Permanent blacklisting of a company is impermissible in law

The Supreme Court in B.C. BIYANI PROJECTS PVT. LTD. VS. STATE OF MADHYA PRADESH AND OTHERS has held that order for blacklisting a company permanently is impermissible in law. A Bench comprising of Justices Madan B. Lokur and R.K. Agrawal was considering plea of a company which was blacklisted for the award of contracts by the state of Madhya Pradesh since it is stated that there was unreasonable delay in the completion of six contracts awarded to the appellant. The order of blacklisting was for an indefinite period. The Apex Court referred to its earlier decision in Kulja Industries Limited Vs. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Others [(2014) 14 SCC 731], wherein it was held that“debarment” cannot be permanent and the period of “debarment” would invariably depend upon the nature of the offence committed by the erring contractor. The Court observed: “Since the appellant was blacklisted by an order dated 14th March, 2013 and since more than three years have goneby during which period the appellant has suffered blacklisting and also taking into consideration the fact that three out of six contracts have been completed by the appellant, we are of opinion that the period of blacklisting already undergone by the appellant is sufficient to meet the ends of justice.” The Court setting aside the order for blacklisting the company permanently observed: “the order for blacklisting the appellant is a permanent one.This is impermissible in law.” The Court however added that, in the event any further contracts are awarded to the appellant, they will ensure that there will not be any unreasonable delay on the part of the appellant in completing the work that is awarded.