Blacklisting order issued without specifying distinct instances of contractual default in show cause notice is legally unsustainable.

The Petitioner was awarded a contract by the M.P. Public Health Services Corporation (Respondent) to supply disposable syringes within 45 days of purchase orders

On August 21, 2024, a fire at the Petitioner’s factory disrupted operations, leading the Petitioner to request a "Force Majeure" extension on August 30, 2024

The Respondent rejected the request, citing a two-day delay beyond the seven-day intimation period required by the contract

Subsequently, the Respondent issued a show-cause notice and passed orders on December 6, 2024, and December 17, 2024, blacklisting the Petitioner’s product for one year, terminating the contract, and forfeiting the security deposit (invoking a bank guarantee of Rs. 1,23,050/-) for failure to supply

The Petitioner challenged these orders as arbitrary and lacking specific details of defaults

1. Whether the Respondent was justified in refusing to treat the fire incident as a Force Majeure event solely on the grounds of a two-day delay in intimation

2. Whether the show-cause notice and the subsequent blacklisting order satisfied the requirements of natural justice regarding specificity of charges

3. Whether a blacklisting order can be sustained if the show-cause notice fails to mention specific instances of default or the exact period of non-compliance

The court applied the principles of natural justice and the doctrine of Force Majeure as interpreted through the terms of the contract

UMC Technologies Private Ltd. vs. Food Corporation of India and Another (2021) 2 SCC 551, which established that a valid show-cause notice for blacklisting must clearly mention the proposed action and provide specific details of the alleged breach

The court also noted that blacklisting amounts to "civil death," requiring a higher threshold of procedural fairness

The Court observed that the fire incident, supported by an FIR, was a legitimate Force Majeure event, and the Respondent’s refusal to recognize it due to a mere two-day delay in reporting was arbitrary

Examining the show-cause notice, the Court found it lacked specific details—such as purchase order dates or the completion of the 90-day default period required under the NIT for penal action

Relying on UMC Technologies, the Court reasoned that a vague notice mentioning "appropriate steps" or citing general contract clauses does not suffice for the severe penalty of blacklisting

The Respondent's failure to mention specific instances of default meant the Petitioner could not file an effective reply, rendering the impugned orders legally unsustainable

The Court held that the blacklisting of the disposable syringes and the forfeiture of the security deposit were invalid due to procedural irregularities and the arbitrary rejection of the Force Majeure claim. The Petitioner was granted the right to claim or adjust the forfeited security deposit amount