1 CGHC010285422026 2026:CGHC:34058-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 4055 of 2026 Sam Kem Pvt. Ltd. Through Its Director Mr.Lalit Kakani, S/o Shri Kantilal Kakani, Age 50 Years, Occupation Business, Having Registered Office At 15-B, A.K.V.N. Industrial Area, Rangwasa, Rau, Indore (M.P.) ... Petitioner versus 1 - Union of India Through Secretary, Department of Health And Family Welfare, Nirman Bhawan, New Delhi 2 - State of Chhattisgarh Through Secretary, Department of Health And Family Welfare, Mahanadi Bhawan, Nava Raipur, Chhattisgarh 3 - Managing Director, Chhattisgarh Medical Services Corporation Ltd, Mahanadi Bhawan, Nava Raipur, Chhattisgarh ... Respondents ----------------------------------------------------------------------------------------------- For Petitioner : Mr. Kshitij Sharma, Advocate For Respondent No.1/UOI : Ms. Anmol Sharma, CGC For Respondent No.2/State : Mr. S.S. Baghel, Govt. Advocate For Respondent No.3 : Mr. Trivikram Nayak, Advocate ----------------------------------------------------------------------------------------------- Hon'ble Mr. Ramesh Sinha, Chief Justice Hon'ble Mr. Ravindra Kumar Agrawal , Judge Order on Board Per Ramesh Sinha, Chief Justice 05.08.2026 1. Though the matter is listed today as a fresh matter for admission, however, considering the fact that impugned order dated 14.01.2026 passed by the respondent No.3, whereby the petitioner company was debarred from participating in the tenders of the respondent authority for a period of five years by invoking ROHIT KUMAR CHANDRA Digitally signed by ROHIT KUMAR CHANDRA 2 Clause 7.1(iv) of the tender conditions, and further considering the fact that the said order effectively amounts to blacklisting of the petitioner company, which has serious civil consequences and adversely affects the business interests and reputation of the petitioner and since all the parties are represented through their respective learned counsel who have expressed their readiness to address the matter finally, with the consent learned counsel for the parties, we proceed to hear and decide the writ petition finally at the stage of admission itself. 2. Heard Mr. Kshitij Sharma, learned counsel for the petitioner. Also heard Ms. Anmol Sharma, learned Central Government Counsel, appearing for respondent No.1/UOI, Mr. S.S. Baghel, learned Government Advocate, appearing for respondent No.2/State as well as Mr. Trivikram Nayak, learned counsel, appearing for respondent No.3 / CMSCL. 3. The present petition has been filed by the petitioner under Article 226 of the Constitution of India seeking following reliefs :- “10.1 A writ and/or order of an appropriate nature do issue quashing the impugned communication dated 14.01.2026 (Annexure P-1), being illegal, arbitrary, malicious, and arising out of discrimination against the petitioner. 10.2 A writ and/or an order of appropriate nature be issued directing the respondent authority to restore the empanelment of the petitioner, in aside of the consequence to the setting impugned order as stated above. 3 10.3 Any other relief that may be deemed fit and just in the facts & circumstances of case. An affidavit in support is filed herewith.” 4. Brief facts of the case are that the petitioner is a company engaged in the business of manufacturing and supplying drugs and medicines. The respondent authorities, namely the Chhattisgarh Medical Services Corporation Limited, issued an e- tender for entering into a rate contract for procurement and supply of drugs and medicines for treatment in Government Hospitals across the State of Chhattisgarh. The tender process was conducted through an online mode, and the petitioner company, being eligible and interested in participating in the procurement process, duly submitted its bid in accordance with the terms and conditions prescribed in the tender document. During the course of evaluation of the bid submitted by the petitioner, Respondent No. 3 alleged that the petitioner company had failed to disclose certain information and had violated the tender conditions, particularly Clause 10 relating to disclosure of blacklisting/debarment by any Government organization. It was alleged that the petitioner company had been blacklisted by the Jammu and Kashmir Medical Supplies Corporation Limited for a period of two years vide order dated 21.08.2025, and that such information was not disclosed by the petitioner at the time of submission of the tender. On the basis of the said allegation, a show cause notice dated 02.12.2025 was issued to the petitioner 4 alleging violation of the tender conditions and calling upon the petitioner to submit its explanation. 5. The petitioner, in response to the aforesaid show cause notice, submitted a detailed reply dated 03.12.2025 denying the allegations and specifically stating that there was no concealment, suppression or misrepresentation on its part. It was submitted that the petitioner had submitted its tender application before the alleged blacklisting order passed by the Jammu and Kashmir Medical Supplies Corporation Limited. The petitioner further clarified that the tender submission was completed on 16.07.2025, whereas the alleged blacklisting order was issued subsequently on 21.08.2025, and therefore, there was no occasion for the petitioner to disclose any such fact at the time of submission of the bid. The petitioner also submitted that all documents furnished along with the tender were genuine, verifiable and in accordance with the tender requirements. However, after considering the reply submitted by the petitioner, Respondent No. 3 proceeded to pass the impugned order dated 14.01.2026, whereby the petitioner company was debarred from participating in the tenders of the respondent authority for a period of five years by invoking Clause 7.1(iv) of the tender conditions. The said order effectively amounts to blacklisting of the petitioner company, which has serious civil consequences and adversely affects the business interests and reputation of the petitioner. Being aggrieved by the aforesaid action of the respondent 5 authorities, the petitioner has approached this Court by way of instant petition seeking aforequoted reliefs. 6. Learned counsel for the petitioner submitted that the impugned order dated 14.01.2026 passed by Respondent No. 3, whereby the petitioner company has been debarred from participating in the tenders of the respondent authority for a period of five years, is wholly arbitrary, illegal and unsustainable in law. It was contended that the action of blacklisting has been taken on the basis of an incorrect assumption that the petitioner had suppressed or concealed the fact of blacklisting by the Jammu and Kashmir Medical Supplies Corporation Limited. However, the petitioner had submitted its bid on 16.07.2025, whereas the alleged blacklisting order was passed subsequently on 21.08.2025. Therefore, on the date of submission of the tender, there was no existing order of blacklisting against the petitioner which required disclosure. Hence, there was no violation of Clause 10 of the tender conditions and the allegation of concealment or misrepresentation is wholly misconceived. Learned counsel further submitted that the petitioner had participated in the tender process in a bona fide manner and had furnished all relevant documents and information as required under the tender conditions. The petitioner had also submitted a detailed reply to the show cause notice specifically explaining that no information was suppressed and that all documents furnished by the petitioner were genuine and verifiable. However, the 6 respondent authority failed to properly appreciate the explanation submitted by the petitioner and mechanically proceeded to impose the extreme punishment of debarment for five years. It was argued that blacklisting has serious civil consequences and affects the reputation and commercial prospects of the petitioner; therefore, such action must be based on cogent reasons, supported by material and should be proportionate to the alleged misconduct. It was further submitted that the impugned order suffers from non-application of mind and is contrary to the settled principles governing blacklisting proceedings. The respondent authority has failed to establish any deliberate act of fraud, suppression or misrepresentation on the part of the petitioner. The mere subsequent passing of a blacklisting order by another authority cannot be treated as a failure on the part of the petitioner to disclose information at the time of submitting the bid. It was contended that the impugned order is excessive, disproportionate and violative of the principles of natural justice, warranting interference by this Hon'ble Court in exercise of its writ jurisdiction. Learned counsel lastly submitted that the power to blacklist a contractor or supplier must be exercised fairly, reasonably and in accordance with law. In the present case, the petitioner has been subjected to a severe penalty of five years' debarment without there being any deliberate violation of the tender conditions. Therefore, it was prayed that the impugned order dated 14.01.2026 be quashed and the respondents be 7 directed to restore the eligibility of the petitioner company to participate in future tender processes. 7. Learned counsel appearing for Respondent No. 3 very fairly submitted that the respondent authority does not dispute that the petitioner had submitted a reply to the show cause notice explaining the factual position and that the documents furnished by the petitioner were found to be genuine and verifiable. It was contended that, in the absence of any deliberate suppression, misrepresentation or fraudulent conduct on the part of the petitioner, invocation of the penal clause of the tender conditions resulting in debarment for a period of five years was not justified. He further submitted that the respondent authority has no objection if the impugned order dated 14.01.2026 is reconsidered or appropriate orders are passed by this Hon'ble Court in accordance with law. 8. Having heard learned counsel for the parties and upon perusal of the material available on record, this Court finds that the petitioner company has challenged the order dated 14.01.2026 passed by Respondent No. 3, whereby the petitioner has been debarred from participating in the tender process of the respondent authority for a period of five years on the allegation of suppression and concealment of the fact regarding blacklisting by the Jammu and Kashmir Medical Supplies Corporation Limited. 8 9. The undisputed facts emerging from the record reveal that the petitioner submitted its bid on 16.07.2025 pursuant to the e-tender issued by the Chhattisgarh Medical Services Corporation Limited. The alleged order of blacklisting passed by the Jammu and Kashmir Medical Supplies Corporation Limited came into existence subsequently on 21.08.2025. Therefore, on the date when the petitioner submitted its tender documents, there was no subsisting order of blacklisting against the petitioner which could have been disclosed under the relevant clause of the tender document. In such circumstances, the allegation of deliberate suppression, concealment or misrepresentation on the part of the petitioner cannot be sustained. 10. The Hon'ble Supreme Court has consistently held that an order of blacklisting has serious civil consequences as it affects the right of a person to participate in commercial transactions with the Government and, therefore, such power must be exercised fairly, reasonably and in accordance with the principles of natural justice. In Erusian Equipment & Chemicals Ltd. v. State of West Bengal, (1975) 1 SCC 70, the Hon'ble Supreme Court held that blacklisting has the effect of preventing a person from entering into lawful relationships with the Government and casts a stigma affecting the reputation of the person concerned. It was held that before passing such an order, the authority must follow the principles of fair play and provide a meaningful opportunity of hearing. 9 11. The Hon'ble Supreme Court in Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project BSNL, (2014) 14 SCC 731 further held that although the State has the inherent power to blacklist a contractor or supplier, such power is subject to judicial review on the touchstone of principles of natural justice and proportionality. The Court observed that the order of blacklisting must be reasonable, fair and proportionate to the alleged misconduct. Similarly, in Gorkha Security Services v. Government (NCT of Delhi), (2014) 9 SCC 105, the Supreme Court emphasized that since blacklisting entails serious consequences, the notice issued to the affected party must clearly indicate the proposed action of blacklisting and the grounds on which such action is contemplated. 12. In the present case, the petitioner was issued a show cause notice alleging violation of the tender conditions, to which the petitioner submitted a detailed reply explaining that the alleged blacklisting order was subsequent to the submission of the tender and, therefore, there was no question of suppression of any material fact. The respondent authority has also fairly conceded that the documents submitted by the petitioner were genuine and verifiable and that there was no deliberate suppression, misrepresentation or fraudulent conduct on the part of the petitioner. Thus, the very foundation for imposing the extreme penalty of debarment is absent. 10 13. This Court is also of the considered view that the punishment imposed upon the petitioner is grossly disproportionate to the alleged violation. A period of five years' debarment has serious consequences upon the business activities, reputation and future commercial prospects of the petitioner. The power of blacklisting, though available with the State authorities, cannot be exercised arbitrarily or mechanically and must satisfy the test of fairness, reasonableness and proportionality under Article 14 of the Constitution of India. 14. In view of the aforesaid discussion, this Court finds that the impugned order dated 14.01.2026 has been passed on an erroneous appreciation of facts and suffers from non-application of mind. The petitioner cannot be held guilty of suppressing an event which had occurred subsequent to the submission of its tender bid. There being no material to establish any deliberate violation of the tender conditions, the action of Respondent No. 3 in debarring the petitioner for a period of five years cannot be sustained. 15. Accordingly, the present petition is allowed. The impugned order dated 14.01.2026 passed by Respondent No. 3, whereby the petitioner company has been debarred from participating in the tender process for a period of five years, is hereby quashed and set aside. The respondent authorities are directed to permit the 11 petitioner to participate in future tender processes, subject to fulfillment of the applicable tender conditions and requirements. 16. It is made clear that this Court has not examined the legality or validity of the order passed by the Jammu and Kashmir Medical Supplies Corporation Limited and the present order is confined only to the legality of the impugned action taken by Respondent No. 3. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice Chandra