Bombay High Court Upholds ₹1,198 Crore IOCL RVI Tender, Says CVC 80% Guideline Not Mandatory

A Division Bench of Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad dismissed two writ petitions challenging Indian Oil Corporation Limited's (IOCL) all-India tender for Retail Visual Identity (RVI) works, rejecting allegations that the conditions were arbitrary or discriminated against MSME bidders.

The tender, valued at approximately ₹1,198 crore, sought to empanel contractors for supply, fabrication, installation and commissioning of RVI elements—including canopies, building fascias, logos and signages—across 16 State Offices covering 28 States and 5 Union Territories. A total of 109 work orders for 4,730 RVI installations were contemplated.

The Challenge

Petitioners Denish Jasubhai Sankhala, Gulshan Kumar (proprietors of Fusion Digital and Shubham Engineering respectively) and Retail Impact Private Limited objected to Condition Nos. 22.3(vi), (ix), (x)(c) and (x)(e) of the tender. They argued that using annual turnover as a tie-breaking criterion would unfairly favour large bidders over MSMEs, especially when all bidders potentially quote the lowest permissible rate of (−)20%. They contended the turnover requirement had no rational nexus to the capacity to execute RVI works, as it included income from unrelated business activities.

Additionally, they challenged the pre-qualification requirement that a bidder must have completed a "Similar Work" of at least ₹37.50 lakh, arguing it violated the Central Vigilance Commission's Office Memorandum of 17 December 2002, which suggested that single similar work should be valued at not less than 80% of the estimated cost.

IOCL's Defence

Senior Advocate Dr. Milind Sathe, appearing for IOCL, argued that the turnover criterion was not an eligibility bar but only operated as a last-resort tie-breaker between otherwise qualified bidders who quoted identical rates. He explained the tender's structure: bidders must first meet stringent pre-qualification criteria—including experience, turnover, manufacturing facility with specified machinery, and factory size graded by the number of State Offices—before their price bids are even opened.

IOCL clarified that a single bidder could secure at most one work order per State Office, debunking fears of monopolisation. The evaluation process involved separate merit lists for each State Office, with a discount bidding mechanism for ties at rates other than (−)20%. Only when a tie persisted even after further negotiations was the higher annual turnover used to rank bidders.

Limited Role of Turnover

The Court observed that the manufacturing capacity requirement was a critical aspect of the tender structure, directly linked to a bidder's ability to execute RVI works. "It is in this context that the annual turnover criterion must be viewed," the judgment noted. "The role subsequently assigned to the annual turnover in a tie-breaker is materially narrower."

The Bench found that the annual turnover of a bidder "does not determine who enters the competition. It only operates to resolve a residual tie at the last stage between otherwise similarly placed bidders." The Court illustrated that even if the highest turnover bidder seeks qualification for all 16 State Offices, it can at best secure only 16 out of 109 work orders—hardly a monopolistic outcome.

Rejecting the CVC Challenge

On the CVC circular contention, the Court held that the Office Memorandum dated 17 December 2002 is illustrative, not mandatory . "The submission proceeds on the assumption that the figure of 80% mentioned in the said Circular constitutes a mandatory eligibility requirement. That is not so," the judgment stated.

The Bench emphasised that the all-India tender of ₹1,198 crore prescribing a ₹37.50 lakh threshold for similar works "permits the widest possible participation." It reasoned that the value of work may fluctuate depending on quotes within the price band of (−)20% to (+)5% , and therefore "the 80% reference in the CVC Circular cannot be applied mechanically by comparing it with the aggregate value of all works which may potentially be awarded under the Tender."

Key Observations

The Court cited settled principles from the Supreme Court in Agmatel India Private Limited vs. Resoursys Telecom and Others and Directorate of Education vs. Educomp Datamatis Ltd. , reaffirming that the author of a tender document is best placed to interpret its terms, and that courts must defer to the commercial wisdom of the tendering authority unless the decision is arbitrary, irrational, discriminatory or mala fide.

Notably, the Bench observed that the same methodology had been successfully adopted by IOCL in earlier RVI tenders where 85 contracts were awarded. "Respondent No.2 is also justified in adopting the established methodology as it is the best judge of its commercial requirements," the judgment added.

No Ground for Interference

The Court distinguished the petitioners' reliance on Vinishma Technologies Pvt. Ltd. vs. State of Chhattisgarh , noting that in that case the tender imposed an entry barrier restricting bidders from other States—a scenario entirely absent here. "The Tender is on an all-India basis. It does not impose any entry barrier ," the Bench clarified.

Concluding that the impugned conditions were neither arbitrary nor discriminatory, the Division Bench dismissed both writ petitions and disposed of the interim applications. "The scope of judicial review in tender matters is extremely limited . The court cannot undertake a microscopic examination of the commercial wisdom underlying every component of the tender," the judgment held.

Source: Court Judgment dated 21 August 2026 in WP(L) No. 16159/2026 and WP(L) No. 28202/2026.