April 04, 2020

The Supreme Court has said that blacklisting of a contractor firm for an indefinite period is impermissible in law. In the case B.K.Biyani Projects Pvt. Ltd. v. State of Madhya Pradesh and Ors., the court held that if a contractor firm deviated from contract terms, it cannot be penalized for it for an indefinite period. Hence, it cannot be the case of any contract awarding authority not to allow a contractor to compete for future contracts after a reasonable length of time has passed since his blacklisting. In the instant case, the court said that the passage of three years was a long enough time for the contractor to become eligible for competing for contracts again.

In the instant case, the contractor had delayed six projects awarded to him by the state. The firm was debarred for an indefinite period by an order dated 14th March 2013.

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The court cited the case Kulja Industries Ltd. v CGM, Western Telecom Project, BSNL & Ors. in which the apex court had opined that “suffice it to say that “debarment” is recognized and often used as an effective method for disciplining deviant suppliers/contractors who may have committed acts of omission and commission or frauds including misrepresentations, falsification of records and other breaches of the regulations under which such contracts were allotted. What is notable is that the “debarment” is never permanent and the period of debarment would invariably depend upon the nature of the offence committed by the erring contractor.”

The court then said that “as mentioned above, the order for blacklisting the appellant is a permanent one. This is impermissible in law. Since the appellant was blacklisted by an order 14th March 2013 and since three years have gone by during which period the appellant has suffered blacklisting and also taking into consideration the fact that three out of six contracts have been completed by the appellant, we are of the opinion that the period of blacklisting already undergone by the appellant is sufficient to meet the ends of justice.”

Despite earlier judgments in this matter, government officers are so full of their authority that they pass illegal orders debarring contractor firms for indefinite period. This goes against the principles of natural justice. A person or a firm can only be handed out punishment according to the gravity of the deviation committed. This order has clarified the situation.

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