No Blacklisting Without Fair Hearing And Prior Notice: Kerala High Court

Arbitrary blacklisting orders issued without giving notice or an opportunity to be heard cannot withstand judicial scrutiny, as executive power must comply with natural justice. The High Court set aside a two-year debarment order issued by the State Government against a global consulting firm over alleged lapses in background verification.

A single-judge bench of Justice Harisankar V. Menon delivered the decision while setting aside an order passed by the Electronics and Information Technology Department of the State of Kerala. The Court was hearing a writ petition challenging the debarment order issued against the petitioner company without prior notice or hearing.

Evaluating the principles governing debarment, the High Court observed that state actions entailing civil consequences must satisfy the test of fairness. The Court in its directions issued:

"i. Ext.P1 order passed by the 1st respondent is annulled.
ii. In view of the admitted facts that it is without serving the copy of the enquiry report, serving a show cause notice, and without granting an opportunity for hearing that it was issued originally, it is further declared that the order at Ext.P1 shall not operate against the rights and interests of the petitioner in further tender process."

Addressing the necessity of procedural fairness in blacklisting actions, the Court, in its reasoning, observed: "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..."

Background

The petitioner, PricewaterhouseCoopers Private Limited, was appointed as the Project Management Unit (PMU) for the Kerala Fibre Optics Network (KFON) project under Constitution of India, 1950. The Managing Director of the Kerala State Information Technology Infrastructure Limited (KSITIL) shared the CV of one Swapna Suresh for engagement in the Space Park Project. The petitioner facilitated a background check through M/s. Vision Technology and M/s. Knowy HR Solutions Private Limited, which provided a clean report. Following media reports alleging the candidate's involvement in a gold smuggling case and the use of fake educational certificates, the state authorities terminated the contract and subsequently issued an order blacklisting the petitioner for two years from projects under the Electronics and Information Technology Department.

The petitioner challenged the blacklisting order under Article 226 of Constitution of India, 1950, contending that it was passed without issuing any show cause notice, without providing a copy of the enquiry report, and without granting a personal hearing. The Court relied on precedents such as Kulija Industries Limited v. Chief General Manager, Western Telecom Project Bharat Sanchar Nigam Limited and Others, Gorkha Security Services v. Government (NCT of Delhi) and Others, Raghunath Thakur v. State of Bihar and Others ( "(1989) 1 SCC 229": 1988 CaseBase(SC) 395), Isolators and Isolators v. Madhya Pradesh Kshetra Vidyut Vitran Company Limited and Another, and Jm Pharma v. Principal Secretary, Department of Health and Others to hold that fair hearing is an essential precondition for blacklisting. Finding that no show cause notice or hearing was afforded, the High Court quashed the blacklisting order and declared that it would not affect the petitioner in future tender processes.

Case Details:
Case No.: WP(C) NO. 27008 OF 2020
Neutral Citation: 2026:KER:62857
Case Title: PRICEWATERHOUSECOOPERS PRIVATE LIMITED v. STATE OF KERALA AND ANR.
Appearances:
For the Petitioner(s): SRI. E.K. NANDAKUMAR (SR.), SHRI. M. GOPIKRISHNAN NAMBIAR, SHRI. K. JOHN MATHAI, SRI. JOSON MANAVALAN, SRI. KURYAN THOMAS, SHRI. PAULOSE C. ABRAHAM, SHRI. RAJA KANNAN, SRI. JAI MOHAN
For the Respondent(s): SRI. K.V. SOHAN (STATE ATTORNEY), SRI. K.A. ABDUL SALAM, SRI. SACHIN RAMESH (GOVERNMENT PLEADER), SRI. SUNIL V. MOHAMMED

Source: 2026 CaseBase(KER) 13020