PARIN ENTERPRISES LIMITED vs STATE OF GUJARAT
- Court
- Gujarat High Court
C/SCA/5587/2026 JUDGMENT DATED: 22/04/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 5587 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK Sd/-
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Approved for Reporting Yes No
No
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PARIN ENTERPRISES LIMITED & ANR.
Versus
STATE OF GUJARAT & ANR.
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Appearance:
MR MIHIR JOSHI SENIOR ADVOCATE WITH MR ARJUN M JOSHI(11247)
for the Petitioner(s) No. 1,2
MR NIKUNJ KANARA AGP for the Respondent(s) No. 1,
for Respondent(s) No. 2
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CORAM: HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 22/04/2026
JUDGMENT
1. Mr. A.D. Oza, learned counsel with Mr. Meet Shah,
learned counsel for respondent No.2 submits that he is
appearing for respondent No.2 and he will file his
Vakalatnama in the registry.
2. Registry to accept the Vakalatnama filed by Mr. Oza,
learned counsel on behalf of respondent No.2.
3. Rule returnable forthwith. Mr. Nikunj Kanara, learned
AGP waives service of notice of rule for and on behalf of
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respondent No.1 and Mr. Oza, learned counsel with Mr.
Meet Shah, learned counsel waives service of notice of
rule for and on behalf of respondent No.2.
4. With the consent of the learned counsel appearing for
both the sides, the matter is taken up for final hearing.
5. Present petition is filed by the petitioner under Articles
14, 19, 21 and 226 of the Constitution of India r/w the
provisions of Contract and Tender seeking below
mentioned relief/s:-
“8 (A) That this Court may issue a writ of mandamus, or
a writ in the nature of mandamus, or any other
appropriate writ, order or direction, to quash and set
aside the impugned decision of Respondent No. 2-
Samagra Shiksha dated 16.03.2026 numbered as
SS/Civil/2026/13461-464 (Annexure - A) and
consequentially revoke the debarment of the Petitioner
No. 1.
(B) Pending hearing and final disposal of this Petition,
this Court may stay the operation, implementation and
execution of the impugned decision of Respondent No. 2-
Samagra Shiksha dated 16.03.2026 numbered as
SS/Civil/2026/13461-464 (Annexure A) and
consequentially inter alia permit the Petitioner No. 1 to
participate in tenders on the GeM portal, including that
of the Respondents.
(C) For ad-interim, ex parte relief in terms of (B).
(D) For costs.
(E) For such other reliefs as may be deemed
appropriate.”
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6. The facts giving rise to present petition are that on
12.03.2025, Bid No. GEM/2025/B/6052346 was published
on the Government e-Marketplace (GeM) portal by the
Sarva Shiksha Abhiyan under the Education Department,
Gujarat, for procurement of desks and bench/chair sets
for classrooms. The bid required supply of 24,750 sets
and contained provisions relating to pre-dispatch
inspection and sample approval, and was governed by the
applicable General Terms and Conditions (GeM 4.0,
Version 1.23 dated 05.03.2025).
6.1 Pursuant thereto, Respondent No. 2 awarded the
contract to the petitioner on 01.07.2025, and a formal
contract bearing No. GEMC-511687708497480 was
executed for supply of 12,375 sets valued at Rs.
7,78,51,125/-, to be completed by 28.12.2025. The
petitioner furnished a Performance Bank Guarantee of
Rs. 38,92,556/- and commenced production upon
approval of samples by the respondent on 23.09.2025.
6.2 Subsequently, joint inspections were carried out by
Respondent No. 2 along with Central Institute of
Petrochemicals Engineering and Technology (CIPET). The
first inspection of 6,000 sets was found satisfactory.
However, during inspection of the remaining 6,375 sets,
certain samples failed destructive testing, leading to
rejection of the second lot. Thereafter, correspondence
ensued between the parties, including a clarification
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sought by the respondent regarding additional supplies
and alleged deviations. The petitioner responded by
explaining operational constraints and admitted certain
procedural lapses while asserting overall compliance and
past satisfactory performance.
6.3 Further inspections were conducted at various
institutions, and minor defects were pointed out, which
were promptly rectified by the petitioner. However,
without issuing any prior show cause notice or granting
an opportunity of hearing, Respondent No. 2 passed the
impugned decision dated 11.03.2026, debarring the
petitioner for five years, cancelling other contracts,
forfeiting the Performance Bank Guarantee, withholding
payments, and directing recall of supplied goods, along
with other consequential actions.
6.4 The petitioner, upon receipt of the impugned decision,
submitted representations seeking an opportunity of
hearing, copies of inspection reports, and reconsideration
of the action, while also undertaking to rectify the alleged
defects. Despite further communications and partial
compliance by the petitioner, no response was received
from the respondent authorities.
6.5 In these circumstances, the petitioner has approached
this Court by way of the present petition.
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7. Heard Mr. Mihir Joshi, learned Senior Counsel assisted
by Mr. A.M.Joshi, learned counsel for the petitioner, Mr.
Nikunj Kanara, learned AGP for respondent No.1 and Mr.
A.D. Oza, learned counsel with Mr. Meet Shah, learned
counsel for respondent No.2.
8. Mr. Joshi, learned Senior Counsel for the petitioner has
submitted that the impugned decision is ex facie
arbitrary, unreasonable, and violative of Article 14 of the
Constitution of India, 1950, having been passed without
any application of mind and in disregard of relevant facts.
He has submitted that despite substantial compliance
with contractual obligations and supply of goods in
conformity with specifications, respondent No. 2 has
mechanically imposed the extreme penalty of
debarment/blacklisting.
8.1 Learned Senior Counsel has submitted that the
impugned action is vitiated by breach of principles of
natural justice, inasmuch as no show cause notice was
issued, no statement of imputations or material, including
alleged test reports, was supplied, nor was any
opportunity of hearing granted.
8.2 Learned Senior Counsel has submitted that
blacklisting entails serious civil consequences, amounting
to civil death, and therefore requires strict adherence to
procedural safeguards and proportionality. He has
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submitted that in the present case, the alleged defects
were isolated, and the petitioners had already undertaken
corrective measures, yet a grossly disproportionate
penalty of five years’ debarment has been imposed, which
is unsustainable in law.
8.3 Learned Senior Counsel has submitted that the
respondent has failed to consider relevant factors such as
past performance, substantial compliance, and corrective
steps, while relying on undisclosed considerations.
8.4 Learned Senior Counsel for the petitioner urges
before the Court that present petition may be allowed and
the impugned order passed by the respondent authority
may be quashed and set aside.
9. On the other hand, learned AGP for the respondent
No.1 and learned counsel for the respondent No.2 have
submitted that the impugned order dated 16.03.2026
passed by the respondent No.2 is in consonance with the
settled legal principle and the same does not call for any
interference by this Court. It is submitted that the
impugned decision is legal, valid, and passed after due
consideration of the material on record. It is contended
that the petitioner had committed breaches of contractual
obligations, warranting appropriate action including
debarment. It is submitted that the respondent has acted
within its powers, and the decision cannot be termed
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arbitrary or violative of Articles 14 or 19 of the
Constitution of India. It is further submitted that the
principles of natural justice have been duly complied
with, and the penalty imposed is proportionate to the
gravity of the breach and the respondent has also
considered relevant factors including performance and
compliance, and therefore, no interference is warranted.
It is submitted that the petition, being devoid of merits,
deserves to be dismissed.
10. I have perused the material and relevant documents
available on record. I have also gone through the relevant
record of the petition.
11. It appears that the impugned action is vitiated by
breach of principles of natural justice, inasmuch as no
show cause notice was issued, no statement of
imputations or material, including alleged test reports,
was supplied, nor was any opportunity of hearing
granted. It further appears that before blacklisting the
petitioner opportunity of hearing ought to have been
granted to the petitioner.
12. In present case no opportunity of hearing was
granted to the petitioner nor any show cause notice was
issued by the respondent authority before passing the
impugned order debarring/blacklisting the petitioner.
The petitioner has debarred by the respondent authority
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for five years from bidding the tender.
13. At this stage, it is appropriate to refer the decision of
the Hon’ble Apex Court in the case of (1) Mahabir Auto
Stores Versus Indian Oil Corporation Limited, 1990
SCC 752, (2) Gorkha Security Services Versus
Govt.Of Nct Of Delhi, 2014 9 SCC 105 and (3)
Vetindia Pharmaceuticals Limited Versus State Of
Uttar Pradesh, 2021 1 SCC 804 wherein the Hon’ble
Apex Court has dealt with the similar set of facts.
14. Blacklisting has the effect of preventing a person
from the privilege and advantage of entering into a lawful
relationship with the Government for purposes of gain.
The fact that such an order creates a disability indicates
that the concerned authority must arrive at an objective
satisfaction. The fundamentals of fair play require that
the person concerned be given an opportunity to
represent their case before being placed on the blacklist.
15. Now, it is well settled by a series of decisions of the
Hon’ble Apex Court that 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 inherent in the party allotting the contract.
There is no need for any such power being specifically
conferred by statute or reserved by the contractor. That
is because “blacklisting” simply signifies a business
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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. However, any such decision is
subject to judicial review when it is taken by the State or
any of its instrumentalities. This implies that such a
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 for a valid order of
blacklisting. The order itself, being reasonable, fair, and
proportionate to the gravity of the offence, is similarly
examinable by a writ court.
16. The legal position on the subject is settled by a long
line of decisions rendered by the Hon’ble Apex Court,
starting with Erusian Equipment & Chemicals Ltd. v.
State of West Bengal and Anr., reported in (1975) 1
SCC 70, wherein it has been declared that blacklisting
has the effect of preventing a person from entering into a
lawful relationship with the Government for purposes of
gain, and that the authority passing such an order is
required to give a fair hearing before blacklisting any
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entity.
17. In view of the above facts, I am of the opinion that the
ends of justice would be met if the impugned order is
quashed and set aside and if it is open for the concerned
respondent authority to take a fresh decision in
accordance with law.
18. Accordingly, the present petition is allowed. The
impugned order dated 16.03.2026, bearing No.
SS/Civil/2026/13461-464, is hereby quashed and set
aside, and the respondent authority is at liberty to take
appropriate steps in accordance with law.
19. The concerned respondent authority shall, after
affording full and reasonable opportunity of hearing to
the petitioner, pass a fresh order. It shall be open for the
petitioner to raise all contentions available in law before
the concerned respondent authority, and the authority
shall, after hearing the petitioner, pass an order in
accordance with law, as expeditiously as possible. It is
needless to say that this Court has not entered into the
merits of the matter and contentions of all the parties are
kept opened.
Sd/-
(HEMANT M. PRACHCHHAK,J)
SURESH SOLANKI
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