The Bombay High Court has upheld the all-India RVI tender floated by IOCL valued at approximately Rs. 1,198 crores covering 16 State Offices, 4,730 RVIs and 109 work orders, rejecting the challenge that the turnover-based tie-breaker was arbitrary or discriminatory against MSME bidders. The Court held that financial capacity is a legitimate consideration and turnover criterion operates only as a last-resort mechanism for resolving price-ties between otherwise qualified bidders.
The Court said that author of the tender document is the best person to understand and appreciate its requirements, and constitutional courts must defer to this understanding unless the decision is mala fide, discriminatory, manifestly arbitrary or such that no reasonable authority could have arrived at it. Financial capacity is a legitimate consideration for awarding contracts of this magnitude and geographical spread, and a bidder’s overall turnover is a reasonable indicator of its financial and operational capacity.
Further, the Court clarified that turnover criterion in the present tender provides an objective method to resolve price-ties between otherwise qualified bidders and does not operate as a device to exclude smaller bidders, since each bidder can secure a maximum of one work order per State Office. Thus, the Court held that the CVC Circular prescribing the 80% benchmark is illustrative and not mandatory, and cannot be mechanically applied to a consolidated all-India tender.
The Division Bench comprising the Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad observed that Petitioners had not participated in the Tender, but proceeded to consider the challenge on a demurrer that the Petitioners possessed the requisite qualifications. The Court noted that the Tender was an all-India rate contract for 16 State Offices comprising 28 States and 5 Union Territories, contemplating 109 work orders for installation of 4,730 RVIs.
The Court observed that the eligibility criteria required bidders to demonstrate experience of a single Similar Work of Rs. 37.50 lakhs, annual turnover of Rs. 1.50 crore per State Office, possession of stipulated factory premises and prescribed machinery. Considering the total Tender value of Rs. 1,198 crores, the Court found that these Pre-Qualifying Criteria (PQC) were not restrictive. The manufacturing capacity prescribed under Clause 21(III) was identified as a critical aspect, requiring bidders to possess manufacturing facilities and machinery commensurate with their participation.
The Court observed that the annual turnover criterion did not determine who enters the competition but only operated to resolve a residual tie at the last stage between otherwise similarly placed bidders. The Court noted that even assuming a bidder with the highest turnover submits bids for all 16 State Offices, it could at the highest secure only 16 work orders out of the total 109 work orders contemplated under the Tender. The apprehension that the impugned condition was tailor-made for a high-turnover bidder to monopolise the Tender was found to be unfounded.
Regarding the CVC Circular challenge, the Court observed that Clause 5 of the CVC Circular began with the words “The following points must be kept in view while fixing the eligibility criteria”, and did not prescribe any mandatory formula that every Tendering Authority must adopt 80% of the estimated cost as the minimum value of single similar work. The Court held that the CVC Circular was illustrative in nature and the 80% reference could not be applied mechanically by comparing it with the aggregate value of all works potentially awarded under the Tender.
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Briefly, petitions were filed before the Bombay High Court challenging certain conditions of a tender floated by Indian Oil Corporation Limited (IOCL) for the supply, fabrication, transportation, installation and commissioning of Retail Visual Identity (RVI) elements, including canopies, building fascias, Indian Oil logo/lettering, signages and allied structures at Indian Oil retail outlets across 16 State Offices in India. The first petition was filed by Denish Jasubhai Sankhala and Gulshan Kumar, while the second was filed by Retail Impact Private Limited. The Petitioners impugned Condition Nos. 22.3(vi), (ix), (x)(c) and (x)(e) of the Tender, which prescribed the price band, tie-breaking mechanism and evaluation criteria.
The estimated project value of the Tender was Rs. 1198.82 crores, covering 4,730 RVIs across 16 State Offices, with 109 work orders to be awarded. The Petitioners submitted a representation to Respondent No. 2 on 26th March 2026 objecting to the impugned clauses, which were reiterated at the pre-bid meeting held on 8th April 2026. IOCL responded on 15th April 2026 simply stating that the Tender conditions would prevail, following which a further representation was submitted on 1st May 2026. The Petition was filed on 4th May 2026, prior to the last date for submission of bids on 6th May 2026, as the Tender contained a stipulation that a bidder, having submitted its bid, cannot thereafter challenge the Tender conditions.
The Petitioners challenged the eligibility criteria prescribing a single Similar Work order of Rs. 37.50 lakhs in the preceding seven years and an annual turnover of Rs. 150 lakhs in any of the preceding three financial years. They also assailed the price band of (-) 20% to (+) 5% and the tie-breaking mechanism based on highest annual turnover, contending that this discriminated against MSME bidders with lower overall turnover. The Petitioner additionally challenged Condition No. 21(I) for violating the CVC Office Memorandum dated 17th December 2002, which prescribed that similar completed works should cost not less than 80% of the estimated cost.
