ORDER : Nagesh Bheemapaka, J. Petitioner is a company duly incorporated under the provisions of the Companies Act, 2013 and is an empanelled outsourcing agency authorized to provide manpower services to various Government departments on contractual basis. It is their specific case that it has been entrusted with the responsibility of providing outsourcing manpower to various ESI Dispensaries functioning under the Insurance Medical Services Department in Sangareddy District commencing from 2023- 2024. The said engagement was renewed for the subsequent year 2024-2025, and Petitioner continued to render services uninterruptedly during the entire period. 1.1. It is asserted that throughout its tenure, Petitioner discharged its contractual obligations diligently and efficiently; no complaints were raised either by the departmental authorities or by the outsourced employees regarding payment of salaries, statutory deductions, or quality of services. On the contrary, the record demonstrates that Petitioner ensured prompt payment of wages as well as timely remittance of statutory contributions towards Employees' Provident Fund and Employees' State Insurance, thereby safeguarding the interests of the outsourced workforce. 1.2. Petitioner states that prior to expiry of contractual period for 2024-25, it made a formal Application dated 20.03.2025 seeking renewal of its outsourcing services for 2025- 26. Along with the said Application, Petitioner enclosed a Service Satisfaction Certificate issued by the Joint Director (Medical), Insurance Medical Services, Hyderabad, certifying in unequivocal terms that the services rendered by Petitioner during 2024-25 were satisfactory and that there were no outstanding dues towards salaries, ESI or EPF contributions as on the date of issuance of the certificate. 1.3. It is further contended that upon consideration of the renewal application and taking note of the services rendered by Petitioner during the previous years, the District Employment Officer, Sangareddy, who is the Convener of the District Level Outsourcing Committee, issued proceedings dated 26.04.2025, recording that as per the note orders approved by the District Collector, Sangareddy, Petitioner was renewed for providing outsourcing services in the District for 2025-26, subject to the terms and conditions specified therein. According to Petitioner, issuance of the said proceedings created a legitimate expectation that its services would be continued for the ensuing year. Petitioner further places reliance on the letter dated 18.02.2025 issued by the Joint Director (Medical), Insurance Medical Services, Hyderabad, addressed to the District Employment Officer, Sangareddy, specifically recommending continuation of Petitioner agency for the next three years. According to Petitioner, issuance of the said proceedings created a legitimate expectation that its services would be continued for the ensuing year. Petitioner further places reliance on the letter dated 18.02.2025 issued by the Joint Director (Medical), Insurance Medical Services, Hyderabad, addressed to the District Employment Officer, Sangareddy, specifically recommending continuation of Petitioner agency for the next three years. The recommendation was founded on practical and administrative considerations, namely that frequent change of outsourcing agencies was causing disruption in payment of salaries and statutory contributions such as ESI and EPF to employees, and that continuity of Petitioner Agency would avoid such hardships. It was also noted therein that Petitioner had expressed its willingness to continue its services. 1.4. In support of its claim for continuity, Petitioner relies upon G.O.Rt.No.3969 dated 09.07.2007 issued by the General Administration (SU.IV) Department, which prescribes guidelines for outsourcing of supporting services in Government departments. According to Petitioner, Clause 9(c) contemplates engagement of outsourcing agencies for a minimum period of three years, and these guidelines continue to be followed by Government departments even after formation of the State of Telangana. Petitioner contends that notwithstanding the above material on record, including the Service Satisfaction Certificate issued by the 4th Respondent, renewal proceedings dated 26.04.2025 issued by the 3rd Respondent with the approval of the 2 nd Respondent, and the recommendation made by the Joint Director (Medical), the 2 nd Respondent abruptly issued the impugned proceedings dated 30.05.2025 allotting the outsourcing contract for 2025-26 in favour of the 5 th Respondent. It is specifically alleged that the impugned proceedings were issued without issuing any notice to Petitioner and without affording any opportunity of hearing, thereby violating the principles of natural justice. According to Petitioner, the impugned action is arbitrary, discriminatory and violative of Articles 14 and 21 of the Constitution of India. 1.5. Petitioner further states that even after formal expiry of the contract period on 31.03.2025, it continued to provide outsourcing services in the interest of public administration and to ensure that essential medical services were not disrupted. It is asserted that Petitioner paid salaries and remitted EPF and ESI contributions for the outsourced employees for April and May 2025 as well. According to Petitioner, this conduct evidences its bona fides and commitment, which ought to have been taken into consideration by the 2nd Respondent while taking a decision regarding continuation of outsourcing services. 1.6. It is asserted that Petitioner paid salaries and remitted EPF and ESI contributions for the outsourced employees for April and May 2025 as well. According to Petitioner, this conduct evidences its bona fides and commitment, which ought to have been taken into consideration by the 2nd Respondent while taking a decision regarding continuation of outsourcing services. 1.6. With regard to the allegation relating to unauthorized absence of one outsourced employee, namely Smt. S. Navneetha, Staff Nurse working at ESI Dispensary, Patancheru, Petitioner disputes the said allegation. It is contended that Smt. S. Navneetha had submitted a written application seeking maternity leave commencing from 04.10.2024, and that the monthly attendance certificates issued by the In-charge Medical Officer for the relevant period recorded her status as on maternity leave. It is asserted, the allegation of unauthorized absence from 29.07.2024 is contrary to record. 1.7. It is also stated that upon receipt of the letter dated 16.05.2025 issued by the Joint Director (Medical) alleging unauthorized absence and calling for an explanation within 48 hours, Petitioner promptly submitted its explanation on 21.05.2025. In accordance with the contractual clauses governing replacement of manpower, Petitioner replaced the said employee to ensure that there was no disruption of services. The replacement proposed was accepted by the authorities on 23.05.2025, thereby confirming that the issue stood resolved. Petitioner therefore, states that the allegation of unauthorized absence is factually-incorrect, legally-untenable and could not have been relied upon to deny renewal of outsourcing services. 2. By order dated 18.06.2025, this Court directed suspension of proceedings dated 30.05.2025 issued by the 2 nd respondent - District Collector allotting outsourcing services and activities in favour of the 5th respondent. 3. Respondent No.2 - District Collector, Sangareddy District, who is also the Chairman of the District Level Outsourcing Committee, filed a detailed counter affidavit opposing the Writ Petition. It is stated, the impugned proceedings were issued strictly in accordance with the prevailing Government guidelines, Circulars and instructions governing outsourcing of services at the district level, and only after due scrutiny of the applications submitted by all empanelled outsourcing agencies. 3.1. It is contended that Petitioner does not possess any vested or indefeasible right to seek renewal or continuation of the outsourcing contract merely on the basis of its earlier engagement. 3.1. It is contended that Petitioner does not possess any vested or indefeasible right to seek renewal or continuation of the outsourcing contract merely on the basis of its earlier engagement. The power to allot outsourcing agencies vests with the District Collector as Chairman of the District Level Outsourcing Committee, who is required to exercise discretion based on administrative necessity, verification of credentials and compliance with applicable guidelines. It is further contended that although proceedings dated 26.04.2025 were issued in favour of Petitioner renewing its empanelment for 2025-26, no specific department or establishment was allotted to Petitioner under the said proceedings. According to Respondent No.2, issuance of the said proceedings did not confer any final right of allotment, as the process of verification of documents and scrutiny of compliance was still in progress. 3.2. During the course of such verification, certain irregularities came to light with respect to the functioning of Petitioner agency, particularly relating to unauthorized absence of one outsourced employee, namely Smt. S. Navneetha, Staff Nurse working at ESI Dispensary, Patancheru. It is alleged that the said employee remained unauthorisedly absent from duties for a prolonged period commencing from 29.07.2024 and continuing till May 2025, which, according to Respondents, had the potential to adversely affect the functioning of the Medical and Health services at the ESI Dispensary. 3.3. In support of the above allegation, reliance is placed on the letter dated 16.05.2025 issued by the Joint Director (Medical), Insurance Medical Services, Nacharam, Hyderabad, calling upon Petitioner agency to submit explanation within 48 hours regarding the unauthorized absence of the said employee. It is further stated that the District Employment Officer had sought the explanation submitted by Petitioner, but reply was awaited at the relevant time. It is further contended, Petitioner has wrongly relied upon G.O.Rt.No.3969 dated 09.07.2007 issued by the General Administration (SU.IV) Department. The said Government Order is applicable only to Secretariat Departments and Heads of Departments located at Hyderabad and does not govern outsourcing at the district level. It is asserted that outsourcing services at the district level are governed by G.O.Rt.No.4459 dated 27.12.2006 and subsequent Government Orders, which clearly stipulate that outsourcing agencies must renew their licenses every year and that contracts are to be considered on an annual basis. 3.4. It is asserted that outsourcing services at the district level are governed by G.O.Rt.No.4459 dated 27.12.2006 and subsequent Government Orders, which clearly stipulate that outsourcing agencies must renew their licenses every year and that contracts are to be considered on an annual basis. 3.4. It is therefore, contended that there is no statutory or administrative mandate to continue the same outsourcing agency for a minimum period of three years at the district level, and Petitioner's claim to such continuation is misconceived. Respondent No.2 further asserts that the District Level Outsourcing Committee reserves the right to accept or reject any Application or tender without assigning reasons and also retains the discretion to enter into parallel contracts, as per the applicable guidelines. 4. Respondent No.3 - District Employment Officer, Sangareddy District, who is also the Convener of the District Level Outsourcing Committee, has filed a separate counter affidavit substantially supporting the stand taken by Respondent No.2. Respondent No.3 contends that all the actions taken by him were strictly in accordance with the instructions of the District Collector and in conformity with the Government guidelines governing outsourcing. It is asserted, though Petitioner was initially renewed vide proceedings dated 26.04.2025, further verification revealed irregularities in the functioning of Petitioner Agency, particularly relating to unauthorized absence of the outsourced employee, as communicated by the Joint Director (Medical). Respondent No.3 contends that such irregularities warranted reconsideration of the allotment and justified the subsequent issuance of the impugned proceedings. 4.1. Respondent No.3 also reiterates, Petitioner has violated the terms and conditions of the agreement as well as the tender conditions and that in such circumstances, the District Collector, as Chairman of the Committee, was well within his authority to issue the impugned proceedings. It is contended that Writ Petition is devoid of merit and is liable to be dismissed. 5. Respondent No.5 - the successful outsourcing agency, has also filed a detailed counter affidavit opposing the Writ Petition. It is asserted, it is a duly-empanelled outsourcing agency with all requisite statutory registrations, including PF, ESI, Professional Tax and GST, and that it has been providing outsourcing services to various Government departments in the State for several years. It is contended, the impugned proceedings dated 30.05.2025 were issued after due scrutiny of all Applications submitted by empanelled agencies and after following the procedure prescribed under the applicable Government Orders. It is contended, the impugned proceedings dated 30.05.2025 were issued after due scrutiny of all Applications submitted by empanelled agencies and after following the procedure prescribed under the applicable Government Orders. Respondent No.5 submits that it was selected on merit and eligibility and that no illegality or arbitrariness can be attributed to the decision-making process. 5.1. Respondent No.5 further contends that continuation of Petitioner for multiple consecutive years would be contrary to the Government Orders mandating annual renewal of outsourcing licenses and contracts, and would result in denial of equal opportunity to other eligible and empanelled agencies, including Respondent No.5. It is asserted that outsourcing contracts are not meant to be monopolized by a single agency and that fair competition must be maintained among empanelled agencies. Respondent No.5 disputes the applicability of G.O.Rt.No.3969 dated 09.07.2007 relied upon by Petitioner and asserts that the said Government Order was neither adopted by the State of Telangana after bifurcation nor continues to be in force. According to them, outsourcing at the district level is governed by G.O.Rt.No.4459 dated 27.12.2006, G.O.Rt.No.4271 dated 01.11.2008, G.O.Ms.No.13 dated 01.07.2014 and other subsequent Government Orders, all of which contemplate annual renewal and do not provide for automatic continuation of an agency for three years. 5.2. Respondent No.5 also alleges that recommendations made by Respondents 3 and 4 in favour of Petitioner demonstrates favouritism and collusion, and that such recommendations were issued ignoring the claims of other equally-eligible empanelled agencies. 6. To the counter filed by Respondent No.5, Petitioner filed a detailed reply traversing and denying the allegations made therein. The assertion that Petitioner has been continuously providing outsourcing services for three years is denied. It is clarified that Petitioner was entrusted with outsourcing services only for 2023-24 and 2024-25 and had applied for renewal for 2025-26. The allegation that Petitioner enjoyed a continuous three-year tenure is stated to be factually- incorrect and misleading. 6.1. With regard to the allegation of unauthorized absence of one outsourced employee, namely Smt. S. Navneetha, Staff Nurse, Petitioner categorically denies the same. It is stated that the said employee had applied for maternity leave commencing from 04.10.2024, and the monthly attendance certificates issued by the In-charge Medical Officer for the relevant period recorded her status as being on maternity leave. It is stated that the said employee had applied for maternity leave commencing from 04.10.2024, and the monthly attendance certificates issued by the In-charge Medical Officer for the relevant period recorded her status as being on maternity leave. It is contended that only the certificate dated 05.05.2025 shows her as absent and that the allegation of unauthorized absence from 29.07.2024 is contrary to record. 6.2. Petitioner further states that upon receipt of the letter dated 16.05.2025 issued by the Joint Director (Medical) alleging unauthorized absence and calling for an explanation within 48 hours, the Petitioner submitted a detailed explanation on 21.05.2025. It is asserted that despite repeated efforts, the said employee was not responding and was untraceable, therefore, in accordance with the contractual terms, Petitioner replaced her with another candidate. When the first replacement candidate met with an accident, Petitioner proposed a second replacement, and the same was accepted by the authorities on 23.05.2025. The issue stood resolved and closed and cannot be treated as a subsisting irregularity. 6.3. Petitioner relies upon the relevant clauses of the Agreement governing outsourcing services, which permit maternity leave, deduction of remuneration for non-attendance, and replacement of manpower in cases of unavoidable circumstances or unsatisfactory service. Petitioner strictly complied with the contractual obligations and ensured uninterrupted services at the ESI Dispensary. Petitioner also places reliance on subsequent correspondence of the Joint Director (Medical), including the letter dated 13.06.2025, wherein it was stated that Respondent No.5 had been allotted outsourcing services in Medchal District for 2024-25 and that outsourcing employees in that district had submitted grievances alleging that the services of Respondent No.5 were not satisfactory. They refer to the earlier letter dated 11.06.2024 addressed by the Joint Director (Medical) to the District Collector, wherein it was stated that employees working under Respondent No.5 in Medchal District had complained of non- payment of salaries for several months and non-credit of ESI and PF contributions, and had requested change of the outsourcing agency. 6.4. Petitioner further alleges that there are material discrepancies in the proceedings dated 30.05.2025 relied upon by Respondents 3 and 5. It is stated that copies of the said proceedings filed by Respondents 3 and 5 differ in material particulars, including the number of terms and conditions mentioned and the manner of attestation. 6.4. Petitioner further alleges that there are material discrepancies in the proceedings dated 30.05.2025 relied upon by Respondents 3 and 5. It is stated that copies of the said proceedings filed by Respondents 3 and 5 differ in material particulars, including the number of terms and conditions mentioned and the manner of attestation. According to Petitioner, these inconsistencies cast serious doubt on the genuineness and authenticity of the impugned proceedings and indicate collusion between Respondents 3 and 5. 6.5. Petitioner denies the allegation of favouritism or monopoly and asserts that it has acted responsibly, ensured timely payment of salaries and statutory contributions, and continued services even beyond the contractual period in the interest of public service. It is contended, the action of the 2nd respondent in issuing the impugned proceedings without notice, despite renewal proceedings dated 26.04.2025 and acceptance of replacement of manpower, is arbitrary and unsustainable. Petitioner therefore, reiterates its prayer that the impugned proceedings dated 30.05.2025 be declared illegal and that the Petitioner be continued as the outsourcing agency for providing manpower to ESI Dispensaries in Sangareddy District for the year 2025-2026. 7. Heard Sri Raja Sripathi Rao, learned Senior Counsel appearing on behalf of Sri Thaduri Srikanth, learned counsel for petitioner, learned Government Pleaders for Labour on behalf of Respondents 1 to 3, learned Government Pleader for Medical and Health on behalf of Respondent No. 4 and Sri V. Ravi Krishna, learned counsel for the 5 th respondent. 8. Having considered the entire material on record and having heard learned counsel on either side, it is evident that the core issue that arises for consideration is whether the action of the 2 nd Respondent in issuing the impugned proceedings allotting outsourcing services for the ESI Dispensaries in Sangareddy District for 2025-26 in favour of Respondent No.5, can be sustained in law, having regard to the prior renewal proceedings dated 26.04.2025, recommendations made by Respondents 3 and 4 and the manner in which the impugned decision has been taken. 9. At the outset, it is not in dispute that Petitioner has been providing outsourcing manpower to ESI Dispensaries in Sangareddy District during the years 2023-24 and 2024-25. 9. At the outset, it is not in dispute that Petitioner has been providing outsourcing manpower to ESI Dispensaries in Sangareddy District during the years 2023-24 and 2024-25. It is also not in dispute that the Joint Director (Medical), Insurance Medical Services, Hyderabad, issued a Service Satisfaction Certificate certifying that the services rendered by Petitioner for 2024-25 were satisfactory and that there were no pending dues towards salaries, ESI or EPF contributions. These facts stand admitted on record. 10. It is further an admitted position that the District Employment Officer, Sangareddy, who is the Convener of the District Level Outsourcing Committee, issued proceedings dated 26.04.2025 stating that, as per the note orders approved by the District Collector, Petitioner was renewed for providing outsourcing services for 2025-26. The said proceedings were not withdrawn or cancelled by any separate order prior to issuance of the impugned proceedings. 11. The contention of Respondents that proceedings dated 26.04.2025 did not allot any specific department to Petitioner and that verification was still in progress does not dilute the legal effect of the said proceedings. Once the competent authority records renewal of an agency based on approval of the District Collector, such renewal cannot be rendered otiose by a subsequent unilateral decision without affording an opportunity to the affected party, particularly when the renewal order itself emanates from the same authority. 12. The principal justification put forth by Respondents 2 and 3 for issuing the impugned proceedings is the alleged unauthorized absence of one outsourced employee, namely Smt. S. Navneetha, Staff Nurse. However, the material placed on record demonstrates that the said issue was not only explained by Petitioner but was also acted upon by the departmental authorities. Petitioner has placed on record attendance certificates indicating maternity leave, explanation dated 21.05.2025 submitted in response to the letter dated 16.05.2025, and the subsequent replacement of the employee, which replacement was accepted by the competent authority on 23.05.2025. 13. It is also to be noted, the contractual clauses governing outsourcing services, as referred to by Petitioner, specifically contemplate maternity leave, deduction of remuneration for non-attendance, and replacement of manpower in cases of unavoidable circumstances or unsatisfactory service. The record shows that Petitioner complied with these clauses and ensured continuity of services. 13. It is also to be noted, the contractual clauses governing outsourcing services, as referred to by Petitioner, specifically contemplate maternity leave, deduction of remuneration for non-attendance, and replacement of manpower in cases of unavoidable circumstances or unsatisfactory service. The record shows that Petitioner complied with these clauses and ensured continuity of services. In such circumstances, the allegation of unauthorized absence cannot be treated as a subsisting or unresolved irregularity warranting denial of renewal, particularly without a reasoned determination or adverse finding communicated to the Petitioner. 14. This Court is mindful of the settled position that an outsourcing agency does not acquire an indefeasible right to renewal or continuation of contract. Equally, it is well-settled that administrative discretion, even in contractual matters, must be exercised in a fair, transparent and non-arbitrary manner, consistent with Article 14 of the Constitution of India. When an authority grants renewal and thereafter, reverses its position, the minimum requirement is adherence to the principles of natural justice. 15. In the present case, it is an admitted fact that no notice was issued to Petitioner before issuing the impugned proceedings dated 30.05.2025. No opportunity of hearing was afforded, despite the existence of renewal proceedings dated 26.04.2025, Service Satisfaction Certificate, and acceptance of replacement of manpower. The impugned proceedings also do not disclose any independent reasoning as to why Petitioner was found unsuitable, except a general reference to verification and alleged irregularities. 16. As regards the rival submissions on applicability of G.O.Rt.No.3969 dated 09.07.2007 vis-à-vis other Government Orders governing district-level outsourcing, this Court is of the view that even assuming Respondents' contention that annual renewal applies at the district level, such annual regime does not dispense with the requirement of fairness in decision- making. The issue in the present case is not whether Petitioner was entitled to automatic continuation for three years, but whether the process adopted to displace Petitioner after granting renewal meets the constitutional standard of reasonableness. 17. This Court has also examined the scope of judicial review in contractual and outsourcing matters in light of the principles laid down by the Hon'ble Supreme Court in the judgment reported in Escorts Ltd. vs. Commissioner of Central Excise, Delhi II , (2004) 8 SCC 335 . The said decision recognizes that the State and its instrumentalities possess a certain degree of discretion in matters relating to award, renewal or non-renewal of contracts. The said decision recognizes that the State and its instrumentalities possess a certain degree of discretion in matters relating to award, renewal or non-renewal of contracts. At the same time, the Hon'ble Supreme Court has categorically held that such discretion is not immune from judicial review and that interference under Article 226 of the Constitution is permissible where the decision-making process is arbitrary, unreasonable, actuated by extraneous considerations or vitiated by violation of the principles of natural justice. 18. Applying the above principles to the facts of the present case, this Court finds that the impugned proceedings dated 30.05.2025 do not represent a mere policy choice or administrative preference exercised at the threshold stage. Petitioner had already been renewed through proceedings dated 26.04.2025 with the approval of the District Collector, and the said renewal was followed by continued performance of services and compliance with statutory obligations. The subsequent decision to displace Petitioner and allot the outsourcing services in favour of Respondent No.5, without issuance of notice, without affording an opportunity of hearing, and without recording cogent reasons, falls foul of the standards of fairness and reasonableness emphasized by the Hon'ble Supreme Court in the above said judgment. Therefore, even within the limited parameters of judicial review applicable to contractual matters, the impugned action warrants interference by this Court. 19. The reply affidavit filed by Petitioner also brings on record material relating to the functioning of Respondent No.5 in other districts, as well as discrepancies in the copies of the proceedings dated 30.05.2025 produced by different Respondents. While this Court refrains from recording any final finding on allegations of collusion, the existence of such discrepancies further underscores the necessity for transparency and procedural fairness in administrative decisions affecting competing rights of empanelled agencies. 20. It is also relevant to note that Petitioner continued to provide services and paid salaries and statutory contributions for April and May 2025 even after expiry of the formal contract period, in order to avoid disruption of essential medical services. This conduct reflects bona fides and was a relevant consideration which the 2 nd Respondent ought to have taken into account while taking a final decision. 21. This conduct reflects bona fides and was a relevant consideration which the 2 nd Respondent ought to have taken into account while taking a final decision. 21. Viewed cumulatively, this Court finds that the impugned proceedings dated 30.05.2025 were issued in undue haste, without notice, without affording an opportunity of hearing, and without proper consideration of the renewal proceedings dated 26.04.2025, the Service Satisfaction Certificate and the subsequent compliance by the Petitioner in relation to the alleged irregularity. The decision-making process therefore, suffers from arbitrariness and violation of the principles of natural justice. 22. The Writ Petition therefore, is allowed. The proceedings dated 30.05.2025 of the 2 nd Respondent are hereby set aside. Respondents 1 to 4 are directed to continue Petitioner as the outsourcing agency for providing manpower services to the ESI Dispensaries of Insurance Medical Services in Sangareddy District for 2025-26, in terms of the proceedings dated 26.04.2025 and subject to compliance with the applicable contractual conditions and statutory requirements. 22.1. It is, however, made clear that this order shall not preclude official Respondents from taking appropriate action in future in accordance with law, after due notice and by following the principles of natural justice, if any genuine deficiency or violation is established. No costs. 23. Pending miscellaneous Applications, if any, shall stand closed.