### Blacklisting Requires Conclusive Finding of Intentional Fraud or Conscious Misrepresentation to Satisfy Proportionality Summary of Ruling: The High Court of Chhattisgarh upheld the termination of government contracts where bidders secured technical qualification using doubtful experience certificates. However, the Court quashed the three-year blacklisting orders, ruling that blacklisting—being "civil death"—is disproportionate without a definitive finding of *mens rea* or deliberate fraud attributable to the contractor. While the State may annul a contract to protect tender sanctity, stigmatic exclusion requires establishing conscious culpability rather than mere reliance on a defective document.

The petitioners were successful bidders for several water supply contracts under the "Jal Jeevan Mission".

Following the issuance of work orders, the respondent authorities alleged that technical experience certificates submitted by the petitioners (purportedly issued by Municipal Council, Karad) were fake.

In an earlier round of litigation (WPC No. 1263/2025), the High Court quashed initial show-cause notices due to pre-determination but granted the State liberty to take a fresh decision.

Consequently, the Apex Committee of the State Water and Sanitation Mission held a meeting on 02.12.2025, after providing a personal hearing to the petitioners.

The Committee decided to maintain the cancellation of the contracts and blacklisted the petitioners for three years.

The petitioners challenged this decision, claiming they relied in good faith on certificates provided by their joint-venture partner (Respondent No. 6) and that substantial work (~70%) was already completed.

Whether the respondent authorities violated the principles of natural justice while reaching the impugned decision dated 02.12.2025.

Whether the termination of the contract and the subsequent NIT for balance work were legally sustainable given the dispute over the genuineness of the experience certificates.

Whether the imposition of a three-year blacklisting was proportionate and valid in the absence of a conclusive finding of deliberate fraud by the petitioners.

The court applied Article 226 of the Constitution of India regarding the scope of judicial review in contractual matters.

It relied on the principle that submission of forged documents in public procurement strikes at the root of the bidding process and vitiates the contract.

For blacklisting, the court applied the "Proportionality Test" and "Reasoned Decision-Making" doctrine.

It heavily cited *Gorkha Security Services v. Government (NCT of Delhi)* (2014) 9 SCC 105, which characterizes blacklisting as "civil death".

It heavily cited *UMC Technologies Pvt. Ltd. v. Food Corporation of India* (2021) 2 SCC 551, which mandates that blacklisting must be preceded by an unambiguous show-cause notice and must not be arbitrary.

The Court found that procedural fairness was maintained as the petitioners were granted a personal hearing on 28.11.2025.

Regarding the contract termination, the Court held that since the petitioners gained technical qualification based on a certificate that the alleged issuing authority (Municipal Council, Karad) denied issuing, the employer was justified in cancelling the agreement to protect the sanctity of the tender process.

However, the Court distinguished between a bidder’s intentional forgery and a situation where a bidder relies on a document from a third party (Respondent No. 6) that is later found defective.

The Court noted that the Apex Committee failed to record a definitive finding of mens rea (deliberate intent to defraud) on the part of the petitioners.

Consequently, while the contract cancellation was an adequate measure to neutralize the advantage of a doubtful certificate, the additional penalty of a three-year debarment was deemed disproportionate and lacked the necessary foundation of established culpability.

It upheld the respondents' decision to annul the contracts and proceed with re-tendering.

However, it set aside the order blacklisting the petitioners for three years, holding it to be disproportionate in the absence of a conclusive finding of deliberate fraud.

Regarding disputes over payment for work done and measurement, the Court directed the petitioners to invoke the specific dispute-resolution/arbitration mechanism or approach a Civil Court, as these involved factual determinations beyond the scope of Article 226.