Allahabad High Court quashes perpetual debarment of firm

The Allahabad High Court has held that State authorities who blacklist a firm for an indefinite period act in flagrant disregard of the constitutional mandate under Article 144, which requires all civil and judicial authorities to act in aid of the Supreme Court. Relying on multiple Supreme Court rulings, the bench of Justice J.J. Munir and Justice Indrajeet Shukla ruled that debarment cannot be imposed in perpetuity, especially without a valid show cause notice.

The Court was hearing a petition by a society registered under the Multi State Cooperative Societies Act, 2002. The petitioners argued that an erstwhile president fraudulently executed an agreement on 2 April 2019, after petitioner no. 2, Ritu Meena, had already been elected president. The District Magistrate allotted wheat purchase centres based on that agreement, and the Regional Food Controller issued a show cause notice to a private respondent, not the society. The society was debarred indefinitely on 5 October 2019 without receiving any notice.

The Court quashed the debarment order, noting that perpetual blacklisting amounts to civil or commercial death for an entity. It also held that the society could not be held liable for Mandi fee and development charges since it had not procured the wheat. The claim of the Mandi Samiti was directed to be recovered from the Regional Food Controller.