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TMI Blog2004 (11) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. - Y.K. Sabharwal, D.M. Dharmadhikari and Tarun Chatterjee For the Appearing parties: Mohan Parasaran, Additional Solicitor General, Gopal Subramanium, R.F. Nariman, Harish N. Salve, T.L.V. Iyer, S. Balakrishnan and Vivek K. Tankha, Sr. Advs., Hiren Uppal, Abhishek Agrawal, Sarika Varma, Liz Mathew, Indu Malhotra, Vikram Mehta, Rakesh K. Sharma, K.V. Vijay Kumar, Navin Prakash, Sand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolative of fundamental right of trade under Articles 19(1)(g) and discriminatory under Article 14 of Constitution of India. 4. A survey of the relevant provisions of the Act and Rules continuing the Scheme of High Security Registration Plates is necessary for considering the merit of the petitioners' grievances. 5. The object of the new scheme is to curb the increasing menace of vehicle thefts and their usage in commission of crimes like murder, dacoity, kidnapping etc. It is felt urgent to check usage of motor vehicles in terrorists activities. The Central Government on the recommendation of its Technical Committee has devised a system of High Security Registration Plates which will ensure public safety and security. With the above purpose, Rule 50 of the Motor Vehicles Rules has been amended. Rule 50 was first amended on 28.03.2001, then on 24.09.2001 and lastly on 21.01.2003 w.e.f. 01.01.2004. The relevant part of the rule in its amended form reads as under: Rule 50- Form and manner of display of registration marks on the motor vehicles - (1) On or after commencement of this rule, the registration mark referred to in Sub-section (6) of Section 41 shall be displayed both at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urers to the above specification; (vi) the size of the plate for different categories of vehicles shall be as follows:- Provided that this sub-rule shall apply to already registered vehicles two years from the date of commencement: Provided further that the size of the registration plates for agricultural tractors shall be as follows:- 2 to 6. ...................................... [Underlining for pointed attention] 6. The rule in the above manner requires manufacture of such registration plates which would be non-reusable and non-replaceable. The technical specifications of the registration plates are such as to make identification of the vehicle and its tracking easier and certain. The other requirements contained in Rule 50 are that apart from regulating the aspect of issuing registration mark with use of specific kinds of letters and numerals, it seeks to ensure its safety and security by regulating issuance and fixation of number plate from the premises of the Regional Transport Office of the concerned area. The RTO will issue registration number and also issue the plate itself. Thus a high security number plate with specified technical features is to be issued under Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for supply of such registration plates may be for the State as a whole or for any region of the State . (xi) The registration plate will be supplied to the motor vehicle owners by the vendor against the authorization by the Road Transport Officer or any other designated for the purpose by the State Transport Department. (xii) The replacement for any existing registration plate may be made by the concerned transport authority only after ensuring that the old plate has been surrendered and destroyed. (xiii) A proper record of the registration plates issued by the manufacturer or the vendor, authorized by the State Government, should be maintained on a daily basis and got tallied periodically with the records of the Transport Office. (xiv) Periodic audit shall be carried out by concerned testing agencies to ensure compliance of the requirements of the High Security Registration Plates. [Highlighted for emphasis] 9. According to the respondents, the source of power to issue the New High Security Registration Plates Order, 2001 is to be found in Sub-section 3 of Section 109. The petitioners have challenged the validity of the Registration Plates Order, 2001 (hereinafter shortly referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with the States. Eventually, on 6.3.2002 the Union laid down guidelines for incorporating necessary conditions in the Notices Inviting Tenders to be issued by the various States. In substance, the guidelines suggest as follows: - 1. The tender document would specify whether the appointment of vendor was for the whole State or for certain parts. 2. The tender document would specify the terms of the bank guarantee . 3. The tender document would require report back on certain aspects on a periodic and regular basis . 4. The bidder must furnish proof of past experience/expertise in this area or proof of the same with a collaborator. 13. NIT guidelines were later modified by letter dated 14.6.2002 sent by the Ministry. It was suggested that the bidders may be asked to provide details about the experience/capability of its collaborator to the satisfaction of the State Authorities. 14. On 16.9.2002, meeting was held between officials of Ministry, representatives of States/Union Territories and manufacturers of New Registration Plats wherein several issues pertaining to the introduction of the new system as well as the terms of NIT were discussed. The minutes of the said meeting resulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners together must have a minimum annual turnover equivalent to INR 30 crores in the immediately preceding last year. At least 25% of this turnover must be from the license plate business . Certificate confirming and the certification of the minimum 25% turnover being from licensed plates business will have to be provided duly attested by a Chartered Accountant/any bank to be attached in support of fulfillment of this condition, Condition (c): The contract will be for a period of fifteen years commencing from the date of commencement of the scheme. A detailed agreement shall be entered into between the successful bidder and the Government for a period of fifteen years and government ensures that no second bidder will be approved during the currency of the contract in the State except in the case of termination of the contract in view of the strictest of adherence to High Security Features and to impose answerability on to the successful bidder. [Portions highlighted being under specific challenge] 16. We shall now take up for consideration the various submissions made by the counsel appearing for the petitioners in assailing certain conditions of the Notices Inviting Tenders issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working in the above mentioned small countries with a very small vehicular population would be of any help as an experience for supplying registration plates for large vehicular population of India whose needs and requirements are of far greater magnitude and in no way comparable to the above mentioned small countries. The total vehicular population of all above mentioned nations accumulated does not match the vehicular population of Delhi alone. Indigenous manufacturers of High Security Plates can manufacture and supply registration plates on their own strength by complying with all standards and in conformity with all norms laid down in Rule 50 without entering into collaboration with any foreign partner. 20. It is contended that in the name of implementing the amended Rule 50, the States are imposing conditions in the tender that would take away the existing rights of the manufacturers of plates in India. The implication of conditions is that indigenous manufacturers, although capable of fulfilling the requirements of Rule 50, are prohibited to do the business of manufacturing and supplying the High Security plates. This violates their fundamental right under Article 19(1)(g) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars in favour of a single manufacturer would render grant of Type Approved Certificate to other manufacturers, inconsequential. Referring to the relevant data of the business of the respondent group companies working in collaboration with foreign companies as joint venture concerns, the petitioners highlights that if indigenous manufacturers are involved in implementation of scheme the plates can be made available only for ₹ 200-250 for two plates whereas creating monopoly right in favour of joint venture companies in foreign collaboration would hike the cost of plates to not less than ₹ 2,000/- per pair in contrast to the market price of ₹ 800 to ₹ 900 per pair by the Indian manufacturers. In conclusion, learned counsel for the petitioner submits that the tender conditions are arbitrary, irrelevant and tailor-made to involve only certain joint venture companies in foreign collaboration. They aim at eliminating the indigenous manufacturers of plates. The petitioners seek quashing of the impugned tender conditions. Reliance is placed on Sterling Computers v. M. and N. Publications AIR1996SC51 and Union of India v. Dinesh Engineering AIR2001SC3887 . 24. The ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and technical qualifications. A fair process of selection may eliminate persons or parties who may not be found technically, financially and on the basis of past experience sound to be awarded the contract. Reliance is placed on Krishnan Kakkanth v. Govt. of Kerala 1997 (5) SCC 495 ; Ugar Sugar Works Ltd. v. Delhi Administration and Ors. [2001]2SCR630 ; and M.R.F. Ltd. v. Inspector Kerala Govt. and Ors. (1999)ILLJ289SC . 27. On behalf of State of West Bengal, the learned senior counsel appearing supported the manner of implementation of scheme contained in Rule 50 and the conditions contained in the Notice Inviting Tenders [NITs]. It is submitted that the main objective of the competitive bidder process was to ensure that such manufacturers as selected by the State would be able to comply with the requirements of Rule 50. In selecting a suitable manufacturer, his capability and capacity to invest and build necessary infrastructure, has to be assessed so that through him, the scheme becomes operation able from the targeted date 28.2.2003 and without any difficulty it remains so operational for a longer period so that all existing vehicles switch over to high security registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een chosen in proportion to the average road-worthy life of a vehicle in India. 30. Looking to the huge vehicular population of the country, the capacity of the manufacturer has to be as great because plates are to be fitted to a very large number of existing vehicles within first two years. Thereafter, every year about one lakh vehicles in each State would be required to be fitted with the plates. If the bulk of contract is exhausted in the first two years, fresh manufacturers would not come forward to undertake the remaining work as it would not be cost-effective. A lone-term contract was necessitated for various reasons such as necessity of huge investment for building infrastructure, uninterrupted supply of plates in the first two years and thereafter every year and the investment of such infrastructure requiring recovery over a long duration by way of supply. If the contract period is lowered, the cost of plate might go up as the huge investment will have to be recovered in a shorter period. 31. Justifying the selection of a single manufacturer for a region or an entire State, to ensure security considerations, the following factors have been highlighted as sub-serving the pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete chaos. 32. By highlighting the above factors, it is submitted that if multiple manufacturers are involved in implementation of the policy, it is not likely to work satisfactorily. It is submitted that a single selected manufacturer would not just be marketing, servicing and providing a new product but would engage in assisting the State in fulfillment of statutory obligations to grant the high security registrations to the owners of motor-vehicles in accordance with the provisions of the Act and the Rules. It is submitted that tender conditions are suitably formulated for performance guarantee, experience and understanding of business, financial strength, and capacity of creating and installing the entire infrastructure and networking. Finally, it is submitted that the eligibility criteria prescribed by the State is commensurate not only with the scale of operation and size of network to be created by the operator but also with statutory requirement of States' continued delivery of its obligations to vehicle owners without any interruption. It is contended that through open tender, identifying and selecting an approved manufacturer to discharge statutory duty of RTO is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant criteria for framing suitable conditions of any Notices Inviting Tenders. The impugned clauses by which it is stipulated that the tenderer individually or as a member of joint-venture must have an experience in the field of registration plates in at least three countries, a common minimum net worth of ₹ 40 crores and either joint-venture partner having a minimum annual turnover of at least ₹ 50 crores and a minimum of 15% turnover of registration plates business have been, as stated, incorporated as essential conditions to ensure that the manufacturer selected would be technically and financially competent to fulfil the contractual obligations which looking to the magnitude of the job requires huge investment qualitatively and quantatively. 36. In the course of hearing, it could not be seriously disputed by the parties that technical know-how for the high security registration plates is outside the country. It is true that many indigenous manufacturers are in a position to supply the plates on the basis of technical assistance available in and outside the country. There are many tenderer who possess Type Approval Certificates [TACs] but to ensure major quantit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rers. 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. 39. 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. 40. Selecting one manufacturer through a process of open competition is not creation of any monopoly, as contended, in violation of Article 19(1)(g) of the Constitution read with Clause (6) of the said Article. As is sought to be pointed out, the implementation involves large network of operations of highly sophisticated materials. The manufacturer has to have embossing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long period the work of affixation of security plates would continue uninterrupted in fulfillment of the object of the scheme contained in Rule 50. Our considered opinion, therefore, is that none of the impugned clauses in the tender conditions can be held to be arbitrary or discriminatory deserving its striking down as prayed for on behalf of the petitioners. 42. There is no material on record to infer any mala fide design on the part of the tendering authority to favour parties having foreign collaborations and keep out of fray indigenous manufacturers. The high security plates is a sophisticated article - new for manufacturer in India. It is being introduced for the first time under the scheme contained in Rule 50 of the Rules and the Act. At the time of issuance of Notices of Tender, technical know-how for manufacture of plates and its further development was undoubtedly outside the country. Only a few concerns in India having collaboration with foreign parties possessed the expertise and were available in the market. The terms of the notice inviting tender were formulated after joint deliberations of Central and State Authorities and the available manufacturers in the field. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd conditions were tailor-made to promote parties with foreign collaborations and to exclude indigenous manufacturers, judicial interference is uncalled for. Challenge to the tender conditions on Paragraph 2 of Rule 50(1)(v). 45. On behalf of the petitioners, paragraph 2 of Rule 50(1)(v), which is reproduced below, has been interpreted. The contention is that it does not contemplate selection of sole manufacturer for a State or a Region. The relevant paragraph 2 of Rule 50(1)(v) reads thus :- Rule 50(1)(v). Form and manner of display of registration marks on the motor vehicles. - (1)............... (i) to (iv) ............................................... (v) ................... The licence plates with all the above specifications and the specified registrations for a vehicle shall be issued by the registering authority or approved licence plates manufacturers or their dealers . The Central Road Research Institute, New Delhi or any of the agency authorized by the Central Government shall approve the license plates manufacturers to above specification. [Emphasis supplied] 46. Learned counsel for the petitioners argues that the use of the word approved in para 2 of Clause (v) of Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The manufacturer or the vendors selected by the State Transport Department for supply of such registration plates may be for the State as a whole or for any region of the State . 50. On behalf of the petitioners, it is submitted that para 4(x) of the statutory Order, 2001 is ultra vires Section 109(3) of the Act under which it is purported to have been issued. Section 109 with its heading and the relevant Sub-section (3) reads as under :- Section 109. General provision regarding construction and maintenance of vehicles . (1) Every motor vehicle shall be so constructed and so maintained as to be at all times under the effective control of the person driving the vehicle. (2) Every motor vehicle shall be so constructed as to have right hand steering control unless it is equipped with a mechanical or electrical signaling device of a prescribed nature. (3) If the Central Government is of the opinion that it is necessary or expedient so to do in public interest, it may by order published in the Official Gazette, notify that any article or process used by a manufacturer shall conform to such standard as may be specified in that order. [Highlighted for interpretation]. 51. It is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. Sub-section (4) of Section 212 of the Act, prescribes a mandatory requirement of first publishing draft rule before making a final rule on any subject. Since in promulgating para 4(x) of the statutory order of 2001, mandatory requirement of Section 212(4) has not been complied with, the impugned para of the said statutory order of 2001 cannot be supported even as a statutory rule. The other submission made on the subject is that provisions for selecting only one manufacturer for registration plates in a region or a State is not a subject of 'prescribing manner and form in which the registration mark' would be displayed on the motor vehicles. On the above ground, it is submitted that para 4(x) of the statutory order of 2001 deserves to be struck down as ultra vires the Act. It is violative of the Article 19(1)(g) of the Constitution. 53. The above argument based on Section 109(3) and the other provisions in Chapter IV of the Act have been suitably replied by the counsel appearing for the respondents. The reasoning advanced on behalf of the respondents is worthy of acceptance. The statutory order of 2001 is expressly issued under Section 109(3) of the Act which no doubt i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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