The High Court · 2025

L7) For the aforementioned reasons, white confirming the action of the respondents an blacklisting the petitioner's Company, the impugned order dated 28.03.2025 is set aside to the extent of not indicating the period of blacklisting and the matter is remanded to the authorities for taking appropriate decision on the period for which the petitioner's Company is to be blacklisted duly considering the law laid down by the Hon'ble Supreme Court in Panda Infra Projects (India) Private Limited (referred supra) as well as the gravity of lapses on the part of the petitioner. The entire exercise shall be completed within a period of four weeks from the date of receipt of a copy of this order.

4. Learned Senior Desionat d Counsel aooearino on behalf of the appellant mainlv outs-forth the followinq submissions:- i) The impugned order dated 01.05.2025 passed in W.P. No. 11034 of 2025 needs to be set aside on the ground that the appellant was not provided with an opportunity of personal hearing to put-forth the appellant's case, before the 2nd respondent prior to passing oF the impugned order, dated

28.03.2025 by the 2nd respondent and therefore, the present Writ Appeal needs to be allowed as prayed for. l SN.J & JSR,J W.A.No.549 2025 ii) The appellani is entitled for being provided with a reasonable opportunity of personal hearing for deciding the subject issue on merits and hence, the relief as prayed for by the appellant/writ petitioner in W.P.No.11034 of 2024 needs to be granted in favour of the appellant/writ petitloner. iii) Placing reliance on the judgment of the Apex Court in "M/s.Techno Prints Vs.Chhattisgarh Text Book Corporation and another" dated 12.02.2025 and also the judgment of this Court dated 24.3.2023 passed in W.P.No.518 of 2023 in support of appellant's case, the learned senior designated counsel contends that the appellant/petitioner herein is entitled for the relief as prayed for in the present wrlt appeal. iv) The order impugned in W.P.No.11034 of 2025 passed by the 2nd respondent, dated 28.03.2025 is unreasoned order passed in clear violation of principles of natural justice and hence, the order, dated 01.05.2025 passed in W.P.No.11O34 of 2025 confirmlng the action of the respondents in blacklisting the petitioner's company vide the said impugned order, dated

28.03.2025 of the 2nd respondent has to be set-aside. Based on the aforesaid submissions, the lea rned n tor nated coun n h tf h I 4 SN,J & JSR,J W.A.No.549 2025 :. :-. n r con Aooeal has to be allowed as Draved for.

5. The lea rned Advocate General aDoearlno on behalf oft he resoondents mainlv Duts-forth the f'ollowino sub misslons:- i) Despite the issuance of six notices to the appellant herein, the appellant failed to furnish any explanation. ii) Since the said notices clearly indicated that failure to submit a satisfactory explanation within the stipulated time from the date of issuance of the said notices would result in termination/forfeiture/blacklisting and despite the said intimation, the appellant/petitioner did not provide any explanation. Therefore, the relief sought for by the appellant in the present writ appeal cannot be granted. iii) Principles of natural justice are not a straight jacket formula and an opportunity of personal hearing need not be provided to the appellant/petitioner, since he had failed to respond to six (06) show-cause notices. Basedont he aforesaid subm rssi ons, the learned Advocate Gen ral aooearino onb half of the resDon dents 5 SN,J & JSR,J W.A.No.549 2025 s that the re n eal n s dismissed. DISCUS SION AND CONC USION:-

6. A bare perusal of the order of this Court dated 01.05.2025 passed in W.P. No.11034 of 2025 clearly indicates that the impugned order dated 28.03.2025 was set aside to the extent that it did not specify the period of blacklisting which in the considered view of the Court admittedly was observed to be too harsh and the matter was remanded to the authorities for an appropriate decision regarding the period for which the appellant's company is to be blacklisted duly examining the gravity of the lapses on the part of the appellant/petitioner. The entire exercise was further directed to be completed within four weeks from the date of receipt of a copy of the said order.

7. This Court in its order, dated 01.05.2025 passed in W.P.No.11034 of 2025 observed that the judgmentS, relied by the learned senior designated counsel in Erusian Equipment and Chemicals Ltd., Raghunath Thakur, Gorka Security Services and UMC Technologies are not applicable to the case on hand and are distinguishable as the appellant/petitioner had not submitted its explanation to the show-cause notices issued to it r! 6 SN,J & JSR,J W.A.No.549 2025 by the respondent Authorities, but however, this Court in its order, dated 01.05.2025 in W.p.No.11034 of 2025 failed to take note of an important fact borne on record that respondent Nos.2 & 3 entered into agreement, dated 07.02.2023 with the appellant/petitioner company for supply of Eggs as per the terms and conditions of the agreement for a period of two years in the districts of Medchal-Malkajgiri, Ranga Reddy, Sangareddy and Vikarabad in Zone-VI, Charimnar Zone commencing from

01.03.2023 and the said period concluded even before passing of the impunged proceedings, dated 28.03.2025 by the 2nd respondent on 01.03.2025 itself, therefore, this Court opines that the order impugned of the znd respondent, dated

28.03.2025 after conclusion of period of contract had been passed hastily without providing an opportunity of personal hearing to the petitioner without application of mind and hence, an adverse inference can be drawn that the 2nd respondent acted malafidely to prohibit the appellant/petitioner from participating in future tenders.

8. This Court opines that the plea as put-forth by the learned Advocate General appearing on behalf of the respondents that the appellant/petationer having failed to submit explanation for '6' show-cause notices cannot / 7 SN.J & JSR,J W.A.No.549 2025 be provided with an opportunity of personal hearing and further the plea that principles of natural iustice are not a straight Jacket formula to be extended to a person who is not diligent and prompt in furnishing his explanation to the show-cause notices'are not tenable Co and hence, rejected since ont he oa rt of the aooellan /oetition er to su bmit exolanation to the vario us show-cause no ices issuedto the oetitioner would no be sufficient to sh t the doo rs of this Court on the ooella nt /writ D tion er etitio rlssu vide t rmpu qned ord er, dated 28.03.202 5 of the 2nd resDOn dent f had be conclu ded with the resoond ent Authoritv on O1.03 .2025 tf and tn ead t ld eve u ella nt ner' cklistin h to lif and ri ohtt o occuoatio n itself at stake.

9. The Apex Court in its several judgments observed in express terms that it is an implied principles of the rule of law that any order having civil consequence should be passed only after following the principles of natura! justice. It has to be realised that blacklisting any person 8 SN,J & JSR,J W.A.No.549 2025 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. Therefore, in that view of the matter, this Court opines that the order impugned, dated 28.O3.2025 of the 2nd respondent in blacklisting the appellant/petitioner company with immediate effect restricting and barring the appellant,/petitioner company from participating in any future contracts tenders or procurement processes with WD and CW Department on the ground that appellant/petitioner failed to submit exptanation to the show-cause notices issued to the appellant/petitioner observing that the same indicates negligence and unwillingness to adhere to the terms of the contract when the contract of appellant/petitioner company wath the respondents itself expired on 01.03.2025 itself as not onty harsh for the alleged lapses, but is also a clear example of colourable exercise of power by the 2nd respondent herein. , 9 SN,J & JSR,J W.A.No.549 2025

10. This Court oDines that mode of Dre-emDtivelv di ualifvinq him or her from lacklistino a bidder is a oa rtici pati nq i n a nv f utu re cotrtractua l relationshjp.ience blacklistinq can be resorted to only after puttinq the affected oartv to notice and onlv after affordinq an oooortunitv to be heard. whi ch is a rudimentarv orinciole of natural iustice.

11. In Gorkha Security Services v. State (NCT of Delhi) [(2014) 9 SCC 1O5], the Honourable Supreme Court has described blacklisting as being equivalent to the civil death of a person because it is stigmatic and debars a person from participating in government tenders. L2, The ADex Court in its i udqment (2O2Ol 18 SCC 55O in Deffodills Pharmaceuticals Limited an r vs. State of Uttar Pradesh an Another in its head note observed as under: A. Govern ment Contracts and Tenders Blacklistino - Effect of Hearino con rned Derson orior to blacklistinq Essentially of Passinq of dverse order ased on with orinciol es of natural Justice-Imoe rmissibiliW of U n i laterallv oassino adverse o er aqainst appellant for certain actions of its erstwhile Director who had Ieft company long back-On facts held, order preventing procurement from appellant was of indefinite duration and at too wi h t0 SN,J & JSR,J W A.No.549 2025 n d ispro portion ate as it was passed assumDti on without heari o aDDellant Cons iderinq tonq duration of oDeration of adverse order. Suoreme C urt itself decided matter without atter to oriqinal authorities, and remandinq ouashed the dverse order Held, blacklisting has the effect of preventing a person from privilege and advantage of entering into lawful . relationship with 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 olav reouire that Derson conce rned should be qiven an ooDortunitv to reoresent hi case before he is out on the blacklist. The Aoex ourt in the aforesaid Judqment, in oarticu la r, at Para 14 observed as under :

14. The decisions in Erusian Equipment & Chemicals Ltd. v. State of WB and Raghunath Thakur v. State of Bihar as well as later decisions have now clarified that before any executive decision-maker proposes a drastic adverse action, such as a debarring or blacklisting order, it is necessary that opportunity of hearing and representation against the proposed action is given to the party likely to be affected. This has been stated in unequivocal terms in Raghunath Thakur as follows: (Erusian Equipment & Chemicals case. 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. 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."

13. The severitv of the effects blacklistino and the r strict observance of the orincioles of n atural b eH r le Su lG / SN,J & JSR,J W.A.No.549 2025 tn E rus ran EouiDm ent& hem ica ls Ltd. v.State .B m 70 tn h t "quality 75 1S "12. ... The order of blacklisting has the effect of depriving of opportunity in the.Tutt"r. of public u-p"ifon of Io-.iriit. A person who is on the approved list is unable to enter into advantageous relations with the Government oliir." of the order of blacklisting' A person who has Oe"n Oeafing with the Government in the matter of sale unO prt.nuie of materials has a legitimate interest or When the State acts to the prejudice of a "rp"Jution. person it has to be supported by legality'

15. ... The blacklisting order involves civil consequences' It casts a slur. It creates a barrier between the persons biacklisted and the Government in the matter of irinsactions. The blacklists are "instruments of coercion"' - "g" -piiuif

20. Blacklisting has the effect of preventing a person from anO advantage of entering into lawful il " ieratlbnsnii with the Government for purposes of gains' rne fact inut a disability is created by the order of blacklisting indicates that the relevant authority is to have oO;".tlr" 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 - L4. Th ADex Cou L d vs. NL o tnl ts iudomen inKulia Industries 4 4s v r 7 1 arl hel e r rde rrl o r o s b h f d n ; I i ; : t2 SN,J & JSR,J W.A.No.549 2025 In the present case, on hand admittedly as borne on record and even as admitted by the learned Advocate General appearing on behalf of the respondents, the appellant/petitioner had not been provided with a reasonable opportunity of personal hearing prior to passing of the order impugned, dated 2A.O3.2O25 by the 2nd respondent herein nor the order impugned passed by the 2"d respondent, dated 28.O3.2O25 is a reasoned order passed on merits. m h ized the Th A ex Co f rea sons in administrative, ouasi-iudicia! an oroceedin os in the case of Kranti Associates ( P) Ltd. v. Masood Ahmed Khan reoort di n (2O1O) 9 SCC 496. The i ud icia I st ntn relevan oortion reads as u nder: "12. The necessity of giving reason by a body or authority in support of its decision came up for consideration before this Court in several cases. Initially this Court recognised a sort of demarcation between adminlstrative orders and quasijudicial orders but with the passage of time the distinction between the two got blurred and thinned out and virtually reached a vanishing point in the judgment of this Court in A.K. Kraipak v. Union of India [(1969) 2 SCC 262).

14. The expression "speaking order" was first coined by Lord Chancellor Earl Cairns in a rather strange context. The Lord Chancellor, while explaining the ambit of the writ , l3 SN,J & JSR,J W.A.No.549 2025 of certiorari, reFerred to orders with errors on the face of the record and pointed out that an order with errors on its face, is a speaking order.

15. This Court always opined that the face of an order passed by a quasi-judicial authority or even an administrative authority affecting the rights of parties, must speak. It must not be like the "inscrutable face of a sphinx".

47. Summarising the above discussion, this Court holds: (a) In India the judicial trend has always been to record reasons/ even in admlnistrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in su pport of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi- judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by d isrega rd ing extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior co u rts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision-making justifying the principle that reason is the soul of justice. I ,' I I i l4 SN,J & JSR,J W.A.No.549 2025 (i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants' faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of increme n ta lism . (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or "rubber-stamp reasons" is not to be equated with a valid decision-making process. (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decisionmakers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor [( 1987) 100 Harvard Law Review 731-371 .) (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision-making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See Ruiz Torija v. Spain [(1994) 19 EHRR 5531 EHRR, at 562 para 29 and Anya v. University of Oxford [2001 EWCA Civ 405 (CA)] , wherein the Court referred to Article 6 of the European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for u l5 SN,J & JSR,J W.A.No.549 2025 development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "due process.

16. TAKING INTO CONSIDERATION: a) The aforesaid facts and circumstances of the case, b) The submissions made by the ' learned senior designated counse! appearing on behalf of the appellant and the learned Advocate General appearing on behalf of the respondents. c) The observations of the Apex Court in the judgments:(referred to and extracted above) and enlisted below: