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IN THE HIGH COURT OF JHARKHAND AT RANCHI

W.P. (C) No. 2527 of 2026

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M/s SK Electricals, a proprietorship firm, having its office at Bye

Pass Road, P.O. & P.S.-Daltonganj, Palamu, Jharkhand, represented

through its proprietor, Shri Santosh Kumar, S/o Pancham Saw, R/o

New Sahdeo Nagar, P.O. & P.S.-Hehal, Behind Colony of OTC

Ground, Ratu Pandra Road, near Chota Hanuman Mandir, P.O. &

P.S.-Hehal, District-Ranchi … … Petitioner

Versus

1. RITES Ltd., a Government of India enterprise and a company

registered under Companies Act, 1956, having its registered office

at SCOPE Minar, Laxmi Nagar, New Delhi, represented through its

Group General Manager (Civil) & PU-Head, ERPO, Kolkata, having

its office at Plot No. DJ/20, Action Area-1D, Street No. 326, New

Town, P.O. & P.S.-New Town, District-Kolkata

2. Group General Manager (Civil) & PU-Head, RITES Limited, ERPO,

Kolkata, Plot No. DJ/20, Action Area-1D, Street No. 326, P.O. & P.S.-

New Town, Kolkata

3. Neyveli Uttar Pradesh Power Limited (NUPPL), through its

Chairman, having its registered office at KH-419, G.N. Extension,

Gomti Nagar, P.O. & P.S.-Gomti Nagar, District-Lucknow (U.P.),

having its site office at near Village-Lahurimau-Kasimpur,

Ghatampur, Tehsil, P.O. & P.S.-Samuhi, District-Kanpur (U.P.)

…. .… Respondents

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CORAM: HON’BLE THE CHIEF JUSTICE

HON'BLE MR. JUSTICE RAJESH SHANKAR

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For the Petitioner : Mr. Indrajit Sinha, Advocate

Mr. Vipul Poddar, Advocate

Mr. Pradyumna Poddar, Advocate

Ms. Sugandha Jaiswal Poddar, Advocate

For the Respondents: Mr. Srijit Choudhary, Advocate

Ms. Tanya Rai, Advocate

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Reserved on 31.08.2026 Pronounced on 07.09.2026

Per : Rajesh Shankar, J. :

1. The present writ petition has been filed making multiple prayers,

however, in course of argument, the learned counsel for the

petitioner confines the prayer to the following extent: -

f. For issuance of an appropriate writ(s), order(s) or

direction(s) for quashing and setting aside the order

contained in Serial No. RITES/PU -

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KOL/OHE/NUPPL/2026/718 dated 22.04.2026 issued

under the signature of General Manager (Civil), PU

Head, Kolkata, whereby the respondent-department

has declared the petitioner as a 'Poor Performer' and

subsequently placed the petitioner in the 'Negative List

of Contractors'.

g. Upon quashing of the aforesaid order a further

writ(s), order(s) or direction(s) be issued declaring

that Clause 3(b) of the General Conditions of Contract

so far as it relates to declaration as Poor Performer

without giving appropriate opportunity of notice and

hearing is violative of the principles of natural justice

and thus is liable to struck down.

Submissions made by the learned counsel for the

petitioner:

2. Mr. Indrajit Sinha, the learned counsel appearing on behalf of the

petitioner submits that RITES Limited (respondent no.1) floated an

e-tender no. 09/OT/RITES/ERPO/PU -KOL/NUPPL-Kurwa/OHE-

General Electrical/2023 dated 31.10.2023 for the work-"Design,

Drawing, Supply, Erection, Testing & Commissioning of 25 KV OHE

system with SSP, Yard Illuminations & Electrification of Different

Buildings for Construction of new Railway Siding at NUPPL Dumka

Siding under Eastern Railway, Howrah Division for Pachwara South

Coal Block/ Neyveli Uttar Pradesh Power Limited (NUPPL) for

transportation of coal from Pachwara South Coal Block through

Indian Railway network." The said tender was issued by the

respondent no. 1 in the capacity of an agent/duly authorized

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Power of Attorney Holder, acting for and on behalf of Neyveli Uttar

Pradesh Power Limited (NUPPL).

3. The petitioner participated in the said e- tender process and

emerged as the successful bidder. Thereafter, a Letter of

Acceptance dated 24.01.2024 was issued in its favour awarding

the work at a total contract price of Rs 6,40,10,551/- excluding

GST. Subsequently, Agreement No. RITES/PU - KOL/NUPPL-

OHE/RT760-00168/2024/637, dated 29.04.2024 was executed

between the petitioner and the respondent no. 1.

4. It is submitted that from the very inception of the work, the

petitioner was prevented from executing the contractual

obligations on account of multiple hindrances attributable to the

respondents due to which the execution of the work could not be

commenced and/or proceeded with as per the contractual

schedule.

5. The General Manager (Civil), PU Head, Kolkata (respondent no. 2)

issued letter no. RITES/PU-KOL/OHE/NUPPL/2026/293 dated

16.02.2026 under Clause 3(iii) of GCC whereby the petitioner was

directed to take necessary action to accelerate the progress of

work within seven days of issuance of the said letter, failing which

a recommendation was to be made to the competent authority for

determination of the contract. It was mentioned in the said letter

that the performance guarantee as well as the security deposit

would also be forfeited by the employer. It was further warned in

the said letter that in the event of determination of the contract,

the petitioner would be declared as ‘poor performer’ in terms with

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Clause 3(a)(i) of the General Conditions of Contract (in short

‘GCC’).

6. The petitioner replied the said letter of the respondent no. 2,

however vide letter no. RITES/PU-KOL/OHE/NUPPL/ 2026/378

dated 25.02.2026, the respondent no. 2 again issued a similar

direction with warning as was given to the petitioner in the letter

dated 16.02.2026. The petitioner replied the said letter on this

occasion also denying all the allegations made against it.

7. Finally, vide letter dated 16.03.2026 issued by the respondent no.

2, the contract of the petitioner was terminated alleging, inter alia,

that there was no concrete planning on the part of the petitioner

for procurement of copper materials, which were vital for

completion of the project. It was further alleged that the

petitioner's communications did not reflect any firm commitment

for timely completion of the work as well as there was no

assurance regarding completion of SSP work and other electrical

general works. It was also alleged that the petitioner had declined

to undertake certain additional works relating to providing 11 KV

local power supply to the proposed siding. Consequently, the

performance guarantee amounting to Rs. 32,00,528/- and the

security deposit of Rs. 13,50,491.66/- were forfeited.

8. Subsequently, the respondent no. 2, vide letter no. RITES/PU-

KOL/OHE/NUPPL/ 2026/718 dated 22.04.2026, declared the

petitioner as a 'Poor Performer'. It was also placed in the 'Negative

List of Contractors' and was debarred from participating in any

further tender to be invited by the respondent no. 1 for a period of

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two years i.e., from 22.04.2026 to 21.04.2028.

9. Learned counsel for the petitioner contends that the legal position

on the subject of blacklisting has been settled in the cases of

Erusian Equipment & Chemicals Ltd. Vs. State of W.B. &

Another reported in (1975) 1 SCC 70, UMC Technologies (P)

Ltd. Vs. Food Corpn. of India & Another reported in (2021) 2

SCC 551, Techno Prints Vs. Chhattisgarh Textbook

Corporation and Another reported in 2025 SCC OnLine SC

343 and A.K.G Construction and Developers Pvt. Ltd. Vs.

State of Jharkhand & others reported in 2026 SCC OnLine

SC 520. The ratio culled out from the aforesaid judgments is that

the blacklisting has the effect of preventing a person from entering

into lawful relationship with the government for the purposes of

gains and as such the authority is required to give a fair hearing to

the concerned contractor before passing an order of blacklisting

against it.

10. It is submitted that the notices dated 16.02.2026 and 25.02.2026

were issued under Clause 3(iii) of GCC by way of warning that

upon determination of contract, the petitioner would be declared

as a ‘Poor performer’ in terms of clause 3(a)(i) and not under

Clause 3(b) of the GCC. The said notices cannot be said to have

been issued proposing the punishment of debarment.

11. It is further submitted that every action of the State or its

instrumentality, in exercise of its executive power, must be

supported by reason. An action uninformed by reasons may be

questioned as arbitrary in a proceeding under Article 226 of the

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Constitution.

12. It is also contended that Clause 3(b) of the GCC, to the extent it

contemplates deemed and automatic declaration of a contractor as

"poor performer" and consequent debarment for a period up to

two years as per Clause 52.7 of the GCC, which is inevitable

consequence after determination of the contract under Clause

3(a), is manifestly unreasonable and arbitrary being violative of

the principles of natural justice. The said clause operates

mechanically and without any application of mind as it neither

envisages an independent inquiry regarding conduct of the

contractor, nor provides any opportunity of hearing to it before

imputing the stigma of a "poor performer" and imposing a

punishment of debarment.

13. It is further argued that a contractor whose contract stands

determined, may have failed to proceed with the allotted work for

the reasons entirely beyond its control, or on account of a genuine

dispute with the employer, yet Clause 3(b) of GCC visits the

contractor with debarment as an automatic and inescapable

consequence, without distinction or discretion. Such a clause,

which conflates determination with debarment, strips the

contractor of any meaningful opportunity to demonstrate why the

graver consequence should not follow. It treats unequal situations

equally, which is contrary to the principles of natural justice being

violative of the fundamental right guaranteed under Article 14 of

the Constitution of India against arbitrary State action and is

contrary to the settled legal proposition.

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14. It is also submitted that the respondents, being the

instrumentalities of the State, are bound to act fairly, reasonably,

and in a non-arbitrarily manner even in contractual matters. The

impugned termination has been issued in a mechanical manner,

ignoring the undisputed hindrances at the site and the petitioner's

repeated communications, thereby rendering the action arbitrary

and unconstitutional.

15. It is further submitted that mere alleged breach of contract should

not be a ground for blacklisting, rather for passing such an order,

the conduct of contractor must be so deviant or aberrant so as to

warrant a punitive measure of the said nature.

16. It is also urged that the petitioner was prevented from executing

the work due to non-availability of site, non-readiness of track

beds, absence of permissions, pending civil works and other

impediments attributable to the faults on the part of the

respondents for which the petitioner cannot be penalized.

Submissions on behalf of the respondents

17. Mr. Srijit Choudhary, Advocate, appearing on behalf of the

respondents at the outset submits that the present writ petition is

not maintainable in view of the fact that the petitioner has

expressly agreed under the contract that the city of jurisdiction of

Court would be “Kolkata” and as such it cannot now seek to invoke

the jurisdiction of this Court contrary to the agreed contractual

forum.

18. It is further submitted that the order declaring the petitioner as a

"Poor Performer” and placing it in the “Negative List of

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Contractors” was not founded upon a solitary incident or an

unsubstantiated allegation, rather the respondents had issued

several notices to the petitioner with respect to its repeated acts of

breach of the contract. The petitioner kept on assuring the

respondents that the requisite materials would be procured and

supplied within the specified target dates, however despite

repeated assurances, the petitioner failed to procure and supply

the required copper materials within the contractual period. The

repeated failure to honour its own commitments constituted clear

and objective material suggesting that the petitioner had failed to

perform its contractual obligations. Thus, the respondents had

sufficient evidence before them to arrive at a conclusion that the

petitioner's performance was unsatisfactory and that it could not

be permitted to continue to deal with the respondents as a

contractor. Moreover, it had to face the consequences

contemplated under the contractual framework.

19. It is further submitted that the declaration of the petitioner as

‘Poor Performer’ was not an automatic consequence of

termination, rather before making such declaration, the

respondents considered the actual conduct and performance of the

petitioner, including its failure to arrange the essential materials

despite repeated assurances and opportunities. Thus, the present

case is significantly different from the judgments relied upon by

the petitioner where the contractors were automatically blacklisted

merely because their contracts were terminated without any

independent consideration of their conduct and without any

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foundational facts.

20. It is also contended that the petitioner has placed much reliance

on the judgments of the Hon’ble Supreme Court rendered in the

cases of A.K.G Construction (Supra.) and UMC Technologies

(Supra.), however, the said judgments are not applicable in the

facts and circumstance of the present case. The correct

proposition emerging from the aforesaid judgments is that the

blacklisting must be supported by sufficient material, application of

mind and procedural fairness. In the present case, the

respondents were repeatedly confronted with the petitioner

defaults and had provided several opportunities to it to rectify the

same. The petitioner was also asked on numerous occasions to

demonstrate its ability to supply the requisite materials, including

copper, however, it failed to perform its contractual obligations

even after giving repeated assurances.

Finding of the Court:

Finding Qua Maintainability:

21. Respondents' have raised the issue of maintainability of the

present writ petition asserting that in view of Clause 46.17

mentioned under the heading “Clauses of Contract” in the Section

4 (Proforma of Schedules) of Part-1 (Technical Bid) relating to the

tender and contract document, the city of Jurisdiction of Court is

‘Kolkata’ and hence the said clause completely oust the jurisdiction

of this Court to hear the matter.

22. In support of the said contention, the learned counsel for the

respondents places reliance on the judgment of the Hon’ble

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Supreme Court rendered in the case of M/s Swastik Gases (P)

Ltd. Vs. Indian Oil Corpn. Ltd. reported in (2013) 9 SCC 32.

In the said case, the question for consideration before the Hon’ble

Supreme Court was as to whether in view of Clause 18 of the

consignment agency agreement, the Calcutta High Court had the

exclusive jurisdiction in respect of the application made by the

appellant under Section 11 of the Arbitration and Conciliation Act,

1996. Moreover, though the appellant did not dispute that the

agreement was amenable to the jurisdiction of the Courts at

Kolkata, however, it claimed that part of the cause of action had

also arisen at Jaipur and, therefore, the Chief Justice of the

Rajasthan High Court or the designate Judge had the territorial

jurisdiction to consider the appellant’s application seeking

appointment of an arbitrator under Section 11. In the said case,

Their Lordships held that by having Clause 18 in the agreement,

the intention of the parties were clear and unambiguous that the

courts at Kolkata alone had the jurisdiction. It was further held

that to construe the jurisdiction clause like Clause 18 of the

agreement, the maxim expressio unius est exclusio alterius comes

into play which means that expression of one is the exclusion of

another. Where the contract agreement specifies the jurisdiction of

the courts at a particular place and such courts have the

jurisdiction to deal with the matter, an inference may be drawn

that parties intended to exclude all other courts.

23. We have also perused the judgment of the Hon’ble Supreme Court

rendered in the case of Indus Mobile Distribution (P) Ltd. v.

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Datawind Innovations (P) Ltd. & Others reported in (2017)

7 SCC 678. In the said case, the question was as to whether,

when the seat of arbitration was at Mumbai, an exclusive

jurisdiction clause stating that the courts at Mumbai alone would

have jurisdiction in respect of the disputes arising under the

agreement, would oust all other courts including the High Court of

Delhi, whose judgment was appealed against. In the said case,

Their Lordships followed the judgment of M/S Swastik Gases

(P) Ltd. (Supra.) and other similar judgments holding that the

Mumbai Courts alone had the jurisdiction to the exclusion of all

other courts in the country, as the juridical seat of arbitration was

at Mumbai.

24. In both the aforesaid judgments, the matter was relating to fixing

of jurisdictional seat of arbitration by the parties under the Act,

1996 to one court excluding all other courts in the country. In the

said cases, there was no issue as to whether the parties to a

private contract can oust jurisdiction of the High Court under

Article 226 of the Constitution of India by a private agreement.

Thus, the facts and circumstances involved in the cases relied

upon by the learned counsel for the respondents is quite

distinguishable from the facts of the present case.

25. We have also perused the judgment of the Hon’ble Supreme Court

rendered in the case of Maharashtra Chess Association Vs.

Union of India & Others reported in (2020) 13 SCC 285 as

has been relied by the learned counsel for the petitioner. In the

said case, the issue was as to whether a private agreement

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entered into between the appellant and the second respondent

(the All India Chess Federation) in the form of the constitution and

bye-laws of the latter, by conferring exclusive jurisdiction on the

courts at Chennai, can oust the writ jurisdiction of the Bombay

High Court under Article 226 of the Constitution.

26. In the said case, Their Lordships have held that there is a marked

distinction between the jurisdiction of a civil court and the writ

jurisdiction of a High Court under Article 226 of the Constitution of

India. The parties to a contract can agree to submit their disputes

to only one amongst several courts having jurisdiction so as to

exclude of all other courts, however, the contractual exclusion

clause cannot ipso facto exclude jurisdiction of a writ court. The

writ jurisdiction of the High Court is fundamentally discretionary

and even the existence of an alternate adequate remedy is merely

an additional factor to be taken into consideration by the High

Court in deciding whether or not to exercise its writ jurisdiction. In

exercising its discretion to entertain a particular case under Article

226, the High Court may take into consideration various factors

including the nature of injustice alleged by the petitioner, whether

or not an alternate remedy exists, or whether the facts raise a

question of constitutional interpretation. The High Court must take

a holistic view of the facts as presented in the writ petition and

make a determination on the facts and circumstances of each

unique case.

27. The Hon’ble Supreme Court has further held that the Bombay High

Court relied solely on Clause 21 of the constitution and bye-laws of

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the All India Chess Federation to hold that its own writ jurisdiction

was ousted. The Bombay High Court however failed to examine

the case holistically and made a considered determination as to

whether or not it should, in its discretion, exercise its powers

under Article 226. The scrutiny to be applied by the High Court to

every writ petition under Article 226 of the Constitution is a crucial

safeguard of the rule of law. It is not open to a High Court to

abdicate this responsibility merely due to the existence of a

privately negotiated document ousting its jurisdiction.

28. Thus, it is no more res integra that jurisdiction of the High Court

under Article 226 of the Constitution of India cannot be taken

away by a private agreement between the parties to a contract. It

is upon the High Court itself to decide as to whether the facts and

circumstances of a particular case is fit one to exercise the

extraordinary writ jurisdiction.

29. In the present case, the place of work was at ‘Dumka’-a district in

the State of Jharkhand and as such the same is within the

territorial jurisdiction of this court. Even the alleged default has

been committed by the petitioner within the State of Jharkhand

and therefore major part of the cause of action qua the debarment

of the petitioner has arisen within the territorial jurisdiction of this

Court. Thus, it would not be in the interest of justice to relegate

the petitioner to the jurisdiction of a Court at ‘Kolkata’ that too

when the petitioner has confined its prayer with respect to

challenging the order dated 22.04.2026 whereby it has been

declared as a ‘Poor Performer’ and has been placed in the

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‘Negative List of Contractors’ also debarring it for a period of two

years from 22.04.2026 to 21.04.2028 making it ineligible to

participate in future tenders of the respondent no. 1.

30. It is a well settled principle of law that the order of blacklisting

amounts to civil death of a contractor and as such the same is

amenable to judicial review on the touchstone of natural justice. In

the case of Techno Prints (Supra.), the Hon'ble Supreme Court

has observed that once a blacklisting order is passed, the

contractor is left with no other option but to take recourse before

the High Court invoking writ jurisdiction under Article 226 of the

Constitution. Thus, the writ court is the only forum where the

order of blacklisting can be challenged and therefore the petitioner

has no other alternative/efficacious remedy except filing of the

present writ petition.

31. Even otherwise, the respondents have challenged the

maintainability of the present writ petition by relying on the

printed terms and conditions of the contract wherein the city of

jurisdiction of court is mentioned as ‘Kolkata’. In the case of

Godrej Projects Development Ltd. Vs. Anil Karlekar &

Others; reported in (2025) 4 SCC 259 as has been relied upon

by the learned counsel for the petitioner, the Hon’ble Supreme

Court has held that keeping in view the principle enshrined in

Article 14 of the Constitution, the courts should not enforce an

unfair and unreasonable contract or any such clause in a contract

entered into between the parties who are not equal in bargaining

powers, rather the Courts should strike down such clause in a

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contract. In the said case, Their Lordships have further referred

few illustrations regarding inequality of bargaining power and out

of those illustrations, one is that the aforesaid principle of equality

before law will apply where a person has no choice, or rather no

meaningful choice, but to give his assent to a contract or to sign

on the dotted lines in a prescribed or standard form or to accept a

set of rules as part of the contract, however unfair, unreasonable

and unconscionable a clause in that contract or form or rules may

be.

32. In the present case also, though, the said contract was signed by

the petitioner as well as the representative of the respondent no.1,

at the time of signing of the said contract, the bargaining powers

of the parties were not the same. The petitioner had no choice to

deny the said term of the contract or to demand for change of the

same. Thus, the petitioner was the weaker party in the said

contract. Under the said circumstance, the writ petition is not liable

to be dismissed merely on the ground that in the tender

document, the place of jurisdiction of the Court has been shown to

be at Kolkata.

33. For the reasons as aforesaid, the objection regarding

maintainability of the present writ petition raised by the learned

counsel for the respondents is not liable to be sustained and is

rejected.

Finding on the issue of declaring the petitioner as ‘poor

performer’ and placing it in the negative list of contractors

and thereby debarring it from participating in further

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tender process to be floated by the respondent no. 1 for a

period of two years:

34. On perusal of the GCC, it is evident that one of the consequences

of determination of contract has been detailed under clause Cause

3(b) of GCC which provides that the contractor shall be deemed to

be declared a ‘Poor Performer’ as per Clause 52.7 of GCC and shall

not be eligible for a period up to two years, to participate in

tenders of other works which may be invited by the respondent

no. 1. Further, Clause 52.7 of GCC provides that the Engineer-in-

Chief without prejudice to the other rights against the contractor,

may declare the contractor to be a ‘poor performer’ after giving

him written notice of seven days in any of the following cases: -

“i. The contractor abandons the work for 30

days or more without valid reasons.

ii. Progress on the work is behind schedule

by 25% or more of the stipulated contract period

for reasons solely attributable to the contractor.

iii. Completion of work is delayed by 25% or

more of the stipulated contract period for reasons

solely attributable to the contractor.

iv. The contractor repeatedly (twice or more)

makes claims on frivolous grounds or goes to court

or seeks arbitration for such claims.

v. The contractor repeatedly (twice or more)

seeks extra-contractual financial support from

RITES for completing the work.

vi. If there are more than two instances of

financial failure of contractor in making timely

payments to his labour or sub-contractors or to

suppliers of materials.”

35. The said clause further provides that upon declaration of a

contractor as ‘poor performer’, his name will be placed in the

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RITES ‘Negative List of Contractors’ and will not be eligible for a

period up to two years, to participate in tenders of other works

which may be invited by the RITES.

36. The learned counsel for the respondents puts much stress on the

notices dated 16.02.2026 and 25.02.2026 contending that the

petitioner was provided reasonable opportunity of hearing before

putting it in the ‘Negative List of Contractors’ and debarring it for a

period of two years from participating in the tenders of other

works of the respondent no. 1.

37. To appreciate the said contentions of the learned counsel for the

respondent no. 1, we have perused both the aforesaid letters

which were issued to the petitioner under Clause 3(iii) of GCC. In

the said letters, it was alleged against the petitioner that it had

failed to execute and complete the contract as per its commitment.

The petitioner was further advised to accelerate the progress of

work within seven days of issuance of the said notice, otherwise a

recommendation was to be made to the competent authority to

determine the contract and in such event, the bank guarantee as

well as security deposit were to be forfeited. In the said letters, it

was further mentioned that in the event of determination of

contract in terms with clause 3(iii) of contract, the petitioner would

also be declared a ‘poor performer’ as per clause 3(a)(i) of the

contract. In the said letters, it was however not specifically

mentioned that the petitioner would be put in the ‘Negative List of

the Contractors’ and would be debarred from participating in the

future tenders to be invited by the respondent no. 1 for a period

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up to two years.

38. In the case of Erusian Equipment & Chemicals Ltd. (Supra.),

the Hon’ble Supreme Court has held that the order of blacklisting

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”.

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. Moreover, the 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.

39. In the case of UMC Technologies (P) Ltd. (Supra.), the

Hon’ble Supreme Court has held 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 factor of the principles of natural justice is that

before an adjudication starts, the authority should issue notice to

the concerned party disclosing the precise reason for drawing the

proceeding against him so that he can defend himself. Such notice

should specifically and unambiguously mention the grounds

necessitating action and the proposed penalty/action. An order

travelling beyond the bounds of notice is impermissible and

without jurisdiction to that extent. It has further been held that in

the context of blacklisting of a person or an entity by the State or

its instrumentality, the requirement of a valid, particularised and

unambiguous show-cause notice is crucial particularly due to the

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severe consequences of blacklisting and the stigmatisation that

accrues to the person/entity being blacklisted.

40. In the case of Techno Prints (Supra.), the ratio laid down in the

judgment of the Hon’ble Supreme Court rendered in the case of

Erusian Equipment & Chemicals Ltd. (Supra.) has been

followed holding that there have to be strong, independent and

overwhelming materials to resort to the power of blacklisting

which has the drastic consequences on a contractor. It has further

been held that the power to blacklist cannot be resorted to when

the grounds for the same are only breach or violation of the term

or condition of a particular contract and when legal redress is

available to both parties. If a contractor is to be visited with the

punitive measure of blacklisting on account of an allegation that it

has committed a breach of contract, the nature of its conduct must

be so deviant or aberrant so as to warrant such a punitive

measure.

41. In the case of A.K.G Construction and Developers Pvt. Ltd.

(Supra.), the Hon’ble Supreme Court has held that while

exercising judicial review over administrative actions of the State

or its instrumentalities in relation to contracts provisioning clauses

and rules relating to termination and/or blacklisting, the Courts

must apply distinct standards of legality, rationality and

proportionality. Such an approach is compelling since the

conditions for imposing such measures, as also the consequences

of such actions, have differing gravity. It has further been held that

the contractual conditions governing termination vis-à-vis those

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relating to blacklisting are distinct and are to 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 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.

42. In the present case, before putting the petitioner in the ‘Negative

List of Contractors’ and debarring it from participating in future

tenders of the respondent no. 1 for a period of two years, no

specific show cause notice was issued to it stating the grounds of

action and the proposed penalty/action, so as to afford an

opportunity to the petitioner to defend the same. Even in the order

dated 22.04.2026, no ground has been mentioned on which the

order of debarment of the petitioner from participating in future

tenders invited by the respondent no. 1, has been passed. It

merely discloses that the contract awarded to the petitioner has

been determined and it has been declared as ‘Poor Performer’ and

in view of the said reason, it has been placed in the ‘Negative List

of the Contractors’ as well as has been debarred from participating

in the future tenders of the respondent no. 1 for a period of two

years.

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43. It transpires from the conduct of the respondents particularly the

respondent no. 2 that the order of debarment was passed

mechanically without any application of mind. Thus, the action of

the debarment was taken against the petitioner as an automatic

consequence of determination of the awarded contract. In the

case of Techno Prints (Supra.), it has been specifically held by

the Hon’ble Supreme Court that the order of debarment of a

contractor cannot be automatic after determination of contract on

the ground of failure to fulfill the terms and conditions of the

contract. The order of debarment or blacklisting cannot be passed

unless the conduct of the contractor is shown to be so deviant that

warrants punitive action.

44. Even if the petitioner may not have much to say regarding

termination of the contract, however this does not mean that it

has nothing to say against the action of debarment. An order of

debarment cannot be passed merely for violation of the terms and

conditions of the contract, unless it is found that the nature of the

conduct of the petitioner is so deviant or aberrant which warrants

the punitive measure.

45. Under the said circumstance, we are of the considered view that

the letters dated 16.02.2026 and 25.02.2026 on which much stress

has been given by the respondents, do not fulfill the requirement

of issuance of show cause notice for blacklisting. The said letters

merely contain warning to the petitioner for not expediting the

progress of work and those cannot to be said to be the show

cause notices in true sense.

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46. For the reasons as aforesaid, the impugned letter dated

22.04.2026 to the extent of placing the petitioner in the ‘Negative

List of Contractors’ for a period of two years from 22.04.2026 to

21.04.2028 and debarring it from participating in the tenders to be

invited by the respondent no. 1 for the said period, is hereby

quashed and set aside.

47. So far as, the other actions of the respondents relating to the said

contract including that of the petitioner being declared as a ‘Poor

Performer’ is concerned, the same do not warrant interference by

this Court under its extraordinary writ jurisdiction. The petitioner is

however at liberty to challenge the same in accordance with law.

The respondents will also have the liberty, if so advised, to initiate

fresh proceeding for debarment against the petitioner and pass

appropriate order after following due process of law.

48. The writ petition is, accordingly, disposed of with the aforesaid

observations.

49. Pending interlocutory application, if any, also stands disposed

of.

(M.S. Sonak, C.J.)

(Rajesh Shankar, J.)

07.09.2026

Vikas/A.F.R.

Uploaded on 07.09.2026