/2022 INSC 0177/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.1083 OF 2022
State of Odisha & Ors.             ..Appellant (S)
VERSUS
M/s Panda Infraproject Limited                     ..Respondent (S)
With 
CIVIL APPEAL NO.1084 OF 2022
State of Odisha & Ors.             ..Appellant (S)
VERSUS
M/s Panda Infra Projects (India) Pvt. Ltd.            ..Respondent (S)
J U D G M E N T 
M. R. Shah, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
judgment and order dated 23.03.2021 passed by the High
Court   of   Orissa   at   Cuttack   in   W.P.   (C)   No.26408   of   2017,
by which the High Court has allowed the said writ petition
and   has   quashed   and   set   aside   the   order   passed   by   the
State, banning the respondent herein from participating or
1

bidding   for   any   work   to   be   undertaken   by   Government   of
Odisha  and   transacting   any   business with  Government  of
Odisha,   either   directly   in   the   name   of   propriety   bidder   or
indirectly   under   any   different   name   or   title,   the   State   of
Odisha has preferred the present C.A. No.1083 of 2022.  
2. Feeling   aggrieved   and   dissatisfied   with   the   subsequent
consequential   order   passed   by   the   High   Court   vide   order
dated   04.06.2021   in   W.P.   (C)   No.16723   of   2021   by   which
the   High   Court,   in   consequence   of   the   earlier   order   dated
23.03.2021 passed in W.P. (C) No.26408 of 2017, directed
the State of Odisha to remove the name of the contractor –
respondent   herein   from  the   list   of   blacklisted   contractors,
the State of Odisha has preferred the present C.A. No.1084
of 2022. 
3. That   the   respondent   –   contractor   was   awarded   a   contract
for construction of a flyover over the railway level crossing
at Bomikhal Junction in Bhubaneswar. That in pursuance
of   the   said   contract   the   respondent   –   contractor
constructed the said flyover. In the year 2017, a ten meter
slab   of   the   flyover   collapsed   during   concreting   of   the
2

railway over bridge at the level crossing, which resulted in
loss   of   life   and   property.   One   person   died   and   eleven
others were injured. A high­level inquiry was conducted by
the   Chief   Engineer   (Design)   and   Chief   Engineer   (DPI   and
Roads).   The   committee   submitted   a   comprehensive   report
after   a   detailed   inquiry   and   found   the   contractor   –
respondent herein guilty. It was found that the contractor
did not  submit  the formwork design  and  adopted his  own
arrangement   leading   to   collapse   of   such   a   huge   structure
during construction. It was also found that the contractor
had   not   ensured   adequate   safety   measures   during   the
period of construction; otherwise such an unfortunate fatal
accident   could   have   been   avoided.   It   was   found   that   the
quality   assurance   had   not   been   maintained   as   stipulated
in   the   codes   and   manuals   and   as   per   the   agreement.   It
was   found   that   there   were   a   lot   many   deficiencies   in
workmanship   that   could   affect   the   quality   of   work,   as
found   in   other   formwork   assemblies.   Therefore,   the
committee   found   the   contractor   responsible   for   such   a
serious accident. 
3

3.1 On the basis of such report the State Government took the
matter   very   seriously   and   directed   that   immediate
necessary   action   be   taken   for   blacklisting   the   contractor
following   the   procedure   as   per   the   Orissa   Public   Works
Department (OPWD) Code. Thereafter, a show cause notice
was issued to the contractor and the contractor was asked
to   show   cause   as   to   why   it   be   not   blacklisted   for
intentionally   violating   the   relevant   clauses   of   the
Agreement   No.15­P1/2011­12.   The   respondent   filed   a
detailed   reply.   That   on   considering   the   allegations   in   the
said   show   cause   notice   and   reply   thereto,   the   Chief
Engineer   (DPI   &   Roads)   Odisha   issued   an   order   dated
12.12.2017,   whereby   the   respondent   –   contractor   was
blacklisted   with   immediate   effect,   for   intentional   violation
of  condition   of  the  contract  leading  to   injuries  and  loss  of
life.   The   respondent   –   contractor   was   banned   from
participating  or bidding  for any work to be undertaken by
the   Government   of   Odisha   and   the   contractor   was   also
banned   from   transacting   business   with   Government   of
Odisha, either directly or indirectly. 
4

3.2 Aggrieved   by   the   order   of   blacklisting   dated   12.12.2017,
the   contractor   filed   Writ   Petition   (C)   No.26408   of   2017
seeking   quashing   of   the   order   of   blacklisting   and   by   the
impugned   judgment   and   order,   the   High   Court   has   set
aside   the   order   of   blacklisting   mainly   on   the   ground   that
the   order   of   blacklisting   is   in   violation   of   principles   of
natural justice. The impugned judgment and order passed
by the High Court quashing and setting aside the order of
blacklisting   is   the   subject   matter   of   Civil   Appeal   No.1083
of 2022.   
3.3 That   thereafter   the   contractor   filed   another   Writ   Petition
(C) No.16723 of 2021, making a grievance that despite the
order   of   blacklisting   set   aside   by   the   High   Court   in   Writ
Petition   (C)   No.26408   of   2017,   the   contractor’s   name
continues   to   be   shown   as   the   blacklisted   in   the   official
portal   of   the   Government   of   Odisha.   By   the   order   dated
04.06.2021,   the   High   Court   has   disposed   of   the   said   writ
petition by directing the State to pass appropriate orders to
stop   showing   on   the   official   portal   of   the   Government   of
Odisha the name of the contractor – respondent herein as
5

a   blacklisted   company   to   enable   the   contractor   to   seek
renewal of its licence as well participate in future tenders.
The   order   dated   04.06.2021   passed   by   the   High   Court   in
Writ Petition (C) No.16723 of 2021 is the subject matter of
Civil Appeal No.1084 of 2022.   
4. Shri   Ashok   Kumar   Parija,   learned   Advocate   General   has
appeared   on   behalf   of   the   State   of   Odisha   and   Shri   Sibo
Sankar Misra, learned Advocate has appeared on behalf of
the respondent – contractor.  
5. Shri   Ashok   Kumar   Parija,   learned   Advocate   General
appearing on behalf of the State of Odisha has vehemently
submitted that in the facts and circumstances of the case,
the   High   Court   has   materially   erred   in   quashing   and
setting   aside   the   order   passed   by   the   State   of   Odisha
blacklisting the respondent – contractor.
5.1 It   is   contended   that   the   High   Court   has   erred   in   holding
that   the   order   of   blacklisting   was   in   violation   of   the
principles of natural justice. 
6

5.2 It   is   submitted   that   as   such   before   blacklisting   the
respondent   –   contractor   a   show   cause   notice   was   issued
and   served   upon   the   respondent.   The   procedure   as
required   as   far   as   Appendix­XXXIV   of   OPWD   Code   was
followed   and   thereafter,   after   considering   the   reply
submitted  by   the  contractor,  the   order   of  blacklisting  was
passed. It is submitted that therefore, the High Court has
erred   in   holding   that   the   order   of   blacklisting   was   in
breach of principles of natural justice.
5.3 It   is   further   submitted   by   Shri   Parija,   learned   Advocate
General   appearing   on   behalf   of   the   State   that   the   High
Court   has   also   erred   in   concluding   that   the   blacklisting
order   was   pre­decided   as   the   same   was   passed   on   the
basis of the recommendations made in  the  inquiry  report.
It is urged that in fact the findings recorded by the inquiry
committee   can   be   said   to   be   the   basis   for   initiating   the
action   of   blacklisting   against   the   contractor.   It   is
submitted   that   therefore,   the   findings   recorded   by   the
inquiry committee can be said to be a prima facie opinion
while   initiating   the   proceedings   for   blacklisting.   It   is
7

submitted   that   merely   because   show   cause   notice   was
issued   and   the   blacklisting   order   was   passed   on
consideration of the inquiry report, that by itself it cannot
be said that the blacklisting order was pre­decided.
5.4 It   is   further   submitted   by   Shri   Parija,   learned   Advocate
General,   appearing   on   behalf   of   the   State   that   even
otherwise,   while   passing   the   impugned   judgment   and
order   quashing   and   setting   aside   the   blacklisting   order,
the High Court has not at all considered the seriousness of
the allegations against the contractor. It is submitted that
it was a case of grave lapse and omission and commission
on   the   part   of   the   contractor;   a   serious   incident   occurred
in which one person died and eleven others were injured. It
is   submitted   that   therefore,   the   High   Court   ought   not   to
have   interfered   with   the   order   passed   by   the   State
Government blacklisting the respondent – contractor  
6. The present appeals are vehemently opposed by  Shri Sibo
Sankar   Misra,   learned   counsel   appearing   on   behalf  of   the
respondent – contractor. 
8

6.1 It  is  submitted  that   in  the  facts  and  circumstances  of  the
case the High Court has rightly observed and held that the
order of blacklisting was pre­determined and the same was
in breach of principles of natural justice.
6.2 It is submitted that before a show cause notice was issued
to   the   respondent   –   contractor,   a   communication/letter
dated   10.10.2017   was   written   by   the   Under   Secretary   in
the Works Department to the Chief Engineer which shows
that   the   Government   had   already   ordered   blacklisting   of
the   contractor   and   the   Engineer­in­Chief   was   directed   to
take  immediate  action  for  blacklisting  the contractor. It is
submitted   that   as   rightly   observed   that   the   action   of
blacklisting   the   contractor   was   pre­determined.     It   is
submitted that it is rightly observed by the High Court that
giving   a   show   cause  notice   was  an   empty   formality   which
was   not   going   to   change   the   decision   already   taken   to
blacklist the contractor. 
9

6.3 It is further submitted that even in the show cause notice
there   was   no   reference   to   the   letter   dated   10.10.2017
and/or to the report of the committee. 
6.4 It   is   further   submitted   that   even   after   the   show   cause
notice   containing   serious   allegations   of   violations   by   the
contractor,   the   contractor   was   asked   to   execute   the
balance  work, on  a revised design,  which the  contractor  –
respondent admittedly completed to the satisfaction of the
Department by 31.03.2018. It is submitted that therefore,
the   High   Court   has   rightly   quashed   the   order   of
blacklisting the respondent – contractor. 
6.5 In   the   alternative,   it   is   contended   by   learned   counsel
appearing on behalf of the respondent – contractor that in
the   facts   and   circumstances   of   the   case,   the   order   of
blacklisting   the   respondent   –   contractor   permanently   can
be   said   to   be   too   harsh   and/or   disproportionate   to   the
charge/misconduct   proved   against   the   respondent   –
contractor. 
10

6.6 It is urged that it was the first offence by the respondent –
contractor.   That   after   the   impugned   order   passed   by   the
Government,   the   Government   of   Odisha,   Works
Department   passed   an   office   memorandum   dated
26.11.2021,   which   provides   that   the   blacklisting   period
per   offence   shall   be   limited   to   three   years   subject   to   an
overall   maximum   cumulative   period   of   ten   years   for
multiple offences. It is submitted that the respondent  has
completed   a   period   of   4  ½	  years   of   its   blacklisting.   It   is
submitted   that   therefore   the   order   of   blacklisting
respondent   –   contractor   permanently   also   deserves   to   be
quashed and set aside.   
6.7 Making   the   above   submissions   and   relying   on   the
decisions of this Court in the cases of  Erusian Equipment
&   Chemicals   Ltd.   Vs.   State   of   West   Bengal   and   Anr.
(1975)   1   SCC   70,   Kulja   Industries   Limited   Vs.   Chief
General   Manager,   Western   Telecom   Project   Bharat
Sanchar   Nigam   Limited   and   Ors.   (2014)   14   SCC   731
and   M/s.   Daffodills   Pharmaceuticals   Ltd.   &   Anr.   Vs.
State of U.P. & Anr. 2019 (17) Scale 758 , it is prayed to
11

dismiss   the   present   appeals   and/or   in   the   alternative   to
reduce the period of blacklisting.  
7. We have heard learned counsel appearing on behalf of the
respective parties at length.   
8. By the impugned judgment and order, the High Court has
set   aside   the   order   passed   by   the   Government   of   Odisha
blacklisting   the   respondent   contractor   mainly   on   the
ground that the same was pre­determined and in breach of
principles of natural justice. 
8.1 However,   it   is   required   to   be   noted   that   the   action   of
blacklisting followed a high­level inquiry conducted by two
members   committee,   Chief   Engineer   (Designs)   and   Chief
Engineer   (DPI   &   Roads).   After   studying   the   contract
provisions   and   drawings,   as   also   inquiry   on   the   spot   and
after a detailed consideration of the general behaviour and
collapse   of   the   formwork,   a   comprehensive   report   was
submitted   and   the   following   observations   were   made   in
respect of the respondent – contractor: ­
“(b)  In respect of the Contractor
12

(i) The   Contractor   has   not   submitted   the
formwork design and has adopted his own
arrangement leading to such occurrence of
collapse   of   such   huge   structure   during
construction.   Design   of   the   formwork   is
the   responsibility   of   the   Contractor   and
the   Contractor   shall   also   be   entirely
responsible   for   adequacy   and   safety   of
formwork,   notwithstanding   any   approval
or   review   of   drawing   and   design   by   the
Engineer.
(ii) The   Contractor   has   not   ensured   adequate
safety   measures   during   construction
activities   with   which   such   unfortunate
fatal   accident   could   have   been   avoided,
even in case of failure.
(iii) Quality   assurance   has   not   been
emphasized as stipulated in the codes and
manuals and as per the Agreement.
(iv) There   are   lot   many   deficiencies   in
workmanship   that   may   affect   the   quality
of   work,   as   found   in   other   formwork
assemblies."
8.2 Thereafter,   the   State   Government   studied   the   report
submitted   by   a   high­level   committee   and   having
considered the case of lapse on the part of the contractor,
a   serious   incident   had   taken   place   of   collapse   of   a   ten
meter   slab   and   in   the   said   incident,   one   person   died   and
eleven others were injured. Hence, a decision was taken to
blacklist   the   contractor   after   following   the   proceedings   as
per   the   OPWD   Code.  Thereafter,  a   show   cause  notice  was
13

issued   upon   the   respondent   –   contractor   and   the
respondent – contractor was called upon to show cause as
to   why   he   be   not   blacklisted.   The   said   show   cause   notice
was   issued   in   terms   of   the   provisions   and   the   procedures
in the OPWD Code. The respondent – contractor replied to
the   same.   After   considering   the   allegations   in   the   show
cause   notice   and   the   reply   submitted   by   the   contractor,
thereafter the Government passed an order of blacklisting.
Merely because the show cause notice was issued after the
inquiry   committee   report   was   considered   and   thereafter
the   State   Government   took   the   decision   to   initiate
proceedings for blacklisting, that by itself it cannot be said
that   the   order   of   blacklisting   was   pre­determined   as
observed   by   the   High   Court.   The   communication   dated
10.10.2017 by the State Government to the Chief Engineer
can   be   said   to   be   a   proposed   decision   to   initiate   the
proceedings   for   blacklisting.   In   the   communication   dated
10.10.2017,   it   has   been   specifically   mentioned   that   the
action   be   taken   for   blacklisting   after   following   the
procedure as per the OPWD Code. Before any show cause
notice is issued for any action when a tentative decision is
14

taken, it cannot be said that subsequent decision followed
by   a   show   cause   notice   and   the   proceedings   as   per   the
OPWD   Code   can   be   said   to   be   pre­determined.   Before
initiation  of  any  proceedings  for  blacklisting,  there can   be
a   tentative   decision   on   the   basis   of   the   material   available
forming   a   tentative/prima   facie   opinion   that   action   is
required.   In   the   instant   case   a   committee   submitted   a
detailed   report   which   was   the   basis   for   issuance   of   the
show   cause   notice   to   the   respondent.   The   action   initiated
against   the   respondent   was   not   in   a   vacuum   but   after
considering   the   committee’s   report   and   after   following   the
due  procedure  as  required.  Therefore,  the  High  Court  has
erred   in   holding   that   the   blacklisting   order   was   pre­
determined. 
8.3 So far as the findings recorded by the High Court that the
blacklisting   order   was   in   breach   of   principles   of   natural
justice is concerned, it is to be noted that the blacklisting
order   was   passed   after   issuing   a   show   cause   notice   to
which the contractor – respondent was called upon to reply
and show cause as to why he be not blacklisted. A detailed
15

show   cause   notice   was   issued   with   specific   allegations   to
which   the   respondent   –   contractor   submitted   a   detailed
reply.   After   considering   the   allegations   in   the   show   cause
notice,   considering   the   reply   and   also   by   considering   the
material   available   on   record   the   order   of   blacklisting   was
passed.   We   fail   to   appreciate,   how   in   such   a   case   the
blacklisting order can be said to be in breach of principles
of natural justice. 
8.4 In   the   case   of   Grosons   Pharmaceuticals   (P)   Ltd.   &   Anr.
v.   State   of   U.P.,   (2001)   8   SCC   604,   the   order   of
blacklisting   was   challenged   by   the   contractor   on   the
ground   that   the   contractor   was   not   supplied   with   all   the
materials on  the  basis of which  charges against  him  were
based. It was the case on behalf of the contractor that non­
supply   of   such   material   resulted   in   violation   of   principles
of natural justice. To that, this Court observed that it was
sufficient   requirement   of   law   that   an   opportunity   of   show
cause was given to the appellant before it was blacklisted.
This   Court   observed   that   the   contractor   was   given   an
opportunity   to   show   cause   and   it   did   reply   to   the   show­
16

cause   to   the   State   Government   and   therefore   the
procedure   adopted   by   the   Government   while   blacklisting
the   contractor   was   in   conformity   with   the   principles   of
natural justice. 
8.5 In   the   present   case   as   observed   hereinabove,   show   cause
notice   was   issued   upon   the   contractor   by   which   the
contractor   was   called   upon   to   show   cause   why   he   be   not
blacklisted;   the   show   cause   notice   was   replied   to   by   the
contractor   and   thereafter,   after   considering   the   material
on   record   and   the   reply   submitted   by   the   contractor   and
having   found   the   serious   lapses   which   led   to   a   serious
incident  in  which  one  person  died and  eleven  others  were
injured, the State Government took a conscious decision to
blacklist   the   contractor.   Therefore,   it   cannot   be   said   the
order   blacklisting   the   contractor   was   in   violation   of
principles of natural justice. 
8.6 As observed by this Court in the case of   Gorkha Security
Services   v.   Govt.   (NCT   of   Delhi)   &   Ors.,   (2014)   9   SCC
105,   the   fundamental   purpose   behind   the   serving   of   a
17

show­cause   notice   is   to   make   the   noticee   understand   the
precise case set up against him which he has to meet. This
would   require   the   statement   of   imputations   detailing   out
the   alleged   breaches   and   defaults   he   has   committed,   so
that   he   gets   an   opportunity   to   rebut   the   same.   Another
requirement is the nature of action which is proposed to be
taken for such a breach. 
8.7 As   per   the   law   laid   down   by   this   Court   in   a   catena   of
decisions  “debarment”  is  recognised  and  often   used  as  an
effective   method   for   disciplining   deviant
suppliers/contractors   who   may   have   committed   acts   of
omission and commission. It is for the State or appropriate
authority to pass an order of blacklisting/debarment in the
facts   and   circumstances   of   the   case.   Therefore,   the   High
Court   has   erred   and   has   exceeded   its   jurisdiction   in
exercise of powers under Article 226 of the Constitution of
India by quashing and setting aside the blacklisting order,
that   too,   without   adverting   to   the   serious   allegations   and
the   act   of   omission   and   commission   on   the   part   of   the
contractor which led to a serious incident of collapse of ten
18

meter   slab   while   concrete   work   of   the   deck   was   going   on
and due to which one person died and eleven others were
injured.   It   was   specifically   found   that   the   safety
arrangements   were   lacking   severely   in   the   construction
work   zone.   It   was   also   found   that   quality   assurance   was
not   emphasised   as   stipulated   in   the   codes   and   manuals
and as per the Agreement. Therefore, the High Court ought
to have considered the seriousness of the incident in which
due   to   omission   and   commission   on   the   part   of   the
contractor in constructing the flyover one person died and
eleven others were injured.
    
9. The next question which is posed for consideration of this
Court   is,   whether,   in   the   facts   and   circumstances   of   the
case   the   contractor   was   required   to   be
debarred/blacklisted permanently?
9.1 In   the   case   of   Kulja   Industries   Limited   (supra),   this
Court has observed that “debarment” is never  permanent
and   the   period   of   debarment   would   invariably   depend
upon   the   nature   of   the   offence   committed   by   the   erring
contractor. 
19

In   the   said   decision   this   Court   emphasised   on
prescribing guidelines by determining the period for which
the blacklisting should be effective. It is observed and held
by this Court that while determining the period for which
the   blacklisting   should   be   effective,   for   the   sake   of
objectivity   and   transparency   it   is   required   to   formulate
broad guidelines to be followed. It is further observed that
different periods of debarment depending upon the gravity
of the offences, violations and breaches may be prescribed
by such guidelines. In the present case, after the order of
blacklisting   was   passed,   the   State   Government   has
formulated   guidelines   by   O.M.   dated   26.11.2021   which
provides as under:­ 
“The   blacklisting   period   per   offence   shall   be   limited   to   03
(Three)   years   subject   to   an   overall   maximum   cumulative
period of 10 (Ten) years for multiple offences” 
However,   we   may   observe   that   we   do   not   approve   of
the   guidelines   issued   by   the   State   Government   by   O.M.
dated   26.11.2021.   Duration   of   blacklisting   cannot   be
solely   per   offence.   Seriousness   of   the   lapse   and   the
incident   and/or   gravity   of   commission   and   omission   on
20

the   part   of   the   contractor   which   led   to   the   incident
should be the relevant considerations. In a given case, it
may   happen   that   the   commission   and   omission   is   very
grave and because of the serious lapse and/or negligence,
a major incident would have taken place. In such a case,
it   may   be   the   contractor’s   first   offence,   in   such   a   case,
the   period/duration   of   the   blacklisting/banning   can   be
more   than   three   years.   However,   as   the   said   guidelines
are   not   under   challenge,   we   rest   the   matter   there   and
leave   it   to   the   State   Government   to   suitably   amend
and/or   modify   the   said   office   memorandum.   However,
what   we   have   observed   above   can   be   a   guide   while
determining the period of debarment/blacklisting. 
In   the   instant   case,   it   might   be   true   that   the   offence
was   the   first   offence   committed   by   the   contractor.
However,   considering   the   seriousness   of   the   matter   that
due   to   the   omission   and   commission   on   the   part   of   the
contractor a serious incident had occurred as there was a
collapse   of   a   ten   meter   slab   while   constructing   a   flyover
in   which   one   person   died   and   eleven   others   injured,   as
21

such   the   contractor   does   not   deserve   any   leniency.
However, to debar him permanently can be said to be too
harsh   a   punishment.   But   considering   the   subsequent
O.M. dated 26.11.2021 reproduced hereinabove (to which
as such we do not agree as observed hereinabove), we are
of   the   opinion   that   if   the   blacklisting   is   restricted   to   five
years, it may be in the fitness of things.      
10. In view of the above discussion and for the reasons stated
above,   present   appeal,   i.e.,   C.   A.   No.   1083   of   2022   is
allowed   in   part.   The   impugned   judgment   and   order
passed by the High Court quashing and setting aside the
order   dated   12.12.2017   blacklisting   the   respondent
herein   –   contractor   is   hereby   quashed   and   set   aside.
However,   the   period   of   blacklisting   is   ordered   to   be
restricted   to   five   years   from   the   date   of   passing   of   the
order   of   blacklisting.   Civil   Appeal   No.1083   of   2022   is
allowed to the aforesaid extent. 
22

In view of the order passed in Civil Appeal No.1083 of
2022, Civil Appeal No.1084 of 2022 stands dismissed. In
the facts and circumstances of the case, there shall be no
order as to costs. 
…………………………………J.
                  (M. R. SHAH)
…………………………………J.
 (B.V. NAGARATHNA)
New Delhi, 
February  24, 2022.
23