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2026 Supreme(Online)(Chh) 9903

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Ramesh Sinha, CJ, Ravindra Kumar Agrawal, J
M/s Shri Ram Computers – Appellant
Versus
Chhattisgarh State Warehousing Corporation – Respondent
WPC No. 1459 of 2026

Advocates:
For the Appellants/Petitioners: Sudeep Agrawal
For the Respondents: Shivraj Singh, Udit Khatri, Anumesh Shrivastava

The blacklisting of a contractor, being a stigmatic and harsh administrative action with severe civil consequences, violates the principles of natural justice if imposed without a specific show-cause notice explicitly apprising the party of the proposed penal action.

Headnote:(A) Natural Justice - Blacklisting of contractor - Necessity of show-cause notice - Principles of natural justice and equity - Blacklisting is a stigmatic action entailing civil consequences - Absence of specific show-cause notice indicating proposed blacklisting renders the action arbitrary and unsustainable - Necessity of affording meaningful opportunity to the party to explain or rebut before imposing extreme penalties. (Paras 6, 8, 15)

(B) Contractual Dispute - Forfeiture of Earnest Money Deposit (EMD) - Existence of arbitration clause - Dispute resolution mechanism - When a contract provides for an independent arbitration mechanism, claims relating to financial forfeiture should be adjudicated through that process rather than via writ jurisdiction. (Paras 17, 18)

Facts of the case:
Petitioner, a partnership firm, was awarded a contract for supply and installation of CCTV systems. Following allegations of performance deficiencies, respondents issued an order blacklisting the firm and forfeiting the Earnest Money Deposit (EMD) without issuing a specific show-cause notice proposing such extreme penal actions. The firm challenged this order, arguing it had complied with all maintenance requests and that the action was taken in violation of the principles of natural justice.

Findings of Court:
The Court held that the order of blacklisting was passed in violation of the principles of natural justice as no prior show-cause notice regarding the intention to blacklist was served upon the petitioner. The court quashed the blacklisting order but directed the parties to resolve the dispute regarding the forfeited EMD through the arbitration clause provided in the contract.

Issues: Whether the blacklisting of a contractor and forfeiture of EMD without a specific prior show-cause notice violates the principles of natural justice, and whether the High Court should intervene in financial disputes where an arbitration clause exists.

Ratio Decidendi: Blacklisting involves serious civil consequences and creates a commercial stigma; therefore, any such power must be exercised only after providing the party with a specific show-cause notice. However, once the primary grievance of blacklisting is addressed, other financial disputes arising from the contract should follow the contractually agreed-upon arbitration mechanism.

Result: Writ petition partly allowed; blacklisting quashed; EMD dispute relegated to arbitration.

Table of Content
1. overview of the petition, the impugned blacklisting order, and the factual history of the contract and installation. (Para 1 , 2 , 3 , 4)
2. petitioner's argument regarding the violation of natural justice and lack of due process in blacklisting. (Para 5 , 6 , 7 , 8 , 9)
3. respondents' defense justifying the blacklisting as a necessary administrative measure for performance compliance. (Para 10 , 11 , 12)
4. judicial scrutiny of the necessity of a specific show-cause notice for blacklisting actions. (Para 13 , 14 , 15)
5. court order quashing blacklisting while referring the emd dispute to arbitration. (Para 16 , 17 , 18 , 19)

NAFR

Order on Board

Per Ramesh Sinha, Chief Justice

02/04/2026

1. Heard Dr. Sudeep Agrawal, learned counsel for the petitioner. Also heard Mr. Shivraj Singh, through virtual mode and Mr. Anumesh Shrivastava and Mr. Udit Khatri, Advocate for the respective Respondents.

2. The present petition has been filed by the petitioner seeking the following relief(s):

“10.1 That, this Hon'ble Court may kindly be pleased to quash the impugned order No. 14301/CGWC/Tec/2025 Nawa Raipur, dated 26.11.2025 (Annexure P-1) passed by the respondent no. 1/Chhattisgarh State Warehousing Corporation wherein the Earnest Money Deposit (EMD) Security Deposit has been forfeited and further the petitioner firm has been blacklisted for a period of five years as being without any authority of law and even without adhering to the principles of natural justice and equity.

10.2 Any other relief or relief(s) which this Hon'ble Court may think proper in view of the facts and circumstances of the case may also kindly be granted, in the interest of justice.”

3. The petitioner, who is a registered partnership firm represented through its authorized partner, calls in question the legality and validity of the impugned order dated 26.11.2025, whereby the petitioner has been blacklisted for five years by the respondent authorities and its Earnest Money Deposit (EMD) has also been forfeited. The record reflects that pursuant to NIT No. 74 dated 10.10.2022 issued by the respondent No.2/CSIDC for the supply and installation of CCTV Surveillance Systems at various centres of the Chhattisgarh State Warehousing Corporation across the State, the petitioner was awarded the contract under the CSIDC rate contract. In furtherance thereof, supply orders dated 08.10.2023, followed by an item description order dated 30.10.2023, were issued, stipulating completion of work within a period of 45 days. It is the specific case of the petitioner that the entire work of supply and installation was completed within the stipulated time frame in accordance with the contractual terms and conditions, without any delay or deficiency attributable to the petitioner.

4. It further appears that after completion of installation, the respondent authorities issued various notices dated 17.05.2024, 29.11.2024 and 22.01.2025 directing the petitioner to carry out repair and maintenance work of the installed CCTV systems at different centres. The petitioner contends that it duly complied with all such directions and undertook necessary repair, replacement and maintenance work promptly, including installation of new cameras at locations where the earlier units were found missing, despite such circumstances being beyond the petitioner’s control. The petitioner has also placed on record detailed communications dated 03.02.2025, 01.04.2025 and other correspondences indicating centre-wise status of compliance, thereby demonstrating its bona fide conduct and adherence to contractual obligations throughout the subsistence of the contract.

5. However, despite the aforesaid compliance, the respondent No.1, without issuing any specific show cause notice proposing blacklisting or forfeiture of EMD and without affording any opportunity of hearing, proceeded to pass the impugned order dated 26.11.2025, blacklisting the petitioner firm and forfeiting its EMD. The

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2026 Supreme(Online)(Chh) 9903

IN THE HIGH COURT OF CHHATTISGARH AT BILASPURRamesh Sinha, CJ, Ravindra Kumar Agrawal, JM/s Shri Ram Computers – AppellantVersusChhattisgarh State Warehousing Corporation – RespondentWPC No. 1459 of 2026

The blacklisting of a contractor, being a stigmatic and harsh administrative action with severe civil consequences, violates the principles of natural justice if imposed without a specific show-cause notice explicitly apprising the party of the proposed penal action.

Cases Referred (2)

IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Ramesh Sinha, CJ, Ravindra Kumar Agrawal, J
M/s Shri Ram Computers – Appellant
Versus
Chhattisgarh State Warehousing Corporation – Respondent
WPC No. 1459 of 2026