30 November 2004
Supreme Court


Case number: W.P.(C) No.-000041-000041 / 2003
Diary number: 25561 / 2002
Advocates: Vs ANIL KATIYAR



CASE NO.: Writ Petition (civil)  41 of 2003

PETITIONER: Association of Registration Plates

RESPONDENT: Union of India & Ors.  

DATE OF JUDGMENT: 30/11/2004

BENCH: 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.  

Dharmadhikari J.

       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 specification;  

(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 commencement:

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 non-replaceable.   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 41;

(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)          ................        \005\005\005\005\005   (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 fitted.  

(ix)    No high security plate shall be affixed outside 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 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 Office.  

(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 aluminium plate.  2.      The plate should be suitable for hot stamping and would be  a reflective sheet.  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 200 meters.  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 State Authorities.  

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 registration plates.  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.  

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 Security plates.           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  conditions.  Reliance is placed on Sterling Computers  Vs. M.and N.  Publications [ 1993 (1) SCC 445 and  Union of  India Vs. Dinesh  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 period.  

       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 platform.  

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 different manufacturers.  

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 regions.  

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)  SCC 617] and Asia Foundation & Construction Ltd. Vs. Trafalgar  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 indigenous manufacturers.  

       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 manufacturers.  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 sophisticated materials.  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 country.  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 collaboration.  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 interest.  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 contractors.  

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. \026 (1)............... (i) to (iv)     ............................... .................. (v)             ....................                   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 registration plate.  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, dismissed.  

In the circumstances, we direct that the parties shall bear their



own costs in all these cases.