Supreme Court of India
ASSOCIATION OF REGISTRATION PLATESversusUNION OF INDIA AND ORS.
- Citation
- 2004 INSC 386
- Decided
- 26 May 2004
- Disposal
- Matter referred to larger bench
- Bench
- S RAJENDRA BABU
Holding
Clause 4(x) of the 2001 Order and the related eligibility conditions are ultra vires and violative of Article 19(1)(g), and are therefore quashed.
Summary
The petitioners challenged Clause 4(x) of the Motor Vehicles (New High Security Vehicle Registration Plates) Order, 2001 and the eligibility conditions in various State NITs, alleging that they created a monopoly in favour of a single private manufacturer, violating Article 19(1)(g) of the Constitution. The petitioners also contended that the Central Government had acted ultra vires by issuing the Order under Section 109(3) of the Motor Vehicles Act, 1988. The Court, by a majority opinion (Mathur J.), held that the selection of a single manufacturer for the whole State amounted to an impermissible monopoly and that the eligibility criteria (turnover and foreign experience) were arbitrary and discriminatory. Consequently, Clause 4(x) and the contested eligibility conditions were declared void. The Court also held that the Central Government could not issue the Order under the cited statutory power, rendering it ultra vires. The writ petitions were allowed, the impugned provisions were quashed, and the matter was referred to a larger bench for further consideration.
Issues considered
- The validity of Clause 4(x) of the Motor Vehicles (New High Security Vehicle Registration Plates) Order, 2001 under Article 19(1)(g).
- Whether the Central Government could issue the Order under Section 109(3) of the Motor Vehicles Act, 1988.
- The lawfulness of the eligibility conditions (turnover and foreign experience) imposed in State NITs.
- Whether the selection of a single manufacturer creates an impermissible monopoly in favour of a private entity.
Legislation cited
- Central Motor Vehicles Rules, 1989s. Rule 50
- Constitution of Indias. Article 14, s. Article 19(1)(g), s. Article 19(6)
- Motor Vehicles Act, 1988s. 109(3), s. 212, s. 2(21-A), s. 2(28), s. 41, s. 41(6), s. 64(b), s. 64(d)
Subjects
high security vehicle registration platesmonopolyArticle 19(1)(g)ultra virespublic procurementarbitrarinessMotor Vehicles Act
Judgment
ASSOCIATION OF REGISTRATION PLATES A
v.
UNION OF INDIA AND ORS.
MAY 26, 2004
[RAJENDRA BABU, CJ. AND G.P. MATHUR, J.]
B
Motor Vehicles (New High Security Vehicle Registration Plates)
Order, 2001--Clause 4(x)-Selection of single manufacturer for High
Security Vehicle Registration Plates (HSVRP) for motor vehicles for whole
of State under, and procedure adopted by various State Governments in C
inviting bids for the purpose-Validity of-Held: Per Mathur, J.: Clause
4(x) is liable to be quashed as selection of single manufacturer creates
monopoly in his favour-Eligibility conditions mentioned by various State
Government also quashed-Furthermore, Central Government cannot
issue Order of 2001 in exercise of power under section 109(3), as such D
ultra vires-Per Rajendra Babu, J.: No monopoly is sought to be created
and hence, clause 4(x) not liable to be quashed-In view of difference of
opinion, matter referred to larger Bench-Motor Vehicles Act, 1988-
Section I 09(3).
E
The question which arose for consideration in these matters is
with regard to the validity of clause 4(x) of the Motor Vehicles (New
High Security Registration Plates) Order, 2001 issued by the Central
Government in exercise of power under section 109(3) of the Motor
Vehicles Act, 1988 that the State Government is to select a single
manufacturer for supply of High Security Vehicle Registration Plates F
(HSVRP) for motor vehicles for the whole of the State, and the
eligibility conditions imposed in the notice inviting tenders (NITs)
issued by various State Governments regarding turnover of Rs. 50
crores or so with 15 to 25 per cent thereof in the business of
manufacture of registration plates in the immediately preceding year, G
and experience of manufacturing registration plates in 3/5 countries,
for appointment of manufacturer for supply of HSVRP.
Petitioners contended that clause 4(x) of the Order and the notices
inviting tenders by the variious State Governments for selection of one H
783
784 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A manufacturer for whole of the State violates the fundamental right of
the writ petitioner guaranteed under Article 19(1 )(g) of the Constitution
as a monopoly is being created in favour of a single private operator;
that the licence plate manufacturers having the requisite approval
from the bodies mentioned in,second para to clause (v) of sub-rule (l)
B of Rule 50 of the Central Motor Vehicles Rules, 1989 are entitled to
supply HSRVP; that the eligibility conditions mentioned in the NITs
that there should be a turnover of Rs. 50 crores or so with 15 to 25
per cent thereof in the business of manufacture of registration plates
in the immediately preceding year and experience of manufacturing
C registration plates in 3/5 countries are wholly arbitrary, irrelevant and
discriminatory against the Indian manufacturers of HSVRP; and that
clause 4(x) of the Order made in exercise of power conferred by section
I 09(3) is ultra vires.
Respondents inter alia contended that clause 4(x) of the order
D issued by State Government and also the procedure adopted by the
State Government cannot be faulted with; that Article 19(6) of the
Constitution does not prohibit giving of a contract to single individual
and selection of a person does not create a monopoly; that Rule 40(1 )(v)
lays down only the eligibility criteria for a manufacturer or dealer of
E HSVRP and it is not possible to read it in a literal manner; and that
the conditions set out in the Order of 2001 are in addition to the
requirements of Rules 50 and it lays down how the new policy will be
implemented.
Referring the matter to a larger Bench, the Court
F
HELD : Per Mathur J.
1.1. Under Article 19(6)(ii) of the Constitution of India, the
Sti!te is free to create a monopoly in favour of itself with regard to
G carrying of any trade, business, industry or service but the entire
benefit. arising therefrom is to enure to the State and the monopoly
itself is not used as clock for conferring private benefit upon a limited
class of persons. The action of the government if conceived and
executed in the interest of the general public is not open to judicial
H scrutiny but it is not open to the government thereby to create a
ASSON. OF REGISTRATION PLATES. v. U.0.1. 785
monopoly in favour of third parties from their own monopoly. A
[801-C; 802-B-D)
Rashf!ed Ahmed v. Municipal Board Kairana, AIR (1950) SC 163;
Akadash Padhan v. State of Orissa, AIR (1963) SC 1047; Rashbihari
Panda v. State of Orissa, [1969) 1 sec 414 and State of Rajasthan v. B
Mohan Lal Vyas, [1971) 3 SCC 705, referred to.
1.2. In the instant case, the registration authority of the State
Government has not undertaken to supply the licence plates. It is neither
granting largesse nor selling its property or buying property where it C
can do so in favour of a single individual by inviting tenders. A single
licence plates manufacturer is entrusted with the job of supplying High
Security Vehicle Registration Plates (HSVRP) to all the existing owners
ofvehicles and new buyers for a period of 15 years. Such HSVRP have
to be bought by all those who own a vehicle. By selection of a single
manufacturer a monopoly is sought to be created in his favour and all D
the owners of vehicles would be compelled to purchase HSVRP from
that single manufacturer or his dealers. This action of the State
Government whereby all other licence plates manufacturers, who are
satisfying the statutory requirement, namely, of second para of clause
(v) of sub-rule (1) of Rule 50 of the Central Motor Vehicles Rules, 1989 E
(have got Type Approval Certificate from the Central Road Research
Institute or authorized agency) are totally excluded clearly violates the
fundamental right of the writ petitioner as guaranteed under Article
19(1)(g) of the Constitution. Therefore, clause 4(x) of the Motor Vehicles
(New High Security Vehicle Registration Plates) Order, 2001 issued by F
the Central Government and also the procedure adopted by the State
Governments in selecting a single manufacturer for supply of HSVRP
violates the fundamental rights of the writ petitioner guaranteed under
Article 19(1)(g) of the Constitution and are invalid and as such liable to
be quashed. [799-F-H; 800-A-C; 803-8-C)
G
1.3. Proviso appended to clause (v) of the Order requires that
permanent consecutive identification number shall be preceded by two
alphabets representing the name of vendor or manufacturer or the
supplier. This itself contemplates existence of several manufacturer or
supplier othenvise there was no necessity of mentioning their name and H
786 SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A that several manufacturers can simultaneously operate. (806-F-Gl
2.1. There is a specific provision regarding eligibility of
manufactures of licence plates. Licence plate manufacturers having the
requisite approval from the Central Road Research Institute or from
B any of the authorized agencies as mentioned in second para to clause
(v) of sub-rule (1) of Rule 50 of the Central Motor Vehicle Rules, 1989
are entitled to supply HSVRP. Having regard to the same, the further
eligibility conditions mentioned in the Notice Inviting Tender regarding
turnover of Rs. 50 crores or so with 15 to 25 per cent thereof in the
C business of manufacture of registration plates in the immediately
preceding year, and experience of manufacturing registration plates in
3/5 countries are wholly arbitrary and have no rationale basis and are
quashed. [805-A-B; 807-G-Hl
2.2 The names of the countries namely Armenia, Columbia, Congo,
D Curacao, Ethiopia, Georgia, Iraq, Mali, Maatta, Oman, Palestine,
Srilanka, Tanzania, Uganda, Uruguay, Zambia, having holographic
number plates demonstrates the sheer futility of having a condition in
the tender document regarding experience in 3 to 5 countries. Some
of these countries .ire tiny States and most of them are backward and
E poor as compared to India. The number of vehicles therein must be
very small. The experience of supplying HSVRP in these countries is
hardly a guarantee of the quality of the products supplied. When India
is capable of making most sophisticated missiles and rockets and
passenger cars manufactured in India are being exported to highly
F advance countries of Western Europe like U.K. and Germany and
commercial vehicles to many countries all over the world facing stiff
competition, it does not at all appeal to reason that to ensure quality
of the product, experience in three to five other countries should be
necessary. Similarly the condition in the NITs regarding a particular
G quantum of turnover in number plates business in immediately preceding
year cannot be met by any Indian company which is exclusively dealing
with HSVRP as the said product (number plates) is being introduced
in the country for the first time. It can be met only by those whose joint
venture partner is a foreign company and is already dealing with such
H type of licence plates. The condition again has the affect of completely
AS SON. OF REGISTRATION PLATES. v. U.0.1. 787
ousting Indian companies. (805-G-H; 806-A-D) A
2.3. The letter dated 13th March, 2002 and 14th June, 2002 sent
by the Governnient oflndia, Ministry of Road Transport and Highways
were merely suggestive in nature and they do not stipulate details
about experience capacity of bidder/collaborators. It was also mentioned B
therein that experience in 5 countries is not a mandatory requirement.
This letter has been completely ignored while laying down the eligibility
criteria. (806-D-E)
Tata Cellular v. Union of India, AIR (1996) SC 11 and Union of
India v. Dinesh Engineering Corporation, [2001) 8 SCC 491, referred to. C
Administrative Law by David Foulkes Butterworths 1990 Ed., relied
on.
2. The Central Government cannot issue Order of2001, being an D
order concerning a number plate simplicitor, in exercise of power
conferred by sub-section (3) of Section 109 of the Motor Vehicles Act,
1988. The Central Government exercises power under sub-section (3)
ofsection 109 for prescribing the standard of the materials or articles
or any process used as such in the manufacturing of the vehicle. E
Reading of sub-section (3) along with sub-sections (1) and (2) will show
that it basically deals with the passengers travelling therein and also
of others who are on the road. Issuing a certificate of registration and
assigning it a registration mark arises only after sale of a motor vehicle.
Therefore, until the motor vehicle has been sold to a person by a dealer, F
the registering authority would not come into picture and there is no
occasion for assigning it a registration mark. A manufacturer of
vehicle is not at all concerned with registration thereof by the registering
authority or assignment of a registration mark as contelllplated by
section 41 of the 1988 Act. Furthermore, the power to issue such kind
of notification cannot be traced to sections 4(6) and 64(b) and (d) of G
the 1988 Act. (809-B-E)
Per Rajendra Babu, CJ! (Dissenting) :
1. The object of the Clause 4(x) of the Motor Vehicles (New High H
788 SUPREME COURT REPORTS [?.004) SUPP. 2 S.C.R.
A Security Vehicle Registration Plates) Order, 2001 issued by the Central
Government on 22nd August, 2001 is not to create a monopoly in favour
of any person and hence, is not liable to be quashed. (810-D-E)
CIVIL ORIGINAL JURISDICTION : Writ Petition (C) No. 41 of
B 2003.
Under Article 32 of the Constitution of India.
WITH
c WP (C) Nos. 77, 24, 56 of2003, TC(C) Nos. 30-31, 32, 38, 39-40,
41, 42 of2003, TC(C) No. 62/2003@ from TP (C) No. 973 of2002 and
letter dated 19.7.2003 in TP(C) No. 974 of2002 and WP(C) No. 395 of
2003.
D Mukul Rohtagi, Additional Solicitor General, S. Ganesh, H.N. Salve,
Kapil Sibal, R.F. Nariman, Rajeev Dhawan, Ashok H. Desai, R. Mohan,
Dipankar P. Gupta and M.L. Verma, A.S. Rawat, Additional Advocate
General, S. Uppal, Ms. Indu Malhotra, Vikram Mehta, Abhishek Agarwal,
Ms. V. Deepa, Ms. Ruchi Khurana, S. Wasim, A. Qadri, Ms. Niranjana
E Singh, Mrs. Anil Katiyar, A. Agarwalla, K.V. Vijayakumar, Ms. Minakshi,
Joseph Pookkatt, Prashant Kumar, Saket Singh, Goodwill Indeevar,
Vishwajit Singh, Rana Mukherjee, Siddarth Gautam, Ms. Ruby Singh
Ahuja, Ms. Rachna Gupta, Avijit Bhattacharjee, Jatinder Kumar Bhatia,
R.S. Suri, Ranjan Mukherjee, Manish Singhvi, Ashok K. Mahajan, Nalin
F Tripati, Mrs. Sarla Chandra, D.S. Bhattachyarya, Praveen Swarup, Vijay
Kumar Banthia, W.A. Nomani, B.B. Singh, Anil Suhrawardy, A.S. Rawat,
D.S. Mahra, Rakesh K. Sharma, V.G. Pragasam, P.N. Ramalingam, V.
Balaji, Bijan Kumar Ghosh, Ramesh Babu M.R. and Rameshwar Prasad
Goyal for the appearing parties.
G The Judgment of the Court was delivered by
G.P. MATHUR, J. : 1. The challenge in these Writ Petitions and
Transfer Cases is to certain clauses in the Motor Vehicles (New High
Security Vehicle Registration Plates) Order, 2001 issued by the Central
H Government and also to some conditions imposed in the Notice Inviting
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 789
Tenders issued ~y various State Governments for supply of High Security A
Registration Plates. Writ Petition No. 41 of2003 shall be treated as leading
case.
2. It will be convenient to give the background under which the State
Governments issued the Notice Inviting Tenders (for short N!Ts) for B
supply of High Security Vehicle Registration Plates (for short HSVRP).
Section 2(28) of the Motor Vehicles Act, 1988 (for short 'the Act') defines
"motor vehicle" or "vehicle". Section 2(32) defines "prescribed" and it
means prescribed by rules made under the Act. Section 39 of the Act lays
down that no person shall drive any motor vehicle and no owner of a motor
vehicle shall cause or permit the vehicle to be driven in any public place C
or in any other place unless the vehicle is registered in accordance with
Chapter IV and the vehicle carries a registration mark displayed in the
prescribed manner. Section 41 of the Act deals with registration of the
vehicle and it lays down that on an application made by or on behalf of
the owner of a motor vehicle for registration in the prescribed form and D
accompanied by prescribed fee, the registering authority shall issue to the
owner of a motor vehicle registered by it a certificate of registration in such
form and containing such particulars and information and in such manner
as may be prescribed by the Central Government. Sub-section (6) of this
Section provides that the registering authority shall assign to the vehicle E
for display thereon, a distinguishing mark referred to as the registration
mark consisting of one of the groups of such of those letters and followed
by such letters and figures as are allotted to the State by the Central
Government from time to time by notification in the Official Gazette, and
displayed and shown on the motor vehicle in such form and in such manner F
as may be prescribed by the Central Government. In exercise of power
conferred by Section 64 of the Act and after previous publication as
required by Section 212, the Central Government made the Central Motor
Vehicles Rules. 1989 (for short 'the Rules'). Rule 50 of the Rules deals
with form and manner of display of registration marks on the motor
vehicles. Sub-rule(!) of this Rule deals with motor vehicles and sub-rule G
(2) deals with motor cycles. Sub-rule (I) of Rule 50 in so far as it is relevant
for the controversy in hand is being reproduced below;
Section 50. Form and manner of display of registration marks on
the motor vehicles - (I) On or after commencement of this rule, H
790 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A the registration mark referred to in sub-section (6) of Section 41
shall be displayed both at the front and at the rear of all motor
vehicles clearly and legibly in the form of security license plate
of the following specifications, namely :
(i) the plate shall be a solid unit made of 1.0 mm aluminium
B conforming to DIN 1745/DIN 1783 or ISO 7591. Border edges
and comers of the plate shall be rounded to avoid injuries to the
extent of approx. I Omm and the plates must have an embossed
border. The plate shall be suitable for hot stamping and reflective
sheet has to be guaranteed for imperishable nature for minimum
five years. The fast colouring of legend and border to be done by
c hot stamping;
(ii) the plate should bear the letter "IND" in blue colour on the
extreme left centre of the plate. The letter should be one-fourth
of the size ofletters mentioned in rule 51 and should be buried into
the foil or applied by hot stamping and should be integral part of
D the plate;
(iii) each plate shall be protected against counterfeiting by
applying chromium-based hologram, applied by hot stamping.
Stickers and adhesive labels are not permitted. The plate shall bear
a permanent consecutive identification number of minimum seven
E
digits, to be laser branded into the reflective sheeting and hot
stamping firm shall bear a verification inscription;
(iv) apart from the registration marks on the front and rear, the
third registration mark in the form of self destructive type,
F chromium based hologram sticker shall be affixed on the left hand
top side of the windshield of the vehicle. The registration details
such as registration number, registering authority, etc., shall be
printed on the sticker. The third registration mark shall be issued
by the registering authorities/approved dealers of the license
plates manufacturer along with the regular registration marks, and
G thereafter if such sticker is destroyed it shall be issued by the
license plate manufacturer of his dealer;
(v) the plate shall be fastened with non-removable non-reusable
snap lock fitting system on rear of the vehicle at the premises of
H the registering authority;
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.) 791
The license plates with all the above specifications and the A
specified registrations for a vehicle shall be issued by the registering
authority or approved license plates manufacturers or their dealers.
The Central Road Research Institute, New Delhi or any of the
agency authorised by the Central Government shall approve the
license plates manufacturers to the above specifications. B
(vi) ........... (omitted as not relevant)
3. In Exercise of the power under sub-section (3) of Section 109 of
the Act the Central Government issued an order known as Motor Vehicles C
(New High Security Registration Plates) Order, 2001 on 22nd August,
2001 in order to notify certain standards in respect of new system of high
security registration plates for motor vehicles and the process used by a
manufacturer or vendor for manufacturing or supplying such plates with
reference to the amendments made in the Central Motor Vehicle Rules, D
1989 by the Central Motor Vehicles (!st Amendment) Rules, 2001. Clauses
2, 3 and 4 of this Order are being reproduced below :
2- It shall come into force on the 28th day of September, 200 I
in case of new registered vehicles from that date. In case of E
already registered vehicles, two years from the date of publication
of this Order in the official gazette.
3- Application - This Order shall apply to motor vehicles as
defined in clause 28 of Section 2 of the Motor Vehicles Act, 1988 F
(59 of 1988).
4- A manufacturer or supplier of new High Security Registration
Plates shall comply with the following specification, namely :
G
(i) The manufacturer or supplier· shall have a
certificate from the Central Road Research Institute,
New Delhi or any one of the testing agencies authorised
by the Central Government under Rule 126 of the
Central Motor Vehi~les Rules, 1989. H
792 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A (ii) The registration plate shall conform to the
specifications spelt out in Rule 50 of the Central Motor
Vehicles Rules, 1989 and shall conform to DIN 1745/
DIN 1783 or ISO 7591, as updated from time to time.
The Registration Plate has to be guaranteed for
imperishable nature for a minimum of five years.
B
(iii) ........................................( omitted as not
relevant)
(iv) To protect against counterfeiting, a chromium-
c based hologram of the size of 20 mm x 20 mm is to
be applied by hot stamping on the top left hand comer --
of the plate in both front and rear plates. The hologram
shall contain Ashoka emblem with "Bharat Sarkar" and
"Government of India" on each side, on left and right
D side respectively on Ashoka emblem vertically, as
specified in the sketch, as given in the Annexure
annexed to this Order.
(v)
E
(vi)
(vii)
(viii) The registration plates fitted in the rear of
F the vehicle shall be fastened with non-removable/non-
reusable snap lock system, for the sake of better
security, at least two such snap locks shall be fitted.
(ix) No high security plate shall be affixed outside
G the premises of the registering authority.
(x) The manufacturer or the vendor selected by
the State Transport Department for supply of such
registration plates may be for the State as a whole or
H for any region of the State.
ASSON. OF REGISTRATION PLATES. v. U.0.l. [G.P. MATHUR, J.) 793
(xi) The registration plate will be supplied to the A
motor vehicle owners by the vendor against the
authorization by the Road Transport Officer or any
officer designated for the purpose by the State Transport
Department.
(xii) The replacement for any existing registration
B
plate may be made by the concerned transport authority
only after ensuing that the old plate has been surrendered
and destroyed.'
(xiii) A proper record of the registration plates C
issued by the manufacturer or the vendor, authorised
by the State Government should be maintained on a
daily basis and got tallied periodically with the records
of the Transport Office.
D
(xiv) Periodic audit shall be carried out by
concerned testing agencies to ensure compliance of the
requirements of the High Security Registration Plates.
4. The aforesaid Order was amended by a notification d«ted 16th
October, 2001 issued by the Central Government in exercise of power E
under Section I 09(3)of the Act and the Order so issued is called Motor
Vehicles (New High Security Registration Plates) (Amendment) Order,
200 I. By this Order certain provisions of the earlier order were amended
and in sub-clause (v) the following proviso was inserted :
F
"Provided that the permanent consecutive identification number
in Arabic number shall be preceded by two alphabets representing
the name of the vendor or the manufacturer or the supplier, as the
case may be, for whom the type approval certificate is issued by
the test agencies."
G
The Union Territory Administration of Daman & Diu issued a notice
inviting bids for appointment of the manufacturer for supply of High
Security Registration Plates for all types of veh:cles and in order to
implement Rule 50 of the Rules as amended up to date and the Orders
issued by the Central Government in this regard. The opening part of the H
794 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A Notice Inviting Tenders (NITs) and para 1.5.3, 1.5.5 and 1.5.6 are being
reproduced below :
"The appointment of the manufacturer shall be for the whole
Union Territory.
B
The Director of Transport, Daman & Diu invites bids on
behalf of the President of India for selection of an eligible
manufacturer having type approvai and requisite manufacturing
capacity to produce the High Security Registration Plates in
conformity with the specifications mentioned in the above
c mentioned amendments.
1.5. ELIGIBLE BIDDERS
This invitation for bid is open to all the bidders who fulfill all the
D following Criteria on cumulative basis.
1.5.3 The bidder or the Promoter or any of the members of Joint
Venture should have sufficient experience in the field of
Registration Plates and should be working in at least three
E countries for Registration Plates having Security Features
worldwide or in minimum three such projects (necessary credentials
•from the Government of such country should be attached along
with a proforma as per Annexure XI duly filled ir).
1.5.5 The Bidder or the Joint Venture partners together must have
F a minimum net worth equivalent to Indian Rupees 40 crores (Bank
Solvency Certificate to be produced).
1.5.6 The Bidders or the joint venture partners together must have
a minimum annual turnover equivalent to Indian Rupees 50
G Crores in the immediately preceding last year and at least 15%
of this turnover must be from the Registration Plate business.
Certificate confirming above and certification of minimum 15%
turnover being from registration plate business will have to be
provided duly attested by a Chartered Accountant/any Bank to be
H attached in support of fulfillment of this condition."
ASSON. OF REGISTRATION PLATES. v. U.0.1. (G.P. MATHUR, J.] 795
5. In Writ Petition (C) No. 395 of 2003 (Mis Signs India v. Union A
of India & Ors.,) NITs issued by State of Pondicherry and State of West
Bengal have been challenged which contain more or less similar clauses.
The eligibility criteria of clause J .5.3 of NIT issued by State of Pondicherry
requires that the bidder or the promoter or any of the members of Joint
Venture should have sufficient experience in the field of Registration Plates B
and should be working in minimum of five countries with Registration
Plates having security features. Clause 1.5.6 requires that the bidder or the
joint venture partners together must have a minimum annual turn over
equivalent to Indian Rupees 75 crores in the immediately preceding last
year and at last 15% of this turnover must be from the Registration Plates
business. Similarly clause 1.5.5 ofNIT issued by the State of West Bengal C
requires the bidder or the joint venture partners together must have a
minimum net worth equivalent to Indian Rupees 50 crores and clause 1.5.6
requires the bidders or the joint venture partners together must have a
minimum annual turnover equivalent to Indian Rs. 50 crores during
preceding financial year i.e. 2002-2003 and 25% of this amount should D
have come from High Security Registration Plate business.
6. In compliance with the Motor Vehicles (New High Security
Registration Plates) Orders, 200 I the NITs further required that the bidders
must have obtained "Type Approval Certificate" from the test agencies E
CRRI, ARAI or VIDE for the High Security Registration Plates as per the
Gazette notification and the certificate must be valid on the date ofopening
of bid.
7. The writ petitioners feel aggrieved by and have challenged clause F
4(x) of the Motor Vehicles (New High Security Registration Plates) Order,
200 I which provides that the manufacturer or the vendor selected by the
State Transport Department for supply of such Registration Plates may be
for State as a whole or for any region of the Sate. They have also challenged
the procedure adopted by various State Governments in inviting bids for
the purpose of selecting and appointing only one manufacturer of HSVRP G
for supplying the registration plates for all the motor vehicles and two-
wheelers in the whole State.
8. Shri S. Ganesh, learned senior counsel for the petitioners has
submitted that under Section 41 of the Act the registering authority, on the H
796 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A application moved by the owner of the vehicle, has to assign a registration
mark to a vehicle for display thereon. The form of the license plates and
the manner in which it has to be fastened to the vehicle has been provided
in Rule 50 of the Rules. In view of clause 2 of Motor Vehicles (New High
Security Registration Plates) Order, 2001 not only the new vehicles are to
B have HSVRP but all the old and existing vehicles are also required to
replace their number plates with HSVRP within a period of two years. But,
clause 4(x) of the said Order empowers the State Government to select a
single manufacturer or vendor for the whole State. The State Governments
have also issued N!Ts for the purpose of selecting a single manufacturer
C or vendor for their respective States. The affect of such a provision is that
all other manufacturers or suppliers who may have a Type Approval
Certificate from the Central Road Research Institute, New Delhi or from
any one of the testing agencies authorised by the Central Government
under Rule 126 of the Rules, like the writ petitioner, would be totally
deprived of an opportunity to carry on trade or business in HSVRP.
D Learned counsel has submitted that clause 4(x) of the Order and also the
notices issued by the various State Governments inviting tenders for
selection of one manufacturer or vendor for whole of the State clearly
violates the fundamental right of the writ petitioner guaranteed under
Article 19( I Xg) of the Constitution as a monopoly is being created in
E favour of a single private operator, who will get a huge business of Rupees
four to five thousand crores.
9. Shri S. Uppal who appeared for the petitioners in writ petition No.
77 of 2003 has submitted that the selection of a single suppfo::r for the
F whole of the State goes against the preamble of the Constitution which lays
emphasis on securing to all its citizens equality of opportunity and also
violates Article 39(b) and (c) of the Constitution by creating a monopoly
in favour of a single individal. Shri M.L. Verma, while supporting the writ
petitioners has submitted that in terms of the Order issued by the Central
Government on 22nd August, 2001 or the amended Order issued on 16th
G October, 2001 anyone having a Type Approval Certificate from one of the
bodies mentioned in second para of Rule 50(1 )(v) of the Rules is fully
entitled to supply HSVRP. Therefore neither any such Order can be issued
by the Central Government nor any such procedure can be laid down by
the State Governments wherein the right to supply HSVRP to the owners
H of the vehicle may be given to a single individual. Shri Verma has further
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 797
submitted that the N!Ts do not show that a manufacturer or supplier so A
selected will charge a fixed amount from the owner of a motor vehicle
towards the cost of HSVRP and as the person so selected will have a
monopoly business for a long period of 15 years, he may enhance the
amount in an arbitrary manner to the detriment of owner of the vehicle.
B
10. Shri Mukul Rohtagi, learned Addi. Solicitor General appearing
for Union of India has submitted that the conditions set out in the Order
are in addition to the requirements of Rule 50 and it lays down how the
new policy will be implemented. He has further submitted that sub-clauses
(ix) and (x) of clause 4 of the Order ensures full proof implementation of C
the Scheme and the Scheme cannot be implemented if there are several
persons who are doing the work of supply of HSVRP to the owners of
motor vehicle. Shri Kapil Sibbal, learned counsel appearing for respondent
No. 5 has submitted that Rule 50(l)(v) lays down only the eligibility
criteria for a manufacturer or dealer of HSVRP. It is fully open for the
Union of India or for the State Government to impose further conditions D
in the tender document and in exercise of such a power the States are
competent to select only one manufacturer. Shri Harish Salve, learned
senior counsel appearing for respondent No. I I has submitted that the
nature of activity namely supply of HSVRP is such that there are inherent
limitations in the same. He has submitted that like mobile phone operators E
and TV Channel operators the Government cannot give licence to everyone
and has to make a selection. So is the case with HSVRP and the scheme
would fail, ifthere are many players in the field who are either manufacturing
or supplying the HSVRP. Shri R.F. Nariman, learned senior counsel
appearing for respondent No. 6 and Shri Rajiv Dhawan, learned senior F
counsel appearing for respondent No. 8 have supported the aforesaid
contention. Learned senior counsel have submitted that it is not possible
to read second para of Rule 50(1)(v) in a literal manner otherwise the very
purpose of achieving security would be defeated. In such circumstances
there has to be a selection of a manufacturer or supplier and consequently
clause 4(x) of the Order issued by the Central Government and also the G
procedure adopte<;I by the State Governments cannot be faulted in any
manner. Shri Dhawan has further submitted that Article 19(6) of the
Constitution does not in any manner prohibit giving of a contract to a single
individual and selection of a person does not create a monopoly. Shri
Dipankar Gupta who has appeared for respondent No. 2 (West Bengal H
798 SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.
A Transport Infrastructure Development Corporation Ltd.) an Undertaking of
Transport Department, Government of West Bengal has submitted that the
Motor Vehicles Act and the Rules.framed thereunder require High Security
Number Plates and the respondent No. 2 has no choice in the matter and
has to implement the Scheme. He has further submitted that Scheme cannot
B be successfully implemented if. there are number of persons who are
manufacturing or supplying number plates and having too many
manufacturer or suppliers would defeat the Scheme itself.
11. Before considering the legal submissions made by learned counsel
C for the parties it is necessary to bear in mind that HSVRP by itself has
nothing to do with the security of the vehicle. HSVRP cannot in any
manner help in preventing the theft or the use of the vehicle by an
unauthorised person. It does not contain any mechanism by which it may
ensure that the door of the vehicle would not be open or the ignition will
not work or engine will not start or the steering would not work which may
D either deter or prevent a person from committing theft of the vehicle or
using the same in an unauthorised manner. HSVRP is only confined to the
number plates and the only aspect which has been pointed out by learned
counsel for the respondents is that they will be so designed or manufactured
that it will not be possible for a third person to either prepare a duplicate
E or to replace them without damaging the chromium based hologram which
would be affixed on the left hand inner side of windshield of the vehicle.
The Number Plates on the rear of the vehicle shall be fastened with snap
lock fitting system which, it is said, would break, if an attempt is made
to replace the same.
F 12. Section 39 of the Act enjoins that no person shall drive any motor
vehicle and no owner of a motor vehicle shall cause or permit the vehicle
to be driven in any public place unless the vehicle is registered and the
vehicle carries a registration mark displayed in the prescribed manner.
Section 41 of the Act gives the procedure for the registration of vehicle
G and sub-section (6) thereof provides that the registering authority shall
assign to the vehicle a registration mark which has to be displayed and
shown on the vehicle in a manner prescribed by the Central Government.
Rule 50 lays down the form and manner of display of registration mark
on the motor vehicles. The second para of clause (v) of SUb-rule (I} of
H Rule 50 is important and it lays down that the license plates with all the
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 799
specifications contained in cfauses (i) to (iv) shall be issued by the A
registering authority or approved licence plates manufacturers or their
dealers. It further lays down that the Central Road Research Institute, New
Delhi or any of the agency authorised by the Central Government shall
approve the licence plates manufacturers to the specifications contained in
clauses (i) to (iv). The effect of these provisions is that no motor vehicle B
can be driven in a public place without a registration mark displayed in
the prescribed manner and this registration mark is such which is assigned
to the vehicle by the registering authority. The registration mark has to be
displayed in the form of licence pates which shall be issued by the
registering authority or approved licence plates manufacturers or their
dealers. Therefore it is open for the registering authority itself to issue a C
licence plate after charging an appropriate fee or consideration. In addition
to the registering authority, licence plates may also be issued by a licence
plates manufacturer who has been approved by the Central Road Research
Institute, New Delhi (CRRI) or any other agency authorised by the Central
Government and also by dealers of such manufacturers. D
13. The statutory provisions namely, the Act and the Rules do not lay
down that there has to be only one manufacturer for the entire State. The
question which requires consideration is whether in view of these statutory
provisions is it permissible for the Central Government, while exercising E
power under Section 109(3) of the Act, to issue an Order to the affect that
the manufacturer or the vendor selected by the State for supply of such
registration plates may be for whole of the State or any region of the State
which in affect means selection of a single manufacturer for supply of
registration plates in the entire State. Similarly the competence of the State F
Government to select a single manufacturer for supply oflicence plates for
the whole State has to be judged in that light. It is important to emphasise
that in the cases in hand the registration authority of the State Government
has not undertaken to supply the licence plates. It is not a case where the
State Government is either granting a largesse or selling its property where
it can do so w favour of a single individual by inviting tendets. Similarly G
it is not a case where the State Government maybe buying some property
which it may do so from a single individual by inviting tenders. Here the
job of supplying HSVRP to all the existing owners of vehicles and new
buyers for a period of 15 years is being entrusted to a single licence plates
manufacturer. Such HSVRP have to be brought by all those who own a H
800 SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A vehicle. By selection of a single manufacturer a monopoly is sought to be
created in his favour and all the owners of vehicles would be compelled
to purchase HSVRP from that single manufacturer or his dealers even
though in the matter of purchase of vehicle they have a wide range of
choice without any kind of compulsion by the Government. This action
B of the State Government whereby all other licence plates manufacturers,
who are satisfying the statutory requirement, namely, of second para of
clause (v) of sub-rule (I) of Rule 50 of the Rules, (have got Type Approval
Certificate from the Central Road Research Institute or authorised agency)
are totally excluded clearly violates the fundamental right of the writ
C petitioner as guaranteed under Article 19(1 )(g) of the Constitution.
14. The first decision touching the creation of a monopoly in favour
of a private individual to carry on business to the exclusion of all others
was rendered by Six Judges of this Court (the Court then consisted of six
Judges only) in Rasheed Ahmed v. Municipal Board Kairana, AIR (1950)
D SC 163. In this case the Municipal Board, on the basis of an auction gave
the exclusive contract, for carrying on whole sale business in vegetables,
in favour of one H. The writ petitioner Rasheed Ahmad, who was earlier
carrying on wholesale business as commission agent in vegetables applied
for a licence but his application were rejected and the stand of the
E Municipal Board was that except for H, no one else can carry on the said
wholesale business. It was held that the action of the Municipal Board in
granting monopoly rights in favour of H violated the fundamental right of
the writ petitioner guaranteed under Article 19( I )(g)of the Constitution.
F 15. Clause 6 of Article 19 of the Constitution was amended by the
Constitution (First Amendment) Act, 1951 which came into force on 18th
June, 1951 and it reads as under:
"(6) Nothing in sub-clause (g) of the said clause shall affect the
operation of any existing law in so far as it imposes, or prevent
G the State from making any law imposing in the interests of the
general public, reasonable restrictions on the exercise of the right
conferred by the said sub-clause, and, in particular, nothing in the
said sub-clause shall affect the operation of any existing law in
so far as it relates to, or prevent the State from making any law
H relating to, -
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.) 801
(i) the professional or technical qualifications necessary for A
practising any profession or carrying on any occupation,
traCle or business, or
(ii) the carrying on by the State, or by a corporation owned or
controlled by the State, of any trade, business, industry or B
service, whether to the exclusion, complete or partial, of
citizens or otherwise."
16. In view of Article 19(6)(ii) the carrying of any trade, business,
industry<or service by the State, would not be questionable on the ground C
that it infringes the right guaranteed by Article 19( I )(g) even though by
law the State excludes the citizens, wholly or partially, from the trade or
business entered upon by the State. The State- is, therefore, free to create
a monopoly in favour of itself. In Akadash Padhan v. State o/Orissa, AIR
(1963) SC 1047 the vires ofOrissa Kendu Leaves (Control of Trade) Act
came up for consideration, Section 3 of the Act provides that no person D
other than (a) the Government (b) an officer of government authorised in
that behalf; (c) an agent in respect of the unit in which the leaves have
grown shall purchase or.transport Kendu leaves. Section 4 empowered the
government to fix the price at which Kendu leave shall be purchased by
any officer or agent from the growers of Kendu leaves and section 8 E
empowerd the government to appoint agents for different units to purchase
Kendu leaves. Section I 0 provided that "Kendu leaves purchased by
government or by their officers or agents under the Act shall be sold or
otherwise disposed of in such manner as government may direct". Agents
were appointed by the government to purchase Kendu leaves and they F
were authorised under the agreements to purchase Kendu leaves and also
to trade in the Kendu leaves so purchased. After examining the provisions
of the Act this Court held that sections 3 and 4 of the Act were valid but
declined in substance to give effect to the monopoly because the agents
appointed were not agents of the government merely for purchasing Kendu
leaves but were authorised to carry on trade in leaves purchased on their G
own account. It was held that the operation of the State monopoly was also
to give rise to a monopoly in favour of the agents which did not had the
protection of Article 19(6)(ii). It was further held that the law cannot be
used by the State for the private benefit of agents, it must only be
administered for the benefit of the general public and any arrangement in H
802 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A which under the guise of monopoly the State permitted a set of persons
to make profit for themselves by carrying on business in Kendu leaves on
their own behalf was invalid. After the decision in Akadasi Padhan (supra)
the Government of Orissa made some changes in the machinery for the
implementation of the monopoly and entered into an agreement of sale of
B Kendu leaves after inviting tenders from traders. This was again challenged
and in Rashbihari Panda v. State ofOrissa, [1969] 1 SCC 414 which was
decided by a Constitution Bench. It was held that the validity of the law
by which the State assumed the monopoly to trade in a given commodity
has to be judged by the test whether the entire benefit arising therefrom
C is to enure to the State, and the monopoly is not used as a cloak for
conferring private benefit upon a limited class of persons. It was also held
that the action of the government if conceived and executed in the interest
of the general public is not open to judicial scrutiny but it is not open to
the government thereby to create a monopoly in favour of third parties from
D their own monopoly. It was accordingly held that both the Schemes
evolved by the government were violative of the fundamental right of the
writ petitioners under Article 19( 1)(g) and Article 14 because the schemes
give rise to a monopoly in the trade in Kendu leaves to certain traders, and
singled out other traders for discriminatory treatment. This principle was
E more succinctly stated in State of Rajasthan v. Mohan Lal Vyas, (1971]
3 sec 705 in the following words :
"(i) There cannot be any law in violation of the provisions of the
Constitution. A monopoly right cannot be conferred on a citizen
under the Constitution nor can it be justified under the Constitution.
F The State can enter into monopoly but if the State conferred any
monopoly right on a citizen it •would be indefensible and
impermissible and would be an infraction of the inviolable
provision of the Constitution.
G (ii) The Constitution forbids grant by the State to a citizen of
monopoly right to carry on the business of plying buses undertaken
in the agreements. The manner in which the agreements were to
be performed became illegal as a result of the Constitution. The
agreements were therefore incapable of enforcement. The
H Constitution struck at the root of those agreement."
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 803
17. Shri Mukul Rohtagi has submitted that the single manufacturer A
who will be selected for supply of HSVRP would pay five percent royalty
to the State Government. This fact is not very clear from the tender
document. Even assuming it to be so, in order to satisfy the requirement
of Article I 9(6)(ii) the entire benefit arising from creation of monopoly
must go to the State. In view of this legal position sub-clause (x) of clause B
4 of the Order issued by the Central Government and also the procedure
adopted by the State Governments in selecting a single manufacturer for
supply of HSVRP violates the fundamental rights of the writ petitioner
. guaranteed under Article 19(1 )(g) of the Constitution and are invalid and
consequently they are liable to be struck down. C
18. In Administrative Law by David Foulkes (Butterworths - 1990
Ed.) in Chapter XIV dealing with The Contracts of Police Authorities on
page 427, the author has said that there would certainly be no impropriety
in a local authority acting on a policy, in awarding contracts, of favouring D
local firms - just as it may, in exercising development control functions.
There are requirements of European Economic Community relevant to
contracting procedures. Directives EEC 71/304 (concerning construction
contracts) and 70/32 (concerning supply contracts) seek to ensure that
public authorities do not discriminate on the grounds of nationality against E
contractors from other member States. EEC Directive 71 /305 and 77 /62
contain, respectively, detailed requirements about both categories of
contract. On page 428 it is said that criteria on which authority is to award
the contract have been laid down in the directives, but these directives are
largely ineffective. This shows that even members of European Economic
Community adopt a policy of favouring local contractors and, therefore, F
some directives have been issued. But, in the present case, the conditions
mentioned in the N!Ts by different State Governments are just the reverse
and have been purposely so designed so as to completely oust an Indian
manufacturer and to ensure that the contract is awarded to such a company
which must have a joint venture with a foreign company already dealing G
in such kind of business. The award of contract for a period of 15 years
would mean that not only the doors for Indian companies or the Government
wol!ld be shut for such a long period but even ff a better or cheaper
technology is developed, either here or abroad, the same cannot be
implemented. H
804 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A 19. Shri S. Ganesh, learned senior counsel has also assailed the
eligibility conditions mentioned in the NITs issued by some of the State
Governments as wholly arbitrary, irrelevant and discriminatory against the
Indian manufacturers of HSVRP. As mentioned earlier the eligibility
criteria in the NIT issued by the Union Territory of Daman and Diu
B contains a clause that the bidder or the promoter or the joint venture partner
should have experience in at least three countries in the field of registration
plates having security features, their minimum' net worth should be Rs. 40
crores, annual turnover in the immediately proceeding last year should be
Rs. 50 crores and at least 15 per cent of this turnover must be from the
C registration plates business. The eligibility condition in the NIT issued by
the State of Tamil Nadu requires the bidder, promoter or any member of
the joint venture should have sufficient experience of working in at least
five countries; must have minimum net worth of Rs. 50 crores; and must
have annual turnover of Rs. I 00 crores in the immediately preceding last
D year. Similar is the case for State of Pondicherry with requires working
experience in five countries; minimum annual tum over of Rs. 75 crores
in the immediately preceding year and at least 15 per cent of this tum over
must be from registration plates business. The State of West Bengal
requires minimum net worth of Rs. 50 crores; must have a minimum annual
E tum over of Rs. 50 crores during the year 2002-2003; and 25 per cent of
this amount should have from the High Security Registration Plates
business.
20. Shri Ganesh has submitted that the respondent Nos. 5, 6, 7 and
8 have entered into some kind of agreement with two German companies,
F namely, Mis. Kurz India Pvt. Ltd. and Mis. Eric UTSCH Ltd. who are
manufacturers of HSVRP of the type which is mentioned in the Order
issued by the Central Government on 22nd August, 2001 and also in the
NITs issued by various State Governments and these two companies also
have experience of selling these kind of number plates in 3 to 5 countries.
G The condition requiring certain percentage of tum over in registration
plates business and experience in three to five countries, it is submitted,
has been deliberately introduced in order to oust all Indian companies at
the threshold and to ensure that the contract is awarded only to respondent
No. 5, 6, 7 and 8 to the exclusion of all others as they alone would be able
H to meet the eligibility qualification.
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 805
21. In my opinion there is substance in the contention raised on behalf A
of the writ petitioners. The legislature has taken care in making a specific
provision regarding eligibility of manufacturers of licence plates. The
second para of clause (v) of sub-rule (1) of Rule 50 of the Rules says that
the Central Road Research Institute, New Delhi or any of the agency
authorised by the Central Government shall approve licence plates B
manufacturers to the specifications given in clauses (i) to (iv) of the sub-
rule. Therefore in terms of the Rules once approval is given to a licence
plates manufacturer by Central Road Research Institute, New Delhi or any
other agency authorised by the Central Government, it becomes eligible
to supply HSVRP (licence plates). The HSVRP are sought to be introduced
for the first time in the country after Rule 50 had been amended on C
28.3.2001. Any clause in NIT which requires that the tenderer or bidder
or joint venture partner should have a turnover of Rs. 50 crores in the
immediately preceding last year and at least 25 per cent of this turnover
must be from the licence plates business, inevitably means that it would
be a foreign company. The HSVRP having not been introduced in India D
so far it is obvious that no Indian company can have a turn over of that
magnitude in the preceding year. The clear impact of this condition is that
all Indian companies must be ousted even though they may be technically
competent to manufacture HS VRP and have the requisite approval from
the body or agencies mentioned in second para of clause (v) of sub-rule E
(1) of Rule 50 of the Rules. The petitioners have placed on record the reply
given by Hon. Minister for Road Transport and Highways in the Rajya
Sabha on 29th November, 2001 in response to a question put to him
regarding the details of the countries where holographic vehicle number
places have been made mandatory and the names of such countries are as F
under:
(a) Armenia (b) Columbia (c) Congo (d) Curacao (e) Ethiopia (f) Georgia
(g) Iraq (h) Mali (i) Maalta 0) Om;m (k) Palestine (1) Srilanka (m) Tanzania
(n) Uganda (o) Uruguay (p) Zambia.
G
22. The names of the countries having holographic number plates
demonstrates the sheer futility of having a condition in the tender document
regarding experience in 3 to 5 countries. Some of the~e countries are tiny
States and most of them are backward and poor as cmnpared to India. The
number of vehicles therein must be very small. The experience of H
806 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A supplying HS\fR? in these countries is hardly a guarantee of the quality
of the products sU'pplied. When India is capable of making most sophisticated
missiles and rockets and passenger cars manufactured in India are being
exported to highly advance countries of Western Europe like U.K. and
Germany and cominercial vehicles to many countries all over the world
B facing stiff competition, it does not at all appeal to reason that to ensure
quality of the product, experknce in three to five other countries (which
would be amongst those described earlier) should be necessary. Similarly
the condition in the N!Ts regarding a particular quantum of turnover in
number plates business in immediately preceding year cannot be met by
any Indian company which is exclusively dealing with HSVRP as the said
C product (number plates) is being introduced in the country for the first time.
It can be met only by those whose joint venture partner is a foreign
company and is already dealing with such type of licence plates. This
condition again has the affect of completely ousting Indian companies. The
Government of.India, Ministry of Road Transport and Highways had sent
D a letter dated 13th November, 2002 to the Secretary/Commissioner
(Transport) of all States wherein it was clearly mentioned that earlier
guidelines circulated on 6th March, 2002 and 14th June, 2002 were merely
suggestive in nature and they do not stipulate details about experience/
capacity of bidder/collaborators. It was also mentioned therein that
E experience in 5 countries is not a mandatory requirement. This letter has
been completely ignored while laying down the eligibility criteria.
23. It may be mentioned have that the Order issued by the Central
Government on 19th October, 200 I by which a proviso was appended to
F clause (v) of the Order issued on 22nd August2001 requires that permanent
consecutive idi!ntification number shall be preceded by two alphabets
representing the name of vendor or manufacturer or the supplier. This itself
contemplates existence of several manufacturer or supplier otherwise there
was no necessity of mentioning their name and that several manufacturers
can simultaneously operate.
G
24. In Tata Cellular v. Union of India, AIR ( 1996) SC 11 it was held
that the principles of judicial review would apply to the exercise of
contractual powers by Government bodies in order to prevent arbitrariness
or favouritism. It was also held that the principles laid down in Article 14
H of the Constitution have to be kept in view while accepting or refusing a
ASSON. OF REGISTRATION PLATES. v. U.0.l. [G.P. MATHUR, J.] 807
tender. After review of large number of earlier decisions on the scope of A
judicial review of administrative decisions and exercise of contractual
powers of Government bodies one of the principles enunciated therein is
as under :
"The Government must have freedom of contract. In other words, B
a fairplay in the joints is a necessary concomitant for an
administrative body functioning in an administrative sphere or
quasi-administrative sphere. However, the decision must not only
be tested by the application of Wednesbury principle of
reasonableness (including its other facets) but must be free from C
arbitrariness not affected by bias or actuated by ma/a fides."
25. In Union of India v. Dinesh Engineering Corporation, [2001] 8
SCC 491 the Court rules as under :
"But then as has been held by this Court in the very same D
judgment that a public authority even in contractual matters
should not have unfettered discretion and in contracts having
commercial even though some extra discretion is to be conceded
in such authorities, they are bound to follow the norms recognised
by courts while dealing with public property. This requirement is E
necessary to avoid unreasonable and arbitrary decisions being
taken by public authorities whose actions are amenable to judicial
review. Therefore, merely because the authority has certain elbow
room available for use of discretion in accepting offer in contracts,
the same will have to be down within the four comers of the F
requirements of law, especially Article 14 of the
Constitution ........... "
26. I am of the opinion that in the fact situation of the present case
especially having regard to the requirement contained in second para of
clause (v) of sub-rule (1) of Rule 50 of obtaining approval from Central G
Road Research Institution or from any of the authorised agencies, the
further condition in the NITs regarding tum over of a particular amount
in the preceding year coupled with 15 or 25 per cent of the said tum over
in the business of manufacturing liceni:e plates and also the condition
regarding experience in 3 to 5 countries are wholly arbitrary and have no H
808 SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A rationale basis. The said condition is accordingly struck down.
27. Shri Ganesh has also submitted that clause 4(x) of the Motor
Vehicles (New High Security Registration Plates) Order, 2001 which lays
down that the manufacturer or the vendor selected by the State for supply
B of such registration plates may be for the State as a whole or any region
of the State is ultra vires as no such order can be made in the exercise of
power conferred by sub-section (3) of Section I09 of the Act. Section I 09
finds place in Chapter VII of the Act and the title of the said Chapter is
- Construction, Equipment and Maintenance of Motor Vehicles. Section
I 09 of the Act reads as under :
c
Section I 09 : General provision regarding construction and
maintenance of vehicles : ( 1) Every motor vehicle shall be so
constructed and so maintained as to be at all times under the
effective control of the person driving the vehicle.
D
(2) Every motor vehicle shall be so constructed as to have right
hand steering control unless it is equipped with a mechanical or
electrical signaling device of a prescribed nature.
E (3) If the Central Government is of the opinion that it is necessary
or expedient so to do, in public interest, it may, by order published
in the Official Gazette, notify that any article or process used by
a manufacturer shall conform to such standard as may be specified
in that order.
F 28. Section 2 (21-A) defines "manufacturer" and it means a person
who is engaged in the manufacture of motor vehicles. Section 2(28) defines
"motor vehicles" or "vehicle" and it means any mechanically propelled
vehicle adapted for use upon roads. A motor vehicle manufactured by a
a
manufacturer is sold without registration plate. Thereafter the dealer sells
G the motor vehicle to a customer again without the registration plate. This
position will be clear from the proviso to Section 39 of the Act which says
that nothing in the section shall apply to a motor vehicle in possession of
a dealer subject to such conditions as may be prescribed by the Central
Government. Section 41 also points to the same question as it enjoins as
H application on behalf of the owner of a motor vehicle for its registration.
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 809
The question of issuing a certificate of registration and assigning it a A
registration mark arises only after sale of a motor vehicle. Therefore until
the motor vehicle has been sold to a person by a dealer, the registering
authority would not come into picture and there is no occasion for
assigning it a registration mark. A manufacturer of vehicle is not at all
concerned with registration thereof by the registering authority or assignment B
of a registration mark as contemplated by section 41 of the Act. Under sub-
section (3) of section 109 the Central Government can prescribe the
standards for any article or process used by a manufacturer. The power
under this provisions can, therefore, be exercised by the Central Government
for prescribing the standard of the materials or articles or any process used C
as such in the manufacturing of the vehicle. Reading of sub-section (3)
along with sub-sections ( 1) and (2) will show that it basically deals with
the mechanical construction of the vehicle and to ensure safety both of the
passengers travelling therein and also of others who are on the road. No
order concerning a number plate simplicitor can, therefore, be issued by D
the Central Government in exercise of power conferred by sub-section (3)
of section 109 of the Act. Shri Rohtagi has submitted that power to issue
such kind of notification can be traced to sections 41(6) and 64 (b & d)
of the Act. It is not possible to accept the submission made. Section 41(6)
empowers the Central Government to allot group of letters and figures to E
a State for the purpose of assignment of registration mark by making a
notification in the Official Gazette. Therefore, there is no scope for issuing
the impugned notification in exercise of power conferred by this provision.
Section 64 confers rule making power upon the Central Government but
in view of section 212 the power to make rules under the Act is subject
to the condition of the rules being made after previous publication. It is F
not the case of the respondents that the previous publication of the
notification dated 22nd August, 2001 had been made. The Central
Government has also never treated in to be a rule. Consequently the
impugned notification cannot be held to have been made by the Central
Government in exercise of power under section 64(d) of the A.ct. In fact G
the Central Government has always treated it to be an Order issued under
sub-section (3) of section 109 of the Act. The inevitable conclusion is that
clause 4(x) of the notification dated 22nd August, 2001 could not be issued
by the Central Government in exercise of the power conferred by section
109(3) of the Act and therefore the said notification is ultra vires. H
810 SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A 29. For the reasons mentioned above the Writ Petitions and Transfer
Petitions are allowed with costs. Clause 4(x) of the Motor Vehicles (New
High Security Vehicle Registration Plates) Order, 2001 issued by the
Central Government on 22nd August, 2001 is quashed. The eligibility
conditions mentioned in the N!Ts issued by various State Governments
B regarding; (I) tum over of Rs. 50 crores or so with 15 to 25 per cent thereof
in the business of manufacture of registration plates in the immediately
preceding year, and (2) experience of manufacturing registration plates in
3/5 countries are also quashed.
RAJENDRA BABU CJ. : 1 had the advantage of reading the draft
C judgment prepared by my learned Brother Mathur, J. and 1 regret my
inability to agree with him.
The object of the relevant provisions, which are under challenge
before this Court is not to create a monopoly in favour of any person as
D has been held by my learned Brother. I cannot also agree that Clause 4(x)
of the Motor Vehicles (New High Security Vehicle Registration Plates)
Order, 2001 issued by the Central Government on 22nd August, 2001
deserves to be quashed. I am not giving detailed reasons because in any
event the matter will have to go to a larger bench for due appreciation of
E the matter.
In view of the disagreement between us, the matter is referred to a
larger bench.
ORDER
F
In view of the disagreement between us, the matters are referred to
a larger Bench.
N.J. Referred to the larger Bench
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