Click the Play button to listen to article

The Jharkhand HC has held that merely responding to a show-cause notice which does not disclose the proposed action of debarment cannot amount to waiver of the principles of natural justice. The Court quashed an order debarring a contractor from participating in a future tender, observing that the contractor had been denied an opportunity to contest the proposed penalty.

A Division Bench comprising Chief Justice M.S. Sonak and Justice Manoj Prasad held that a show-cause notice preceding debarment must either expressly mention the proposed action or make it clear from the surrounding circumstances that such action is contemplated.

The Court was hearing a writ petition filed by M/s Jai Mahakal Construction challenging a communication dated November 11, 2025, debarring it from participating in the next tender to be issued by the respondents. The petitioner also sought directions for consideration of its representations seeking release of payments and issuance of completion certificates.

The petitioner submitted that the show-cause notice dated August 18, 2025, which preceded the debarment order, did not mention any proposed blacklisting or debarment. Relying on the Supreme Court's decision in Gorkha Security Services v. Govt. (NCT of Delhi), (2014) 9 SCC 105, it argued that a specific show-cause notice was mandatory before imposing such a penalty.

Opposing the petition, the State submitted that the contractor had been issued a show-cause notice and had responded to it on September 26, 2025. It contended that the debarment order was passed after considering the response and that the petitioner had not complained of any breach of natural justice.

Examining the notice, the High Court found that it merely required the contractor to expedite the work and rectify the defects pointed out. It warned that action under the law would be initiated if the work was not expedited, but made no reference to debarment, either expressly or by implication.

The Bench noted that although the contractor had responded to the allegations concerning its work, it had no occasion to contest the proposed penalty of debarment because that consequence had never been disclosed. Rejecting the contention that submitting a reply amounted to acquiescence or waiver, the Court observed:

“Therefore, this is not a case of acquiescence or waiver. Rather, this response shows that the petitioner was prejudiced by not being informed of the proposed consequence of debarment, in case the petitioner's response on merits was found unsatisfactory. A case of breach of natural justice is therefore made out.”

Referring to Gorkha Security Services, the Bench noted the Supreme Court's observations that blacklisting carries serious civil consequences and has been described as the “civil death” of the person subjected to it, since it prevents participation in government tenders. The Court further noted that a show-cause notice must communicate not only the allegations or defaults attributed to the noticee but also the nature of the proposed action. This enables the affected party to contest the proposed penalty even where the explanation concerning the alleged defaults is found unsatisfactory.

Applying these principles, the High Court held that the communication dated November 11, 2025, was liable to be set aside because the preceding notice had failed to disclose the proposed debarment. Accordingly, the Court quashed the debarment order.

However, the Bench clarified that the respondents were not precluded from issuing a fresh show-cause notice expressly indicating the proposed debarment. If such a notice is issued, the authorities must decide the matter in accordance with law after providing the petitioner an adequate opportunity to respond.

The Court also left open all contentions concerning the merits and demerits of the alleged defaults.

Appearance:

For the Petitioner: Mr. Saurabh Shekhar, Advocate; Mr. Dhruva Kumar, Advocate; Mr. Anurag Kumar, Advocate

For the Respondents: Mr. Rahul Saboo, GP-II; Mr. Gaurang Jajodia, AC to GP-I

Tags: