A) ABSTRACT / HEADNOTE

This judgment examines whether a show-cause notice issued by a statutory corporation seeking to blacklist a successful tenderer for three years (and forfeit its EMD) was justified on the material before the Authority and whether judicial interference at the show-cause stage was warranted. The appellant, a printing contractor, was L-1 for multiple textbook printing groups but failed to complete the allotted quantity within contractual timelines during the COVID-19 period. The Corporation invoked clauses in the tender (notably Clauses 13.3, 16.1, 16.3, and 16.9) and served a detailed show-cause notice requiring explanation why the contractor should not be blacklisted and EMD forfeited.

The High Court refused to quash the show-cause notice and the appeal reached the Supreme Court. The Court reiterated settled principles that ordinarily a writ challenge to a show-cause/charge sheet is premature unless the notice is issued without jurisdiction or tainted by mala fides, while emphasizing that blacklisting is a drastic and stigmatic step requiring strong and cogent materials. Applying precedents like Kulja Industries Ltd. and The Blue Dreamz Advertising Pvt. Ltd., the Court held that the Authority must test the reasonableness of invoking blacklisting even at the stage of issuing a show-cause.

On the facts with admitted disruption by the COVID-19 lockdown and absence of allegations of deliberate deceit the Court permitted forfeiture of the EMD but quashed the limb of the show-cause calling for blacklisting. The decision preserves administrative inquiry but curtails premature initiation of blacklisting proceedings where the factual matrix does not justify such a punitive step.

Keywords: show-cause notice; blacklisting; tender clauses; EMD forfeiture; COVID-19 pandemic; contractual breach; writ jurisdiction; stigmatic penalty.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from textbook printing tenders for academic session 2020–21 where Techno Prints was allotted substantial quantities as L-1 but could not complete the contractual printing within the stipulated period. The Corporation relied upon tender stipulations notably Clauses 16.1 (time for supply), 16.3 (power to cancel and forfeit EMD), and 16.9 (blacklisting for non-completion) and alleged slow progress, partial lifting of supplied paper, and non-compliance with bank-guarantee and positive/CD procedures. The contractor blamed pandemic-related lockdowns and explained inability to perform.

Earlier rounds produced a blacklisting order that the High Court quashed for exceeding grounds in the show-cause; thereafter the Corporation issued a fresh, elaborate show-cause notice on 14.12.2022 detailing quantities, shortfall and alleged contractual lapses. The contractor challenged that notice by writ. The High Court and subsequent Division Bench refused to quash the show-cause, holding it premature to interfere and permitting administrative inquiry.

The appeal to the Supreme Court posed two core questions:

(1) whether judicial interference was justified at the show-cause stage and

(2) whether facts warranted a blacklisting notice given the pandemic context and the stigmatic effects of debarment.

The Court balanced the principle of non-interference with administrative process against the need to prevent arbitrary employment of blacklisting where facts do not support such an extreme penalty.

D) FACTS OF THE CASE

Techno Prints participated in CG Textbook Corporation’s printing tender and was declared L-1 for multiple groups. Work orders issued between January–February 2020 aggregated to ~1267.496 MT of paper allocation (detailed group-wise particulars contained in the work orders). The tender required printing completion within 90 days (clause 16.1), furnished bank guarantee obligations for paper supply (clause 9.1), and permitted cancellation/forfeiture if progress was unsatisfactory (clause 16.3). By 22.03.2020 date of national lockdown the contractor had printed only 549.927 MT leaving 717.569 MT unprinted.

The Corporation alleged delay, partial lifting of paper against bank guarantee limits, failure to utilize positives/CDs correctly (clause 13.3.1), and refusal/ inability to complete work thereby invoking clause 16.9 for proposed 3-year blacklisting and EMD forfeiture of ₹5,00,000/-. The contractor wrote multiple letters seeking EMD refund and citing lockdown interruptions; earlier blacklisting order (dated 02.01.2021) had been quashed by the High Court for exceeding the grounds shown in the earlier show-cause.

The fresh notice (14.12.2022) set out comprehensive quantitative particulars and required response within two weeks. The contractor filed writ challenging the fresh notice; the High Court declined to quash it and the matter reached the Supreme Court.

E) LEGAL ISSUES RAISED

1. Whether a writ court should ordinarily entertain a challenge to a show-cause notice issued by a statutory body or corporation?

2. Whether facts constituting delay due to COVID-19 or other mitigating circumstances can justify quashing proceedings that seek blacklisting and forfeiture of EMD?

3. Whether the show-cause notice on its face makes out sufficient grounds to seek a punitive blacklisting order under the tender terms?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioner / Appellant submitted that:

• The inability to complete printing arose from the COVID-19 lockdown and exceptional circumstances, not from any deliberate default or mala fide conduct.

• Blacklisting is a stigmatic penalty and cannot be invoked where breach is non-willful; mere contractual delay does not justify debarment.

• Earlier blacklisting had been quashed; fresh initiation on similar facts amounted to harassment and was disproportionate.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that:

• The Corporation was entitled under the tender terms to blacklist or forfeit EMD when contractual obligations were not met.

• The question of intent or deliberateness is not a precondition for invoking contractual penalties — breaches and resultant damages suffice.

• A prior quashing of a blacklisting order did not preclude the Authority from initiating a fresh proceeding when it believes irregularities persist.

H) JUDGEMENT

The Supreme Court granted leave and considered two central questions: appropriateness of interfering with a show-cause notice and the reasonableness of seeking blacklisting. The Court reaffirmed the settled principle that ordinarily writ courts should not quash a show-cause/charge-sheet at the threshold unless the notice is issued without competence or is tainted by mala fides, relying on precedent authorities that bar routine quashing of charge documents.

However, the Court emphasized that blacklisting is not an ordinary contractual remedy; it is a drastic, stigmatic penalty with long-term adverse commercial consequences. The Court invoked Kulja Industries Ltd. v. BSNL and The Blue Dreamz Advertising Pvt. Ltd. to record that authorities must exercise the power to blacklist sparingly and only on cogent grounds such as habitual non-performance, persistent failure of supplied equipment to meet standards, or failure to honour bids without sufficient grounds. Those guiding principles, the Court held, ought to inform the Authority even at the stage of issuing a show-cause because a show-cause that cannot, on its face, sustain blacklisting is an empty formality and indicative of predecision.

Applying the principles to the facts, the Court noted the pandemic context and that the appellant had admitted inability to perform due to COVID-19. There was no material of deliberate cheat or grossly deviant conduct akin to fraudulent behaviour. While the tender terms permitted blacklisting, reasonableness must be tested. The Court observed that the show-cause on its face did not disclose the kind of overwhelming independent materials necessary to justify blacklisting; it largely recited contractual shortfall and timelines disrupted by lockdown.

Given that backdrop, the Court found issuance of a notice seeking blacklisting to be disproportionate and quashed that limb of the notice. The Court, nevertheless, permitted the Corporation to forfeit the EMD and pursue recovery/other contractual remedies, since those measures are compensatory and within the tender terms. The appeal was disposed accordingly show-cause’s blacklisting prayer quashed; other parts not disturbed.

a. RATIO DECIDENDI

The controlling ratio is twofold:

(1) judicial restraint ordinarily prevents quashing of a show-cause/charge sheet unless jurisdictional infirmity or mala fides is shown; and

(2) blacklisting is an exceptional, stigmatic administrative penalty that must be founded on strong, independent, and overwhelming materials absence of such materials even at show-cause stage permits judicial interference to prevent disproportionate prejudice.

Therefore, where the show-cause itself does not prima facie make out grounds warranting blacklisting, the court may quash that part even while permitting other contractual remedies like EMD forfeiture.

b. OBITER DICTA 

The Court observed obiter that Authorities should exercise care before issuing blacklisting-oriented show-causes and must appreciate the long-lasting stigma attached to debarment; issuance of show-cause as a mere formality where decision is already taken undermines fairness. The Bench analogized the exercise to arrest powers power exists but should be exercised only when necessary. The Court also remarked that litigation should be curtailed where settled law provides clear guideposts, and that Authorities must apply reasonableness while initiating penal administrative steps.

c. GUIDELINES

1. Before issuing any show-cause invoking blacklisting, the Authority must assess whether prima facie materials demonstrate habitual non-performance, fraudulent conduct or willful breach beyond mere contractual delay.

2. A show-cause must, on its face, delineate the specific grounds envisaged in the tender that justify debarment; omnibus recitals of breach are insufficient.

3. Where exceptional external events (e.g., pandemic/force majeure) impede performance, Authorities must weigh reasonableness and proportionality before seeking blacklisting.

4. Administrative measures that are compensatory (forfeiture of EMD, recovery of damages) remain available even if blacklisting is inappropriate; Authorities should prefer such remedies when the breach is not egregious.

I) CONCLUSION & COMMENTS

The decision delicately balances administrative autonomy in procurement with constitutional fairness. It preserves the rule that courts should not ordinarily defeat administrative inquiries at inception while recognizing that blacklisting is sui generis and requires enhanced justification. Practically, the judgment places an onus on procuring Authorities to craft show-cause notices with precise, persuasive factual allegations when seeking stigmatic penalties; a laconic recitation of delay or numerical shortfall particularly in contexts like the 2020 COVID lockdown will not suffice.

For contractors, the ruling affirms that pandemic-driven non-performance merits careful consideration and does not automatically invite debarment. For litigators, the case refines remedy strategy: challenge blacklisting where the show-cause lacks prima facie substance; accept compensatory reliefs may legitimately be pursued. The Court’s reasoning advances administrative fairness without unduly fettering contractual enforcement, and signals that public procurement must marry contractual strictness with proportionality and context-sensitive judgment.

J) REFERENCES

a. Important Cases Referred

1. Kulja Industries Ltd. v. Chief General Manager Western Telecom Project BSNL & Ors., AIR 2014 SC 9. (As cited in judgment).

2. The Blue Dreamz Advertising Pvt. Ltd. & Anr. v. Kolkata Municipal Corp. & Ors., 2024 INSC 589. (As cited in judgment).

3. Erusian Equipment & Chemicals Ltd. v. State of W.B., (1975) 1 SCC 70 : [1975] 2 SCR 674. (As cited in judgment).

4. State of Uttar Pradesh v. Brahm Datt Sharma & Anr., (1987) 2 SCC 179. (Referenced by High Court and judgment).

5. Secretary, Ministry of Defence & Ors. v. Prabhash Chandra Mirdha, (2012) 11 SCC 565. (Referenced).

b. Important Statutes / Instruments Referred

1. Constitution of India, Article 226 — Writ jurisdiction (contextual).