Judgment :- Basheer, J. The challenge in this writ Appeal is against blacklisting of appellant from undertaking any contract in the Kerala State Civil Supplies Corporation (for short "the Corporation"). 2. Appellant was awarded a contract by the corporation for handling and transportation of food grains to the Sub Depot at Vellayil in Kozhikode for a period of two years commencing from 21.4.1997. Main two items of operation under the contract were cleaning of the food grains and filling the loose grains in gunnies. In the nature of the dispute that is to be resolved in this case, we are not referring to the various other details relating to the contract in question. 3. As mentioned earlier, the contract awarded to the appellant was initially for a period of two years starting from 21.4.1997. It is not in dispute that the contract was being renewed by the corporation from time to time at the same rates and on the same terms and conditions as indicated in Ext.P1. However, by Ext.P3 communication dated 23.3.2002 the Regional Manager of the corporation informed the appellant that the special audit party which conducted a detailed audit of accounts relating to cleaning and rebagging of the food grains undertaken at the sub depot, for the period from 26.5.1997 to 31.12.2000 had detected a lot of discrepancies and that the appellant was paid a sum of Rs. 2,57,361.55 on the basis of "bogus claims" made by him. Therefore, the appellant was directed to remit the above-mentioned sum of Rs.2,57,361.55 to the Corporation, being the cleaning and filling charges received by him fraudulently within seven days of receipt of Ext.P3 communication. In response to the above communication, the appellant submitted Exts.P4 and P5 representations, which, however, were not productive. Thereafter, the Corporation informed the appellant by its communication-dated 3.7.2002 (Ext.P6) that the above sum of Rs.2,57,361.55 would be recovered from the pending bills payable to him towards the handling and transporting charges. Later, appellant was informed that his request to reconsider the order for recovery cannot be entertained. Soon thereafter, by Ext.P8 order dated 6.8.2002 the Chairman and Managing Director of the Corporation "found" that the appellant had cheated the corporation to the tune of Rs.2,57,361.55 and consequently it was ordered that the appellant be blacklisted from undertaking any type of work in the corporation. 4. Soon thereafter, by Ext.P8 order dated 6.8.2002 the Chairman and Managing Director of the Corporation "found" that the appellant had cheated the corporation to the tune of Rs.2,57,361.55 and consequently it was ordered that the appellant be blacklisted from undertaking any type of work in the corporation. 4. The appellant challenged the above orders/communications (Exts.P3, P6, P7and P8) issued by the corporation in the Original petition under Article 226 of the constitution. The learned Single Judge took the view that the order putting the appellant in the "blacklist" cannot be characterized as arbitrary. It was further held that the facts and circumstances of the case did not warrant that the corporation ought to have called for an explanation from the appellant before he was blacklisted. Consequently, the Original petition was dismissed. Hence, the Writ Appeal. 5. Shri K. Chandrasekharan, learned Senior Counsel for the appellant vehemently contended that the order passed by the corporation putting the appellant in the blacklist without affording an opportunity to e heard, is against all cannons of law and the well settled principles of natural justice. The learned Senior Counsel invited our attention to the operative portion of the impugned order issued by the chairman and Managing Director of the Corporation which reads as follows: "In the above circumstances I find that the Handling and Transporting Contractor M/s. Expert line Enterprises, 5/2848, Thuruthiyad, Puthiyara P.O., Kozhikode has cheated the Kerala state Civil supplies Corporation for an amount of Rs.2,57,361/55 (Rupees two lakhs fifty seven thousand three hundred sixty one and paise fifty five). Therefore I hereby order to blacklist M/s. Expert line Enterprises from undertaking any type of work in Kerala State Civil supplies Corporation." 6. The fact that the appellant was not heard before the above order was issued by the Corporation, is beyond dispute. The Corporation had informed the appellant for the first time on 23.3.2002 that the special Audit party of the corporation had scrutinized the entire accounts of the operations at the sub depot, Vellayil for the period from 24.5.1997 to 31.12.2000 and that on such scrutiny it was found that the appellant had been paid a sum of Rs.2,57,361.55 on the basis of "bogus claims" preferred by him. The corporation does not have a case that details of the so-called "findings" of the special audit party were made available to the appellant nor had he been given a copy of the report of the special audit party. It is also pertinent to note that the corporation has held the appellant guilty of cheating the corporation without even asking the appellant to explain why the so called findings of the special audit party should not be accepted, much less why a harsh and drastic step like blacklisting of the appellant should not be resorted to. 7. The contention of the corporation is that since the appellant cheated the corporation by making "bogus claims" and received huge sums pursuant thereto, he was liable to make good the loss sustained by the Corporation. The appellant was informed about the audit and scrutiny of the accounts conducted by the special audit party. According to the Corporation, the appellant ought to have know that the natural consequence of such a criminal act was nothing but blacklisting. It is therefore contended by the learned counsel for the corporation that a formal show cause notice was not necessary to be issued before blacklisting the appellant. 8. In the facts and circumstances mentioned above, the question that falls for consideration is whether there was breach of the rules of natural justice in refusing an opportunity of being heard to the appellant before he was blacklisted. A further question may yet arise whether issuance of a show cause notice would have made any substantial change in the ultimate decision that the corporation might have taken even assuming there was breach of the rules of natural justice. In other words, was it necessary to issue show cause notice to the appellant if no prejudice was likely to be caused? 9. According to the corporation, even without issuing a show cause notice, the appellant knew what action was likely to be taken against him, and therefore it was not necessary for the corporation to go through and empty formality of issuing a show cause notice to him and hearing him before he was blacklisted. 10. 9. According to the corporation, even without issuing a show cause notice, the appellant knew what action was likely to be taken against him, and therefore it was not necessary for the corporation to go through and empty formality of issuing a show cause notice to him and hearing him before he was blacklisted. 10. The above contention necessarily calls for considering the question whether any prejudice has been caused to the appellant by denying him an opportunity of being heard before he was blacklisted and also whether the "useless formality" theory would come into play in the facts and circumstances of the case. It may be true that the rigour of the rule that "breach of principles of natural justice was in itself prejudice and no other de facto prejudice need be proved", (Ridge V. Baldwin - (1963) 2 All. E.R, 66(HL) has been relaxed considerable. However, it cannot be said that the executive authorities need not adhere to the salutary principle of audi alteram partem at all. Insistence for complying with the rules of natural justice with all its rigour and force may not be necessary if the "admitted or indisputable facts" lead only to one conclusion. But this relaxation in the rigour to comply with the principles of natural justice does not mean that the authority which passes an order adverse to the rights liberties of a citizen can spurn those principles and take any decision with impunity. 11. In Erusian Equipment & Chemicals LTD. V. State of west Bengal - AIR 1975 SC 266.) the Hon'ble Supreme court held: "Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purpose of gains. The fact that a Disability is created by the order of blacklisting indicates that the relevant authority is to have and objective satisfaction. Fundaments 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 above decision was followed by the Supreme Court in Joseph Vilangadan v. The Executive Engineer (PWD), Ernakulam (AIR 1978 SC 93) and in M/s. Southern painters V. Fertilizers & Chemicals Travancore Ltd. (AIR 1994 SC 1277). In Erusian Equipment's case, the Supreme Court further observed as follows: "The blacklisting order does not pertain to any particular contractor. In Erusian Equipment's case, the Supreme Court further observed as follows: "The blacklisting order does not pertain to any particular contractor. Where the blacklisting order involves civil consequences it casts a slur. It creates a barrier between the persons blacklisted and the Government in the matter of transactions. The blacklists are " instruments of coercion." 12. In Raghunath Thakur V. State of Bihar (AIR 1989 sc 620) the Supreme Court held that "blacklisting any person in respect of business ventures has civil consequence for the future business of the person concerned in any event. Even if the rules do not express so, it is an elementary principle of natural justice that parties affected by any order should have right of being heard and making representations against the order." In Grosons pharmaceuticals (P) Ltd. V. State if U.P. (JT 2001 (7) SC 500) the supreme court held that "an order blacklisting an approved contractor results in civil consequences And in such a situation in the absence of statutory rules, the only requirement of law while passing such an order was to observe the principle of audi alteram partem which is one of the facts of the principles of natural justice." 13. The judicial precedents referred to above leave no room for any ambiguity for the position that blacklisting a contractor entails a civil consequence. It is punitive, undoubtedly. The repercussions of an order of blacklisting will be disastrous and far-reaching. The stigma of blacklisting will not only ruin the career of eh contractor concerned, but will certainly mar his reputation also. 14. In the words of His Lordship Justice K.K. Mathew, (AIR 1969 Ker. 81): 15. "Government has right like any private citizen to enter into contracts with any person it chooses and no person has a right fundamental or otherwise to insist that Government must enter into a contractual relation with him." A contractual relationship presupposes a consensus of two minds. If Government is not willing to enter into contract with a person, I do not think that Government can be forced to do so. If Government is not willing to enter into contract with a person, I do not think that Government can be forced to do so. It is one thing to say that Government, like any other private citizen, can enter into contract with any person it pleases, but a totally different thing to say that Government can unreasonably put a person's name in a black-list and debar him from entering into any contractual relationship with the Government for years to come. Reputation can be viewed both as an interest of personality and as an interest of substance, viz. as an asset." 16. In this context we may deal with the contention of the corporation that issuance of show cause notice to the appellant might have been only an empty formality. No useful purpose would have been served even if the appellant was heard before orders of recovery and blacklisting were issued. This contention necessarily takes us to the "useless formality theory". In M.C Mehta V. Union of India & Ors. (1999) 6 SCC 237. His Lordship Jagannadha Rao has dealt with applicability of the above principle to cases where "all facts are not admitted or are not all beyond dispute". While tracing the history and growth of the theory in India and abroad, and after referring to various authors of eminence, His Lordship has quoted the following observation of Ackner, J. ".. Convenience and justice are often not on speaking terms. Useless formality theory is a dangerous one and however inconvenient, natural justice must be followed." The Supreme Court did not make any final pronouncement on the applicability of "useless formality theory" either in M.C.Mehta's case or in Aligarh Muslim University and another V. Mansoor Alikhan (2000) 7 SCC 529. It was broadly stated that applicability of the above theory may depend on the facts of a particular case. It was broadly stated that applicability of the above theory may depend on the facts of a particular case. In S.L.Kappor V. Jag Mohan (1980 (4) SCC 379) His Lordship justice Chinnappa Reddy observed as follows: "As we said earlier where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because courts do not issue futile writs" After referring to the above exception to the general rules of natural justice, the Supreme Court in Mansoor Ali Khan's case (supra) observed as follows: "We may add a word of caution. Care must be taken, wherever the court is justifying a denial of natural justice, that its decision is not described as a "preconceived view" or one in substitution of the view of the authority who would have considered the explanation. That Is why we have taken pains to examine in depth whether the case fits into the exception." 16. In the above context, the observation of the Supreme Court in A.K. Kraipak V. Union of India (AIR 1970 SC 150) may be noticed. Speaking on behalf of the 5 Judge Bench of the Court, His Lordship Justice Hedge observed as follows. "The Aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years." 17. We have carefully considered the submission made by the learned counsel for the parties. It is pertinent to note that there is no "admitted or indisputable factual position" in the case on hand. As noticed earlier, the appellant was not given an opportunity to give his explanation about the alleged irregularities detected by the Internal Audit Wing. Ext.P3 order was issued by the Corporation on 23.3.2002 directing the appellant to remit Rs.257, 361.55 within seven days. There was no show cause notice preceding the above order. As noticed earlier, the appellant was not given an opportunity to give his explanation about the alleged irregularities detected by the Internal Audit Wing. Ext.P3 order was issued by the Corporation on 23.3.2002 directing the appellant to remit Rs.257, 361.55 within seven days. There was no show cause notice preceding the above order. Though appellant had given a reply to this order through Ext.P4 followed by Ext.P5 he was not given an opportunity to give his explanation about the alleged irregularities detected by the Internal Audit wing. Ext.P3 order was issued by the Corporation on 23.3.2002 directing the appellant to remit Rs. 257, 361.55 within seven days. There was no show cause notice preceding the above order. Though appellant had given a reply to this order through Ext. P4 followed by Ext. P5 he was not given any opportunity to be heard. No details were furnished to the appellant as t how the Corporation had quantified the amount of Rs. 2,57,361.55. Ext.P6 order was subsequently issued by the Corporation informing the appellant that the above sum of money had been recovered from the bills payable to him. Ext.P6 order does not reveal that the reply given by the appellant (Exts.P4 and P5) were considered by the corporation before issuing the said order. The order only states that the Managing Director had "ordered" the recovery through a Fax message. We have no hesitation to hold that Ext.P3 and P6 orders are highly arbitrary, illegal and vitiated. It is well settled that the rules of natural justice have to be complied with by the administrative authorities also while passing orders affecting the rights of individuals. The protection given to an individual under Articles 14 and 16 of the Constitution has to be safeguarded. This Court cannot Countenance any violation of the right of the citizens. 18. There is considerable force in the contention of the Senior Counsel that the appellant was not given any opportunity to be heard before his name was included in the "instrument of coercion". He was not furnished with anyy data or details with regard to the "findings" of the Internal Audit wing in the audit inspection relating to the period from 24.5.1997 to 31.12.2000. Ext.P8 order by which the name of the appellant was put in the blacklist was served on him in August 2002 after a lapse of more than 2 1/2 years. Ext.P8 order by which the name of the appellant was put in the blacklist was served on him in August 2002 after a lapse of more than 2 1/2 years. It is true that certain reasons and conclusions have been mentioned in the above order, which prompted the Corporation to pass the impugned order. We do not propose to express any opinion on the "finding" entered by the Chairman and Managing Director of the Corporation holding the appellant guilty of cheating the Corporation. However tenable the reasons may be, we are of the view that Ext. P8 order cannot stand scrutiny in the eye of law. 19. The learned single Judge took the view that as far as the Corporation is concerned, the question of retention of the appellant on the roll of the contractors did not arise at all in view of the grave misdeeds of the appellant. Therefore the learned Judge held that issuance of a show cause notice to the appellant seeking his response there of would not have made any difference. It was in the above circumstances that the learned Judge repelled the contentions of the appellant as regards violation of his right to be heard in the matter. The learned Judge proceeded to consider the question erroneously according to us, as to whether the appellant would be entitled to contend that the Corporation had a legal duty to continue to retain the appellant as a contractor to do business with it. In fact, the primary issue which arose for consideration in the Original petition was whether the appellant could have been blacklisted without affording him an opportunity of being heard. The question whether the corporation had a legal obligation to continue to entertain the appellant as a contractor and to do business with him was only secondary. On the basis of the materials available on record, we are not satisfied that the action of the Corporation in issuing the impugned orders without hearing the appellant was justified. 20. Learned single Judge has referred to the decision of the Supreme Court in Gangadhar Behera v. State of Orissa (2002) 8 SCC 381). In our view, the principle laid down by the Supreme Court in the above decision does not have any bearing on the facts of this case. 20. Learned single Judge has referred to the decision of the Supreme Court in Gangadhar Behera v. State of Orissa (2002) 8 SCC 381). In our view, the principle laid down by the Supreme Court in the above decision does not have any bearing on the facts of this case. The said decision dealt with the benefit of doubt that is available to an accused in a criminal trial and also largely with the principles relating to appreciation of evidence of witnesses in a criminal case. The court was considering the acceptable degree of probability, which culminates in proof as compared to pieces of evidence that come within the realm of '˜reasonable doubt'. We are therefore of the view that the principle laid down in Gangadhar Behera's case is of no help to the corporation. 21. Having regard to the entire facts and circumstances of the case we are satisfied that Exts.P3, P6 and P8 orders are ex facie arbitrary, vitiated and against the rules of natural justice. These orders issued by the Corporation are liable to be quashed. 22. Hence the writ Appeal is allowed. The impugned judgment is set aside. Exts.P3, P6 and P8 orders are quashed. The corporation may, if so advised, initiate fresh proceedings against the appellant on the basis of the report of the internal Audit wing after affording an opportunity to be heard. If no fresh action is being initiated against the appellant, the entire amounts payable to him shall be paid within two months from the date of receipt of a certified copy of this judgment.