Kamthean Security Service vs. National Institute Of Technology Raipur

Facts

The petitioners, Kamthean Security Service and its proprietor R.K. Drivedi, provided security and housekeeping services to the National Institute of Technology Raipur (NIT Raipur) from March 2024 to February 2025 under a work order issued on 29.02.2024. Disputes arose due to pending invoices. The petitioners allege that they were unaware of a circular dated 19.12.2025, issued by NIT Raipur, which blacklisted them for one year, until August 2026 when it was revealed during a tender process elsewhere. They claim this blacklisting order was passed without any show cause notice or opportunity of hearing, deeming it arbitrary and unreasonable. The respondents contend that the petitioners' services were unsatisfactory, and despite multiple notices and warnings, deficiencies were not rectified, leading to the termination of the contract and blacklisting.

Held

The Court held that the impugned circular dated 19.12.2025, to the extent it blacklisted/debarred the petitioner-firm for a period of one year, could not be sustained and was therefore quashed and set aside. The Court reasoned that blacklisting entails serious civil consequences and reputation damage, thus requiring adherence to the principles of natural justice. Although the respondents contended that several notices and warnings were issued during the subsistence of the contract regarding alleged deficiencies, they failed to demonstrate that a specific show cause notice proposing blacklisting for one year was issued prior to the impugned circular, nor that an effective opportunity was afforded to the petitioners to present their case against such a proposed action. The Court emphasized that notices issued during the contract's currency regarding performance issues do not substitute for a specific notice proposing blacklisting. The Court cited the Supreme Court's decisions in Gorkha Security Services v. Government (NCT of Delhi) and UMC Technologies Pvt. Ltd. v. Food Corporation of India, which underscore the necessity of a show cause notice and opportunity of hearing before imposing blacklisting, describing it as "civil death." The Court also noted that the petitioners claimed to have learned of the blacklisting order only subsequently. The Court explicitly stated it was not opining on the merits of the allegations of unsatisfactory performance or other deficiencies, but solely on the procedural fairness of the blacklisting order. The respondent-authority was granted liberty to initiate fresh proceedings for blacklisting by issuing a proper show cause notice and affording a reasonable opportunity of hearing.

Key Issues

1. Whether the impugned circular dated 19.12.2025, blacklisting the petitioner-firm for one year, is liable to be quashed for being passed without issuing a show cause notice and affording an opportunity of hearing to the petitioner, thereby violating the principles of natural justice? Petitioner's Arguments: - The petitioners argue that the blacklisting order, having severe civil consequences, was passed without adhering to the principles of natural justice, specifically by failing to issue a show cause notice or provide an opportunity for hearing. - They rely on the Supreme Court's decision in Erusian Equipment & Chemicals Ltd. v. State of West Bengal and this Court's judgment in M/s. Dynmi Enterprises v. Union of India & Others, where similar blacklisting orders were set aside due to lack of natural justice. - They contend that they first learned of the blacklisting order in August 2026, approximately eight months after its issuance and after the completion of their work order. Respondent's Arguments: - The respondents assert that the petitioner-firm's performance was unsatisfactory, and the contract was terminated and the firm blacklisted for one year from 19.12.2025. - They claim that the circular itself clarifies that despite multiple written notices, warnings, and opportunities to rectify deficiencies, the petitioner consistently failed to comply with essential service requirements, including GST payments and statutory obligations.