1. Printing contract — Alleged breach of tender clauses — Show cause notice for blacklisting and security deposit forfeiture — Challenge to the notice. (Para 3 , 4 , 5 , 6 , 23 , 24 )
Back
Next 
2025 Supreme(SC) 359
SUPREME COURT OF INDIA
J.B. Pardiwala, R. Mahadevan, JJ.
M/S Techno Prints – Appellant
Versus
Chhattisgarh Textbook Corporation & Anr. – Respondents
Civil Appeal No. 2362 of 2025 (Arising out of SLP(C) No. 10042 of 2023
Decided On : 12-02-2025
Important Points
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.
Subject
Administrative Law - Contractual Obligations
Act Referred
Headnote
(A) Chhattisgarh Text Book Corporation Act - Clauses 16.1, 16.3, 16.9 - Blacklisting of contractor - The appellant, a printing firm, challenged a show cause notice for blacklisting due to alleged contract violations during the COVID-19 pandemic - The court held that the show cause notice exceeded the grounds stated and quashed it, allowing the appellant to respond to the allegations without the threat of blacklisting - The authority must have reasonable grounds to issue such notices. (Paras 3, 4, 7, 9, 10, 14, 36, 37)
(B) Judicial Review - Scope of judicial review in disciplinary matters - The court emphasized that blacklisting should not be imposed without substantial evidence of misconduct and that mere breach of contract does not warrant such punitive measures. (Paras 25, 27, 34)
(B) Judicial Review - Scope of judicial review in disciplinary matters - The court emphasized that blacklisting should not be imposed without substantial evidence of misconduct and that mere breach of contract does not warrant such punitive measures. (Paras 25, 27, 34)
Legal Category Hierarchy
Advocates appeared:
For the Petitioner(s): Mr. Gaurav Agarwal, Sr. Adv. Mr. Chandrashekhar A Chakdabbi, Adv. Mr. Vaibhav Shukla, Adv. Mr. Himanshu Sinha, Adv. Mr. Anshul Rai, Adv.
For the Respondent(s): Mr. Ankit Mishra, Adv. Mr. Archit Mandhyan, Adv. Ms. Kanupriya Mishra, Adv. Mr. Shantanu Krishna, AOR.
For the Petitioner(s): Mr. Gaurav Agarwal, Sr. Adv. Mr. Chandrashekhar A Chakdabbi, Adv. Mr. Vaibhav Shukla, Adv. Mr. Himanshu Sinha, Adv. Mr. Anshul Rai, Adv.
For the Respondent(s): Mr. Ankit Mishra, Adv. Mr. Archit Mandhyan, Adv. Ms. Kanupriya Mishra, Adv. Mr. Shantanu Krishna, AOR.
Table of Contents
2. Appellant contends blacklisting requires intent to cheat; Respondent argues contract contravention and resulting damage are sufficient grounds regardless of intent. (Para 21 , 22 )
3. Blacklisting is a stigmatic, drastic measure; its exercise requires reasonable grounds and evidence of deviant conduct beyond simple contractual breach to avoid empty formalities. (Para 29 , 30 , 32 , 33 , 34 , 36 )
4. Punitive blacklisting requires deviant or aberrant conduct; mere breach of contractual obligations, where other legal remedies exist, does not justify such a stigmatic penalty. (Para 33 , 34 )
5. Show cause notice regarding blacklisting quashed; forfeiture of security deposit upheld. (Para 37 , 39 )
6. When is blacklisting justified as a penalty for a contractor?
Blacklisting is justified only when necessary to safeguard public interest from irresponsible or dishonest contractors, requiring strong, independent, and overwhelming material showing deviant or aberrant conduct, rather than a mere breach of contract. (Para 27 , 33 , 34 )
7. Does a mere breach of contractual obligations warrant blacklisting?
No. A mere allegation of breach of contractual obligations without additional deviant conduct does not invite blacklisting, as legal remedies like damages or security deposit forfeiture are available to compensate the aggrieved party. (Para 33 , 34 )
8. Should a show cause notice for blacklisting be issued in all cases of contract breach?
No. Authorities must ensure there are reasonable grounds to exercise the power to blacklist before issuing a notice; otherwise, the process becomes an empty formality and leads to unnecessary litigation. (Para 29 , 30 , 36 )
9. What is the legal nature of a blacklisting order?
A blacklisting order is considered a drastic, stigmatic measure that casts a slur on the party and can effectively end their business, necessitating a higher threshold of justification. (Para 32 , 33 , 35 )
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.
xxx xxx xxx
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.
xxx xxx xxx
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 with the show cause notice, in the instant case, it clearly spells out that the order of blacklisting exceeded the grounds which were given in show cause. The main emphasis was that the petitioner has received paper material in excess of bank guarantee for which the agreement contains m
