A show cause notice for blacklisting must be based on reasonable grounds and cannot be issued merely for breach of contract without substantial evidence of misconduct.

ORDER :

1. Leave granted.

2. This appeal arises from the judgment and order passed by the High court of Chhattisgarh at Bilaspur in Writ Appeal No.72 of 2023, by which the writ appeal filed by the appellant herein, came to be dismissed and thereby the judgment and order passed by the Learned Single Judge, rejecting the writ petition of the appellant came to be affirmed.

3. The facts giving rise to this appeal may be summarized as under:-

(a) The appellant herein, is in the business of printing past many years.

(b) The appellant company is one of the 30 firms, registered with the Chhattisgarh Text Book Corporation (respondent no.1 herein).

(c) The subject matter of this litigation is the show cause notice that came to be issued by the respondent no.1 to the appellant firm, calling upon the firm to show cause as to why it should not be blacklisted for a period of three years and the EMD of Rs.5,00,000/- (Rupees Five Lakh only), be forfeited. The appellant firm was also called upon to show cause as to why the loss incurred by the corporation, due to its default in fulfilling its terms of contract, be recovered.

4. Prima facie, it appears that the petitioner firm was declared as L-1 in one of the tenders issued by the corporation i.e. the respondent no.1. According to the respondent no.1, the appellant firm violated few clauses of the tender agreement.

5. The relevant clauses of the tender document/agreement which according to the respondent no.1, have been breached, read thus:-

“16.1 Period of supply of books maximum 90 days as per mentioned in the work order from the date of printing order. It will be imperative upon the bidder to complete the allotted printing & binding work within stipulated time period i.e. maximum 90 days as per mentioned in the work order. In emergency the CGPPN will reduce period for supply of books as per requirements. The 22/52 decision of the Managing Director in this regard will be final and binding on concerned bidder.

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16.3 If the progress of work at any stage is found slower than expected and if the Nigam is convinced that the printer will not be able to complete the work in time, the Nigam shall cancel the contract in full or in part and give it to other printer at the cost and risk of defaulting printer. In the event of such cancellation, the security deposit/EMD of the printer shall be forfeited and the printer will not be entitled to any compensation.

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16.9 If the tenderer is awarded to the lowest rate printer on the basis of L-1 rate of group/groups and Nigam allots the printing works to the tenderer on the basis of his L1 rate (Lowest Tenderer) of group/groups then also if tenderer refuses to do the printing work or work not completed, in this condition Nigam has right to put the tenderer in BLACK LIST for 3 (Three) years and security deposit and EMD will be forfeited.”

6. The show cause notice issued by the respondent no.1 was made a subject matter of challenge, by filing writ petition before the High Court.

7. The Learned Single Judge rejected the writ petition holding as under:-

“8. Having heard the contention put forth on either side and on perusal of records what is required to be taken note of at this juncture is the opening paragraph of the order of the High Court in WPC No. 1297/2021 (Sharda Offset Printers Pvt. Ltd. v. Chhattisgarh Textbook Corporation & another) and the operative part of the judgment of the said writ petition is reproduced hereinunder for ready reference:

“1. The challenge in this writ petition is to the order dated 02.01.2021 passed by respondent No.1 whereby the petitioner has been blacklisted for a period of 3 years. 23. Therefore, when the order of blacklisting is compared