Blacklisting is valid where a meaningful hearing is afforded and contractual conditions are satisfied.

The petitioner, proprietor of M/s P Square Solutions, was engaged by IGNOU for printing and supplying study material pursuant to empanelment and various job orders issued between 2019 and 2024.

After the petitioner initiated recovery proceedings under the MSME Act for alleged outstanding dues, IGNOU issued warning letters dated 24.07.2023, 02.08.2023 and 30.04.2024 concerning delays in supply.

IGNOU initially blacklisted the petitioner and forfeited its ₹25,00,000 performance security without issuing a prior show-cause notice; that action was quashed by the Coordinate Bench in W.P.(C) No. 7927/2024 on 29.05.2024, with liberty to IGNOU to proceed in accordance with law.

IGNOU thereafter issued a show-cause notice dated 11.06.2024, requiring a response by 18.06.2024 and fixing a personal hearing on that date. The petitioner submitted an eight-page preliminary reply, sought further time and did not appear for the personal hearing.

On 17.03.2025, IGNOU blacklisted the petitioner for two years and ordered forfeiture of the performance security, relying on Clause 13(e) of its contractual terms and alleged delays in Job Order Nos. 5332, 6777 and 8000, in addition to 129 other instances of delayed supply.

The petitioner challenged the blacklisting, the warning letters and the forfeiture of the performance security.

1. Whether the impugned blacklisting order was vitiated by violation of natural justice because the petitioner was granted insufficient time to respond and was not afforded a meaningful opportunity of personal hearing?

2. Whether IGNOU had validly invoked Clause 13(e) of the contractual terms on the basis of three warning letters and alleged delays exceeding 28 days?

3. Whether the blacklisting and forfeiture of the performance security were arbitrary, mala fide or disproportionate, particularly because the job orders were ultimately accepted and the warning letters were issued after the petitioner commenced MSME recovery proceedings?

The Court applied the principles of natural justice, requiring a reasonable and effective opportunity to respond to adverse allegations and an opportunity of hearing before blacklisting.

It also applied the limited scope of judicial review in contractual matters, under which the writ court primarily examines the legality, fairness and rationality of the decision-making process rather than reappreciating disputed contractual evidence.

The Court relied on Clauses 13(d) and 13(e) of the IGNOU Terms and Conditions of Contract: Clause 13(d) permitted cancellation of a job order or recovery of liquidated damages by way of penalty, while Clause 13(e) prescribed penalties for delayed delivery, contemplated a warning for delay beyond 28 days, and authorised blacklisting and forfeiture of performance security upon issuance of three warning letters.

The Court further applied the principle that contractual action will not be disturbed unless it is arbitrary, perverse, mala fide, legally infirm or shockingly disproportionate.

The Court held that the petitioner received the show-cause notice electronically on 11.06.2024 and was given time until 18.06.2024 to respond, besides being offered a personal hearing on that date.

The petitioner submitted a preliminary reply but neither appeared for the hearing nor filed any further reply or documents during the approximately ten months before the impugned order was passed; therefore, the opportunity was not illusory merely because the petitioner considered the time inadequate.

On the merits, the Court noted that the petitioner admitted receipt of the three warning letters, while the impugned order identified delays of 45 days, 31 days and 36 days in the three relevant job orders and recorded the penalties imposed.

The non-cancellation of the job orders did not waive IGNOU’s contractual rights because the University had rationally continued the orders to avoid further prejudice to students.

The Court declined to reappreciate disputed delivery records and contractual material in writ jurisdiction, finding no perversity, mala fides or patent error.

The additional 129 instances of delay and the impact of delayed study material on IGNOU learners supported the conclusion that the action was neither arbitrary nor shockingly disproportionate.

The alleged retaliatory motive arising from the MSME proceedings was also rejected for want of material beyond the timing of the warning letters.

It further held that IGNOU had acted within Clauses 13(d) and 13(e) on the basis of three warning letters, identified delays beyond 28 days, penalties and additional instances of delayed supply.

The two-year blacklisting and forfeiture of the ₹25,00,000 performance security were therefore not shown to be arbitrary, mala fide, disproportionate or otherwise legally infirm.

The writ petition and pending applications were dismissed.