The failure to provide notice and an opportunity for a hearing before revoking the contract constitutes a violation of natural justice principles in outsourcing matters.

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. 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