M/S A.K.G. CONSTRUCTION AND DEVELOPERS PVT. LTD versus STATE OF JHARKHAND & ORS.

Citation: [2026] 4 S.C.R. 331 · Decided: 02-04-2026 · Supreme Court of India · Bench: PAMIDIGHANTAM SRI NARASIMHA · Disposal: Disposed off
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Judgment (excerpt)

[2026] 4 S.C.R. 331 : 2026 INSC 312
M/s A.K.G. Construction and Developers Pvt. Ltd 
v. 
State of Jharkhand & Ors.
(Civil Appeal No. 4152 of 2026)
02 April 2026
[Pamidighantam Sri Narasimha and Alok Aradhe, JJ.]
Issue for Consideration
Whether the black listing order, in the instant case, suffers from 
patent infirmities; whether the blacklisting, being stigmatic and 
exclusionary in nature, can be imposed mechanistically.
Headnotes†
Contract – Termination – Blacklisting – The appellant, 
a registered contractor with the Water and Sanitation 
Department was contracted for construction of an Elevated 
Service Reservoir (ESR) by issuance of a Letter of 
Acceptance (LOA) on 06.03.2023 – During the subsistence 
of the contract, on 01.06.2024, the top dome of the reservoir 
collapsed – Department issued a show cause notice dated 
04.06.2024 seeking explanation as to why action should not 
be taken for the negligence and bad quality of work – Upon 
receiving concurrent reports indicating negligence on part 
of appellant, respondent no. 3, Chief Engineer, Drinking 
Water and Sanitation Department, passed the termination 
cum blacklisting order dated 23.08.2024 – Aggrieved, the 
appellant filed an appeal, which was dismissed by the 
Appellate Authority – Appellant filed writ petition, which was 
also dismissed – Correctness:
Held: In view of the clear findings of negligence as articulated in the 
order of termination, this Court will not interfere with the decision 
of termination – In so far as the order relating to blacklisting is 
concerned, the blacklisting order suffers from patent infirmities: it 
evinces no application of mind, disregards the mandatory precept of 
audi alteram partem, and fails to precede with a show-cause notice 
requiring the contractor to demonstrate why such drastic action 
should not be taken – Blacklisting, being stigmatic and exclusionary 
332
[2026] 4 S.C.R.
Supreme Court Reports
in nature, cannot be imposed mechanistically but must comport with 
principles of natural justice and reasonableness – The final order 
of blacklisting, dated 23.08.2024, does not list the reasons as to 
why an order of blacklisting has become necessary – A blacklisting 
order assumes that the contractor is an incorrigible entity, at least 
for some time to come, in this case such an assumption was 
intended to operate for five years – For giving effect to such a 
premise, there has to be sufficient evidence, clear application of 
mind and stronger adherence to principles of natural justice – The 
blacklisting order dated 23.08.2004 falls short of this requirement 
and is liable to be set aside – Thus, the decision of blacklisting of 
the appellant is illegal, arbitrary and unreasonable – The declaration 
of blacklisting is set aside. [Paras 15, 16, 3, 23, 25]
Contract – Termination – Blacklisting:
Held: The contractual conditions governing termination on the one 
hand and those that relate to blacklisting on the other are distinct 
and will be exercised independently – A decision of blacklisting 
is not automatic and certainly not a logical consequence of a 
decision of termination – Even after the Department decides 
to terminate the contract, there is still a choice of exercising 
the power of blacklisting  – These decisions operate in two 
dimensions-past and subsisting for termination and future for 
blacklisting – In other words, an order of blacklisting transcends 
the existing contract and debars the contractor from contracts that 
could probably be executed in the next five years – In view of 
the serious consequences, it is necessary for the Department to 
issue a specific notice proposing blacklisting of a contractor and 
call for an explanation as to why an order of blacklisting should 
not be passed. [Para 18]
Case Law Cited
Erusian Equipment & Chemicals Ltd. v. State of West Bengal, 
[1975] 2 SCR 674 : (1975) 1 SCC 70; UMC Technologies Pvt 
Ltd v. Food Corporation of India [2020] 13 SCR 1175 : (2021) 2 
SCC 551; M/s Techno Prints v. Chhattisgarh Textbook Corporation 
& Anr., 2025 INSC 236 : [2025] 3 SCR 208 – relied on.
Raghunath Thakur v. State of Bihar, [1988] 3 Supp. SCR 867 : 
(1989) 1 SCC 229; Gorkha Security Services v. Govt. (NCT of Delhi) 
[2026] 4 S.C.R. 
333
M/s A.K.G. Construction and Developers Pvt. Ltd v.  
State of Jharkhand & Ors.
[2014] 13 SCR 617 : (2014) 9 SCC 105; Kulja Industries Ltd. v. 
Chief General Manager, Western Telecom Project BSNL [2013] 
14 SCR 430 : (2014) 14 SCC 731; The
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