Existing milk contracts prevail over overlapping tender

The Karnataka High Court dealt with two connected writ petitions concerning milk marketing and co-packing operations in Telangana. The dispute arose after KMF issued a communication and later a tender and letter of award that, according to the petitioners, overlapped with their existing contractual territory under arrangements routed through Hassan Co-operative Milk Producers Societies Union.

In WP No. 23487 of 2024, the petitioner said it had been appointed in 2015 as marketing, warehousing, clearing and forwarding agent for Sri Rajeshwari Dairy Products for the entire State of Telangana. It relied on later arrangements under which Hassan handled the operations and a work order and agreement were executed on 30.03.2019. The grievance was that KMF’s communication dated 07.08.2024 permitted Raichur Bellary Koppal District Co-operative Milk Producers Societies Union to market Nandini milk and allied products in several Telangana districts, including Warangal, Adilabad, Nizamabad, Karimnagar and Khammam.

In WP No. 22850 of 2024, the petitioner challenged the tender dated 20.05.2024 and the letter of award dated 07.08.2024 in favour of Hassan and, later, the co-packing arrangement in favour of M/s Shakti Milk and Milk Products. The common complaint was that the new arrangements could not lawfully cut into the petitioners’ existing operational territory.

Justice Suraj Govindaraj accepted the core contractual concern. The operative directions state that the arrangements could not extend to or encroach upon the Hyderabad Metropolitan Area, as notified by HMDA, which was treated as the petitioners’ operational territory under their subsisting agreements with Hassan CMPSU. To that extent, the impugned communication, tender and letter of award were not allowed to override the earlier contractual rights.

The Court also directed M/s Shakti Milk not to carry out co-packing operations within the Hyderabad Metropolitan Area so long as the petitioner’s agreement with Hassan CMPSU remained in force. Hassan Co-operative Milk Producers Societies Union was directed to honour the agreements with both petitioners in respect of their respective operations within the Hyderabad Metropolitan Area during their subsistence.

The judgment therefore turns on protection of existing contractual arrangements against later overlapping administrative action in the same market territory.

Practical takeaway: where a public-sector milk federation has already placed a contractor in a defined territory, later tenders and work orders cannot displace that contract without respecting its subsisting scope.