Telangana High Court
Telangana Gurukula Contractors ... vs The State Of Telangana on 31 October, 2025
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 23933 OF 2025
O R D E R:
This Writ Petition is filed by petitioner aggrieved by the action of the 1st respondent - State of Telangana, represented by its Secretary, Scheduled Caste Development (Education) Department in issuing G.O.Ms.No.17 SCD (Edn.A2) Department, dated 08.07.2025, whereby the Government constituted a Project Monitoring Unit (PMU) to function as a nodal agency for a uniform procurement system of various items for the hostels and residential educational institutions across the State. The said G.O. was followed by the consequential guidelines dated 25.07.2025 issued by the 2nd respondent- Secretary, Telangana Social Welfare Residential Educational Institutions Society (TGSWREIS), through which the entire procurement system was centralized, treating the district as the unit for dry provisions and the mandal as the unit for fruits, vegetables, mutton and chicken. Petitioner submits that the said G.O. and guidelines are ex facie arbitrary, discriminatory and violative of Articles 14, 19(1)(g) and 21 of the Constitution of India, as they have eliminated over 5000 small contractors who have been earning their livelihood for more than 20 years 2 by supplying dietary provisions and related items to more than 1023 residential schools and hostels functioning under five welfare departments in the State.
2. It is the case of petitioner that their Association, registered under No. 217 of 2024, with its office at Hyderabad, represents approximately 5000 small contractors, who have been engaged in supply of provisions, eggs, milk, fruits, vegetables, chicken, mutton and catering services to residential educational institutions under the Telangana Social Welfare Residential Educational Institutions Society (TGSWREIS), Telangana Tribal Welfare Residential Educational Institutions Society (TGTWREIS), Mahatma Jyothiba Phule BC Welfare Residential Educational Institutions Society (MJPTBCWREIS), Telangana Minorities Residential Educational Institutions Society (TMREIS) and Telangana Residential Educational Institutions Society (TREIS). Collectively, these institutions run over 1023 residential schools and hostels catering to lakhs of students from marginalized backgrounds.
2.1. For more than two decades, procurement of dietary items was conducted independently by each school or hostel, treating each institution as a separate unit. Tenders were called at the school level for specific items such as food provisions, 3 fruits, vegetables, eggs, mutton, chicken and catering services. EMDs. and tender fees were nominal and proportionate to the value of the supplies such as Rs.15,000/- for vegetables, Rs.25,000/- for fruits, Rs.50,000/- for eggs and meat and Rs.2,00,000/- for provisions with 40% concession extended to SC/ST contractors. There was no provision for security deposits and small contractors across the State were able to participate freely, ensuring competition, fair pricing and continuous supply. However, the entire system was abruptly altered when the Scheduled Caste Development Department issued G.O.Ms.No.16, dated 03.07.2025, prescribing uniform standards for procurement and supply of eggs through District Purchase Committees (DPCs) headed by District Collectors. Shortly thereafter, through G.O.Ms.No.17 dated 08.07.2025, Government extended this concept to all dietary items and constituted the PMU, with the Secretary of the TGSWREIS as its Chairman, as the nodal agency for formulating a uniform procurement system for all residential educational institutions across departments. Acting under the said G.O., PMU issued common procurement guidelines dated 25.07.2025, prescribing the procedure for calling for tenders at the district level and 4 introducing a new system that abolished the earlier school- based tenders.
2.2. Petitioner states that the new guidelines fundamentally altered the existing decentralized system by authorizing the District Purchase Committees to invite tenders for all the institutions within the district for dry provisions, treating the district as a single unit and for perishable items such as vegetables, fruits, mutton and chicken, treating each mandal as a unit. This change drastically reduced the number of potential tenders from over 1023 institutions to merely 33 districts, thereby depriving thousands of small contractors of their livelihood and confining eligibility to a handful of financially strong entities. The guidelines also conferred unbridled discretionary powers upon DPCs. to identify and allot tenders directly to Mandal Mahila Samakhyas, Zilla Mahila Samakhyas and Girijan Cooperative Corporation (GCC) without any competitive bidding process or prior reservation of specific units for such agencies. This, petitioners contend, amounts to creating a monopoly in favour of certain preferred entities, thereby eliminating transparency and competition. 2.3. Petitioners further contend that under the new guidelines, the District Diet Committees (DDCs) are tasked with 5 fixing the rates for all items after conducting market surveys. The tenderers are not permitted to quote their own rates; instead, they are bound to supply items at the fixed prices prescribed by the DDC. Therefore, the process ceases to be a competitive tender. Petitioners assert that the system of inviting bids without permitting price competition and resorting to allotment by lottery among technically-qualified bidders is wholly irrational, arbitrary and contrary to the settled principles of procurement law. It is further stated that PMU guidelines imposed unrealistic financial conditions such as a minimum turnover of Rs.3 crores even for contracts valued below Rs.3 crores, 5% EMD on the total value of work and an additional 20% security deposit. For instance, in Medchal-Malkajgiri District, where the total estimated value for food provisions was Rs.13,67,11,023/-, a contractor is required to pay Rs.65 lakhs towards EMD, making it impossible for small contractors to participate.
2.4. Petitioners state that such financial and procedural restrictions have the effect of excluding almost all small contractors who have been the backbone of the existing supply system. By allowing only large contractors with massive 6 turnovers to participate, the State has effectively destroyed competition and created monopolies. The policy thereby violates Articles 14 and 19(1)(g) of the Constitution. Furthermore, the guidelines make no mention of the actual estimated value of work for each category, making the EMD and security deposit requirements wholly arbitrary. It is stated that while G.O.Ms.No.17 empowered PMU to act as a coordinating body for ensuring uniformity and quality, it did not authorize PMU to frame new policy directions or alter the procurement structure. Therefore, the guidelines dated 25.07.2025, being beyond the scope of G.O.Ms.No.17, are ultra vires and without authority of law. Petitioners also contend that the impugned policy violates the right to livelihood guaranteed under Article 21 of the Constitution, as it deprives thousands of small contractors of their sole means of income.
2.5. Petitioner is stated to have made multiple representations dated 06.08.2025 and 12.08.2025 to the 2nd respondent-Secretary, PMU, Principal Secretary, Chief Secretary and Ministers concerned, ventilating their grievances and requesting reconsideration of new procurement system, but the authorities have failed to respond. Petitioners therefore, approached this Court seeking relief. It is stated, petitioners 7 have, at all times, instructed their members to continue supply and have merely exercised their legal right to question an arbitrary policy.
2.6. Petitioners reiterate that the State, even in matters of contract, cannot act unreasonably or unfairly. The object of a tender process is to ensure transparent competition and secure the best value for public money. When rates are pre-fixed and selection is by lottery, the process loses its competitive character and becomes a mechanical formality. The arbitrary fixation of high EMDs, unequal tender fee structure across districts (ranging from Rs.2,000/- in Medchal to Rs.25,000/- in Suryapet) and the discretion conferred on DPCs. to nominate preferred agencies, all constitute a colourable exercise of power. The impugned action, therefore, deserves to be struck down as illegal, arbitrary and violative of the fundamental rights of petitioner.
3. The 2nd respondent, Secretary of Telangana Social Welfare Residential Educational Institutions Society (TGSWREIS), in her counter affidavit, denied all the allegations and contends that Writ Petition is devoid of merit, misconceived and filed with mala fide intention to stall a major welfare reform. It is stated, Telangana Government, after careful review and 8 consultation, issued G.O.Ms.No.17 dated 08.07.2025 constituting a Project Monitoring Unit (PMU) as a nodal agency for implementing a common and uniform procurement system for all welfare residential educational institutions. The object of the policy is to ensure uniform quality, transparency, timely supply and accountability in procurement in line with the Common Diet Menu introduced vide G.O.Ms.No.9, dated 31.10.2024.
3.1. It is stated, before the introduction of uniform procurement policy, there existed a decentralized and fragmented system of tendering at the institutional level, which led to several irregularities such as poor-quality supplies, non- standardized diets, delayed deliveries, pilferages and frequent food poisoning incidents. The earlier system also suffered from lack of oversight, as each institution functioned in isolation. To address these issues, Government introduced a Common Diet Menu in December 2024, ensuring that every child in residential institutions across Telangana receives nutritious, balanced and hygienic meals. However, despite this policy, implementation at the institution level was inconsistent. Government therefore, decided to centralize procurement 9 through PMU to ensure economies of scale, transparency, and uniformity.
3.2. This Respondent submits that impugned system is neither arbitrary nor discriminatory, as alleged. The scope of judicial review in tender matters is limited. The policy decisions of the State in matters of economic and administrative governance cannot be substituted by judicial opinion unless the same are patently arbitrary, mala fide or actuated by extraneous considerations. The Hon'ble Supreme Court in Tata Cellular v. Union of India 1, laid down the following principle in paragraph 94, which squarely applies to the facts of this case.
" The principles deducible from the above are: (1) The modern trend points to judicial restraint in administrative action. (2) The Court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts."
3.3. In the instant case, the PMU, being a body constituted by the Government, has exercised its discretion 1 (1994) 6 SCC 651 10 based on expert administrative and technical considerations. The Hon'ble Supreme Court has consistently held that Courts should not interfere in tender conditions merely because certain contractors are unable to satisfy the eligibility criteria. The purpose of fixing financial and technical qualifications is to ensure reliability, timely supply and quality assurance. Respondents further state that legality of such tender restrictions and Government's discretion in structuring procurement processes have been upheld in Nomula Poultry Farm v. State of Telangana 2, where the Division Bench of this Court, while dealing with a challenge to similar uniform procurement conditions for egg supply under the ICDS Scheme, upheld the tender in the following terms:
" Para 34: Learned Single Judge posed the question as to whether the tender reference dated 21.11.2022 was in violation of Article 14 of the Constitution of India and whether respondents have violated the scheme of ICDS project more particularly the memo dated 09.12.2014... Learned Single Judge observed that insistence on AGMARK certification is justified in as much as the same would bind the suppliers to maintain a minimum standard while supplying the eggs. AGMARK is a quality certificate and insistence on the same is in the larger public interest including that of the children, pregnant women and lactating mothers. No fault could be found with the insistence on such certification."
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2023 SCC OnLine TS 1241 11 Para 35: We are in agreement with the contention of Mr. P. Sri. Raghu Ram, learned Senior Counsel that terms of the tender are within the realm of contract and it is not for the courts to lay down what should be the terms and conditions of a contract. This position has been well settled by the Supreme Court in Tata Cellular v. Union of India."
Para 36: We see no arbitrariness or unreasonableness in the tender conditions insisted upon by respondent No. 2 in the tender reference dated 21.11.2022 to warrant interference". 3.4. This Court in Nomula Poultry Farm's case also emphasized that tender system must be viewed from the perspective of public welfare and not from the narrow viewpoint of a few contractors. The Court recognized the State's prerogative to restructure procurement systems to achieve uniformity, quality control and accountability and held that policy decisions taken after due deliberation cannot be struck down merely because some parties are inconvenienced. Similarly, the Hon'ble Supreme Court in Agmatel India Pvt. Ltd. v. Resoursys Telecom 3 reiterated in paragraph 26 as under:
" When the State or its instrumentalities act in the realm of contract, they must adhere to the principle of fairness and reasonableness. However, this does not mean that the court can substitute its own view for that of the tendering authority. Interference is warranted only when the decision- making process is vitiated by mala fides, arbitrariness, or irrationality. The court cannot sit in judgment over the commercial or technical wisdom of the tendering authority." 3
(2022) 5 SCC 362 12 3.5. Further, in Silppi Constructions Contractors v. Union of India 4, the Hon'ble Supreme Court held in paragraph 20 as under:
" The essence of the law on judicial review in tender matters is that the Government must have freedom of contract. Fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere. The courts will not interfere unless the action of the authority is found to be mala fide or intended to favour someone or is arbitrary and irrational. Mere errors or deviations cannot be a ground for interference."
3.6. Respondents therefore state that the policy of uniform procurement as well as the guidelines framed by PMU stand fully justified under the principles laid down by the Hon'ble Supreme Court and this Court. Introduction of district and mandal level tendering units, fixation of standard rates and procedure of empanelment and selection by lottery are administrative decisions made to ensure equitable distribution of work, prevent cartelization and guarantee uninterrupted supply to all the institutions. It is further stated that the policy also reserves discretion for the District Purchase Committees to allot work to Girijan Cooperative Corporation and Mahila Samakhyas to promote women empowerment and cooperative 4 (2020) 16 SCC 489 13 participation. Such preferential consideration in public welfare sector cannot be faulted, being a valid policy measure intended to achieve social justice objectives consistent with Directive Principles of State Policy.
3.7. It is also contended that the uniform procurement guidelines issued on 25.07.2025 were framed after extensive consultations with experts, Secretaries of all welfare departments and district officials. The guidelines stipulate that the District Purchase Committees, headed by the District Collectors, would conduct tenders for all dietary items with the district being treated as the unit for dry provisions and the mandal for perishables. This decision, according to the respondents, ensures efficiency, reduces administrative duplication and allows for better monitoring. The guidelines further provide for digital governance of procurement, stock tracking, and payments, minimizing the scope for corruption. It is categorically denied that policy eliminates small contractors. It is stated that each year over 12,000 individuals participate in the tenders and many of them are small-scale suppliers. The guidelines permit small vendors to form consortiums or apply for multiple mandals depending upon their capacity. EMD and Security Deposit amounts are proportional to the tender value; 14 thus, if a contractor applies for a smaller area, the deposit requirement reduces accordingly. Respondents state that fixation of 5% EMD and 20% Security Deposit is standard across government tenders and necessary to ensure seriousness and performance.
3.8. The 2nd respondent asserts that petitioner, who is a cooking contractor, has not been engaged in the supply of provisions and has been indulging in disruptive activities by issuing notices and instigating stoppage of supplies since 06.08.2025, thereby affecting lakhs of poor students. It is stated that the alleged figure of 5000 affected contractors is fabricated to attract sympathy. The new policy does not aim at employment generation for contractors but at improving the quality of nutrition for ten lakh students from underprivileged backgrounds. Respondents justify the preference extended to GCC and Mandal/Zilla Mahila Samakhyas as a conscious policy decision of the Government to encourage women's self-help groups and promote economic empowerment. It is pointed out that Mahila Samakhyas function under the Society for Elimination of Rural Poverty (SERP) and similar self-help groups have long been successfully managing the Mid-Day Meal Programme across the State. Exemption of EMD to such 15 organizations is justified since they are Government-backed entities which furnish security deposits upon allotment. GCC, being a State-run enterprise, has been supplying dry provisions to Tribal Welfare Residential Schools and hostels for many years, and its inclusion in the uniform procurement policy is a continuation of existing practice.
3.9. It is further stated, tender process is transparent and that selection among technically-qualified bidders is done through a lottery system to prevent favoritism and cartelization. Fixation of rates through District Diet Committees ensures uniform pricing and eliminates the scope for manipulation. It is also contended that tender application fees is fixed by each DPC depending upon the number of institutions and the total value of work in that district, hence variation across districts cannot be termed discriminatory. The requirement of Security Deposits equivalent to two months worth of supplies ensures continuity in case of default by any contractor and safeguards public funds.
4. In the additional counter affidavit, respondents state that the previous system was riddled with corruption and collusion between contractors and institutional heads, resulting in supply of adulterated and unhygienic food. The new policy 16 was formulated after identifying these systemic deficiencies through extensive consultations and feedback. Respondents emphasize that the policy was framed in public interest and after due deliberation, and Courts should refrain from interfering in such policy decisions. It is further stated that tenders have already been successfully invited in all 33 districts and that any delay in their finalization will jeopardize the supply of provisions to over ten lakh students, resulting in grave hardship.
4.1. Respondents reiterate that no contractor has been excluded from participation, as tenders are open to all meeting eligibility criteria. The allegation of monopoly is baseless, as multiple agencies are empanelled at district and mandal levels to ensure flexibility and competition. The Writ Petition has been filed only to derail the implementation of a well-intentioned welfare scheme and to protect the vested interests of a few contractors who benefited from the earlier unregulated system. It is therefore prayed that this Court may vacate the interim order dated 21.08.2025 and dismiss the Writ Petition as devoid of merit.
5. Petitioner states that the averments made in counter and additional counter affidavit are wholly untenable, 17 misleading and devoid of merit. Save and except what are specifically admitted herein, all other averments, allegations, contentions and insinuations made in the said counter affidavits are denied in toto. Respondents failed to justify the legality of G.O.Ms.No.17 dated 08.07.2025 and the consequential guidelines issued by the Project Monitoring Unit (PMU) on 25.07.2025. The counter seeks to portray introduction of the uniform procurement system as a welfare-oriented reform; however, respondents have not produced any material or statutory authority to show that PMU had the competence or delegated power to abolish the pre-existing school-level procurement system and replace it with a new, centralized model. Petitioners state that the entire exercise of PMU, acting through the 2nd respondent, ultra vires the parent G.O., contrary to law, and violative of the fundamental rights guaranteed under Articles 14, 19(1)(g), and 21 of the Constitution of India.
5.1. Petitioner further states that the 2nd respondent, in her counter, has attempted to justify the impugned guidelines on grounds of nutritional adequacy and administrative efficiency, but failed to explain how those objectives necessitated elimination of earlier tender structure which was 18 functioning effectively for more than 25 years. Respondents have completely misconstrued the scope of G.O.Ms.No.17 dated 08.07.2025. The said G.O. merely contemplated the establishment of a PMU to act as a nodal body for coordination and to ensure uniform standards in procurement, but it did not confer legislative or rule-making power to devise new tender mechanisms. The 2nd respondent, while purporting to implement the G.O., has, in fact, substituted the entire procurement regime by introducing district-wise and mandal- wise tender units, fixing exorbitant financial thresholds and permitting allotments by lottery all of which are administrative inventions without any statutory basis. The PMU could not, under the guise of implementation, override the existing legal framework of tendering that was followed uniformly by all residential welfare societies for decades.
5.2. Petitioner categorically denied the allegations made against them regarding alleged threats, stoppage of supplies or disruption of food provision to students. The respondents' statements are false, baseless and defamatory, intended solely to prejudice the mind of this Court. petitioner Association had, on 06.08.2025, submitted four detailed representations to the PMU highlighting the hardships caused by the new procurement 19 system, the disproportionate financial criteria, and the elimination of small contractors. Copies of the said representations were also submitted to the Principal Secretary, Chief Secretary, and concerned Ministers on 12.08.2025. These representations were made peacefully, without any protest or obstruction of supplies. On the contrary, as the elected President of the Telangana Gurukula Contractors Association, the petitioner had instructed all member contractors to continue supplying items without interruption. Hence, the allegations of coercion and stoppage of supplies are fabricated and motivated, meant only to divert attention from the illegality of the impugned policy.
5.3. Petitioners state that respondents' claim that earlier system was inefficient, unhygienic and corrupt is a generalized and exaggerated assertion unsupported by any empirical data. No study, committee report or audit document has been produced to demonstrate large-scale failure or malpractice under the old system. Respondents' reference to food poisoning incidents or irregular supplies is generic and cannot justify the complete overhaul of the tender mechanism, particularly when such incidents, if any could have been addressed through enhanced monitoring rather than exclusionary restructuring. 20 The Government's obligation is to ensure fair opportunity to all, not to restrict access to a few entities with financial clout. The respondents' justification that the policy was framed in public interest does not validate the illegality of the process. The Hon'ble Supreme Court has consistently held in Ramana Dayaram Shetty v. International Airport Authority of India that the State cannot act arbitrarily even in contractual matters and must adhere to standards of fairness and equality under Article 14.
5.4. Petitioners further state that respondents have sought to justify the impugned policy by citing logistical convenience and the need for uniformity. However, administrative convenience cannot be placed above constitutional guarantees. Respondents admit in their counter that all rates are fixed by the District Diet Committees (DDCs) and that tenderers are not allowed to quote their own prices. Such a mechanism, by definition, destroys the very essence of competitive bidding. When rates are pre-determined, the process of drawing lots among technically-qualified bidders becomes an artificial and mechanical exercise, not a tender in the legal sense. The fixation of rates and subsequent selection by lottery effectively converts a public tender into a nomination 21 system, vesting uncontrolled discretion in the District Purchase Committees to favor certain agencies. This system lacks transparency, objectivity, and competitiveness and is therefore unconstitutional and void ab initio.
5.5. It is also stated that respondents have sought to justify the exemption of EMD and preferential treatment to Mandal Mahila Samakhyas, Zilla Mahila Samakhyas, and the Girijan Cooperative Corporation (GCC) as a policy decision. However, no Government Order or statutory notification has been produced to show that any reservation or preference was declared in advance in favour of these agencies. The PMU guidelines themselves provide that DPC may identify mandals or districts to be allotted to such agencies after tenders are called, which demonstrates that the process is ad hoc, opaque and discretionary. Respondents failed to disclose any transparent mechanism or criteria for such nomination. It is settled principle that any preference or reservation in public contracts must be declared prior to the commencement of the tender process, not introduced arbitrarily thereafter. Therefore, reliance on policy consideration is misplaced and contrary to the doctrine of legitimate expectation and equality before law. 22 5.6. Petitioner also refutes respondents' contention that small contractors can form consortiums to participate in the tender process. Such a suggestion is illusory and impractical. The eligibility criteria under the new system, including a minimum turnover of Rs.3 crores and EMD of up to Rs.65 lakhs, make consortium participation unfeasible for small suppliers, most of whom operate on marginal resources. Respondents' contention that EMD is proportional to the work value is misleading because the tender notifications does not disclose the actual estimated value of work, leaving bidders unable to assess financial obligations before applying. The lack of transparency in valuation, coupled with exorbitant deposit requirements, violates the principles of reasonableness and proportionality in administrative action. Respondents' justification regarding the need for Security Deposits equivalent to two months' value of supplies is arbitrary and disproportionate. Petitioner Association has been supplying food and provisions for decades without any default or requirement for such massive deposits. There is no empirical basis or evidence to show that such deposits are necessary to ensure performance. Instead, these conditions only serve to exclude small vendors from participation. Respondents' assertion that 23 tenders have already been successfully invited in all districts is incorrect. Several tenders have been questioned and remained unfinalized owing to ongoing litigation and widespread opposition from contractors across districts. Hence, the plea of urgency raised by respondents to vacate interim orders is self- serving and unfounded.
5.7. Petitioner further denies respondents' attempt to malign the Association by alleging collusion or profiteering in the earlier system. The earlier system functioned through a transparent process where tenders were invited for each institution, ensuring fair competition and accountability. If isolated instances of irregularities existed, they could have been rectified through improved supervision or digital monitoring, rather than by introducing a policy that benefits only a handful of financially powerful entities. Respondents' claim that new system is in the welfare of students is a mere pretext to justify an unlawful administrative overhaul that has effectively created monopolies and excluded thousands of small, law-abiding contractors. Petitioners reiterate that G.O.Ms.No.17 dated 08.07.2025 does not empower the PMU to change the unit of procurement or the tender structure. The entire policy of treating the district as a unit for dry provisions and mandal as a 24 unit for perishable items is not traceable to any clause in the G.O. The PMU, by issuing guidelines dated 25.07.2025, has usurped the powers of the Government and acted beyond its mandate. Respondents have not produced any cabinet approval or statutory notification authorizing such change. Hence, the guidelines are ultra vires, illegal and void.
5.8. Petitioners further state that respondents' contention that policy was implemented for the benefit of "ten lakh students" is irrelevant to the legality of the process. The Constitution does not permit deprivation of one class's livelihood on the pretext of benefiting another. The right to livelihood under Article 21 and the right to trade under Article 19(1)(g) cannot be extinguished by administrative convenience. The impugned policy, by eliminating small contractors, directly impacts the livelihood of thousands of families who depend solely on such supplies. Hence, respondents' defence is not only legally unsustainable but morally indefensible. In the light of the above submissions, petitioner states that counter and additional counter affidavits filed by respondents are replete with misstatements, omissions and unfounded allegations. Respondents have failed to justify the legality, necessity or proportionality of the impugned policy. The guidelines issued by 25 the PMU dated 25.07.2025 ultra vires G.O.Ms.No.17 dated 08.07.2025, arbitrary, unreasonable, and violative of Articles 14, 19, and 21 of the Constitution of India. Petitioners therefore, pray that this Court be pleased to reject the contentions of respondents, uphold the petitioners' challenge and allow the Writ Petition as prayed for in the interests of justice.
6. Heard Sri P.V. Ramana, learned counsel for petitioner, Sri T. Rajanikanth Reddy, learned Additional Advocate General on behalf of State and Sri Bhanothu Hussain, learned Standing Counsel for the 3rd respondent.
7. Having regard to the facts and circumstances of the case, pleadings and submissions made by both the parties and upon perusal of the material on record, this Court is of the considered opinion that while the object of the Government in introducing a uniform procurement system through G.O.Ms.No.17 dated 08.07.2025 and the consequential common guidelines dated 25.07.2025 issued by PMU appears to be bona fide and aimed at ensuring uniformity, quality and accountability in the procurement of dietary and consumable items for hostels and residential educational institutions under various welfare departments, certain aspects of the 26 implementation and structure of the said guidelines call for reconsideration and modification.
8. This Court observes that the concept of centralized procurement and standardization of quality standards is in the larger public interest and cannot, per se, be faulted. However, the method adopted in the present instance, particularly fixation of districts and mandals as single procurement unit, absence of clear, pre-declared reservation or notification in favour of certain agencies such as Mahila Samakhyas or Girijan Cooperative Corporation and adoption of a lottery-based selection process among technically-qualified bidders, suffers from procedural opacity and lack of adequate transparency.
9. While this Court does not find the policy itself to be mala fide or arbitrary in its objective, the operational mechanism, as contained in the impugned process/guidelines, requires restructuring to ensure a level playing field, fairness in participation and accountability in selection. The right to livelihood of small contractors, who have been engaged for years in the decentralized procurement system, must be balanced against the Government's obligation to ensure quality and uniformity.
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10. Accordingly, while upholding the power of the Government and PMU to frame a uniform procurement policy, this Court deems it appropriate to dispose of the Writ Petition with the following directions / guidelines:
i. Respondents shall ensure that any reservation or preference proposed in favour of Girijan Cooperative Corporation (GCC), Mandal Mahila Samakhyas, or Zilla Mahila Samakhyas is clearly declared in advance in the tender notification itself along with percentage of such reservation, areas or categories of supply to which it applies and justification for such preferential treatment. No discretion shall be left to District Purchase Committees to identify or nominate such agencies after the tender process has commenced, as such post- facto identification would defeat the transparency and fairness of public procurement.
ii. The Earnest Money Deposit (EMD), Security Deposit and turnover conditions prescribed in the tender guidelines shall be fixed rationally, proportionately and in direct correlation to the total estimated value of work. Respondents shall ensure that such financial requirements are not excessive or discriminatory so as to exclude small and medium contractors. In the case of contracts valued below Rs.1 crore, 28 EMD shall ordinarily not exceed two per cent of the estimated value and the annual turnover requirement shall not exceed the value of the work proposed to be allotted.
iii. Respondents shall ensure that every tender notification clearly specifies the total estimated value of work, item-wise quantities to be supplied and approximate unit rates, enabling all potential bidders to assess the scale and feasibility of the contract prior to participation. Omission of such details often leads to ambiguity and discourages genuine competition, therefore, this disclosure shall be made mandatory in all future notifications.
iv. The Project Monitoring Unit (PMU) and District Purchase Committees (DPCs) shall frame and adopt a uniform, objective and transparent evaluation matrix to assess tender bids based on measurable parameters such as technical competence, past performance, prior experience, financial capacity, and price reasonableness. All evaluation reports, including comparative statements and reasons for acceptance or rejection of any bid, shall be recorded in writing and made publicly accessible through the official websites of the respective welfare departments to ensure transparency and accountability in decision-making.29
v. Respondents shall forthwith discontinue the practice of allotting work by draw of lots among technically- qualified bidders. Such a system, being devoid of competitive evaluation, does not conform to the principles of fairness and reasonableness underlying public procurement. The selection of agencies shall instead be made strictly on comparative merit, objective assessment and documented evaluation so as to ensure that the best-qualified and the most suitable bidders are awarded the work.
vi. Respondents shall make provision for reserving not less than twenty-five per cent of the procurement units, either at the mandal level or institutional level, for participation by small and local contractors possessing requisite experience and capacity, thereby safeguarding their right to livelihood and ensuring equitable distribution of government contracts. This reservation shall be implemented through an open and transparent process without compromising on quality standards.
vii. Respondents shall establish a centralized on line mechanism for publication of tender notices, issue of clarifications, corrigenda, results of evaluation and for receiving and resolving grievances related to tender processes. This on 30 line platform shall include a timeline for response and resolution of complaints and shall remain accessible to all registered contractors to maintain continuous transparency and accountability.
viii. The Project Monitoring Unit (PMU) shall convene consultative meetings with representatives of recognized contractor Associations at least once in every financial year to review the functioning of the procurement process, address genuine difficulties faced by stakeholders and consider recommendations for improvement, thereby ensuring participatory governance and regular review of the procurement system.
ix. Respondents shall publish revised and restructured procurement guidelines incorporating the above directions within a period of two weeks from the date of receipt of a copy of this order and shall ensure that the same are uniformly applied by all welfare departments and their subordinate institutions across the State.
x. Respondents shall, in all future procurement exercises, adhere scrupulously to the principles of fairness, transparency, equality of opportunity, and reasonableness, ensuring that the objectives of uniform quality and 31 accountability are achieved without compromising the livelihood and participation rights of small and medium contractors.
11. Subject to the above, the Writ Petition is disposed of. No costs.
12. Consequently, Miscellaneous Applications, if any shall stand closed.
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NAGESH BHEEMAPAKA, J 31st October, 2025 ksld