Delhi High Court has objected to Bharat Sanchar Nigam Limited’s (BSNL) action of terminating the letter of intent (LoI) to Starnet Communications Private Limited on failure to submit a performance bank guarantee (PBG) from an Indian scheduled bank.

The move comes after Starnet filed a petition against cancellation of the LoI by BSNL. The company stated that nowhere in the LoI was stipulated that PBG had to be given from an Indian scheduled bank only. Further, the company has contended that BSNL has encashed Rs 200,000 submitted as the bid security.

The court has said that BSNL’s action of terminating the LoI of the petitioner on the ground of non-furnishing of a PBG from an Indian Scheduled Bank is unsustainable. Further, the court has stated that non-acceptance of PBG while encashment of bid security amount are invalid and inconsistent. It has directed BSNL to refund Rs 200,000 to Starnet and has imposed a cost of Rs 50,000 as penalty on the state enterprise.

BSNL had awarded a wireless broadband network contract to Starnet in Haryana circle.