Law relating to act of blacklisting any person in respect of business ventures #indianlaws

In the judgment as passed by Supreme Court in the matter namely M/s. Southern Painters Vs. Fertilizers & Chemicals Travancore Ltd. and another, decided on 10.09.1993 (reported as AIR 1994 SC 1277 = 1994Supp(2)SCC699), dealt with issue as to what State should be conscious of while taking actions like deletion of party’s name from the list of qualified contractors on the ground of pendency of any enquiry etc. and whether it is justified to black list any of the participant in the process without even offering an opportunity of being heard.

State while entering into any contract must ensure fairness and indiscrimination. It must be conscious of the fact that reputation is a part of a person’s character and personality. Blacklisting spoils one’s reputation. To hold back a member of the public from dealing with a State in contractual transactions has the effect of preventing him from doing a lawful trade by discriminating against him in favour of other people. It must be kept in mind that any order having civil consequence should be passed only after following the principles of natural justice. Act of blacklisting any person in respect of business ventures has civil consequence for the future business of such person in any event. The parties affected by any such order should have right of being heard and making representations against the same. Accordingly, deletion of name from the list of approved contractors on the ground that there were some vigilance report against it, could only be after the compliance of the principles of natural justice.