Blacklisting Contractor Has Civil Consequences, Mandatory Debarment Procedure Can't Be Bypassed: Calcutta High Court
Observing that blacklisting of a contractor has serious civil consequences and must strictly follow the prescribed statutory procedure, the Calcutta High Court set aside a six-month debarment imposed by a Panchayat Samiti, holding that the action was taken in breach of both the Standard Bid Document and principles of natural justice.
Justice Kausik Chanda ruled that the multi-stage mechanism for debarment under West Bengal Form No. 2911 is “sequential and cannot be bypassed,” and that the Panchayat Samiti lacked jurisdiction to directly blacklist the contractor.
The writ petition was filed by M/s. Rahaman Construction challenging two orders dated January 2, 2026 issued by the Suti-I Panchayat Samiti, Murshidabad—one cancelling a work order for construction of a cement concrete road and another blacklisting the firm for six months. During hearing, the petitioners confined their challenge to the blacklisting order.
According to the record, the work order had been issued in February 2024 with a completion period of 60 days. The authorities alleged that the petitioners repeatedly failed to commence the work despite extensions, inspection, revised estimates and reminders. Show-cause notices were issued in July 2025 and again in December 2025 proposing cancellation of the contract, forfeiture of earnest money and blacklisting. Although the petitioners responded, citing flooding and collapse of a portion of the road as reasons for delay, the Tender Committee recommended cancellation and blacklisting. The Panchayat Samiti accepted the recommendation and issued the impugned debarment order.
The petitioners contended that the authorities had not followed the “Procedure for Debarment during the Contract Implementation Stage” under the Standard Bid Document. They argued that the rules mandate a structured process involving recommendation by the Engineer-in-Charge, scrutiny by the Bid Evaluation Committee, hearing by the Debarment Committee and a final order by the concerned Department. According to them, none of these mandatory steps were properly complied with.
Examining the framework, the Court emphasised that the debarment process is a four-stage mechanism and each step is mandatory. It held that the show-cause notice was issued even before the Tender Committee's recommendation and that the petitioners were not granted an effective opportunity to respond after such recommendation. Significantly, the authorities failed to consider the petitioners' reply to the second show-cause notice dated December 24, 2025 while deciding to blacklist them. The Court observed that once the first notice was not acted upon, only the second notice remained operative and its reply ought to have been duly considered.
The Court further held that the power to blacklist vested exclusively in the concerned State Department and not in the Panchayat Samiti. Consequently, the impugned order suffered from lack of jurisdiction. Reiterating that blacklisting affects the right to carry on business and must satisfy Article 14 standards of fairness, the Court relied on decisions of the Supreme Court in Erusian Equipment & Chemicals Ltd. v. State of West Bengal, Raghunath Thakur v. State of Bihar, and Patel Engineering Limited v. Union of India, which mandate adherence to natural justice and prohibit arbitrary debarment.
Holding that the blacklisting order was procedurally illegal and without authority, the Court set it aside. However, it clarified that the respondents are free to initiate fresh proceedings in accordance with the prescribed debarment procedure after properly considering the petitioners' reply. The writ petition was accordingly allowed, and the State's request for stay of the judgment was rejected.
Case: M/S. RAHAMAN CONSTRUCTION AND ANOTHER -VERSUS- THE STATE OF WEST BENGAL AND OTHERS
Case No: W.P.A. No.561 of 2026