TaxTMI 
TaxTMI 
2004 (11) TMI 600
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...., Suchit Mohanty, Pawan Kumar, Sanjay K. Verma, Goodwill Indeevar, Ranjan Mukherjee, P.N. Ramalingam, Praveen Swarup, Ashok K. Mahajan, Sarla Chandra, Vishwajit Singh, B.S. Banthia, Avijit Bhattacharjee, Rachna Gupta, Anis Subhrawardy and Vijay Kumar, Advs. and Avatar Singh Rawat, Additional Adv. General for State of Uttaranchal JUDGMENT D.M. Dharmadhikari, J. 1. The present writ petition along with the cases transferred from various High Courts have been placed before this Bench on a difference of opinion between Hon'ble Judges constituting the Division Bench. 2. The dispute concerns the terms and conditions of Notices Inviting Tenders [NITs] for supply of High Security Registration Plates to motor vehicles. The tenders have been issued by various State Governments on the guidelines circulated by the Central Government for implementing the provisions of Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') and the newly amended Central Motor Vehicles Rules, 1989 (hereinafter referred to as 'the Rules'). 3. The main grievance of the petitioner is that all Notices Inviting Tenders (NITs) which have been issued by various State Governments....
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....e shall be suitable for hot stamping and reflective sheet has to be guaranteed for imperishable nature for minimum five years. The fast colouring of legend and border to be done by hot stamping; (ii) the plate should bear the letters "IND" in blue colour on the extreme left center of the plate. The letter should be one fourth of the size of letters mentioned in Rule 51 and should be buried into the foil or applied by hot stamping and should be Integral part of the plate; (iii) each plate shall be protected against counterfeiting by applying chromium-based hologram, applied by hot stamping. Stickers and adhesive labels are not permitted. The plate shall bear a permanent consecutive identification number of minimum seven digits, to be laser branded into a reflective sheeting and hot stamping film shall bear a verification inscription; (iv) apart from the registration marks on the front and rear, the third registration mark in the form of self destructive type, chromium based hologram sticker shall be affixed on the left hand top side of the windshield of the vehicle. The registration details such as registration number, registering authority, etc., shall be....
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....der Governmental control and supervision. The Scheme contained in Rule 50 substitutes the existing system where the registration number was given by the RTO and ordinary plate obtained from the open market. The implementation of the rule requires cooperation and coordination between the authorities of the State and the manufacturer of registration plates. 7. The source of power for providing Scheme of High Registration Plates by Rule 50 is traceable to Rule Making Power of Central Government contained in Section 64, Clauses (a) to (e) of the Act which read as under:- "Section 64. Power of Central Govt. to make rules. - The Central Government may make rules to provide for all or any of the following matter namely :- (a) the period within which and the form in which an application shall be made and the documents, particulars and information it shall accompany under Sub-section (1) of Section 41; (b) the form in which the certificate of registration shall be made and the particulars and information it shall contain and the manner in which it shall be issued under Sub-section (3) of Section 41; (c) the form and manner in which the particulars of t....
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....s to be found in Sub-section 3 of Section 109. The petitioners have challenged the validity of the Registration Plates Order, 2001 (hereinafter shortly referred to as Order of 2001) which according to them is beyond provisions of the Act and has no legal efficacy. 10. The main features of the High Security Registration Plates as provided in Rule 50 and the order of 2001 are as follows:- 1. It provides for a solid aluminium plate. 2. The plate should be suitable for hot stamping and would be a reflective sheet. 3. The plate should bear the letters "IND" in blue colour. 4. It should have a chromium based hologram which shall also be hot stamped. 5. There would be third registration mark which would be self-reflective being a chromium based hologram sticker and which would be affixed on the windshield of the vehicle. 6. The plate on the rear shall be fastened with non-removable/non- reusable snap lock fitting system 11. The above-mentioned features to the High Security Registration Plates have been insisted upon for the following reasons:- 1. Hot Chromium based hologram would prevent counterfeiting. 2. The i....
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....ion 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 in issuance of a clarificatory letter on 13.11.2002 wherein it is reiterated that the guidelines are suggestive in nature. The main features of the guidelines issued after due deliberations between Union and States officials and the representatives of manufacturers are as follows: - "The determination of the physical and financial capability of the bidder was to be done by the State. A suggestion was voiced that instead of tender process the market process should be given and all manufacturers would obtain technical approval certificate for being allowed to sell their product. This led to clarification by the Secretary of Road Transport and Highways that the State Transport Authorities will have to exercise control over issuance of registration plates. Representatives of certain States opposed to free open market situation having large....
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....ination 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 by various States, provisions of the Rule 50 and the statutory order of 2001 issued to implement the scheme of High Security Registration Plates. 1) Challenge to the impugned tender conditions. 17. The learned counsel appearing for the petitioners submit that the three conditions concerning experience and extent of business (the gist of which has been mentioned above) contained in the Notices Inviting Tenders, are per se discriminatory and unreasonable. They are apparently tailor-made to sub-serve the business interests of a class of manufacturers having foreign collaboration and for a cartel of companies. He further submitted that the above mentioned three clauses which are substantially same in all the NITs issued by many of the States, make it mandatory for the bidders to enter into collabo....
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....tates are imposing conditions in the tender that would take away the existing rights of the manufacturers of plates in India. The implication of conditions is that indigenous manufacturers, although capable of fulfilling the requirements of Rule 50, are prohibited to do the business of manufacturing and supplying the High Security plates. This violates their fundamental right under Article 19(1)(g) of the Constitution of India. 21. The further contention is that all security features for number plates have been specified for the first time in India and, therefore, insistence on possessing experience in five countries from the manufacturers is to eliminate manufacturers of India. It is pointed out that as per the requirements of Rule 50 the plates are required to conform to DIN 1745/DIN 1783 or ISO 7591 standards (DIN of the German Standards and ISO of the World standards). The other security features are the additional features. It is submitted that these standards have been used to suit only one or two manufacturers. It is submitted that the laid down standards and security features are so laid down as to wipe out indigenous manufacturers from the field although Indian manufact....
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....tions 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 other counsel appearing in connected cases for the petitioners have submitted that selection of sole manufacturer for supply of registration plates -has no justification either in law or on facts. On behalf of the petitioners, it is contended that grant of contract to more than one manufacturer would, in fact, ensure better and prompt services to the vehicle owners and minimize their inconvenience and possibility of black-marketing which might be there in case of monopoly. The submission is that regulated and disciplined multi-vendors system with registration of operating manufacturers and making them answerable and accountable is the only permissible method of implementation of the policy akin to that followed in other developed countries where no monopoly is created in favour of a sole man....
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.... 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 plates as also the newly purchased vehicles are fitted with such plates. The tender conditions are deliberately so framed as to eliminate newly floated companies commonly described as 'fly by night companies' which merely compete to obtain the contract but have neither technical nor financial capacity to fulfil the contract of such vast dimensions. 28. It is submitted that the tender conditions are formulated keeping into account the public interest consideration and aspects of high security. The States do not possess the requisite resources of its own to implement the scheme. It has, therefore, to search and select a dependable manufacturer. It is submitted that the tender conditions specifically require the manufacturer to conform to the technical specification of high s....
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....vestment 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 public interest :- 1. That it would not be possible to implement the scheme since the scheme provides that the approved manufacturer would use the premises of the State RTO and lay down V-Sat links so that the entire state is networked on a common platform. 2. It would be impossible for the State to provide all the TAC holders space and infrastructure in the RTO premises. 3. It would be difficult for the state to identify the source of any counterfeiting in case there are multiple manufacturers. This would severely compromise the security considerations involved in the scheme. 4. Different manufacturers would lead to variations in price between different manufacturers. 5. The State is at disadvantage since all the manufacturers woul....
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....nancial strength, and capacity of creating and installing the entire infrastructure and networking. Finally, it is submitted that the eligibility criteria prescribed by the State is commensurate not only with the scale of operation and size of network to be created by the operator but also with statutory requirement of States' continued delivery of its obligations to vehicle owners without any interruption. It is contended that through open tender, identifying and selecting an approved manufacturer to discharge statutory duty of RTO is not an act of the State creating any monopoly in favour of any private party . The grievance of infringement of fundamental rights under Article 19(1)(g) of the Constitution of India is misconceived. Reliance is placed on Air India v. Cochin International Airport Ltd., [2000]1SCR505 and Asia Foundation & Construction Ltd. v. Trafalgar House Construction Ltd. (1997)1SCC738 . 33. The learned senior counsel appearing for the respondent No. 5, has supported the submissions made on behalf of the Union of India and the State of West Bengal by advancing separate arguments with additional reasons. 34. We shall separately deal with the submissions m....
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....ntractual 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 quantity of supply in initial two years and periodical supply for new vehicles for a long period, only a manufacturer who is sound both technically and financially, is required. Learned Brother G. P. Mathur J., in his elaborate opinion expressed by him (2004)5SCC364 , found a serious vice in the tender conditions that they necessarily intend to promote such companies which have foreign collaborations and exclude indigenous manufacturers. 37. It is not controverted that the technical 'know-how' for the manufacture of high security registration plates presently is available outside India. Technically and financially, competent indigenous m....
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....onopoly 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 stations within the premises of the RTO. He has to maintain a data of each plate which he would be getting from his main unit. It has to be cross-checked by the RTO data. There has to be a server in the RTO's office which is linked with all RTOs' in each State and thereon linked to the whole nation. Maintenance of record by one and supervision over its activity would be simpler for the State if there is one manufacturer instead of multi-manufacturers as suppliers. The actual operation of the scheme through the RTOs in their premises would get complicated and confused if multi-manufacturers are involved. That would also s....
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....cturer in India. It is being introduced for the first time under the scheme contained in Rule 50 of the Rules and the Act. At the time of issuance of Notices of Tender, technical know-how for manufacture of plates and its further development was undoubtedly outside the country. Only a few concerns in India having collaboration with foreign parties possessed the expertise and were available in the market. The terms of the notice inviting tender were formulated after joint deliberations of Central and State Authorities and the available manufacturers in the field. The terms of the tender prescribing quantum of turnover of its business and business in plates with fixation of long term period of the contract are said to have been incorporated to ensure uninterrupted supply of plates to a large number of existing vehicles within a period of two years and new vehicles for a long period in the coming years. It is easy to allege but difficult to accept that terms of the Notices Inviting Tenders which were fixed after joint deliberations between State authorities and intending tenderers were so tailored as to benefit only a certain identified manufacturers having foreign collaboration. Mere....
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...... (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 Rule 50(1) has to be given its natural meaning and cannot be read to mean "selected" through notice inviting tender. In this respect, it is further submitted that the rule making authority has used the word 'approved' and 'approve' twice in the same paragraph. The rule read harmoniously rules out selection of sole manufacturer through a tender process. The argument in substance is that every approved licence plate manufacturer can be entrusted with the job of supplying the registration plates and selection of one manufacturer for the job is against ....
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....ery 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 that Section 109(3) falls under Chapter VII which deals with construction, equipment and maintenance of motor vehicles. Registration of motor-vehicles falls under Chapter IV of the Act. Under Section 109(3), a direction or order can be issued only to a 'manufacturer' defined in Section 2(21A) to mean manufacturer of motor vehicles. It is submitted that a motor-vehicle manufactured by a manufacturer is sold to a dealer without a registration plate. Thereafter, the dealer sells the motor vehicle to....
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....es 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 is concerned with construction, equipment and maintenance of motor vehicles. Sub-section (3) of Section 109 permits Central Government to "notify that any article or process used by a manufacturer shall conform to such standard as prescribed". The word "manufacturer" is defined in Section 2(21A) of the Act to mean a person engaged in the manufacture of the motor vehicles but the definition clause is prefixed by the words "unless the context otherwise requires". In the context of Sub-section (3) of ....