I feel that the dongle is just a modem ( with a DHCP server ) which distributes/assigns ipaddress .The ipaddress is maintained at NIC card ( after negotiation with dhcp server ).
This is incorrect in three ways.
First, the dongle is not just a modem. It's a network interface.
Second, why would a modem need a DHCP server? Typically a modem would be used in front of a router or other device that would provide DHCP service if that was needed. But if you only want to connect one device to the Internet, what purpose would a DHCP server have? It would have to get an IP address from somewhere else anyway, and once it did, it would already have that IP address.
Third, machines don't need physical NICs to have IP addresses. There are numerous counterexamples. For example, what about local IP addresses like 127.0.0.1? Before NICs were common, it wasn't unusual to use SLIP or PPP to get a machine on the Internet through its serial port. In fact, it was quite common to buy a modem, connect it to your serial port, and get on the Internet that way with no NIC at all.