I had the same problem and got it solved by using a different directory.
bash-4.2$ bundle install Could not locate Gemfile bash-4.2$ pwd /home/amit/redmine/redmine-2.2.2-0/apps/redmine bash-4.2$ cd htdocs/ bash-4.2$ ls app config db extra Gemfile lib plugins Rakefile script tmp bin config.ru doc files Gemfile.lock log public README.rdoc test vendor bash-4.2$ cd plugins/ bash-4.2$ bundle install Using rake (0.9.2.2) Using i18n (0.6.0) Using multi_json (1.3.6) Using activesupport (3.2.11) Using builder (3.0.0) Using activemodel (3.2.11) Using erubis (2.7.0) Using journey (1.0.4) Using rack (1.4.1) Using rack-cache (1.2) Using rack-test (0.6.1) Using hike (1.2.1) Using tilt (1.3.3) Using sprockets (2.2.1) Using actionpack (3.2.11) Using mime-types (1.19) Using polyglot (0.3.3) Using treetop (1.4.10) Using mail (2.4.4) Using actionmailer (3.2.11) Using arel (3.0.2) Using tzinfo (0.3.33) Using activerecord (3.2.11) Using activeresource (3.2.11) Using coderay (1.0.6) Using rack-ssl (1.3.2) Using json (1.7.5) Using rdoc (3.12) Using thor (0.15.4) Using railties (3.2.11) Using jquery-rails (2.0.3) Using mysql2 (0.3.11) Using net-ldap (0.3.1) Using ruby-openid (2.1.8) Using rack-openid (1.3.1) Using bundler (1.2.3) Using rails (3.2.11) Using rmagick (2.13.1) Your bundle i