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Govt can't blacklist private firm without show cause notice: Delhi High Court

A private firm cannot be barred or blacklisted from doing business with the government or its agencies without a proper show cause notice as such actions have "serious" consequences, the Delhi High Court has said.

"It is an undisputed proposition of law that since an order debarring a person from doing business with the government or its agencies carries serious civil consequences, no such order can be passed without giving notice to him, requiring him to show cause against the proposed debarring/blacklisting," Justice V K Jain said.

The court's observation came in a verdict by which it quashed a circular of Delhi Development Authority (DDA).

DDA blacklisted M/s Thermo Blow Engineers, engaged in manufacturing and supply of sports and fitness equipment, from taking part in future tenders on the ground that it supplied faulty belts and decks for the treadmills in 2012.

DDA, in one of letters, alleged that due to faulty spares, "jerk was felt during workout of treadmill and there were chances of the user getting injured during the workout".

Seeking replacement of equipment, DDA issued a notice to the firm saying "... you (company) are therefore informed that why not actions should be initiated as deemed fit."

DDA followed up its notice, which did not indicate the proposed action, by issuing a circular on August 7, 2012 to debar the firm from taking part in future tenders for an indefinite period.

"It would, thus, be seen that there was no reference to the proposed debarring/blacklisting in the above-referred communication... In any case, the petitioner could not have taken this communication as an opportunity to explain his position qua the proposed blacklisting/debarring. The notice issued to the petitioner does not specify the action DDA proposes to take against it," the court said.

Artcile referred: http://articles.economictimes.indiatimes.com/2013-06-04/news/39740817_1_show-cause-notice-dda-delhi-development-authority

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