Calcutta High Court (Appellete Side)
Sk. Karim vs State Of West Bengal & Ors on 9 April, 2026
Author: Hiranmay Bhattacharyya
Bench: Hiranmay Bhattacharyya
2026:CHC-AS:589
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Before:
The Hon'ble Justice Hiranmay Bhattacharyya
WPA 7742 of 2026
Sk. Karim
VS.
State of West Bengal & Ors.
For the petitioner : Mr. Sukanta Chakraborty
Mr. Soumya Kanti Sinha
Ms. Suparna Das
Mr. Anindya Halder
..... advocates
For the State : Mr. Lalit Mohan Mahata, Ld. AGP
Mr. Rudranil De
...... advocates
Reserved on : 07.04.2026
Judgment on : 09.04.2026
Hiranmay Bhattacharyya, J.:-
1. Petitioner has prayed for setting aside the Memo dated 02.02.2026 by virtue
of which the e-Auction vide Request for Proposal being RFP No.
WBIW/SE/WC-II/RFP-25(e)/2025-26 was cancelled and the Office Order
dated 03.02.2026, by virtue of which the petitioner was debarred from
participating in all e-Auction for a period of next 3(three) years and the Bid
Security was forfeited, in this writ petition.
2. A Request for Proposal (for short "RFP") being RFP No. WBIW/SE/WC-
II/RFP-25(e)/2025-26 was issued by the Superintending Engineer, Western
Circle II, Irrigation & Water ways Directorate, Paschim Medinipur i.e., the 5th
respondent for selection of Contractor for the work
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“Dredging/Desilting/Removal of river bed materials from Sila Khal from
Mugbosan to Kanunya under “No Cost to State Exchequer” Basis. Petitioner
submitted its Bid. In the Auction Evaluation Summary Sheet, petitioner was
declared as the H1 bidder. Petitioner submitted a representation dated
05.03.2026 alleging “collusive bidding” and/or “bid rigging” by the 6th and
7th respondent.
3. The 3rd respondent issued an Office Order dated 03.02.2026 debarring the
petitioner from participating in all e-Auction for a period of next 3 years and
forfeiting the Bid Security of the petitioner and the 5th respondent issued an
order dated 02.02.2026 cancelling the Auction.
4. Challenging the decision of cancellation of e-Auction, and the order of
debarment and forfeiture of Bid Security, petitioner has approached this
Court.
5. Mr. Chakraborty, learned advocate for the petitioner contended that the
order forfeiting the bid security and debarment of the petitioner from
participating in future e-auction for a specified period without affording any
opportunity of hearing to the petitioner is arbitrary, unreasonable and is in
violation of the principles of natural justice and as such the said order is
liable to be set aside. He placed reliance upon the decision in M/s. Erusian
Equipment & Chemicals Limited vs. State of West Bengal and another
reported at (1975) 1 SCC 70; Techno Prints vs. Chattisgarh Textbook
Corporation and Another reported at 2025 SCC Online SC 343; Raman
Kalra vs. Govt. of NCT of Delhi and others reported at 2017 SCC Online
Del 9414; AL. Sudais Haj Umrah Service vs. Union of India and
another reported at 2023 SCC Online Del 476 and an unreported
judgment of the co-ordinate bench delivered on 24.02.2026 in WPA 561 of
2026 in the case of M/s. Rahaman Construction and Another vs. The
State of West Bengal and others in support of his contention that an
order of debarment could be passed only after issuance of a show cause
notice and hearing the petitioner.
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6. Mr. Chakraborty contended that RFP issued by the 5th respondent on
24.10.2025 did not contain Clause 6.10.3. Such clause was added by way of
a Corrigendum-I issued by the 5th respondent dated 18.11.2025. Mr.
Chakraborty further contended that the auction process was initiated with
the issuance of the RFP dated 24.10.2025 and the tender conditions could
not have been changed after initiation of the auction process, more
particularly, the incorporation of the penal provision vide clause 6.10.3. In
support of such contention he placed reliance upon the decision of the
Hon’ble Supreme Court in the case of Tej Prakash Pathak and others vs.
Rajasthan High Court and ors. reported at (2025)2 SCC 1.
7. Mr. Chakraborty further contended that the Tender Evaluation Committee
comprising of the Chairman and two other members after evaluating the
Bids declared the petitioner as H1 bidder. He contended that the decision to
forfeit the bid security and debarring the petitioner taken by any authority
other than the Tender Evaluation Committee comprising of the Chairman
and two members is without jurisdiction. He, thus, submitted that the
decision of the 3rd respondent debarring the petitioner and forfeiting the Bid
Security is without jurisdiction.
8. Mr. Chakraborty contended that, the private respondents reached the bid
value within few minutes of the opening of the auction on 12.12.2025
thereby leaving no scope for the petitioner to participate in the bid process
by putting the highest bid value within the total estimated volume of
riverbed materials to be dredged. He further contended that the private
respondent indulged in “collusive bidding” and “bid rigging” and the
petitioner submitted a representation before the respondent authorities by a
letter dated March 05, 2026 and immediately thereafter the impugned
orders were issued. He submitted that no decision on such representation
was communicated to the petitioner.
9. Mr. Mahata Learned Additional Government Pleader appeared for the
respondents and seriously disputed the submissions made by the learned
advocate for the petitioner. He contended that the bid quoted by the
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petitioner exceeded the estimated volume of river bed materials to be
dredged for which the entire e-auction had to be cancelled, bid security for
the petitioner was forfeited and the petitioner was debarred from
participating in e-auction for the next three years. In support of such
contention he placed reliance upon Clause 6.10.3 of RFP.
10. He further contended that since the petitioner quoted a bid value exceeding
total estimated volume of river bed materials to be dredged, clause 6.10.3
automatically stood attracted. He contended that the petitioner was aware of
the consequences of quoting a bid exceeding the total volume of river
materials to be dredged and, therefore, there was no necessity to issue a
show cause notice and to afford an opportunity of hearing to the petitioner.
11. Mr. Mahata, the learned Additional Government Pleader contended that the
petitioner participated in the auction process by way of uploading Techno
Commercial Bid after the issuance of the Corrigendum, and, therefore, the
petitioner was aware of the consequences of quoting a bid exceeding the
total estimated volume of river bed materials to be dredged. He, therefore,
submitted that the petitioner could not have complained against issuance of
Corrigendum incorporating various clauses including clause no. 6.10.3 after
the issuance of the said RFP. He also placed reliance upon clause 5.9 of the
RFP in support of his contention that the said document permits issuance of
corrigendum and amendment to the bid document at any time prior to the
Bid due date. The learned Additional Government Pleader placed reliance
upon the decision of the Hon’ble Supreme Court in the case of N.G. Projects
Limited vs. Vinod Kumar Jain and others reported at (2022) 6 SCC 127
in support of his contention that the writ court should refrain itself from
imposing its decision over the decision of the employer as to whether or not
to accept the bid of a tenderer.
12. Mr. Mahata further contended that the petitioner has not challenged the
terms of the RFP and the Corrigendum in this writ petition. He submitted
that the High Court cannot grant any relief that has not been prayed for by
the petitioner in a petition under Article 226 of the Constitution of India and
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in support of such contention he placed reliance upon the decision of the
Hon’ble Supreme Court in the case of Bharat Amratlal Kothari and
another vs. Dosukhan Samadkhan Sindhi and others reported at (2010)
1 SCC 234.
13. In support of his contention that no show cause notice is necessary prior to
passing an order of debarment, Mr. Mahata placed reliance upon a decision
of the Hon’ble Supreme Court in the case of M/s. A.K.G Construction and
Developers Pvt. Ltd. vs. State of Jharkhand & Ors. reported at (2026)
INSC 312.
14. Heard the learned advocates for the parties and perused the materials
placed.
15. The 5th respondent issued the RFP No. 25(e)/2025-26 on 24.10.2025 (for
short the “said RFP”) for selection of Contractor for the work
“Dredging/Desilting/Removal of river bed materials Sila Khal from
Mugbosan to Kanunya (for short the “said work”). The said RFP contains the
Schedule Sheet mentioning the last date and time for Online Submission of
Techno-Commercial Bid and for Offline Submission of Techno-Commercial
Bid Documents (Physical copy) as well as the date for conduct of electronic
auction. The total estimated volume of River Bed Materials to be
Dredged/Desilted/Removal is 49,51,805.73 cubic feet and the Floor volume
for bidder was 5% thereof i.e., 2,47,590.29 cu.ft.
16. The Eligibility Criteria has been specifically laid down under various sub-
clauses of clause 5.3. General conditions for Online submission of Techno-
Commercial Bid and for offline submission of Supporting Documents to
Techno-commercial Bid have been stated under Sub-clauses 6.1 and 6.2
respectively. Non-compliance of the provisions contained in sub-clause 6.1
and 6.2 under Clause no. 6 would result in rejection of Bid(s) under sub-
clause 6.9.
17. Sub-clause 6.10 deals with Financial Bid through e-auction and sub-clause
6.10.1 states that the Bidder shall quote Financial Bid greater than Floor
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volume as mentioned in Date Sheet and the Financial Bid may be quoted in
multiples of 5000 cubic feet over and above the Floor volume.
18. The 5th respondent issued the Corrigendum-I dated 18.11.2025. By virtue of
the said corrigendum some addendum was incorporated in RPF No.
25(e)/2025-26 and a new clause no. 6.10.3 was incorporated which deals
with cancellation of entire auction process; forfeiture bid security and for
debarment from participating in future e-auction. The said sub-clause is
extracted hereinafter-
“6.10.3. In case of Bid quoted equal to or exceeding the estimate quantity
of earth, entire auction process will be cancelled and Bid Security for the
Bidder(s) quoting rate equal to/excess of the estimated volume will be
forfeited and debarred from participating in e-Auction for next 3 (three)
years.”
19. After going through Clause 5-9 of the RFP, this Court finds that the power to
amend the RFP document by issuing a corrigendum has been specifically
reserved under Sub-clause 5.9.1 and in view of Sub-clause 5.9.2, the said
Corrigendum should be considered as an integral part of the RFP.
20. That apart, the date for Online submission of Techno Commercial Bid,
Offline submission of Technical Bid Documents etc. were also extended by
the said Corrigendum and the petitioner submitted his Techno Commercial
Bid within the extended time limit. Petitioner took advantage of the
extension of the time limit for submission of Bid as per the corrigendum.
Thus, the petitioner participated in the Auction being fully aware of the
Clauses incorporated by way of corrigendum more particularly Clause
6.10.3 and it does not lie in the mouth of the petitioner to contend that the
corrigendum cannot apply to e-auction in question.
21. In Tej Prakash Pathak (supra), it was held that the eligibility criteria for
being placed in the select list, notified at the commencement of the
recruitment process, cannot be changed midway through the selection
process unless the extant rules so permit or the advertisement, which is not
contrary to the extant rules, so permit. The said decision cannot come to the
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aid of the petitioner as Clause 5.9 of the RFP empowered the authority to
issue Corrigendum subsequently.
22. Clause 7.2 of the said RFP deals with Evaluation of Techno-Commercial Bid.
Sub-clause 7.2.1 states that High Value Tender Evaluation Committee
comprising of (i) Chief Engineer (D&R), Chairman, (ii) Chief Engineer S.W.,
Member, (iii) Superintending Engineers of Western Circle-II, Member-
Secretary will evaluate the Techno-Commercial Bid received during the e-
auction process.
23. Sub-clause 7.2.7 states that the Techno-Commercial Proposal which meet
the Eligibility Criteria shall be considered as technically qualified by the
Superintending Engineer, Western Circle II, and the list of technically
qualified bidder will be uploaded as per “Document approval end date”
mentioned in the Schedule Sheet. It further states that the final Technical
Evaluation Sheet of the technical qualified bidders would be published
/uploaded and the qualified bidders will be eligible to participate in e-
auction.
24. After going through clause 7.2 of the said RFP, this Court is of the
considered view that the High Value Tender Evaluation Committee has been
vested with the task of evaluation of the Techno Commercial Bid only and
not the Financial Bid.
25. It is not in dispute that the petitioner was declared as a qualified bidder and
was eligible to participate in e-auction as per sub-clause 7.2.7.
26. Clause 7.3 of the said RFP deals with e-auction and declaration of preferred
bidder. Sub-clause 7.3.2 of the said RFP states that the Bidder quoting the
highest share of volume (in cum/cft) of Dredged/Desilted silt/soil/Earth
shall be declared as H1. It further states that the Bid Evaluation Sheet
containing quoted bids in the e-auction will be downloaded and duly Test
Checked by the DAO, West Midnapore Division before uploading the same in
the portal by the Superintending Engineer, W.C.-II. The Superintending
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Engineer, W.C.-II will then recommend the H1 Bidder to the concerned
EE/SE/CE, as the case may be, for acceptance.
27. The said three member High value Tender Evaluation Committee do not
have any role to play after final Technical Evaluation Sheet of the technically
qualified bidder are published. The evaluation of the Financial Bid falls
within the domain of the one member Tender Evaluation Committee of the
5th respondent.
28. In the case on hand, the cancellation of the Tender was made after
declaration of the H1 bidder. For such reason this Court is not inclined to
accept the submission of Mr. Chakraborty that it is only the three member
High Value Tender Evaluation Committee which can take a decision to
cancel the auction.
29. Record reveals that the Auction Evaluation Sheet was uploaded on
15.12.2025 by the 5th respondent, who is the appropriate authority under
sub-clause 7.3.2.
30. Mr. Chakraborty would vehemently contend that upon declaration as H1
bidder, a vested right accrued in favour of the petitioner for issuance of
LOI/LOA in its favour.
31. This Court is not inclined to accept the aforesaid contention of Mr.
Chakraborty for the reasons as set out hereinafter.
32. Note 3 appearing after sub-clause 6.10.1 read with the first limb of sub-
clause 7.3.2 states that the bidder quoting the highest share of volume shall
be declared as H1. The Auction Evaluation Summary Sheet dated
15.12.2025 has been prepared in the descending order of quoted sharing of
volume by the bidders and the bidder quoting the highest share of volume
i.e., the petitioner has been ranked as H1 and the other bidders have been
ranked as H2 to H5 in descending order.
33. Ranking of a bidder as H1 in the Auction Evaluation Sheet does not amount
to crystallization of right to be issued with the LOI/LOA as such decision is
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subject to the decision of the “Authority” to accept or reject the bid as
clarified under the “Remarks” column of the Auction Summary Sheet.
Auction Summary Sheet has been uploaded by the 5th respondent, who is
only the Tender Evaluation Committee and the recommending authority for
issuance of LOI/LOA.
34. Though it is well settled that the State or an instrumentality of the State has
the freedom to contract or not to contract with a party but it is equally
settled that such decision shall be subject to Judicial Review. Such a
decision shall be open to scrutiny not only on the touchstone of the
principles of natural justice but also on the doctrine of proportionality.
35. Court in exercise of the power of Judicial Review can interfere where there is
arbitrariness in the action of the State or its instrumentalities even at a
stage prior to execution of a contract. In other words, the decision of
entering or not entering into contracts by the State or its instrumentalities is
also subject to Judicial Review where there is arbitrariness. It is well settled
that actions uninformed by reason may be questioned as arbitrary in a
proceeding under Article 226 of the Constitution of India.
36. The Hon’ble Supreme Court in Kulja Industries Ltd. vs. Western Telecom
Project BSNL reported at (2014) 14 SCC 731) held thus –
20. It is also well settled that even though the right of the writ petitioner
is in the nature of a contractual right, the manner, the method and the
motive behind the decision of the authority whether or not to enter into a
contract is subject to judicial review on the touchstone of fairness,
relevance, natural justice, non-discrimination, equality and
proportionality. All these considerations that go to determine whether the
action is sustainable in law have been sanctified by judicial
pronouncements of this Court and are of seminal importance in a system
that is committed to the rule of law. We do not consider it necessary to
burden this judgment by a copious reference to the decisions on the
subject. A reference to the following passage from the decision of this
Court in Mahabir Auto Stores v. Indian Oil Corpn. should, in our view,
suffice:
“12. It is well settled that every action of the State or an
instrumentality of the State in exercise of its executive power, must
be informed by reason. In appropriate cases, actions uninformed by
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reason may be questioned as arbitrary in proceedings under Article
226 or Article 32 of the Constitution.
Reliance in this connection may be placed on the observations of
this Court in Radhakrishna Agarwal v. State of Bihar. In case any
right conferred on the citizens which is sought to be interfered, such
action is subject to Article 14 of the Constitution, and must be
reasonable and can be taken only upon lawful and relevant grounds
of public interest. Where there is arbitrariness in State action of this
type of entering or not entering into contracts, Article 14 springs up
and judicial review strikes such an action down. Every action of the
State executive authority must be subject to rule of law and must be
informed by reason. So, whatever be the activity of the public
authority, in such monopoly or semi-monopoly dealings, it should
meet the test of Article 14 of the Constitution. If a governmental
action even in the matters of entering or not entering into contracts,
fails to satisfy the test of reasonableness, the same would be
unreasonable… It appears to us that rule of reason and rule against
arbitrariness and discrimination, rules of fair play and natural
justice are part of the rule of law applicable in situation or action by
State instrumentality in dealing with citizens in a situation like the
present one. Even though the rights of the citizens are in the nature
of contractual rights, the manner, the method and motive of a
decision of entering or not entering into a contract, are subject to
judicial review on the touchstone of relevance and reasonableness,
fair play, natural justice, equality and non-discrimination in the type
of the transactions and nature of the dealing as in the present case.”
(emphasis supplied)
37. It, therefore, follows that a decision not to contract with a party is also
subject to Judicial Review and such an action not informed with reasons
may be questioned in a writ petition on the ground of arbitrariness.
38. In course of hearing of the writ petition, a copy of the Memo dated
27.01.2026 issued by the Secretary, Irrigation and Waterways Department
filed by the learned Additional Government Pleader was taken on record and
a copy of such letter have also been supplied to the petitioner and the
counsels for the respective parties also made submissions on such
documents.
39. After going through the aforesaid Memo this Court finds that the
Superintending Engineer, reported that during the auction held on
12.12.2025, petitioner exceeded the permitted volume as stipulated in RFP
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and as per Clause 6.10.3 the entire auction process will be cancelled and
Bid security of the petitioner will be forfeited and the petitioner be debarred
from participating in e-auction for next 3 years.
40. The Secretary, by a letter under Memo dated 27.01.2026, conveyed the
consent of the Department towards cancellation of the e-auction on the
ground of violation of sub-clause 6.10.3 and for taking punitive action as
per the provision of RFP.
41. Record reveals that the cancellation order dated 02.02.2026 and the Office
Order dated 03.02.2026 debarring the petitioner from participating in e-
auction to be initiated by the Irrigation & Waterways Department for a
period of three years with immediate effect along with a direction for
forfeiture of the Bid Security was issued in terms of the Memo dated
27.01.2026 issued by the Secretary, Irrigation and Waterways Department.
42. It is not in dispute that the petitioner quoted a bid value exceeding the
estimated quantity of earth. Thus, Clause 6.10.3 stood attracted which
contemplates cancellation of the entire e-auction. The respondents
authorities invoked clause 6.10.3 and cancelled the entire e-auction. The
decision to cancel do not suffer from the vices of arbitrariness. This Court is,
therefore, not inclined to interfere with the decision to cancel the entire e-
auction.
43. The question that now falls for consideration is whether the order of
debarment is liable to be set aside on the ground of violation of the
principles of natural justice.
44. In M/s. Erusian Equipment & Chemicals Limited (supra), the Hon’ble
Supreme Court held that the blacklisting order involves civil consequences
and it casts a slur. It was further held that fundamentals of fair play require
that the person concerned should be given an opportunity to represent his
case before he is put on the blacklist. The Hon’ble Supreme Court held thus-
“20. Blacklisting has the effect of preventing a person from the privilege
and advantage of entering into lawful relationship with the Government
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for purposes of gains. The fact that a disability is created by the order of
blacklisting indicates that the relevant authority is to have an objective
satisfaction. Fundamentals of fair play require that the person concerned
should be given an opportunity to represent his case before he is put on
the blacklist.”
45. In the case on hand, RFP specifically provides that in case of Bid quoted
equal to or exceeding the estimated quantity of earth, the entire auction will
be cancelled, Bid security for the Bidder(s) quoting rate equal to or excess of
the estimated volume will be forfeited and debarred from participating in e-
auction for next 3 years.
46. Therefore, this Court has to decide whether in-corporation of such a clause
would entitle the Authority to debar the petitioner without issuing any show
cause notice and without affording any opportunity of hearing.
47. In Techno Prints (supra), the appellant was assigned a contract of printing
books by the Corporation. The contract was entered into sometimes in 2020.
Unfortunately, from mid 2020, the entire country was in the grip of Covid-19
pandemic Appellant fairly accepted that the obligations in terms of the
contract could not be discharged due to circumstances beyond its control.
The terms of the tender document provided that if the party is unable to
fulfill its terms of the agreement, he would be liable to be blacklisted. Show
cause notice was issued alleging violation of certain clauses of the
agreement. Appellant unsuccessfully challenged the show cause notice
before the High Court.
48. The Hon’ble Supreme Court after noting the facts of the said case observed
that at best it could be a case of breach of contract. The Hon’ble Supreme
Court reiterated the proposition of law laid down in Blue Dreamz
Advertising Pvt. Ltd. (supra) that in case there exists a genuine dispute
between the parties based on the terms of the contract, blacklisting as a
penalty cannot be imposed. The penalty of blacklisting may only be imposed
when it is necessary to safeguard the public interest from irresponsible and
dishonest contractors and the corporation being a statutory body, have a
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higher threshold to satisfy before passing such blacklisting order and,
therefore, the measures undertaken by it should be reasonable.
49. The Hon’ble Supreme Court held that the aforesaid principles though are
guiding principles as to when and in what circumstances, a blacklisting
order can be passed, should also be kept in mind by the Authority at the
time of issuing the show cause notice in order to determine whether it is a
genuine case to blacklist a contractor or visit him with any other penalty like
forfeiture of EMD, recovery of damages etc.
50. From the aforesaid decision it follows that in a given case, the penalty of
forfeiture of E.MD may be a substitute for a penalty by way of debarment.
51. In Raman Kalra (supra), the bids submitted by the petitioner were accepted
and DTIDC issued a Letter of Acceptance and called upon the petitioner to
furnish certain amounts within a specified time limit to avoid forfeiture of
EMD. Petitioner sent a letter requesting that he be granted further time to
complete the formalities citing illness. On failure on the part of the petitioner
to deposit the funds as required in terms of LOAs, petitioner’s EMD was
forfeited and also debarred him from participating in any further tenders for
the specified period.
52. The Hon’ble Delhi High Court in Raman Kalra (supra), after reiterating the
well settled proposition of law that the bidder cannot challenge the tender
conditions after it has participated in the tender did not accept the
contention of the petitioner that the action of forfeiture of EMD was unlawful
or illegal. However, it was held that debarment would not follow
automatically and without affording the bidder a chance to represent
against the same.
53. Thus, on the facts of the said case, the action of forfeiture of EMD was held
to be lawful.
54. In AL. Sudais Haj Umrah Service (supra), the concerned authority
originally neither imposed nor contemplated the imposition of the penalty of
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debarment and forfeiture of security. The Apex Committee had no authority
to either impose such a penalty nor make a recommendation in that regard.
The concerned authority acted solely on the basis of the recommendation of
the Apex Committee. On such factual matrix the order of blacklisting and
forfeiture of security was set aside.
55. In Rahaman Construction (supra), the co-ordinate bench after noticing
that the Standard Bid Document prescribes the procedure for debarment
during the contract implementation stage had set aside the blacklisting
order after holding that the authorities did not comply with the procedures
laid down for debarment.
56. The power to blacklist a contractor whether the contract be for supply of
material or equipment or for the execution of any other work whatsoever is
inherent in the party allotting the contract. There is no need for any such
power being conferred by statute or reserved by contractor as because
“blacklisting” signifies a business decision by which the party affected by the
breach decides not to enter into any contractual relation with the party
committing the breach. (see Kulja Industries Ltd. vs. Western Telecom
Project BSNL reported at (2014) 14 SCC 731)
57. However, in the case on hand, RFP specifically provides the power to debar a
bidder. The petitioner having participated in the Tender cannot turn around
and challenge the terms of the RFP and the corrigendum after the tender
was cancelled.
58. The Hon’ble Supreme Court in Raghunath Thakur vs. State of Bihar &
Others reported at (1989) 1 SCC 229, after noting that there was no
requirement as per the relevant rules for giving any prior notice before black
listing any person held that it is an implied principle of the rule of law that
any order having civil consequences should be passed only after following
the principles of natural justice. The Hon’ble Supreme Court held that even
if the rules do not expressly provide so, it is an elementary principle of
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natural justice that parties affected by any order should have the right of
being heard and making representations against the order.
59. The Hon’ble Supreme Court in M/s. A.K.G Construction and Developers
Pvt. Ltd. (supra) also held that before blacklisting the contractor a show
cause notice should be issued calling upon the contractor to explain why a
consequential order of blacklisting should not be passed. It was further held
that the said letter must be indicative of the proposed decision to blacklist
and the requirement of the contractor to respond to it. The said decision,
therefore, cannot come to the aid of the respondent.
60. The Hon’ble Supreme Court In UMC Technologies Private Limited vs.
Food Corporation of India and another reported at (2021) 2 SCC 551
after noticing several decisions including the decision in the case of Gorkha
Security Services vs. Government (NCT of Delhi) & Others reported at
(2014) 9 SCC 105 held that a prior show cause notice granting a reasonable
opportunity of being heard is an essential element of all administrative
decision making and particular so in decisions pertaining to blacklisting
which entail grave consequences for the entity being blacklisted.
61. Though the terms and conditions mentioned in the PPF do not specifically
provide for issuance of a prior show cause notice and an opportunity of
hearing to be afforded prior to issuing an order of department, it is now a
well-established proposition of law that unless a statutory provision either
specifically or by necessary implication excludes the application of any rules
of natural justice, in exercise of power prejudicially affecting another must
be in conformity with the rules of natural justice. It is equally well settled
that the rules of natural justice are not embodied rules but their aim is to
secure justice and to prevent miscarriage of justice (see Gorkha Security
Services vs. Government (NCT of Delhi) & Others reported at (2014) 9
SCC 105 (paragraph 29))
62. To the mind of this Court, the rules of natural justice has to be read into
Clause 6.10.3 insofar as it relates to issuance of a debarment order.
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63. Though the order of debarment may not be permanent as the same would
remain effective only for a limited period but its adverse effect would
continue to affect the business of the debarred enterprise even for a period
beyond the period of debarment.
64. There may be cases where the act of the bidder in quoting bid exceeding the
total volume of river bed materials to be dredged may be unintentional. The
question would be whether for an unintentional act on the part of the bidder
a harsh punishment of debarment could have been imposed. In a given case
it may also appear to the authorities that the period of debarment could
have been a period shorter than a period mentioned in clause 6.10.3.
Interpretation of Clause 6.10.3 as automatic insofar as the power of
debarment is concerned would amount to taking away the power of an
authority to decide on a case to case basis whether a penalty should be
imposed or not.
65. This Court is, therefore, of the considered view that before taking any
punitive action against the bidder/petitioner herein in the form of a
debarment order, a prior show cause notice ought to have been issued
calling upon the petitioner to show cause stating the grounds on which an
action is proposed against the petitioner to enable the petitioner to meet
such grounds as such an order has serious civil consequences.
66. This Court finds that the petitioner has submitted a representation dated
05.03.2026 alleging “bid rigging” and “collusive bidding” by some bidders.
Petitioner also prayed for refund of the Bid Security. This Court, therefore,
feels that the authorities should be directed to decide the issue of “bid
rigging” and “collusive bidding” raised by the petitioner as well as refund of
Bid security by passing a reasoned order within a specified time. It will be
open to the respondent authorities to revisit the order of forfeiture of Bid
Security if the same is necessary for considering the prayer for refund of Bid
Security.
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67. The decision in the case of N.G. Projects Limited (supra) is an authority for
the proposition of law that whether a term of a contract is essential or not is
to be viewed from the perspective of the employer and by the employer. Such
an issue did not arise for consideration in this writ petition.
68. There is no quarrel to the proposition of law laid down in Bharat Amratlal
Kothari (supra) that though the Court has very wide discretion in granting
relief, the Court, however, cannot, ignoring and keeping aside the norms
and principles governing a relief, grant a relief not even prayed for by the
petitioner. Such a situation has not arisen in the case on hand.
69. In the case on hand, no show cause notice, prior to issuing the order of
debarment, has been issued. No opportunity of hearing has also been
afforded to the petitioner prior to passing the order of the debarment. This
Court holds that the action of debarment is in violation of the principles of
natural justice.
70. For all the reasons as aforesaid the Office Order dated 03.02.2026 insofar as
the petitioner was debarred from participating in auction for next three
years is set aside.
71. The 5th respondent is directed to consider the representation dated
05.03.2026 insofar as it relates to “bid rigging” and “collusive bidding” by
some of the bidders as well as refund of Bid security by passing a reasoned
order after affording an opportunity of hearing to the petitioner and any
other party(ies) who may be affected by such decision and communicate the
reasoned order to the petitioner as expeditiously as possible but preferably
within a period of eight weeks from the receipt of a server copy of this order.
72. The writ petition stands disposed of with the aforesaid observations and
directions.
73. It is, however, made clear that this order shall not preclude the respondent
authorities from issuing a show cause notice indicating the reasons as to
why a debarment order is felt necessary and to call upon the petitioner to
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give reply to the same and, thereafter proceed in accordance with law.
Before parting, this Court further makes it clear that the order of
cancellation of the auction is not interfered with by this Court. There shall
be, however, no order as to cost.
74. Urgent photostat certified copies, if applied for, be supplied to the parties
upon compliance of all formalities.
(HIRANMAY BHATTACHARYYA, J.)
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