# ASSOCIATION OF REGISTRATION PLATES v. UNION OF INDIA AND ORS

- **Citation:** [2004] Supp. 2 S.C.R. 783
- **Court:** Supreme Court of India
- **Decided:** 2004-05-26
- **Bench:** Rajendra Babu, G.P. Mathur
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/association-of-registration-plates-v-union-of-india-and-ors-20109
- **Pages:** 28

## Headnote

B
Motor Vehicles (New High Security Vehicle Registration Plates)
Order, 2001--Clause 4(x)-Selection of single manufacturer for High
Security Vehicle Registration Plates (HSVRP) for motor vehicles for whole
of State under, and procedure adopted by various State Governments in C
inviting bids for the purpose-Validity of-Held: Per Mathur, J.: Clause
4(x) is liable to be quashed as selection of single manufacturer creates
monopoly in his favour-Eligibility conditions mentioned by various State
Government also quashed-Furthermore, Central Government cannot
issue Order of 2001 in exercise of power under section 109(3), as such D
ultra vires-Per Rajendra Babu, J.: No monopoly is sought to be created
and hence, clause 4(x) not liable to be quashed-In view of difference of
opinion, matter referred to larger Bench-Motor Vehicles Act, 1988Section I 09(3).
E
The question which arose for consideration in these matters is
with regard to the validity of clause 4(x) of the Motor Vehicles (New
High Security Registration Plates) Order, 2001 issued by the Central
Government in exercise of power under section 109(3) of the Motor
Vehicles Act, 1988 that the State Government is to select a single
manufacturer for supply of High Security Vehicle Registration Plates F
(HSVRP) for motor vehicles for the whole of the State, and the
eligibility conditions imposed in the notice inviting tenders (NITs)
issued by various State Governments regarding turnover of Rs. 50
crores or so with 15 to 25 per cent thereof in the business of
manufacture of registration plates in the immediately preceding year, G
and experience of manufacturing registration plates in 3/5 countries,
for appointment of manufacturer for supply of HSVRP.
Petitioners contended that clause 4(x) of the Order and the notices
inviting tenders by the variious State Governments for selection of one H
783
784
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A manufacturer for whole of the State violates the fundamental right of
the writ petitioner guaranteed under Article 19(1 )(g) of the Constitution
as a monopoly is being created in favour of a single private operator;
that the licence plate manufacturers having the requisite approval
from the bodies mentioned in,second para to clause (v) of sub-rule (l)
B of Rule 50 of the Central Motor Vehicles Rules, 1989 are entitled to
supply HSRVP; that the eligibility conditions mentioned in the NITs
that there should be a turnover of Rs. 50 crores or so with 15 to 25
per cent thereof in the business of manufacture of registration plates
in the immediately preceding year and experience of manufacturing
C registration plates in 3/5 countries are wholly arbitrary, irrelevant and
discriminatory against the Indian manufacturers of HSVRP; and that
clause 4(x) of the Order made in exercise of power conferred by section
I 09(3) is ultra vires.
Respondents inter alia contended that clause 4(x) of the order
D issued by State Government and also the procedure adopted by the
State Government cannot be faulted with; that Article 19(6) of the
Constitution does not prohibit giving of a contract to single individual
and selection of a person does not create a monopoly; that Rule 40(1 )(v)
lays down only the eligibility criteria for a manufacturer or dealer of
E HSVRP and it is not possible to read it in a literal manner; and that
the conditions set out in the Order of 2001 are in addition to the
requirements of Rules 50 and it lays down how the new policy will be
implemented.
F
Referring the matter to a larger Bench, the Court
HELD : Per Mathur J.
1.1.
Under Article 19(6)(ii) of the Constitution of India, the
Sti!te is free to create a monopoly in favour of itself with regard to
G carrying of any trade, business, industry or service but the entire
benefit. arising therefrom is to enure to the State and the monopoly
itself is not used as clock for conferring private benefit upon a limited
class of persons. The action of the government if conceived and
executed in the interest

## Text

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ASSOCIATION OF REGISTRATION PLATES
A
v.
UNION OF INDIA AND ORS.
MAY 26, 2004
[RAJENDRA BABU, CJ. AND G.P. MATHUR, J.]
B
Motor Vehicles (New High Security Vehicle Registration Plates)
Order, 2001--Clause 4(x)-Selection of single manufacturer for High
Security Vehicle Registration Plates (HSVRP) for motor vehicles for whole
of State under, and procedure adopted by various State Governments in C
inviting bids for the purpose-Validity of-Held: Per Mathur, J.: Clause
4(x) is liable to be quashed as selection of single manufacturer creates
monopoly in his favour-Eligibility conditions mentioned by various State
Government also quashed-Furthermore, Central Government cannot
issue Order of 2001 in exercise of power under section 109(3), as such D
ultra vires-Per Rajendra Babu, J.: No monopoly is sought to be created
and hence, clause 4(x) not liable to be quashed-In view of difference of
opinion, matter referred to larger Bench-Motor Vehicles Act, 1988Section I 09(3).
E
The question which arose for consideration in these matters is
with regard to the validity of clause 4(x) of the Motor Vehicles (New
High Security Registration Plates) Order, 2001 issued by the Central
Government in exercise of power under section 109(3) of the Motor
Vehicles Act, 1988 that the State Government is to select a single
manufacturer for supply of High Security Vehicle Registration Plates F
(HSVRP) for motor vehicles for the whole of the State, and the
eligibility conditions imposed in the notice inviting tenders (NITs)
issued by various State Governments regarding turnover of Rs. 50
crores or so with 15 to 25 per cent thereof in the business of
manufacture of registration plates in the immediately preceding year, G
and experience of manufacturing registration plates in 3/5 countries,
for appointment of manufacturer for supply of HSVRP.
Petitioners contended that clause 4(x) of the Order and the notices
inviting tenders by the variious State Governments for selection of one H
783
784
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A manufacturer for whole of the State violates the fundamental right of
the writ petitioner guaranteed under Article 19(1 )(g) of the Constitution
as a monopoly is being created in favour of a single private operator;
that the licence plate manufacturers having the requisite approval
from the bodies mentioned in,second para to clause (v) of sub-rule (l)
B of Rule 50 of the Central Motor Vehicles Rules, 1989 are entitled to
supply HSRVP; that the eligibility conditions mentioned in the NITs
that there should be a turnover of Rs. 50 crores or so with 15 to 25
per cent thereof in the business of manufacture of registration plates
in the immediately preceding year and experience of manufacturing
C registration plates in 3/5 countries are wholly arbitrary, irrelevant and
discriminatory against the Indian manufacturers of HSVRP; and that
clause 4(x) of the Order made in exercise of power conferred by section
I 09(3) is ultra vires.
Respondents inter alia contended that clause 4(x) of the order
D issued by State Government and also the procedure adopted by the
State Government cannot be faulted with; that Article 19(6) of the
Constitution does not prohibit giving of a contract to single individual
and selection of a person does not create a monopoly; that Rule 40(1 )(v)
lays down only the eligibility criteria for a manufacturer or dealer of
E HSVRP and it is not possible to read it in a literal manner; and that
the conditions set out in the Order of 2001 are in addition to the
requirements of Rules 50 and it lays down how the new policy will be
implemented.
F
Referring the matter to a larger Bench, the Court
HELD : Per Mathur J.
1.1.
Under Article 19(6)(ii) of the Constitution of India, the
Sti!te is free to create a monopoly in favour of itself with regard to
G carrying of any trade, business, industry or service but the entire
benefit. arising therefrom is to enure to the State and the monopoly
itself is not used as clock for conferring private benefit upon a limited
class of persons. The action of the government if conceived and
executed in the interest of the general public is not open to judicial
H scrutiny but it is not open to the government thereby to create a
ASSON. OF REGISTRATION PLATES. v. U.0.1.
785
monopoly in favour of third parties from their own monopoly.
A
[801-C; 802-B-D)
Rashf!ed Ahmed v. Municipal Board Kairana, AIR (1950) SC 163;
Akadash Padhan v. State of Orissa, AIR (1963) SC 1047; Rashbihari
Panda v. State of Orissa, [1969) 1 sec 414 and State of Rajasthan v. B
Mohan Lal Vyas, [1971) 3 SCC 705, referred to.
1.2. In the instant case, the registration authority of the State
Government has not undertaken to supply the licence plates. It is neither
granting largesse nor selling its property or buying property where it C
can do so in favour of a single individual by inviting tenders. A single
licence plates manufacturer is entrusted with the job of supplying High
Security Vehicle Registration Plates (HSVRP) to all the existing owners
ofvehicles and new buyers for a period of 15 years. Such HSVRP have
to be bought by all those who own a vehicle. By selection of a single
manufacturer a monopoly is sought to be created in his favour and all D
the owners of vehicles would be compelled to purchase HSVRP from
that single manufacturer or his dealers. This action of the State
Government whereby all other licence plates manufacturers, who are
satisfying the statutory requirement, namely, of second para of clause
(v) of sub-rule (1) of Rule 50 of the Central Motor Vehicles Rules, 1989 E
(have got Type Approval Certificate from the Central Road Research
Institute or authorized agency) are totally excluded clearly violates the
fundamental right of the writ petitioner as guaranteed under Article
19(1)(g) of the Constitution. Therefore, clause 4(x) of the Motor Vehicles
(New High Security Vehicle Registration Plates) Order, 2001 issued by F
the Central Government and also the procedure adopted by the State
Governments in selecting a single manufacturer for supply of HSVRP
violates the fundamental rights of the writ petitioner guaranteed under
Article 19(1)(g) of the Constitution and are invalid and as such liable to
be quashed. [799-F-H; 800-A-C; 803-8-C)
G
1.3. Proviso appended to clause (v) of the Order requires that
permanent consecutive identification number shall be preceded by two
alphabets representing the name of vendor or manufacturer or the
supplier. This itself contemplates existence of several manufacturer or
supplier othenvise there was no necessity of mentioning their name and H
786
SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A that several manufacturers can simultaneously operate. (806-F-Gl
2.1. There is a specific provision regarding eligibility of
manufactures of licence plates. Licence plate manufacturers having the
requisite approval from the Central Road Research Institute or from
B any of the authorized agencies as mentioned in second para to clause
(v) of sub-rule (1) of Rule 50 of the Central Motor Vehicle Rules, 1989
are entitled to supply HSVRP. Having regard to the same, the further
eligibility conditions mentioned in the Notice Inviting Tender regarding
turnover of Rs. 50 crores or so with 15 to 25 per cent thereof in the
C business of manufacture of registration plates in the immediately
preceding year, and experience of manufacturing registration plates in
3/5 countries are wholly arbitrary and have no rationale basis and are
quashed. [805-A-B; 807-G-Hl
D
E
2.2 The names of the countries namely Armenia, Columbia, Congo,
Curacao, Ethiopia, Georgia, Iraq, Mali, Maatta, Oman, Palestine,
Srilanka, Tanzania, Uganda, Uruguay, Zambia, having holographic
number plates demonstrates the sheer futility of having a condition in
the tender document regarding experience in 3 to 5 countries. Some
of these countries .ire tiny States and most of them are backward and
poor as compared to India. The number of vehicles therein must be
very small. The experience of supplying HSVRP in these countries is
hardly a guarantee of the quality of the products supplied. When India
is capable of making most sophisticated missiles and rockets and
passenger cars manufactured in India are being exported to highly
F advance countries of Western Europe like U.K. and Germany and
commercial vehicles to many countries all over the world facing stiff
competition, it does not at all appeal to reason that to ensure quality
of the product, experience in three to five other countries should be
necessary. Similarly the condition in the NITs regarding a particular
G quantum of turnover in number plates business in immediately preceding
year cannot be met by any Indian company which is exclusively dealing
with HSVRP as the said product (number plates) is being introduced
in the country for the first time. It can be met only by those whose joint
venture partner is a foreign company and is already dealing with such
H type of licence plates. The condition again has the affect of completely
AS SON. OF REGISTRATION PLATES. v. U.0.1.
787
ousting Indian companies. (805-G-H; 806-A-D)
A
2.3. The letter dated 13th March, 2002 and 14th June, 2002 sent
by the Governnient oflndia, Ministry of Road Transport and Highways
were merely suggestive in nature and they do not stipulate details
about experience capacity of bidder/collaborators. It was also mentioned B
therein that experience in 5 countries is not a mandatory requirement.
This letter has been completely ignored while laying down the eligibility
criteria. (806-D-E)
Tata Cellular v. Union of India, AIR (1996) SC 11 and Union of
India v. Dinesh Engineering Corporation, [2001) 8 SCC 491, referred to. C
Administrative Law by David Foulkes Butterworths 1990 Ed., relied
on.
2. The Central Government cannot issue Order of2001, being an D
order concerning a number plate simplicitor, in exercise of power
conferred by sub-section (3) of Section 109 of the Motor Vehicles Act,
1988. The Central Government exercises power under sub-section (3)
ofsection 109 for prescribing the standard of the materials or articles
or any process used as such in the manufacturing of the vehicle. E
Reading of sub-section (3) along with sub-sections (1) and (2) will show
that it basically deals with the passengers travelling therein and also
of others who are on the road. Issuing a certificate of registration and
assigning it a registration mark arises only after sale of a motor vehicle.
Therefore, until the motor vehicle has been sold to a person by a dealer, F
the registering authority would not come into picture and there is no
occasion for assigning it a registration mark. A manufacturer of
vehicle is not at all concerned with registration thereof by the registering
authority or assignment of a registration mark as contelllplated by
section 41 of the 1988 Act. Furthermore, the power to issue such kind
of notification cannot be traced to sections 4(6) and 64(b) and (d) of G
the 1988 Act. (809-B-E)
Per Rajendra Babu, CJ! (Dissenting) :
1. The object of the Clause 4(x) of the Motor Vehicles (New High H
788
SUPREME COURT REPORTS [?.004) SUPP. 2 S.C.R.
A Security Vehicle Registration Plates) Order, 2001 issued by the Central
Government on 22nd August, 2001 is not to create a monopoly in favour
of any person and hence, is not liable to be quashed. (810-D-E)
CIVIL ORIGINAL JURISDICTION : Writ Petition (C) No. 41 of
B 2003.
c
D
Under Article 32 of the Constitution of India.
WITH
WP (C) Nos. 77, 24, 56 of2003, TC(C) Nos. 30-31, 32, 38, 39-40,
41, 42 of2003, TC(C) No. 62/2003@ from TP (C) No. 973 of2002 and
letter dated 19.7.2003 in TP(C) No. 974 of2002 and WP(C) No. 395 of
2003.
Mukul Rohtagi, Additional Solicitor General, S. Ganesh, H.N. Salve,
Kapil Sibal, R.F. Nariman, Rajeev Dhawan, Ashok H. Desai, R. Mohan,
Dipankar P. Gupta and M.L. Verma, A.S. Rawat, Additional Advocate
General, S. Uppal, Ms. Indu Malhotra, Vikram Mehta, Abhishek Agarwal,
Ms. V. Deepa, Ms. Ruchi Khurana, S. Wasim, A. Qadri, Ms. Niranjana
E Singh, Mrs. Anil Katiyar, A. Agarwalla, K.V. Vijayakumar, Ms. Minakshi,
Joseph Pookkatt, Prashant Kumar, Saket Singh, Goodwill Indeevar,
Vishwajit Singh, Rana Mukherjee, Siddarth Gautam, Ms. Ruby Singh
Ahuja, Ms. Rachna Gupta, Avijit Bhattacharjee, Jatinder Kumar Bhatia,
R.S. Suri, Ranjan Mukherjee, Manish Singhvi, Ashok K. Mahajan, Nalin
F Tripati, Mrs. Sarla Chandra, D.S. Bhattachyarya, Praveen Swarup, Vijay
Kumar Banthia, W.A. Nomani, B.B. Singh, Anil Suhrawardy, A.S. Rawat,
D.S. Mahra, Rakesh K. Sharma, V.G. Pragasam, P.N. Ramalingam, V.
Balaji, Bijan Kumar Ghosh, Ramesh Babu M.R. and Rameshwar Prasad
Goyal for the appearing parties.
G
The Judgment of the Court was delivered by
G.P. MATHUR, J. : 1. The challenge in these Writ Petitions and
Transfer Cases is to certain clauses in the Motor Vehicles (New High
Security Vehicle Registration Plates) Order, 2001 issued by the Central
H Government and also to some conditions imposed in the Notice Inviting
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 789
Tenders issued ~y various State Governments for supply of High Security A
Registration Plates. Writ Petition No. 41 of2003 shall be treated as leading
case.
2. It will be convenient to give the background under which the State
Governments issued the Notice Inviting Tenders (for short N!Ts) for B
supply of High Security Vehicle Registration Plates (for short HSVRP).
Section 2(28) of the Motor Vehicles Act, 1988 (for short 'the Act') defines
"motor vehicle" or "vehicle". Section 2(32) defines "prescribed" and it
means prescribed by rules made under the Act. Section 39 of the Act lays
down that no person shall drive any motor vehicle and no owner of a motor
vehicle shall cause or permit the vehicle to be driven in any public place C
or in any other place unless the vehicle is registered in accordance with
Chapter IV and the vehicle carries a registration mark displayed in the
prescribed manner. Section 41 of the Act deals with registration of the
vehicle and it lays down that on an application made by or on behalf of
the owner of a motor vehicle for registration in the prescribed form and D
accompanied by prescribed fee, the registering authority shall issue to the
owner of a motor vehicle registered by it a certificate of registration in such
form and containing such particulars and information and in such manner
as may be prescribed by the Central Government. Sub-section (6) of this
Section provides that the registering authority shall assign to the vehicle E
for display thereon, a distinguishing mark referred to as the registration
mark consisting of one of the groups of such of those letters and followed
by such letters and figures as are allotted to the State by the Central
Government from time to time by notification in the Official Gazette, and
displayed and shown on the motor vehicle in such form and in such manner F
as may be prescribed by the Central Government. In exercise of power
conferred by Section 64 of the Act and after previous publication as
required by Section 212, the Central Government made the Central Motor
Vehicles Rules. 1989 (for short 'the Rules'). Rule 50 of the Rules deals
with form and manner of display of registration marks on the motor
vehicles. Sub-rule(!) of this Rule deals with motor vehicles and sub-rule G
(2) deals with motor cycles. Sub-rule (I) of Rule 50 in so far as it is relevant
for the controversy in hand is being reproduced below;
Section 50. Form and manner of display of registration marks on
the motor vehicles -
(I) On or after commencement of this rule, H
790
A
B
c
D
E
F
G
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
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 comers of the plate shall be rounded to avoid injuries to the
extent of approx. I Omm and the plates must have an embossed
border. The plate shall be suitable for hot stamping and reflective
sheet has to be guaranteed for imperishable nature for minimum
five years. The fast colouring of legend and border to be done by
hot stamping;
(ii) the plate should bear the letter "IND" in blue colour on the
extreme left centre of the plate. The letter should be one-fourth
of the size ofletters mentioned in rule 51 and should be buried into
the foil or applied by hot stamping and should be integral part of
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 the reflective sheeting and hot
stamping firm shall bear a verification inscription;
(iv) apart from the registration marks on the front and rear, the
third registration mark in the form of self destructive type,
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 of his dealer;
(v) the plate shall be fastened with non-removable non-reusable
snap lock fitting system on rear of the vehicle at the premises of
H
the registering authority;
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.) 791
The license plates with all the above specifications and the A
specified registrations for a vehicle shall be issued by the registering
authority or approved license plates manufacturers or their dealers.
The Central Road Research Institute, New Delhi or any of the
agency authorised by the Central Government shall approve the
license plates manufacturers to the above specifications.
B
(vi) ........... (omitted as not relevant)
3. In Exercise of the power under sub-section (3) of Section 109 of
the Act the Central Government issued an order known as Motor Vehicles C
(New High Security Registration Plates) Order, 2001 on 22nd August,
2001 in order to notify certain standards in respect of new system of high
security registration plates for motor vehicles and the process used by a
manufacturer or vendor for manufacturing or supplying such plates with
reference to the amendments made in the Central Motor Vehicle Rules, D
1989 by the Central Motor Vehicles (!st Amendment) Rules, 2001. Clauses
2, 3 and 4 of this Order are being reproduced below :
2It shall come into force on the 28th day of September, 200 I
in case of new registered vehicles from that date. In case of E
already registered vehicles, two years from the date of publication
of this Order in the official gazette.
3Application -
This Order shall apply to motor vehicles as
defined in clause 28 of Section 2 of the Motor Vehicles Act, 1988 F
( 59 of 1988).
4A manufacturer or supplier of new High Security Registration
Plates shall comply with the following specification, namely :
(i) The manufacturer or supplier· shall have a
certificate from the Central Road Research Institute,
New Delhi or any one of the testing agencies authorised
by the Central Government under Rule 126 of the
G
Central Motor Vehi~les Rules, 1989.
H
792
A
B
c
D
E
F
G
H
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
(ii) The registration plate shall conform to the
specifications spelt out in Rule 50 of the Central Motor
Vehicles Rules, 1989 and shall conform to DIN 1745/
DIN 1783 or ISO 7591, as updated from time to time.
The Registration
Plate has to be guaranteed for
imperishable nature for a minimum of five years.
(iii) ........................................ ( omitted as not
relevant)
(iv) To protect against counterfeiting, a chromiumbased hologram of the size of 20 mm x 20 mm is to
be applied by hot stamping on the top left hand comer
of the plate in both front and rear plates. The hologram
shall contain Ashoka emblem with "Bharat Sarkar" and
"Government of India" on each side, on left and right
side respectively on Ashoka emblem vertically, as
specified in the sketch, as given in the Annexure
annexed to this Order.
(v)
(vi)
(vii)
(viii) The registration plates fitted in the rear of
the vehicle shall be fastened with non-removable/nonreusable 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.
--
ASSON. OF REGISTRATION PLATES. v. U.0.l. [G.P. MATHUR, J.) 793
(xi) The registration plate will be supplied to the A
motor vehicle owners by the vendor against the
authorization by the Road Transport Officer or any
officer designated for the purpose by the State Transport
Department.
(xii) The replacement for any existing registration
plate may be made by the concerned transport authority
only after ensuing that the old plate has been surrendered
and destroyed.'
B
(xiii) A proper record of the registration plates C
issued by the manufacturer or the vendor, authorised
by the State Government should be maintained on a
daily basis and got tallied periodically with the records
of the Transport Office.
(xiv) Periodic audit shall be carried out by
concerned testing agencies to ensure compliance of the
requirements of the High Security Registration Plates.
D
4. The aforesaid Order was amended by a notification d«ted 16th
October, 2001 issued by the Central Government in exercise of power E
under Section I 09(3)of the Act and the Order so issued is called Motor
Vehicles (New High Security Registration Plates) (Amendment) Order,
200 I. By this Order certain provisions of the earlier order were amended
and in sub-clause (v) the following proviso was inserted :
"Provided that the permanent consecutive identification number
in Arabic number shall be preceded by two alphabets representing
the name of the vendor or the manufacturer or the supplier, as the
case may be, for whom the type approval certificate is issued by
the test agencies."
F
G
The Union Territory Administration of Daman & Diu issued a notice
inviting bids for appointment of the manufacturer for supply of High
Security Registration Plates for all types of veh:cles and in order to
implement Rule 50 of the Rules as amended up to date and the Orders
issued by the Central Government in this regard. The opening part of the H
794
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A Notice Inviting Tenders (NITs) and para 1.5.3, 1.5.5 and 1.5.6 are being
reproduced below :
B
c
"The appointment of the manufacturer shall be for the whole
Union Territory.
The Director of Transport, Daman & Diu invites bids on
behalf of the President of India for selection of an eligible
manufacturer having type approvai and requisite manufacturing
capacity to produce the High Security Registration Plates in
conformity with the specifications mentioned in the above
mentioned amendments.
1.5. ELIGIBLE BIDDERS
This invitation for bid is open to all the bidders who fulfill all the
D
following Criteria on cumulative basis.
E
F
G
H
1.5.3 The bidder or the Promoter or any of the members of Joint
Venture should have sufficient experience in the field of
Registration Plates and should be working in at least three
countries for Registration Plates having Security Features
worldwide or in minimum three such projects (necessary credentials
•from the Government of such country should be attached along
with a proforma as per Annexure XI duly filled ir).
1.5.5 The Bidder or the Joint Venture partners together must have
a minimum net worth equivalent to Indian Rupees 40 crores (Bank
Solvency Certificate to be produced).
1.5.6 The Bidders or the joint venture partners together must have
a minimum annual turnover equivalent to Indian Rupees 50
Crores in the immediately preceding last year and at least 15%
of this turnover must be from the Registration Plate business.
Certificate confirming above and certification of minimum 15%
turnover being from registration plate business will have to be
provided duly attested by a Chartered Accountant/any Bank to be
attached in support of fulfillment of this condition."
ASSON. OF REGISTRATION PLATES. v. U.0.1. (G.P. MATHUR, J.] 795
5. In Writ Petition (C) No. 395 of 2003 (Mis Signs India v. Union A
of India & Ors.,) NITs issued by State of Pondicherry and State of West
Bengal have been challenged which contain more or less similar clauses.
The eligibility criteria of clause J .5.3 of NIT issued by State of Pondicherry
requires that the bidder or the promoter or any of the members of Joint
Venture should have sufficient experience in the field of Registration Plates B
and should be working in minimum of five countries with Registration
Plates having security features. Clause 1.5.6 requires that the bidder or the
joint venture partners together must have a minimum annual turn over
equivalent to Indian Rupees 75 crores in the immediately preceding last
year and at last 15% of this turnover must be from the Registration Plates
business. Similarly clause 1.5.5 ofNIT issued by the State of West Bengal C
requires the bidder or the joint venture partners together must have a
minimum net worth equivalent to Indian Rupees 50 crores and clause 1.5.6
requires the bidders or the joint venture partners together must have a
minimum annual turnover equivalent to Indian Rs. 50 crores during
preceding financial year i.e. 2002-2003 and 25% of this amount should D
have come from High Security Registration Plate business.
6. In compliance with the Motor Vehicles (New High Security
Registration Plates) Orders, 200 I the NITs further required that the bidders
must have obtained "Type Approval Certificate" from the test agencies E
CRRI, ARAI or VIDE for the High Security Registration Plates as per the
Gazette notification and the certificate must be valid on the date ofopening
of bid.
7. The writ petitioners feel aggrieved by and have challenged clause F
4(x) of the Motor Vehicles (New High Security Registration Plates) Order,
200 I which provides that the manufacturer or the vendor selected by the
State Transport Department for supply of such Registration Plates may be
for State as a whole or for any region of the Sate. They have also challenged
the procedure adopted by various State Governments in inviting bids for
the purpose of selecting and appointing only one manufacturer of HSVRP G
for supplying the registration plates for all the motor vehicles and twowheelers in the whole State.
8. Shri S. Ganesh, learned senior counsel for the petitioners has
submitted that under Section 41 of the Act the registering authority, on the H
796
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R.
A application moved by the owner of the vehicle, has to assign a registration
mark to a vehicle for display thereon. The form of the license plates and
the manner in which it has to be fastened to the vehicle has been provided
in Rule 50 of the Rules. In view of clause 2 of Motor Vehicles (New High
Security Registration Plates) Order, 2001 not only the new vehicles are to
B have HSVRP but all the old and existing vehicles are also required to
replace their number plates with HSVRP within a period of two years. But,
clause 4(x) of the said Order empowers the State Government to select a
single manufacturer or vendor for the whole State. The State Governments
have also issued N!Ts for the purpose of selecting a single manufacturer
C or vendor for their respective States. The affect of such a provision is that
all other manufacturers or suppliers who may have a Type Approval
Certificate from the Central Road Research Institute, New Delhi or from
any one of the testing agencies authorised by the Central Government
under Rule 126 of the Rules, like the writ petitioner, would be totally
deprived of an opportunity to carry on trade or business in HSVRP.
D Learned counsel has submitted that clause 4(x) of the Order and also the
notices issued by the various State Governments inviting tenders for
selection of one manufacturer or vendor for whole of the State clearly
violates the fundamental right of the writ petitioner guaranteed under
Article 19( I Xg) of the Constitution as a monopoly is being created in
E favour of a single private operator, who will get a huge business of Rupees
four to five thousand crores.
9. Shri S. Uppal who appeared for the petitioners in writ petition No.
77 of 2003 has submitted that the selection of a single suppfo::r for the
F whole of the State goes against the preamble of the Constitution which lays
emphasis on securing to all its citizens equality of opportunity and also
violates Article 39(b) and ( c) of the Constitution by creating a monopoly
in favour of a single individal. Shri M.L. Verma, while supporting the writ
petitioners has submitted that in terms of the Order issued by the Central
Government on 22nd August, 2001 or the amended Order issued on 16th
G October, 2001 anyone having a Type Approval Certificate from one of the
bodies mentioned in second para of Rule 50(1 )( v) of the Rules is fully
entitled to supply HSVRP. Therefore neither any such Order can be issued
by the Central Government nor any such procedure can be laid down by
the State Governments wherein the right to supply HSVRP to the owners
H of the vehicle may be given to a single individual. Shri Verma has further
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 797
submitted that the N!Ts do not show that a manufacturer or supplier so A
selected will charge a fixed amount from the owner of a motor vehicle
towards the cost of HSVRP and as the person so selected will have a
monopoly business for a long period of 15 years, he may enhance the
amount in an arbitrary manner to the detriment of owner of the vehicle.
10. Shri Mukul Rohtagi, learned Addi. Solicitor General appearing
for Union of India has submitted that the conditions set out in the Order
B
are in addition to the requirements of Rule 50 and it lays down how the
new policy will be implemented. He has further submitted that sub-clauses
(ix) and (x) of clause 4 of the Order ensures full proof implementation of C
the Scheme and the Scheme cannot be implemented if there are several
persons who are doing the work of supply of HSVRP to the owners of
motor vehicle. Shri Kapil Sibbal, learned counsel appearing for respondent
No. 5 has submitted that Rule 50(l)(v) lays down only the eligibility
criteria for a manufacturer or dealer of HSVRP. It is fully open for the
Union of India or for the State Government to impose further conditions D
in the tender document and in exercise of such a power the States are
competent to select only one manufacturer. Shri Harish Salve, learned
senior counsel appearing for respondent No. I I has submitted that the
nature of activity namely supply of HSVRP is such that there are inherent
limitations in the same. He has submitted that like mobile phone operators E
and TV Channel operators the Government cannot give licence to everyone
and has to make a selection. So is the case with HSVRP and the scheme
would fail, ifthere are many players in the field who are either manufacturing
or supplying the HSVRP. Shri R.F. Nariman, learned senior counsel
appearing for respondent No. 6 and Shri Rajiv Dhawan, learned senior F
counsel appearing for respondent No. 8 have supported the aforesaid
contention. Learned senior counsel have submitted that it is not possible
to read second para of Rule 50(1)(v) in a literal manner otherwise the very
purpose of achieving security would be defeated. In such circumstances
there has to be a selection of a manufacturer or supplier and consequently
clause 4(x) of the Order issued by the Central Government and also the G
procedure adopte<;I by the State Governments cannot be faulted in any
manner. Shri Dhawan has further submitted that Article 19(6) of the
Constitution does not in any manner prohibit giving of a contract to a single
individual and selection of a person does not create a monopoly. Shri
Dipankar Gupta who has appeared for respondent No. 2 (West Bengal H
798
SUPREME COURT REPORTS [2004) SUPP. 2 S.C.R.
A Transport Infrastructure Development Corporation Ltd.) an Undertaking of
Transport Department, Government of West Bengal has submitted that the
Motor Vehicles Act and the Rules.framed thereunder require High Security
Number Plates and the respondent No. 2 has no choice in the matter and
has to implement the Scheme. He has further submitted that Scheme cannot
B be successfully implemented if. there are number of persons who are
manufacturing or supplying number plates and having too many
manufacturer or suppliers would defeat the Scheme itself.
11. Before considering the legal submissions made by learned counsel
C for the parties it is necessary to bear in mind that HSVRP by itself has
nothing to do with the security of the vehicle. HSVRP cannot in any
manner help in preventing the theft or the use of the vehicle by an
unauthorised person. It does not contain any mechanism by which it may
ensure that the door of the vehicle would not be open or the ignition will
not work or engine will not start or the steering would not work which may
D either deter or prevent a person from committing theft of the vehicle or
using the same in an unauthorised manner. HSVRP is only confined to the
number plates and the only aspect which has been pointed out by learned
counsel for the respondents is that they will be so designed or manufactured
that it will not be possible for a third person to either prepare a duplicate
E or to replace them without damaging the chromium based hologram which
would be affixed on the left hand inner side of windshield of the vehicle.
The Number Plates on the rear of the vehicle shall be fastened with snap
lock fitting system which, it is said, would break, if an attempt is made
to replace the same.
F
12. Section 39 of the Act enjoins that no person shall drive any motor
vehicle and no owner of a motor vehicle shall cause or permit the vehicle
to be driven in any public place unless the vehicle is registered and the
vehicle carries a registration mark displayed in the prescribed manner.
Section 41 of the Act gives the procedure for the registration of vehicle
G and sub-section (6) thereof provides that the registering authority shall
assign to the vehicle a registration mark which has to be displayed and
shown on the vehicle in a manner prescribed by the Central Government.
Rule 50 lays down the form and manner of display of registration mark
on the motor vehicles. The second para of clause (v) of SUb-rule (I} of
H Rule 50 is important and it lays down that the license plates with all the
ASSON. OF REGISTRATION PLATES. v. U.0.1. [G.P. MATHUR, J.] 799
specifications contained in cfauses (i) to (iv) shall be issued by the A
registering authority or approved licence plates manufacturers or their
dealers. It further lays down that the Central Road Research Institute, New
Delhi or any of the agency authorised by the Central Government shall
approve the licence plates manufacturers to the specifications contained in
clauses (i) to (iv). The effect of these provisions is that no motor vehicle B
can be driven in a public place without a registration mark displayed in
the prescribed manner and this registration mark is such which is assigned
to the vehicle by the registering authority. The registration mark has to be
displayed in the form of licence pates which shall be issued by the
registering authority or approved licence plates manufacturers or their
dealers. Therefore it is open for the registering authority itself to issue a C
licence plate after charging an appropriate fee or consideration. In addition
to the registering authority, licence plates may also be issued by a licence
plates manufacturer who has been approved by the Central Road Research
Institute, New Delhi (CRRI) or any other agency authorised by the Central
Government and also by dealers of such manufacturers.
D
13. The statutory provisions namely, the Act and the Rules do not lay
down that there has to be only one manufacturer for the entire State. The
question which requires consideration is whether in view of these statutory
provisions is it permissible for the Central Government, while exercising E
power under Section 109(3) of the Act, to issue an Order to the affect that
the manufacturer or the vendor selected by the State for supply of such
registration plates may be for whole of the State or any region of the State
which in affect means selection of a single manufacturer for supply of
registration plates in the entire State. Similarly the competence of the State F
Government to select a single manufacturer for supply oflicence plates for
the whole State has to be judged in that light. It is important to emphasise
that in the cases in hand the registration authority of the State Government
has not undertaken to supply the licence plates. It is not a case where the
State Government is either granting a largesse or selling its property where
it can do so w favour of a single individual by inviting tendets. Similarly G
it is not a case where the State Government maybe buying some property
which it may do so from a single individual by inviting tenders. Here the
job of supplying HSVRP to all the existing owners of vehicles and new
buyers for a period of 15 years is being entrusted to a single licence plates
manufacturer. Such HSVRP have to be brought by all those who own a H
800
SUPREME COURT REPORTS (2004] SUPP. 2 S.C.R.
A vehicle. By selection of a single manufacturer a monopoly is sought to be
created in his favour and all the owners of vehicles would be compelled
to purchase HSVRP from that single manufacturer or his dealers even
though in the matter of purchase of vehicle they have a wide range of
choice without any kind of compulsion by the Government. This action
B of the State Government whereby all other licence plates manufacturers,
who are satisfying the statutory requirement, namely, of second para of
clause (v) of sub-rule (I) of Rule 50 of the Rules, (have got Type Approval
Certificate from the Central Road Research Institute or authorised agency)
are totally excluded clearly violates the fundamental right of the writ
C petitioner as guaranteed under Article 19(1 )(g) of the Constitution.
14. The first decision touching the creation of a monopoly in favour
of a private individual to carry on business to the exclusion of all others
was rendered by Six Judges of this Court (the Court then consisted of six
Judges only) in Rasheed Ahmed v. Municipal Board Kairana, AIR (1950)
D SC 163. In this case the Municipal Board, on the basis of an auction gave
the exclusive contract, for carrying on whole sale business in vegetables,
in favour of one H. The writ petitioner Rasheed Ahmad, who was earlier
carrying on wholesale business as commission agent in vegetables applied
for a licence but his application were rejected and the stand of the
E Municipal Board was that except for H, no one else can carry on the said
wholesale business. It was held that the action of the Municipal Board in
granting monopoly rights in favour of H violated the fundamental right of
the writ petitioner guaranteed under Article 19( I )(g)of the Constitution.
F
15.