Indefinite blacklisting will spell the death knell for commercial organisations and institutions, the Supreme Court has said in a judgment.
A Bench of Justices Rohinton F. Nariman, Navin Sinha and Krishna Murari described the blacklisting of a business entity as its “civil death.”
“An order of blacklisting operates to the prejudice of a commercial person not only in praesenti but also puts a taint which attaches far beyond and may well spell the death knell of the organisation/institution for all times to come described as a civil death,” Justice Sinha, who authored the verdict, said.
The court was hearing an appeal filed by VetIndia Pharmaceuticals Limited against an indefinite order of blacklisting issued against it by the Uttar Pradesh government on the ground of supplying substandard quality products. The first blacklisting order was in September 8, 2009. The Allahabad High Court had later refused to lift the blacklisting order, saying the company came 10 years too late to the court for relief.
The Bench found that the show-cause notice issued to the company by the State did not caution the company that they would blacklist the company, thus, giving no opportunity for the latter to make a suitable response.
The apex court acknowledged the submission made by the company that indefinite blacklisting has caused it prejudice.
The apex court referred to its own past judgments which held that “an order of blacklisting beyond three years or maximum of five years was disproportionate.”
“We therefore hold that the order of blacklisting dated 08.09.2009 stands vitiated from the very inception on more than one ground and merits interference,” the apex court declared.
