Blacklisting without prior show-cause notice specifically proposing such action is illegal and violates natural justice.

The petitioner, an A-Class electrical contractor and proprietor of M/S Sagar Associates, has supplied equipment to various government departments since 2014

On September 12, 2022, the petitioner requested information from respondent No. 4 regarding pending payments

In response, rather than providing the information, the respondent issued an impugned order dated September 22, 2022, blacklisting the petitioner for one year with immediate effect

The respondents admitted that no show-cause notice was issued, justifying the omission on the grounds of superior instructions and alleged financial loss caused to the State exchequer by the petitioner’s conduct

The petitioner challenged this order via a writ of certiorari

1. Whether the blacklisting of a contractor without the issuance of a prior show-cause notice specifically proposing such action is legally sustainable.

2. Whether the state can bypass the principles of natural justice on the grounds of superior instructions or alleged financial irregularities.

The court primarily relied on the principles of natural justice as interpreted by the Supreme Court in Gorkha Security Services v. Govt. of NCT of Delhi (2014) 9 SCC 105, which held that blacklisting constitutes "civil death" and requires a prior show-cause notice specifically stating the proposed action to allow the party to represent against such a harsh penalty

It further cited Chairman, Board of Mining Examination v. Ramjee (1977) 2 SCC 256, which established that while natural justice is flexible, it fundamentally requires fairness and a reasonable opportunity to be heard, ensuring "no man shall be hit below the belt"

The court found that the respondents failed to comply with the mandatory procedural requirements of natural justice

By their own admission, the respondents did not issue a show-cause notice because they believed superior instructions and the nature of the financial irregularity exempted them from doing so

The court rejected this reasoning, applying the ratio from Gorkha Security Services, noting that even if defaults exist, a party must be given a chance to provide extenuating circumstances or plead for a lesser penalty before the extreme action of blacklisting is taken

Since no notice was issued to the petitioner regarding the contemplated blacklisting, the court determined the impugned order was per se illegal and unsustainable in law

The court held that the requirement of a show-cause notice is a settled proposition of law that cannot be bypassed

The court clarified that the respondents remain at liberty to initiate fresh action against the petitioner provided they strictly comply with necessary procedural formalities and the principles of natural justice

No costs were awarded