Courts must defer to tendering authorities 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 estimated aggregate value was approximately ₹1,198 crores, involving 4,730 RVIs and 109 proposed work orders.

The Petitioners challenged Condition Nos. 22.3(vi), (ix), (x)(c) and (x)(e), which prescribed a price band of minus 20% to plus 5% and used the bidder’s annual turnover as a tie-breaking criterion.

Retail Impact Private Limited additionally challenged Clause 21(I), requiring experience of one similar completed work valued at ₹37.50 lakhs or more.

The challenge was made before the last date for submission of bids; Retail Impact had participated in the tender, whereas the Petitioners in Writ Petition (Lodging) No. 16159 of 2026 had not participated.

The Court nevertheless considered the challenge on merits on the basis that the non-participating Petitioners would be deemed, for the purpose of adjudication, to possess the requisite qualifications.

1. Whether the writ petition filed by prospective bidders who had not participated in the tender was maintainable?

2. Whether the use of annual turnover as a tie-breaking criterion under Clause 22.3 of the tender was arbitrary, discriminatory or unrelated to the object of the tender?

3. Whether the price band of minus 20% to plus 5%, coupled with turnover-based ranking in the event of a tie, impermissibly disadvantaged MSME bidders?

4. Whether the requirement under Clause 21(I) of one similar completed work valued at ₹37.50 lakhs or more violated the Central Vigilance Commission (“CVC”) Office Memorandum dated 17 December 2002, particularly its reference to 80% of the estimated cost?

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

The Court applied the settled principle that tender conditions fall primarily within the commercial and technical domain of the tendering authority, and judicial review under Article 226 is limited to cases of mala fides, bias, discrimination, manifest arbitrariness, irrationality, perversity or a decision that no reasonable authority could have taken.

Relying on Agmatel India Pvt. Ltd. v. Resoursys Telecom, Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation, Silppi Constructions Contractors v. Union of India, Jagdish Mandal v. State of Orissa and Montecarlo Ltd. v. NTPC Ltd., the Court held that the authority which authors the tender is best placed to understand its requirements and that courts must defer to a plausible, non-perverse interpretation of the tender.

Directorate of Education v. Educomp Datamatics Ltd. supported the proposition that financial capacity is a legitimate consideration in awarding a substantial contract.

The CVC Office Memorandum dated 17 December 2002 was treated as providing illustrative guidance rather than prescribing a mandatory requirement that every similar-work criterion must equal 80% of the aggregate estimated tender value.

The Court also distinguished Vinishma Technologies Pvt. Ltd. v. State of Chhattisgarh, which concerned a discriminatory geographical entry barrier, unlike the all-India tender in the present case.

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 evaluation for 16 State Offices, preparation of State-wise merit lists and distribution among 109 work orders.

The eligibility requirements—similar-work experience, proportionate annual turnover, manufacturing premises and specified machinery—were considered reasonably connected with the scale and execution requirements of the project and were not restrictive.

Annual turnover did not determine entry into the tender; it operated only as a residual tie-breaker between otherwise technically qualified bidders quoting the same rate.

Where the rate was not minus 20%, tied L-1 bidders were first invited to submit further discount bids, and turnover was considered only if the tie persisted.

Further, no bidder could receive more than one work order in a State Office; consequently, even a bidder with the highest turnover could obtain at most 16 work orders out of 109.

The Court therefore held that the turnover criterion had a rational relationship with financial and operational capacity and did not exclude MSME bidders or create an arbitrary advantage.

As to Clause 21(I), the Court held that the CVC’s 80% reference could not be mechanically applied to the aggregate value of an all-India tender involving multiple separately allocated works; the ₹37.50-lakh threshold was intended to facilitate wider participation and did not violate the CVC guidance.

Since no mala fides, discrimination, perversity or manifest arbitrariness was established, judicial interference was unwarranted.

It declined to non-suit the non-participating Petitioners on maintainability and considered their challenge on merits, but held that the impugned tender conditions were neither arbitrary nor discriminatory.

The turnover-based tie-breaking mechanism was upheld as a rational and limited method of ranking otherwise qualified bidders, and the ₹37.50-lakh similar-work requirement was held consistent with the CVC Office Memorandum.

Both writ petitions were dismissed; Interim Application (Lodging) No. 27395 of 2026 was disposed of, the Rule was discharged, and there was no order as to costs.