Delhi High Court Upholds Nomination-Based LoA for Telecom Infrastructure.

Headnote:

The Delhi High Court dismissed an intra-court appeal challenging the issuance of a Letter of Acceptance (LoA) dated 13.02.2025 by Delhi Metro Rail Corporation (DMRC) in favor of respondent no.2 for providing In-Building Solution (IBS) telecom services at certain Airport Express Line metro stations. The Court held that nomination of the respondent without a tender was permissible under Rule 194 of the General Financial Rules, 2017, given the exceptional circumstances arising from repeated failures of the appellant to meet contractual obligations and the urgent need to ensure uninterrupted mobile connectivity for metro operations and commuter services. Alleged discrimination in minimum chargeable area and pricing did not invalidate the LoA.

Background:

1. The appellant, Crest Digitel Pvt. Ltd., had entered into a license agreement with DMRC on 03.01.2019 for providing shared mobile coverage (2G/3G/4G) inside certain metro stations, including underground areas, with obligations to ensure >99.95% network availability.
2. Prior license agreement dated 14.11.2018 between DMRC and respondent no.2 permitted variation of tendered sites and areas up to certain limits.
3. The appellant alleged that the LoA dated 13.02.2025 issued in favor of respondent no.2:
4. Exceeded the scope of the original license;
5. Rendered its agreement ineffective, causing operational and financial loss;
6. Offered discriminatory terms regarding minimum chargeable area, violating Article 14 of the Constitution; and
7. Was issued without a tendering process, which was legally impermissible.
8. DMRC countered that the appellant had repeatedly failed to meet its contractual obligations, penalties were imposed multiple times, and urgent measures were required to ensure mobile network quality along the Airport Express Line.

Court’s Observations:

1. Rule 194, GFR 2017: Single-source selection by nomination is permissible under exceptional circumstances, including continuation of previous work, emergencies, proprietary expertise, or when selection serves departmental interest with adequate justification.
2. The LoA issuance was based on detailed recommendations by a Negotiation Committee that considered complaints about poor mobile coverage, reviewed pricing, and proposed co-terminus tenure and IBS expansion.
3. The appellant’s failure to perform obligations and repeated penalties justified the recourse to nomination instead of tender.
4. Pricing allegations were addressed as respondent no.2 agreed to match the existing license rate (Rs. 11,088 per sq.m/month), ensuring no undue advantage.
5. Previous case law (Nagar Nigam, Meerut v. Al Faheem Meat Exports & Ors.; Sahakar Global Limited JV v. MCD) recognizes that while tenders are the norm, exceptional circumstances allow deviation through private negotiation.

Legal Provisions Discussed:

1. Rule 194, General Financial Rules, 2017 (GFR) – Permits single-source selection by nomination under exceptional circumstances.
2. Article 14, Constitution of India – Equality before law and prohibition of discriminatory treatment in public contracts.
3. License Agreements (14.11.2018 & 03.01.2019) – Contractual obligations for installation, operation, and maintenance of telecom and IBS infrastructure.

Conclusion:

The appeal lacked merit. The Court upheld the LoA dated 13.02.2025 issued in favor of respondent no.2, confirming that:

1. Nomination was legally permissible under Rule 194 of the GFR;
2. The action was necessary to ensure uninterrupted mobile services for commuters and metro operations; and
3. There was no discrimination or violation of contractual principles.

Result: Appeal and pending applications dismissed; no order as to costs.

Citation: 2025:DEL:588/2025

Case: Crest Digitel Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd. & Anr.

Court: High Court of Delhi at New Delhi

Coram: Devendra Kumar Upadhyaya, C.J. & Tushar Rao Gedela, J.

Date of Decision: 18 November 2025

LPA No.: 588/2025