Blacklisting orders based on undisclosed internal vigilance reports violate principles of natural justice and are legally unsustainable.

The petitioners (M/s Creation Advertising, M/s Edison International, and M/s Rhino Enterprise) are registered vendors of Indian Oil Corporation Ltd. (IOCL).

Between 2020 and 2022, they were awarded various purchase orders for capital and revenue works at the LPG Bottling Plant in Dimapur.

Upon completion of work in late 2022, final measurements were certified by the Engineer-in-Charge, Service Entry Sheets were generated, and final bills were paid without objection.

After the Defect Liability Periods expired in late 2023, IOCL issued Show-Cause Notices on 07.10.2025, alleging that a recent vigilance verification revealed quantities billed were in excess of actual work executed.

IOCL placed the petitioners on a "Holiday List" (debarment) for one year and ordered recovery of alleged excess payments via orders dated 22.01.2026.

The petitioners challenged these orders under Article 226, arguing they were denied access to the Vigilance and Joint Inspection Reports used against them.

1. Whether the respondent Corporation violated the principles of natural justice by refusing to disclose the internal Vigilance and Joint Inspection Reports that formed the basis of the debarment.

2. Whether the Holiday Listing Guidelines dated 19.01.2023 could be applied retrospectively to contracts executed in 2022.

3. Whether the decision-making process was fair and objective as required for state instrumentalities under Article 14.

The Court primarily applied the principles of fair play and natural justice governing administrative actions that carry civil consequences.

M/s Erusian Equipment & Chemicals Ltd. v. State of West Bengal: established that blacklisting/debarment tarnishes reputation and requires objective satisfaction and an opportunity for the noticee to represent their case.

Gorkha Security Services v. Government (NCT of Delhi): requiring precise statement of imputations as part of the "twin requirements" for show-cause notices.

T. Takano v. SEBI: if an internal report is relied upon for adjudication, it must be shared with the noticee (doctrine of "due disclosure").

Southern Painters v. Fertilizers & Chemicals Travancore Ltd.: held that debarment based on vigilance reports without notice is inherently unfair.

The Court observed that the respondent’s decision-making committee relied heavily on four internal documents, including a Vigilance recommendation and a Joint Inspection Report.

The Court reasoned that since these reports contained the measurements and findings of alleged "dishonesty" upon which the penalty was based, non-disclosure amounted to an "ex parte adverse adjudication".

The Court noted that the works were originally supervised and certified by IOCL's own Site Engineers and Engineers-in-Charge in 2022.

By conducting a re-measurement behind the petitioners' backs nearly a year after the Defect Liability Period and withholding the methodology used for quantification, the respondent deprived the petitioners of a "real, meaningful, and effective opportunity" to rebut the charges.

The Court allowed the writ petitions and quashed the impugned Holiday Listing orders dated 22.01.2026.

No order was made as to costs.