Without clear intention in show cause notice to blacklist the entity, the Decision-Making Authority cannot blacklist an entity: SC

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UMC Technologies Private Limited v Food Corporations of India

CIVIL APPEAL NO 3687 OF 2020 (Arising out of S.L.P. (C) No. 14228 of 2019) decided on November 16, 2020.

BENCHS Abdul Nazeer, BR Gavai, JJ.


In the present case, Food Corporation of India (FCI) issued tenderinviting bids for appointment of a recruitment agency to conduct the process of recruitment. Appellant was also one of the bidders and was appointed for the period of 2 years. Later while conducting the examination process the question paper was leaked. FCI issued a show cause notice to appellant and after due deliberation, passed an order blacklisting the agency from undertaking FCI projects for period of next five years. Appellant approached High Court of Madhya Pradesh on account of being blacklisted, where his challenge was dismissed. Aggrieved by this he appealed before the Supreme Court of India.


Whether the FCI’s decision to blacklist the appellant from endeavouring any future FCI project is ultra vires?


Supreme Court in its judgement observed that a clear notice is essential for ensuring that the person against whom the penalty of blacklisting is intended to be imposed, has an adequate, informed and meaningful opportunity to show cause against his possible blacklisting. However in the present case, action of blacklisting was neither expressly proposed nor could have been inferred from the language employed by the FCI in the show cause notice. Secondly, the bid contract merely lays down eligibility criteria and does not grant any power of future blacklisting. The Court observed that blacklisting a company has some inherent social stigma attached which may eventually lead to civil death of the appellant. Further, appellant is not given reasonable opportunity to defend himself; it is violation of principles of natural justice. Hence on abovementioned observations the Supreme Court allowed the appeal and set aside the order of blacklisting.

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