Blacklisting Order For Future Tenders Exceeding Reasons In Showcause Notice Violates Right To Carry On Business: Rajasthan High Court

The Rajasthan High Court held that an order of blacklisting beyond the scope of charges in the show cause notice was not only contrary to the principles of natural justice but also amounted to a denial of opportunity, affecting the right of business of the aggrieved party.

The bench of Justice Anoop Kumar Dhand was hearing a petition by an insurance company, which was appointed as a Third Party Administrator for the Rajasthan Government Health Scheme, against the order of the State that blacklisted it from participating in other tender processes for 3 years.

The petitioner was appointed as a TPA in 2022 and completed its work until the contract ended in 2025. After the contract ended, it received a show cause notice to which reply was submitted by the petitioner. However, the petitioner was blacklisted from participating in other tender processes for 3 years.

It was the case of the petitioner that the grounds and reasons mentioned in the blacklisting order went beyond the scope of the show cause notice and hence the order was not sustainable.

After hearing the contentions, the Court referred to a recent Supreme Court judgment of M/s Techno Prints v. Chhattisgarh Textbook Corporation and Anr. (2025) which held that the blacklisting order could not go beyond the scope/grounds of the show cause notice, and if it did, the same was not tenable.

In this background, the Court highlighted that, “A further perusal of the show cause notice, reveals that it did not contain sufficient details justifying blacklisting of the petitioner, however, the respondents have passed the blacklisting order exceeding beyond the charges mentioned in the show cause notice…Penalty of blacklisting without detailed show cause notice is contrary to rule of law…Every action which is contrary to rule of law is arbitrary and violative of Article 14…”

Furthermore, the Court held that the order was not only contrary to the principles of natural justice but also affected and denied petitioner's right to carry on its business by denying participation in the tender processes. Hence, the order not only had civil consequences but also denied right to carry business.

Accordingly, the order of blacklisting was set aside with liberty to the State to issue a fresh show cause notice. The petitioner was disposed of.

Title: M/s Mdindia Health Insurance Pvt. Ltd. v State of Rajasthan & Ors.

Citation: 2025 LiveLaw (Raj) 270

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