Association of Registration Plates Vs. Union of India & Ors  Insc 724 (30
Y. K. Sabharwal, D. M. Dharmadhikari & Tarun Chatterjee] WITH
WP ( c) No. 24/03, TC ( c ) 30-31/03, TC ( c ) 32/03, TC ( c ) 38/03 TC ( c )
39-40/03, TC ( c ) 41/03 TC ( c ) 42/03, TC ( c ) 62/03, WP(c) 56/03, WP(c )
395/03, WP (c) 77/03.
The present writ petition along with the cases transferred from various High
Courts have been placed before this Bench on a difference of opinion between
Hon'ble Judges constituting the Division Bench.
The dispute concerns the terms and conditions of Notices Inviting Tenders
[NITs] for supply of High Security Registration Plates to motor vehicles. The
tenders have been issued by various State Governments on the guidelines
circulated by the Central Government for implementing the provisions of Motor
Vehicles Act, 1988 (hereinafter referred to as 'the Act') and the newly amended
Central Motor Vehicles Rules, 1989 (hereinafter referred to as 'the Rules').
The main grievance of the petitioner is that all Notices Inviting Tenders
(NITs) which have been issued by various State Governments contain conditions
which seem to have been tailored to favour companies having foreign
collaboration. The tender conditions are described to be discriminatory under
Article 14 of the Constitution of India being aimed at excluding indigenous
manufacturers from the tender process. In all the cases the grievance is that
the work of supply of High Security Registration Plates for all existing
vehicles and new vehicles is being entrusted to a single license plates
manufacturer in a State or a region and for a long period of 15 years thus
creating monopoly in favour of selected bidders to the complete exclusion of
all others in the field. The contention advanced is that creation of monopoly
in favour of few parties having connection with foreign concerns is violative
of fundamental right of trade under Articles 19 (1) (g) and discriminatory
under Article 14 of Constitution of India.
A survey of the relevant provisions of the Act and Rules continuing the
Scheme of High Security Registration Plates is necessary for considering the
merit of the petitioners' grievances.
The object of the new scheme is to curb the increasing menace of vehicle thefts
and their usage in commission of crimes like murder, dacoity, kidnapping etc.
It is felt urgent to check usage of motor vehicles in terrorists activities.
The Central Government on the recommendation of its Technical Committee has
devised a system of High Security Registration Plates which will ensure public
safety and security. With the above purpose, Rule 50 of the Motor Vehicles
Rules has been amended. Rule 50 was first amended on 28.03.2001, then on
24.09.2001 and lastly on 21.01.2003 w.e.f. 01.01.2004. The relevant part of the
rule in its amended form reads as under:
"Rule 50- Form and manner of display of registration marks on the motor
vehicles - (1) On or after commencement of this rule, 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 conforming to DIN 1745/DIN 1783
or ISO 7591. Border edges and corners of the plate shall be rounded to avoid
injuries to the extent of approx. 10 mm 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 hot stamping;
(ii) the plate should bear the letters "IND" in blue colour on the
extreme left center of the plate. The letter should be one fourth of the size
of letters mentioned in rule 51 and should be buried into the foil or applied
by hot stamping and should be integral part of 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 digits, to be laser branded into a reflective sheeting
and hot stamping film 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, 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 thereafter if such sticker is destroyed it
shall be issued by the license plate manufacturer or 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 the registering
authority; The licence plates with all the above specifications and the
specified registrations for a vehicle shall be issued by the registering
authority or approved the licence plates manufacturers or their dealers. The Central
Road Research Institute, New Delhi or any of the agency authorized by the
Central Government shall approve the license plates manufacturers to the above
(vi) the size of the plate for different categories of vehicles shall be as
follows:- For two and three wheelers 200 x 100 mm For light motor vehicles and
Passenger cars 340 x 200 mm/ 500 x 120 mm For medium commercial vehicles Heavy
commercial vehicles and Trailer/combination 340 x 200 mm Provided that this
sub-rule shall apply to already registered vehicles two years from the date of
Provided further that the size of the registration plates for agricultural
tractors shall be as follows:- Front - 285 x 45 mm Rear - 200 x 100 mm 2 to 6.
[Underlining for pointed attention] The rule in the above manner requires
manufacture of such registration plates which would be non-reusable and
The technical specifications of the registration plates are such as to make
identification of the vehicle and its tracking easier and certain.
The other requirements contained in Rule 50 are that apart from regulating
the aspect of issuing registration mark with use of specific kinds of letters
and numerals, it seeks to ensure its safety and security by regulating issuance
and fixation of number plate from the premises of the Regional Transport Office
of the concerned area. The RTO will issue registration number and also issue
the plate itself. Thus a high security number plate with specified technical
features is to be issued under Governmental control and supervision. The Scheme
contained in Rule 50 substitutes the existing system where the registration
number was given by the RTO and ordinary plate obtained from the open market.
The implementation of the rule requires cooperation and coordination between
the authorities of the State and the manufacturer of registration plates.
The source of power for providing Scheme of High Registration Plates by Rule
50 is traceable to Rule Making Power of Central Government contained in Section
64, clauses (a) to (e) of the Act which read as under:- "Section 64. Power
of Central Govt. to make rules. - The Central Government may make rules to
provide for all or any of the following matter namely :- (a) the period within
which and the form in which an application shall be made and the documents,
particulars and information it shall accompany under sub-section (1) of Section
(b) the form in which the certificate of registration shall be made and the
particulars and information it shall contain and the manner in which it shall
be issued under sub-section (3) of Section 41;
(c) the form and manner in which the particulars of the certificate of
registration shall be entered in the records of the registering authority under
sub-section (5) of Section 41;
(d) the manner in which and the form in which the registration mark, the
letters and figures and other particulars referred to in sub- section (6) of
Section 41 shall be displayed and shown;
(e) the period within which and the form in which the application shall be
made and the particulars and information it shall contain under sub-section (8)
of Section 41 (f) to (o) ..............................
The Central Government has also issued the Motor Vehicles (New High Security
Registration Plates) Order, 2001 in purported exercise of power under
sub-section (3) of Section 109 of the Act. The relevant parts of the order of
2001 contained in sub-clauses (viii) to (xiv) read as under:- "(i) to
(vii) ................ (viii) The registration plates fitted in the rear of
the vehicles shall be fastened with non-removable/non-resuable snap lock
system. For the sake of better security, at least two such snap locks shall be
(ix) No high security plate shall be affixed outside the premises of the
(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 for any region of the State.
(xi) The registration plate will be supplied to the motor vehicle owners by
the vendor against the authorization by the Road Transport Officer or any other
designated for the purpose by the State Transport Department.
(xii) The replacement for any existing registration plate may be made by the
concerned transport authority only after ensuring that the old plate has been
surrendered and destroyed.
(xiii) A proper record of the registration plates issued by the manufacturer
or the vendor, authorized by the State Government, should be maintained on a
daily basis and got tallied periodically with the records of the Transport
(xiv) Periodic audit shall be carried out by concerned ;testing agencies to
ensure compliance of the requirements of the High Security Registration Plates.
" [Highlighted for emphasis] According to the respondents, the source of
power to issue the New High Security Registration Plates Order, 2001 is to be
found in sub-section 3 of Section 109. The petitioners have challenged the validity
of the Registration Plates Order, 2001 (hereinafter shortly referred to as
Order of 2001) which according to them is beyond provisions of the Act and has
no legal efficacy.
The main features of the High Security Registration Plates as provided in
Rule 50 and the order of 2001 are as follows:- 1. It provides for a solid
2. The plate should be suitable for hot stamping and would be a reflective
3. The plate should bear the letters "IND" in blue colour.
4. It should have a chromium based hologram which shall also be hot stamped.
5. There would be third registration mark which would be self-reflective
being a chromium based hologram sticker and which would be affixed on the
windshield of the vehicle.
6. The plate on the rear shall be fastened with non- removable/non-resuable
snap lock fitting system The above-mentioned features to the High Security
Registration Plates have been insisted upon for the following reasons:-
1. Hot Chromium based hologram would prevent counterfeiting.
2. The ingress letter "IND" on the plate would secure national
identity and standardization.
3. The laser etched 7 digits code to be given by the manufacturer to each
plate is with a view that there should be a sequential identification of
individual registration plate across the country. This would act as a watermark
and not erasable by any mechanical or technical process.
4. Snap lock to be fitted on the rear portions of the vehicle would be
temper proof. Any attempt to remove the plate would break it.
5. The reflective sheet of superior grade would be visible from a minimum of
6. The alpha-numeral would be easily readable and identifiable.
7. On alpha-numeral border, ingress letters "IND" would prevent
painting and screen printing which would act as protection and counterfeiting.
8. The sticker to be affixed on the windshield would have 7 digit laser code
containing the engine number and the chassis number. This was so designed to be
self- destructive upon removal.
After Rule 50 was amended and New High Registration Plates (amendment)
Order, 2001 was issued in purported exercise of power under Section 109(3) of
the Act. The Ministry of Road Transport and Highways vide its letter dated
6.3.2002 circulated the minutes of meeting of 4.3.2001 held between the
representatives of all States and Union Territories on introduction of the new
system of the registration plates. A series of meetings were held by the Union
with the States. Eventually, on 6.3.2002 the Union laid down guidelines for
incorporating necessary conditions in the Notices Inviting Tenders to be issued
by the various States. In substance, the guidelines suggest as follows:-
1. The tender document would specify whether the appointment of vendor was
for the whole State or for certain parts.
2. The tender document would specify the terms of the bank guarantee .
3. The tender document would require report back on certain aspects on
"a periodic and regular basis".
4. The bidder must furnish proof of past experience/expertise in this area
or proof of the same with a collaborator.
NIT guidelines were later modified by letter dated 14.6.2002 sent by the
Ministry. It was suggested that the bidders may be asked to provide details
about the experience/capability of its collaborator to the satisfaction of the
On 16.9.2002, meeting was held between officials of Ministry,
representatives of States/Union Territories and manufacturers of New
Registration Plats wherein several issues pertaining to the introduction of the
new system as well as the terms of NIT were discussed. The minutes of the said
meeting resulted in issuance of a clarificatory letter on 13.11.2002 wherein it
is reiterated that the guidelines are suggestive in nature. The main features
of the guidelines issued after due deliberations between Union and States
officials and the representatives of manufacturers are as follows:- "The
determination of the physical and financial capability of the bidder was to be
done by the State. A suggestion was voiced that instead of tender process the
market process should be given and all manufacturers would obtain technical
approval certificate for being allowed to sell their product. This led to
clarification by the Secretary of Road Transport and Highways that the State
Transport Authorities will have to exercise control over issuance of
Representatives of certain States opposed to free open market situation
having large vehicular population of cities and likelihood of successful
tenderer neglecting the rural area having low vehicular population." The
Ministry of Road Transport and Highways left the discretion to the States in
the matter of issuing NIT but reiterated security and rural concerns. On the
guidelines given by Central Government and pursuant to joint deliberations
between the officials of the Union, States and the manufacturers, several
States issued Notices Inviting Tenders which led to filing of petitions in the
High Courts of several States. The petitioners have challenged the terms and
conditions of the NITs. All those cases have been transferred to this Court for
decision along with the writ petitions directly filed here. It is not necessary
to reproduce all the conditions in various Notices Inviting tenders issued by
different States. The gist of impugned conditions in various NITs may be
summerised as under:- Condition (a) Tenderer/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 at least in 5 countries for license
plates and in a minimum of 3 countries with license plates having security
features world-wide (necessary credentials from the Government of such country
should be attached along with a performa as per annexure XIII duly filed in ) .
Apart from the above credentials the tenderer/bidder should furnish
"Type Approved Certificate" from Testing Agencies".
Condition (b): The tenderers/bidders of the joint venture partners together
must have a minimum annual turnover equivalent to INR 30 crores in the
immediately preceding last year. At least 25% of this turnover must be from the
license plate business.
Certificate confirming and the certification of the minimum 25% turnover
being from licensed plates business will have to be provided duly attested by a
Chartered Accountant/any bank to be attached in support of fulfillment of this
Condition ( c): The contract will be for a period of fifteen years
commencing from the date of commencement of the scheme. A detailed agreement
shall be entered into between the successful bidder and the Government for a
period of fifteen years and government ensures that no second bidder will be
approved during the currency of the contract in the State except in the case of
termination of the contract in view of the strictest of adherence to High
Security Features and to impose answerability on to the successful bidder.
[Portions highlighted being under specific challenge] We shall now take up
for consideration the various submissions made by the counsel appearing for the
petitioners in assailing certain conditions of the Notices Inviting Tenders
issued by various States, provisions of the Rule 50 and the statutory order of
2001 issued to implement the scheme of High Security Registration Plates.
1) Challenge to the impugned tender conditions.
The learned counsel appearing for the petitioners submit that the three
conditions concerning experience and extent of business (the gist of which has
been mentioned above) contained in the Notices Inviting Tenders, are per se
discriminatory and unreasonable. They are apparently tailor-made to sub-serve
the business interests of a class of manufacturers having foreign collaboration
and for a cartel of companies. He further submitted that the above mentioned
three clauses which are substantially same in all the NITs issued by many of
the States, make it mandatory for the bidders to enter into collaboration with
the foreign collaborators. It becomes a pre-condition to participate in the
bidding process. It envisages collaboration with few known foreign companies in
the field of manufacture which alone can satisfy the tender conditions. It is
known to tendering authorities that there are not more than 1 or 2 companies
that could satisfy the stringent eligibility conditions laid down in the NITs.
It is submitted that Rule 50 as amended has inbuilt safeguards to ensure the
technical competence of the prospective manufacturer and for controlled
issuance of registration plates. The manufacturers can manufacture the said
plates only after it has got type approved certificate from one of the
autonomous certifying agencies. Supply of the plates to the vehicle users can
be made only after the grant of certificate of conformity of the standard of
the production. The States, therefore, can have no jurisdiction to decide or
declare any of the manufacturers as competent or incompetent with respect to
their technical competence.
To reinforce the challenge to the conditions and describing them as highly
unreasonable and resulting in complete exclusion of indigenous manufacturers,
it is submitted that at present, registration plates with specified security
features are in use only in some of the countries which are much smaller than
India. They are Armenia, Columbia, Congo, Curacao, Ethiopia, Georgia, Iraq,
Mali, Malta Oman, Palastine, Sri Lanka, Tanzania, Uganda, Uragua, and Zambia.
The learned counsel argues that it is difficult to understand as to how the
experience of working in the above mentioned small countries with a very small
vehicular population would be of any help as an experience for supplying
registration plates for large vehicular population of India whose needs and
requirements are of far greater magnitude and in no way comparable to the above
mentioned small countries. The total vehicular population of all above
mentioned nations accumulated does not match the vehicular population of Delhi
alone. Indigenous manufacturers of High Security Plates can manufacture and
supply registration plates on their own strength by complying with all
standards and in conformity with all norms laid down in Rule 50 without
entering into collaboration with any foreign partner.
It is contended that in the name of implementing the amended Rule 50, the
States are imposing conditions in the tender that would take away the existing
rights of the manufacturers of plates in India.
The implication of conditions is that indigenous manufacturers, although
capable of fulfilling the requirements of Rule 50, are prohibited to do the
business of manufacturing and supplying the High Security plates. This violates
their fundamental right under Article 19 (1) (g) of the Constitution of India.
The further contention is that all security features for number plates have
been specified for the first time in India and, therefore, insistence on
possessing experience in five countries from the manufacturers is to eliminate
manufacturers of India. It is pointed out that as per the requirements of Rule
50 the plates are required to conform to DIN 1745/DIN 1783 or ISO 7591
standards (DIN of the German Standards and ISO of the World standards). The
other security features are the additional features. It is submitted that these
standards have been used to suit only one or two manufacturers. It is submitted
that the laid down standards and security features are so laid down as to wipe
out indigenous manufacturers from the field although Indian manufacturers are
fully competent to be involved in the implementation of the new scheme of High
To the condition laid down of prescribed minimum turnover of business, the
challenge made on behalf of the petitioners is that fixing such high turnover
for such a new business is only for the purpose of advancing the business
interests of a group of companies having foreign links and support. It is
impossible for any indigenous manufacturers of security plates to have a
turnover of approximately
12.5 crores from the High Security Registration Plates which are sought to
be introduced in India for the first time and the implementation of the project
has not yet started in any of the States.
On the question of condition of a period of 15 years for supply of High
Security Registration Plates the contention advanced is that it is an attempt
to create monopoly in favour of one private company or a cartel of companies.
This is against public interest as it would leave the consumers/vehicle owners
at the mercy of a sole successful bidder. Award of a contract for a long term
of 15 years would eliminate indigenous Type Approved manufacturers for a long
period of time and would deprive the vehicle users of the number plates from
the benefits of the competitive market. In the event of further development of
the technology of security plates, the State Government would be obliged to
involve the same manufacturers who had been awarded the contract first of all.
The process of grant of Type Approved Certificate is a continuing process and
award of contract for a long period of 15 years in favour of a single
manufacturer would render grant of Type Approved Certificate to other
manufacturers, inconsequential. Referring to the relevant data of the business
of the respondent group companies working in collaboration with foreign
companies as joint venture concerns, the petitioners highlights that if
indigenous manufacturers are involved in implementation of scheme the plates
can be made available only for Rs. 200-250 for two plates whereas creating
monopoly right in favour of joint venture companies in foreign collaboration
would hike the cost of plates to not less than Rs. 2,000/- per pair in contrast
to the market price of Rs. 800 to Rs. 900 per pair by the Indian manufacturers.
In conclusion, learned counsel for the petitioner submits that the tender
conditions are arbitrary, irrelevant and tailor- made to involve only certain
joint venture companies in foreign collaboration. They aim at eliminating the
indigenous manufacturers of plates. The petitioners seek quashing of the
impugned tender Engineering [ 2001 (8) SCC 491] The other counsel appearing in
connected cases for the petitioners have submitted that selection of sole
manufacturer for supply of registration plates has no justification either in
law or on facts. On behalf of the petitioners, it is contended that grant of
contract to more than one manufacturer would, in fact, ensure better and prompt
services to the vehicle owners and minimize their inconvenience and possibility
of black-marketing which might be there in case of monopoly. The submission is
that regulated and disciplined multi-vendors system with registration of
operating manufacturers and making them answerable and accountable is the only
permissible method of implementation of the policy akin to that followed in
other developed countries where no monopoly is created in favour of a sole
manufacturer in the name of control and security.
On the economics of the project, the contention is that keeping in view
large vehicular population of the country, benefits of a lucrative business are
being unjustly conferred on a sole manufacturer for a long period of 15 years
which is likely to give a profit of Rs.2500 crores to the sole manufacturer in
the first two years itself.
The learned counsel appearing for the Union of India, State Authorities and
counsel appearing for the contesting manufacturers, in their replies, have
tried to justify the manner and implementation of the policy contained in Rule
50. On behalf of the Union of India, learned Addl. Solicitor-General submitted
that under Rule 50 read with the statutory order of 2001 issued under section
109(3) of the Act, the State Governments are legally competent to formulate an
appropriate policy for choosing a sole or more manufacturers in order to
fulfill the object of affixation of security plates. The registration plates have
to be issued and affixed on the premises of the registering authority and with
its permission. It is submitted that the scheme contained in rule 50 read with
a statutory order of 2001 leaves it to the discretion of the State concerned to
even choose a single manufacturer for the entire State or more that one
manufacturer regionwise. Such a selection cannot be said to confer any monopoly
right by the State to any private individual or concern. It is just like
selection of an appropriate person for grant of a contract or largesse by the
State on laid down criteria of experience and technical qualifications. A fair
process of selection may eliminate persons or parties who may not be found
technically, financially and on the basis of past experience sound to be
awarded the contract. Reliance is placed on Krishnan Kakkanth vs.
Govt. of Kerala [1997 (5) SCC 495]; Ugar Sugar Works Ltd., vs.
Delhi Administration & Ors. [2001 (3) SCC 635]; and M.R.F. Ltd., vs.
Inspector Kerala Govt. & Ors. [1998 (8) SCC 227].
On behalf of State of West Bengal, the learned senior counsel appearing
supported the manner of implementation of scheme contained in rule 50 and the
conditions contained in the Notice Inviting Tenders [NITs]. It is submitted
that the main objective of the competitive bidder process was to ensure that
such manufacturers as selected by the State would be able to comply with the
requirements of rule 50. In selecting a suitable manufacturer, his capability
and capacity to invest and build necessary infrastructure, has to be assessed
so that through him, the scheme becomes operationable from the targeted date
28.2.2003 and without any difficulty it remains so operational for a longer
period so that all existing vehicles switch over to high security registration plates
as also the newly purchased vehicles are fitted with such plates. The tender
conditions are deliberately so framed as to eliminate newly floated companies
commonly described as 'fly by night companies' which merely compete to obtain
the contract but have neither technical nor financial capacity to fulfil the
contract of such vast dimensions.
It is submitted that the tender conditions are formulated keeping into
account the public interest consideration and aspects of high security. The
States do not possess the requisite resources of its own to implement the
scheme. It has, therefore, to search and select a dependable manufacturer. It
is submitted that the tender conditions specifically require the manufacturer
to conform to the technical specification of high security registration plates.
It should be able to prove existence of requisite financial resources to
integrate large number of RTOs in the State on an on-line platform. The
manufacturer should have a permanent technical partner to the venture so that
the technology support is assured for the entire period of contract. The
manufacturer to be selected should have access to the requisite technology and
should be in a position to upgrade, expand and upscale operation on a
continuous and sustainable basis. It is necessary to have a long term
contractual relationship so that State can fix liability on the manufacturer
and make him answerable for damages or any defects in the registration plates
or for improper implementation of the project. The requirement of the rule that
registration number and plates will be issued on the premises of the RTO, is to
maintain secrecy and security. For the above purpose, selection of one single
manufacturer would ensure security aspects instead of more than one manufacturers
operating from different points.
With regard to 15 years long term contract, it is submitted that it is also
in public interest. The manufacturer who has to stake the money would have to
make huge investment by installing high technology based networking at each
RTO's office. A short-term contract would not, therefore, attract an
experienced and reliable manufacturer. Long-term contract with fixed price for
entire 15 years period is beneficial to the customers as there would be no
price increase for the stipulated period irrespective of inflation. Fifteen
years period has been chosen in proportion to the average road-worthy life of a
vehicle in India.
Looking to the huge vehicular population of the country, the capacity of the
manufacturer has to be as great because plates are to be fitted to a very large
number of existing vehicles within first two years. Thereafter, every year
about one lakh vehicles in each State would be required to be fitted with the
plates. If the bulk of contract is exhausted in the first two years, fresh
manufacturers would not come forward to undertake the remaining work as it
would not be cost- effective. A long-term contract was necessitated for various
reasons such as necessity of huge investment for building infrastructure,
uninterrupted supply of plates in the first two years and thereafter every year
and the investment of such infrastructure requiring recovery over a long
duration by way of supply. If the contract period is lowered, the cost of plate
might go up as the huge investment will have to be recovered in a shorter
Justifying the selection of a single manufacturer for a region or an entire
State, to ensure security considerations, the following factors have been
highlighted as sub-serving the public interest :-
1. That it would not be possible to implement the scheme since the scheme
provides that the approved manufacturer would use the premises of the State RTO
and lay down V-Sat links so that the entire state is networked on a common
2. It would be impossible for the State to provide all the TAC holders space
and infrastructure in the RTO premises.
3. It would be difficult for the state to identify the source of any
counterfeiting in case there are multiple manufacturers. This would severely compromise
the security considerations involved in the scheme.
4. Different manufacturers would lead to variations in price between
5. The State is at disadvantage since all the manufacturers would prefer to
concentrate on supplying only in Kolkata and would not go to the other far
flung RTOs where he would recover the returns on his investment.
6. In case more that one manufacturer operate within the state, it will lead
to discrepancy and non-uniformity in price structure prevailing in different
7. Difficulty in assimilation of data from more than one manufacturer thus
leading to disaggregated and confusing database signals. Such sensitive and
security related business must be governed by uniform database management processes
and unified standardized coding practices.
8. Different manufacturers would mean that there would be variation in
quality of the material and in terms of workmanship.
9. Possible duplication of Registration Plates due to competition between
manufacturer of different regions and lack of aggregated security controlled
database management systems.
10. Non-conformity of data of different manufacturers would lead to
confusion and integration of data from the State RTOs.
11. Difficulty in fixing up the answerability on any one manufacturer for
not following the prescribed procedure.
12. Confidentiality of the public database would be severely compromised.
13. Provision of Training of RTO personnel by each manufacturer would be a
logistic nightmare and would lead to confusion and further lead to the system
being compromised severely.
14. It is also important to note that each registration plate has a unique
number, and consequently, all the RTOs are required to be electronically
connected to each other, if the vendors are allowed to proliferate, this
connection would not be possible, and would lead to complete chaos.
By highlighting the above factors, it is submitted that if multiple
manufacturers are involved in implementation of the policy, it is not likely to
work satisfactorily. It is submitted that a single selected manufacturer would
not just be marketing, servicing and providing a new product but would engage
in assisting the State in fulfillment of statutory obligations to grant the
high security registrations to the owners of motor-vehicles in accordance with
the provisions of the Act and the Rules. It is submitted that tender conditions
are suitably formulated for performance guarantee, experience and understanding
of business, financial strength, and capacity of creating and installing the
entire infrastructure and networking. Finally, it is submitted that the
eligibility criteria prescribed by the State is commensurate not only with the
scale of operation and size of network to be created by the operator but also
with statutory requirement of States' continued delivery of its obligations to
vehicle owners without any interruption. It is contended that through open
tender, identifying and selecting an approved manufacturer to discharge statutory
duty of RTO is not an act of the State creating any monopoly in favour of any
private party .
The grievance of infringement of fundamental rights under Article 19(1)(g)
of the Constitution of India is misconceived. Reliance is placed on Air India
vs. Cochin International Airport Ltd., [2000(2) House Construction Ltd. [1997
(1) SCC 738].
The learned senior counsel appearing for the respondent no. 5, has supported
the submissions made on behalf of the Union of India and the State of West
Bengal by advancing separate arguments with additional reasons.
We shall separately deal with the submissions made on behalf of the
petitioners on the interpretation of the provisions of rule 50 and the
statutory order of 2001 issued under the provisions of the Act.
Taking up first the challenge to the impugned conditions in the Notices
Inviting Tenders issued by various State authorities, we find sufficient force
in submissions advanced on behalf of the Union and the State authorities and
the contesting manufacturers. The State as the implementing authority has to
ensure that scheme of high security plates is effectively implemented. Keeping
in view the enormous work involved in switching over to new plates within two
years for existing vehicles of such large numbers in each State, resort to
'trial and error' method would prove hazardous. Its concern to get the right
and most competent person cannot be questioned. It has to eliminate
manufacturers who have developed recently just to enter into the new field. The
insistence of the State to search for an experienced manufacturer with sound
financial and technical capacity cannot be misunderstood. The relevant terms
and conditions quoted above are so formulated to enable the State to adjudge
the capability of a particular tenderer who can provide a fail-safe and
sustainable delivery capacity. Only such tenderer has to be selected who can
take responsibility for marketing, servicing and providing continuously the
specified plates for vehicles in large number firstly in initial two years and
annually in the next 13 years. The manufacturer chosen would, in fact, be a
sort of an agent or medium of the RTOs concerned for fulfillment of the
statutory obligations on them of providing high security plates to vehicles in
accordance with rule 50. Capacity and capability are two most relevant criteria
for framing suitable conditions of any Notices Inviting Tenders. The impugned
clauses by which it is stipulated that the tenderer individually or as a member
of joint- venture must have an experience in the field of registration plates
in at least three countries, a common minimum net worth of Rs. 40 crores and
either joint-venture partner having a minimum annual turnover of at least Rs.
50 crores and a minimum of 15% turnover of registration plates business have
been, as stated, incorporated as essential conditions to ensure that the
manufacturer selected would be technically and financially competent to fulfil
the contractual obligations which looking to the magnitude of the job requires
huge investment qualitatively and quantitively.
In the course of hearing, it could not be seriously disputed by the parties
that technical know-how for the high security registration plates is outside
the country. It is true that many indigenous manufacturers are in a position to
supply the plates on the basis of technical assistance available in and outside
the country. There are many tenderer who possess Type Approval Certificates
[TACs] but to ensure major quantity of supply in initial two years and periodical
supply for new vehicles for a long period, only a manufacturer who is sound
both technically and financially, is required. Learned Brother G.
P. Mathur J., in his elaborate opinion expressed by him [See 2004(5) SCC
364] found a serious vice in the tender conditions that they necessarily intend
to promote such companies which have foreign collaborations and exclude
It is not controverted that the technical 'know-how' for the manufacture of
high security registration plates presently is available outside India.
Technically and financially, competent indigenous manufacturers are mostly
those who are in collaborations with foreign companies engaged in such
manufacturing activities. The scheme contemplated under rule 50 of registration
plates is a new experiment for India. In the initial stages of its
implementation, tender conditions encouraging such manufacturers who are in
foreign collaborations cannot be held to be discriminatory to indigenous
Keeping in view the nature of the contract and job involved particularly its
magnitude and the huge investment for infrastructure required, attempt to
select such manufacturer - may be having collaboration with foreign companies
and experience in foreign countries cannot be held to be a deliberate attempt
on the part of the State authorities to eliminate indigenous manufacturers.
In the matter of formulating conditions of a tender document and awarding a
contract of the nature of ensuring supply of high security registration plates,
greater latitude is required to be conceded to the State authorities. Unless
the action of tendering Authority is found to be malicious and misuse of its
statutory powers, tender conditions are unassailable. On intensive examination
of tender conditions, we do not find that they violate the equality clause
under Article 14 or encroach on fundamental rights of a class of intending
tenderer under Article 19 of the Constitution. On the basis of the submissions
made on behalf of the Union and State authorities and the justification shown
for the terms of the impugned tender conditions, we do not find that the
clauses requiring experience in the field of supplying registration plates in
foreign countries and the quantum of business turnover are intended only to
keep out of field indigenous manufacturers. It is explained that on the date of
formulation of scheme in rule 50 and issuance of guidelines thereunder by
Central Government, there were not many indigenous manufacturers in India with
technical and financial capability to undertake the job of supply of such high
dimension, on a long term basis and in a manner to ensure safety and security
which is the prime object to be achieved by the introduction of new
sophisticated registration plates.
The notice inviting tender is open to response by all and even if one single
manufacture is ultimately selected for a region or State, it cannot be said
that the State has created monopoly of business in favour of a private party.
Rule 50 permits, the RTOs concerned themselves to implement the policy or to
get it implemented through a selected approved manufacturer.
Selecting one manufacturer through a process of open competition is not
creation of any monopoly, as contended, in violation of Article 19(1)(g) of the
Constitution read with clause (6) of the said Article. As is sought to be
pointed out, the implementation involves large network of operations of highly
The manufacturer has to have embossing stations within the premises of the
RTO. He has to maintain a data of each plate which he would be getting from his
main unit. It has to be cross-checked by the RTO data. There has to be a server
in the RTO's office which is linked with all RTOs' in each State and thereon
linked to the whole nation.
Maintenance of record by one and supervision over its activity would be
simpler for the State if there is one manufacturer instead of multi-
manufacturers as suppliers. The actual operation of the scheme through the RTOs
in their premises would get complicated and confused if multi-manufacturers are
involved. That would also seriously impair the high security concept in
affixation of new plates on the vehicles. If there is a single manufacturer he
can be forced to go and serve rural areas with thin vehicular population and
less volume of business. Multi-manufacturers might concentrate only on urban
areas with higher vehicular population.
The fifteen years contract period has also been supported by Union of Indian
and State authorities. We find great substance in the submissions made on the
data supplied as a justification for awarding contract for long period of 15
years. There would be a huge investment required towards the infrastructure by
the selected manufacturer and the major return would be expected in initial
period of two years although he would be bound down to render his services for
future vehicles on periodically for a long period. Looking to the huge
investment required and the nature of the job which is most sophisticated
requiring network and infrastructure, a long term contract, if thought viable
and feasible, cannot be faulted by the court.
If there are two alternatives available of giving a short-term or a long-
term contract, it is not for the court to suggest that the short-term contract
should be given. On the subject of business management, expertise is available
with the State authorities. The policy has been chalked out and the tender
conditions have been formulated after joint deliberations of authorities of the
State and the intending manufacturers. Contract providing technical expertise,
financial capability and experience qualifications with a long term of 15 years
would serve a dual purpose of attracting sound parties to stake their money in
undertaking the job of supply and safeguard public interest by ensuring that
for a long period the work of affixation of security plates would continue
uninterrupted in fulfillment of the object of the scheme contained in rule 50.
Our considered opinion, therefore, is that none of the impugned clauses in the
tender conditions can be held to be arbitrary or discriminatory deserving its
striking down as prayed for on behalf of the petitioners.
There is no material on record to infer any mala fide design on the part of
the tendering authority to favour parties having foreign collaborations and
keep out of fray indigenous manufacturers. The high security plates is a
sophisticated article - new for manufacturer in India. It is being introduced
for the first time under the scheme contained in rule 50 of the Rules and the
Act. At the time of issuance of Notices of Tender, technical know-how for
manufacture of plates and its further development was undoubtedly outside the
Only a few concerns in India having collaboration with foreign parties
possessed the expertise and were available in the market. The terms of the
notice inviting tender were formulated after joint deliberations of Central and
State Authorities and the available manufacturers in the field. The terms of
the tender prescribing quantum of turnover of its business and business in
plates with fixation of long term period of the contract are said to have been
incorporated to ensure uninterrupted supply of plates to a large number of
existing vehicles within a period of two years and new vehicles for a long
period in the coming years. It is easy to allege but difficult to accept that
terms of the Notices Inviting Tenders which were fixed after joint
deliberations between State authorities and intending tenderers were so
tailored as to benefit only a certain identified manufacturers having foreign
Merely because few manufacturers like the petitioners do not qualify to
submit tender, being not in a position to satisfy the terms and conditions laid
down, the tender conditions cannot be held to be discriminatory.
Certain preconditions or qualifications for tenders have to be laid down to
ensure that the contractor has the capacity and the resources to successfully
execute the work, Article 14 of the Constitution prohibits the government from
arbitrarily choosing a contractor at its will and pleasure. It has to act
reasonably, fairly and in public interest in awarding contract. At the same
time, no person can claim fundamental right to carry on business with the
government. All that he can claim is that in competing for the contract, he
should not be unfairly treated and discriminated to the detriment of public
Undisputedly, the legal position which has been firmly established from
various decisions of this Court, cited at the Bar (supra) is that government
contracts are highly valuable assets and the court should be prepared to
enforce standards of fairness on government in its dealings with tenderers and
The grievance that the terms of notice inviting tender in the present cases
virtually creates a monopoly in favour of parties having foreign
collaborations, is without substance. Selection of a competent contractor for
assigning job of supply of a sophisticated article through an open tender
procedure, is not an act of creating monopoly, as is sought to be suggested on
behalf of the petitioners. What has been argued is that the terms of the
Notices Inviting Tenders deliberately exclude domestic manufacturers and new
entrepreneurs in the field. In the absence of any indication from the record
that the terms and conditions were tailor-made to promote parties with foreign
collaborations and to exclude indigenous manufacturers, judicial interference
is uncalled for.
Challenge to the tender conditions on Paragraph 2 of Rule 50(1)(v).
On behalf of the petitioners, paragraph 2 of rule 50(1)(v), which is
reproduced below, has been interpreted. The contention is that it does not
contemplate selection of sole manufacturer for a State or a Region. The
relevant paragraph 2 of rule 50(1)(v) reads thus :- "Rule 50(1)(v). Form
and manner of display of registration marks on the motor vehicles. (1)...............
(i) to (iv) ...............................
The licence plates with all the above specifications and the specified
registrations for a vehicle shall be issued by the registering authority or
approved licence plates manufacturers or their dealers.
The Central Road Research Institute, New Delhi or any of the agency
authorized by the Central Government shall approve the license plates
manufacturers to above specification.
[Emphasis supplied] Learned counsel for the petitioners argues that the use
of the word "approved" in para 2 of clause (v) of rule 50(1) has to be
given its natural meaning and cannot be read to mean "selected"
through notice inviting tender. In this respect, it is further submitted that
the rule making authority has used the word 'approved' and 'approve' twice in
the same paragraph. The rule read harmoniously rules out selection of sole
manufacturer through a tender process. The argument in substance is that every
approved licence plate manufacturer can be entrusted with the job of supplying
the registration plates and selection of one manufacturer for the job is
against the intendment of the rule.
The above argument seems attractive but on closer scrutiny is unacceptable.
The rule is interpreted to mean that the registration plates can either be
issued by RTO to the exclusion of all others or all type approval certificate
holders must be allowed to do business of supply in open market. In other
words, according to the petitioners, the rule contemplates that if the
registering authority does not supply the plates itself, it allows all TAC
holders to do the business without any restriction.
In interpreting the rule, the object of the scheme providing for affixation
of high security plates has to be kept in view. Where the RTO himself is not
making the supply of plates, an approved registration plate manufacturer can be
selected for supply. The legal obligation on the registering authority under
rule 50(1)(v) to issue specified kinds of registration plates implies issuance
of such registration plates through a selected approved plate manufacturer.
Paragraph 2 of clause (v) of rule 50(1), if reasonably construed, does not
indicate any prohibition of selection of an approved plate manufacturer for
assisting the registering authority to implement the scheme of affixation high
security registration plates to existing vehicles and new vehicles. Such an
interpretation fulfils the object of the scheme. The interpretation sought to
be placed by the petitioners on the said para of the rule would result in
frustrating the high security aspect and object of the scheme of affixation of
high security registration plates on vehicles.
Challenge to Para 4(x) of the Motor-Vehicels [New High Security Registration
Plates] Order, 2001 issued in purported exercise of powers under section 109(3)
of the Act.
Para 4(x) of the statutory Order, 2001 mentioned above, reads as under :-
"The manufacturer or the vendors selected by the State Transport
Department for supply of such registration plates may be for the State as a
whole or for any region of the State." On behalf of the petitioners, it is
submitted that para 4(x) of the statutory Order, 2001 is ultra vires section
109 (3) of the Act under which it is purported to have been issued. Section 109
with its heading and the relevant sub-section (3) reads as under :- "Section
109. 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.
(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.
(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.
[Highlighted for interpretation].
It is contended that section 109(3) falls under Chapter VII which deals with
construction, equipment and maintenance of motor vehicles. Registration of
motor-vehicles falls under Chapter IV of the Act. Under section 109(3), a
direction or order can be issued only to a 'manufacturer' defined in section
2(21A) to mean manufacturer of motor vehicles. It is submitted that a
motor-vehicle manufactured by a manufacturer is sold to a dealer without a
Thereafter, the dealer sells the motor vehicle to a customer without
registration plate. Chapter IV containing section 39 to 65 deal with
registration of motor vehicles of different types. The proviso to section 39 of
the Act says : 'nothing in this section shall apply to 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 position. It casts an
obligation on the owner of a motor vehicle to obtain registration. The question
of issuing a certificate of registration and assigning to a motor vehicle a
registration mark arises only after sale of motor vehicle. Therefore, until the
motor vehicle has been sold to a person by a dealer, the registering authority
would not come into the picture and there is no occasion for assigning it a
registration mark. A manufacturer of motor vehicle is not at all concerned with
registration thereof by the registering authority. On the basis of above
interpretation of provisions of the Act, the submission made is that under
section 109(3), the Central Government can only prescribe standards for any
article or process used by the manufacturer in the manufacturing of the vehicle
and not for selecting any manufacturer of registration plates to the exclusion
of others. It is submitted that reading sub-section (3) with sub-section (1)
& (2) of section 109 of the Act, the position is that the provisions have
nothing to do with registration plates of the vehicles.
It is further submitted that power to issue directions as contained in para
4(x) of the statutory order of 2001, cannot be traced to any provision in
chapter IV of the Act dealing with registration of motor vehicles or to the
rule making power under section 64(d). It is submitted that any provision
regarding registration plates can only be made by rule framed by Central
Government in accordance with provisions of the Act. Sub-section (4) of section
212 of the Act, prescribes a mandatory requirement of first publishing draft
rule before making a final rule on any subject. Since in promulgating para 4(x)
of the statutory order of 2001, mandatory requirement of section 212(4) has not
been complied with, the impugned para of the said statutory order of 2001
cannot be supported even as a statutory rule. The other submission made on the
subject is that provisions for selecting only one manufacturer for registration
plates in a region or a State is not a subject of 'prescribing manner and form
in which the registration mark' would be displayed on the motor vehicles. On
the above ground, it is submitted that para 4(x) of the statutory order of 2001
deserves to be struck down as ultra vires the Act. It is violative of the
Article 19(1)(g) of the Constitution.
The above argument based on section 109(3) and the other provisions in
Chapter IV of the Act have been suitably replied by the counsel appearing for
the respondents. The reasoning advanced on behalf of the respondents is worthy
of acceptance. The statutory order of 2001 is expressly issued under section
109 (3) of the Act which no doubt is concerned with construction, equipment and
maintenance of motor vehicles. Sub-section (3) of section 109 permits Central
Government to "notify that any article or process used by a manufacturer
shall conform to such standard as prescribed". The word
"manufacturer" is defined in section 2(21A) of the Act to mean a
person engaged in the manufacture of the motor vehicles but the definition
clause is prefixed by the words "unless the context otherwise
requires". In the context of sub-section (3) of section 109, an article to
be affixed to the motor vehicle like a high security registration plates is
covered by the use of expression "any article or process used by a
manufacturer". 'In the context' if the provision contained in sub- section
3 is read reasonably, an article' which is adjunct or necessarily attachable to
a motor vehicle, would also be covered in the said expression. The statutory
order of 2001 is published in the official gazette. It does not fall outside
the scope of sub-section (3) of section 109 of the Act. The expression 'any article
or process used by a manufacturer' has to be construed 'in the context' as not
to restrict the expression 'manufacturer' to only manufacturer of motor
vehicles as defined under section 2 (21A) of the Act. The definition in the Act
has to be construed according to the 'context' and if the 'context' otherwise
indicates a meaningful interpretation is to be given to the words 'any article
or process used by any manufacturer' as used in sub-section 3 of section 109 of
the Act. Registration plates are not manufactured by the manufacturer of motor
vehicles but for maintenance and operations of motor vehicles, registration
plates are necessary. Therefore, manufacturer of registration plates can be
subjected to certain standards by a statutory order to be notified and
published in accordance with sub-section (3) of section 109 of the Act.
Any restrictive interpretation of the said sub-section is neither called for
from the language of the sub-section nor the object of the provision. Reference
is made to the opinion of learned Brother G.P.
Mathur J., in these cases. For the reasons mentioned by us above, in our
opinion, the statutory order of 2001 and clause 4(x) thereof cannot be held to
be beyond the purview of sub-section 3 of section 109 of the Act. Clause 4(x)
of the statutory order of 2001, could be issued under section 109(3), as an aid
to the fulfillment of provisions of high security registration plates contained
in rule 50. Such power of the State to issue order containing clause 4(x) is
not only supported by sub-section 3 of section 109 but by rule 50 itself.
Clause 4(x) of the statutory order of 2001 is merely enabling one and re-states
what rule 50 contemplates. We also find force in the alternative submission
made on behalf of the respondents that the statutory order including clause
4(x) can be supported as having been issued in exercise of executive power of
the Central Government which is co-extensive with its legislative power.
For the above reasons, all the challenges made to the provisions of the
rule, statutory order or the tender conditions fail. All the petitions directly
filed in this Court and transferred to this Court from High Courts are, hereby,
In the circumstances, we direct that the parties shall bear their own costs
in all these cases.