Constitution of India (COI) — Article 14 — Right to Fair Hearing — Blacklisting order violates principles of natural justice — Absence of proper show cause notice.

Contract Act, 1872 — Breach of Contract — Proportionality in penalties — Maximum blacklisting period of three years held disproportionate.

Judicial Review — Scope of Interference — Procedural safeguards mandatory for blacklisting orders — Court quashed the impugned orders due to procedural irregularity.

The court held that no proper show cause notice was issued, violating clauses 4.2.1 and 4.2.5 of the policy. Blacklisting order was deemed disproportionate and procedurally irregular. Court quashed the blacklisting orders dated December 29, 2023, and March 29, 2024. Liberty granted to the corporation to proceed afresh in accordance with policy and legal principles.

Subjects:

Blacklisting — Principles of Natural Justice — Procedural Safeguards — Show Cause Notice — Proportionality — Judicial Review — Civil Consequences

Nature of Litigation:

Writ Petition under Article 226 of the Constitution of India challenging the blacklisting order passed by a public sector undertaking.

Relief Sought:

Petitioner sought quashing of blacklisting orders dated December 29, 2023, and March 29, 2024, and claimed violation of principles of natural justice and proportionality.

Reason for Filing the Case:

Petitioner was blacklisted for three years without a proper show cause notice and in violation of the procedural safeguards provided under the policy of Bharat Petroleum Corporation Ltd.

Prior Decisions:

Appeal filed before the appellate authority was dismissed on March 29, 2024.

Issues:

a) Whether the blacklisting order violated principles of natural justice due to absence of proper show cause notice. b) Whether the blacklisting period of three years was disproportionate to the alleged breach of contract. c) Whether procedural safeguards mandated under the policy were adhered to.

Submissions/Arguments:

Petitioner:

• No proper show cause notice was issued as required under clauses 4.2.1 and 4.2.5 of the policy.

• Blacklisting order was passed in violation of principles of natural justice.

• Maximum blacklisting period of three years was disproportionate.

Respondents:

• Multiple show cause notices were issued for non-compliance.

• Petitioner failed to commence work despite extension of deadlines.

• Blacklisting order was justified and proportionate.

Ratio:

• Blacklisting order without proper show cause notice and adherence to procedural safeguards is illegal.

• Principles of natural justice must be strictly followed in cases with civil consequences.

• Proportionality must be maintained in punitive measures like blacklisting.

Precedents:

• Erusian Equipment & Chemicals Ltd. v. State of W.B., (1975) 1 SCC 70

• Raghunath Thakur v. State of Bihar, (1989) 1 SCC 229

• M/s. Techno Prints v. Chhattisgarh Textbook Corporation & Anr., SLP(C) No.10042/2023

• Blue Dreamz Advertising (P) Ltd. v. Kolkata Municipal Corporation, 2024 SCC OnLine SC 1896

Disposition:

• Rule made absolute.

• Writ Petition disposed of.