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World Bank Not A Govt Agency Within Article 12 Of Constitution: Delhi High Court

Akshita Saxena
23 Oct 2021 4:46 AM GMT
World Bank Not A Govt Agency Within Article 12 Of Constitution: Delhi High Court
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The Delhi High Court has held that the World Bank is not a 'Government agency' for the purposes of Article 12 of the Constitution, which defines "State" and "other authorities". A Division Bench of Justices Vipin Sanghi and Jasmeet Singh observed that to be a government agency, a body must be under "pervasive and actual control" of the Government of India. It also observed that...

The Delhi High Court has held that the World Bank is not a 'Government agency' for the purposes of Article 12 of the Constitution, which defines "State" and "other authorities".

A Division Bench of Justices Vipin Sanghi and Jasmeet Singh observed that to be a government agency, a body must be under "pervasive and actual control" of the Government of India.

It also observed that the principle of Principal and Agent would be attracted in such a case.

So far as the World Bank is concerned, the Bench observed,

"We are of view that World Bank or any other international bodies cannot be considered as a Government agency. This is for the reason that none of these international bodies are bound by directions issued by the Government of India.
The Government of India does not exercise control over, actual or pervasive, their affairs and that is why they have been held as not amenable to writ jurisdiction of the High Court, as they are not considered State or other authority within meaning of the said expressions under Articles 12, and 226, of the Constitution of India."

The development comes in a writ petition challenging the decision of the North Delhi Municipal Corporation rejecting the Petitioner's bid and disqualifying it from participating in any re-tendering process on the ground that the petitioner stands debarred by the World Bank.

Senior Advocate Rajiv Nayar appearing for the Petitioner had argued that the debarment by the World Bank Group does not amount to debarment by the Government, or a Government Agency.

Nayar relied on the Delhi High Court's decision in M/S Gvr Infra Projects Limited v. Union Of India & Anr. where it was held that the World Bank, cannot by any stretch, be considered as State or Central Government or an entity controlled by the Central/State Government.

Standing Counsel Mini Pushkarna on the other hand argued that World Bank has representatives of India on its body, which includes the Union Finance Minister. Moreover, the Government of India has voting rights in the World Bank.

Nayar countered this by citing an American Court decision in Phillip W. Sedgwick v. Meri Systems Protection Board, where regardless of the fact that America holds 25% interest in the World Bank, it was held that the body is not a federal agency.

"We have no interest. Only 3.05% voting power," Nayar submitted.

Hearing this, the Bench orally told the Respondent,

"When you say Government agency, it means an agent of the Government. It is an extended limb of the Government. By any stretch of imagination, you can't say that World Bank is an extended arm of India."

Finally, on merits of the case, the High Court held that so far as the decision taken by the respondent to cancel the tender, and to re-tender the works is concerned, there is sufficient justification for the same.

"Even if we assume that the petitioner is right in claiming that it has not been debarred by any Government Agency, and that the World Bank, the AIIB, and the AFDB are not Government Agencies, the respondent would be justified in deciding not to award the contract to such a party, and the decision to scrap the tendering process cannot be said to be arbitrary and unreasonable," it held.

However, so far as re-tendering process is concerned, the Court held that petitioner cannot be barred, 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.

Case Title: A2Z Infraservices Ltd & Anr. v. NDMC

Appearance: Senior Advocate Rajiv Nayar, Advocates Sudhir Sharma, Mohit Bakshi Saurabh Seth, Naman Singh Bagga and Adit Vikarmadaditya Garg for Petitioner; Standing Counsel Mini Pushkarna, Advocates Khushboo Nahar and Latika Malhotra for Respondent.

Click Here To Download Order


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