JYOTI SHARMA Date: 2025.07.22 10:10:54 +0530 2 petitioners’ firm has been blacklisted for a period of two years, from the date of termination of contract i.e. (27.05.2025- 26.05.2027) to participate in tenders of other works of respondent No. 2 & 3. 2. The petitioner prays for following reliefs:- “1) The Hon'ble Court may kindly be pleased to call for the entire records of agreement no- RITES/PU-BSP/NTPC-LARA/CKR Connectivity/2024-25/01, relating to the case of the petitioner for its kind perusal. 2) That, this Hon'ble Court may kindly be pleased to quash the impugned order dated 26/06/2025 by which the petitioner has been black listed for a period of upto two years from the date of termination of contract ie (27/05/2025 to 26/05/2027) to participate in tenders of other works of respondent No-2 & 3. 3) Cost of the petition may also be granted. 4) Any other relief, which this Hon'ble Court deems fit and proper, may also kindly be granted to the petitioner, in the interest of justice.” 3. (A) Learned counsel for the petitioner would submit that the impugned order dated 26.06.2025 was passed by the respondent No. 3 without issuing any notice, without granting any opportunity of hearing, and without any authority or resolution. The action is patently illegal and violation of Articles 14 and 19(1)(g) of the Constitution of India. He further submits that it is contrary to the judgment of the Hon'ble Supreme Court 3 in M/s Techno Prints v. Chhattisgarh Textbook Corporation & Anr., 2025 INSC 236, which mandates that blacklisting cannot be done arbitrarily or without following due process. The petitioner, being barred from participating in public tenders, is suffering irreparable harm. Learned counsel would further submit that with regard to blacklisting of the Petitioner for the period of 2 year, it is submitted that the same is totally arbitrary, illegal and against the well settled judgments of the Hon'ble Apex Court that blacklisting of any contractor has civil consequences thus before taking such extreme steps against any contractor principles of natural justice must be adhered to which in the present case, the Respondents have failed to do so. 4. Learned counsel for the respondents, per contra, would submit that after issuance of the work order, the authorities evaluated the work from time to time and during inspection it has been found that the petitioner is committing delay in completion of the work and for which sufficient reason has not been given by the petitioner and hence on appreciation of all the facts and circumstance, the authorities declared the petitioner as poor performer and accordingly, the petitioner has been placed on the negative list of contractors. The impugned order is just and proper warranting no interference of this Court. 5. We have heard learned counsel for the parties, perused the pleadings and documents. 4 6. Blacklisting is a serious matter affecting commercial credibility in the business world. It has been described as a civil death also. There has to be a balance of competing interests with regard to the rights of the person entitled to supplies under the contract and those who may have failed to abide by the obligations. The jurisdiction of the Court in judicial review is primarily confined to the decision making process. If there are no infirmities in the decision making process, the writ court will ordinarily refrain from going into the matter further except where there may may be compelling circumstances. But if the decision making process before blacklisting suffers from gross procedural infirmities, judicial review will step in and the order will have to be struck down. 7. The terms of the contract contained several options available to the Respondents to take any action against the Petitioner if it defaulted in supplies. Unless he was specifically told that it was the option for blacklisting which was proposed to be exercised, it cannot be said that he was given an adequate opportunity to show cause. It is very reasonable to presume that the Petitioner may have thought that the Respondents would invoke other options and not blacklisting. This aspect of the matter need not detain us for further discussions in view of the enunciation of law laid down in (2014) 9 Supreme Court Cases 105 (Gorkha Security Services vs. Government [NCT of Delhi) and Others), as follows: 5 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 notice 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.” ……………………………………………………………... 26 This clause, no doubt, gives further right to the Department to blacklist the contractor for a period of 4 years and also forfeit his earnest money/security deposit, if so required. It is thus apparent that this sub- clause provides for various actions which can be taken and penalties which can be imposed by the Department. In such a situation which action the 6 Department proposes to take, need to be specifically stated in the show-cause notice. It becomes all the more important when the action of blacklisting and/or forfeiture of earnest money/security deposit is to be taken, as the clause stipulates that such an action can be taken, if so warranted. The words "if so warranted", thus, assume great significance. It would show that it is not necessary for the Department to resort to penalty of blacklisting or forfeiture of earnest money/security deposit in all cases, even if there is such a power. It is left to the Department to inflict any such penalty or not depending upon as to whether circumstances in a particular case warrant such a penalty. There has to be due application of mind by the authority competent to impose the penalty, on these aspects. Therefore, merely because of the reason that Clause 27 empowers the Department to impose such a penalty, would not mean that this specific penalty can be imposed, without putting the defaulting contractor to notice to this effect. " ………………………………………………………………. 33. When we apply the ratio of the aforesaid judgment to the facts of the present case, it becomes difficult to accept the argument of the learned Additional Solicitor General. In the first instance, we may point out that no 7 such case was set up by the respondents that by omitting to state the proposed action of blacklisting the appellant in the show-cause notice, has not caused any prejudice to the appellant. Moreover, had the action of blacklisting being specifically proposed in the show-cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an action even if the defaults were there and the Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to blacklist the appellant. Therefore, it is not at all acceptable that non-mentioning of proposed blacklisting in the show- cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant." 8. Applying the well settled principles of law to the facts of the present case as there is no specific notice issued to the petitioner proposing the blacklisting of the petitioner’s firm and for the reasons mentioned herein above, the impugned order 8 dated 26.06.2025 in respect of blacklisting of the petitioner’s firm is liable to be and is hereby set aside. 9. Accordingly, the writ petition is allowed to the above extent. However, the concerned authority is at liberty to proceed in accordance with law after issuing show cause notice to the petitioner, if so desires. SD/- SD/- (Bibhu Datta Guru) (Ramesh Sinha) Judge Chief Justice Jyoti/ $ Bhilwar