Blacklisting requires prior hearing and cannot be imposed for an indefinite period.

The petitioner, Sewa Sahkari Samiti Sitlaha, challenged the order dated 25 January 2024 passed by Respondent No. 3, the Collector, District Rewa, whereby the petitioner-Samiti was blacklisted.

The petitioner contended that the blacklisting order was passed without issuing a proper opportunity of hearing and that the blacklisting was for an indefinite period, contrary to law.

Notice was issued in the writ petition, and the High Court stayed the operation of the impugned order on 19 September 2024. The State authorities did not file a reply.

During hearing, the State conceded that the order was issued without granting an opportunity of hearing and for an indefinite period, and requested liberty to pass a fresh order after issuing a show-cause notice and hearing the petitioner.

Whether the blacklisting order was invalid for having been passed without affording the petitioner a prior opportunity of hearing and without specifically proposing blacklisting in the show-cause process?

Whether blacklisting or debarment for an indefinite or indeterminate period is legally permissible?

The Court applied the principles of natural justice, particularly the requirement that a person proposed to be blacklisted must receive a prior show-cause notice and a meaningful opportunity to explain why blacklisting should not be imposed.

Relying on Gorkha Security Services v. Government (NCT of Delhi), the Court held that blacklisting is a severe civil consequence and that the proposed action of blacklisting, including its possible duration, must be specifically communicated so that the affected party can address the proposed penalty and plead for a lesser punishment.

The Court also relied on Kulja Industries Ltd. v. Western Telecom Project, BSNL, (2014) 14 SCC 731, and Vetindia Pharmaceuticals Ltd. v. State of U.P., (2021) 1 SCC 804, for the principle that blacklisting or debarment cannot ordinarily be for an indefinite or indeterminate period.

The Court further reiterated that natural justice is flexible and must be applied in light of the facts and circumstances, but fairness and a reasonable opportunity cannot be dispensed with in a proceeding having serious civil consequences.

The impugned order was unsustainable because the petitioner was blacklisted without being afforded an opportunity of hearing, a defect expressly conceded by the State.

Since blacklisting has been recognised as a measure causing serious civil consequences or “civil death,” the petitioner was entitled to notice of the proposed blacklisting and an opportunity to place extenuating circumstances, contest the proportionality of the penalty, or request blacklisting for a lesser and legally permissible period.

Further, the order imposed blacklisting for an indefinite period, contrary to the rule laid down in Kulja Industries and Vetindia Pharmaceuticals that debarment cannot be indefinite or indeterminate.

These procedural and substantive infirmities rendered the order liable to be quashed, while preserving the respondents’ authority to initiate fresh proceedings in accordance with law.

The respondents were granted liberty to pass a fresh order after issuing a proper show-cause notice, affording the petitioner an opportunity of hearing, and complying with the principles laid down in the cited Supreme Court decisions.

The petition was accordingly disposed of finally, with no order as to costs.