Gupta Power Infrastructure Limited vs The South Bihar Power Distribution Company Limited (SBPDCL)

IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.2966 of 2025
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Gupta Power Infrastructure Limited having its Corporate Officer at Cuttack
Road, Bhubaneshwar - 751006 (Odisha) through its Authorized
Representative Pankaj Verma, aged about 42 years (Male), Son of Anant Ram
Verma, resident of Jhanshi Road, Shanti Nagar, Orai, Jalaun, P.S. - Jalaun,
District - Jalaun, Uttar Pradesh.
... ... Petitioner/s
Versus
1. The South Bihar Power Distribution Company Limited (SBPDCL) Patna
through its Managing Director.
2. The Managing Director, South Bihar Power Distribution Company Limited
(SBPDCL), Patna.
3. The Director (Project), South Bihar Power Distribution Company Limited
(SBPDCL), Patna.
4. The Chief Engineer (Planning and Engineering) South Bihar Power
Distribution Company Limited (SBPDCL), Patna.
5. The Chief Engineer (Project), South Bihar Power Distribution Company
Limited (SBPDCL), Patna.
6. The Chief Engineer, Project-I (Rural), South Bihar Power Distribution
Company Limited (SBPDCL), Patna.
7. The Electrical Superintending Engineer, Patna Circle South Bihar Power
Distribution Company Limited (SBPDCL), Patna.
... ... Respondent/s
======================================================
Appearance :
For the Petitioner/s : Mr. Anjani Kumar Jha, Advocate
For the Respondent/s : Mr. Anand Kr. Ojha, Sr. Advocate
Mr. Ashok Kr. Advocate
Mr. Abhishek Raj, Advocate

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CORAM: HONOURABLE MR. JUSTICE SUDHIR SINGH
and
HONOURABLE MR. JUSTICE SHAILENDRA SINGH
CAV JUDGMENT
(Per: HONOURABLE MR. JUSTICE SUDHIR SINGH)
Date : 13-05-2026
Heard learned counsel for the parties.
2. The present writ application has been filed seeking
the following reliefs:
“a) To quash order as contained in
Letter No. 2311 dated 31.12.2024 [Annexure
P14] issued by the Respondent no. 6 whereby
and whereunder, inter alia, the works allotted
to the Petitioner [pursuant to NIT NO.
42/PR/SBPDCL/2019 and LOA Nos. 367 &
368 dated 19.09.2019] has been cancelled and
the Petitioner has been blacklisted for a period
of three years in a most arbitrary and illegal
manner and in complete violation of principles
of natural justice.
b) For a further direction upon the
Respondents to not to give effect to impugned
order as contained in Letter No. 2311 dated
31.12.2024 [Annexure P14] issued by
Respondent No. 6 during the pendency of the
writ application and allow the Petitioner to
participate in departmental tenders.
c) To restrain the Respondent
Authorities from invoking Bank Guarantees
deposited by the Petitioner as performance
security / guarantee with respect to LOA Nos.
367 & 368 dated 19.09.2019 [pursuant to NIT
NO. 42/PR/SBPDCL/2019] during the

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pendency of the instant writ application.
d) To restrain the Respondent
Authorities from allotting the remaining work
with respect to LOA Nos. 367 & 368 dated
19.09.2019 [pursuant to NIT NO.
42/PR/SBPDCL/2019] to any other agency /
departmental authority during the pendency of
the instant writ application.
e) For a direction upon the
Respondent Authorities to make payment of all
pending bills of the Petitioner with respect to
LOA Nos. 367 & 368 dated 19.09.2019
[pursuant to NIT NO. 42/PR/SBPDCL/2019]
forthwith and provide reasonable time to the
Petitioner to execute reaming work.
f) To pass any other order/orders in
shape of a consequential relief to which the
Petitioner may be found to be legally entitled
to in the facts and circumstances of the instant
case at hand.”
3. The brief facts of the case are that the petitioner, a
registered company and contractor, participated in a tender
floated by the Respondent-South Bihar Power Distribution
Company Limited (SBPDCL) vide NIT No.
42/PR/SBPDCL/2019 for construction of five numbers of 2×5
MVA, 33/11 KV Power Sub-stations along with associated 33
KV and 11 KV lines on turnkey basis in Nalanda and Patna
districts. Pursuant to the tender process, the work was awarded
to the petitioner in two parts vide Letters of Award both dated
19.09.2019, namely: (i) supply of materials and equipment for
construction of three numbers of 2×5 MVA, 33/11 KV Power

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Sub-stations with associated lines; and (ii) erection, installation,
testing and commissioning of the said works. Thereafter,
Contract Agreement Nos. 07/2019 and 08/2019, both dated
16.10.2019, were executed between the parties. The scope of
work related to three locations, namely Kosiyawan, Jaitipur and
Kaladiyara, with a stipulated completion period linked to the
date of award or handing over of land.
4. During execution of the work, the works at
Kosiyawan and Jaitipur sites, comprising supply, civil, erection
and commissioning of 2×5 MVA, 33/11 KV Power Sub-stations
along with associated 33 KV and 11 KV lines, were completed
and the substations were subsequently taken over and made
operational. However, the work at Kaladiyara site, involving
similar specifications, remained partly completed. Thereafter,
notices dated 13.11.2024 and 21.11.2024 were issued to the
petitioner seeking explanation with regard to non-completion of
the work. Subsequently, by order dated 31.12.2024, the
respondents terminated the contracts, invoked the performance
bank guarantee and blacklisted the petitioner for a specified
period, while also directing completion of the remaining work
through other means.
5. Learned counsel for the petitioner submits that the

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impugned order dated 31.12.2024 is arbitrary and violative of
the principles of natural justice. It is submitted that although the
petitioner had submitted a detailed reply to the show cause
notices issued by the respondents, the same has not been
properly considered while passing the impugned order.
6. It is further submitted that the respondent
authorities lacked jurisdiction to blacklist the petitioner in
absence of any enabling provision in the Notice Inviting Tender,
Letters of Award or Agreements executed between the parties. It
is contended that in absence of any specific clause authorising
blacklisting, the impugned action of blacklisting is without
authority of law and liable to be set aside.
7. Per contra, learned counsel for the respondents
submits that adequate opportunity was afforded to the petitioner
before passing the impugned order. It is submitted that
notices/show cause notices were issued to the petitioner on
10.09.2024, 13.11.2024 and 21.11.2024 under Clause 39 of the
NIT, wherein the proposed actions, including termination and
blacklisting, were specifically indicated. Pursuant thereto, the
petitioner submitted its reply, which was duly considered by the
competent authority before passing the impugned order dated
31.12.2024. It is thus submitted that the principles of natural

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justice were fully complied with and the impugned order is a
reasoned and speaking order passed upon due consideration of
the materials available on record.
8. It is further submitted that merely because the NIT
or agreement does not expressly contain a clause relating to
blacklisting, the same does not denude the respondent
authorities of such power. Reliance in this regard has been
placed upon the judgments of the Hon’ble Supreme Court in
Kulja Industries Limited v. Chief General Manager, Western
Telecom Project Bharat Sanchar Nigam Limited and Ors.
reported in (2014) 14 SCC 731 and Patel Engineering Limited
v. Union of India and Anr. reported in (2012) 11 SCC 257 to
contend that the State and its instrumentalities possess inherent
power to blacklist a contractor in exercise of executive powers,
even in absence of an express stipulation in the contract or NIT,
provided the action is taken in a fair and reasonable manner
following due process.
9. The following issues arise for consideration before
this Court:
(i) Whether, in absence of any express provision or
specific clause in the Notice Inviting Tender (NIT), Letters of
Award or Agreements executed between the parties authorising

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blacklisting, the respondent-State or its instrumentalities can
nevertheless exercise the power to blacklist the petitioner; and
(ii) Whether the impugned order dated 31.12.2024
has been passed in compliance with the principles of natural
justice, particularly with regard to issuance of adequate show
cause notices and consideration of the petitioner’s reply.
Re: Issue No. (i)
10. The principal contention advanced on behalf of
the petitioner is that neither the Notice Inviting Tender (NIT),
nor the Letters of Award, nor the Agreements executed between
the parties contain any express stipulation empowering the
respondent authorities to blacklist the petitioner and, therefore,
the impugned action of blacklisting is wholly without
jurisdiction.
11. The aforesaid issue is no longer res integra . Even
in absence of an express provision in the Notice Inviting Tender
(NIT) or the contract, the respondent, being a State
instrumentality, retains the inherent power to blacklist a
contractor in exercise of its executive authority. However, such
power is not unfettered and must be exercised in a fair,
reasonable and non-arbitrary manner, strictly in compliance with
the principles of natural justice. The decision to blacklist must

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be preceded by a clear and specific show cause notice,
disclosure of grounds and a meaningful opportunity of hearing.
Further, the order of blacklisting must be reasoned,
proportionate and based on relevant material. Any deviation
from these requirements would render the action vulnerable to
judicial review.
12. It is well settled that even in absence of an express
provision in the Notice Inviting Tender (NIT) or the contract,
the State or its instrumentalities possess the inherent executive
power to blacklist a contractor.
13. The Hon’ble Supreme Court in Kulja Industries
Limited (supra) and Patel Engineering Limited (supra) has
categorically held that the power to blacklist is an inherent
power of the State and its instrumentalities flowing from Article
298 of the Constitution of India and such power is not
dependent upon existence of an express clause in the contract or
tender document.
14. In Kulja Industries Ltd. (supra) , the Hon’ble
Supreme Court observed as follows:
“ 17. That apart, the power to
blacklist a contractor whether the contract be for
supply of material or equipment or for the
execution of any other work whatsoever is in our
opinion inherent in the party allotting the
contract. There is no need for any such power

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being specifically conferred by statute or
reserved by contractor. That is because
“blacklisting” simply signifies a business
decision by which the party affected by the
breach decides not to enter into any contractual
relationship with the party committing the
breach. Between two private parties the right to
take any such decision is absolute and
untrammelled by any constraints whatsoever.
The freedom to contract or not to contract is
unqualified in the case of private parties. But
any such decision is subject to judicial review
when the same is taken by the State or any of its
instrumentalities. This implies that any such
decision will be open to scrutiny not only on the
touchstone of the principles of natural justice but
also on the doctrine of proportionality. A fair
hearing to the party being blacklisted thus
becomes an essential precondition for a proper
exercise of the power and a valid order of
blacklisting made pursuant thereto. The order
itself being reasonable, fair and proportionate to
the gravity of the offence is similarly examinable
by a writ court.”
15. Similarly, in Patel Engg. (supra) , the Hon’ble
Supreme Court recognised that the State possesses the right to
decide with whom it would enter into contractual relations and
such power includes the authority to blacklist a contractor even
in absence of a specific contractual stipulation. The relevant part
of the said order reads as follows:
“ 13. The concept of “blacklisting” is
explained by this Court in Erusian Equipment &
Chemicals Ltd. v. State of W.B. [(1975) 1 SCC
70] as under: (SCC p. 75, para 20)
“20. Blacklisting has the effect
of preventing a person from the privilege

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and advantage of entering into lawful
relationship with the Government for
purposes of gains.”
14. The nature of the authority of the
State to blacklist the persons was considered by this
Court in the abovementioned case [ “12. Under
Article 298 of the Constitution the executive power of
the Union and the State shall extend to the carrying
on of any trade and to the acquisition, holding and
disposal of property and the making of contracts for
any purpose. The State can carry on executive
function by making a law or without making a law.
The exercise of such powers and functions in trade by
the State is subject to Part III of the Constitution.
Article 14 speaks of equality before the law and equal
protection of the laws. Equality of opportunity should
apply to matters of public contracts. The State has the
right to trade. The State has there the duty to observe
equality. An ordinary individual can choose not to
deal with any person. The Government cannot choose
to exclude persons by discrimination. The order of
blacklisting has the effect of depriving a person of
equality of opportunity in the matter of public
contract. A person who is on the approved list is
unable to enter into advantageous relations with the
Government because of the order of blacklisting. A
person who has been dealing with the Government in
the matter of sale and purchase of materials has a
legitimate interest or expectation.” (Erusian
Equipment case) and took note of the constitutional
provision (Article 298) [ “ 298. Power to carry on
trade, etc .—The executive power of the Union and of
each State shall extend to the carrying on of any
trade or business and to the acquisition, holding and
disposal of property and the making of contracts for
any purpose:Provided that—(a) the said executive
power of the Union shall, insofar as such trade or
business or such purpose is not one with respect to
which Parliament may make laws, be subject in each
State to legislation by the State; and (b) the said
executive power of each State shall, insofar as such
trade or business or such purpose is not one with
respect to which the State Legislature may make laws,
be subject to legislation by Parliament.”] , which
authorises both the Union of India and the States to

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make contracts for any purpose and to carry on any
trade or business. It also authorises the acquisition,
holding and disposal of property. This Court also
took note of the fact that the right to make a contract
includes the right not to make a contract. By
definition, the said right is inherent in every person
capable of entering into a contract. However, such a
right either to enter or not to enter into a contract
with any person is subject to a constitutional
obligation to obey the command of Article 14.
Though nobody has any right to compel the State to
enter into a contract, everybody has a right to be
treated equally when the State seeks to establish
contractual relationships [ “17. The Government is a
Government of laws and not of men. It is true that
neither the petitioner nor the respondent has any
right to enter into a contract but they are entitled to
equal treatment with others who offer tender or
quotations for the purchase of the goods. This
privilege arises because it is the Government which is
trading with the public and the democratic form of
Government demands equality and absence of
arbitrariness and discrimination in such transactions.
Hohfeld treats privileges as a form of liberty as
opposed to a duty. The activities of the Government
have a public element and, therefore, there should be
fairness and equality. The State need not enter into
any contract with any one but if it does so, it must do
so fairly without discrimination and without unfair
procedure. Reputation is a part of a person's
character and personality. Blacklisting tarnishes
one's reputation.”(Erusian Equipment case [(1975) 1
SCC 70] , SCC p. 75, para 17)] . The effect of
excluding a person from entering into a contractual
relationship with the State would be to deprive such
person to be treated equally with those, who are also
engaged in similar activity.
15. It follows from the above judgment in
Erusian Equipment case [(1975) 1 SCC 70] that the
decision of the State or its instrumentalities not to
deal with certain persons or class of persons on
account of the undesirability of entering into the
contractual relationship with such persons is called
blacklisting. The State can decline to enter into a
contractual relationship with a person or a class of

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persons for a legitimate purpose. The authority of the
State to blacklist a person is a necessary concomitant
to the executive power of the State to carry on the
trade or the business and making of contracts for any
purpose, etc. There need not be any statutory grant of
such power. The only legal limitation upon the
exercise of such an authority is that the State is to act
fairly and rationally without in any way being
arbitrary—thereby such a decision can be taken for
some legitimate purpose. What is the legitimate
purpose that is sought to be achieved by the State in a
given case can vary depending upon various
factors.”
16. In the present case, therefore, merely because the
NIT or contractual documents do not expressly provide for
blacklisting would not denude the respondent authorities of such
power. The Respondent-SBPDCL, being an instrumentality of
the State, was legally competent to initiate and pass an order of
blacklisting, subject, however, to compliance with the principles
of natural justice and fairness in decision making.
Re: Issue No. (ii)
17. The petitioner has challenged the impugned order
primarily on the ground of violation of principles of natural
justice. However, from the impugned order itself, it appears that
the respondent authorities had, from time to time, afforded
sufficient opportunity to the petitioner to improve the progress
of the work relating to construction of three numbers of 2×5
MVA, 33/11 KV Power Sub-stations along with associated 33
KV and 11 KV lines at Kosiyawan, Jaitipur and Kaladiyara.

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18. The impugned order reflects that the petitioner
was repeatedly directed in various weekly and monthly review
meetings to expedite the work progress in terms of the LOA and
NIT. It further appears that prior to the impugned action, the
respondent authorities had issued several communications and
notices to the petitioner, including Letter No. 247 dated
06.03.2023 calling upon the petitioner to show cause as to why
action of debarment/blacklisting be not taken. In response
thereto, the petitioner itself undertook to complete the
Kaladiyara PSS by 31.06.2023 and requested the authorities not
to debar it.
19. The impugned order further records that despite
expiry of the timeline assured by the petitioner, no significant
progress in the work was observed. Thereafter, the petitioner
was debarred from participating in future tenders till completion
of the project or for two years vide Letter No. 263 dated
28.02.2024. Subsequently, notices of termination under Clause
39 of the NIT were issued vide Letter No. 607 dated 13.05.2024
granting 30 days’ time, Letter No. 1447 dated 10.09.2024
granting 15 days’ time, Letter No. 1920 dated 13.11.2024
granting 7 days’ time, and finally Letter No. 1963 dated
21.11.2024 granting 48 hours’ final notice to explain as to why

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the contract be not terminated and further action including
invocation of bank guarantee and blacklisting be not taken.
20. It further transpires from the impugned order that
no reply was submitted by the petitioner pursuant to the earlier
notices and only after issuance of the final notice dated
21.11.2024 did the petitioner submit its reply vide Letter No.
328 dated 23.11.2024. The said reply was examined by the
respondent authorities and was found unsatisfactory. The
impugned order thereafter proceeds to discuss the physical
progress of the work and records that out of three allotted PSS
works, only two had been completed even after lapse of more
than five years from commencement of the project. The
authority ultimately concluded that the delay in execution was
attributable to consistent non-performance and negligence on
the part of the petitioner despite repeated opportunities for
improvement.
21. The Hon’ble Supreme Court in Kulja Industries
Limited (supra) , Patel Engineering Limited (supra) and
Erusian Equipment & Chemicals Ltd. (supra) has consistently
held that before passing an order of blacklisting, the affected
party must be put to notice and afforded reasonable opportunity
of hearing.

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22. In the present case, this Court finds that repeated
notices were issued to the petitioner over a considerable period
of time, sufficient opportunity was granted to improve the work
progress, and the proposed actions including blacklisting were
specifically disclosed in the notices themselves. The petitioner
was also afforded opportunity to submit its explanation, which
was considered before passing the impugned order. Moreover,
the impugned order records reasons and cannot be said to be
either cryptic or non-speaking in nature.
23. In such circumstances, this Court is of the
considered opinion that the requirement of compliance with
principles of natural justice stood adequately satisfied in the
facts of the present case.
24. In view of the discussions made hereinabove, this
Court is of the view that the impugned order does not warrant
interference in exercise of writ jurisdiction under Article 226 of
the Constitution of India.
25. Accordingly, the writ application stands dismissed.
26. However, insofar as the grievance of the petitioner
relating to alleged non-payment/release of dues for the work
already executed is concerned, liberty is reserved to the
petitioner to avail such remedy as may be available to it in

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accordance with law before the appropriate forum/authority.
27. Pending application(s), if any, shall also stand
disposed of.

(Sudhir Singh, J)
Shailendra Singh, J: I agree

(Shailendra Singh, J)
Anushka/-
AFR/NAFR AFR
CAV DATE 06.05.2026
Uploading Date 13.05.2026
Transmission Date