Orissa HC Quashes FCI Bidder’s 3-Year Ban After Experienced-Category Bidder Was Treated As Inexperienced, Orders ₹1,67,500 And EMD Refund

The petitioner challenged the Food Corporation of India’s order dated 9 March 2023 debarring him from participating in future tenders for three years and sought refund of ₹1,67,500 deposited towards security, together with the EMD

He contended that he had participated under the experienced category but was treated as the lowest bidder under the inexperienced category and required to furnish the security and bank guarantees applicable to that category

The Corporation argued that he had received extensions and a personal hearing but had failed to comply with the tender requirements

The High Court considered the challenge to the debarment and the refund claim

Blacklisting by a State instrumentality is subject to judicial review for compliance with natural justice, fairness, reasonableness and proportionality; a fair hearing is a precondition, and the order must be proportionate to the alleged misconduct.

The Court relied on Kulja Industries Ltd. v. Chief General Manager, W.T. Project, BSNL, (2014) 14 SCC 731, which recognises these requirements and the inherent power to blacklist, subject to judicial review;

Erusian Equipment & Chemicals Ltd. v. State of West Bengal, (1975) 1 SCC 70, on the need to give the affected party an opportunity to represent its case before blacklisting;

and UMC Technologies Pvt. Ltd. v. Food Corporation of India, (2021) 2 SCC 551, on the serious consequences of blacklisting and the requirement of a fair and meaningful hearing.

The Court also referred to Artatran Bhuyan v. State of Odisha, W.P.(C) No. 37383 of 2021, and M/s. Konark Ayurvedic Pharmacy, Khurda v. State of Odisha, W.P.(C) No. 10170 of 2026, as applying the same principles.

The Court held that the petitioner’s failure to furnish the required security could not be assessed in isolation from the Corporation’s treatment of his bid.

If he was ineligible under the experienced category, his bid should have been dealt with under the applicable tender conditions; absent a proper basis in those conditions, he could not be treated as a successful bidder under the inexperienced category and penalised for failing to meet that category’s financial requirements.

Although the petitioner received a hearing, that fact did not insulate the decision from review for fairness and proportionality.

Given the unresolved basis for categorising his bid, the three-year debarment could not be sustained.

The Court further concluded that the Corporation could not retain the security deposit and EMD on the basis of the impugned action.

It directed the Corporation to refund the ₹1,67,500 security deposit and the EMD within eight weeks from communication or production of a certified copy of the order.