GAUHATI HIGH COURT ISSUES ORDER FOR THE MANIPUR INDUSTRIAL DEVELOPMENT CORPORATION V/S THE UNION OF INDIA AND 2 ORS.

GUWAHATI, India, Nov. 30 -- Gauhati High Court issued the following order on Oct. 27:

1. Heard Mr. HS Paonam, the learned Senior Counsel assisted by Mr. R Sekhar, the learned counsel who appears on behalf of the petitioner. Ms. A Gayan, the learned CGC, who appears on behalf of the Union of India as well as the respondent Nos.2 and 3.

2. The petitioner herein has assailed the communication dated 18.08.2025 whereby the contract with the petitioner was terminated and the petitioner was further blacklisted with immediate effect. Taking into account that there is an arbitration clause, Mr. HS Paonam, the learned Senior Counsel appearing on behalf of the petitioner submitted that the challenge to the communication dated 18.08.2025 is limited to blacklisting of the petitioner only and not to the termination of the contract. The learned Senior Counsel further submitted that as regards the termination, the petitioner would take recourse to arbitration proceedings, if so advised.

3. In the backdrop of the above, it is the submission of the learned Senior Counsel that vide the impugned communication dated 18.08.2025, the petitioner was blacklisted with immediate effect, that too, without any opportunity of hearing being given to the petitioner. The learned Senior Counsel further submitted that blacklisting in the manner in which it has been sought to be done is contrary to the settled principles of law, inasmuch as, the blacklisting cannot be for a period indefinite. In that regard, the learned Senior Counsel has placed before this Court the judgment of the Supreme Court in the case of Gorkha Security Services Vs. Govt. of NCT Of Delhi & Ors. reported in (2014) 9 SCC 105 as well as the judgment of the Supreme Court in the case of M/s. Kulja Industries Ltd. Vs. Chief General Manager Western Telecom Project BSNL & Ors., reported in (2014) 14 SCC 731.

4. It is seen that the respondents herein have duly filed the affidavit-inopposition. On 17.10.2025, when the matter was taken up, this Court while passing the order observed that the respondent authorities shall bring on record the affidavit indicating as to whether any proceedings were initiated prior to passing of the order of blacklisting against the petitioner by giving the petitioner due notice.

5. Ms. A Gayan, the learned counsel who appears on behalf of the respondents submitted that the blacklisting is permissible as per the terms of the contract. However, she submitted that the said order of blacklisting was not preceded by any show cause notice. Under such circumstances, the learned counsel appearing on behalf of the respondents submits that taking into account the judgments as referred to by the learned Senior Counsel appearing on behalf of the petitioner, this Court, if interferes with the order of blacklisting, may give the liberty to the respondents to take action by following the due procedure of law.

6. This Court finds it very pertinent upon hearing the learned counsels appearing on behalf of the parties to take note of the judgment of the Supreme Court in the case of Gorkha Security Services (supra) wherein the Supreme Court at paragraph Nos. 16 and 20 categorically observed that there is a requirement of issuance of a show cause notice prior to taking a decision to blacklist. In paragraph Nos. 21 and 22 of the said judgment, the Supreme Court further emphasized what should be the contents of the show cause notice. Taking into account the above, this Court finds it pertinent to reproduce the paragraph Nos.16, 20, 21 and 22 as under:

".......Necessity of serving show cause notice as a requisite of the Principles of Natural Justice:

16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting many civil and/ or evil consequences follow. It is described as "civil death" of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts.

*Rest of the document can be viewed at: (https://hcservices.ecourts.gov.in/ecourtindiaHC/cases/display_pdf.php?filename=A9S7c5LDIsB6RXaCf816xwKCzBPnIb6gV36iJUGVHbdOCbEA3IH8IoKalBzoPhjR&caseno=WP(C)/5763/2025&cCode=1&cino=GAHC010219452025&state_code=6&appFlag=)

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