World Bank cannot be considered a government agency: Delhi High Court

The Delhi High Court has held that international bodies like World Bank cannot be termed as a "government agency" since they are not bound by any directions issued by the Government of India and are not considered 'State' or other authority under Articles 12 and 226 of the Constitution of India (A2Z Infraservices Limited and Anr. vs. NDMC)..A Division Bench of Justices Vipin Sanghi and Jasmeet Singh said that the Government of India does not exercise any control, actual or pervasive, over the affairs of these bodies."We are of the view that the World Bank–or any of the other international bodies, which have proceeded to debar the petitioner, cannot be considered as a “Government Agency”. This is for the reason that none of these international bodies are bound by any directions issued by the Government of India," the judgment said. Consequently, such bodies are not amenable to the writ jurisdiction of the High Court, the Court ruled.The Bench was hearing a plea by A2Z Infraservices Limited (petitioner) relating to rejection of a bidder for an electricity tender floated by the New Delhi Municipal Corporation (NDMC),The bid was rejected on the ground that the petitioner was debarred by by World Bank with effect from March 17, 2021 till November 11, 2024, and this fact had not been disclosed by the petitioner in the undertaking submitted by the petitioner as per Clause No. 20(r) of Chapter II of the Request for Proposal (RFP) document.Clause 20(r) mandated disclosure with regard to debarment/ blacklisting by any government agency. The primary issue was whether the World Bank could be considered as a'government agency' in terms of clause 20 (r) of the tender conditions..Appearing on behalf of NDMC, advocate Mini Pushkarna submitted that that World Bank has representatives of India on its body, including the Union Finance Minister. Moreover, she stated that the Government of India also held voting rights in the World Bank.On the other hand Rajiv Nayar, Senior Counsel for the petitioner, submitted that for the World Bank to be categorized as the “government agency”, it would have to establish that the World Bank acted as an agent of Government of India. He also submitted that an agent would be bound by instructions of the principal and that it could not be said that the World Bank acted on the instructions of the Government of India.To buttress his arguments, Nayar placed reliance on the judgment of the Court of Appeals for the Federal Circuit in a case titled Philip W. Sedgwick vs. Merit Systems Protection Board, wherein the American Court had held that World Bank was not a federal agency.The High Court after examining the rival contentions, held that clause 20(r) has to be construed strictly and World Bank cannot be considered a government agency since it was not bound by directions issued by Government of India. "We may also observe that the clauses in the tender in question, namely, Clause 20 (r) read with Clause 55 are penal in nature, as they purport to debar the bidder who does not make a disclosure about its debarment by a Government agency. The said clauses, therefore, necessarily have to be construed strictly," the order said.Further, World Bank cannot be construed as a government agency by mere implication, the Bench stated. "By mere implication, the World Bank cannot be construed as a government agency when, generally understood, it is not a government agency. We are, therefore, of the view, that “Government agency”– in the present context, certainly cannot be construed as encompassing within its scope, bodies like the World Bank," the Court said.Therefore, the Court ruled that the petitioner cannot be barred from participating in the re-tendering process, unless the respondent amends the terms and conditions of the tender so as to specifically bar all such bidders who have been barred by international bodies, like the World Bank..[Read Order]