1 2026:CGHC:19543-DB NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 1785 of 2026 M/s Ascent Technology Solution Through- Sole Proprietor, Anand Suhane, S/o Shri G.D. Suhane, Aged About 45 Years, Office Address- 433, Beside Anchal Nursing Home, Mahaveer Nagar Ring Road No. 1 Raipur, District Raipur (C.G.) ... Petitioner(s) versus 1 - Chhattisgarh State Warehousing Corporation Through Managing Director, Head Office, Sector- 24, Atal Nagar, Nawa Raipur, District Raipur (C.G.) 2 - Chhattisgarh State Industrial Development Corporation Through Managing Director, First Floor, Udhyog Bhawan, Ring Road No. 01, Telibandha, Raipur, District Raipur (C.G.) ... Respondent(s) For Petitioner(s) : Dr. Sudeep Agrawal, Advocate For Respondent No. 1 For Respondent No. 2 : : Mr. Sajal Kumar Gupta, Advocate along with Mr. Trivikram Nayak, Advocate Mr. Syed Jayed Ziya Ali, along with Mr. Anumesh Shrivastava, Advocate SAGRIKA AGRAWAL Digitally signed by SAGRIKA AGRAWAL Date: 2026.04.30 10:49:06 +0530 2 Hon'ble Shri Ramesh Sinha, Chief Justice Hon'ble Shri Ravindra Kumar Agrawal, Judge Order on Board Per Ramesh Sinha, Chief Justice 28/04/2026 1. Heard Dr. Sudeep Agrawal, learned counsel for the petitioner. Also heard Mr. Mr. Sajal Kumar Gupta, Advocate along with Mr. Trivikram Nayak, Advocate and Mr. Syed Jayed Ziya Ali, along with Mr. Anumesh Shrivastava, Advocate for the respective Respondents. 1. The present petition has been filed by the petitioner seeking the following relief(s): “"10.1 That, this Hon'ble Court may kindly be pleased to quash the impugned order No. 14300/CGWC/Tec/2025 Nawa Raipur, dated 26.11.2025 (Annexure P-1) passed by the respondent no. 1/Chhattisgarh State Warehousing Corporation wherein the Security Deposit has been forfeited and further the petitioner firm has been blacklisted for a period of five years as being without any authority of law and even without adhering to the principles of natural justice and equity. 10.2 Any other relief or relief(s) which this Hon'ble Court may think proper in view of the facts and circumstances of the case may also kindly be 3 granted, in the interest of justice.” 2. The petitioner, who is a sole proprietorship firm represented through its proprietor, calls in question the legality and validity of the impugned order dated 26.11.2025, whereby the petitioner has been blacklisted for five years by the respondent authorities and its security deposit has also been forfeited. The record reflects that pursuant to NIT No. 74 dated 10.10.2022 issued by the respondent No.2/CSIDC for the supply and installation of CCTV Surveillance Systems at various centres of the Chhattisgarh State Warehousing Corporation across the State, the petitioner was awarded the contract under the CSIDC rate contract. In furtherance thereof, supply orders dated 08.10.2023 and 10.10.2023 were issued, stipulating completion of work within a period of 45 days. It is the specific case of the petitioner that the entire work of supply and installation was completed within the stipulated time frame in accordance with the contractual terms and conditions, without any delay or deficiency attributable to the petitioner. 3. It further appears that after completion of installation, the respondent authorities issued various notices dated 17.05.2024, 29.11.2024 and 22.01.2025 directing the petitioner to carry out repair and maintenance work of the installed CCTV systems at different centres. The petitioner contends that it duly complied with all such directions and undertook necessary repair, replacement and maintenance work promptly, including installation of new cameras at locations where the earlier units were found missing, despite such circumstances being beyond the petitioner’s control. 4 4. However, the respondent No.1, without issuing any specific show cause notice proposing blacklisting or forfeiture of security deposit and without affording any opportunity of hearing, proceeded to pass the impugned order dated 26.11.2025, blacklisting the petitioner firm and forfeiting its security deposit. The petitioner submits that such action entails serious civil and financial consequences and could not have been taken in the absence of due process. It is further submitted that the petitioner submitted representation dated 27.11.2025 and 24.12.2025 seeking revocation of the blacklisting order and release of the forfeited security deposit, however, the said representations have not been considered till date. In this backdrop, the petitioner has approached this Court invoking its writ jurisdiction, contending that the impugned action is arbitrary, violative of principles of natural justice, and unsustainable in law. 5. Learned counsel for the petitioner would submit that the petitioner firm has approached this Court challenging the impugned order dated 26.11.2025 (Annexure P-1) passed by the respondent authorities, whereby the petitioner has been blacklisted for a period of five years and its security deposit has been forfeited. It is submitted that the impugned order has been passed without issuing any specific show cause notice indicating the proposal or intention of the respondent No.1 to blacklist the petitioner. By straightaway passing the blacklisting order, the authorities have acted in gross violation of the principles of natural justice and equity, thereby rendering the impugned order arbitrary and illegal. 5 6. It is further submitted that the petitioner had duly complied with all contractual obligations and directives issued by the respondent authorities. Specifically, pursuant to notices dated 17.05.2024, 29.11.2024, and 22.01.2025, the petitioner carried out necessary repairs, replacements, and maintenance of the CCTV cameras across all nominated centres, including the replacement of missing cameras, without raising any objection. Despite such compliance, the authorities arbitrarily imposed a blacklisting order coupled with the forfeiture of security deposit. It is submitted that such an action is disproportionate and grossly penal in nature, resulting in severe civil consequences, including commercial stigma and the inability to participate in future government contracts, amounting to a form of “civil death” for the petitioner. It is also submitted that unilateral termination of the contract/agreement is arbitrary, illegal and unjustifiable as there is an arbitration clause in the agreement, and in spite of that by acting capriciously in a colourful and unfair manner, the impugned order has been issued, which is clearly against the settled principles of law. Further, the breach of terms and conditions of the contract on the part of the petitioner does not arise as the petitioner has written several letters/representations to the Respondent No. 1, time and again requesting them to cooperate in the execution of work, and thereafter, there were reasons attributable to the Respondent No. 1. 7. In the present case, the petitioner has been subjected to blacklisting and security deposit forfeiture without any specific show cause notice indicating the intention to blacklist, without recording any 6 subjective satisfaction, and despite fully complying with all contractual obligations, including remedial measures and replacements requested by the respondent authorities. The action of the respondent is therefore arbitrary, disproportionate, and violative of principles of natural justice, equity, and settled legal norms regarding blacklisting. In these circumstances, the impugned order dated 26.11.2025 deserves to be quashed with consequential relief of release of the forfeited security deposit. 8. He would rely upon the judgment dated 28-08-2025, passed by the Coordinate Bench of this Court in W.P.(C) No. 1135/2025 (Recorders and Medicare Systems Pvt. Ltd. vs. State of C.G.),” Nasir Ahmed v. Assistant Custodian General”, AIR 1980 1157, and “Gorkha Security Services v. Govt. (NCT of Delhi) and Others” (2014) 9 SCC 105. 9. On the other hand, learned counsel for the respective respondents vehemently objected and submits that the impugned order dated 26.11.2025, blacklisting the petitioner and forfeiting the security deposit, was passed in exercise of the statutory and contractual powers conferred upon the respondent authorities under the CSIDC rate contract and NIT No. 74 dated 10.10.2022. It is submitted that the petitioner had entered into a contractual obligation to supply, install, and maintain CCTV Surveillance Systems across various centres of the Chhattisgarh State Warehousing Corporation within the stipulated timelines and in accordance with specifications. The respondents contend that despite multiple reminders and notices issued to the 7 petitioner firm, including those dated 17.05.2024, 29.11.2024, and 22.01.2025, there were instances of deficiencies in the performance, delay in remedial measures, and failure to ensure proper maintenance of certain CCTV cameras. Consequently, the respondents were constrained to initiate penal action, including blacklisting and forfeiture of security deposit, to safeguard the interests of the public authorities and to ensure compliance with contractual obligations. 10. It is further submitted by the respondents that blacklisting of a contractor is an administrative action intended to protect the integrity and efficiency of public procurement and government contracts, and is well within the powers of the authority. The respondents contend that the petitioner was aware of the consequences of non-compliance with the terms of the contract, including the possibility of blacklisting, as the same was explicitly mentioned in the tender documents and rate contract. The respondents would also submit that the petitioner was afforded ample opportunity to respond to the notices and to remedy deficiencies, and that the repeated failure to maintain operational CCTV systems justified issuance of the impugned order. The forfeiture of security deposit is further submitted to be in accordance with the terms of the contract as a security for performance, and arises out of the petitioner’s alleged failure to discharge contractual duties satisfactorily. 11. It is also submitted that the impugned action is administrative in nature and does not violate principles of natural justice, as adequate communication regarding deficiencies was made through notices, and the petitioner had been given a reasonable opportunity to address the 8 same. It is thus submitted that the impugned order is legal, valid, and justified in the facts and circumstances of the case, and the writ petition lacks merit. 12. We have heard learned counsel for the respective parties and perused the material annexed with the petition and gone through the pleading. 13. It is undisputed that the petitioner was awarded a contract under NIT No. 74 dated 10.10.2022 and the CSIDC Rate Contract for the supply, installation, and maintenance of CCTV Surveillance Systems at various centres of the Chhattisgarh State Warehousing Corporation. The petitioner has placed on record documents, including supply orders, repair reports, and correspondence (Annexures P-4 to P-10), which demonstrate that the CCTV systems were installed and necessary repairs and replacements were carried out in response to notices dated 17.05.2024, 29.11.2024, and 22.01.2025, including the replacement of missing cameras. The petitioner has shown a bona fide and timely compliance with contractual obligations. 14. The impugned blacklisting order dated 26.11.2025 has been challenged primarily on the ground that no specific show cause notice indicating the intention to blacklist the petitioner was issued, and no subjective satisfaction regarding non-performance or breach was recorded by the respondent authorities. The petitioner’s submissions are supported by the principles laid down by the Hon’ble Supreme Court in Gorkha Security Services (supra), which emphasize that blacklisting is a stigmatic action that requires an adequate, specific, and 9 meaningful opportunity to be afforded to the party concerned. In the present case, the petitioner’s conduct indicates no mala fide intent or deliberate default, and the impugned action appears arbitrary and disproportionate. In the case of Gorkha Security Services (supra), the Hon’ble Supreme Court has held that:- 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 notice 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. In the present case, it is obvious that action is taken as provided in sub-clause (ii). Under this clause, as is clear from the reading thereof, the Department had a right to cancel the contract and withhold the agreement. That has been done. The Department has also a right to get the job which was to be carried out by the defaulting contractor, to be carried out from other contractor(s). In such an event, the Department also has a right to recover the difference from the defaulting contractor. This clause, no doubt, gives further right to the 10 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 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 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 11 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. 15. The respondents contend that blacklisting and security deposit forfeiture are administrative measures designed to safeguard public contracts and ensure compliance. While the Court recognizes the importance of maintaining integrity in public procurement, it is evident from the record that the petitioner had undertaken all repair and replacement obligations promptly, and there is no evidence of intentional default or dereliction. In these circumstances, continuation of the blacklisting order would be manifestly unfair and contrary to the principles of natural justice. 16. Considering the above, the Court finds that the blacklisting order dated 26.11.2025 is disproportionate and violative of principles of natural justice. Accordingly, the blacklisting of the petitioner firm is quashed with immediate effect. However, as regards the forfeited security deposit, the Court notes that the contract between the parties contains a valid arbitration clause, which provides an independent 12 mechanism for the resolution of disputes relating to performance or financial claims. The petitioner is therefore directed to pursue its claim for refund of the security deposit through arbitration under the Dispute Resolution Clause, i.e. Clause 24 of the conditions of contract in the NIT, in accordance with the terms of the contract. 17. In view of the above, the writ petition is partly allowed, the impugned blacklisting is quashed, and the petitioner is relieved from the disqualification arising therefrom, but the question of security deposit shall be adjudicated in arbitration as per the contractual terms. The petitioner may raise its dispute regarding the forfeiture of security deposit in the arbitration proceeding. 18. The parties shall bear their own costs. Sd/- Sd/- (Ravindra Kumar Agrawal) (Ramesh Sinha) Judge Chief Justice sagrika