1. Court’s decision
The Delhi High Court has dismissed an intra-court appeal filed by a telecom infrastructure licensee challenging DMRC’s Letter of Acceptance (LoA) dated 13 February 2025, issued in favour of another licensee (respondent no. 2), for implementation of IBS 5G mobile network solutions at key stations along the Airport Express Line (AEL).
The Court held that:
- DMRC validly invoked Rule 194 of the General Financial Rules (GFR), 2017, permitting nomination-based award in “special circumstances” and “in the overall interest of the department.”
- The appellant’s continuous contractual failures—including repeated penalties and inability to meet coverage obligations—created an urgent public-service deficit, justifying departure from a fresh tender.
- Variation under Clause 2.2(c) of respondent no. 2’s earlier 2018 licence legitimately allowed expansion to IBS services.
- Price parity was maintained, as respondent no. 2 voluntarily matched the appellant’s own rate—₹11,088 per sq.m/month—removing any Article 14 concerns.
- There was no uneven playing field, and the LoA did not rewrite or nullify the appellant’s 2019 licence.
Dismissing the appeal, the Court held that the appellant’s challenge was meritless, delayed, and contrary to the public interest in maintaining seamless metro connectivity.
2. Facts
The dispute arises from two separate DMRC licences:
(A) Respondent no. 2’s 2018 licence
A licence agreement dated 14 November 2018 allowed respondent no. 2 to design, install and maintain telecom towers/masts to enhance mobile coverage at AEL stations.
• Clause 2.2(c) permitted a 25% site variance and an additional 10% area variance, with further expansion possible on negotiated terms.
(B) Appellant’s 2019 licence
On 3 January 2019, DMRC licensed the appellant for In-Building Solutions (IBS) at five AEL stations. The appellant was obligated to ensure:
• 95% area coverage,
• uninterrupted mobile connectivity inside tunnels and trains,
• coverage drop gaps not exceeding 50 meters,
• radio availability above 99.95%.
DMRC repeatedly found lapses:
Penalties were imposed on 11.06.2019, 11.07.2019, 07.08.2019, 13.12.2019, 07.01.2020, 09.09.2019, 13.02.2020, 17.03.2020, 11.08.2020, 25.09.2020, 26.10.2021, 03.03.2022.
(C) Government concerns
The Ministry of Communications wrote on 19 July 2019 highlighting critical failures in mobile connectivity along the Airport–Dhaula Kuan corridor that affected:
• international travellers,
• domestic commuters,
• QR/UPI ticketing reliability,
• TRAI-documented QoS standards.
(D) Negotiation Committee & IBS 5G proposal
In January 2025, DMRC formed a Negotiation Committee to assess service gaps.
It:
• reviewed TRAI findings and commuter complaints;
• considered respondent no. 2’s proposal for integrated IBS 5G infrastructure;
• invoked Clause 2.2(c) to treat it as a variation of the 2018 licence;
• recommended a licensed rate of ₹5,500 per sq.m/month, which respondent no. 2 later increased voluntarily to ₹11,088, matching the appellant’s contract.
DMRC accepted the recommendation and issued the LoA dated 13.02.2025.
The appellant’s writ petition challenging the LoA was dismissed; hence this LPA.
3. Issues
The Court considered:
- Whether DMRC could award work by nomination instead of tender.
- Whether respondent no. 2’s licence could be varied to include IBS 5G, expanding beyond originally tendered scope.
- Whether differential minimum chargeable area (12 sq.m vs 20 sq.m) violated Article 14.
- Whether the LoA rendered the appellant’s existing 2019 licence defunct.
- Whether delay, laches, and third-party investments barred interference.
4. Appellant’s arguments
The appellant contended that:
• DMRC’s nomination violated mandatory tendering principles and did not fit within Rule 194 GFR exceptions.
• Respondent no. 2’s minimum area requirement (12 sq.m) gave it a competitive advantage, allowing it to offer better rates, violating Article 14.
• The LoA impermissibly rewrote the 2018 licence and made the appellant’s 2019 licence redundant.
• The Single Judge ignored Supreme Court principles in Nagar Nigam Meerut v. Al Faheem Meat Exports and the Delhi High Court’s view in Sahakar Global JV.
• The variation under Clause 2.2(c) was misused to avoid a tender.
5. Respondent’s arguments
DMRC and respondent no. 2 argued that:
• The appellant had chronically failed in network obligations, causing public-service disruption.
• Rule 194 specifically permits nomination in special circumstances, and this case met the criteria.
• The Negotiation Committee provided full justification.
• Respondent no. 2 agreed to price parity, neutralising discrimination allegations.
• The minimum area difference was a function of DMRC’s engineering assessment of IBS infrastructure needs.
• The appeal was filed months after the LoA, during which respondent no. 2 invested ₹25.6 crores, creating third-party rights.
6. Analysis of the law
A. Rule 194 GFR — nomination permitted in special circumstances
The Court held that sub-clause (iv) of Rule 194 directly applied:
• recurring failures by the appellant,
• TRAI-documented QoS collapse,
• public-service disruption in ticketing and payments,
• urgency in 5G-capable IBS integration.
The LoA was therefore lawful.
B. Variation under Clause 2.2(c) was legitimate
The 2018 licence expressly allowed:
• site/area increase up to 25%,
• additional area allocation on negotiated rates,
• DMRC discretion based on availability/feasibility.
Thus, adding IBS 5G to respondent no. 2’s scope was not a new contract but a variation.
C. Article 14 challenge rejected
Since respondent no. 2 matched the appellant’s rate of ₹11,088/sq.m/month, pricing discrimination did not exist.
DMRC’s technical determination of the minimum area (12 sq.m vs 20 sq.m) was a commercial and engineering decision, immune from judicial substitution absent arbitrariness—which was not shown.
D. Appellant’s failures justified deviation from tendering
Multiple penalties and the Ministry’s 2019 letter showed the appellant’s “consistent inability” to fulfil mandated coverage levels.
Public service obligations trumped purely commercial objections.
E. No rewriting of the appellant’s licence
The appellant remained bound by its 2019 contract. The LoA neither cancelled nor superseded it.
7. Precedent analysis
Nagar Nigam Meerut v. Al Faheem Meat Exports (2006)
Held: public contracts should normally be granted by tender, but private negotiation is permissible in rare and exceptional circumstances.
The Court held that the present case fell within this exception.
Sahakar Global JV (Delhi HC, 2025)
Reaffirmed Nagar Nigam Meerut.
Distinguished: that case involved absence of public-interest urgency, unlike DMRC’s IBS 5G scenario.
The precedents supported, rather than contradicted, DMRC’s approach.
8. Court’s reasoning
The Court’s reasoning comprised the following:
- Urgency + service failure = special circumstances
The metro’s dependence on uninterrupted connectivity for ticketing, UPI payments and safety justified bypassing tender. - Appellant’s conduct undermined its own challenge
A party repeatedly penalised cannot invoke parity to block necessary public infrastructure upgrades. - Technical variation permissible
IBS 5G integration fell within the permissible variation framework of the 2018 licence. - Price parity ensured fairness
Respondent no. 2 accepted identical rates; hence no unfair advantage. - Delay and third-party rights
The appeal was filed months after the LoA, during which large investments were made—another bar to interference.
9. Conclusion
The High Court upheld the LoA dated 13.02.2025, affirming that:
• DMRC acted lawfully under Rule 194 GFR;
• variation under Clause 2.2(c) was valid;
• no discrimination or Article 14 violation existed;
• public interest justified immediate nomination;
• the appellant’s appeal was devoid of merit.
The appeal and applications were dismissed.
10. Implications
This ruling significantly clarifies:
• Public authorities may legitimately invoke Rule 194 GFR for nomination-based awards in urgent service-critical contexts.
• Telecom infrastructure at mass-transit systems forms part of essential public-service obligations.
• Tender deviation is permissible where service failure + urgency + contractual breach coexist.
• Variations under existing contracts can legally support major technological upgrades (including 5G IBS).
• Article 14 claims must show real competitive disadvantage, not engineering differences in area allocation.
The judgment will influence telecom-integrated urban transport infrastructure procurement, especially during 5G expansion.
Case Law References
Nagar Nigam, Meerut v. Al Faheem Meat Exports (2006)
Recognised that private negotiation is permissible in rare exceptional cases; applied to justify DMRC’s nomination.
Sahakar Global JV (Del HC, 2025)
Reaffirmed principles of transparency and exceptions; distinguished on public-interest urgency grounds.
Rule 194 GFR jurisprudence
The judgment effectively becomes a key precedent on applying Rule 194 in telecom–transport integration scenarios.
FAQs
1. Can DMRC award telecom infrastructure work without tender?
Yes, under Rule 194 GFR, DMRC can use nomination in special circumstances, including urgent public-service needs.
2. Does varying an existing licence to include IBS 5G require a fresh tender?
No. Clause 2.2(c) permitted variation, making DMRC’s approach lawful.
3. Is it discriminatory if two licensees have different minimum area requirements?
No. Technical engineering assessments determine area needs; parity in rates is the key consideration.