Blacklisting in public contracts may rest on inherent contractual power, and a show-cause response can satisfy fair hearing requirements.

Blacklisting is an incident of the State's contractual power and may be exercised even without an express blacklist clause, provided the action is fair, rational and for a legitimate public purpose. The measure was upheld as proportionate because the successful bidder later declined to execute the contract, causing prejudice and undermining the integrity of the tender process; the public interest in deterring such conduct outweighed the bidder's business impact. An oral hearing was not mandatory, as a show-cause notice and opportunity to respond satisfied fair hearing requirements in the circumstances.

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Issues: (i) Whether the authority had power to blacklist the successful bidder despite no express stipulation in the bid document, (ii) whether the blacklisting order was disproportionate to the default, and (iii) whether an oral hearing was mandatory before passing the order.

Issue (i): Whether the authority had power to blacklist the successful bidder despite no express stipulation in the bid document.

Analysis: Blacklisting is an incident of the power to decide with whom the State or its instrumentality will contract. Such power flows from the authority to enter into contracts and its concomitant power not to contract in appropriate cases. The absence of an express blacklist clause in the bid document did not take away that inherent power, provided the action was fair, rational, and taken for a legitimate purpose.

Conclusion: The authority was competent to blacklist the bidder even without an express contractual clause.

Issue (ii): Whether the blacklisting order was disproportionate to the default.

Analysis: The bidder had been declared successful but later refused to execute the necessary documents, causing financial prejudice and undermining trust in public contracting. The authority relied on the bidder's lack of reliability, the loss caused, and the need to deter similar conduct. Applying proportionality, the adverse effect on the bidder's business prospects was held to be outweighed by the public interest in protecting the integrity of the tender process.

Conclusion: The blacklisting order was not disproportionate.

Issue (iii): Whether an oral hearing was mandatory before passing the order.

Analysis: There is no invariable rule requiring a personal hearing before every administrative or commercial decision. The bidder had been issued a show-cause notice and given an opportunity to respond, which satisfied the requirement of fair hearing in the circumstances.

Conclusion: An oral hearing was not mandatory and the opportunity given was sufficient.

Final Conclusion: The challenge to the blacklisting order failed, and the impugned decision was sustained.

Ratio Decidendi: The State or its instrumentality may blacklist a party in the exercise of its contractual power, even without an express blacklist clause, if the decision is non-arbitrary, fair, and proportionate to the legitimate public purpose sought to be achieved.

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