Jharkhand High Court
Pawan Kumar Gupta vs The State Of Jharkhand on 24 July, 2025
Author: Sujit Narayan Prasad
Bench: Sujit Narayan Prasad
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IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 5734 of 2024
Pawan Kumar Gupta, aged 46 years, son of Late Bajrang Sahu, resident
of Karra Road, P.O. and P.S. Khunti, District-Khunti.
... Petitioner
Versus
1. The State of Jharkhand.
2. The Deputy Commissioner-cum-District Magistrate (Social Security
Cell), Khunti, P.O. and P.S. Khunti, District-Khunti.
3. Incharge Officer, District General Branch, Khunti, P.O. and P.S.
Khunti, District-Khunti.
4. District Supply Officer, Khunti, P.O. and P.S. Khunti, District-
Khunti.
... Respondents
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CORAM: HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE SUJIT NARAYAN PRASAD
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For the Petitioner: Mr. Nilesh Kumar, Advocate
Ms. Sonal Sodhani, Advocate
For the Respondents: Mr. Baibhaw Gahlaut, A.C. to A.A.G.-V
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05/Dated: 24.07.2025
Tarlok Singh Chauhan, C.J.(Oral)
1. The instant petition has been filed for the following reliefs:-
"For issuance of an appropriate writ/order/direction from
this Hon'ble Court for setting aside order dated 10.6.2024
(Annexure-2) passed by Deputy Commissioner, Khunti by
which the petitioner has been blacklisted for an indefinite
period from participating in government Tender."
2. The respondent no.3 wrote a letter dated 30th April, 2024 based
upon which a First Information Report came to be lodged against the
petitioner with the allegation that he had submitted Character
Certificate bearing No.44 dated 06.04.2023 in the office of the District
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Supply Officer, Khunti for tender application which was placed before
the Social Security Cell. Both the Offices attempted to verify the
Character Certificate provided by the petitioner and it was ultimately
found that the said Character Certificate was forged.
3. After registration of the F.I.R. against the petitioner, an order was
issued by the Deputy Commissioner, Khunti on 10.06.2024 vide Memo
No.99 stating therein that the petitioner had got a tender vide Memo
dated 08.11.2023 for supply of blankets in the financial year 2023-24
on the basis of a forged document which suggested that the petitioner
intended to cheat the Department. Accordingly, the petitioner was
blacklisted from applying in all government tenders.
4. It is not in dispute that the order of blacklisting was passed
without issuing any show-cause notice to the petitioner. It is further not
in dispute that even the duration of blacklisting has not been mentioned
in the aforesaid order dated 10.06.2024.
5. In Gorkha Security Services v. Government (NCT of Delhi) and
Others, (2014) 9 SCC 105, the Hon'ble Supreme Court observed that it
was incumbent upon the petitioner to issue show-cause notice and also
afford an opportunity of hearing to the petitioner prior to taking
debarment action. The relevant paragraphs are reproduced hereunder-
"16. It is a common case of the parties that the blacklisting has
to be preceded by a show-cause notice. Law in this regard is
firmly grounded and does not even demand much amplification.
The necessity of compliance with the principles of natural justice
by giving the opportunity to the person against whom action of
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blacklisting is sought to be taken has a valid and solid rationale
behind it. With blacklisting, many civil and/or evil consequences
follow. It is described as "civil death" of a person who is foisted
with the order of blacklisting. Such an order is stigmatic in
nature and debars such a person from participating in
government tenders which means precluding him from the award
of government contracts.
17. Way back in the year 1975, this Court in Erusian Equipment
& Chemicals Ltd. v. State of W.B., highlighted the necessity of
giving an opportunity to such a person by serving a show-cause
notice thereby giving him opportunity to meet the allegations
which were in the mind of the authority contemplating
blacklisting of such a person. This is clear from the reading of
paras 12 and 20 of the said judgment. Necessitating this
requirement, the Court observed thus: (SCC pp. 74-75)
"12. Under Article 298 of the Constitution the executive
power of the Union and the State shall extend to the
carrying on of any trade and to the acquisition, holding
and disposal of property and the making of contracts for
any purpose. The State can carry on executive function by
making a law or without making a law. The exercise of
such powers and functions in trade by the State is subject
to Part III of the Constitution. Article 14 speaks of
equality before the law and equal protection of the laws.
Equality of opportunity should apply to matters of public
contracts. The State has the right to trade. The State has
there the duty to observe equality. An ordinary individual
can choose not to deal with any person. The Government
cannot choose to exclude persons by discrimination. The
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order of blacklisting has the effect of depriving a person
of equality of opportunity in the matter of public contract.
A person who is on the approved list is unable to enter
into advantageous relations with the Government
because of the order of blacklisting. A person who has
been dealing with the Government in the matter of sale
and purchase of materials has a legitimate interest or
expectation. When the State acts to the prejudice of a
person it has to be supported by legality.
* * *
20. Blacklisting has the effect of preventing a person from
the privilege and advantage of entering into lawful
relationship with the Government for purposes of gains.
The fact that a disability is created by the order of
blacklisting indicates that the relevant authority is to
have an objective satisfaction. Fundamentals of fair play
require that the person concerned should be given an
opportunity to represent his case before he is put on the
blacklist."
18. Again, in Raghunath Thakur v. State of Bihar the aforesaid
principle was reiterated in the following manner: (SCC p. 230,
para 4)
"4. Indisputably, no notice had been given to the
appellant of the proposal of blacklisting the appellant. It
was contended on behalf of the State Government that
there was no requirement in the rule of giving any prior
notice before blacklisting any person. Insofar as the
contention that there is no requirement specifically of
giving any notice is concerned, the respondent is right.
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But it is an implied principle of the rule of law that any
order having civil consequence should be passed only
after following the principles of natural justice. It has to
be realised that blacklisting any person in respect of
business ventures has civil consequence for the future
business of the person concerned in any event. Even if the
rules do not express so, it is an elementary principle of
natural justice that parties affected by any order should
have right of being heard and making representations
against the order. In that view of the matter, the last
portion of the order insofar as it directs blacklisting of
the appellant in respect of future contracts, cannot be
sustained in law. In the premises, that portion of the
order directing that the appellant be placed in the
blacklist in respect of future contracts under the
Collector is set aside. So far as the cancellation of the bid
of the appellant is concerned, that is not affected. This
order will, however, not prevent the State Government or
the appropriate authorities from taking any future steps
for blacklisting the appellant if the Government is so
entitled to do in accordance with law i.e. after giving the
appellant due notice and an opportunity of making
representation. After hearing the appellant, the State
Government will be at liberty to pass any order in
accordance with law indicating the reasons therefor. We,
however, make it quite clear that we are not expressing
any opinion on the correctness or otherwise of the
allegations made against the appellant. The appeal is
thus disposed of."
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19. Recently, in Patel Engg. Ltd. v. Union of India speaking
through one of us (Jasti Chelameswar, J.) this Court
emphatically reiterated the principle by explaining the same in
the following manner: (SCC pp. 262-63, paras 13-15)
"13. The concept of 'blacklisting' is explained by this
Court in Erusian Equipment & Chemicals Ltd. v. State of
W.B. as under: (SCC p. 75, para 20)
'20. Blacklisting has the effect of preventing a
person from the privilege and advantage of
entering into lawful relationship with the
Government for purposes of gains.'
14. The nature of the authority of the State to blacklist the
persons was considered by this Court in the
abovementioned case and took note of the constitutional
provision (Article 298), which authorises both the Union
of India and the States to make contracts for any purpose
and to carry on any trade or business. It also authorises
the acquisition, holding and disposal of property. This
Court also took note of the fact that the right to make a
contract includes the right not to make a contract. By
definition, the said right is inherent in every person
capable of entering into a contract. However, such a
right either to enter or not to enter into a contract with
any person is subject to a constitutional obligation to
obey the command of Article 14. Though nobody has any
right to compel the State to enter into a contract,
everybody has a right to be treated equally when the
State seeks to establish contractual relationships. The
effect of excluding a person from entering into a
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contractual relationship with the State would be to
deprive such person to be treated equally with those, who
are also engaged in similar activity.
15. It follows from the above judgment in Erusian
Equipment case that the decision of the State or its
instrumentalities not to deal with certain persons or class
of persons on account of the undesirability of entering
into the contractual relationship with such persons is
called blacklisting. The State can decline to enter into a
contractual relationship with a person or a class of
persons for a legitimate purpose. The authority of the
State to blacklist a person is a necessary concomitant to
the executive power of the State to carry on the trade or
the business and making of contracts for any purpose,
etc. There need not be any statutory grant of such power.
The only legal limitation upon the exercise of such an
authority is that the State is to act fairly and rationally
without in any way being arbitrary--thereby such a
decision can be taken for some legitimate purpose. What
is the legitimate purpose that is sought to be achieved by
the State in a given case can vary depending upon
various factors."
20. Thus, there is no dispute about the requirement of serving
show-cause notice. We may also hasten to add that once the
show-cause notice is given and opportunity to reply to the show-
cause notice is afforded, it is not even necessary to give an oral
hearing. The High Court has rightly repudiated the appellant's
attempt in finding foul with the impugned order on this ground.
Such a contention was specifically repelled in Patel Engg."
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6. Similar reiteration of law can be found in the judgment rendered
by the Hon'ble Supreme Court in Vetindia Pharmaceuticals Ltd. v.
State of Uttar Pradesh and Another, (2021) 1 SCC 804, wherein the
Hon'ble Supreme Court held that it was incumbent on the part of the
Department to state in the show-cause notice that the competent
authority intended to impose such a penalty of blacklisting so as to
provide adequate and meaningful opportunity to the appellant to show
cause against the same. The Hon'ble Supreme Court held that there
must be a clear inference from show-cause notice that blacklisting
action is proposed.
7. Yet again, similar reiteration of law can be found in another
judgment of the Hon'ble Supreme Court in UMC Technologies (P)
Ltd. v. Food Corporation of India and Another, (2021) 2 SCC 551,
wherein the Hon'ble Supreme Court reiterated that for show-cause
notice to constitute the valid basis of a blacklisting order, such notice
must spell out clearly, or its contents be such that it can be clearly
inferred therefrom that there is intention on the part of the issuer of the
notice to blacklist the noticee. The Hon'ble Supreme Court further held
that existence of a clause in the bid document, which mentions
blacklisting as a bar against eligibility, cannot satisfy the mandatory
requirement of a clear mention of the proposed action in the show-
cause notice. Lastly, it was held that requirement of a valid,
particularized and unambiguous show-cause notice is particularly
crucial due to the severe consequences of blacklisting and the
stigmatization that accrues to the person/entity being blacklisted.
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8. Earlier to this, the Hon'ble Supreme Court in Daffodills
Pharmaceuticals Ltd. v. State of Uttar Pradesh and Another, (2020)
18 SCC 550, held that blacklisting has the effect of preventing a person
from privilege and advantage of entering into lawful relationship with
the Government for purposes of gain. The fact that a disability is
created by the order of blacklisting indicates that the relevant authority
is to have an objective satisfaction. Fundamentals of fair play require
that the person concerned should be given an opportunity to represent
his case before he is put on blacklist.
9. Merely because the Government has a right to enter into contract
with anyone of its choice does not give the Government the power to
arbitrarily blacklist a party without affording a fair hearing as
blacklisting involves material damage of losing the prospect of entering
into contracts with the Government in future.
10. The effect of blacklisting, needless to observe, are quite drastic.
It prevents a person from the privilege and the advantage of entering
into lawful relationship with the Government, PSUs for the purposes of
gain. Apart from reducing the person's prospects of making profits, it
leads to loss of credibility and goodwill, a decline in business, and
clients, besides causing financial hardship. It virtually acts as a libel to
the person if unjustifiably done.
11. This is precisely the reason why the courts of law have, time and
again, established certain principles before blacklisting a person which
include (a) Principles of natural justice and (b) Doctrine of
proportionality. The 'doctrine of proportionality' here would essentially
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have to be understood as, maintaining a proper balance between the
adverse effects which the administrative order may have on the rights,
persons, keeping in mind the purpose for which they intend to serve.
12. Reverting back to the facts of instant case, since the petitioner
has not been issued any show-cause notice or afforded an opportunity
of personal hearing and has straightway been blacklisted, the action of
blacklisting vide impugned letter dated 10.06.2024 cannot withstand the
judicial scrutiny and the said order is accordingly quashed and set aside.
The writ petition is, accordingly, allowed. However, this order shall not
come in the way of the respondents in case they choose to further
proceed in the matter by issuing a show-cause notice to the petitioner if
they still intend to blacklist the petitioner, and thereafter proceed in
accordance with law affording an opportunity of hearing to the
petitioner.
(Tarlok Singh Chauhan, C.J.)
(Sujit Narayan Prasad, J.)
Manoj/Cp.2
