### Blacklisting Requires Conclusive Finding of Intentional Misrepresentation Beyond Justification for Contract Termination

The petitioners, construction firms, were awarded various contracts under the 'Jal Jeevan Mission' by the Public Health Engineering Department of Chhattisgarh.

To qualify for the technical bids, the petitioners submitted experience certificates purportedly issued by Respondent No. 6 (M/s Vijay V Salunkhe) and verified by the Municipal Council, Karad.

Subsequent verification by the Department revealed that the Municipal Council had not issued such certificates, leading to allegations of fraud.

Following prior litigation where show-cause notices were quashed due to pre-determination, the Apex Committee of the State Water and Sanitation Mission conducted a fresh hearing on 02.12.2025.

The Committee subsequently maintained its decision to terminate the agreements, invite fresh tenders at the petitioners’ risk and cost, and blacklist the petitioners for three years.

The petitioners challenged these orders, asserting the work was substantially complete and the certificates were genuine according to certain criminal court observations.

Whether the termination of the contracts and the invitation of fresh tenders at the petitioners' risk and cost were legally sustainable given the disputed genuineness of the experience certificates.

Whether the imposition of a three-year blacklisting penalty was proportionate and fair in the absence of a definitive finding of intentional fraud or mens rea by the petitioners.

The Court applied the principles of administrative law governing public procurement and the doctrine of proportionality in blacklisting.

It relied on Gorkha Security Services v. Government (NCT of Delhi) (2014) 9 SCC 105, which characterizes blacklisting as "civil death" requiring strict adherence to natural justice and fair play.

It further applied UMC Technologies Pvt. Ltd. v. Food Corporation of India (2021) 2 SCC 551, emphasizing that blacklisting has long-lasting stigmatic consequences and requires a valid, particularized basis.

The Court also upheld the principle that submission of false information or forged documents in a tender process vitiates the contract ab initio, justifying termination.

The Court reasoned that in tender matters, eligibility secured through misrepresentation strikes at the root of the process.

Since the contemporaneous verification from the Municipal Council, Karad, denied the issuance of the certificates, the Department was justified in canceling the contracts to protect the sanctity of public procurement.

Regarding blacklisting, the Court observed a critical distinction between a bidder who knowingly forges a document and one who relies on a third party's document later found to be defective.

The Court found that the Apex Committee failed to record a conclusive finding of mens rea or deliberate fraud specifically attributable to the petitioners.

While termination was a necessary corrective measure to neutralize the advantage gained from the doubtful certificates, the additional three-year debarment was deemed disproportionate and lacked the "clear and established culpability" required for such a stigmatic penalty.

It upheld the termination of the contracts and the respondents' right to re-tender the work, noting that contractual disputes regarding payments and measurements must be resolved through the civil court or the arbitration mechanism provided in the agreement.

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

No order as to costs was passed.