The principle that 'debarment' cannot be permanent and the period of 'debarment' would depend upon the nature of the offence committed by the erring contractor.

ORDER :

Mr. Madan B. Lokur and Mr. R.K. Agrawal, JJ.

Leave granted.

2. We have heard learned counsel for the parties.

3. The appellant was blacklisted for the award of contracts by the respondents since it is stated that there was unreasonable delay in the completion of six contracts awarded to the appellant.

4. An affidavit has been filed by the appellant in which it is stated that work has been completed in respect of the three out of the six contracts and with respect to remaining three, arbitration proceedings have been initiated.

5. It is stated by learned counsel for the appellant that out of those three contracts for which arbitration proceedings have been initiated, the work has been completed in one of them by a third party. With regard to the remaining two contracts, it is stated by learned counsel for the State of Madhya Pradesh that the work has been given to a third party. As such, the appellant cannot complete the work in those two remaining contracts since it has been given to some third party.

6. The appellant was blacklisted by an order dated 14th March, 2013. The order of blacklisting is for an indefinite period.

7. In Kulja Industries Limited v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Others [(2014) 14 SCC 731], this Court held in paragraph 25 of the report that "debarment" cannot be permanent and the period of "debarment" would invariably depend upon the nature of the offence committed by the erring contractor. Paragraph 25 of the report reads as follows :

"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, falsification 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 committed by the erring contractor"

8. As mentioned above, the order for blacklisting the appellant is a permanent one. This is impermissible in law.

9. Since the appellant was blacklisted by an order dated 14th March, 2013 and since more than three years have gone by during which period the appellant has suffered blacklisting and also taking into consideration the fact that three out of six contracts have been completed by the appellant, we are of opinion that the period of blacklisting already undergone by the appellant is sufficient to meet the ends of justice.

10. Accordingly, we allow the appeal and set aside the order of blacklisting the appellant permanently and hold that blacklisting of the appellant will remain valid until today.

11. Learned counsel for the appellant assures us that in the event any further contracts are awarded to the appellant, they will ensure that there will not be any unreasonable delay on the part of the appellant in completing the work that is awarded. The appellant is bound by this assurance given by its learned counsel.

12. We make it clear that this order will not come in the way of arbitration proceedings and will not come in the way of awarding future contracts to the appellant.