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2026 Supreme(Online)(AP) 12590

HIGH COURT OF ANDHRA PRADESH
Subba Reddy Satti, J
Shirdi Sai Baba Constructions – Appellant
Versus
State Of Andhra Pradesh – Respondent
WRIT PETITION NO: 29586/2023



Advocates:
For the Appellants/Petitioners: Koti Reddy Idamakanti
For the Respondents: GP for Panchayat Raj Rural Dev

Blacklisting a government contractor without providing a prior show-cause notice and an opportunity to be heard is procedurally improper, arbitrary, and violates the principles of natural justice.

Headnote:(A) Constitution of India - Article 226 - Blacklisting of contractor - Principles of natural justice - Necessity of show-cause notice - Procurement of civil works - Absence of notice prior to blacklisting renders the administrative action illegal, arbitrary and violative of fair play - Recovery of cost for alleged substandard work post-defect liability period - Absence of material evidence regarding inspection conduct and liability - Orders set aside. (Paras 12, 13, 15, 16, 20)

Facts of the case:
The petitioner, a construction firm, executed a road work contract under a government scheme. Following a vigilance report submitted seven years after the work completion, the authorities issued an order to blacklist the firm and recover costs for alleged substandard work. The petitioner challenged these orders on grounds that no opportunity for hearing was provided, the inspection was conducted without notice, and the claim initiated beyond the contractual defect liability period.

Findings of Court:
The Court held that blacklisting is a serious administrative action that requires adherence to natural justice, specifically the issuance of a prior show-cause notice. As the respondent failed to provide such an opportunity, the blacklisting order was unsustainable. Furthermore, there was no evidence that the alleged inspection occurred within the contractual defect liability period, rendering the recovery claims unenforceable.

Issues: Whether the unilateral blacklisting of a contractor and the issuance of recovery notices for alleged substandard work without prior notice or opportunity to be heard are legally sustainable.

Ratio Decidendi: Administrative decisions involving civil consequences, such as blacklisting, necessitate prior notice and an opportunity to represent one's case; failure to comply with these principles of natural justice renders the order arbitrary and illegal.

Result: Writ petition allowed.

Table of Content
1. overview of the blacklisting dispute and procedural background. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. requirement of show-cause notice before blacklisting contractors. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17)
3. limitations on recovery notices beyond defect liability period. (Para 18 , 19 , 20 , 21)

Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate Writ, order or direction more particularly one in the nature of WRIT OF MANDAMUS declaring Memo No. 1929135/Vig. 11/2022, dt. 25-03-2023 issued by the 1st respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the proceedings dt. 01.062023 of the 4th respondent and the consequential letters dt. 17-05-2023 and 29-08-2023 of the respondents 2 and 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, is illegal, arbitrary and violation of Article 19(1)(g) of Constitution of India and to pass Prayer is amended as per the Order of this Court, dt.27.11.2023 vide order passed in I.A.4 of 2023.

IA NO: 1 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend Memo No. 1929135/Vig. 11/2022, dt. 25-03-2023 issued by the 1st respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the consequential letters dt. 17-05-2023 and 29-08-2023 of the respondents 2 and 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, pending disposal of the main writ petition and pass

IA NO: 2 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to permit the petitioner to implead the Engineer in Chief (PR) as respondent no.4 in the writ petition as he is the proper and necessary party to these proceedings and pass

IA NO: 3 OF 2023

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend Memo No. 1929135A/ig. II/2022, .dt. 25-03-2023 issued by the 1strespondent whereunder directed to blacklist the petitionerfor on the allegation of substandard quality work execution and the proceedings dt.01-06-2023 of the 4threspondent and the consequential letters dt. 17-05-2023 and 29-08-2023 of the respondents 2 & 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs. 43,71,676/- will be recovered towards the cost of the rejected components of work, pending disposal of the main writ petition and pass such other order or orders as this Hon‟ble Court may deem fit and proper in the circumstance of the case” in the place of “I further humbly pray that this Hon‟ble Court may be pleased to suspend Memo No.1929135A/ig. 11/2022, dt. 25-03-2023 issued by the 1 respondent whereunder directed to blacklist the petitioner for on the allegation of substandard quality work execution and the consequential letters dt. 17-05- 2023 and 29-08-2023 of the respondents 2 & 3 whereunder directed me to pay an amount of Rs.37,074/- and to relay the rejected components of the work at the cost and risk of the petitioner failing which an amount of Rs.43,71,676/- will be recovered towards the cost of the rejected component

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