JUDGMENT : The present writ petition has been filed for quashing letter No. 13/19-1313 dated 24.12.2019 (Annexure-6 to the writ petition) by reasons of which the respondent No.2 has permanently blacklisted the petitioner-company. Further prayer has been made for quashing letter No. 13/19-1312 dated 24.12.2019 (Annexure-7 to the writ petition) by reasons of which the respondent No.2 has directed the Director/the In-Charge Principal of BIT, Sindri as well as the other educational institutions not to take any equipment from the petitioner-company and also to keep its balance due amount in abeyance. 2. The factual background of the case, as stated in the writ petition, is that the Department of Higher, Technical Education and Skill Development, Government of Jharkhand floated an e-tender notice vide Reference No. 923 Ranchi/2018-19 for supply of laboratory equipments in various colleges of the State of Jharkhand. Pursuant to the said e-tender notice, the petitioner-company submitted its bid on 07.01.2019 and qualified the technical as well as financial bid. Thereafter, the respondent No.3 sent the supply order to the petitioner-company for supply of certain equipments vide letter No. 981 dated 22.01.2019 in response to which the petitioner-company supplied the required equipments to the respondent No.3. As per the reports dated 24.02.2019, the receiving/installation/demonstration of all the supplied equipments was done by the petitioner-company and the respondent No.3 approved the same without any objection. Only one apparatus was found damaged which was informed to the petitioner-company and in response to the same, it replaced the said apparatus and thereafter there was no objection with regard to the remaining apparatuses/ equipments. The petitioner-company was also paid the amount of bills raised on two different dates i.e. 27.02.2019 & 07.03.2019. However, suddenly the respondent No.2 issued the impugned letter No. 13/19-1313 dated 24.12.2019 by reasons of which it was blacklisted without issuing any show cause notice. 3. Learned counsel for the petitioner submits that the terms and conditions of e-tender notice manifestly indicate that any payment was to be made to the petitioner-company after delivery, verification of quality, specification and successful installation, demonstration and training of the equipments and softwares (if any) at institute. 3. Learned counsel for the petitioner submits that the terms and conditions of e-tender notice manifestly indicate that any payment was to be made to the petitioner-company after delivery, verification of quality, specification and successful installation, demonstration and training of the equipments and softwares (if any) at institute. Hence, the payment of the bill raised in consonance with the reports of the Government Polytechnic, Ranchi makes it quite clear that there was no infirmity in the equipments supplied by the petitioner-company and the same were supplied as per the terms and conditions of the said e-tender notice as well as the work order. The impugned letter dated 24.12.2019 of the respondent No.2 blacklisting the petitioner-company has been issued without giving any show cause notice to it which is contrary to the settled principle of law. It is further submitted that the petitioner-company has been blacklisted without making any proper enquiry in this regard. The impugned order dated 24.12.2019 though speaks of the discrepancies/anomalies in the equipments supplied by the petitioner-company, however, the installation/demonstration report of the Government Polytechnic, Ranchi would clearly suggest that all the equipments were properly working and one damaged apparatus was also replaced and thereafter the payment was already made by the Government Polytechnic, Ranchi on being satisfied with the quality/quantity of the supplied equipments. The respondent No.2 however did not make any enquiry before issuing the impugned letter dated 24.12.2019. The petitioner was never served with any enquiry report conducted at the instance of the respondent No.2 so as to suggest that the quality of the equipments supplied by the petitioner-company was verified. The entire tender process was conducted under the supervision of the respondent No.2 and no objection was ever raised by the said authority while the petitioner-company was declared as the successful tenderer. As such, after passage of such a long time, the allegation made by the respondent No.2 in the impugned letters dated 24.12.2019 is completely arbitrary and malafide. 4. Per-contra, learned counsel for the respondents submits that the supplied engineering machines and equipments by the petitioner were inspected properly and the same were found to be of inferior quality as well as most of them were also found to be defective. The majority of the equipments/accessories were found missing and nonfunctional as well as those were not conforming to the conditions mentioned in the tender documents. The majority of the equipments/accessories were found missing and nonfunctional as well as those were not conforming to the conditions mentioned in the tender documents. Thereafter, the said infirmities were reported to the concerned Department of the Government whereupon an inspection team was constituted which conducted onsite verification and quality check of the supplied engineering machines and equipments. The enquiry/inspection team then submitted its report on 07.08.2019 which suggested that the respondent No.3 was involved in mismanagement in several aspects. Subsequently, the respondent No. 2 vide letter No. 1025 dated 12.09.2019, sought clarification from the respondent No.3 on different pointes including purchase of inferior quality of the equipments. The respondent No.3, however, did not reply the said letter issued by the respondent No.2 and as such a reminder was sent vide letter No. 1198 dated 01.11.2019 to the respondent No.3. Since no reply/clarification was received from the respondent No.3 even after reminder of the concerned Department of the Government, the inspection team again made onsite verification and quality check of the engineering machineries and equipments supplied by the petitioner-company and the said team again submitted negative report. The said matter was viewed seriously by the concerned Department of the Government raising question on the entire tender process itself. Under the aforesaid background, the impugned letters dated 24.12.2019 were issued by the respondent No.2 so as to stop the petitioner-company from supplying any inferior quality of equipments to the other educational institutions. 5. Heard learned counsel for the parties and perused the relevant materials available on record. The main submission of learned counsel for the petitioner-company is that the impugned letter dated 24.12.2019 blacklisting the petitioner-company has been issued in violation of the principles of natural justice as no show cause notice was given to it before issuance of the said letter. 6. To appreciate the arguments advanced on behalf of leaned counsel for the parties, few relevant judgments rendered by the Hon’ble Supreme Court are required to be discussed. 7. The Hon’ble Supreme Court in the case of Kulja Industries Ltd. Vs. Chief General Manager, Western Telecom Project BSNL & Anr., reported in (2014) 14 SCC 731 , has held as under: “17. 7. The Hon’ble Supreme Court in the case of Kulja Industries Ltd. Vs. Chief General Manager, Western Telecom Project BSNL & Anr., reported in (2014) 14 SCC 731 , has held as under: “17. That apart, 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 in our opinion inherent in the party allotting the contract. There is no need for any such power being specifically conferred by statute or reserved by contractor. That is because “blacklisting” simply signifies a business decision by which the party affected by the breach decides not to enter into any contractual relationship with the party committing the breach. Between two private parties the right to take any such decision is absolute and untrammelled by any constraints whatsoever. The freedom to contract or not to contract is unqualified in the case of private parties. But any such decision is subject to judicial review when the same is taken by the State or any of its instrumentalities. This implies that any such decision will be open to scrutiny not only on the touchstone of the principles of natural justice but also on the doctrine of proportionality. A fair hearing to the party being blacklisted thus becomes an essential precondition for a proper exercise of the power and a valid order of blacklisting made pursuant thereto. The order itself being reasonable, fair and proportionate to the gravity of the offence is similarly examinable by a writ court. 18. The legal position on the subject is settled by a long line of decisions rendered by this Court starting with Erusian Equipment & Chemicals Ltd. v. State of W.B. where this Court declared that blacklisting has the effect of preventing a person from entering into lawful relationship with the Government for purposes of gains and that the authority passing any such order was required to give a fair hearing before passing an order blacklisting a certain entity. This Court observed: (SCC p. 75, para 20) “20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government 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. This Court observed: (SCC p. 75, para 20) “20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government 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.” Subsequent decisions of this Court in Southern Painters v. Fertilizers & Chemicals Travancore Ltd.; Patel Engg. Ltd. v. Union of India ; B.S.N. Joshi & Sons Ltd. v. Nair Coal Services Ltd.; Joseph Vilangandan v. Executive Engineer (PWD) among others have followed the ratio of that decision and applied the principle of audi alteram partem to the process that may eventually culminate in the blacklisting of a contractor. 19. Even the second facet of the scrutiny which the blacklisting order must suffer is no longer res integra. The decisions of this Court in Radha Krishna Agarwal v. State of Bihar; E.P. Royappa v. State of T.N.; Maneka Gandhi v. Union of India; Ajay Hasia v. Khalid MujibSehravardi; RamanaDayaramShetty v. International Airport Authority of India and Dwarka Das Marfatia and Sons v. Port of Bombay have ruled against arbitrariness and discrimination in every matter that is subject to judicial review before a writ court exercising powers under Article 226 or Article 32 of the Constitution. 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: (SCC pp. 760-61, para 12) “12. 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: (SCC pp. 760-61, para 12) “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 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 Radha Krishna 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.” 8. Further, in the case of Gorkha Security Services Vs. Govt. Further, in the case of Gorkha Security Services Vs. Govt. (NCT of Delhi) & Anr., reported in (2014) 9 SCC 105 , the Hon’ble Supreme Court has held as under: “16. It is a common case of the parties that the blacklisting has to be preceded by a show-cause notice. Law in this regard is firmly grounded and does not even demand much amplification. The necessity of compliance with the principles of natural justice by giving the opportunity to the person against whom action of blacklisting is sought to be taken has a valid and solid rationale behind it. With blacklisting, many civil and/or evil consequences follow. It is described as “civil death” of a person who is foisted with the order of blacklisting. Such an order is stigmatic in nature and debars such a person from participating in government tenders which means precluding him from the award of government contracts. 17. Way back in the year 1975, this Court in Erusian Equipment & Chemicals Ltd. v. State of W.B., highlighted the necessity of giving an opportunity to such a person by serving a show-cause notice thereby giving him opportunity to meet the allegations which were in the mind of the authority contemplating blacklisting of such a person. This is clear from the reading of paras 12 and 20 of the said judgment. Necessitating this requirement, the Court observed thus: (SCC pp. 74-75) “12. Under Article 298 of the Constitution the executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. The State has the right to trade. The State has there the duty to observe equality. An ordinary individual can choose not to deal with any person. The Government cannot choose to exclude persons by discrimination. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. A person who is on the approved list is unable to enter into advantageous relations with the Government because of the order of blacklisting. A person who has been dealing with the Government in the matter of sale and purchase of materials has a legitimate interest or expectation. When the State acts to the prejudice of a person it has to be supported by legality. 20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government 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.” 18. Again, in Raghunath Thakur v. State of Bihar the aforesaid principle was reiterated in the following manner : (SCC p. 230, para 4) “4. Indisputably, no notice had been given to the appellant of the proposal of blacklisting the appellant. It was contended on behalf of the State Government that there was no requirement in the rule of giving any prior notice before blacklisting any person. Insofar as the contention that there is no requirement specifically of giving any notice is concerned, the respondent is right. But it is an implied principle of the rule of law that any order having civil consequence should be passed only after following the principles of natural justice. It has to be realised 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. 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 that view of the matter, the last portion of the order insofar as it directs blacklisting of the appellant in respect of future contracts, cannot be sustained in law. In the premises, that portion of the order directing that the appellant be placed in the blacklist in respect of future contracts under the Collector is set aside. So far as the cancellation of the bid of the appellant is concerned, that is not affected. This order will, however, not prevent the State Government or the appropriate authorities from taking any future steps for blacklisting the appellant if the Government is so entitled to do in accordance with law i.e. after giving the appellant due notice and an opportunity of making representation. After hearing the appellant, the State Government will be at liberty to pass any order in accordance with law indicating the reasons therefor. We, however, make it quite clear that we are not expressing any opinion on the correctness or otherwise of the allegations made against the appellant. The appeal is thus disposed of.” 19. Recently, in Patel Engg. Ltd. v. Union of India speaking through one of us (Justice Chelameswar, J.) this Court emphatically reiterated the principle by explaining the same in the following manner : (SCC pp. 262-63, paras 13-15) “13. The concept of ‘blacklisting’ is explained by this Court in Erusian Equipment & Chemicals Ltd. v. State of W.B. as under: (SCC p. 75, para 20) ‘20. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the Government for purposes of gains.’ 14. The nature of the authority of the State to blacklist the persons was considered by this Court in the abovementioned case and took note of the constitutional provision (Article 298), which authorises both the Union of India and the States to make contracts for any purpose and to carry on any trade or business. It also authorises the acquisition, holding and disposal of property. This Court also took note of the fact that the right to make a contract includes the right not to make a contract. It also authorises the acquisition, holding and disposal of property. This Court also took note of the fact that the right to make a contract includes the right not to make a contract. By definition, the said right is inherent in every person capable of entering into a contract. However, such a right either to enter or not to enter into a contract with any person is subject to a constitutional obligation to obey the command of Article 14. Though nobody has any right to compel the State to enter into a contract, everybody has a right to be treated equally when the State seeks to establish contractual relationships. The effect of excluding a person from entering into a contractual relationship with the State would be to deprive such person to be treated equally with those, who are also engaged in similar activity. 15. It follows from the above judgment in Erusian Equipment case that the decision of the State or its instrumentalities not to deal with certain persons or class of persons on account of the undesirability of entering into the contractual relationship with such persons is called blacklisting. The State can decline to enter into a contractual relationship with a person or a class of persons for a legitimate purpose. The authority of the State to blacklist a person is a necessary concomitant to the executive power of the State to carry on the trade or the business and making of contracts for any purpose, etc. There need not be any statutory grant of such power. The only legal limitation upon the exercise of such an authority is that the State is to act fairly and rationally without in any way being arbitrary—thereby such a decision can be taken for some legitimate purpose. What is the legitimate purpose that is sought to be achieved by the State in a given case can vary depending upon various factors.” 20. Thus, there is no dispute about the requirement of serving show-cause notice. We may also hasten to add that once the show-cause notice is given and opportunity to reply to the show-cause notice is afforded, it is not even necessary to give an oral hearing. The High Court has rightly repudiated the appellant’s attempt in finding foul with the impugned order on this ground. Such a contention was specifically repelled in Patel Engg.” 9. The High Court has rightly repudiated the appellant’s attempt in finding foul with the impugned order on this ground. Such a contention was specifically repelled in Patel Engg.” 9. It would thus be evident that the Hon’ble Supreme Court has held that when a contract is entered between two private parties, then in case of any breach by one party, the other party has every right to blacklist the defaulter and such right is unqualified. However, in a situation where an order of blacklisting is passed by the State or its instrumentalities, then such order is within the realm of judicial review of the Writ Court and the same has to be tested in the touchstone of the principle of natural justice, doctrine of proportionality, reasonableness and fairness. The order of blacklisting has the effect of depriving a person of equality of opportunity in the matter of public contract. Blacklisting has the effect of preventing a person from the privilege and advantage of entering into lawful relationship with the government/government agencies for the purposes of gains. Thus, before taking such a harsh decision, the person concerned should be given an opportunity to represent his case before he is put on the blacklist. The show cause notice on this issue must not be mere formality, rather the same should specifically mention the grounds on which the department necessitates the action and should also disclose the proposed action so that the aggrieved person may get opportunity to appropriately defend himself. 10. Coming back to the present case. On perusal of the impugned letter No. 13/19-1313 dated 24.12.2019, it appears that the order of blacklisting of the petitioner-company has been passed by the respondent No.2 observing inter alia that though the petitioner-company was not technically qualified, its financial bid was opened and the supply order was issued to it and as such the process of the said tender itself was suspicious. It has further been observed by the respondent No.2 that the items supplied by the petitioner-company were found to be of inferior quality, which were not conforming to the conditions of the said tender. According to the respondent No.2, the equipments installed by the petitioner-company were also not in running condition from the very beginning. It has further been observed by the respondent No.2 that the items supplied by the petitioner-company were found to be of inferior quality, which were not conforming to the conditions of the said tender. According to the respondent No.2, the equipments installed by the petitioner-company were also not in running condition from the very beginning. However, the specific contention of the petitioner is that it was not served any show cause notice to explain the allegation levelled against it and therefore it was not in a position to controvert the said allegation by putting forth sufficient explanation. 11. On perusal of the counter affidavit filed on behalf of the respondents, it appears that the show cause notice was issued to the respondent No.3 and not to the petitioner. The same cannot be said to be sufficient compliance of the principles of natural justice so far as the petitioner-company is concerned. Since the impugned letter of blacklisting is prejudicial to the interest of the petitioner, the respondents should have served a specific show-cause notice to it before issuing the said letter, which they have failed to comply and on this score alone, the impugned letter No. 13/19-1313 dated 24.12.2019 cannot be sustained in law. It also appears from the impugned letter of blacklisting that the same does not mention any period for which the petitioner has been blacklisted which is also in the contravention of the ratio laid down by the Hon’ble Apex Court in the aforesaid cases. Thus, I am of the considered view that the decision making process of the respondent-authorities, particularly the respondent No.2, in blacklisting the petitioner-company is vitiated in law having been undertaken in violation of the principles of natural justice i.e. without affording sufficient opportunity of hearing to the petitioner to defend its case. 12. As regards the prayer of the petitioner for quashing letter No. 13/19-1312 dated 24.12.2019 whereby the payment of the due amount against the supply made by it has been ordered to be kept in abeyance, I find that before issuing the said letter, the equipments supplied by the petitioner-company were inquired by a team of the Government officials and most of them were not found as per the specifications mentioned in the said tender and some of those were not found running since the date of installation. 13. In the case of Joshi Technologies International Inc. Vs. 13. In the case of Joshi Technologies International Inc. Vs. Union of India & Ors., reported in (2015) 7 SCC 728 , the Hon’ble Supreme Court has held as under: “69. The position thus summarised in the aforesaid principles has to be understood in the context of discussion that preceded which we have pointed out above. As per this, no doubt, there is no absolute bar to the maintainability of the writ petition even in contractual matters or where there are disputed questions of fact or even when monetary claim is raised. At the same time, discretion lies with the High Court which under certain circumstances, it can refuse to exercise. It also follows that under the following circumstances, “normally”, the Court would not exercise such a discretion: 69.1. The Court may not examine the issue unless the action has some public law character attached to it. 69.2. Whenever a particular mode of settlement of dispute is provided in the contract, the High Court would refuse to exercise its discretion under Article 226 of the Constitution and relegate the party to the said mode of settlement, particularly when settlement of disputes is to be resorted to through the means of arbitration. 69.3. If there are very serious disputed questions of fact which are of complex nature and require oral evidence for their determination. 69.4. Money claims per se particularly arising out of contractual obligations are normally not to be entertained except in exceptional circumstances.” 14. The dues of the petitioner-company which has been ordered to be kept in abeyance by the respondent No.2 is not an admitted dues and as such no direction can be issued on the said aspect in the Writ jurisdiction of this Court. Moreover, the said direction also does not appear to be a final one. However, since the petitioner was not given prior notice on this issue also, I think it appropriate to direct the concerned respondent to issue a specific show cause notice to the petitioner-company before taking the final decision with regard to retaining its due amount against the supply of equipments/machineries made by it. 15. Under the aforesaid facts and circumstances, the present writ petition is disposed of by passing the following orders: (i) Letter No. 13/19-1313 dated 24.12.2019 (Annexure-6 to the writ petition) issued by the respondent No.2 blacklisting/debarring the petitioner-company is hereby quashed and set aside. 15. Under the aforesaid facts and circumstances, the present writ petition is disposed of by passing the following orders: (i) Letter No. 13/19-1313 dated 24.12.2019 (Annexure-6 to the writ petition) issued by the respondent No.2 blacklisting/debarring the petitioner-company is hereby quashed and set aside. The respondent No.2 shall take a final decision by passing an informed order on the issue of blacklisting/debarment of the petitioner-company after issuing a specific show cause notice to it and on providing due opportunity of hearing to the representative of the petitioner-company, preferably within a period of twelve weeks from the date of receipt/production of a copy of this order. (ii) The respondent No.2 is also directed to issue a specific show cause notice to the petitioner-company in relation to retaining the dues of the petitioner-company against the supply made by it and to take an informed decision after providing due opportunity of hearing to the representative of the petitioner-company within the aforesaid period itself. The direction issued by the respondent No.2 vide letter No. 13/19-1312 dated 24.12.2019 (Annexure-7 to the writ petition) shall be subject to the final decision to be taken by the respondent No.2 in this regard.