Madhya Pradesh High Court
Abdul Wahid Khan vs The State Of Madhya Pradesh on 12 August, 2025
1
WP No.3032-2024
I N T H E H I G H C O U RT O F M A D H YA P R A D E S H
AT G WA L I O R
BEFORE
HON'BLE SHRI JUSTICE AMIT SETH
ON THE 12TH OF AUGUST, 2025
WRIT PETITION NO.3032 OF 2024
ABDUL WAHID KHAN
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
.......................................................................................
Appearance:
Shri Tej Singh Mahadik - Advocate for the petitioner.
Shri Prabhat Pateriya - Government Advocate for the respondent
No.1-State.
Shri Raghvendra Dixit - Advocate for the respondent Nos.2 to 4.
.......................................................................................
ORDER
With the consent of the parties, the matter is heard finally.
2. The instant writ petition under Article 226 of the Constitution of India takes exception to the order dated 06.11.2023 passed by the re- spondent No.4 i.e. Dy. General Manager, Madhya Kshetra Vidyut Vit- ran Co. Ltd., Ganjbasoda whereby, the petitioner/contractor has been directed to be permanently blacklisted from participating into the ten- der/contract of the respondent Nos.2 to 4.
2
WP No.3032-2024
3. The brief facts leading to filing of the instant writ petition are that the petitioner being the supplier of the vehicles, participated in the tender proceedings conducted by the respondent No.4 for supply of Tata 407 Pickup vehicle to be used under the TMT (Transformation Maintenance Team) pursuant to the tender notice No.3629 dated 31.07.2023. When the bid submitted by the petitioner was found to be lowest, he was declared 'L-1' and was accordingly called upon to exe- cute the contract agreement for supply of the vehicles in terms of the bid documents issued by the respondent No.4. In response whereof, the petitioner allegedly entered into communication with the respon- dent No.4 seeking alteration in terms and conditions of the agreement and insisted on execution of the agreement for the period of five years.
3.1 The contract agreement could not be executed leading to the cancellation of the tender proceedings itself. 3.2 Since, not only financial losses were accrued to the respondent Nos.2 to 4, but the entire tender proceedings were required to be shelved on account of the action of the petitioner, a show-cause notice dated 17.10.2023 was issued to the petitioner by the respondent No.4 3 WP No.3032-2024 calling upon him to show-cause as to why the petitioner be not black- listed from further participation in the tender proceedings of the re- spondents. Reply to the show-cause notice was submitted by the peti- tioner on 23.10.2023 citing reasons for inability to execute the con- tract in question and thereby disputing the contents of the notice is- sued to him.
3.3 On due consideration of the reply filed by the petitioner, the re- spondents came to the conclusion that on account of the act of the pe- titioner i.e. non-supply of the vehicles in spite of he being declared 'L-1', the public related works were affected, financial losses have ac- crued to the respondents and valuable & precious time was wasted in conducting the exercise of re-tendering afresh. Accordingly, the order dated 06.11.2023 (Annexure-P/1) was passed whereby the petitioner has been permanently blacklisted from participation in the future ten- der of the respondents.
4. Learned counsel appearing for the petitioner submits that the impugned order dated 06.11.2023 (Annexure-P/1) passed by the re- spondents with regard to permanent blacklisting the petitioner, does not precede a show-cause notice and the same has been passed with- 4
WP No.3032-2024 out affording an opportunity of hearing to the petitioner. He further submits that the terms and conditions of the tender so also the applica- ble policy of the respondent Nos.2 to 4 does not empower the respon- dents to pass an order of blacklisting. He further submits that the or- der of permanent blacklisting is too harsh and is violative of rights of the petitioner in terms of Article 21 of the Constitution of India.
5. Learned counsel appearing for the petitioner further submits that just and cogent reasons have been assigned by the petitioner in his reply/representation to the concerned authorities expressing inabil- ity to supply the vehicles in question and, therefore, the respondents authorities are not justified in passing the order of permanent black- listing of the petitioner. In support of his contentions, the petitioner relies upon the judgment of the Hon'ble Supreme Court in the case of Southern Painters Vs. Fertilizers & Chemicals Travancore Ltd.; 1994 SCC (SUPP) 2 699 and M/S Kulja Industries Limited Vs. Chief General Manager Western Telecom Project Bharat Sanchar Nigam Limited & Ors; (2014) 14 SCC 731.
6. On the other hand, learned counsel appearing for the respon- dents opposes the contentions advanced on behalf of the petitioner 5 WP No.3032-2024 and submits that the order of blacklisting dated 06.11.2023 has been passed after affording full opportunity of hearing to the petitioner and after issuing a show-cause notice to the petitioner and also on consid- eration of the reply to the said show-cause notice submitted by the pe- titioner. The copy of the show-cause notice is already on record at page No.51 of the return filed on behalf of the respondent Nos.2 to 4. As per the own showing of the petitioner, he has submitted the reply to the show-cause notice on 23.10.2023 and the said reply is already on record as Annexure-P/7 of the writ petition, therefore, it is wholly incorrect on the part of the petitioner to contend that impugned order has been passed without affording opportunity of hearing. Learned counsel appearing for respondents No.2 to 4 submits that after being declared 'L-1' and on being called upon to execute the agreement, the petitioner herein entered into unnecessary communications seeking alteration in the terms and conditions of the agreement which was not in conformity with the initial tender notice. On account of adamant at- titude of the petitioner, the tender proceeding was required to be can- celled resulting in sheer wastage of precious time, financial losses to 6 WP No.3032-2024 answering the respondents and adverse affect on the interest of gener- al public at large.
7. Counsel appearing for the respondent further submitted that it is fairly well settled in law that judicial review of an order of blacklist- ing of a contractor under Article 226 of the Constitution of India is limited to the extent of observance of the principles of natural justice and the doctrine of proportionality. The merits/reasons for blacklisting are not ordinarily open for judicial review.
8. That apart, learned counsel appearing for the respondents sub- mits that it is not a solitary case wherein, after being declared L-1, the petitioner had failed to get the contract agreement executed, but by placing reliance on averments made in para 3 of the writ petition, it is contended by the learned counsel appearing for the respondents that in as many as four tender proceedings, similar tactics have been adopted by the petitioner herein i.e. after being declared 'L-1', the pe- titioner herein tried to dictate his own terms and insisted for execution of contract agreement on terms and conditions contrary to that which were provided in the tender documents. Ultimately, all these tender proceedings were required to be cancelled and fresh tender proceed- 7
WP No.3032-2024 ings were required to be conducted resulting in financial losses, wastage of valuable time and adverse effect on the interest of general public at large.
9. By referring to averments made in his return, the learned coun- sel appearing for the respondents No.2 to 4 further submits that the petitioner even tried to commit forgery with the department for which, a police complaint was also made. He further submits that all the averments made by the respondents No.2 to 4 in their return have not been rebutted to by the petitioner by way of filing any rejoinder and, therefore, in the absence of any rebuttal to averments made in the re- ply, the same are to be accepted as correct and, therefore, no further indulgence is warranted in the instant petition.
10. Learned counsel appearing for respondents No.2 to 4 further submits that even if, there is no enabling provision either under the tender document or under the policy governing the issuance of tender, then also, power to blacklist is inherent in the employer and for just and cogent reasons, it is always open for the employer/tender inviting authority to pass an order of blacklisting. The said issue has also been 8 WP No.3032-2024 considered by the Hon'ble Supreme Court in the case of Kulja Industries Limited (supra) relied upon by the petitioner himself.
11. Insofar as the question of permanent blacklisting is concerned, learned counsel appearing for respondents No.2 to 4 submits that in view of the seriousness of the acts/omissions committed by the petitioner, he has been rightly permanently blacklisted. Accordingly, he prays for dismissal of the writ petition.
12. No other point has been pressed by the learned counsel appearing for the parties.
13. Heard learned counsel for the parties and perused the record.
14. Insofar as the challenge put forth by the petitioner to the order of blacklisting on the ground of non-affording an opportunity of hearing/non-issuance of show cause notice prior to passing of the order of blacklisting is concerned, the same is held to be wholly misconceived, baseless and incorrect as the notice dated 17.10.2023 issued by the respondents No.2 to 4 filed along with their reply is clear and unambiguous wherein, the petitioner was specifically put to notice calling upon him to show cause as to why he should not be blacklisted. The petitioner has duly filed his reply to the said show 9 WP No.3032-2024 cause notice. In view whereof, the said ground raised by the petitioner deserves to be and is hereby rejected.
15. The other ground raised by the petitioner as regards non- availability of any express provision either in the tender document or in the policy governing the award of contract in question for passing an order of blacklisting is concerned, the said issue has been considered by the Hon'ble Supreme Court in the case of Kulja Industries Limited (supra) in para 17 which reads as under:-
"17. That apart, the power to blacklist a contractor whether the contract be for supply of material or equipment or for the execution of any other work whatsoever is in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because "blacklisting" simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court."10
WP No.3032-2024
16. This court, therefore, finds much force in the contention advanced on behalf of learned counsel appearing for respondents No.2 to 4 that even in the non-availability of any enabling provision either under the tender document or under the policy governing the award of tender empowering the authority to pass an order of blacklisting then also, there remains absolute and untrammeled power with the employer to pass an order of blacklisting in case, the facts and circumstances of the case so warrants. In the instant case, the material placed on record in the return clearly indicates that the action of the petitioner herein resulted in cancellation of more than one tender proceedings causing not only financial losses to the respondents but also resulted in wastage of precious time and also adversely affected the interests of general public at large.
17. Recently, the Hon'ble Supreme Court in the case of M/s. Techno Prints Vs. Chhattisgarh Textbook Corporation (SLP Civil No.10042/2023); vide judgment dated 12.02.2025 has been pleased to hold that mere violation of the tender conditions may not be sufficient to pass an order of blacklisting of the contractor unless, there is something more.
11
WP No.3032-2024
18. The facts of the case when examined in the light of the aforesaid judgment of the Hon'ble Supreme Court, this Court is of the considered opinion that it is not a case of mere violation of the terms and conditions of contract on the part of the petitioner. The act of the petitioner has resulted in wastage of public money and time and also deprived the general public at large from the essential service of electricity maintenance on account of non-supply of vehicles. That apart, the contract proceedings which were required to be cancelled at the behest of the petitioner were thereafter successfully executed by subsequent tenderers. Therefore, the action of the respondents in blacklisting the petitioner is justified.
19. The issue now remaining for consideration of this Court is as to whether, in the given facts and circumstances of the case, the order of permanent blacklisting of the petitioner can be said to be proportionate ?
20. The Hon'ble Supreme Court in the case of Kulja Industries Limited (supra) has considered this aspect as well and in para 21 to 28 of the order held as under:-
"21. The legal position governing blacklisting of suppliers in USA and UK is no different. In USA instead of using the ex- pression "blacklisting" the term "debarring" is used by the 12 WP No.3032-2024 statutes and the courts. The Federal Government considers "suspension and debarment" as a powerful tool for protecting taxpayer resources and maintaining integrity of the processes for federal acquisitions. Comprehensive guidelines are, there- fore, issued by the Government for protecting public interest from those contractors and recipients who are non-responsible, lack business integrity or engage in dishonest or illegal conduct or are otherwise unable to perform satisfactorily. These guide- lines prescribe the following among other grounds for debar- ment:
(a) Conviction of or civil judgment for.-- (1) Commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public or private agreement or transaction;
(2) Violation of Federal or State antitrust statutes, including those proscribing price fixing between competitors, allocation of customers be- tween competitors, and bid rigging;
(3) Commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, receiving stolen property, making false claims, or obstruction of justice; or (4) Commission of any other offense indicating a lack of business integrity or business honesty that seriously and directly affects your present respon- sibility;
(b) Violation of the terms of a public agreement or transaction so serious as to affect the integrity of an agency program, such as.--
(1) A wilful failure to perform in accordance with the terms of one or more public agreements or transactions;
(2) A history of failure to perform or of unsatis-
factory performance of one or more public agree- ments or transactions; or (3) A wilful violation of a statutory or regulato- ry provision or requirement applicable to a public agreement or transaction;
(c)***
(d) Any other cause of so serious or compelling a nature that it affects your present responsibility. 13
WP No.3032-2024
22.The guidelines also stipulate the factors that may influence the debarring official's decision which include the following:
(a) The actual or potential harm or impact that results or may result from the wrongdoing.
(b) The frequency of incidents and/or duration of the wrong- doing.
(c) Whether there is a pattern or prior history of wrongdo- ing.
(d) Whether the contractor has been excluded or disquali-
fied by an agency of the Federal Government or has not been allowed to participate in State or local contracts or assistance agreements on the basis of conduct similar to one or more of the causes for debarment specified in this part.
(e) Whether and to what extent did the contractor plan, initi- ate or carry out the wrongdoing.
(f) Whether the contractor has accepted responsibility for the wrongdoing and recognized the seriousness of the miscon- duct.
(g) Whether the contractor has paid or agreed to pay all criminal, civil and administrative liabilities for the improper ac- tivity, including any investigative or administrative costs in- curred by the Government, and has made or agreed to make full restitution.
(h) Whether the contractor has cooperated fully with the government agencies during the investigation and any court or administrative action.
(i) Whether the wrongdoing was pervasive within the con- tractor's organization.
(j) The kind of positions held by the individuals involved in the wrongdoing.
(k) Whether the contractor has taken appropriate corrective action or remedial measures, such as establishing ethics train- ing and implementing programs to prevent recurrence.
(l) Whether the contractor fully investigated the circum- stances surrounding the cause for debarment and, if so, made the result of the investigation available to the debarring offi- cial."
23. As regards the period for which the order of debarment will remain effective, the guidelines state that the same would depend upon the seriousness of the case leading to such debarment. 14
WP No.3032-2024
24. Similarly in England, Wales and Northern Ireland, there are statutory provisions that make operators ineligible on several grounds including fraud, fraudulent trading or conspiracy to de- fraud, bribery, etc.
25. Suffice it to say that "debarment" is recognised and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsifi- cation of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the "debarment" is never permanent and the period of debarment would invariably depend upon the nature of the offence commit- ted by the erring contractor.
26. In the case at hand according to the respondent BSNL, the appellant had fraudulently withdrawn a huge amount of money which was not due to it in collusion and conspiracy with the offi- cials of the respondent Corporation. Even so permanent debar- ment from future contracts for all times to come may sound too harsh and heavy a punishment to be considered reasonable espe- cially when (a) the appellant is supplying bulk of its manufac- tured products to the respondent BSNL, and (b) the excess amount received by it has already been paid back.
27. The next question then is whether this Court ought to itself determine the time period for which the appellant should be blacklisted or remit the matter back to the authority to do so having regard to the attendant facts and circumstances.
28. A remand back to the competent authority has appealed to us to be a more appropriate option than an order by which we may ourselves determine the period for which the appellant would remain blacklisted. We say so for two precise reasons:
28.1. Firstly, because blacklisting is in the nature of penalty the quantum whereof is a matter that rests primarily with the au-
thority competent to impose the same. In the realm of service ju- risprudence this Court has no doubt cut short the agony of a delinquent employee in exceptional circumstances to prevent de- lay and further litigation by modifying the quantum of punish- ment but such considerations do not apply to a company en- gaged in a lucrative business like supply of optical fibre/HDPE pipes to BSNL.
28.2. Secondly, because while determining the period for which the blacklisting should be effective the respondent Corporation may for the sake of objectivity and transparency formulate broad guidelines to be followed in such cases. Differ- 15
WP No.3032-2024 ent periods of debarment depending upon the gravity of the of- fences, violations and breaches may be prescribed by such guidelines. While it may not be possible to exhaustively enumer- ate all types of offences and acts of misdemeanour, or violations of contractual obligations by a contractor, the respondent Corporation may do so as far as possible to reduce if not totally eliminate arbitrariness in the exercise of the power vested in it and inspire confidence in the fairness of the order which the competent authority may pass against a defaulting contractor."
21. The order of permanent blacklisting when tested on the aforesaid principles of law laid down by the Hon'ble Supreme Court, this Court is of the considered opinion that permanent blacklisting of the petitioner is excessive and harsh, as on account of permanent blacklisting, the petitioner incurrs ineligibility from participation in tender proceedings of other government functionaries as well. As now a days in most of the tenders, the affidavit is required to be submitted by the bidder as to whether, he has ever been blacklisted or not. Thus, permanent blacklisting entails an adverse affect on the livelihood of the contractor which also violates the protection guaranteed under Article 21 of the Constitution of India.
22. However, the period for which the blacklisting of the petitioner/ contractor would be sufficient is required to be considered by the respondent No. 4 itself, and therefore, the instant writ petition stands partly allowed, though the blacklisting of the petitioner by respondent 16 WP No.3032-2024 No. 4 is upheld. However, the permanent blacklisting is set aside, the matter is remitted back to respondent No. 4 to consider and decide the period for which the blacklisting of the petitioner would be just and appropriate and accordingly, pass an order afresh within a period of 60 days from the date of receipt of certified copy of this order.
23. Needless to emphasize that while passing the fresh order, respondent No. 4 shall take into consideration the fact that w.e.f., 06.11.2023, the petitioner had already suffered one year nine months of blacklisting.
24. With the aforesaid, the instant writ petition stands partly allowed and disposed of.
(AMIT SETH)
JUDGE
Adnan
ADNAN Digitally signed by ADNAN HUSAIN
ANSARI
DN: c=IN, o=HIGH COURT OF MADHYA
PRADESH BENCH AT GWALIOR,
HUSAIN
2.5.4.20=43f3ff8f444225f9f0d9c30497105a bb80e91238ac53cf96a7b005e256158275, ou=GWALIOR COURT,CID - 7022526, postalCode=474001, st=Madhya Pradesh, serialNumber=922e3dc382e0127257ce0d ANSARI cc4e29cd410e0bf39fab6aa6dcb81675bb2 af2dfcf, cn=ADNAN HUSAIN ANSARI Date: 2025.08.23 12:14:42 +05'30'