Courts must defer to tender conditions absent mala fides, perversity, or manifest arbitrariness.

Indian Oil Corporation Limited (IOCL) issued an all-India tender for the supply, fabrication, transportation, installation and commissioning of Retail Visual Identity (RVI) elements at retail outlets across 16 State Offices. The tender, valued at approximately ₹1,198 crores, contemplated 109 work orders for 4,730 RVIs.

The Petitioners challenged Condition Nos. 22.3(vi), (ix), (x)(c) and (x)(e), particularly the requirement that annual turnover be used as a tie-breaking criterion where bidders quoted identical rates, including the minimum bid band of (-)20% to (+)5%.

Retail Impact Private Limited, which had participated in the tender, also challenged the requirement under Clause 21(I) of having completed a similar work valued at ₹37.50 lakhs or more, contending that it was inconsistent with the Central Vigilance Commission’s 17 December 2002 Office Memorandum.

IOCL defended the tender structure, explaining that bids would be evaluated separately for each State Office, with empanelment and distribution among multiple contractors.

Whether the writ petition filed by prospective bidders who had not participated in the tender was maintainable, and whether the challenge could be considered on the assumption that they satisfied the eligibility criteria.

Whether using the bidder’s overall annual turnover as a tie-breaking criterion under Clause 22.3, particularly where bidders quoted (-)20% or remained tied after further bidding, was arbitrary, discriminatory or unrelated to the tender’s objective.

Whether the tender’s minimum similar-work experience requirement of ₹37.50 lakhs under Clause 21(I) violated the CVC Office Memorandum dated 17 December 2002, which referred to 80% of the estimated cost as a guideline.

Whether the impugned tender conditions warranted judicial interference under Article 226 of the Constitution.

The Court applied the settled principle that tender conditions and their interpretation lie primarily within the commercial and technical domain of the tendering authority, whose decision must receive judicial deference unless it is mala fide, perverse, discriminatory, manifestly arbitrary or irrational.

Relying on Agmatel India Pvt. Ltd. v. Resoursys Telecom and the principles reiterated from Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn., Bharat Coking Coal Ltd. v. AMR Dev Prabha, Silppi Constructions Contractors v. Union of India, Jagdish Mandal v. State of Orissa and Montecarlo Ltd. v. NTPC Ltd., the Court held that judicial review examines the legality and rationality of the decision-making process, not whether the Court would have adopted a preferable commercial criterion.

The Court further relied on Directorate of Education v. Educomp Datamatis Ltd. for the proposition that financial capacity is a legitimate consideration in awarding contracts of substantial value.

The CVC Office Memorandum was treated as illustrative guidance rather than a mandatory formula requiring every tender to prescribe similar-work experience equal to 80% of the aggregate estimated tender value.

The Court found that the tender was not a single contract capable of being monopolised by one bidder, but a consolidated rate contract involving separate State Office-wise evaluations, 109 proposed work orders and distribution among empanelled contractors; no bidder could receive more than one work order in a State Office.

The eligibility requirements—similar-work experience, State Office-wise turnover, factory premises and specified machinery—were considered proportionate to the scale and nature of the RVI works and were not restrictive.

Annual turnover did not determine entry into the tender; it operated only as a residual tie-breaker between bidders who were otherwise technically qualified and had quoted or negotiated the same price.

In the case of bids at (-)20%, no further discount or negotiation was permitted, making higher turnover an objective method of ranking equally placed bidders. The Court held that overall turnover was a reasonable indicator of financial and operational capacity for a nationwide contract, notwithstanding that it could include income from activities unrelated to RVI works.

The challenge based on the CVC guideline also failed because applying 80% mechanically to the aggregate value of a multi-State tender would be inappropriate, particularly when the tender contemplated numerous separate work orders and sought wider participation.

No mala fides, discriminatory intent, perversity or irrationality was established, and the Court declined to substitute its own commercial assessment for that of IOCL.

It held that the ₹37.50-lakh similar-work criterion did not violate the CVC Office Memorandum and that the impugned conditions were neither arbitrary nor discriminatory.

Writ Petition (L) Nos. 16159 of 2026 and 28202 of 2026 were dismissed; Interim Application (L) No. 27395 of 2026 was disposed of, Rule was discharged, and there was no order as to costs.