Paniyaram is a fried dish available both in sweet and spicy form.
The students from class 1 to 8 complained of nausea after consuming the dish, sold by a woman outside the school. They were admitted to government hospital and now out of danger, police said.
A girl was the first to vomit and faint after she found parts of lizard in her dish, they said.
Police said they were enquiring about the road-side eatery owner.