Blacklisting a contractor requires adherence to natural justice principles, including issuing a show cause notice, and cannot be arbitrary or disproportionate.

JUDGMENT :

ALOK ARADHE, C.J.

1. Rule. Rule is made returnable forthwith. By consent of the parties, heard finally.

2. In this petition, the petitioner has assailed the validity of Clause 4.1.1 (g)-(h) of Policy for Holiday Listing (Policy) of Bharat Petroleum Corporation Ltd.(Corporation) as well as the validity of orders dated 29^th December 2023 and 29^th March 2024. In order to appreciate the challenge of the petitioner to the impugned clauses of the Policy as well as the impugned orders, the relevant facts need mention which are stated infra.

3. The petitioner is a Company incorporated under the laws of India. The petitioner deals with contracts of laying down and maintenance etc. of water pipelines. The Respondent Corporation is a Public Sector Undertaking. The Corporation issued a Notice Inviting Bid for laying pipelines in Ahmednagar and Aurangabad in the State of Maharashtra. The petitioner on 13^th March 2023 in the aforesaid tender was adjudged as successful bidder and a Letter of Acceptance (LoA) was issued to the petitioner on the same day.

4. The Project Management Consultant (PMC) of the Corporation, within a period of less than six weeks from issuance of LoA to the petitioner, issued a show cause notice to it on 24^th April 2023 for not mobilizing the labour by which the petitioner was informed that in case it fails to mobilize the site in 45 days, the Corporation shall put the contractor on holiday list for future tendering process. The petitioner, on 27^th April 2023 submitted a response to the PMC of the Corporation. The Corporation, vide communication dated 30^th May 2023 again informed the petitioner that any further delay on its part will force the Corporation to invoke the clause as per the Policy. Thereafter, on 17^th June 2023 a meeting was held between the parties in which the Corporation agreed to extend the period of completion of contract by three months i.e. upto 31^st October 2023.

5. The Corporation, by communication dated 10^th July 2023 issued another notice to the petitioner by which the petitioner was informed that on account of non-compliance of contractual obligations by the petitioner, the contract period shall not be extended further and shall be terminated on 12^th July 2023. The petitioner, thereupon, submitted its response on 14^th July 2023 and stated that after completion of the land acquisition process, it shall start the work within a week. The Corporation, however, on 24^th July 2023 terminated the contract even before the extended deadline for completion of the work i.e. upto 31^st October 2023.

6. The Corporation, on 11^th September 2023 issued a notice to the petitioner terminating the contract and initiating the process of blacklisting under Clause 10(b) of General Conditions of Contract. The petitioner, on 18^th September 2023 submitted a response. Thereafter, on 29^th December 2023 the impugned order was passed by the Corporation blacklisting the petitioner for a period of three years, which is the maximum period prescribed under Clause 4.2.12 of the Policy. The petitioner, thereafter on 14^th January 2023 filed an appeal before the appellate authority, which was dismissed by an order dated 29^th March 2023. In the aforesaid factual back-ground the petitioner has approached this Court seeking the reliefs stated supra.

7. Learned Counsel for the petitioner submitted that no show cause notice, as mandated under clauses 4.2.1 and 4.2.5 read with Annexure-I of the Policy, was issued prior to bla