Meghalaya High Court upholds blacklisting of infrastructure firm over bribery ledgers

A Hyderabad-based infrastructure company has failed in its bid to overturn a five-year ban from government contracts in Meghalaya, after the state's High Court ruled that ledger entries showing gifts and cash payments to public officials constituted sufficient grounds for blacklisting.

The Division Bench of Chief Justice Revati Mohite Dere and Justice W Diengdoh dismissed the appeal filed by M/s BSCPL Infrastructure Ltd on February 19, upholding both the blacklisting order issued by the Public Works Department on 3 December 2024 and a Single Judge's ruling from December last year that had gone against the company.

The controversy stems from a road construction contract worth Rs 1,303.83 crore awarded in February 2011 to a joint venture between BSCPL and C&C Construction for the two-laning of the Shillong-Nongstoin and Nongstoin-Rongjeng-Tura sections of NH-44. The project, originally meant to be completed by March 2014, dragged on for years and was eventually finished in December 2017 at a revised cost of Rs 2,406.46 crore.

Disputes between the company and the PWD led to prolonged arbitration proceedings. It was during these proceedings, in May 2019, that the joint venture submitted a statement of claims running to over 9,500 pages across 16 volumes. Buried within those documents was a "business promotion account" — a ledger recording a series of cash and cheque payments made to government officials during the contract's execution between 2014 and 2017.

The entries made for uncomfortable reading. Among them: cash paid for gift items for government officials; whisky bottles purchased for officials; an HP laptop bought for a PWD junior engineer; Samsung mobile phones and tablets given as Christmas gifts to officials; Titan watches gifted to local administrators; monthly cash payments to a police station; a Rs 4 lakh donation to a Police Officers' Wives Association; and a Rs 5 lakh cheque to an organisation called Nongkhnum We Care Society, described as being made "as per instructions of Higher Management."

The respondent said it only formally examined these entries in September 2024, following cross-examination of the company's witnesses before the arbitral tribunal. A complaint was filed with Sardar Police Station in East Khasi Hills on September 3, 2024, and FIR No. 286(9) of 2024 was registered under sections of the IPC and the Prevention of Corruption Act. A show cause notice followed on 16 September, and the blacklisting order came on December 3, 2024.

BSCPL, represented by senior counsel Mr Jethmalani, argued vigorously that the blacklisting was legally flawed and motivated by malice. The show cause notice, he contended, lacked vital particulars — it did not identify the specific officials allegedly bribed, did not establish what reciprocal benefit the company received, and did not demonstrate any quid pro quo.

He argued that the ledger entries were simply records of routine business expenses and goodwill gestures, not bribes, and that "at the highest, it can be said that it was a goodwill gesture by the appellant-JV to the bureaucracy." He also pointed to the timing of the action — taken only after five years since the ledgers were filed before the arbitral tribunal — and submitted that the entire exercise was designed to derail the arbitration proceedings and deny the company legitimate dues. The FIR, he noted, did not even allege any offence under the Prevention of Corruption Act, and curiously cited the entire arbitral award amount of Rs 2,366.77 crore as the "property stolen."

The court was unpersuaded. It found that the ledger entries had neither been denied nor adequately explained by the company. The explanation that the payments were ordinary business expenses or charitable donations was dismissed as an afterthought.

On the question of delay, the bench noted that arbitration proceedings had been stayed for significant periods, that cross-examination of the company's witnesses began only in July 2022, and that the complaint was filed shortly after those proceedings concluded. The court held that this sequence did not amount to the kind of delay that would invalidate the blacklisting.

The court cited the contract's own terms — Clause 37 on corrupt or fraudulent practice, and Clause 59.2(h), which defines "corrupt practice" as "the offering, giving, receiving or soliciting of anything of value to influence the action of a public official in procurement process or in contract execution." Crucially, the court noted that even absent these contractual provisions, the PWD possessed an inherent power to debar contractors who engage in corrupt conduct.

Referring to established Supreme Court precedent, the bench reiterated that blacklisting "involves civil consequences" and "creates a barrier between the persons blacklisted and the Government," making procedural fairness essential — but also that the State is "under an obligation to put public interest over everything else."

The court declined to comment on the merits of the arbitration proceedings or the FIR, both of which remain pending before separate forums. The writ appeal was dismissed.