2004 (11) TMI 600 - SC - Companies Law

Validity of terms and conditions of Notices Inviting Tenders NITs for supply of High Security Registration Plates to motor vehicles - guidelines circulated by the Central Government for implementing the provisions of Motor Vehicles Act, 1988 ('the Act') and the newly amended Central Motor Vehicles Rules, 1989 ('the Rules')Interpretation of Rule 50 and the statutory order of 2001 - HELD THAT - On the basis of the submissions made on behalf of the Union and State authorities and the justification shown for the terms of the impugned tender conditions, we do not find that the clauses requiring experience in the field of supplying registration plates in foreign countries and the quantum of business turnover are intended only to keep out of field indigenous manufacturers. It is explained that on the date of formulation of scheme in Rule 50 and issuance of guidelines thereunder by Central Government, there were not many indigenous manufacturers in India with technical and financial capability to undertake the job of supply of such high dimension, on a long term basis and in a manner to ensure safety and security which is the prime object to be achieved by the introduction of new sophisticated registration plates. The notice inviting tender is open to response by all and even if one single manufacture is ultimately selected for a region or State, it cannot be said that the State has created monopoly of business in favour of a private party. Rule 50 permits, the RTOs concerned themselves to implement the policy or to get it implemented through a selected approved manufacturer. The terms of the tender prescribing quantum of turnover of its business and business in plates with fixation of long term period of the contract are said to have been incorporated to ensure uninterrupted supply of plates to a large number of existing vehicles within a period of two years and new vehicles for a long period in the coming years. It is easy to allege but difficult to accept that terms of the Notices Inviting Tenders which were fixed after joint deliberations between State authorities and intending tenderers were so tailored as to benefit only a certain identified manufacturers having foreign collaboration. Merely because few manufacturers like the petitioners do not qualify to submit tender, being not in a position to satisfy the terms and conditions laid down, the tender conditions cannot be held to be discriminatory. In interpreting the rule, the object of the scheme providing for affixation of high security plates has to be kept in view. Where the RTO himself is not making the supply of plates, an approved registration plate manufacturer can be selected for supply. The legal obligation on the registering authority under Rule 50(1)(v) to issue specified kinds of registration plates implies issuance of such registration plates through a selected approved plate manufacturer. Paragraph 2 of Clause (v) of Rule 50(1) , if reasonably construed, does not indicate any prohibition of selection of an approved plate manufacturer for assisting the registering authority to implement the scheme of affixation high security registration plates to existing vehicles and new vehicles. Such an interpretation fulfils the object of the scheme. The interpretation sought to be placed by the petitioners on the said para of the rule would result in frustrating the high security aspect and object of the scheme of affixation of high security registration plates on vehicles. Registration plates are not manufactured by the manufacturer of motor vehicles but for maintenance and operations of motor vehicles, registration plates are necessary. Therefore, manufacturer of registration plates can be subjected to certain standards by a statutory order to be notified and published in accordance with Sub-section (3) of Section 109 of the Act. Any restrictive interpretation of the said sub-section is neither called for from the language of the sub-section nor the object of the provision. Reference is made to the opinion of learned Brother G.P. Mathur J., in these cases. Thus, in our opinion, the statutory order of 2001 and Clause 4(x) thereof cannot be held to be beyond the purview of Sub-section 3 of Section 109 of the Act. Clause 4(x) of the statutory order of 2001, could be issued under Section 109(3), as an aid to the fulfillment of provisions of high security registration plates contained in Rule 50. Such power of the State to issue order containing Clause 4(x) is not only supported by Sub-section 3 of Section 109 but by Rule 50 itself. Clause 4(x) of the statutory order of 2001 is merely enabling one and re-states what Rule 50 contemplates. We also find force in the alternative submission made on behalf of the respondents that the statutory order including Clause 4(x) can be supported as having been issued in exercise of executive power of the Central Government which is co-extensive with its legislative power. Thus, all the challenges made to the provisions of the rule, statutory order or the tender conditions fail. All the petitions directly filed in this Court and transferred to this Court from High Courts are, hereby, dismissed. In the circumstances, we direct that the parties shall bear their own costs in all these cases.

Summary

Issues Involved:
1. Challenge to the impugned tender conditions.
2. Challenge to Paragraph 2 of Rule 50(1)(v).
3. Challenge to Para 4(x) of the Motor-Vehicles [New High Security Registration Plates] Order, 2001.

Summary:

1. Challenge to the impugned tender conditions:
The petitioners argued that the tender conditions for supplying High Security Registration Plates (HSRP) were discriminatory and tailored to favor companies with foreign collaboration, violating Articles 14 and 19(1)(g) of the Constitution. They contended that indigenous manufacturers were capable of meeting the standards without foreign collaboration and that the conditions created a monopoly favoring a few companies. The Court, however, found that the conditions were justified to ensure the technical and financial capability of the manufacturers, given the large-scale implementation required. The Court held that the conditions did not violate the equality clause under Article 14 or encroach on fundamental rights under Article 19(1)(g).

2. Challenge to Paragraph 2 of Rule 50(1)(v):
The petitioners interpreted Paragraph 2 of Rule 50(1)(v) to mean that all approved license plate manufacturers should be allowed to supply plates without restriction. The Court disagreed, stating that the rule allowed for the selection of an approved manufacturer to assist the registering authority in implementing the HSRP scheme. The Court held that this interpretation was in line with the objective of the scheme and did not frustrate its high-security aspect.

3. Challenge to Para 4(x) of the Motor-Vehicles [New High Security Registration Plates] Order, 2001:
The petitioners argued that Para 4(x) of the 2001 Order, which allowed the selection of a single manufacturer for a state or region, was ultra vires Section 109(3) of the Motor Vehicles Act. The Court found that the statutory order was within the scope of Section 109(3), which permits the Central Government to notify standards for any article or process used by a manufacturer. The Court held that the order was not beyond the purview of the Act and could be supported as an exercise of the Central Government's executive power.

Conclusion:
The Supreme Court dismissed all the petitions, upholding the validity of the tender conditions, Rule 50(1)(v), and Para 4(x) of the 2001 Order. The Court directed that each party bear its own costs.