Is World Bank a Govt Agency as per Article 12 of Constitution, HC replies [Read Judgement]

The Delhi High Court has recently retierated on whether World Bank falls under 'Government Agency' category in reference to Article 12 of the Constitution, which defines 'State' and 'other authorities'.

A Division Bench comprising of Justice Vipin Sanghi and Justice Jasmeet Singh faced the question while dealing with a petition wherein challenge was posed to decision of rejection of the Petitioner's bid and its further disqualification from participating in any re-tendering process, reason being it stands debarred by the World Bank.

Brief Facts of the Case

The petitioner firm was aggrieved with the NDMC's decision of rejection of its bid and further disqualification making its debarrment from World Bank the basis of the it.

The Ld. Counsel of the petitioner contended that the debarment by the World Bank Group doesn't amount to debarment by the Government, or a Government Agency as the Agency doesn't fall under the definition by Article 12 of the Constitution. 

The Ld. Standing Counsel for State on the other hand argued that World Bank has representatives of India on its body, which includes the Union Finance Minister and that Government of India has voting rights in the World Bank. By this logic it is a Govt Agency 

To this Ld. Counsel of the petitioner cited US Court decision in Phillip W. Sedgwick v. Meri Systems Protection Board, wherein it was held that regardless of the fact that America holds 25% interest in the World Bank, its not a 'Federal Agency'. He added that India not only have no interest by has a mere 3.5% voting power.

He also argued that for the World Bank to be categorized as the “Government Agency”, it will have to be established that the World Bank acts as an agent of Government of India. He submits that an agent is bound by instructions of the principal and certainly World Bank doesn't acts on the instructions of the Government of India.

High Court's Observation

The Bench upon hearing both the parties observed 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” as these International Bodies aren't bound by directions issued by the Government of India.

The Court further said:

In view of the above the Court thus held that the petitioner cannot be disqualified as the Clauses in the said Agreement purport to debar the bidder who doesn't make a disclosure about its debarment by a 'Government Agency' and in the present context, it certainly cannot be construed as encompassing within its scope, bodies like the World Bank.

Read Judgement Here: