REPORTABLE       

IN THE SUPREME COURT OF INDIA

CIVIL  APPELLATE JURISDICTION

CIVIL APPEAL NO.               OF 2010 (Arising out of SLP(C) No. 11621 of 2006)

Shimnit Utsch India Pvt. Ltd. & Anr.          …Appellants

Versus   West Bengal Transport Infrastructure  Development Corporation Ltd. & Ors.                 …Respondents

WITH

CIVIL APPEAL NO.               OF 2010 (Arising out of SLP(C) No. 11988 of 2010)

JUDGEMENT

R.M. Lodha, J.

Leave granted.

2. Of the two appeals by special leave, one has been  

preferred  by  Shimnit  Utsch  India  Private  Limited  (for  short,  

‘Shimnit’)  being  aggrieved  by  the  judgment  dated  June  27,  

2006 of the Calcutta High Court whereby the Division Bench

dismissed their appeal and affirmed the order dated February  

20, 2006 of the Single Judge dismissing their writ petition and  

the  other  at  the   instance  of  M/s  Tonnjes  Eastern  Security  

Technologies Private Limited (for short, ‘Tonnjes’) challenging  

the order dated March 23, 2010 whereby the Division Bench of  

Orissa High Court dismissed their writ petition.  

The Issue

3. The common question that arises for consideration in the  

two  appeals  is,  whether  after  decision  of  this  Court  in  

Association of Registration Plates v.  Union of India and Ors.1  

wherein the conditions provided for experience in the field of  

registration  plates  in  the  foreign  countries  and  a  minimum  

annual turnover from such business were upheld as essential  

conditions in  the Notices Inviting Tenders (NIT)  for  award of  

contract  for  manufacture  and  supply  of  High  Security  

Registration Plates (HSRP) for motor vehicles, it is necessary  

for the State Governments to continue with these conditions or  

it is permissible for them to do away with such conditions.  

1 (2005) 1 SCC 679

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Factual  and  legal  background  in  Association  of   Registration Plates

4. The Motor Vehicles Act, 1988 (for short, ‘1988 Act’)  

came into force on July 1, 1989. Chapter –IV thereof deals with  

registration of motor vehicles as defined in Section 2(28).  Sub-

section (6) of Section 41 provides that the registering authority  

shall assign to the vehicle, for display thereon, a distinguishing  

mark (registration mark) consisting of one of the groups of such  

of those letters and followed by such letters and figures as are  

allotted to the State by the Central Government from time to  

time by notification in the Official Gazette. Pursuant thereto a  

Notification came to be issued by the Central Government on  

July 1, 1989 allocating group of letters to various States. The  

Central  Motor  Vehicles  Rules,  1989 [for  short,  `1989 Rules’)  

were  framed  by  the  Central  Government  in  exercise  of  its  

powers under Section 64 and other relevant provisions of 1988  

Act.  Rule 50 of 1989 Rules provides for form and manner of  

display of registration marks on the motor vehicles.  The said  

Rule 50 has been amended from time to time and new system  

of  HSRP  thereunder  is  now  to  come  into  effect  from  

June 1, 2010.  

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5. Under sub-section (3) of Section 109 of 1988 Act,  

the  Central  Government  issued  Motor  Vehicles  (New  High  

Security  Registration  Plates)  Order,  2001  (for  short,  ‘Order,  

2001’).  On October 16, 2001, the Central Government further  

issued Motor Vehicles [New High Security Registration Plates  

(Amendment)]  Order,  2001  (for  short,  ‘Amendment  Order,  

2001’). Amendment Order, 2001 provided for certain standards  

in respect of the new system of HSRP for motor vehicles and  

the  process  used  by  a  manufacturer  or  vendor  for  

manufacturing or supplying such plates.

6. On March 6,  2002,  a communication laying down  

guidelines for incorporating necessary conditions in the NIT to  

be issued by the various States and Union Territories  (UTs)  

was  circulated  by the  Central  Government  to  all  States  and  

UTs.  The  guidelines,  inter  alia,  provided;  (i)  the  tender  

document would specify whether the appointment of the vendor  

is  for  the  whole  State  or  for  certain  parts;  (ii)  the  tender  

document would specify the terms of the bank guarantee; (iii)  

the  tender  document  would  require  a  report  back  on certain  

aspects on ‘a  periodic and regular  basis’  and (iv)  the bidder  

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must furnish proof of past experience/expertise in this area or  

proof  of  the  same  with  the  collaborator.  By  further  

communication  dated  June  14,  2002  the  aforenoticed  NIT  

guidelines were modified by the Central Government and 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. By another communication  

dated November 13, 2002, the Central Government clarified to  

the States and UTs that the guidelines are suggestive in nature  

and left the discretion to the States and UTs in the matter of  

issuing NIT but reiterated security concern.  

7. In  the  light  of  the  guidelines  suggested  by  the  

Central  Government,  several  States/UTs  issued  NIT  which,  

inter alia, included conditions, namely, (i) experience in the field  

of registration plates i.e., bidder should be working at least in  

five  countries  for  licence  plates  and  in  a  minimum  of  three  

countries  with  licence  plates  having  security  features  

worldwide;  (ii)   the bidder must have had a minimum annual  

turnover equivalent to INR 30 crores immediately preceding last  

year;  at  least  25% of  this turnover must  be from the licence  

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plate business and (iii) the contract will  be for a period of 15  

years.

8. The  NIT  containing  the  aforenoticed  conditions  

issued by several  States  led  to  filing  of  writ  petitions  before  

various High Courts. Few writ petitions were filed directly before  

this Court.  Since the controversy was common, writ petitions  

filed  before  High  Courts  were  transferred  to  this  Court  and  

taken  up  along  with  writ  petition  filed  by  Association  of  

Registration Plates1.  It was argued on behalf of the petitioners  

before  this  Court  that  these  conditions  in  NIT  have  been  

tailored to favour companies having foreign collaboration and  

aimed at excluding indigenous manufacturers from the tender  

process; there are not more than one or two companies that  

could satisfy the stringent eligibility conditions laid down in NIT;  

Indian manufacturers are fully competent to be involved for the  

implementation  of  the  scheme  of  HSRP  but  the  condition  

concerning  experience  in  foreign  countries  has obviated  any  

chance of their participating in the bidding process; fixing high  

turnover  from  such  business  is  only  for  the  purpose  of  

advancing the business interest of a group of companies having  

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foreign  links  and  support  and  that  it  is  impossible  for  any  

indigenous manufacturer of security plates to have a turnover of  

approximately 12.5 crores from the HSRP 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.

9. The  States  who  had  issued  NIT  defended  the  

impugned tender  conditions before  this  Court.  Insofar  as the  

State of West Bengal is concerned, a counter affidavit was filed  

through  West  Bengal  Transport  Infrastructure  Development  

Corporation  Ltd.  (WBTIDCL).  It  was  stated  in  the  counter  

affidavit  that  impugned  conditions  in  NIT  are  intended  to  

achieve  the  high  objective  of  public  safety  involved  in  the  

implementation  of  HSRP.  The  relevant  averments  in  the  

counter affidavit are reproduced below :

“………  The  State  Governments  realizing  the  importance  of  the  project  came  out  with  various  conditions in the Tender which are primarily related to  seeing  the  experience  and  the  capacity  of  the  manufacturer to undertake such a huge task concerning  the manufacturing and supply of  HSRPs in the State.  The  State  Government  therefore  came  out  with  conditions to insure that the manufacturer who supplied  the HSRPs in the State is not fly-by-night operator but is  personally experienced enough and capable enough to  carry out such an activity……..

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……………The  power  therefore  is  wide  enough  to  include  aspects,  which  may  not  have  been  provided  specifically  elsewhere  in  the  Act.  The  Central  Government  is  well  within  its  powers to prescribe the  fact that the State Government has the power to select  the manufacturer of HSRPs as it is State Government  which understood its specific requirements and needs  and has to  be satisfied about  the competence of  the  manufacturer that whom it has to work jointly in order to  ensure that the objective behind the HSRPs scheme is  not  deviated.  In  the  absence of  such a  provision the  whole  scheme  of  HSRPs  which  means  towards  achieving  public  safety  and  security  by  ensuring  that  there is issuing control and supervision of HSRPs by the  State Government will get deviated.

…………The State under the Tender wishes to choose  a  person  who  is  already  worked  in  connection  with  HSRPs rather than chose a person who merely claims  that it  can deliver.  Surely in a project of such a large  scale  concerning  public  safety  and security  the  State  cannot be justified to employ the hit and trial method.

………….The objective by no means can be lost of or  given an improper degree of attention. The objective is  to  ensure highest  levels  of  public  safety  and security  established in  the wake of  the uncertain    times that  people  are  subject  to  these  days.  Consequently,  the  introduction of HSRPs mandates adherence to highest  standards  both  in  supply  of  manufacturing  quality  of  products, required supply of the quantity of the project  and above al mandates coordination with the State will  have  the  general  control  and  supervision  over  the  issuance of these number plates. The fact is mentioned  are  by  no  means  exhaustive  but  are  only  given  to  illustrate  the  basis  tenets  of  the  whole  business  of  HSRPs. The State Government by no means can adopt  a hit and trial method in a project of such a vast nature.  It  has  been  no  necessarily  ensured  that  the  manufacturer  is  selected  by  a  fair,  competitive  and  transparent  means  of  selection,  which  is  the  Tender  process.  The  selection  necessarily  has  to  happen  amongst the TAC holders. The State Government has  

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to be satisfied to the extent to leaving no scope of doubt  with  regard  to  the  expertise  and  capability  of  the  selected manufacturer of HSRPs the State Government  has to be satisfied that the company concerned will be  able to meet the requirement both on the qualitative and  quantitative  basis  and  in  bare  commercial  terms  the  company chosen is the best company amongst the TAC  holders.  The  scheme envisages  constant  cooperation  and coordination amongst  the supplier  and the State.  Any  brake  at  any  point  of  time  in  the  system  as  envisaged will deviate the objective which is sought to  be  achieved.  It  is  in  this  background  that  the  challenge/grievances of the petitioner must be viewed.”

Decision in Association of Registration Plates  

10. This  Court  dismissed  the  entire  group  of  writ  

petitions on November 30, 2004. The tender conditions relating  

to  experience  in  foreign  countries,  prescribed  percentage  of  

turnover  from such business and term of  15 years  were not  

held to be arbitrary,  discriminatory or  mala fide;  rather these  

conditions were held in public interest. This Court observed :

• The State as an implementing authority has to ensure that  the  scheme  of  HSRPs  is  effectively  implemented.  Keeping in view the enormous work involved in switching  over to new plates within two years for existing vehicles,  resort to “trial-and-error” method would prove hazardous.

• The State Government’s right to get the right and most  competent person cannot be questioned.

• The  State  Government  has  to  eliminate  manufacturers  who have developed recently just to enter into the new  field.

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• The insistence of the State to search for an experienced  manufacturer with sound financial and technical capacity  cannot be misunderstood.

• The terms and conditions in NITs 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  numbers, firstly in the initial two years, and annually in the  next 13 years.

• Capacity and capability are the two most relevant criteria  for  framing  suitable  conditions  of  any  notices  inviting  tenders  and  the  conditions  of  experience  and  turnover  incorporated as essential conditions are to ensure that the  manufacturer  selected  would  be  technically  and  financially competent to fulfill the contractual obligations,  which, looking to the magnitude of the job, requires huge  investment qualitatively and quantitatively.

Facts post 30.11.2004

(A) West Bengal

11. After  the  decision  of  this  Court  in  Association  of  

Registration Plates1 on November 30, 2004, the Government of  

West  Bengal  evaluated  the  bids  already  submitted  in  

accordance with the NIT and the bid of Shimnit was cleared at  

the  prequalification  stage.  One  M/s.  Promuk  Hoffman  

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International  Ltd.,  (‘Promuk’  for  short)  was  also  declared  

qualified. Shimnit challenged the pre-qualification of Promuk by  

filing a writ petition (468/2005) before Calcutta High Court on  

the  ground  that  they  did  not  have  requisite  international  

experience. On March 11, 2005, the Single Judge of Calcutta  

High Court by an interim order stayed the finalization of tender.  

12. On  April  27,  2005,  however,  the  Government  of  

West  Bengal  (Transport  Department)  issued  a  Notification  

canceling  its  NIT  for  supply  and  fitment  of  HSRP for  motor  

vehicles issued earlier. The said Notification reads as follows :

“Government of West Bengal

Transport Department

Writers’ Building

No. 2672 WT/3M-56/2003 PL III          Dated 27.04.2005

NOTIFICATION

WHEREAS Notice Inviting Tender (NIT) was issued and  published  in  various  newspapers  on  03.07.2003  &  04.7.2003  respectively,  fixing  06.08.2003  as  the  last  date for submission of such Tender papers for supply  and  fitment  of  High  Security  Registration  Plates  for  Motor  Vehicles,  by  the  West  Bengal  Transport  Infrastructure  Development  Corporation  Limited  (A  Government of West Bengal Undertaking) on behalf of  the Government of West Bengal under instructions from  the Transport Department;

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AND  WHEREAS  only  4  (four)  nos.  of  Bidders  participated  in  the  said  tender  process  which  was  subsequently  stayed  as  per  orders  of  the  Hon’ble  Supreme Court in Writ  Petition (Civil)  No. 41 of 2003  and the other connected cases;

AND WHEREAS the Hon’ble Supreme Court of India by  an  order  dated  30.11.2004  disposed of  the  said  Writ  Petition  (Civil)  No.  41  of  2003  and  other  connected  cases with certain observations, holding inter alia, that  the  concerned  State  Governments  are  legally  competent  to  determine  the  terms and  conditions  for  implementation  of  the  scheme  for  High  Security  Registration Plates for Motor Vehicles in conformity with  the  provisions  of  the  Motor  Vehicles  Act,  1989  and  Rules framed thereudner;

AND WHEREAS the Technical Bids submitted by those  Bidders  could  not  yet  be  processed,  evaluated  and  finalized and whereas due to such non-evaluation of the  Technical Bids the Financial Bids as submitted by those  Bidders could not also be opened.

AND WHEREAS it has come to the notice of the State  Government that subsequent to issue of the said NIT a  considerable  number  of  Manufactures  of  such  High  Security Registration Plates have obtained the requisite  Type Approval Certificates from the Institution approved  by  the  Central  Government  as  per  provisions  of  the  Motor Vehicles Act, 1989 and Rules framed thereunder;

AND WHEREAS due passage of time and consequent  change in the relevant field due to coming up of a very  good  number  of  duly  approved  manufacturers  as  aforesaid and keeping in view the observations of the  Hon’ble Supreme Court of India in Writ Petition (Civil)  No. 41 of 2003 and other connected cases as stated  hereinabove, the Governor deems it  fit  that in greater  public interest and also in the interest of public safety &  security  the  terms  and  conditions  of  the  said  Notice  Inviting  Tenders  (NIT)  for  supply  and  fitment  of  High  Security  Registration  Plates  for  Motor  Vehicles  be  reviewed and determined afresh.

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NOW, THEREFORE, the Governor is pleased to direct  that the entire tender process so far followed pursuant  to the aforesaid Notice Inviting Tenders (NIT) for supply  and  fitment  of  High  Security  Registration  Plates  for  Motor Vehicles as issued by the West Bengal Transport  Infrastructure  Development  Corporation  Limited  on  behalf of the State Government be cancelled and fresh  process for inviting such bids be commenced after due  determination of the terms and conditions thereof in the  light  of  what  has  been  stated  herein  above.  The  Governor  is  further  pleased to direct  that  the Bidders  (four  numbers)  who  had  participated  in  the  previous  tender process to be initiated hereafter, if they so desire  and the Earnest Money Deposit (EMD) made by them  be returned forthwith.

This order shall come into effect immediately.

By Order of the Governor. Sd/-

Sumantra Choudhury, Principal Secretary,

to the Government of West Bengal.”    

 13. Shimnit  was  also  informed  by  WBTIDCL  vide  

communication dated April 27, 2005 that the bidding process in  

terms of earlier NIT has been cancelled and requested them to  

collect the refund of their earnest money.

14. On  October  4,  2005,  a  fresh  NIT  (hereinafter  

referred to as ‘second NIT’) came to be issued by WBTIDCL for  

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manufacture and supply of  HSRP, inter  alia,  to  the following  

effect :

“BID FOR

NOTICE INVITING BIDS FOR HIGH SECURITY  

REGISTRATION PLATES

The Transport Department, Government of West Bengal  has  decided  to  implement  through  WBTIDC  Ltd.  the  revised Rule 50 of Central Motor Vehicle Rules, 1989 as  modified by the Government of India, Ministry of Roads,  Transport  and  Highway  vide  Notification  issued  from  time  to  time  for  implementation  of  High  Security  Registration for all existing registered vehicles and also  new  vehicles  to  be  registered  in  West  Bengal  for  a  period of 10 years.

Now,  on  behalf  of  the  Transport  Department,  Government  of  West  Bengal,  The  Managing  Director/West  Bengal  Transport  Infrastructure  Development  Corporation  Limited  (WBTIDC),  invites  bids  for  selection  of  eligible  bidders  having  Type  Approval  from authorized agencies  of  Government  of  India and adequate financial resources to undertake the  production  of  High  Security  Regulation  Plates  in  conformity  with  the  specifications.  A panel  of  Bidders  will be finally selected to implement and operate in two  designated zones of the States on Build, Operate and  Transport (BOT) basis.

The intending Bidders which may be single firm, Joint  Venture  or  a  Consortium  should  have  in  addition  to  above a minimum annual average Turnover of Rs. 50  crores  and  net  worth  of  Rs.  20  crores  as  per  audit  balance sheet of 2003-04.

Bid  documents  containing  detail  scope  of  work  and  other terms and conditions may be purchased from the  office  of  the  Managing  Director,  WBTIDC,  between  

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04.10.2005 and 20.10.2005 both days inclusive during  office hours, but excluding holidays,  by paying a non- refundable  cost  of  the  same amount  of  Rs.  50,000/-  (Rupees Fifty Thousand only) for each set of two copies  of Bid Documents, in the form of Demand Draft drawn in  favour  of  “West  Bengal  Transport  Infrastructure  Development Corporation Ltd.” payable in Kolkata.

Bid  must  be  accompanied  with  the  Earnest  Money  Deposit (EMD) of Rs. 25,00,000/- (Rupees Twenty five  lacs only) in the form as specified in bid documents. No  exemption certificate in this regard will be accepted.  

Bids completed in  all  respect must  be submitted in a  sealed cover super scribed Bid for  HSRP, WB at the  office  of  the  Managing  Director,  WBTIDC  Ltd.  on  or  before 14.00 hrs on 14.11.2005 and will be opened as  per schedule indicated in the Bid Document. In case the  date of receiving the Bids happens to be a holiday, bids  will be received on the next working day.

WBTIDC Ltd. reserves the right to reject any or all bids  or annual bidding process without assigning any reason,  thereof……….”  

15. In the second NIT, clauses pertaining to experience  

in the foreign countries and the minimum prescribed turnover  

from such business were done away with; the period was also  

reduced from 15 years to 10 years.

16. Pursuant to the second NIT, Shimnit submitted its  

tender on November 21, 2005 and simultaneously filed a writ  

petition before Calcutta High Court challenging the conditions of  

second  NIT,  principally  on  the  ground  that  the  essential  

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conditions pertaining to experience in foreign countries and the  

prescribed turnover from such business having been approved  

by the Supreme Court could not have been done away with.  

Shimnit  also prayed for interim order during the pendency of  

writ  petition.   The  controversy  relating  thereto  reached  this  

Court and by an order dated January 5, 2006, this Court while  

disposing of SLPs directed that the interim order that contract  

shall not be awarded until further orders will continue to operate  

till the matter is decided by the Single Judge. The Single Judge  

by his judgment dated February 20, 2006 dismissed Shimnit’s  

writ  petition.  An intra court appeal was preferred by Shimnit  

before the Division Bench in which the interim order of status  

quo was passed. The Division Bench ultimately dismissed the  

intra court  appeal vide judgment dated June 27, 2006 giving  

rise to the present appeal by special leave.   

(B) Orissa

17. On April 11, 2007, the Government of Orissa issued  

NIT inviting bids for the manufacture and supply of HSRP  in  

respect of the existing motor vehicles and the vehicles to be  

registered in the State of Orissa. The eligibility criteria provided  

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therein did not contain conditions like experience in the foreign  

countries  and  minimum  prescribed  turnover  from  the  said  

business,  although,  the  tender  document  did  lay  down  that  

bidder should have experience of working in the field of HSRP  

having used the security features as mentioned in Rule 50 of  

1989 Rules.  

18. After issuance of NIT dated April 11, 2007, Tonnjes  

submitted representations to the Government of Orissa on May  

9,  2007  and  May  15,  2007  requesting  for  

amendment/modification of the tender conditions so as to bring  

it  in conformity with the conditions approved by this Court  in  

Association of Registration Plates1.  

19. On May 16, 2007, a Corrigendum-III was issued by  

the  Transport  Commissioner-cum-Chairman,  State  Transport  

Authority,  Government  of  Orissa  extending  the  due  date  

beyond May 24, 2007. It is the case of Tonnjes that no further  

steps were taken by the Government of Orissa in pursuance of  

the said NIT.

20. On July  6,  2009,  a  fresh  NIT  was  issued  by  the  

Government  of  Orissa  for  manufacture,  distribution  and  

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affixation  of  HSRP  at  a  Build  Own  Operate  (BOO)  basis.  

Tonnjes  again  made  a  representation  to  the  Government  of  

Orissa for bringing the terms and conditions of the fresh NIT in  

conformity  with  the  decision  of  this  Court  in  Association  of  

Registration  Plates1.  When  nothing  was  heard  from  the  

Government of Orissa, Tonnjes filed a writ petition before the  

Orissa High Court for quashing that NIT.  The High Court, by  

way of an interim order, directed that the bids pursuant to the  

said NIT may be permitted to be filed by the bidders as per the  

tender rules but no further action shall be taken without leave of  

the Court.

21. The Division Bench of the Orissa High Court heard  

the  arguments  and  by  its  judgment  dated  March  23,  2010  

dismissed the writ petition filed by Tonnjes.   

Writ Petition (PIL) by Maninderjit Singh Bitta  

22. One  Maninderjit  Singh  Bitta  filed  a  writ  petition  

before this Court  in public interest seeking implementation of  

the  judgment  by  this  Court  in  Association  of  Registration  

Plates1.   It  was urged that  though in the aforesaid judgment  

18

norms were fixed and the desirability of having HSRP has been  

highlighted but nothing concrete has been done by the States  

and UTs. This Court disposed of writ petition on May 8, 2008  

and gave time of six months to States and UTs to take decision  

as to whether there is need for giving effect to the amended  

Rule 50 and the scheme of  HSRP and the modalities  to  be  

followed.  

23. Maninderjit  Singh  Bitta  filed  an  Interlocutory  

Application No. 5 before this Court seeking clarification of the  

order dated May 8, 2008. The said application was disposed of  

by this Court on May 5, 2009 by the following order :

“It is made clear that there was no discretion given to  the States/UTs not to give effect to the amended Rule  50  and  the  claim of  HSRP and  the  modalities  to  be  followed.  It  is  stated  by  learned  counsel  for  the  petitioner that in some cases no action has been taken  by the concerned States and the UTs within the period  of  six  months  as  was  given.  Needless  to  say  that  if  same is the position, the directions shall be carried out  immediately  and  not  later  than  three  months  from  today.”

24. On  August  26,  2009,  the  Government  of  India,  

Ministry of Road Transport and Highways addressed a letter to  

the States and UTs requesting them to take all necessary steps  

for implementation of HSRP scheme by the end of 2009. In the  

19

said letter the Government of India brought to the notice of the  

States and UTs the order of this Court dated May 5, 2009 and  

also informed them to keep in view the judgment of this Court in  

Association of Registration Plates1.

25. On September 11, 2009, a further letter was sent by  

the Government of India to the States and UTs informing them  

that a committee has been constituted by the Ministry to review  

the  progress  of  implementation  of  HSRP  and  other  related  

issues. The States and UTs were requested to implement the  

scheme of HSRP as early as possible.

26. On behalf of Union of India, few applications came  

to be filed (I.A. Nos. 6-9) before this Court in disposed of writ  

petition no. 510 of 2005 (Maninderjit Singh Bitta) for extension  

of time to ensure compliance with the directions contained in  

order dated May 5, 2009. These applications were disposed of  

by this Court  on December 15, 2009 by extending time upto  

May 31, 2010.

Contentions  

27. Mr. F.S. Nariman, learned senior counsel appearing  

for Shimnit submitted that in Association of Registration Plates1,   

20

after considering the scheme of HSRP including the guidelines  

issued by the Central Government and the conditions in the NIT  

pertaining  to  experience  in  the  foreign  countries  and  the  

turnover from the said business, this Court held that these are  

essential  conditions  of  the  tender  aimed  to  ensure  that  the  

manufacturer  selected  would  be  technically  and  financially  

competent to fulfill  the contractual obligations keeping in view  

the magnitude of the job and the huge investment required in  

the project. He submitted that these conditions having got the  

seal  of  approval  from this  Court  could  not  have  been  done  

away  with  in  second  NIT  and  if  for  any  reason  the  State  

Government thought of cancelling the first NIT and decided to  

issue fresh NIT dispensing with the conditions of experience in  

foreign countries and prescribed minimum turn over from such  

business,  they  ought  to  have  approached  this  Court  for  an  

appropriate  direction.  Mr.  F.S.  Nariman  submitted  that  in  

Association of  Registration Plates,  the case pertaining to the  

State of West Bengal was treated as a lead case and the State  

of West Bengal vehemently defended the conditions in the first  

NIT  before  this  Court  and  now  doing  away  with  essential  

21

conditions in the second NIT flies in the face of the law laid  

down by this Court.  Learned senior counsel submitted that it  

was unfortunate that the State of West Bengal did not consider  

itself bound by the law of land declared by the highest Court of  

the  country  in  a  decision  to  which  it  was  a  party.  He  also  

contended that the second NIT was designed to favour some of  

the  bidders  and  was  clearly  mala  fide as  the  Shimnit  had  

challenged the prequalification of Promuk by filing a writ petition  

before  the  Calcutta  High  Court  and  an  interim  order  was  

passed therein by the Single Judge staying the finalization of  

tender. He, thus, submitted that the High Court was not correct  

in dismissing Shimnit’s writ petition.

28. Mr.  R.F.  Nariman,  learned  senior  counsel  for  

Tonnjes adopted the arguments of Mr. F.S. Nariman and also  

invited our attention to  the fact  that  as of  now, except  West  

Bengal and Orissa, all other States have followed the essential  

conditions approved by this Court in the case of Association of  

Registration Plates in the NIT.

29. On the other hand, Mr. S. Ganesh, learned senior  

counsel  appearing  for  State  of  West  Bengal  and  Mr.  L.  

22

Nageshwar  Rao,  learned  senior  counsel  for  State  of  Orissa  

submitted that the conditions in the NIT issued by these two  

States respectively are in the public interest and do not violate  

constitutional or any other provision of law. They submitted that  

the  whole  idea  of  not  having  the  experience  in  the  foreign  

countries and the prescribed turnover from the said business is  

to make available HSRP of the specifications as notified to the  

motor vehicles in these States at reasonable rates without in  

any  manner  compromising  on  safety,  security,  quality  or  

sustainable delivery capacity. Mr. S. Ganesh extensively read  

the reasoning given by the Division Bench of the Calcutta High  

Court in the impugned order and submitted that no interference  

was called for in that order.

30. Mr.  F.S.  Nariman,  learned  senior  counsel,  in  

rejoinder vehemently contended that the judgment of this Court  

in Association of Registration Plates1  must be read as read by  

this Court  subsequently  in Maninderjit  Singh Bitta’s case. He  

would contend that acquisition of Type of Approval Certificates  

(TAC)  does  not  mean  that  such  manufacturers  are  

commercially  competent  to manufacture HSRP as TAC have  

23

limited efficacy. Learned senior counsel also submitted that if  

public interest could be served by the fulfillment of conditions in  

first NIT, then how by deleting these essential conditions, public  

interest could be achieved.

  Tenders,  Government  contracts  and  change  in  policy  :  Judicial Review

31. Before we refer to some of the important decisions  

of this Court dealing with the aspects of judicial review in the  

matters of government contracts, tenders and change in policy,  

it is appropriate to notice the observations made in a couple of  

English decisions and one Australian case on judicial review in  

the matters of change in administrative policy.

32. In  Hughes v.  Deptt. of Health and Social Security2,  

Lord Diplock, J. said:

“….Administrative  policies  may  change  with  changing  circumstances,  including  changes  in  the  political  complexion of governments.  The liberty to make such  changes  is  something  that  is  inherent  in  our  constitutional form of government…..”

2 1985 AC 776

24

33. In  Attorney-General  for  the  State  of  New  South  

Wales v.  Quin3,  Mason  C.J.  (majority  view,  Australian  High  

Court) observed :

“Once this is accepted, I am unable to perceive how a  representation made or  an impression created by the  Executive can preclude the Crown or the Executive from  adopting  a  new  policy,  or  acting  in  accordance  with  such  a  policy,  in  relation  to  the  appointment  of  magistrates, so long as the new policy is one that falls  within the ambit of the relevant duty or discretion, as in  this  case  the  new  policy  unquestionably  does.  The  Executive cannot by representation or promise disable  itself from; or hinder itself in, performing a statutory duty  or exercising a statutory discretion to be performed or  exercised in the public interest, by binding itself not to  perform  the  duty  or  exercise  the  discretion  in  a  particular way in advance of the actual performance of  the duty or exercise of the power…….”  

34. In  R. v.  Secretary of State for Transport, Ex parte  

Richmond upon Thames London Borough Council & Ors.4 while  

laying down that  the  Wednesbury reasonableness test  alone  

was applicable for finding out if the change from one policy to  

another was justified, Laws, J. stated :

“The court is not the Judge of the merits of the decision- maker’s policy. … the public authority in question is the  Judge of the issue whether ‘overriding public  interest’  justifies such a change in policy…. But this is no more  than  to  assert  that  a  change  in  policy,  like  any  

3 1990 64 ALJR 327 4 (1994) 1 All E.R. 577

25

discretionary  decision  by  a  public  authority,  must  not  transgress Wednesbury principles…..”

35. Now,  we  consider  the  decisions  of  this  Court.  In  

Mohd.  Fida  Karim and  Anr. v.  State  of  Bihar  &  Ors.5,  while  

dealing with a case of change in Government policy for licence  

under Bihar Excise Act, this Court held thus :

“……The new policy of adopting the method of auction- cum-tender is certainly a change of policy. The reason  for change of policy given by the Government is that it  realised that making settlement for five years would give  rise to monopolistic tendency, which will not be in public  interest, at the same time the interest of revenue was  not fully protected in the former policy. This clearly goes  to show that  the Government wanted to adopt a new  policy in public interest to be made applicable from the  year 1991-92. Learned Counsel appearing on behalf of  the  State  of  Bihar  submitted  in  clear  terms  that  the  earlier policy was wrong and the Government realised  its mistake and thus adopted a new policy to augment  its revenue and to avoid monopolistic tendency. We do  not find anything wrong in taking such view by the State  Government  and to  change its  policy  considering  the  same to be in public interest………………”

36. This Court in Sterling Computers Limited v. M/s. M  

&  N  Publications  Limited  &  Ors.6,  while  dealing  with  judicial  

review  in  a  matter  relating  to  publication  of  telephone  

directories  of  Mahanagar  Telephone  Nigam  Limited  (a  

5 (1992) 2 SCC 631 6 (1993) 1 SCC 445

26

Government  of  India  Undertaking)  made  the  following  

observations :

“12. At times it is said that public authorities must have  the same liberty as they have in framing the policies,  even  while  entering  into  contracts  because  many  contracts  amount  to  implementation  or  projection  of  policies of the Government. But it cannot be overlooked  that  unlike  policies,  contracts  are  legally  binding  commitments and they commit the authority which may  be held to be a State within the meaning of Article 12 of  the Constitution in many cases for years. That is why  the  courts  have  impressed  that  even  in  contractual  matters the public authority should not have unfettered  discretion.  In  contracts  having  commercial  element,  some  more  discretion  has  to  be  conceded  to  the  authorities  so  that  they may enter  into  contracts  with  persons,  keeping  an eye on the  augmentation  of  the  revenue. But even in such matters they have to follow  the  norms  recognised  by  courts  while  dealing  with  public property. It is not possible for courts to question  and  adjudicate  every  decision  taken  by  an  authority,  because many of the Government Undertakings which  in due course have acquired the monopolist position in  matters of sale and purchase of products and with so  many ventures in hand, they can come out with a plea  that it is not always possible to act like a quasi-judicial  authority while awarding contracts. Under some special  circumstances a discretion has to be conceded to the  authorities who have to enter into contract giving them  liberty  to  assess  the  overall  situation  for  purpose  of  taking a decision as to whom the contract be awarded  and at what terms. If the decisions have been taken in  bona  fide  manner  although  not  strictly  following  the  norms  laid  down  by  the  courts,  such  decisions  are  upheld on the principle laid down by Justice Holmes,  that  courts  while  judging  the  constitutional  validity  of  executive  decisions  must  grant  certain  measure  of  freedom of “play in the joints” to the executive.”

27

37. In  the  case of  Tata Cellular v.  Union of  India7,  a  

three-Judge  Bench  of  this  Court  extensively  considered  the  

English decisions as well as the previous decisions of this Court  

in  the  matter  of  judicial  review  and  scope  relating  to  

government  contracts  and  tenders  and  deduced  the  legal  

principles in paragraph 94 of the report thus :

“(1) The modern trend points to judicial  restraint  in   administrative action.

(2) The court does not sit as a court of appeal but   merely reviews the manner in which the decision  was made.

(3) The court does not have the expertise to correct  the  administrative  decision.  If  a  review  of  the   administrative  decision  is  permitted  it  will  be   substituting  its  own  decision,  without  the   necessary expertise which itself may be fallible.

(4) The terms of  the invitation to  tender cannot  be  open to judicial scrutiny because the invitation to  tender  is  in  the  realm  of  contract.  Normally  speaking,  the  decision  to  accept  the  tender  or  award  the  contract  is  reached  by  process  of  negotiations  through  several  tiers.  More  often  than not, such decisions are made qualitatively by  experts.

(5) The Government must have freedom of contract.  In  other  words,  a  fair  play  in  the  joints  is  a   necessary concomitant for an administrative body  functioning in an administrative sphere or quasi- administrative  sphere.  However,  the  decision   must  not  only  be  tested  by  the  application  of   Wednesbury  principle  of  reasonableness   

7 (1994) 6 SCC 651

28

(including its other facts pointed out above) but   must be free from arbitrariness not affected by   bias or actuated by mala fides.

(6) Quashing  decisions  may  impose  heavy   administrative burden on the administration and   lead to increased and unbudgeted expenditure.”

38. That the award of a contract, whether it is by private  

party  or  by  a  public  body  or  the  State  is  essentially  a  

commercial transaction was highlighted by this Court in Raunaq  

International Ltd. v. I.V.R. Construction Ltd. & Ors.8 In that case,  

this Court spelt out the following considerations that weigh in  

making a commercial decision :  

“(1) the price at which the other side is willing to do the  work;  

(2)  whether  the  goods or  services  offered  are  of  the  requisite specifications;  

(3)  whether  the  person  tendering  has  the  ability  to  deliver  the  goods  or  services  as  per  specifications.  When large works  contracts  involving  engagement  of  substantial manpower or requiring specific skills are to  be offered, the financial ability of the tenderer to fulfil the  requirements of the job is also important;  

(4)  the  ability  of  the  tenderer  to  deliver  goods  or  services or to do the work of the requisite standard and  quality;  

(5) past experience of the tenderer and whether he has  successfully completed similar work earlier;  

8 (1999) 1 SCC 492

29

(6)  time  which  will  be  taken  to  deliver  the  goods  or  services; and often  

(7) the ability of the tenderer to take follow-up action,  rectify defects or to give post-contract services.”  

39. Again in the case of Punjab Communications Ltd. v.  

Union  of  India  &  Ors.9,  a  two-Judge  Bench  of  this  Court  

elaborately  examined  the  principles  of  legitimate  expectation  

and a change in policy by the Government. While dealing with  

second  question  formulated  by  the  Court  viz.,  whether  if  

essentially  the  Government  decided  to  fund  the  proposed  

contract  for  Eastern  U.P.  from  its  own  resources,  it  was  

permissible for the Government to change its policy into one for  

providing telephones for rural areas in the entire country and  

whether ‘legitimate expectation’ of the appellant in regard to the  

earlier notification required the Court to direct that a notification  

for  Eastern  U.P.   should  be  continued,  this  Court  held  in  

paragraph 45 of the report thus :

“45. It will be noticed that at one stage when the ADB  loan  lapsed,  the  Government  took  a  decision  to  go  ahead  with  the  project  on  its  own funds.  But  later  it  thought that the scheme regarding telephones in rural  areas must cover not only the villages in Eastern U.P.  but also in other backward rural areas in other States.  

9 (1999) 4 SCC 727

30

The statistics given in the counter-affidavits of the Union  of India to which we have already referred, show that  there  are  other  States  in  the  country  where  the  percentage of telephones is far less than what it is in  Eastern  U.P.  The  said  facts  are  the  reason  for  the  change in the policy of the Government and for giving  up the notification calling for bids for Eastern U.P. Such  a change in policy cannot, in our opinion, be said to be  irrational  or  perverse  according  to  Wednesbury  principles.  In  the  circumstances,  on  the  basis  of  the  clear principles laid down in ex p Hargreaves and ex p  Unilever,  the  Wednesbury principle  of  irrationality  or  perversity is not attracted and the revised policy cannot  be said to be in such gross violation of any substantive  legitimate expectation of  the appellant  which warrants  interference in judicial review proceedings.”

40. In  the  case  of  Monarch  Infrastructure  (P)  Ltd.  v.  

Commissioner., Ulhasnagar Municipal Corporation & Ors.10, this  

Court was concerned with the question relating to NIT issued  

by Ulhasnagar Municipal Corporation for appointment of agents  

for  collection  of  octroi  and  revision  of  terms  and  conditions  

thereof. This Court held :

“…..The High Court had directed the commencement of  a  new  tender  process  subject  to  such  terms  and  conditions,  which  will  be  prescribed  by  the  Municipal  Corporation.  New  terms  and  conditions  have  been  prescribed  apparently  bearing  in  mind  the  nature  of  contract, which is only collection of octroi as an agent  and  depositing  the  same  with  the  Corporation.  In  addition, earnest money and the performance of bank  guarantee are insisted upon; collection of octroi has to  be  made  on  day-to-day  basis  and  payment  must  be  made on a weekly  basis entailing,  in case of default,  

10 (2000) 5 SCC 287

31

cancellation  of  the  contract.  We cannot  say  whether  these conditions are better than what were prescribed  earlier  for  in  such  matters  the  authority  calling  for  tenders  is  the  best  judge.  We  do  not  think  that  we  should  intercede  to  restore  status  quo  ante  the  conditions arising in clauses 6(a) and 6(b) of the Tender  Booklet  and  the  bid  offered  much  earlier  by  Konark  Infrastructure (P) Ltd. should be accepted, for it filed a  writ  petition,  which  was  allowed  with  a  direction  for  calling for fresh tenders…………”    

41. In  Union of India and Anr. v.  International Trading  

Co. and Anr.11, this Court held that non-renewal of permit by the  

Government to a private party on ground of change in its policy  

cannot be faulted if  such change is founded on  Wednesbury  

reasonableness  and  is  otherwise  not  arbitrary,  irrational  and  

perverse. It was held :  

“22.  If  the  State  acts  within  the  bounds  of  reasonableness,  it  would  be  legitimate  to  take  into  consideration  the  national  priorities  and  adopt  trade  policies. As noted above, the ultimate test is whether on  the  touchstone of  reasonableness  the  policy  decision  comes out unscathed.

23.  Reasonableness of restriction is to be determined  in  an  objective  manner  and  from  the  standpoint  of  interests  of  the  general  public  and  not  from  the  standpoint of the interests of persons upon whom the  restrictions  have  been  imposed  or  upon  abstract  consideration.  A  restriction  cannot  be  said  to  be  unreasonable  merely  because  in  a  given  case,  it  operates harshly.  In determining whether there is any  unfairness involved;  the nature of  the right  alleged to  have  been  infringed,  the  underlying  purpose  of  the  restriction imposed, the extent and urgency of the evil  

11 (2003) 5 SCC 437

32

sought to be remedied thereby, the disproportion of the  imposition, the prevailing condition at the relevant time,  enter  into  judicial  verdict.  The  reasonableness  of  the  legitimate  expectation  has  to  be  determined  with  respect  to  the  circumstances  relating  to  the  trade  or  business  in  question.  Canalisation  of  a  particular  business  in  favour  of  even  a  specified  individual  is  reasonable  where  the  interests  of  the  country  are  concerned or where the business affects the economy  of the country.”

42. In the case of  Directorate of Education and Ors. v.  

Educomp  Datamatics  Ltd.  and  Ors.12,  this  Court,  inter  alia,  

applied the principles enunciated in Tata Cellular7 and Monarch  

Infrastructure (P) Ltd.10 and held as follows :

“12. It has clearly been held in these decisions that the  terms of the invitation to tender are not open to judicial  scrutiny, the same being in the realm of contract. That  the Government must have a free hand in setting the  terms of the tender. It must have reasonable play in its  joints as a necessary concomitant for an administrative  body  in  an  administrative  sphere.  The  courts  would  interfere with the administrative policy decision only if it  is  arbitrary,  discriminatory,  mala  fide  or  actuated  by  bias. It is entitled to pragmatic adjustments which may  be called for by the particular circumstances. The courts  cannot strike down the terms of the tender prescribed  by  the  Government  because  it  feels  that  some other  terms  in  the  tender  would  have  been  fair,  wiser  or  logical.  The  courts  can  interfere  only  if  the  policy  decision is arbitrary, discriminatory or mala fide.”

43. In  Bannari Amman Sugars Ltd. v.  Commercial Tax  

Officer  & Ors.13,  this  Court  was concerned with  the question  

12 (2004) 4 SCC 19 13 (2005) 1 SCC 625

33

relating to withdrawal of benefits extended to appellant therein  

as subsidy and it was held :

“………We find no substance in the plea that before a  policy decision is taken to amend or alter the promise  indicated  in  any particular  notification,  the  beneficiary  was  to be granted an opportunity  of  hearing.  Such a  plea  is  clearly  unsustainable.  While  taking  policy  decision,  the Government  is  not  required to  hear  the  persons  who  have been granted  the  benefit  which  is  sought to be withdrawn.”

44. In  Global Energy Limited & Anr. v.  Adani Exports  

Ltd.  and  Ors.14,  this  Court  reiterated  the  principles  that  the  

terms of the invitation to tender are not open to judicial scrutiny  

and the courts cannot whittle down the terms of the tender as  

they  are  in  the  realm  of  contract  unless  they  are  wholly  

arbitrary, discriminatory or actuated by malice.

45. In  Master Marine Services (P) Ltd. v.  Metcalfe &  

Hodgkinson (P) Ltd. & Anr.15, the legal position highlighted in  

Tata Cellular7 was reiterated in the following words :

“12. After an exhaustive consideration of a large number  of decisions and standard books on administrative law,  the Court enunciated the principle that the modern trend  points to judicial restraint in administrative action. The  court  does  not  sit  as  a  court  of  appeal  but  merely  reviews the manner in which the decision was made.  The court  does not  have the expertise  to  correct  the  administrative decision. If a review of the administrative  

14 (2005) 4 SCC 435 15 (2005) 6 SCC 138

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decision  is  permitted  it  will  be  substituting  its  own  decision,  without  the necessary expertise,  which itself  may be fallible. The Government must have freedom of  contract.  In  other  words,  fair  play  in  the  joints  is  a  necessary  concomitant  for  an  administrative  body  functioning  in  an  administrative  sphere  or  quasi- administrative sphere. However, the decision must not  only  be  tested  by  the  application  of  Wednesbury  principles of reasonableness but also must be free from  arbitrariness not affected by bias or actuated by mala  fides.  It  was also pointed out that quashing decisions  may  impose  heavy  administrative  burden  on  the  administration  and lead to  increased and unbudgeted  expenditure.”

Our View

46. In  the light  of  the afore-noticed legal  position,  we  

shall now examine whether judicial intervention is called for in  

NIT issued by the State of West Bengal and State of Orissa for  

manufacture  and  supply  of  HSRP.  Insofar  as  State  of  West  

Bengal is concerned, the first NIT was issued in the month of  

July, 2003 fixing August 6, 2003 as the last date for submission  

of  tender  papers.  Pursuant  thereto,  four  bidders participated.  

The  finalization  of  the  tender  process  could  not  take  place  

because of interim order passed by this Court in Association of  

Registration Plates1 and other connected cases. These cases  

were decided by this Court on November 30, 2004. Of the four  

bidders,  who  initially  participated  in  the  tender  process,  one  

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withdrew and as regards  Promuk, an objection was raised by  

Shimnit  about  their  eligibility.  Shimnit  approached   Calcutta  

High Court and obtained an interim order from the Single Judge  

that tender process shall not be finalized. As a matter of fact,  

due to litigation no substantial progress took place for two years  

in finalization of process for which NIT was issued in July, 2003  

and  practically  two  bidders  in  the  entire  tender  process  

remained  in  fray.   In  interregnum,  considerable  number  of  

indigenous manufacturers obtained the requisite TAC from the  

approved  institutions  as  per  the  provisions  of  1988  Act  and  

thereby acquired capacity and ability to manufacture HSRP.  In  

the backdrop of these reasons, the State Government seemed  

to  have  formed  an  opinion  that  by  increasing  competition,  

greater  public  interest  could  be  achieved  and,  accordingly,  

decided to cancel first NIT and issued second NIT doing away  

with  conditions  like  experience  in  foreign  countries  and  

prescribed  minimum  turnover  from  that  business.   Whether  

State Government  could have changed terms of  NIT despite  

the  judgment  of  this  Court  in  Association  of  Registration  

Plates1? Once a particular matter relating to conditions in NIT  

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has  been  finally  decided  by  the  highest  Court,  the  State  

Government,  which was party to the litigation,  ought  to have  

proceeded accordingly but, in a case such as the present one,  

where the circumstances changed in some material respects as  

aforenoticed, departure from the earlier policy cannot be held to  

be legally flawed, particularly when there is no challenge to the  

changed  policy  reflected  in  second  NIT  on  the  ground  of  

Wednesbury  reasonableness  or  principle  of  legitimate  

expectation  or  arbitrariness  or  irrationality.   In  considering  

whether there has been a change of circumstances sufficient to  

justify departure from the previous stance, the Division Bench  

of Calcutta High Court recorded a finding that reasons stated by  

the State Government for departure from the conditions in the  

first  NIT  did  exist  and  accepted  the  contention  of  the  State  

Government that by increasing the area of competition, greater  

public  interest  would  be  sub-served  because  of  financial  

implications.  We  have  no  justifiable  reason  to  take  a  view  

different  from the High Court  insofar as correctness of  these  

reasons  is  concerned.  The courts  have  repeatedly  held  that  

government  policy  can  be  changed  with  changing  

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circumstances and only on the ground of change, such policy  

will not be vitiated. The government has a discretion to adopt a  

different policy or alter or change its policy calculated to serve  

public  interest  and  make  it  more  effective.  Choice  in  the  

balancing of the pros and cons relevant to the change in policy  

lies with the authority.  But like any discretion exercisable by the  

government  or  public  authority,  change  in  policy  must  be  in  

conformity  with  Wednesbury  reasonableness  and  free  from  

arbitrariness, irrationality, bias and malice.  

47. In  Association  of  Registration  Plates1,  this  Court  

while dealing with the challenge to the conditions with regard to  

experience  in  foreign  countries  and  prescribed  minimum  

turnover  from  that  business  observed  that  these  conditions  

have been framed in the NIT to ensure that the manufacturer  

selected would be technically and financially competent to fulfill  

the  contractual  obligations  and  to  eliminate  fly-by-night  

operators and that the insistence of the State to search for an  

experienced  manufacturer  with  sound  financial  and  technical  

capacity cannot be misunderstood. While maintaining the State  

Government’s right to get the right and most competent person,  

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it  was  held  that  in  the  matter  of  formulating  conditions  of  a  

tender  document  and  awarding  a  contract  of  the  nature  of  

ensuring  supply  of  HSRP,  greater  latitude  is  required  to  be  

conceded  to  the  State  authorities  and  unless  the  action  of  

tendering authority  is found to be malicious and a misuse of  

statutory  powers,  tender  conditions  are  unassailable.  On the  

contentions  advanced,  this  Court  examined  the  impugned  

conditions and did not find any fault and overruled all objections  

raised  by  the  petitioners  therein  in  challenge  to  these  

conditions.  This  Court  has  neither  laid  down as an absolute  

proposition that manufacturer of HSRP must have the foreign  

experience  and  a  particular  financial  capacity  to  fulfill  the  

contractual  obligations  nor  it  has  been  held  that  these  

conditions must necessarily be insisted upon in the NIT. The  

judgment  of  this  Court  in  Association  of  Registration  Plates1   

cannot  be  read  as  prescribing  the  conditions  in  NIT  for  

manufacture and supply of HSRP. Rather this Court examined  

legality and justification of the impugned conditions within the  

permissible  parameters  of  judicial  review and recognized the  

right  of  the  States  in  formulating  tender  conditions.  In  our  

39

opinion, there is no justification in denying the State authorities  

latitude for departure from the conditions of the NIT that came  

up for consideration before this Court in larger public interest to  

broaden the base of competitive bidding due to lapse of time  

and substantial increase in the number of persons having TAC  

from  the  approved  institutes  without  compromising  on  the  

quality and specifications of HSRP as set out in Rule 50, Order  

2001 and Amendment Order, 2001.  

48. Mr.  F.S.  Nariman,  learned  senior  counsel  heavily  

relied upon a decision of  this  Court  in  S.  Nagaraj  & Ors. v.  

State of Karnataka & Anr.16  and submitted that the decision of  

this Court in Association of Registration Plates1  was binding on  

all  States  and  the  said  judgment  has  to  be  enforced  and  

obeyed strictly and any deviation from those conditions by the  

States on their own is impermissible.

49.              In  S. Nagaraj & Ors.16,  this Court observed as  

follows :

“Was it so? Could the Government take up this stand?  Law on the binding effect of an order passed by a court  of law is well settled. Nor there can be any conflict of  opinion  that  if  an  order  had been passed by a  court  which  had  jurisdiction  to  pass  it  then  the  error  or  

16 1993 Suppl. (4) SCC 595

40

mistake in the order can be got corrected by a higher  court or by an application for clarification, modification  or recall of the order and not by ignoring the order by  any  authority  actively  or  passively  or  disobeying  it  expressly  or  impliedly.  Even  if  the  order  has  been  improperly obtained the authorities cannot assume on  themselves the role of  substituting it  or  clarifying and  modifying it as they consider proper. In Halsbury’s Laws  of England (Fourth Edn., Vol. 9, p. 35, para 55) the law  on orders improperly obtained is stated thus:

“The  opinion  has  been expressed  that  the  fact  that an order ought not to have been made is not  a  sufficient  excuse  for  disobeying  it,  that  disobedience  to  it  constitutes  a  contempt,  and  that the party aggrieved should apply to the court  for relief from compliance with the order.”

Any order passed by a court  of  law, more so by the  higher courts and especially this Court whose decisions  are declarations of law are not only entitled to respect  but  are binding and have to be enforced and obeyed  strictly. No court much less an authority howsoever high  can ignore it. Any doubt or ambiguity can be removed  by  the  court  which  passed  the  order  and  not  by  an  authority according to its own understanding.”

50. The statement  of  law exposited in S.  Nagaraj16 is  

beyond question. As noticed above, in the case of Association  

of Registration Plates1, this Court did not find any fault with the  

controversial conditions in the NIT and overruled all objections  

raised by the petitioners therein in challenge to those conditions.  

The impugned conditions of NIT in that group of cases were not  

held to be arbitrary, discriminatory or irrational nor amounted to  

creation of any monopoly as alleged. The declaration of law by  

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this Court in Association of Registration Plates1 is  that in the  

matter of formulating conditions for a contract of the nature of  

ensuring  supply  of  HSRP,  greater  latitude  needs  to  be  

accorded to the State authorities.  We find it difficult to hold that  

by virtue of that judgment the impugned conditions were frozen  

for all times to come and the States were obliged to persist with  

these conditions and could not alter them in larger interest of  

the public. In our view, the decision of this Court in Association  

of Registration Plates1 did not create any impediment for the  

States  to  alter  or  modify  the  conditions  in  the  NIT  if  the  

circumstances changed in material respects by lapse of time.

51. In  the  PIL  filed by Maninderjit  Singh Bitta,  it  was  

prayed that the States and UTs be directed to implement the  

judgment of this Court in  Association of Registration Plates1  .  

This  Court  disposed  of  the  writ  petition  on  May 8,  2008  by  

observing, ‘we feel it would be in the interest of all concerned if  

the  States  and Union Territories  take definite  decision  as to  

whether there is need for giving effect to the amended Rule 50  

and the scheme of HSRP and the modalities to be followed’. It  

was further observed that while taking the decision, the aspects  

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highlighted by this Court in  Association of Registration Plates1  

shall  be kept in view. After disposal of the PIL, the petitioner  

therein filed I.A. No. 5 for clarification of the order dated May 8,  

2008 and this Court while disposing of the said I.A. on May 5,  

2009  clarified  that  there  was  no  discretion  given  to  the  

States/UTs not to give effect to the amended Rule 50 and the  

claim of HSRP and the modalities to be followed. Thereafter,  

I.A.  was filed  by the  Central  Government  on September  17,  

2009  before  this  Court  for  extension  of  time  wherein  the  

following statement was made:

“The  primary  reason  for  non  implementation  of  the  scheme has been the challenges to certain conditions of  the tender floated by various States. The issues such as  experience in foreign countries, minimum net worth and  turnover  with  a  certain  prescribed  percentage  of  turn  over  from  number  plate  business  in  the  immediately  preceding last three years and long term contract to a  single vendor for the entire State had been the subject  matter  of  WP(C)  No.  41  of  2003—Association  of  Registration  Plates  Vs.  UOI  & Ors.  That  this  Hon’ble  Court in the judgment dated 30th November, 2004, laid  to rest all such issues by holding that all such conditions  were essential and mandatory conditions of the HSRP  tender to ensure that the vendors selected by the States  would be technically and financially competent to fulfill  the  contractual  obligations  which  looking  to  the  magnitude  of  the  job  requires  huge  investment  qualitatively and quantitatively.”   

By order dated December 15,  2009,  this Court  extended the  

time for implementation of HSRP upto May 31, 2010. None of  

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these orders holds that while implementing the new system of  

HSRP, States and UTs are bound to incorporate the conditions  

of foreign experience and minimum turnover from that business.  

The  statement  made  by  the  Central  Government  in  its  

application as aforenoticed only reflected the reason for non-

implementation  of  HSRP scheme.   As  a  matter  of  fact,  the  

Central  Government  has  clarified  the  position  in  its  

communication with the States/UTs that draft tender conditions  

circulated by them are only suggestive.  Be that as it may.  The  

decision  of  this  Court  in  Maninderjit  Singh  Bitta  and  the  

subsequently clarificatory order therein are hardly relevant and  

do not help the case of the appellants.

52. It is important to notice that the bids pursuant to the  

second NIT have been evaluated by WBTIDCL and we have  

been informed that the lowest bid per HSRP unit for a vehicle is  

Rs. 469/- while the offer made by Shimnit (appellant) is of about  

Rs. 1200/-. Such a huge difference in the rate per HSRP unit  

shows that the action of the State Government in doing away  

with  the  conditions  of  experience  in  foreign  countries  and  

prescribed  turnover  from  such  business  has  been  in  larger  

44

public  interest  without  compromising  on  safety,  security  and  

quality or sustainable capacity.

53. Mr.  F.S.  Nariman,  learned  senior  counsel  

contended that cancellation of first NIT and issuance of second  

NIT  by  the  Government  of  West  Bengal  was  actuated  with  

malafides  as  Shimnit  had  challenged  the  pre-qualification  of  

Promuk by filing a writ petition before the Calcutta High Court  

wherein an interim order also came to be passed. We are not  

impressed  by  this  submission  at  all  and  it  is  noted  to  be  

rejected. There is no material much less substantial material to  

infer  any  malafides.  Merely  because  Shimnit  challenged  the  

pre-qualification of Promuk before Calcutta High Court, it could  

hardly lead to an inference of malafides.  

54. It is true that the State or its tendering authority is  

bound to give effect to essential conditions of eligibility stated in  

a tender document and is not entitled to waive such conditions  

but  that  does  not  take  away  its  administrative  discretion  to  

cancel the entire tender process in public interest provided such  

action is not actuated with ulterior motive or is otherwise not  

vitiated by any vice of arbitrariness or irrationality or in violation  

45

of some statutory provisions. It is always open to the State to  

give effect to new policy which it wished to pursue keeping in  

view  ‘overriding  public  interest’  and  subject  to  principles  of  

Wednesbury reasonableness.  The judgment of Guwahati High  

Court in Real Mazon India Ltd. v.  State of Assam  and Ors.17  

was also pressed into service by the appellants.   In that case,  

the corrigenda dated December 26, 2006, January 6, 2007 and  

January 16, 2007 issued by the State of Assam deleting the  

conditions of experience, expertise and exposure of the bidders  

in  the  manufacture  and  supply  of  HSRP  were  challenged.  

Guwahati High Court quashed the impugned corrigenda.  We  

are unable to approve the judgment of the Guwahati High Court  

in Real Mazon India Ltd.17 for the reasons  given above.                        

55. As  regards  the  State  of  Orissa,  it  is  an  admitted  

position that it  issued NIT for the first time on April  11, 2007  

inviting bids for the manufacture and supply of HSRP in respect  

of the existing motor vehicles and vehicles to be registered in  

the  State  of  Orissa.  The  said  NIT  was  not  taken  to  logical  

conclusion and a fresh NIT was issued on July 6, 2009 on BOO  

17 2008 (1) GLT 1020

46

basis.   In  that  NIT,  inter  alia,  eligibility  criteria  has  been  

provided that bidder should have experience of working  in the  

field of HSRP having used the security features as mentioned  

in  Rule  50 of  1989 Rules.  However,  NIT  does  not  insist  on  

conditions like experience in the foreign countries and minimum  

prescribed turnover from the said business.  In what we have  

already  discussed  above,  no  case  for  judicial  review  or  

intervention in the said NIT is made out.   

56. For the foregoing reasons,  both appeals must  fail  

and are dismissed with no order as to cost.  

………….……………..J            (R. V. Raveendran)

…..…….……………..J                  (R. M. Lodha)

…..…….……………..J                (C.K. Prasad)

New Delhi May 12, 2010.   

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