The blacklisting order must adhere to the principles of natural justice, have statutory power, and be proportionate to the conduct of the party.

Heard learned counsel for the petitioner and learned counsel for the respondent Bihar State Electricity Board.

2. The petitioner has filed the writ application for quashing the office order dated 29.8.2012 issued by the Secretary, Bihar State Electricity Board ordering that the Board has debarred the petitioner HCL Infosystems Limited from all business dealings with B.S.E.B. including participation in future B.S.E.B.’s tender for two years from the date of issue of the letter.

3. The petitioner HCL Infosystems Limited is a manufacturer of Desk Computer, printers, accessories, etc. and is a registered supplier of the same with DGS & D . It had by letter dated 20.9.2011 informed the Electrical Superintending Engineer (Purchase) of the Bihar State Electricity Board that it had authorized M/s. Starlite Infotech Ltd. to quote and conclude the contract with the Board against the requirement of 47 numbers of Desktop Computers with Printer, UPS, DVD RW, Antivirus, etc. On 21.10.2011 Contract No.37 dated 21.10.2011 was made between the respondent Board as one party and M/s. Starlite Infotech Ltd. and HCL Infosystem Ltd. as the other party (referred to as the “supplier”) in which the supplier agreed to deliver 47 Desktop Computers with Printer, UPS, DVD RW, Antivirus, etc. on DGS & D contract rate as per L.O.I. No.934 dated 21.10.2011, for which Rs.19,11,997/- was to be paid inclusive of all taxes, duty, freight and insurance. The delivery was to be completed within two months from the date of issuance of purchase order and the delivery was to be guaranteed under penalty clause as per the usual term of penalty @ 0.25% per week or part thereof subject to maximum ceiling of 5%. The purchase order was issued on 27.10.2011 to M/s. Starlite Infotech Ltd. in terms of the said contract. When the supply was not made after the lapse of two months, intimations were given to M/s. Starlite Infotech Ltd. It by its letter dated 30.3.2012 said that M/s. HCL Infosystems (petitioner) is not ready to supply the material due to global hike in price. The matter was communicated to the petitioner by letter dated 24.4.2012 by the Board. Other reminders were also issued but since no supply was made in terms of the contract the purchase order dated 27.10.2011 was cancelled by memo dated 27.7.2012 of the Electrical Superintending Engineer (Purchase), copy of which was forwarded to the petitioner’s Patna office. Thereafter, by the impugned order dated 29.8.2012, the Secretary of the Board communicated that the petitioner’s concern has been debarred from all business dealings with the Board, including participation in future B.S.E.B.’s tender for two years from the date of issue of the letter.

4. It is stated in the counter affidavit of the Board that the order was only communicated by the Secretary but passed by the Chairman of the Board, who had been authorized earlier by the Board to pass such orders of blacklisting.

5. Aggrieved by the blacklisting order, the petitioner has come to this Court.

6. Learned counsel for the petitioner submits that the debarring/blacklisting order has been passed by the respondent Board without issuing any notice and without providing any opportunity of being heard to the petitioner. It is, thus, submitted that there has been violation of the principles of natural justice on which ground alone, the order is fit to be set aside.

7. In support of the aforesaid stand, learned counsel for the petitioner relies upon a decision of the Apex Court in the case of M/s. Erusian Equipment & Chemicals Ltd. vs. State of West Bengal and another: AIR 1975 S.C. 266 = (1975) 1 S.C.C. 70, in paragraph Nos. 15 to 20 of which it has been held as follows:-

“15. The blacklisting order does not pertain to any particular contract. The blacklisting order involves civil consequences. It casts a slur. It created a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are "instruments of coercion".

16. In p