Patna HC Upholds Three-Year Blacklisting of Skill-Development Agency Over Forged Placement Records Under DDU-GKY Scheme
The Patna High Court dismissed a writ petition challenging a blacklisting order against a Mumbai-based firm that allegedly submitted fabricated bank statements and placement records under the DDU-GKY skill scheme.
A Division Bench of the Patna High Court, led by Acting Chief Justice Sudhir Singh and Justice Rajesh Kumar Verma, on 20 July 2026 dismissed a civil writ petition filed by Pipal Tree Ventures Private Limited, a Mumbai-registered company, against its blacklisting by the Bihar Rural Livelihood Promotion Society (BRLPS). The BRLPS had, by order dated 9 December 2025, blacklisted the firm for three years, terminated its project, directed recovery of the entire first-installment advance with 10% interest, and authorised certificate proceedings under the Bihar and Orissa Public Demands Recovery Act, 1914 if the amount was not paid. The Court found that the impugned order had been passed after following due procedure, was founded on objective material, and disclosed no arbitrariness or violation of the principles of natural justice.
The Agreement and the Scheme
Pipal Tree Ventures entered into a Memorandum of Understanding with BRLPS on 4 July 2014 for implementing a placement-linked skill development programme under the Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY) scheme in the districts of Muzaffarpur, Sitamarhi and Madhubani. The initial target of training 3,000 candidates was revised under a fresh agreement dated 17 February 2017 and subsequently reduced further in line with revised guidelines issued by the Ministry of Rural Development.
During implementation, BRLPS issued a series of show cause notices alleging discrepancies in the placement documents submitted by the firm — specifically, alleged mismatches in bank account details and submission of forged or fabricated records. The petitioner replied to each notice and also participated in a personal hearing. Despite this, the BRLPS passed the impugned blacklisting order on 9 December 2025.
What the Petitioner Argued
Before the High Court, Mr. Alok Kumar Jha, counsel for the petitioner, advanced three principal contentions. First, that although the petitioner had submitted detailed replies and participated in personal hearings, its explanations were neither considered nor dealt with in the blacklisting order. Second, that the petitioner was never supplied the material relied upon against it, depriving it of an effective opportunity to rebut the allegations. Third, that BRLPS had failed to follow the contractual procedure prescribed under the MOU before terminating the project — specifically, the steps relating to issuance of notice, amicable settlement, reference to the Project Approval Committee and arbitration under Clause 2.6 read with Clause 8 of the general conditions and Clause 8.2 of the special conditions.
The petitioner further argued that BRLPS had itself failed to conduct the periodic desk verification required under the applicable Standard Operating Procedure and, after allowing several years to pass, had sought to verify placement claims at a stage when candidates had changed employment, mobile numbers and bank accounts. Such delayed verification, it was submitted, could not be made the basis for alleging forgery or imposing the extreme penalty of blacklisting.
What BRLPS Contended
Mr. Abhinav Shrivastava, Senior Advocate for the respondents, submitted that the impugned order was passed strictly in accordance with the MOU, the DDU-GKY scheme and the applicable Standard Operating Procedure. He submitted that the petitioner had furnished forged and fabricated documents to support its placement claims, constituting fraudulent conduct warranting termination, recovery and blacklisting.
The respondents placed reliance on desk verification, field verification and verification conducted by ICICI Bank, which revealed large-scale discrepancies: fake bank statements, invalid account numbers and denial of placement by several beneficiaries during physical verification. The respondents maintained that adequate opportunity had been afforded throughout, and that every reply submitted by the petitioner had been duly considered before the impugned action was taken.
How the Bench Reasoned
The Court framed a single issue: whether the respondent authorities were justified in passing the order dated 9 December 2025, terminating the project, blacklisting the petitioner for three years and directing recovery of the advance with interest.
On the natural justice argument, the bench found that the impugned order “meticulously traces the sequence of events” from the first show cause notice dated 17 September 2020, through a personal hearing on 5 October 2020, further show cause notices dated 17 February 2023, 11 April 2023 and 14 July 2025, and repeated opportunities to furnish supporting documents. The order also recorded that every explanation by the petitioner was examined and found unsatisfactory for specifically assigned reasons. The Court held that this procedure fully satisfied the requirement of audi alteram partem.
The bench referred to the Supreme Court's judgment in Erusian Equipment & Chemicals Ltd. v. State of West Bengal, reported in (1975) 1 SCC 70, which held that blacklisting is legally sustainable where the affected party has been given a reasonable opportunity of hearing before the order is passed. The Court noted that those conditions were met in the present case.
On the objectivity of the findings, the Court examined whether the authority had proceeded on mere suspicion. It found that the placement claims had been subjected to repeated verification by ICICI Bank, ECR records had been scrutinised, and field verification had been conducted. These exercises consistently disclosed fabricated bank statements, ECR discrepancies and denial of placement by beneficiaries. The petitioner's explanation — that placement documents had been collected from candidates and any discrepancy could not be attributed to it — was specifically dealt with in the impugned order. The respondent authority had rightly observed that under the MOU, the responsibility to maintain records and furnish genuine, authentic and verifiable documents rested squarely on the Project Implementing Agency, and that submission of forged documents amounted to breach of Clause 1.9.1 of the MOU. The Court found “no perversity or irrationality” in this reasoning.
On the scope of judicial review, the bench drew on two Supreme Court decisions. In Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd., reported in (2016) 16 SCC 818, the Supreme Court held that the employer is the best judge of compliance with contractual conditions, and a writ court ought not to substitute its own assessment unless the decision is shown to be arbitrary, mala fide or so irrational that no reasonable authority could have arrived at it. In NG Projects Ltd. v. Vinod Kumar Jain, reported in (2022) 6 SCC 127, the Supreme Court reiterated that judicial review under Article 226 is directed towards the legality of the decision-making process, not the correctness of the decision on merits.
The Court also addressed proportionality. The impugned order recorded not only the discrepancies established through repeated verification but also the petitioner's earlier performance history, prior warnings, imposition of a minor penalty, and the multiple opportunities granted for rectification before the extreme penalty was imposed. Against that backdrop, the bench found the action neither arbitrary nor disproportionate.
Outcome
The Court answered the framed issue against the petitioner and dismissed Civil Writ Jurisdiction Case No.670 of 2026 as being devoid of merit. All pending applications were disposed of. The blacklisting order dated 9 December 2025, the termination of the project, the direction to recover the entire first-installment advance along with 10% interest, and the authorisation for certificate proceedings under the Bihar and Orissa Public Demands Recovery Act, 1914 in case of non-compliance, accordingly stand confirmed.