In a recent decision in A2Z Infraservices Ltd. v. North Delhi Municipal Corporation1, the High Court of Delhi ("High Court") has held that the World Bank is not a Government Agency. In this article, we navigate through the facts and findings of the aforementioned case.
The first respondent ("NDMC") had issued a tender for certain project ("Project") in which A2Z Infraservices Ltd. ("Petitioner") had participated. On 30 September 2021, NDMC rejected Petitioners bid for the Project on the ground that the Petitioner failed to disclose that it stood debarred by the World Bank with effect from 17 March 2021 until 11 November 2024. As per NDMC, the Petitioner was required to submit an undertaking under Clause No. 20(r) of the request for proposal ("RFP") document that it had not been blacklisted or debarred any government agency in recent past which debarment was still running as on date. The NDMC also referred to Clause 55 of the RFP document which empowered NDMC to remove any bidder who submitted incorrect information in its bid.
Aggrieved by the decision of NDMC, the Petitioner preferred the instant writ petition before the High Court seeking, inter alia, the following reliefs:
- Firstly, issue an appropriate writ, order or direction to quash and set aside the decision of the NDMC disqualifying and debarring the Petitioner from participating in any re-tendering for the Project.
- Secondly, issue an appropriate writ, order or direction to NDMC for considering the bid submitted by the Petitioner in accordance with the terms of the RFP document.
The Petitioner challenged NDMC's decision of disqualifying it from participating in the re-tending of the Project on the ground that World Bank could not be considered to be a government agency in terms of Clause 20(r) of the tender conditions. As per the Petitioner, for the World Bank to be considered as a government agency, it will have to be established that the World Bank acts as an agent of the Government of India. It was submitted that an agent is bound by the instructions of the principal. Therefore, the Petitioners argued that the World Bank could certainly not be said to be a government agency.
The Petitioner placed reliance on the decision of the Court of Appeals for the Federal Circuit in Case No. 2008-3004 namely Philip W. Sedgwick v. Merit Systems Protection Board, wherein an American Court had held that the World Bank was not a federal agency. The Petitioner also placed reliance on the decisions wherein it was held that the World Bank was not an authority under Article 12 of the Constitution of India and hence no writ would lie against it. Lastly, the Petitioner relied on the decision in M/s GVR Infra Projects v. Union of India & Anr.2 In that case, the learned Single Judge rejected the submission of NHAI equating World Bank to the Central or State Governments of India, or an entity controlled by the Government of India.
NDMC submitted that the World Bank had representatives of India on its body, which includes the Union Finance Minister. Moreover, the Government of India had voting rights in the World Bank. Therefore, the World Bank would fall under the ambit of the term government agency.
Decision of the High Court
The High Court having heard the parties, was of the view that the World Bank or any other international body which had debarred the Petitioner in the present matter could not be considered as a government agency. This is because none of these international bodies were bound by the directions issued by the Government of India.
The High Court observed that Government of India did not exercise any control, actual or pervasive, over the affairs of the international bodies mentioned above. It was for this reason that international bodies such as the World Bank were held not be amenable to the writ jurisdiction of the High Court as they are not 'State' or 'other authority' within the meaning of the said expressions under Articles 12, and 226 of the Constitution of India.
The High Court noted that Clause 20(r) read with Clause 55 were penal in nature as they purport to debar the bidder who does not make a proper disclosure about its debarment by a government agency. The said clauses, therefore, necessarily had to be construed strictly. The High Court held that by mere implication, the World Bank could not be construed as a government agency. The High Court concluded that government agency in the present matter, certainly could not be construed as encompassing within its scope, bodies like the World Bank.
Therefore, the High Court held that the Petitioner could not be barred from participating in the re-tendering process, unless NDMC amended 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. The writ petition was disposed of in such terms.
It is a common phenomenon in public tenders to seek an undertaking from the bidders stating that they have not been debarred or blacklisted by any government or government body previously. This is a standard practice to eliminate bidders on the basis of their previous performance. Such tenders also contain a clause which allows the tenderee to bar any bidder from participating further in the bidding process on account of it being blacklisted previously.
Given that these tender conditions are penal in nature, they must be interpreted strictly. The debarment of any corporation has serious consequences on its business. More often than not, such companies are by default not eligible to participate in most of the other public tender which require an undertaking that the company has an unblemished record of performance and has not been previously blacklisted. The High Court in the instant matter rightly held that the World Bank could not be equated with a government agency and left it open to NDMC to amend its tender conditions.
1. A2Z Infraservices Ltd. v. North Delhi Municipal Corporation, WP (C) 11480 of 2021.
2. M/s GVR Infra Projects v. Union of India & Anr., W.P. (C) 8090/2014.
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