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2025 Supreme(Del) 334
IN THE HIGH COURT OF DELHI AT NEW DELHI
SACHIN DATTA, J.
Cembond Constructions Pvt Ltd - Petitioner
Versus
National Thermal Power Corporation Limited - Respondent
W.P.(C) 9067/2025, CM APPL. 38591/2025
Decided on : 04-09-2025
For the Petitioner: Mr. Sanjeev Sagar (Sr. Adv.) along with Mr. AVS Subramnayam, Mr. Niraj Kumar, Ms. Nazia Parveen, Advs.
For the Respondent: Mr. Chetan Sharma (ASG) along with Mr. Kaustubh Anshuraj, Mr. Amit Gupta, Mr. R.V. Prabhat, Mr. Saurabh Tripathi, Mr. Vinay Yadav, Mr. Vikram Aditya, Mr. Shubham Sharma, Mr. Naman, Advs. Mr. Adarsh Tripathi, Mr. Vikram Singh Baid, Mr. Ajitesh Garg, Mr. Viraj Datar (Sr. Adv) along with Mr. Karan Batura, Ms. Meenal Duggal, Advs
Banning an entity from business dealings requires adherence to principles of natural justice, including a show-cause notice and an opportunity to defend against such actions.
Headnote:(A) Administrative Law - Principles of Natural Justice - Banning of business dealings - Impugned banning circular issued by NTPC against Petitioner for one year violates the right to be heard and constitutes an arbitrary denial of due process as there was no show-cause notice or opportunity to present defense (Para 14).
(B) Civil Rights - Extension of action - An order banning an entity from participating in tenders, deemed as 'civil death', requires distinct procedural safeguards; extension of a ban from one entity to another without due process is impermissible, violating principles of natural justice (Paras 15 and 16).
Facts of the case:
The petitioner contested a banning order by NTPC affecting their business dealings due to separate contractual issues with APCPL. The petitioner argued the ban was not preceded by required notices or hearings, restricting their rights unfairly.
Findings of Court:
The court found the banning circular to be unsustainable due to lack of legal and procedural safeguards (Para 16).
Issues: The primary issues were: whether the banning circular constituted a dominion over independent contractual relationships and if it was imposed without a fair hearing.
Ratio Decidendi: The court emphasized the necessity of procedural fairness in banning actions, asserting that without a proper show-cause notice and hearing, such actions are arbitrary and unjustifiable (Para 14).
Result: Banning circular set aside.
JUDGMENT :
SACHIN DATTA, J.
1. The present petition has been filed by the petitioner assailing a “banning circular” bearing Ref. No. CS-QS-C-B-2025/3 dated 07.03.2025 issued by the respondent no.1/M/s National Thermal Power Corporation Limited (NTPC) whereby, the business dealings between respondent no.1 and the petitioner have been banned for a period of one year with effect from 26.02.2025 to 25.02.2026. The said circular reads as under:
“NTPC Ltd.
(Corporate Contracts- Planning & Systems Group)
Ref No. CS-QS-C-B-2025/3 Date 07.03.2023
CIRCULAR NO. B-2025/3
Sub. Banning of Business dealings with M/s Cembond Constructions Pvt. Ltd. for a period of one year from 26.02.2025 to 25.02.2026
1.0 It has been decided to ban business dealings with M/s Cembond Constructions Pvt. Ltd, 1st Floor, House No. 37, Road No-7, East Punjabi Bagh, New Delhi-110026 (Pan NO. AACCC0337K) for a period of one year from 26.02.2025 to 25.02.2026.
2.0 Accordingly, no bidding/tender documents shall be issued and/or award shall be made to M/s Cembond Constructions Pvt. Ltd. for any tender floated from Corporate Centre/USSC/Regional Offices/Projects/Stations and JVs/Subsidiaries of NTPD hereafter, unless this circular is withdrawn or modified earlier than 25.02.2026.
2.1 The Agency would not be allowed to participate in any future tender enquiry and if the Agency has already participated in any tender process and price bids are not opened, its techno- commercial bid will be rejected and price bid will not be opened. Further, where price bid of the Agency has been opened, the price bid of Agency shall be rejected.
2.2 In case award recommendation on the agency has been put up for approval or the award recommendation is approved but award is yet to be placed, then award recommendations on the agency shall stand cancelled and the price bid of the Agency shall be rejected.
Bid Security of the agency shall be returned after rejection of bids in these cases.
3.0 This has the approval of Competent Authority.”
2. The present petition has been filed in the background of a purchase order dated 01.07.2023 awarded to the petitioner by respondent no.2/Aravali Power Company Private Limited (hereinafter “APCPL”) under a Notice Inviting Tender dated 03.02.2023 “for Structure Strengthening & Life Enhancement of NDCT-II” at Indira Gandhi Super Thermal Power Project (IGSTPP), Jharli, Jhajjar (Haryana), at a tender cost of Rs.10,20,80,450.33/-. Disputes arose between the petitioner and respondent no.2, allegedly due to the failure of the respondent no.2 to provide necessary site access and requisite permissions, as a result of which the execution of the said contract was allegedly rendered impossible. Subsequently, the petitioner invoked the arbitration in terms of the relevant contractual stipulation in the contract agreement between the petitioner and the respondent no.2. The same is pending adjudication before the learned sole Arbitrator.
3. In the meantime, a speaking order dated 26.02.2025 came to be issued by respondent no.2, banning the petitioner from business dealings with respondent no.2, for a period of one year. The same reads as under: -
“Taking into account the facts and attending circumstances in the matter, it has been decided to ban business dealings with M/S CEMBOND CONSTRUCTION PVT. LTD. for a period of 01 (one) year with APCPL considering the nature of the default. As per the policy the ban shall extend to NTPC, its subsidiaries and Joint Ventures.
Effect of Banning:
Agency M/S CEMBOND CONSTRUCTION PVT. LTD. after issuance of the Order of Banning of business dealings would not be allowed to participate in any future tender enquiry and if the Agency has already participated in another tender process and the price bids are not opened, its techno-commercial bid will be rejected and price bid will not be opened.
Further, where the price bid of Agency has been opened prior to issuance of Banning Order, the price bid of Age
