Blacklisting a company requires adherence to natural justice principles, including a fair hearing and a reasoned order, due to its severe civil consequences.

Since the pleadings are complete, therefore, this matter is heard finally with the consent of both the parties.

2. This petition under Article 226 of the Constitution of India has been filed by the petitioner questioning the legality, validity and propriety of the order dated 06.02.2024 (Anexure-P/8) passed by the Respondent No. 2, whereby the petitioner company has been blacklisted for a period of five years as also the contract has been terminated and the security deposit of Rs. 7.5 lakhs has been forfeited.

3. At the outset, learned counsel for the petitioner fairly stated that so far as forfeiture of security deposit and termination of contract is concerned, the petitioner is having the remedy under Arbitration Clause prescribed in the agreement, therefore, this petition is confined only to the order of blacklisting which could not have been passed for reasons inter- alia:

(i) Because there is no clause in contract prescribing default of blacklisting;

(ii) Because no opportunity of personal hearing was provided to the petitioner before blacklisting;

(iii) The effect of blacklisting is a civil death for a company and has a very serious consequence, therefore, the order of blacklisting is not sustainable;

(iv) Because no reasons have been assigned for blacklisting the petitioner company.

4. Learned counsel further contended that the order impugned is non- speaking and unreasoned order. The Apex Court in the case of Kranti Associates Vs. Shri Masood Ahmad Khan reported in (2010) 9 SCC 496 has held that even the order of blacklisting should record reasons and should be a speaking order. He further contended that the Apex Court in various judgments have decided the issue with regard to blacklisting which provides for personal hearing.

5. Learned counsel for the petitioner has contended that the order of blacklisting is illegal because as per the settled legal position, the order of blacklisting cannot be issued without giving any opportunity of hearing or issuing show-cause notice. He submitted that the basic order of blacklisting is not sustainable in the eyes of law. He relied upon the decisions reported in (1975) 1 SCC 70 (M/s. Erusian Equipment & Chemicals Ltd. Vs. State of West Bengal and another, (1989) 1 SCC 229 (Raghunath Thakur Vs. State of Bihar and others), (2001) 8 SCC 604 (Grosons Pharmaceuticals (P) Ltd. and another Vs. State of U.P. and others, (2007) 14 SCC 517 (Jagdish Mandal Vs. State of Orissa and others), 2014 (4) M.P.L.J. 225 (Bhupendra Singh Kushwah Vs. State of M.P. and another), (2014) 14 SCC 731 (Kulja Industries Limited Vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and others) and (2014) 9 SCC 105 (Gorkha Security Services Vs. Government (NCT of Delhi) and others).

6. The learned counsel for the petitioner further contended that without providing the opportunity of hearing to the petitioner, straightaway order impugned dated 06.02.2024 has been passed. For the aforesaid reasons, the impugned order sofaras it relates to blacklisting deserves to be set aside.

7. The brief facts of the case are that the petitioner No. 1 is a Pvt. Ltd. Company duly incorporated under the provisions of Companies Act, 1956.

Whereas the petitioner No. 2 is a business partner of petitioner No.1 which is a joint venture company. Pursuant to NIT floated by respondent corporation for branding and marketing agency for disposal of housing unit under the PMAY Indore, the petitioner submitted the bid. The bid was accepted vide letter dated 31.01.2019. Thereafter, an agreement was entered into between the parties on 18.02.2019 bearing Agreement No. 4/PMAY.

8. That on 05.01.2024, a show cause notice was issued to the petitioner alleging booking of one Flat i.e. A03/805 a sum of Rs. 1.50 lakhs in excess has been recovered by one Jugal and Neha Gaur who are stated to be employees of petitioner hence a notice for suspension or termination of contract as per clause 21 of the agreement as well as for blacklisting