01Facts
The Petitioner, a sole proprietorship, was awarded a contract by the Chhattisgarh State Industrial Development Corporation (CSIDC) for the supply and installation of CCTV systems at various state warehouses
p. 3The work was reportedly completed within the 45-day deadline
p. 3Subsequently, the Respondent authorities issued several notices (dated May 2024 to January 2025) directing repairs and maintenance, which the Petitioner claims to have complied with promptly
pp. 3-4On 26.11.2025, Respondent No. 1 issued an impugned order forfeiting the Petitioner’s security deposit and blacklisting the firm for five years
p. 2, 4The Petitioner challenged this order via a writ petition, alleging that the action was taken without a specific show-cause notice proposing blacklisting or an opportunity for a hearing
p. 402Issues
i.1. Whether the impugned order blacklisting the Petitioner for five years was passed in violation of the principles of natural justice due to the absence of a specific show-cause notice
p. 5, 8ii.2. Whether the Petitioner is entitled to the release of the forfeited security deposit through writ jurisdiction despite the presence of an arbitration clause in the contract
p. 5, 1103Law Applied
The court primarily relied on the principles of natural justice and the doctrine of proportionality in administrative actions
p. 8Gorkha Security Services v. Govt. (NCT of Delhi) (2014) 9 SCC 105, which established that blacklisting is a "harsh" and "stigmatic" action requiring a specific show-cause notice that details the alleged breaches and explicitly states the proposed penalty so the party may rebut it
pp. 9-11The court also respected the principle of alternative remedy, noting that financial disputes arising from contracts containing an arbitration clause should be resolved via that mechanism rather than Article 226
p. 11Provisions in the judgment · 1 · Linked ones open on LawLens
Arbitration and Conciliation Act, 1996 Section 7
04Reasoning
The Court observed that while the Respondents claimed deficiencies in performance, the Petitioner had placed on record evidence of timely compliance and remedial measures taken after receiving maintenance notices
p. 7, 8Applying the Gorkha Security Services ratio, the Court found that the Respondents failed to issue a specific notice indicating the "intention to blacklist," which deprived the Petitioner of a meaningful opportunity to argue against such a severe "civil death"
pp. 5, 10-11The Court reasoned that since there was no evidence of mala fide intent or deliberate default, the blacklisting was disproportionate and arbitrary
p. 11Regarding the security deposit, the Court determined that because the dispute involved factual performance and financial claims under a contract, the existing arbitration clause (Clause 24) was the appropriate forum for adjudication
pp. 11-1205Holding
The High Court partly allowed the writ petition
p. 12It quashed the impugned order dated 26.11.2025 specifically regarding the blacklisting of the Petitioner firm, effective immediately, on the grounds of violating natural justice
pp. 11-12the Court declined to grant the refund of the security deposit directly, instead directing the Petitioner to pursue this claim through arbitration as provided under Clause 24 of the NIT
p. 12Parties were ordered to bear their own costs
p. 12Original Court PDF
M/S ASCENT TECHNOLOGY SOLUTIONvsCHHATTISGARH STATE WAREHOUSING CORPORATION
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