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

The petitioner entered into a Contract Agreement on October 4, 2023, with the respondent for the maintenance of an optical fiber cable network for a three-year term

Due to alleged frequent cable damages in late 2024, the respondent terminated the contract and blacklisted the petitioner for three years via a Letter dated November 24, 2025

The respondent justified the lack of a prior show-cause notice by arguing that blacklisting was part of the termination clause (Clause 29) under the Special Conditions of Contract

The petitioner moved the High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection against the blacklisting order on the grounds of violation of natural justice

Principles of Natural Justice, specifically the doctrine of audi alteram partem, holding that a show-cause notice is a sine qua non for the proper exercise of authority

Reliance on A.K.G. Construction and Developers Pvt. Ltd. v. State of Jharkhand, which establishes that the decision to blacklist is independent of termination and requires a separate application of mind and notice

Application of UMC Technologies Private Limited v. Food Corporation of India, which mandates that a show-cause notice must clearly spell out the intention to blacklist to allow an "informed and meaningful opportunity" to respond

The Court observed that the respondent admitted to not issuing a specific notice regarding the proposed blacklisting

The Court rejected the respondent's contention that the existence of a contractual clause (Clause 29) authorizing blacklisting obviated the need for a notice

Applying the UMC Technologies precedent, the Court reasoned that the mere existence of a clause in a bid or contract document does not satisfy the mandatory requirement of a clear proposed action in a show-cause notice

Since the petitioner had a 21-year relationship with the respondent and held various other contracts, the Court found that the blacklisting order without due process would cause irreparable damage, establishing a prima facie case and balance of convenience in favor of the petitioner

Upon the parties' mutual agreement, the Court waived the statutory requirements of Section 21 and Section 11 of the Arbitration Act and referred the dispute to a Sole Arbitrator under the aegis of the Delhi International Arbitration Centre (DIAC)

The petition was disposed of with directions for the arbitrator to adjudicate all claims and counter-claims on merits