Indefinite Debarment and Orders Passed by Non-Registering Authorities Are Legally Unsustainable and Violate Natural Justice

In brief

The question

1. Whether an order of debarment or blacklisting can be passed for an indefinite period.

The court held

The Court answered both issues in the negative, holding that the impugned order was both jurisdictionally flawed and legally excessive.

It also directed

The High Court quashed the Office Order dated 09.01.2026.

The matter was remanded to Respondent No. 3 (the competent Registering Authority) with directions to issue a fresh show-cause notice, invite objections, and pass a reasoned, speaking order in accordance with the law and the specific terms of the agreement.

The writ petition was allowed.

01Facts

The petitioner, a Class I registered contractor under the Bihar Contractors Registration Rules, 2007, was awarded a tender for the "Mukhya Mantri Peyjal Nischay Yojana" in Banka district.

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Following the completion of the work, Respondent No. 4 (Executive Engineer) issued a directive on 29.12.2025 requiring the petitioner to clear outstanding electricity bills, failing which debarment proceedings would initiate.

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Subsequently, via Office Order dated 09.01.2026, Respondent No. 4 debarred the petitioner indefinitely.

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The petitioner challenged this order on grounds of jurisdictional incompetence and the illegality of indefinite debarment.

02Issues

i.1. Whether an order of debarment or blacklisting can be passed for an indefinite period.

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ii.2. Whether the Executive Engineer (Respondent No. 4) was the competent authority to issue the debarment order under the Bihar Contractors Registration Rules, 2007.

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03Law Applied

Rule 11(d) of the Bihar Contractors Registration Rules, 2007, which mandates that blacklisting or suspension orders must be passed by the officer competent to register the contractor or their superior.

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The precedent established in Kulja Industries Limited v. Chief General Manager, W.T. Project, BSNL, (2014) 14 SCC 731, which stipulates that debarment cannot be permanent and the duration must be proportionate to the offense.

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Principles of natural justice and the doctrine of proportionality regarding the fundamental right to carry on trade.

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04Reasoning

The court observed that the petitioner’s registration was granted by Respondent No. 3 (Chief Engineer), making him the "Registering Authority" under Rule 11(d).

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Consequently, Respondent No. 4 lacked the legal competence to issue show-cause notices or the final debarment order.

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The court reasoned that an order passed by an incompetent authority or without a valid show-cause notice is a violation of natural justice.

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Furthermore, the court applied the Kulja Industries doctrine to address the "indefinite" nature of the debarment, noting that permanent blacklisting is legally unsustainable as it infringes upon constitutional rights and ignores the necessity of a fixed duration based on the gravity of the breach.

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