Blacklisting without prior specific show-cause notice violates principles of natural justice and is legally unsustainable.

The petitioner operates a warehouse for storing Public Distribution System (PDS) material under a Joint Venture Scheme (JVS) 2025-26.

Following a news report on May 21, 2025, regarding maintenance irregularities, the Deputy Collector conducted an inquiry.

Based on the inquiry report and a subsequent directive from the Collector, Shivpuri, the Respondent No. 4 issued an order dated May 26, 2025, blacklisting the petitioner’s firm for one year.

The petitioner challenged this order primarily on the ground that no show-cause notice was issued prior to the blacklisting.

1. Whether an order of blacklisting can be passed against a contractor without first issuing a show-cause notice.

2. Whether the availability of an alternative remedy (appeal or arbitration) under the contract bars the High Court from exercising its writ jurisdiction under Article 226.

The court applied the principles of natural justice, specifically the requirement of Audi Alteram Partem in administrative actions involving "civil death."

It relied on the Supreme Court precedents of Erusian Equipment & Chemicals Ltd v. State of West Bengal, which established that blacklisting prevents a person from the privilege of entering into lawful relationships with the Government.

Kulja Industries Limited v. Chief General Manager, BSNL, regarding the necessity of fair procedure.

Gorkha Security Services v. Government of NCT of Delhi, which held that a show-cause notice is a mandatory prerequisite for blacklisting because such orders are stigmatic and preclude participation in government tenders.

Regarding maintainability, the court applied the principle that the existence of an alternative remedy is a rule of discretion and not a jurisdictional bar.

The Court observed that while the respondents argued that an inquiry was conducted where the petitioner had an opportunity to be heard regarding maintenance irregularities, the record failed to show any specific notice calling upon the petitioner to explain why they should not be blacklisted.

The Court noted that the impugned order was passed as a sequel to the Collector’s directive rather than a dedicated notice-process.

Applying the law from Gorkha Security Services, the Court reasoned that because blacklisting carries severe civil consequences, the failure to issue a specific show-cause notice regarding the proposed penalty of blacklisting constitutes a violation of natural justice.

Furthermore, the Court rejected the respondents' objection regarding alternative remedies, stating that in the facts of the present case, it was appropriate to exercise discretionary jurisdiction under Article 226.

It answered the second issue by affirming that the writ petition was maintainable despite alternative remedies.

The High Court quashed the impugned order dated May 26, 2025.

It reserved liberty for the respondents to take fresh action against the petitioner in accordance with the law, provided they follow due procedure.

The petition was allowed with no order as to costs.