A contractor is vicariously liable for the misconduct of its employees under contractual terms, and the writ jurisdiction under Article 226 cannot be used to challenge findings of fact unless a clear error of law apparent on the face of the record exists.

Per, Shree Chandrashekhar, CJ :

Aggrieved by the order of blacklisting dated 20th June 2025, the petitioner-Firm has availed off the remedy of appeal before the Appellate Authority – Business Head (LPG), Bharat Petroleum Corporation Limited, which has been dismissed by an order dated 28th July 2025.

The petitioner-Firm seeks to assail the orders dated 20th June 2025 and 28th July 2025 on several grounds such as

(i) breach of due process, (ii) no loss caused to the Employer-HPCL, (iii) show cause notice not disclosing the period of debarment and (iv) no liability or at least debarment on account of a misconduct by the Employer-respondent no.1.

The petitioner-Firm states that it has been in the business for the last several years and executed works under 164 contracts with the respondent no.1. There was no complaint against it and it was selected and given a special award for the help rendered during the Covid period. Pursuant to the tender bearing CPP Tender No.8846 dated 14th December 2022, the petitioner-Firm was selected for providing services related to Commercial Sales Associates and Planning Assistant at the Mumbai LPG territory through the Letter of Intent dated 27th December 2022. The agreement was executed on 1st January 2023 and it was renewed for one year on 18th December 2023. The show cause notice was issued to the petitioner-Firm on 10th March 2025 for the incident that occurred on 30th November 2024 at Mahul Refinery. The petitioner-Firm was given the said notice regarding mismatch in the number of lorries dispatched on 30th November 2024. The details of the incident and the statement of the employee of the petitioner-Firm were provided in the show cause notice dated 10th March 2025. It was also brought to the notice of the petitioner-Firm that two more cases of financial irregularities were detected and the details thereof are recorded in the show cause notice dated 10th March 2025. The petitioner-Firm was put to notice of the non-adherence of the tender condition and that the act of its employee involved commission of fraud, deception, misrepresentation and dishonesty for unlawful financial and personal gains.

In its reply dated 25th March 2025, the petitioner-Firm took a stand that it has been executing work as per the instructions of the respondent no.1 and it has no direct involvement in the daily operations or decision making. The fraudulent act of the employee is not supported by the petitioner-Firm and it is ready to co-operate with the investigation to ensure accountability. It was further stated by the petitioner-Firm that it has already terminated the engagement of the said employee.

A second show cause notice was issued to the petitioner-Firm on 15th May 2025 narrating once again the whole incident. In the second show cause notice, it is stated that the petitioner-Firm entered into an agreement with the BPCL and the acts of fraud involving deception, misrepresentation and dishonesty were committed by its employee. The reply filed by the petitioner-Firm was found unsatisfactory and it was given a final opportunity to put forth its final defence with documents, and show cause as to why the petitioner-Firm should not be placed on the Holiday List and debarred from entering into any contract with the respondent no.1. The petitioner-Firm in its reply dated 28th May 2025, stated that it had taken all precautions and police clearance certificate before engaging the respondent no.2. There was no financial or personal gain when the said employee committed the misconduct. The petitioner-Firm had no control over the employee who committed such fraud. As noted above, the order of blacklisting the petitioner-Firm for two years has been passed on 20th June 2025 and the appeal preferred by it has been dismissed on 28th July 2025 and the order of blacklisting has been confirmed.

Mr. Dhishan Kukreja, the learned counsel for the petitioner referred to the procedure under clause 4.2 of the “Policy