Delhi HC Upholds MCD’s Discretion to Deny Extension of Parking Contracts

The Hon’ble Delhi High Court, in the case of Jagtar Singh & Ors. v. Municipal Corporation of Delhi, (2026:DHC:1597-DB), decided February 24, 2026, held that extension of parking site contracts under a tender providing a three-year contract with the option of a two-year extension is discretionary and cannot be claimed as a matter of right solely on the basis of satisfactory performance.

The petitioners, authorised parking contractors of the Municipal Corporation of Delhi (MCD), challenged a fresh tender dated January 15, 2026, covering parking sites previously allotted to them under a 2022 tender. They contended that the earlier tender contemplated a three-year tenure extendable by a further two years upon satisfactory performance, that extension requests were duly submitted, and that issuance of a fresh tender without deciding such requests was arbitrary, violative of legitimate expectation, and tantamount to constructive termination of subsisting contractual arrangements.

Opposing the challenge, the MCD argued that the extension clause expressly made continuation of the contract subject to both satisfactory performance and the decision of the competent authority, thereby preserving institutional discretion. The corporation further submitted that re-tendering was undertaken to achieve market-aligned price discovery and maximise revenue from public assets following the expiry of the initial contractual term.

The Court accepted the MCD’s position, holding that the tender clause imposed a twin requirement, performance satisfaction and approval of the competent authority, and therefore did not create an automatic entitlement to extension. The Court observed that the authority was entitled to consider broader factors such as financial prudence, market conditions, and public interest while deciding extension requests. It also rejected the petitioners’ claims of legitimate expectation and deemed extension, noting that the contractual framework itself made continuation conditional. Since the original tenure had expired by efflux of time, the court held that the issuance of a fresh tender did not amount to constructive termination.