The court emphasized the need for strict observance of the principles of natural justice before passing an order of blacklisting and highlighted the requirement of a valid, particularised, and unambiguous show-cause notice, and the need for granting personal hearing before taking extreme action of blacklisting.

JUDGMENT

Manoj Kumar Ohri, J. (Oral)--By way of present petition filed under Articles 226/227 of the Constitution of India, the petitioner has assailed order dated 09.01.2023 passed by the Executive Engineer (E&M-I), MCD thereby blacklisting the petitioner from further tendering with the respondent for a period of one year from the date of issuance of impugned order.

2. Learned counsel for the petitioner submits that the premise of the disputes lies with NIT No. 03 EE (E&M)-I/SDMC/2021-22/D-57 dated 23.06.2021 whereby bids were invited for "supply, installation, testing and commissioning (SITC) of electronic weighbridge along with requisite civil work and portable electronic weight scale along with annual maintenance contact (AMC) at different location under South Delhi Municipal Corporation (SDMC)". It is stated that the petitioner participated in the said bid and was awarded the tender after expiry of the tender bid on 07.01.2022. A letter of intent was issued on 31.01.2022.

Learned counsel further points out that the validity of the tender having expired on 07.01.2022 before the issuance of letter of intent on 31.01.2022, the rates of tender were valid only for 180 days. He has contended that though proceedings were held thereafter, neither any show cause notice was issued nor any proceedings were held with respect to passing of the impugned order blacklisting the petitioner for a period of one year.

3. Mr. Manu Chaturvedi, learned counsel for the respondent/Corporation, on the other hand, submits that the petitioner submitted a bid security declaration wherein it agreed that in case it withdraws from the tender, it would be suspended for a period of one year and would not be eligible to bid for SDMC (now MCD) tenders from the date of issuance of the suspension order. Learned counsel has further placed reliance on speaking order dated 20.05.2022 to submit that a personal hearing was granted to the petitioner.

4. It is worthwhile to note that the Supreme Court in UMC Technologies Private Limited v. Food Corporation of India & Another reported as (2021) 2 SCC 551, while reiterating settled principles, has highlighted the severe consequences of blacklisting orders and the stigmatization that accrues to the person/entity being blacklisted. Relevant excerpt from the said decision reads as follows:

"14. Specifically, in the context of blacklisting of a person or an entity by the State or a State Corporation, the requirement of a valid, particularised and unambiguous show-cause notice is particularly crucial due to the severe consequences of blacklisting and the stigmatisation that accrues to the person/entity being blacklisted. Here, it may be gainful to describe the concept of blacklisting and the graveness of the consequences occasioned by it. Blacklisting has the effect of denying a person or an entity the privileged opportunity of entering into government contracts. This privilege arises because it is the State who is the counterparty in government contracts and as such, every eligible person is to be afforded an equal opportunity to participate in such contracts, without arbitrariness and discrimination. Not only does blacklisting take away this privilege, it also tarnishes the blacklisted person's reputation and brings the person's character into question. Blacklisting also has long-lasting civil consequences for the future business prospects of the blacklisted person.

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16. The severity of the effects of blacklisting and the resultant need for strict observance of the principles of natural justice before passing an order of blacklisting were highlighted by this Court in Erusian Equipment & Chemicals Ltd. v. State of W.B. [Erusian Equipment & Chemicals Ltd. v. State of W.B., (1975) 1 SCC 70] in the following terms: (SCC pp. 74-75, paras 12, 15 & 20)

"12....The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unabl