2026 INSC 312 Page 1 of 18

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). OF 2026

ARISING OUT OF SLP (C) NO. 23858 OF 2025

M/S A.K.G. CONSTRUCTION AND DEVELOPERS

PVT. LTD ...APPELLANT(S)

VERSUS

STATE OF JHARKHAND & ORS. …RESPONDENT(S)

WITH

CIVIL APPEAL NO(S). OF 2026

ARISING OUT OF SLP (C) NO. 22669 OF 2025

J U D G M E N T

1. Leave granted.

2. While exercising judicial review over administrative actions of the

State and its instrumentalities in relation to contracts provisioning clauses

and rules relating to termination and/or blacklisting, Courts must apply

distinct standards of legality, rationality and proportionately. Such an

approach is compelling as conditions for imposing such measures, as also

the consequences of such actions, have differing gravity.

Page 2 of 18

3. Upon careful consideration of the impugned State action, which

terminates the contract and blacklists the appellant without meaningful

distinction, we hold that the termination order is substantiated and

justified. However, the blacklisting order suffers from patent infirmities: it

evinces no application of mind, disregards the mandatory precept of audi

alteram partem, and fails to precede with a show-cause notice requiring

the contractor to demonstrate why such drastic action should not be taken.

Blacklisting, being stigmatic and exclusionary in nature, cannot be

imposed mechanistically but must comport with principles of natural

justice and reasonableness.

4. For the reasons detailed hereafter, we uphold the order of

termination and the impugned judgement and review order affirming the

same, but set aside the decision to blacklist the appellant.

5. Having upheld the order of t ermination, we were of the opinion that

the assumed logical consequence of blacklisting is neither supported by

application of mind nor followed by a clear notice proposing blacklisting.

For the reasons to follow, we set aside the order of blacklisting. However,

in the facts and circumstances of the case, due to passage of time, we

have suitably moulded the relief and directed that the order of blacklisting

shall not continue for five years as directed by the Department but will

cease to operate from the date of our judgment.

Page 3 of 18

Facts

6. The appellant, a registered contractor with the Water and Sanitation

Department was contracted for construction of an Elevated Service

Reservoir (ESR) by issuance of a Letter of Acceptance (LOA) on

06.03.2023. During the subsistence of the contract, on 01.06.2024, the

top dome of the reservoir collapsed. Though it was justified as being a

result of an unexpected cyclone, the appellant offered to reconstruct it at

own expense. However, the Department issued a show cause notice

dated 04.06.2024, seeking explanation as to why action should not be

taken for the negligence and bad quality of work. The contents of the sh ow

cause notice are as follows -

“(PURPOTED SHOW CAUSE)

GOVERNMENT OF JHARKHAND

DRINKING WATER & SANITATION DEPARTMENT

Letter No. 4/A.V.- 01-1019/2024- 1311

From,

Navneet Kumar

Under Secretary to the Government.

To,

M/s. A.K.G. Construction & Developers

Pvt. Ltd. Ranchi.

Ranchi, Date- 4/6/24

Subject: Regarding submitting clarification.

Context: Letter No. 727 of Executive Engineer, Drinking Water and

Sanitation Division, Jhumritilaiya, dated 01.06.2024.

Sir,

As per the directions, the department received information about

collapse of the under-construction water tower in Neemadhi village

Page 4 of 18

under Koderma- Demchonch Jaynagar Mega Rural Water Supply

Scheme through the relevant letter on the above subject.

The collapse of the under-construction water tower proves

that quality was not taken care of in the construction of the water

tower.

Due to your not doing quality work as per the agreement in

the construction of the water tower, the water tower collapsed due

to which the image of the department got tarnished.

Therefore, it is directed by attaching a copy of the letter

describing tire incident that why action should not be taken against

you as per rules for negligence shown by you and not doing quality

construction and, ensure to submit your explanation within 03

(three) days. In case of not receiving the explanation on time, it will

be considered that you have nothing to say regarding the allegation

and the department will be free to take unilateral action.

Translation- As Aforesaid

Yours sincerely,

Sd./-Illegible

04/06/2024

(Navneet Kumar)

Under Secretary to the Government.”

7. Following the s how cause notice, multi-level enquiries were

conducted. Initially, a three-member committee gave its report on

06.06.2024. Thereafter, the Superintending Engineer also examined the

matter in detail. These enquiries drew inputs from Birsa Institute of

Technology, Sindri and also IITs of Delhi, Madras and Bombay. Upon

receiving concurrent reports indicating negligence on part of the appellant,

respondent no. 3, Chief Engineer, Drinking Water and Sanitation

Department, passed the termination cum b lacklisting order dated

23.08.2024. The order containing the reasons for termination and

blacklisting is reproduced below for ready reference;

Page 5 of 18

“GOVERNMENT OF JHARKHAND

DRINKING WATER & SANITATION DEPARTMENT

Order No.-4/A.V.-01-102l/2024- 20(CDO), Ranchi, Date-

23/08/2024

ORDER

It was informed by letter no. 727 dated 01.06.2024 of Executive

Engineer, Drinking Water and Sanitation Division, Jhumritilaiya that

the water tower under construction in Neemadhi village under the

work of Koderma- Domchonch Jaynagar Large Rural Water Supply

Scheme, which is allotteed to the contractor M/s A.K.G.

Construction & Developers Pvt. Ltd., Ranchi, collapsed on

01.06.2024.

In the light of the above, the contractor was asked for clarification

by departmental letter no. 1311 dated 04.06.2024, in the light of

which the contractor submitted clarification through letter no.

AKG/24-25/26 dated 06.06.2024 in which the contractor has

reported that no laxity has been shown in the construction of the

under-construction water tower and the under-construction water

tower fell due to natural disaster/cyclonic storm. In the light of the

above, by letter no. 663 (CDO) dated 21.06.2024 of this office, the

Superintending Engineer, Drinking Water and Sanitation Zone,

Hazaribagh was directed to review the clarification received from

the contractor point by point and provide a report with his clear

opinion. The opinion was provided by letter no. 545 dated

21.06.2024 of the Superintending Engineer, Drinking Water and

Sanitation Zone, Hazaribagh in which it is reported that the work

described has not been done as per the approved Design &

Drawing and the quality of the overall work has not been taken care

of.

In the matter described by the department, an inquiry was

conducted by a three- member inquiry committee. The inquiry

committee submitted the inquiry report through departmental G.S.P.

No.-283 dated 06.06.2024 in which it is reported that negligence

was shown in getting the construction work of the water tower

completed as per the approved Design & Drawing and quality was

not taken care of, due to which the incident of collapse/demolition

of the water tower occurred. Thus, the contractor is

responsible/guilty for negligence and negligence in getting the

quality work done.

The contractor informed the concerned Executive Engineer through

his letter-AKG/24-25/23 dated- 01.06.2024 that he is ready to

construct ESR again at his own expense in place of the demolished

ESR under construction. It was never appropriate for him to

construct ESR again without departmental order. This act of his

reflects an attempt to hide his wrongdoings.

The department condemns this modus operandi of the contractor.

Page 6 of 18

It is clear from the above that the contractor got low quality

construction work done in the work of the scheme, which tarnished

the image of the department and created obstacles in achieving the

objectives of the department. This is a clear violation of rule number -

10.1.8 and 10.1.15 of the Contractor Registration Rules 2012.

Therefore, after review by the department, the explanation of the

contractor is rejected.

Therefore, after due consideration by the department in the light of

Rule No. 10.1.8 and 10.01.15 of Contractor Registration Rules

2012, the contractor M/s A.K.G. Construction & Developers Pvt.

Ltd., Panna Enclave, Flat No- 202, Kadru, Ranchi-834002, e- mail:

ketan.kumar007@gmail.com is blacklisted for 5 (five) years with

immediate effect and in this context, the following order is given in

the light of Rule No. 10.3 and 10.4 of Contractor Registration Rules

2012:-

2. It is decided to stop all the works being done by the contractor

from the date of issuance of the order and to confiscate the security

deposit of all the works. Also, the concerned regional Chief

Engineer/Superintending Engineer/Executive Engineer will ensure

to take appropriate action as per the requirement to complete the

remaining work being done by the contractor.

3. The registration of the contractor in all categories in the

department is cancelled with immediate effect.

4. The proposal has received the approval of the Hon'ble

Departmental Minister.

(Prabhat Kumar Singh)

Chief Engineer, C.D.O

Date: 23/08/2024”

8. Aggrieved, the appellant filed an appeal, which came to be

dismissed vide order dated 05.12.2024 of the Appellate Authority cum

Principal Secretary, Drinking Water and Sanitation Department. The

appellant filed a writ petition challenging orders dated 23.08.2024 and

05.12.2024. By impugned judgement and order dated 07.02.2025, the

High Court dismissed the writ petition, while also imposing a cost of Rs. 2

lakhs on the appellant. It was held that that the corroborated findings of

the enquiries conducted, as also the appellant’s own admission in the form

Page 7 of 18

of offering to reconstruct the entire ESR at its own cost, leads to a logical

inference of negligence in carrying out the construction as per the

approved design and drawings. It was also held that the orders impugned

were neither illegal nor arbitrary as proper opportunity was given to the

appellant at every stage.

9. The appellant sought a review of the decision arrived by the High

Court on self -same grounds, which naturally came to be dismissed by the

High Court vide impugned order dated 04.08.2025. Thus, the present

appeals have been filed against the main judgement as well as the review

order.

Submissions

10. Mr. M.S. Ganesh, learned senior counsel appearing on behalf of the

appellant, would submit that the termination as well as the blacklisting are

illegal and arbitrary. He would submit that constitution of the three-

member committee, followed by its report and subsequent reports, were

without giving any opportunity to the appellant. He would also submit that

the arbitrariness is writ large as the decision to blacklist had the effect of

terminating all subsisting contracts.

11. Mr. Kumar Anurag Singh, learned counsel for the respondent

Department would submit that Clause 59 of the General Conditions of

Contract (GCC), dealing with termination of contract does not provide for

Page 8 of 18

a prior notice. He would also rely on Rule 10 of the Contractor Registration

Rules, 2012, dealing with blacklisting, which mandates issuance of a show

cause notice before blacklisting a contractor upon misconduct. He would

submit that the show cause notice 04.06.2024 was specifically for purpose

of blacklisting the appellant, which according to him, is further cemented

by express use of the phrase “why action should not be taken against it

as per the rules”. In view of the concurrent operation of GCC and the 2012

Rules, he submits that the common order of termination cum blacklisting

is compliant of all conditions and therefore legal and valid.

Analysis

12. The controversy revolves around a true and correct interpretation of

Clause 59 of GCC, relating to termination, and Rule 10 of 2012 Rules,

relating to blacklisting. The Clause and the Rule is reproduced herein for

ready reference.

13. Clause 59 of GCC is as follows -

“59.Termination

59.1. The Employer or the Contractor may terminate the Contract if the other

party causes a fundamental breach of the Contract.

59.2. Fundamental breaches of Contract include, but shall not be limited to

the following:

(a) The Contractor stops work for 28 days when no stoppage of work is

shown on the current Programme and the stoppage has not been

authorized by the Engineer;

(b) The Engineer instructs the Contractor to delay the progress of the Works

and the instruction is not withdrawn within 28 days;

Page 9 of 18

(c) The Employer or the Contractor is made bankrupt or goes into liquidation

other than for a reconstruction or amalgamation.

(d) The Engineer gives Notice that failure to correct a particular Defect is a

fundamental breach of Contract and the Contractor fails to correct it within

a reasonable period of time determined by the Engineer.

(e) The Contractor does not maintain a security which is required;

(f) The Contractor has delayed the completion of works by the number of

days for which the maximum amount of liquidated damages can be paid as

defined in the Contract data; and

(g) If the Contractor, in the judgment of the Employer has engaged in corrupt

or fraudulent practices in competing for or in executing the Contract.

For the purpose of this paragraph: "corrupt practice" means the offering,

giving, receiving or soliciting of anything of value to influence the action of a

public official in the procurement process or in contract execution.

"Fraudulent practice" means a misrepresentation of facts in order to

influence a procurement process or the execution of a contract to the

detriment of the Borrower, and includes collusive practice among Bidders

(prior to or after bid submission) designed to establish bid prices at artificial

non-competitive levels and to deprive the Borrower of the benefits of free

and open competition."

59.3. When either party to the Contract gives notice of a breach of contract

to the Engineer for a cause other than those listed under Sub Clause 59.2.

above, the Engineer shall decide whether the breach is fundamental or not.

59.4. Notwithstanding the above, the Employer may terminate the Contract

for convenience.

59.5. If the Contract is terminated the Contractor shall stop work

immediately, make the Site safe and secure and leave the Site as soon as

reasonably possible”

14. Rule 10 of Contractor Registration Rules, 2012 is as follows -

“10. BLACKLISTING

10.1 A contractor in person or any partner of a registered firm or any director

of a private public limited company or his technical staff or any of his

authorized representatives, registered in any of the above categories, may

be blacklisted for any of the following misconducts:

10.1.1 Creating law and order problem in Government office while receiving

tender documents, submitting tender documents or doing any work related

thereto.

10.1.2 Intimidating or assaulting concerned officer or employee.

10.1.3 If the contractor is found selling or misusing Government goods such

as cement, steel and pipes etc..

10.1.4 If convicted in any criminal activity.

Page 10 of 18

10.1.5 If wrong documents are submitted for registration under these rules.

10.1.6 In case of being banned or blacklisted by any

department/undertaking of the Government of India or any State

Government.

10.1.7 In case of violation of Rule 6.2 of these rules.

10.1.8 Failure to execute the work as per the agreement and prescribed

specifications.

10.1.9 In case of the contractor handing over his work to another

contractor or any person without departmental order (subletting).

10.1.10 No improvement is reflected in the conduct of the suspended

contractor.

10.1.11 Corrupting or attempting to corrupt the tender process.

10.1.12 indulging in malpractices likes bribery, corruption or fraud.

10.1.13 any such act which obstructs the achievement of the objectives of

the works department.

10.1.14 applying political pressure directly or indirectly.

10.1.15 doing work of poor quality.

10.1.16 directly or indirectly threatening or intimidating departmental officers/employees.

10.1.17 not achieving physical targets in proportion to the time elapsed.

10.2 The blacklisted contractor will be debarred from working in any Government Department / Undertaking in future and his registration will be cancelled with immediate effect.

10.3 If a registered contractor is blacklisted in any one category in the light of Rule 10.1, then the registration of the said contractor in all other categories, if any, will also be deemed to be cancelled with immediate effect.

10.4 All the works being carried out by the blacklisted contractor in the

Department of Drinking Water and Sanitation, Jharkhand will be stopped

from the date of the order issued in the light of Rule 10.1, and the security

deposit of all the works will be forfeited and appropriate action will be taken

as per requirement to complete the remaining works.

10.5. Before blacklisting a contractor of a particular category, it will be

necessary to issue a show cause notice.

10.6 The order of blacklisting can be passed by the registration officer of the concerned category or the officer under who's supervision/under whose supervision the registration officer is working.

10.7 Against the penalty imposed, the contractor may file an appeal before the departmental secretary within thirty days.

10.8 After approval by the government, the blacklisting order will be

issued by the concerned registration officer.”

Page 11 of 18

15. Before we proceed to consider the Rules relating to b lacklisting and

its adverse consequences, we may state that it was made clear to Mr.

M.S. Ganesh, learned senior counsel for the appellant, that in view of the

clear findings of negligence as articulated in the order of termination , we

will not interfere with the decision of termination. As regards the

submission of Mr. M.S. Ganesh that the appellant did not have sufficient

opportunity to defend himself, notwithstanding the submission of Mr.

Kumar Anurag Singh that termination does not require prior notice, we are

of the opinion that the appellant had sufficient opportunity at the common

hearing for termination and blacklisting. Further, the appellant argued the

entire case before the Appellate Authority. Appellant also raised and

contested the case on merits before the Division Bench. Having examined

the contest and its due consideration all through, we are of the opinion

that the decision as regards termination is unimpeachable, on merits as

well as on the grounds of due process.

16. In so far as the order relating to blacklisting is concerned, we are of

the opinion that this issue requires close scrutiny and that will be

undertaken by reference to Rule 10 of the 2012 Rules.

17. A cursory reading of Rule 10 makes it evident that an order of

blacklisting has serious consequences, effecting not only the existing

contracts but also bars future business transactions for some years.

Page 12 of 18

Under Rule 10.3, if a registered contractor is blacklisted for any one

category as per Rule 10.1, then the registration of the said contractor in

all other categories, if any, will be deemed to be cancelled with immediate

effect. Upon such cancellation, under Rule 10.4, all the works carried out

by the blacklisted contractor in the department will be stopped from the

date of issuance of order under Rule 10.1. It also provides that the security

deposit for all the works will be forfeited.

18. The contractual conditions governing termination on the one hand

and those that relate to blacklisting on the other are distinct and will be

exercised independently. A decision of blacklisting is not automatic and

certainly not a logical consequence of a decision of termination. Even after

the Department decides to terminate the contract, there is still a choice of

exercising the power of blacklisting. These decisions operate in two

dimensions - past and subsisting for termination and future for blacklisting.

In other words, an order of blacklisting transcends the existing contract

and debars the contractor from contracts that could probably be executed

in the next five years. In view of the serious consequences, it is necessary

for the Department to issue a specific notice proposing blacklisting of a

contractor and call for an explanation as to why an order of blacklisting

should not be passed. This is exactly the purpose and object behind Rule

10.5.

Page 13 of 18

19. The requirement under Clause 10.5 is a clear case of legislative (in

this case subordinate legislation) incorporation of principles of natural

justice. This Court has time and again emphasised the need to adhere to

principles of natural justice while passing blacklisting orders, given the

grave consequences that follow. In Erusian Equipment & Chemicals Ltd.

v. State of West Bengal

1

, it was observed that –

“15. The blacklisting order does not pertain to any particular contract. The

blacklisting order involves civil consequences. It casts a slur . It creates a

barrier between the persons blacklisted and the Government in the matter

of transactions. The blacklists are “instruments of coercion”.

20. Blacklisting has the effect of preventing a person from the privilege and

advantage of entering into lawful relationship with the Government for

purposes of gains. The fact that a disability is created by the order of

blacklisting indicates that the relevant authority is to have an objective

satisfaction. Fundamentals of fair play require that the person concerned

should be given an opportunity to represent his case before he is put on the

blacklist.”

20. In order to emphasise the requirement of a show cause notice

preceding an order of blacklisting, this Court in UMC Technologies Pvt Ltd

v. Food Corporation of India

2

held that –

“13. At the outset, it must be noted that it is the first principle of civilised

jurisprudence that a person against whom any action is sought to be taken

or whose right or interests are being affected should be given a reasonable

opportunity to defend himself. The basic principle of natural justice is

that before adjudication starts, the authority concerned should give to

the affected party a notice of the case against him so that he can

defend himself. Such notice should be adequate and the grounds

necessitating action and the penalty/action proposed should be

mentioned specifically and unambiguously. An order travelling beyond

the bounds of notice is impermissible and without jurisdiction to that extent.

1

(1975) 1 SCC 70. The principle in Eurasian Equipment has been reiterated by this Court in many

subsequent judgements such as Raghunath Thakur v. State of Bihar (1989) 1 SCC 229 , Gorkha Security

Services v. Govt. (NCT of Delhi), (2014) 9 SCC 105, etc.

2

(2021) 2 SCC 551.

Page 14 of 18

This Court in Nasir Ahmad v. Custodian General, Evacuee Property

3

has

held that it is essential for the notice to specify the particular grounds on the

basis of which an action is proposed to be taken so as to enable the noticee

to answer the case against him. If these conditions are not satisfied, the

person cannot be said to have been granted any reasonable opportunity of

being heard.

14. Specifically, in the context of blacklisting of a person or an entity

by the State or a State Corporation, the requirement of a valid,

particularised and unambiguous show-cause notice is particularly

crucial due to the severe consequences of blacklisting and the

stigmatisation that accrues to the person/entity being blacklisted.

Here, it may be gainful to describe the concept of blacklisting and the

graveness of the consequences occasioned by it. Blacklisting has the

effect of denying a person or an entity the privileged opportunity of

entering into government contracts. This privilege arises because it is

the State who is the counterparty in government contracts and as such,

every eligible person is to be afforded an equal opportunity to participate in

such contracts, without arbitrariness and discrimination. Not only does

blacklisting take away this privilege, it also tarnishes the blacklisted

person's reputation and brings the person's character into question.

Blacklisting also has long-lasting civil consequences for the future

business prospects of the blacklisted person.

21. Thus, from the above discussion, a clear legal position emerges that

for a show-cause notice to constitute the valid basis of a blacklisting

order, such notice must spell out clearly, or its contents be such that

it can be clearly inferred therefrom, that there is intention on the part

of the issuer of the notice to blacklist the noticee. Such a clear notice is

essential for ensuring that the person against whom the penalty of

blacklisting is intended to be imposed, has an adequate, informed and

meaningful opportunity to show cause against his possible blacklisting.”

21. The judgment in M/S Techno Prints v. Chhattisgarh Textbook

Corporation & Anr.

4

underscored the need for a detailed consideration of

the consequences of blacklisting right at the outset, that is, from the stage

of issuing of show cause notice. The Court held as follows –

“29. However, what is important for us to say is that when there are

guiding principles explained by this Court as to when & in what

circumstances a blacklisting order can be passed then, in our opinion

such principles should also be borne in mind by the Authority at the

3

Nasir Ahmad v. Custodian General, Evacuee Property, (1980) 3 SCC 1.

4

2025 INSC 236.

Page 15 of 18

time of issuing a show cause notice. We say so because in the facts of

a given case like the one on hand, on the face of which it could be said that

there was no good reason for the Authority to issue a show cause notice

calling upon the contractor why he should not be blacklisted. Why ask the

contractor to face the proceedings when applying the aforesaid principles,

the issue of show cause notice would be an empty formality. We are saying

all this keeping in mind the peculiar facts of this case.

30. Therefore, the Authority is expected to be very careful before issuing a

show cause notice. It is expected to understand the facts well and try to

ascertain what sort of violation is said to have been committed by the

contractor. As noted above, there is always an inherent power in the

Authority to blacklist a contractor. But possessing such inherent power and

exercising such power are two different situations and connotations. There

may be a power but there should be reasonable ground to exercise such

power.

31. To put it by way of an illustration, the Police has the power to arrest but

it is not necessary that in all cases arrest must be effected. The Police

should know whether at all arrest is necessary.

32. We may put it in a slightly different way. Take for instance, the show

cause notice in the present case is the final order of blacklisting. The

final order in any case cannot travel beyond the show cause notice.

Therefore, we take the show cause notice as the final order. Whether

it makes out a case for blacklisting? This should be the test to

determine whether it is a genuine case to blacklist a contractor or visit

him with any other penalty like forfeiture of EMD, recovery of damages

etc. We say so because once an order of blacklisting is passed the

same would put an end to the business of the person concerned. It is

a drastic step. Once the final order blacklisting the Contractor is

passed then the Contractor is left with no other option but to go to the

High Court invoking writ jurisdiction under Article 226 of the

Constitution and challenge the same. If he succeeds before the Single

Judge then it is well and good otherwise he may have to prefer a writ

appeal or LPA as the case may be. This again would lead to unnecessary

litigation in the High Courts. The endeavour should be to curtail the litigation

and not to overburden the High Courts with litigations of the present type

more particularly when the law by and large is very well settled and there is

no further scope of any debate.”

22. Returning to the facts of the present case, at the outset, it is

apparent that the show cause notice dated 04.06.2024 does not purport

to be a show cause notice for blacklisting at all. It perhaps expects the

contractor to assume that it is for termination as well as for blacklisting.

Page 16 of 18

Even if we accept the submissions of Mr. Kumar Anurag Singh that, as

there is no provision for prior notice before termination, this show cause

notice must be taken to be for blacklisting, we are of the opinion that it still

falls short of the requirement of a proper show cause notice for

blacklisting. This is for the reason that as the decision to blacklist is

independent of the decision to terminate, the Department must

demonstrate application of mind before it takes the next step of

blacklisting the contractor, over an order of termination. Upon taking such

a decision, it must also issue a show cause notice calling upon the

contractor to explain why a consequential order of blacklisting should also

not be passed. The letter must be indicative of the proposed decision to

blacklist and the requirement of the contractor to respond to it. The show

cause notice dated 04.06.2024 falls short of these requirements. Similarly,

the final order of blacklisting, dated 23.08.2024, also does not list the

reasons as to why an order of blacklisting has become necessary.

23. The contractual relationship between the parties is governed by two

legal regimes. While GCC governs termination, the 2012 Rules govern

blacklisting. Proceedings for termination should not be conflated with

proceedings for blacklisting. In the latter action, what is at stake is the

future of the contractor. A blacklisting order assumes that the contractor is

an incorrigible entity, at least for some time to come, in this case such an

Page 17 of 18

assumption was intended to operate for five years. For giving effect to

such a premise, there has to be sufficient evidence, clear application of

mind and stronger adherence to principles of natural justice

5

. The

blacklisting order dated 23.08.2004 falls short of this requirement and is

liable to be set aside.

24. As a consequence of our decision to set aside the blacklisting order,

we would have required the Department to issue a fresh show cause

notice indicative of the reasons as to why a blacklisting order is felt

necessary and to thereby call upon the contractor to show cause.

However, in view of the fact that the order of termination cum blacklisting

was passed on 23.08.2024 , and since then almost more than one and a

half year has already passed, without there being a stay of the said order

in the meantime, we are of the opinion that the relief to be granted can

suitably be moulded by directing that the order of blacklisting will cease to

operate with immediate effect. This order will benefit the appellant more

than the Department, because directing issuance of a fresh show cause

notice will only lead to further litigation.

25. Having considered the matter in detail and taking into account the

unimpeachable material about the negligence of the appellant leading to

5

Kulja Industries Ltd. v. Chief General Manager, Western Telecom Project BSNL, (2014) 14 SCC 731; The

Blue Dreamz Advertising Pvt Ltd. & Anr. v. Kolkata Municipal Corporation & Ors, 2024 INSC 589, M/s Techno

Prints (supra).

Page 18 of 18

collapse of the top dome of the ESR, we are of the opinion that the order

of termination of all contracts is legal and valid. Civil Appeals to this extent

are dismissed. However, the decision of blacklisting of the appellant is

illegal, arbitrary and unreasonable. The declaration of blacklisting is set

aside, and shall cease to operate with immediate effect.

………………………………....J.

[PAMIDIGHANTAM SRI NARASIMHA ]

………………………………....J.

[ALOK ARADHE ]

NEW DELHI;

APRIL 02, 2026.