Delhi High Court rules that World Bank is not a government agency

Delhi High Court rules that World Bank is not a government agency

Government of India does not exercise any control over the affairs of the international financial institution

A Division Bench of Justice Vipin Sanghi and Justice Jasmeet Singh has said that the Government of India does not exercise any control, actual or pervasive, over the affairs of bodies like the World Bank.

Since they are not bound by any directions issued by the government and are not considered 'State' or 'other authority', they have been held as not amenable to writ jurisdiction.

The development comes in a writ petition challenging the decision of the North Delhi Municipal Corporation (NDMC) rejecting the petitioner firm's (A2Z Infraservices Ltd. & Anr.) bid and disqualifying it from participating in any re-tendering process on the ground that it stood debarred by the World Bank.

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

The Ld. Counsel of the petitioner contended that the debarment by the World Bank Group in no way amounted to debarment by the government or a government agency, as the agency did not fall under India's constitutional laws.

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 the Government of India has voting rights in the World Bank. By this logic, it is a government agency.

Commenting on the matter, the Ld. Counsel of the petitioner cited the US court's decision in Phillip W. Sedgwick vs Meri Systems Protection Board, wherein it was held that regardless of the fact that America held 25 per cent of interest in the World Bank, it was not a 'Federal Agency'.

Adding that India not only has no interest but also has a mere 3.5 per cent voting power, the counsel argued that for the World Bank to be categorized as a 'government agency', it will have to be established that the former acts as an agent of the Government of India.

He submitted that the World Bank certainly did not act on the instructions of the government.

The court held the view that the petitioner cannot be disqualified as the clauses in the agreement purported to debar the bidder who made no disclosure about its debarment by a 'government agency'. But in this case, it could not be construed as encompassing within its scope, bodies like the World Bank.