In Brief
The Food Corporation of India terminated a recruitment agency's contract and blacklisted it for five years after question papers for an examination allegedly leaked. The Supreme Court held that while the Corporation could terminate the contract, the blacklisting order was invalid. The show cause notice served on the agency did not expressly mention or clearly indicate that blacklisting was contemplated. Blacklisting, which amounts to civil death and severely impacts future business prospects, requires strict compliance with natural justice principles. A valid show cause notice for blacklisting must clearly state the proposed action, not merely reference general contract clauses. The Court quashed only the blacklisting portion of the order while upholding the contract termination.
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