The Chhattisgarh High Court delivered a significant judgment on writ petitions, partially granting them and quashing orders that had blacklisted multiple construction companies for three years. The High Court ruled that , Blacklisting Order Must Meet The Standards Of Fairness, Proportionality, And A Properly Reasoned Order
The Chhattisgarh High Court delivered a notable judgment concerning a series of writ petitions.
The Court partially granted these petitions, nullifying the orders that had blacklisted several construction companies for a period of three years.
While the Court upheld the State’s decision to terminate contracts due to the submission of dubious eligibility documents, it deemed the imposition of blacklisting excessive in the absence of a “clear and conclusive finding of deliberate fraud” by the petitioners.
A Division Bench led by Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal noted that blacklisting resembles a civil death for a business and must comply with standards of fairness, proportionality, and well-reasoned decision-making.
This legal dispute stemmed from tenders associated with the Jal Jeevan Mission aimed at multiple water supply projects in Chhattisgarh. Among the successful bidders were M/s A.K. Construction and Vikram Teleinfra Private Limited, which obtained contracts by forming joint ventures or submitting experience certificates linked to Respondent No. 6, M/s Vijay V Salunkhe.
The petitioners claimed to have completed significant portions of the work (up to 70% in some instances) and invested millions in materials.
However, state authorities alleged that the experience certificates were forged, with verification from the Municipal Council, Karad (Maharashtra) reportedly indicating that no such certificates were issued.
Consequently, the State issued show-cause notices, terminated the contracts, and implemented three-year blacklisting orders.
This case followed an earlier round in which the High Court cancelled the initial show-cause notices for pre-determination, allowing the State to reconsider the matter after providing a fair hearing.
The petitioners, represented by Advocates B.P. Sharma, Raza Ali, and Saurabh Choudhary, argued that,
- They acted in good faith while relying on the certificates provided by their joint venture partner.
- Any doubts regarding the certificates were minimal; a criminal court had recorded inconsistent statements from the Municipal Council, Karad.
- They had invested substantial amounts and completed the majority of the contracted work.
- A three-year blacklisting was excessively harsh, especially since they offered to complete the remaining work at the agreed-upon rates.
The State, represented by Additional Advocate General Praveen Das, countered that,
- The petitioners obtained public contracts using “fake and fabricated” documents.
- The Municipal Council, Karad, confirmed via email that the certificates were not issued.
- Fraud compromises the integrity of the tendering process, rendering the contracts voidable.
- The petitioners were given an opportunity to defend themselves following the Court’s previous directions but failed to establish the authenticity of the certificates.
The Court divided the issues into two main questions: whether the contract termination was justified, and whether blacklisting was a proportionate penalty.
The High Court found that the State was justified in terminating the contracts. It stated that when a bidder’s eligibility is founded on misrepresentation or false documentation, the employer is warranted in canceling the contract, emphasizing that the integrity of public procurement must not be compromised.
The Bench also indicated that outcomes in criminal cases (including anticipatory bail granted to a partner) do not inherently validate a certificate under contractual law.
In relation to the debarment, the Court reached a different conclusion. Citing Supreme Court precedents such as Gorkha Security Services v. Government (NCT of Delhi) and UMC Technologies Pvt. Ltd. v. Food Corporation of India, the Bench recognized that blacklisting carries severe and stigmatic repercussions,
“With blacklisting, many civil and/or evil consequences follow. It is described as ‘civil death’ of a person… Such an order is stigmatic in nature and debars such a person from participating in government tenders.”
The Bench noted that the State’s Apex Committee failed to independently determine that the petitioners had fabricated or knowingly submitted forged documents.
Thus, in the absence of a definitive finding of fraud or intentional misrepresentation by the petitioners, the Court concluded that blacklisting was unjustifiable and that the contract termination itself mitigated any benefit derived from the disputed certificate.
The High Court issued a partial allowance of the petitions and provided the following directions,
- Quashing of Blacklisting: The three-year debarment orders were annulled as disproportionate.
- Upholding Termination: The State’s decision to cancel the contracts and initiate re-tendering for the remaining work was upheld.
- Alternative Remedies: Claims for payment of outstanding dues and valuation for completed work were directed to be pursued through arbitration or in a Civil Court, as those matters involve factual determinations beyond the jurisdiction of Article 226.
The Court affirmed the necessity for the State to uphold the integrity of public tenders while stipulating that administrative actions with stigmatizing consequences must be based on clear evidence of culpability. In this instance, while the cancellation of the contracts was maintained, the severe penalty of blacklisting could not be validated without a definitive finding of deliberate fraud.
Case Title: M/s A.K. Construction & Ors. v. State of Chhattisgarh & Ors. (Lead Case: WPC No. 778 of 2026)