Blacklisting without a specific show-cause notice and hearing violates natural justice.

Respondent Nos. 1 and 2 issued Tender No. 54 of 2025 for the remaining works at the Exhibition Centre, Phase-3, Kothrud, Pune, in which the Petitioner emerged as the lowest bidder (“L1”).

After the Model Code of Conduct came into force, Respondent No. 1 required the Petitioner to furnish an additional security deposit and warned that appropriate action would follow upon non-compliance.

The Petitioner stated that the contract could not be awarded during the operation of the Model Code of Conduct, and subsequently expressed its inability to execute the work due to increased costs, requesting cancellation of the tender.

Respondent No. 1 thereafter issued a Circular/order dated 20 March 2026 blacklisting the Petitioner for one year.

The Petitioner challenged the action on the ground that it had not received a specific show-cause notice proposing blacklisting or an opportunity of hearing.

Whether an order blacklisting the Petitioner could be sustained when no specific show-cause notice proposing blacklisting had been issued.

Whether the communications warning that “further action” would be taken under the tender conditions constituted a valid opportunity to show cause against blacklisting.

Whether the impugned blacklisting order violated the principles of natural justice.

The Court applied the principles of natural justice governing blacklisting, holding that blacklisting has serious civil and commercial consequences and cannot ordinarily be imposed without prior notice and an opportunity of hearing.

Relying principally on Gorkha Security Services v. Government (NCT of Delhi) & Ors., (2014) 9 SCC 105, the Court held that a show-cause notice must not merely identify the alleged defaults but must specifically inform the affected party that blacklisting is proposed, enabling it to address why that severe consequence should not follow.

The Court distinguished Grosons Pharmaceuticals (P) Ltd. v. State of U.P. & Ors., (2001) 8 SCC 604, observing that the decision applied where a specific notice proposing blacklisting had been issued and a reply had been considered.

Although Clause 15 of the tender conditions contemplated blacklisting and other consequences, including forfeiture of security deposit, the contractual provision did not dispense with the requirement of procedural fairness.

The Court found it undisputed that the Petitioner had not been specifically informed that blacklisting was under consideration and had not been granted a hearing before the impugned Circular was issued.

The communication dated 21 January 2026 merely stated that further action under the tender conditions would be initiated for failure to furnish the additional security deposit and other documents; it neither disclosed the proposed penalty of blacklisting nor invited the Petitioner to show cause against it.

Since Clause 15 provided multiple possible consequences for breach, the Petitioner was deprived of a meaningful opportunity to explain why blacklisting, rather than a lesser consequence, should not be imposed.

Accordingly, the general warning of “further action” could not satisfy the specific notice requirement laid down in Gorkha Security Services.

The Circular was quashed and set aside, the Petition was allowed in terms of prayer clause (a), and the Rule was made absolute, with no order as to costs.