### Blacklisting Requires Conclusive Finding of Intentional Misrepresentation Beyond Vitiation of Contractual Eligibility

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

After work orders were issued, Respondent No. 4 issued show-cause notices alleging that the technical experience certificates submitted by the petitioners (purportedly issued by the Municipal Council, Karad) were fake.

In an earlier round of litigation, the High Court quashed initial show-cause notices for being "pre-determined" but granted the State liberty to take fresh decisions following due process.

Following a personal hearing on 28.11.2025, the Apex Committee in its meeting dated 02.12.2025 resolved to terminate the petitioners' contracts and blacklist them for three years.

The petitioners challenged these decisions, contending they were ready to complete the work and that conflicting verification reports existed regarding the certificates.

1. Whether the respondents followed the principles of natural justice and due process as directed in the earlier round of litigation before passing the impugned orders.

2. Whether the termination of the contracts and the subsequent re-tendering at the risk and cost of the petitioners was legally sustainable given the disputed nature of the experience certificates.

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

The court primarily applied the principles of Administrative Law regarding the "Sanctity of Tender Processes," holding that contracts secured via misrepresentation or false documentation are voidable and vitiated.

It relied extensively on the Supreme Court precedents in Gorkha Security Services v. Government (NCT of Delhi) (2014) 105 SCC and UMC Technologies Pvt. Ltd. v. Food Corporation of India (2021) 2 SCC 551.

These precedents establish that blacklisting is equivalent to "civil death" and must satisfy the tests of fairness, proportionality, and a reasoned finding of culpability.

The Court found that procedural requirements were met as the petitioners were granted a personal hearing and an opportunity to file representations following the previous remand.

On the merits of termination, the Court held that since the petitioners secured technical qualification based on a certificate which the alleged issuing authority (Municipal Council, Karad) denied issuing, the contract was vitiated at its inception regardless of the petitioners' claims of bona fide reliance.

However, regarding blacklisting, the Court observed that the respondents failed to record an independent finding of mens rea—specifically, whether the petitioners knowingly fabricated the document or were merely victims of their joint venture partner (Respondent No. 6).

The Court reasoned that termination of the contract was sufficient to neutralize the unfair advantage, and imposing a three-year debarment without proving intentional fraud was disproportionate and an excessive use of administrative power.

It upheld the termination of the contracts and the respondents' right to re-tender the balance work at the petitioners' risk and cost.

However, it quashed and set aside the order blacklisting the petitioners for three years, finding it disproportionate.

The Court directed that any remaining contractual grievances regarding measurements or payments must be resolved through the civil court or the arbitration/dispute resolution mechanism provided in the agreement.