### Blacklisting a Tenderer Without a Conclusive Finding of Intentional Misrepresentation is Disproportionate and Legally Unsustainable

The petitioners were successful bidders for water supply projects under the Jal Jeevan Mission.

After work orders were issued, the respondent authorities alleged that the technical experience certificates submitted by the petitioners (purportedly issued by the Municipal Council, Karad, via Respondent No. 6) were fake.

Following a previous round of litigation where show-cause notices were quashed due to pre-determination, the High Court granted the State liberty to take a fresh decision following due process.

Consequently, the Apex Committee met on 02.12.2025, afforded the petitioners a hearing, and subsequently passed orders terminating the contracts and blacklisting the firms for three years.

The petitioners challenged these orders, contending that the certificates were genuine and citing contradictory information in related criminal proceedings where Respondent No. 6 received anticipatory bail.

1. Whether the principles of natural justice were complied with during the fresh decision-making process by the respondent authorities.

2. Whether the termination of the contracts was legally justified based on the submission of allegedly fake experience certificates.

3. Whether the order of blacklisting for a period of three years was proportionate and sustainable in the absence of a conclusive finding of deliberate fraud by the petitioners.

The Court applied the doctrine that submission of false information or forged documents in tender processes strikes at the root of the bidding process and justifies contract cancellation.

It relied on the principles of natural justice and proportionality in administrative action as established in Gorkha Security Services v. Government (NCT of Delhi) (2014) 9 SCC 105, which defines blacklisting as the "civil death" of a person.

It further applied UMC Technologies Pvt. Ltd. v. Food Corporation of India (2021) 2 SCC 551, emphasizing that blacklisting requires a particularized show-cause notice and a clear determination of culpability due to its stigmatic and exclusionary consequences.

The Court found that procedural fairness was maintained as the petitioners were given notice and an opportunity for a personal hearing before the Apex Committee on 28.11.2025.

Regarding the contract termination, the Court reasoned that since the petitioners' eligibility was based on a certificate which the alleged issuing authority (Municipal Council, Karad) categorically denied issuing, the employer was justified in cancelling the contract to protect the sanctity of public procurement, regardless of the petitioners' claims of bona fide reliance on a third party.

However, regarding the three-year blacklisting, the Court observed that the respondents failed to record a definitive finding of mens rea or intentional fraud specifically attributable to the petitioners.

The Court noted that the termination itself neutralized any unfair advantage, and without a conclusive determination of conscious misrepresentation (as opposed to mere reliance on a defective document), the extreme penalty of blacklisting was disproportionate and lacked the necessary evidentiary foundation.

It upheld the respondents' decision to terminate the contracts and initiate re-tendering for balance work.

However, the Court quashed and set aside the direction debarring/blacklisting the petitioners for three years, holding it to be disproportionate and unsupported by a conclusive finding of deliberate fraud.

The Court directed that disputes regarding payments for work already executed or other contractual claims must be resolved through the specific dispute-resolution mechanisms (Arbitration/Civil Court) provided in the agreement.