Show Cause Lost Its Validity After Authority Executed Agreement Six Days Later: Patna High Court Sets Aside Contractor's Blacklisting

The Patna High Court has held that a show cause notice could not form the basis of a subsequent debarment order where the authority itself chose to execute an agreement merely six days after issuing the notice. Holding that debarment entails serious civil consequences, the Court set aside the order debarring the contractor for violation of the principles of natural justice.A Division Bench of Justice Sudhir Singh and Justice Ranjan Kumar Jha was hearing a writ petition challenging an order dated 27 June 2025 whereby the petitioner was debarred from participating in future tenders until satisfactory progress was achieved in the project.The petitioner submitted that it had successfully participated in a tender floated by the respondent authorities and was issued a Letter of Acceptance on 5 February 2025, followed by a provisional work order on 19 February 2025. A formal agreement between the parties was executed on 26 May 2025. However, barely a month later, the authorities passed the impugned debarment order alleging that the desired progress in the work had not been achieved.Assailing the action, the petitioner contended that no valid show cause notice proposing debarment had been issued before passing the impugned order. It was further submitted that construction could not commence immediately as the work site remained under encroachment, and work could begin only after the Circle Officer completed measurement and demarcation of the site and the agreement was executed.The State, on the other hand, submitted that the site had been made available on 18 February 2025 and the petitioner had failed to make satisfactory progress despite repeated reminders. It further relied upon a show cause notice dated 20 May 2025 to justify the subsequent debarment.The principal issue before the Court was whether a valid show cause notice contemplating debarment had been issued prior to the impugned order. The Court noted that although a provisional work order had been issued in February 2025, the formal agreement between the parties came to be executed only on 26 May 2025, while the debarment order followed on 27 June 2025, which was well before the contractual completion date of 18 February 2026.The Bench observed that debarment results in restrictions on future commercial participation and therefore carries serious civil consequences. Consequently, such an order must be passed strictly in accordance with law and after complying with the principles of natural justice. The rule of audi alteram partem, the Court observed, requires that a contractor be afforded a meaningful opportunity to respond before any adverse decision is taken.Examining the State's reliance on the show cause notice dated 20 May 2025, the Court found that the same could not constitute a valid foundation for the subsequent debarment. It noted that despite issuing the show cause notice, the authorities themselves proceeded to execute the agreement with the petitioner on 26 May 2025. The Court observed:“As such, the issued show cause notice dated 20.05.2025, cannot be said to be a valid show cause notice for action taken on 27.06.2025, particularly when the authorities themselves entered into an agreement dated 26.05.2025.”The Bench further observed that if the authorities genuinely had concerns regarding the petitioner's conduct, appropriate action could have been taken before entering into the agreement. Instead, the sequence of events prima facie reflected a lack of application of mind.Holding that the impugned debarment order had been passed in gross violation of the principles of natural justice and without issuance of any valid show cause notice, the High Court set aside the order dated 27 June 2025. It clarified, however, that the respondent authorities would remain at liberty to take fresh action in accordance with law after following due process.Case Title: Vijay Raj Mewar Construction Co. (P) Ltd. v. State of Bihar.Case Number: Civil Writ Jurisdiction Case No. 19748 of 2025Appearance: Mr. Prabhat Ranjan for the Petitioner. Mr. Rakesh Kumar Ranjan for the Respondent.Click Here To Read/Download Order

Show Cause Lost Its Validity After Authority Executed Agreement Six Days Later: Patna High Court Sets Aside Contractor's Blacklisting

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Show Cause Lost Its Validity After Authority Executed Agreement Six Days Later: Patna High Court Sets Aside Contractor's Blacklisting

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