Holding

The tender conditions, the exclusive appointment of a single manufacturer, and clause 4(x) of the 2001 Order are within the statutory authority and do not contravene Articles 14 or 19(1)(g), so the petitions are dismissed.

Summary

The Supreme Court examined the scheme for High Security Registration Plates introduced under Rule 50 of the Motor Vehicle Rules, 1989 and the 2001 statutory order issued under Section 109(3) of the Motor Vehicles Act, 1988. Petitioners challenged the tender conditions – requiring foreign experience, a minimum turnover and a 15‑year exclusive contract – alleging violations of Articles 14 and 19(1)(g) of the Constitution and creation of a monopoly. The Court held that the conditions were reasonable, aimed at ensuring technical competence, financial capacity and security, and were not intended to exclude indigenous manufacturers. It further ruled that selecting a single manufacturer through open competition does not constitute an unlawful monopoly and that clause 4(x) of the 2001 Order falls within the scope of Section 109(3). Paragraph 2 of Rule 50(1)(v) was interpreted to permit the appointment of an approved manufacturer, not to forbid it. Consequently, all the challenges were rejected and the petitions dismissed.

Issues considered

The tender conditions (experience, turnover, 15‑year term) violate Article 14 of the Constitution.
The tender conditions infringe the right to carry on business under Article 19(1)(g).
The selection of a single manufacturer creates an unlawful monopoly.
Clause 4(x) of the Motor Vehicles (New High Security Registration Plates) Order, 2001 is ultra vires Section 109(3) of the Motor Vehicles Act.
Paragraph 2 of Rule 50(1)(v) prohibits the appointment of a sole manufacturer through tender.
The State's power to impose such tender conditions under Section 64 and related provisions.

Legislation cited

Motor Vehicles Act, 1988s. 109(3), s. 212(4), s. 2(21A), s. 64
Motor Vehicles (New High Security Registration Plates) Order, 2001s. clause 4(x)

Subjects

High Security Registration PlatesMotor Vehicles ActRule 50Section 109(3)Article 14Article 19(1)(g)MonopolyPublic procurementConstitutional lawTender conditions

Judgment

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

NOVEMBER 30, 2004
B
[Y.K. SABHARWAL, D.M. DHARMADHIKARI AND
TARUN CHATTERJEE, JJ.]

Motor Vehicles Act, 1988/Motor Vehicle Rules, 1989/Motor Vehicles
(New High Security Registration Plates) Order 2001-Section 109(3)/Rule
C 50/Para4(x)--Constitution ofIndia, 1950-Artic/es 14and19(J)(g)-Scheme
of High Security Registration Plates-Amen<iment of Rule 50 and passing
of 2001 order-Notices Inviting Tenders-By State Governments~Tender
conditions requiring tenderer having certain experience and having certain
financial capacity and the contract was to be for I 5 years-Contract to be
D given to single manufacturer-Conditions and the Order challenged before
High Courts and this Court-Petitions transferred to this Court from High
Courts-Held: Tender conditions are not violative ofArticles I 4 and I 9(1)(g)
ofthe Constitution-Conditions requiring experience in the field and quantum
of business turnover in view of nature of contract and job involved cannot
be said to be intended to keep out indigenous manufacturers and to favour
E parties having foreign collaborations as no mala fide intention could be
inferred on the part of tendering Authority-Selection of one manufacturer
through open competition cannot be said to be act of creating monopoly-
Award of contract for a long period of I 5 years is also justified in view of
nature ofjob and huge investment involved therein-The statutory Order
F of 2001 and Clause 4(x) thereof cannot be held to be beyond the purview
ofSection 109(3) and the same could be issued under the Section as an aid
to fulfillment ofprovisions of High Security Registration Plates contained
in Rule 50.

Central Government devised a scheme of High Security Registration
G Plates. Consequently Rule 50 of Motor Vehicle Rules, 1989 was amended
to the effect that it required manufacture of Registration Plates of non-
reusable and non-replaceable nature, technical specifications of the _ .
Plates would be such as to make the identification and tracking of the
vehicle easier and certain, the Plate with specified technical features was
H to be issued under Government control and supervision. The
496
ASSON. OF REGISTRATION PLATES v. U.0.1. 497

imp_lementation of the Rule required co-operation and coordination A
between the Authorities of the State and the manufacturer of Registration
Plates. Central Government also issued Motor Vehicle (New High
Security Registration Plates) Order, 2001 under Section 109(3) of Motor
Vehicles Act, 1988. After a series of meeting between the Union, States
and Union Territories on introduction of the new Scheme, Union laid
down guidelines for incorporating necessary conditions in the Notices
B
Inviting Tenders to be issued by various States. On the guidelines and
pursuant to joint deliberations between the officials of Union, States and
the manufacturers, several States issued Notices Inviting Tenders which
intera/ia contained conditions for tenderers or any of the members of
joint venture ~iz. (1) Experience of at least in 5 countries for license C
plates and in a minimum of 3 countries with license plates having
security features world-wide and should furnish "Type Approved
Certificate" from "Testing Agencies"; (2) Having a minimum annual
turnover equivalent to INR 30 crores and at least 25% of the turnover
was required to be from the license plate business; (3) and the contract D
would be for 15 years.

Petitioners filed petitions in different High Courts challenging
terms and conditions of the Notices Inviting Tenders. Writ Petitions
were also filed in this Court. All the Writ Petitions filed before High
Courts have been transferred to this Court. E

Petitioners contended that tender conditions were violative of
fundamental right of trade under Article 19(1)(g) and discriminatory
under Article 14 of the Constitution; that the conditions have been tailor
made to favour companies having foreign collaboration and for a cartel F
companies and aimed at excluding indigenous manufacturers from the
tender process that entrusting of the work to a single license plates
manufacturer for a long period of 15 years was against public interest
depriving the consumers from the benefit of competitive market and the
same created monopoly in favour of selected bidders to the complete
exclusion of all others in the field for a long period; that para 2 of Rule G
50(1)(v) did not contemplate selection of sole manufacturer for a State
or Region; and that para 4(x) of Order, 2001 is ultra vires Section 109(3)
of the Act.

Union States and contesting manufacturers contended that the H
498 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A tender conditions were formulated keeping into account public interest
aspects of high security so as to eliminate newly floated companies; that
in selecting suitable manufacturer; his capability and capacity to invest
and build necessary infrastructure had to be assessed in order ensure
that the Scheme became operationable from the targeted date and the
B same remained operational for a longer period; that selection of single
manufacturer was justified and was in public interest as it would ensure
security aspect because plates were required to be issued on the premises
of RTO and involvement of multiple manufacturers would not result in
satisfactory implementation of the Scheme; that long term contract was
necessitated in order to fix liability on the manufacturer and make him
C answerable and also because it required huge investment. and the
investment of such infrastructure required recovery over a long duration
by way of supply; that if the contract period were lowered the cost of
Plate might go up as the huge investment would be required to be
recovered in a shorter period; and that selecting an approved
D manufacturer through open tender to discharge the statutory duty of
RTO was not an act of the State creating monopoly of any private party.

Dismissing the petitions, the Court

HELD: 1.1. The State as the implementing Authority has to ensure
E that scheme of High security plates is effectively implemented. Keeping in
view the enormous work involved in switching over to new plates within
two year for existing vehicles of such large number in each State, resort to
'trial and error' method would prove hazardous. Its concern to get the
right and most competent person cannot be questioned. It has to eliminate
F manufacturers who have developed recently just to enter into the new
field. The insistence of the State to search for an experienced manufacturer
with sound financial and technical capacity cannot be misunderstood.
The relevant terms and conditions are so formulated to enable the State
to adjudge the capability of a particular tenderer who can provide a fail
- safe and sustainable delivery capacity. Only such tenderer has to be
G selected who can take responsibility for marketing, servicing and providing
continuously the specified plates for vehicles in large number firstly in
initial two years and annually in the next 13 years. The manufacturer
chosen would, in fact, be a sort of an agent or medium of the RTOs
, concerned for fulfillment of the statutory obligations on them of providing
H high security plates to vehicles in accordance with Rule 50. Capacity and
ASSON. OF REGISTRATION PLATES v. U.O.I. 499

capability are two most relevant criteria for framing suitable conditioins A
of any Notices Inviting Tenders. [519-F, G, H; 520-A, BJ

- 1.2. 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 but to ensure major quantity of supply in initial two years
and periodical supply for new vehicles for long period, only a
B

manufacturer who is sound both technically and financially is required.
Technically and financially, competent indigenous manufacturers are
mostly those who are in collaboration with foreign companies engaged
in such manufacturing activities. The scheme contemplated under Rule C
50 of registration plates is a new experiment for India. In the initial
stages of its implementation, tender conditions encouraging such
manufacturers who are in foreign collaborations cannot be held to be
discriminatory to indigenous manufacturers. Keeping in view the nature
of the contract and job involved particlarly its magnitude and the huge D
investment for infrastructure required, attempt to select such
manufacturer-may be having collaboration with foreign companies and
experience in foreign countries, cannot be held to be a deliberate attempt
on the part of the State Authorities to eliminate indigenous
manufacturers. [520-E, F, G, H; 521-A, BJ
E
Association of Registration Plates v. Union of India and Ors., [2004J
5 sec 364, referred to.

1.3. Unless the action of tendering Authority is found to be malicious
and misuse of its statutory powers, tender conditions are unassailable. F
On intensive examination of tender conditions, it is seen that they do not
violate the equality clause under Article 14 or encroach on fundamental
rights ofa class of intending tenderer under Article 19 of the Constitution.
There is no material on record to infer any ma/a fide design on the part
of the tendering Authority to favour parties having foreign collaborations
and keep out of fray indigenous manufacturers. Merely because few G
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. [521-C; 523-A, DJ

.. 1.4. Selecting one manufacturer through a process of open H
500 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A competition is not creation of any monopoly, in violation of Article
19(l)(g) of the Constitution read with clause (6) of the said Article. The

B
implementation involves large network of operations of highly
sophisticated materials. Maintenance of record by one and supervision
over its activity would be simpler for the State ifthere is on manufacturer
instead of multi-manufacturers as suppliers. The actual operation of the
Scheme though the RTOs in their premises would get complicated and
confused if multi-manufacturers are involved. That would also seriously
-
impair the high security concept in affixation of new plates on the
vehicles. If there is a single manufacturer he can be forced to go and
serve rural areas with thin vehicular population and less volume of
c business. Multi-manufacturers might concentrate only on urban areas
with higher vehicular population. [521-G, H; 522-A, B, CJ

1.5. Looking to the huge investment required and the nature of the
job which is most sophisticated requiring network and infrastructure,
D a long term contract, found viable and feasible, cannot be faulted by the
Court. If there are two alternatives available of giving a short-term or
a long-term contract, it is not for the Court to suggest that the short-
term contract should given. On the subject business management,
expertise is available with the State Authorities. The policy has been
chalked out and the tender conditions have been formulated after joint
E deliberations of Authorities of the State and the intending manufacturers.
Contract providing technical expertise, financial capability and
experience qualification with a long term of 15 years would serve a dual
purpose of attracting sound parties to stake their money in undertaking
the job of supply and safeguard public interest by ensuring that for a
F long period the work of affixation of security plates would continue
uninterrupted fulfillment of the object of the Scheme contained in
Rule 50. [522-E, F, G]

1.6. Article 14 of the Constitution prohibits the Government from
arbitrarily choosing a contractor at its will and pleasure. It has to act
G reasonably, fairly and in public interest in awarding contract. At the
same time, no person can claim fundamental right to carry on business ~

with the Government. All that he can claims that in competing for the .
contract, he should not be unfairly treated and discriminating to the
detriment of public interest. Government contracts are highly valuable
H assets and the Courtshould be prepared to enforce standards of fairness ' .
ASSON. OF REGISTRATION PLATES v. U.0.1. 501

on Government in its dealings with tenderers and contractors. [523-F, G] A
1.7. In interpreting Para 2 of Rule 50(1)(v) 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 B
obligation on the registering Authority under Rule 50(1)(v) to issue
specified kinds ofregistration 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 of high C
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. [525-D, E, F] D
2. In the context of Section 109(3) of the Act, an article to be affixed
to the motor vehicle like a high security registration plate is ·covered by
the use of expression "any article or process used by a manufacturer".
The expression 'any article or process used by a manufacturer' has to be
construed 'in the context' as not to restrict the expression 'manufacturer' E
to only manufacturer of motor vehicles as defined under Section 2(21A)
of the Act. The definition in the Act has to be construed according to the
'context' and if the 'context' otherwise indicates, a meaningful
interpretation is to be given to the words 'any article or process used by
any manufacturer' as used in Section 109(3). Registration plates are not F
manufactured by the manufacturer of motor vehicles but for maintenance
and operations of motor vehicles, registration plates are necessary.
Therefore, manufacturer ofregistration plates can be subjected.to certain
standards by a statutory order to be notified and published in accordance
with Section 109(3). Any restrictive interpretation of the said sub-section G
is neither called for from the language of the sub-section nor the object of
the provision. The statutory Order of2001 and clause 4(x) thereof cannot
be held to be beyond the purview of Section 109(3). Clause 4(x) of the
statutory Orderof2001, 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) H
502 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A is not only supported by Section 109(3) but by Rule 50 itself. Clause 4(x)
of the statutory order of2001 is merely enabling one and re-states what
Rule 50 contemplates. 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.
B (528-B, C, D, E, F, G, HJ

Krishnan Kakkanth v. Govt. ofKera/a, (1997) 5 SCC 495; Ugar Sugar
Works Ltd. v. Delhi Administration and Ors., (2001) 3 SCC 635; MR.F.
Ltd v. Inspector Kera/a Govt. and Ors., (1998) 8 SCC 227; Air India v.
Cochin International Airport Ltd, (2000) 2 SCC 617 and Asia Foundation
C and Construction Ltd v. Trafalgar House Construction Ltd., [1997) 1 SCC
738, referred.

CIVIL ORIGINAL JURISDICTION: Writ Petition (C) No. 41 of2003.

Under Article 32 of the Constitution of India.
D
WITH

W.P. (C) No. 24/2003, T.C.(C) Nos. 3031, 32, 38, 39-40, 41., 42, 62/
2003, W.P. (C) Nos. 56, 395, 77 of 2003.

E Mohan Parasaran, Additional Solicitor General, Gopal Subramanium,
R.F. Nariman, Harish N. Salve, T.L.V. Iyer, S. Balakrishanan, Vivek K.
Tankha, Hiren Uppal, Abhishek Agrawal, Ms. Sarika Varma, Ms. Liz Mathew,
Ms. Indu Malhotra, Vikram Mehta, Rakesh K. Sharma, K.V. Vijay Kumar,
Navin Prakash, Ms. Sandhya Goswami, B.K. Prasad, S.W.A. Qadri, Mrs.
F Anil Katiyar, Saket Singh, Anil Aggarwalla, Prashant Kumar, Joseph
Pookkatt, Rein Karanjawala, Ms. Ruby Singh Ahuja, Arunabh Choudhary,
Ms. Niharika, Sarvesh Singh, Ms. Manik Karanjawala, B.B. Singh, V.G.
Pragasam, S. Prasad, Abhay Kumar, Ms. U. Hazarika, Ms. Sumita Hazarika,
Avatar Singh Rawat, Additional Advocate General for State of Uttaranchal
G Baldev Atreya, Jatinder Kumar Bhatia, Arun K. Sinha, Rakesh Singh, Ashok
Bhan, D.S. Mabra, Ms. Sunita Sharma, Bijan K. Ghosh, Rana Mukherjee,
Siddharth Gautam, Suchit Mohanty, Pawan Kumar, Sanjay K. Verma,
Goodwill Indeever, Ranjan Mukherjee, P.N. Ramalingam, Praveen Swarup,
Ashok K. Mahajan, Mrs. Sarla Chandra, Vishwajit Singh, B.S. Banthia,
Avijit Battacharjee, Ms. Rachna Gupta, Anis Suhrawardy and Vijay Kumar
H for the appearing parties.
ASSON. OF REGISTRATION PLATES v. U.0.1. [DHARMADHIKARI, J.] 503

The Judgment of the Court was delivered by A

DHARMADHIKARI, J. : 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~,onstituting the
Division Bench. B
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') C
and the newly amended Central Motor Vehicles Rules, 1989 (hereinafter
referred to as 'the Rules').

The main grievance of the petitioner is that all Notices Inviting Tenders
(NITs) which have been issued by various State Governments contain D
conditions which seem to have been tailoredt to favour companies having
foreign collaboration. The tender conditions are described to be
discriminatory under Article 14 of the Constitution of India being aimed at
excluding indigenous manufacturers from the tender process. In all the
cases the grievance is that the work of supply of High Security Registration
Plates for all existing vehicles and new vehicles is being entrusted to a E
single license plates manufacturer in a State or a region and for a long period
of 15 years thus creating monopoly in favour of selected bidders to the
complete exclusion of all others in the field. The contention advanced is
that creation of monopoly in favour of few parties having connection with
foreign concerns is violative of fundamental right .of trade under Articles F
19 ( l) (g) and discriminatory under Article 14 of Constitution of India.

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.
0
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 H
504 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A 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 manne1' ofdisplay ofregistration marks on the
B
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 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: -
c
(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
corners of the plate shall be rounded to avoid injuries to the extent
of approx. 10 mm and the plates must have an embossed border.
D 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 oflegend 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
E 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
F 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;

G (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
H the sticker. The third registration mark shall be issued by the
ASSON. OF REGISTRATION PLATES v. U.O.I. [DHARMADHIKARI, J.] 505

registering authorities/approved dealers of the license plates A
manufacturer along with the regular registration marks, and thereafter
if such sticker is destroyed it shall be issued by the license plate
manufacturer or 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
B
the registering authority; The licence plates with all the above
specifications and the specified registrations for a vehicle shall be
issued by the registering authority or approved the licence plates
manufacturers or their dealers. The Central Road Research Institute,
New Delhi or any of the agency authorized by the Central C
Government shall approve the license plates manufacturers to the
above specification;

(vi) the size of the plate for different categories of vehicles shall
be as follows:-
D
For two and three wheelers 200 x 100 mm

For light motor vehicles and 340 x 200 mm/
Passenger cars 500 x 120 mm

For medium commercial vehicles E
Heavy commercial vehicles and
Trailer/combination 340 x 200 mm

Provided that this sub-rule shall apply to already registered vehicles
two years from the date of commencement: F
Provided further that the size of the registration plates for agricultural
tractors shall be as follows:-

Front - 285 x 45 mm
Rear - 200 x 100 mm G
2 to 6 ...................................................... .

[Underlining for pointed attention]

The rule .in the above manner requires manufacture of such registration H
506 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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
B 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 Governmental control and supervision. The
Scheme contained in Rule 50 substitutes the existing system where the
c registration number was given by the RTO and ordinary plate obtained from
the open market. The implementatiop of the rule requires cooperation and
coordination between the authorities of the State and the manufacturer of
registration plates.

D The source of power for providing Scheme of High Registration
Plates by Rule 50 is traceable to Rule Making Power of Central Gov,ernment
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
E 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 (I) of Section 41;
F
(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 4 I;

(c) the form and manner in which the particulars of the certificate
G of registration shall be entered in the records of the registering
authority under sub-section (5) of Section 41;

(d) the manner in which and the form in which the registration
mark, the letters and figures and other particulars referred to in sub.:
H section (6) of Section 4 I shall be displayed and shown;
ASSON. OF REGISTRATION PLATES v. U.0.1. [DHARMADHIKARI, J.] 507

(e) the period within which and the form in which the application A~
shall be made and the particulars and information it shall contain
under sub-section (8) of Section 41

(f) to (o) ............................. .
B
The Central Government has also issued the Motor Vehicles (New
High Security Registration Plates) Order, 200 I in purported exercise of
power under sub-section (3) of Section 109 of the Act. The relevant parts
of the order of 2001 contained in sub-clauses (viii) to (xiv) read as under:-

"(i) to (vii) ............... .
c
(viii) The registration plates fitted in the rear of the vehicles shall
be fastened with non-removable/non-resuable snap lock system.
For the sake of better security, at least two such snap locks shall
be fitted. D ·
(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 E
Department 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 F
Department.

(xii) The replacement for any existing registration plate may be
n~ade by the concerned transport authority only after ensuring that
the old plate has been surrendered and destroyed. G

(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.
H
508 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A (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}

According to the respondents, the source of power to issue the New
B
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 referred to as Order of
2001) which according to them is beyond provisions of the Act and has no
legal efficacy.
c
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.
D
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.

E 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
F would be affixed on the windshield of the vehicle.

6. The plate on the rear shall be fastened with non-removable/
non-resuable snap lock fitting system

The above-mentioned features to the High Security Registration Plates
G have been insisted upon for the following reasons:-

1. Hot Chromium based hologram would prevent counterfeiting.

2. The ingress letter "IND" on the plate would secure national
identity and standardization.
H
ASSON. OF REGISTRATION PLATES v. u.o.i. [DHARMADHIKARI, J.) 509

3. The laser etched 7 digits code to be given by the manufacturer. A
to each plate is with a view that there should be a sequential
identification ofindividual registration plate across the country.
This would act as a watermark and not erasable by any
mechanical or technical process.
B
4. Snap lock to be fitted on the rear portions of the vehicle would
be temper proof. Any.,attempt to remove the plate would break
it.

5. The reflective sheet of superior grade would be visible from
a minimum of 200 meters. c
6. The alpha-numeral would be easily readable and identifiable.

7. On alpha-numeral border, ingress letters "IND" would prevent
painting and screen printing which would act as protection
and counterfeiting. D

8. The sticker to be affixed on the windshield would have 7 digit
laser code containing the engine number and the chassis
number. This was so designed to be self-destructive upon
removal.
E
After :k.ule 50 was amended and New High Registration Plates
(amendment) Order, 2001 was issued in purported exercise of power under
Section 109(3) of the Act. The Ministry of Road Transport and Highways
vide its letter dated 6.3.2002 circulated the minutes of meeting of 4.3.2001
held between the representatives of all States and Union Territories on F
introduction of the new system of the registration plates. A series of
meetings were held by the Union 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:- G

• 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. H
510 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A 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.
B
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.

C 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
D 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
E 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
F to free open market situation having large vehicular population of cities and
likelihood of successful tenderer neglecting the rural area having low vehicular
population."

The Ministry of Road Transport and Highways left the discretion to
the States in the matter of issuing NIT but reiterated security and rural
G concerns. On the guidelines given by Central Government and pursuant to
joint deliberations between the officials of the Union, States and the
manufacturers, several States issued Notices Inviting Tenders which led to
filing of petitions in the High Courts of several States. The petitioners have
challenged the terms and conditions of the NITs. All those cases have been
H transferred to this Court for decision along with the writ petitions directly
ASSON. OF REGISTRATION PLATES v. U.0.1. [DHARMADHIKARI, J.] 511

filed here. It is not necessary to reproduce all the conditions in various A
Notices Inviting tenders issued by different States. The gist of impugned
conditions in various NITs may be summerised as under:-

Condition (a) :Tenderer/bidder or the promoter or any of the members
of joint venture should have sufficient experience in the field ofr.egistration B
plates and should be working at least in 5 countries for license plates and
in a minimum of 3 countries with license plates having security features
world-wide (necessary credentials from the Government of such country
should be attached along with a performa as per annexure XIII duly filed
in). Apart from the above credentials the tenderer/bidder should furnish
"Type Approved Certificate" from Testing Agencies". C
-I
Condition (b) :The tenderers/bidders of the joint venture partners
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 D
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 conzract will be for a period of fifteen years
commencing from the date of commencement of the scheme. A detailed E
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 F
the successful bidder. [Portions highlighted being under specific challenge]

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 conditiO.IJS.
G

_... The learned counsel appearing for the petitioners submit tliat the three H
512 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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
B 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
collaboration with the foreign collaborators. It becomes a pre-condition to
participate in the bidding process. It envisages collaboration with few known
foreign companies in the field of manufacture which alone can satisfy the
tender conditions. It is known to tendering authorities that there are not
C more than 1 or 2 companies that could satisfy the stringent eligibility
conditions laid down in the NITs.

It is submitted that Rule 50 as amended has inbuilt safeguards to
ensure the technical competence of the prospective manufacturer and for
D 'controlled issuance ofregistration plates. The manufacturers can manufacture
the said plates only after it has got type approved certificate from one of
the autonomous certifying agencies. Supply of the plates to the vehicle users
can be made only after the grant of certificate of conformity of the standard
of the production. The States, therefore, can have no jurisdiction to decide
or declare any of the manufacturers as competent or incompetent with ·
E respect to their technical competence.

To reinforce the challenge to the conditions and describing them as
highly unreasonable and resulting in complete exclusion of indigenous
manufacturers, it is submitted that at present, registration plates with specified
·p security features are in use only in some of the countries which are much
smaller than India. They are Armenia, Columbia, Congo, Curacao, Ethiopia,
Georgia, Iraq, Mali, Malta Oman, Palastine, Sri Lanka, Tanzania, Uganda,
Uragua, and Zambia. The learned counsel argues that it is difficult to
understand as to how the experience of working in the above mentioned
small countries with a very small vehicular population would be of any help
G as an experience for supplying registration plates for large vehicular
population oflndia 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
H of High Security Plates can manufacture and supply registration plates on
ASSON. OF REGISTRATION PLATES v. U.O.l. [DHARMADHIKARI, J.] 513

their own strength by complying with all standards and in conformity with A
all norms laid down in Rule 50 without entering into collaboration with any
foreign partner.

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, B
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 (l) (g) of the Constitution of India.
c
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 D
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 manufacturers are fully competent to be involved in the implementation E
of the new scheme of High Security plates.

To the condition laid down of prescribed minimum turnover of business,
the challenge made on behalf of the petitioners is that fixing such high
turnover for such a new business is only for the purpose of advancing the F
business interests of a group of companies having foreign links and support.
It is impossible for any indigenous manufacturers of security plates to have
a turnover of approximately 12.5 crores from the High Security Registration
Plates which are sought to be introduced in India for the first time and the
implementation of the project has not yet started in any of the States.
G
On the question of condition ofa period of 15 years for supply of High
Security Registration Plates the contention advanced is that it is an attempt
to create monopoly in favour of one private company or a cartel of companies.
This is against public interest as it would leave the consumers/vehicle
owners at the mercy of a sole successful bidder. Award of a contract for H .
514 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A a long term of 15 years would eliminate indigenous Type Approved
manufacturers for a long period of time and would deprive the vehicle users
of the number plates from the benefits of the competitive market. In the
event of further development of the technology of security plates, the State
Government would be obliged to involve the same manufacturers who had
B been awarded the contract first of all. The process of grant of Type
Approved Certificate is a continuing process and award of contract for a
long period of 15 years 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
c concerns, the petitioners highlights that if indigenous manufacturers are
involved in implementation of scheme the plates can be made available only
for Rs. 200-250 for two plates whe~eas creating monopoly right in favour
of joint venture companies in foreign collaboration would hike the cost of
plates to not less than Rs. 2,000 per pair in contrast to the market price of
D Rs. 800 to Rs. 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. Mand N.
E Publications, [1993] 1 SCC 445 and Union of India v. Dinesh Engineering,
(20011 s sec 491.

The other counsel appearing in connected cases for the petitioners have
submitted that selection of sole manufacturer for supply of registration
F 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
G 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 manufacturer
in the name of control and security.

H On the economics of the project, the contention is that keeping in view
ASSON. OF REGISTRATION PLATES v. U.O.I. [DHARMADHIKARI, J.] 515

large vehicular population of the country, benefits of a lucrative business A
are being unjustly conferred on a sole manufacturer for a long period of 15
years which is likely to give a profit ofRs.2500 crores to the sole manufacturer
in the first two years itself.

The learned counsel appearing for the Union of India, State Authorities B
and counsel appearing for the contesting manufacturers, in their replies,
have tried to justify the manner and implementation of the policy contained
in Rule 50. On behalf of the Union of India, learned Addi. Solicitor-General
submitted that under Rule 50 read with the statutory order of 200 l issued
under section 109(3) of the Act, the State Governments are legally competent
to formulate an appropriate policy for choosing a sole or more manufacturers C
in order to fulfill the object of affixation of security plates. The registration
plates have to be issued and affixed on the premises of the registering
authority and with its permission. It is submitted that the scheme contained
in rule 50 read with a statutory order of 2001 leaves it to the discretion of
the State concerned to even choose a single manufacturer for the entire State D
or more that one manufacturer regionwise. Such a selection cannot be said
to confer any monopoly right by the State to any private individual or
concern. It is just like selection of an appropriate person for grant of a
contract or largesse by the State on laid down criteria of experience and
• technical qualifications. A fair process of selection may eliminate persons
or parties who may not be found technically, financially and on the basis E
of past experience sound to be awarded the contract. Reliance is placed on
Krishnan Kakkanth v. Govt. of Kera/a, (l 997] 5 SCC 495; Ugar Sugar
Works Ltd. v. Delhi Administration & Ors., [2001] 3 SCC 635; and MR.F.
Ltd. v. Inspector Kera/a Govt. & Ors., [1998] 8 SCC 227.
F
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] ..lt is submitted
that the main objective of the cothpetitive 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 G
• capability and capacity to invest and build necessary infrastructure, has to
be assessed so that through him, the scheme becomes operationable from
the targeted date 28.2.2003 and without arty 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 H
516 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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.

B 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 security registration plates.
c It should be able to prove existence of requisite financial resources to
integrate large number of RTOs in the State on an on-line platform. The
manufacturer should have a permanent technical partner to the venture so
that the technology support is assured for the entire period of contract. The
manufacturer to be selected should have access to the requisite technology
D and should be in a position to upgrade, expand and upscale operation on
a continuous and sustainable basis. It is necessary to have a long term
contractual relationship so that State can fix liability on the manufacturer
and make him answerable for damages or any defects in the registration
plates or for improper implementation of the project. The requirement of
the rule that registration number and plates will be issued on the premises
E of the RTO, is to maintain secrecy and security. For the above purpose,
selection of one single manufacturer would ensure security aspects instead
of more than one manufacturers operating from different points.

With regard to 15 years long term contract, it is submitted that it is also
F in public interest. The manufacturer who has to stake the money would have
to make huge investment by installing high technology based networking r-
at each RTO's office. A short-term contract would not, therefore, attract an
experienced and reliable manufacturer. Long-term contract with fixed price
for entire 15 years period is beneficial to•the customers as there would be
G no price increase for the stipulated period irrespective of inflation. Fifteen
years period has been chosen in proportion to the average road-worthy life
of a vehicle in India. •

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
H very large number of existing vehicles within first two years. Thereafter,
ASSON. OF REGISTRATION PLATES v. U.b.l. [DHARMADHIKARI, J.]., 517

every year about one lakh vehicles in each State would be required to be A
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 long-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 B
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.

Justifying the selection of a single manufacturer for a region or an C
entire State, to ensure security considerations, the following factors have
>
been highlighted as sub-serving the public interest :-

I. That it would not be possible to implement the scheme since
the scheme provides that the approved manufacturer would D
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.
E
,.,
-'· 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.
F
4. Different manufacturers would lead to variations in price
between different manufacturers.
(
5. The State is at disadvantage since all the manufacturers would
prefer to concentrate on supplying only in Kolkata and would
1 not go to the other far flung RTOs where he would recover G
the returns on his investment.

6. In case more that one manufacturer operate within the state,
it will lead to discrepancy and non-uniformity in price structure
prevailing in different regions. H
518 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.ll.

A 7. Difficulty in assimilation of data from more than one
manufacturer thus leading to disaggregated and confusing
database signals. Such sensitive and security related b_usiness
must be governed by uniform database management processes '
and unified standardized coding practices.
B
8. Different manufacturers would mean that there would be
variation in quality of the material and in terms of workmanship.

9. Possible duplication of Registration Plates due to competition ....
between manufacturer of different regions and lack of
c aggregated security controlled database management systems.

10. Non-conformity of data of different manufacturers would
lead to confusion and integration of data from the State RTOs.

11. Difficulty in fixing up the answerability on any one
D
manufacturer for not following the prescribed procedure.

12. Confidentiality of the public database would be severely
compromised.

E 13. Provision of Training ofRTO personnel by each manufacturer
would be a logistic nightmare and would lead to confusion and
further lead to the system being compromised severely.

14. It is also important to note that each registration plate has a
F unique number, and consequently, all the RTOs are required
to be electronically connected to each other, ifthe vendors are
allowed to proliferate, this connection would not be possible,
and would lead to complete chaos.

By highlighting the above factors, it is submitted that if multiple
G 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
H accordance with the provisions of the Act and the Rules. It is submitted that
ASSON. OF REGISTRATION PLATES v. U.0.1. [DHARMADHIKARI, J.] 519

tender conditions are suitably formulated for performance guarantee, A
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' B
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 C
v. Cochin International Airport Ltd., [2000] 2 SCC 617 and Asia Foundation
& Construction Ltd. V. Trafalgar House Construction Ltd., [1997] 1 sec
738.

The learned senior counsel appearing for the respondent no. 5, has D
supported the submissions made on behalf of the Union of India and the
State of West Bengal by advancing separate arguments with additional
reasons.

We shall separately deal with the submissions made on behalf of the
petitioners on the interpretation of the provisions of rule 50 and the statutory E
order of 2001 issued under the provisions of the Act.

Taking up first the challenge to the impugned conditions in the Notices
Inviting Tenders issued by various State authorities, we find sufficient force
in submissions advanced on behalf of the Union and the State authorities F
and the contesting manufacturers. The State as the implementing authority
has to ensure that scheme of high security plates is effectively implemented.
Keeping in view the enormous work involved in switching over to new
plates within two years for existing vehicles of such large numbers in each
State, resort to 'trial and error' method would prove hazardous. Its concern
to get the right and most competent person cannot be questioned. It has to G
eliminate manufacturers who have developed recently just to enter into the

..
new field. The insistence of the State to search for an experienced
manufacturer with sound financial and technical capacity cannot be
misunderstood. The relevant terms and conditions quoted above are so
formulated to enable the State to adjudge the capability of a particular H
520 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A tenderer who can provide a fail-safe and sustainable delivery capacity. Only
such tenderer has to be selected who can take responsibility for marketing,
servicing and providing continuously the specified plates for vehicles in
large number firstly in initial two years and annually in the next 13 years.
The manufacturer chosen would, in fact, be a sort of an agent or medium
B of the RTOs concerned for fulfillment of the statutory obligations on them
of providing high security plates to vehicles in accordance with rule 50.
Capacity and capability are two most 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
C countries, a common minimum net worth of Rs. 40 crores and either joint-
venture partner having a minimum annual turnover of at least Rs. 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
D contractual obligations which looking to the magnitude of the job requires
huge investment qualitatively and quantitively.

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
E 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
F required. Learned Brother G. P. Mathur J., in his elaborate opinion expressed
by him [See 2004(5) SCC 364] found a serious vice in the tender conditions
that they necessarily intend to promote such companies which have foreign
collaborations and exclude indigenous manufacturers.

It is not controverted that the technical 'know-how' for the manufacture
G of high security registration plates presently is available outside India.
Technically and financially, competent indigenous manufacturers are mostly
those who are in collaborntions with foreign companies engaged in such
manufacturing activities. The scheme contemplated under rule 50 of
registration plates is a new experiment for India. In the initial stages of its
H implementation, tender conditions encouraging such manufacturers who are
ASSON. OF REGISTRATION PLATES v. U.0.1. [DHARMADHIKARI, J.] 521

in foreign collaborations cannot be held to be discriminatory to indigenous A
manufacturers. Keeping in view the mrture of the contract and job involved
particularly its magnitude and the huge investment for infrastructure required,
attempt to select such manufacturer - may be having collaboration with
~
foreign c8°mpanies and experience in foreign countries cannot be held to be
a deliberate attempt on the part of the State authorities to eliminate indigenous B
manufacturers.

In the matter of formulating conditions of a tender document and

- awarding a contract of the nature of ensuring supply of high security
registration plates, greater latitude is required to be conceded to the State
authorities. Unless the action of tendering Authority is found to be malicious c
·and misuse of its statutory powers, tender conditions are unassailable. On
intensive examination of tender conditions, we do not find that they violate
-'
the equality clause under Article 14 or encroach on fundamental rights of
a class of intending tenderer under Article 19 of the Constitution. On the
basis of the submissions made on behalf of the Union and State authorities D
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 fiaancial capability to
undertake the job of supply of such high dimension, on a long term basis
E

and in a manner to ensure safety and security which is the prime object to
oe achieved by the introduction of new sophisticated registration plates.
F
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.

.. Selecting one manufacturer through a process of open competition is
not creation of any monopoly, as contended, in violation of Article 19(l)(g)
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 H
522 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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. h 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
B 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 seriously impair the high
security concept in affixation of new plates on the vehicles. If there is a
single manufacturer he can be forced to go and serve rural areas with thin
c vehicular population and less volume of business. Multi-manufacturers
might concentrate only on urban areas with higher vehicular population.

The fifteen years contract period has also been supported by Union of
Indian and State authorities. We find great substance in the submissions
D made on the data supplied as a justification for awarding contract for long
period of 15 years. There would be a huge investment required towards the
infrastructure by the selected manufacturer and the major return would be
expected in initial period of two years although he would be bound down
to render his services for future vehicles on periodically for a long period.
E Looking to the huge investment required and the nature of the job which
is most sophisticated requiring network and infrastructure, a long term
contract, if thought viable and feasible, cannot be faulted by the court. If
there are two alternatives available of giving a short-term or a long-term
contract, it is not for the court to suggest that the short-term contract should
be given. On the subject of business management, expertise is available with
F the State authorities. The policy has been chalked out and the tender conditions
have l5een foFiimlated after joint deliberations of authorities of the State and
the intending manufacturers. Contract providing technical expertise, financial
capability and experience qualifications with a long term of 15 years would
serve a dual purpose of attracting sound parties to stake their money in
G undertaking the job of supply and safeguard public interest by ensuring that
for a 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
H its striking down as prayed for on behalf of the petitioners.
ASSON. OF REGISTRATION PLATES v. U.O.l. [DHARMADHIKARI, J.] 523

.... There is no material on record to infer any malafide design on the part A
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 B
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 c
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
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. E

Certain preconditions or qualifications for tenders have to be laid down
to ensure that the contractor has the capacity and the resources to successfully

- execute the work, Article 14 of the Constitution prohibits the government
from arbitrarily choosing a contractor at its will and pleasure. It has to act
. reasonably, fairly and in public interest in awarding contract. At the same
F
time, no person can claim fundamental right to carry on business with the
government. All that he can claim is that in competing for the contract, he
should not be unfairly treated and discriminated to the detriment of public
interest. Undisputedly, the legal position which has been firmly established
from various decisions of this Court, cited at the Bar (supra) is that government G
contracts are highly valuable assets and the court should be prepared to
enforce standards of fairness on government in its dealings with tenderers
and contractors.

The grievance that the terms of notice inviting tender in the present H
524 SUPREME COURT REPORTS [2004) SUPP. 6 S.C.R.

A cases virtually creates a monopoly in favour of parties having foreign
· collaborations, is without substance. Selection of a competent contractor for
assigning job of supply of a sophisticated article through an open tender
procedure, is not an act of creating monopoly, as is sought to be suggested
on behalf of the petitioners. What has been argued is that the terms of the
B Notices Inviting Tenders deliberately exclude domestic manufacturers and
new entrepreneurs in the field. In the absence of any indication from the
record that the terms and conditions were tailor-made to promote parties
with foreign collaborations and to exclude indigenous manufacturers, judicial
interference is uncalled for.

C Challenge to the tender conditions on Paragraph 2 of Rule 50(J)(v).

On behalf of the petitioners, paragraph 2 of r:.ile 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
.D 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. - (I) ............................ .

(i) to (iv)
E

(v)

F 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
G above specification.
[Emphasis supplied}

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
H meaning and cannot be read to mean "selected" through notice inviting
ASSON. OF REGISTRATION PLATES v. U.O.I. [DHARMADHIKARI, J.] 525

tender. In this respect, it is further submitted that the rule making authority A
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 the intendment B
of the rule.

The above argument seems attractive but on closer scrutiny is
unacceptable. The rule is interpreted to mean that the registration plates can
either be issued by RTO to the exclusion of all others or all type approval
certificate holders must be allowed to do business of supply in open market. C
In other words, according to the petitioners, the rule contemplates that ifthe
registering authority does not supply the plates itself, it allows all TAC
holders to do the business without any restriction.

In interpreting the rule, the object of the scheme providing for affixation D
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(l)(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( l ), if reasonably construed, E
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 F
rule would result in frustrating the high security aspect and object of the
scheme of affixation of high security registration plates on vehicles.

Challenge to Para 4(x) of the Motor-Vehice/s [New High Security Regis-
tration Plates] Order, 2001 issued in purported exercise of powers under
section 109(3) of the Act. G

Para 4(x) of the statutory Order, 2001 mentioned above, reads as
under:-

"The manufacturer or the vendors selected by the State Transport H
526 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A Department for supply of such registration plates may be for the
State as a whole or for any region of the State. "

On behalf of the petitioners, it is submitted that para 4(x) of the
~.tatutory Ord;r, 2001 is ultra viressection 109 (3) of the Act under which
B '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. (I) Every motor vehicle shall be so
constructed and so maintained as to be at all times under the
c 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.
D
(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.
E
[High.f ighted for interpretation}.

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),
F a direction or order can be issued only to a 'manufacturer' defined in section
2(21 A) to mean manufacturer ofmotor 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 a customer
without registration plate. Chapter IV containing section 39 to 65 deal with
G registration of motor vehicles of different types. The proviso to section 39
of the Act says : 'nothing in this section shall apply to motor vehicle in
possession of a dealer subject to such conditions as may be prescribed by
the Central Government'. Section 41 also points to the same position. It casts
an obligation on the owner of a motor vehicle to obtain registration. The
H question of issuing a certificate of registration and assigning to a motor
ASSON. OF REGISTRATION PLATES v. U.0.1. [DHARMADHIKARI, J.] 527

vehicle a registration mark arises only after sale of motor vehicle. Therefore, A
until the motor vehicle has been sold to a person by a dealer, the registering
authority would not come into the picture and there is no occasion for
assigning it a registration mark. A manufacturer of motor vehicle is not at
all concerned with registration thereof by the registering authority. 9n the
basis of above interpretation of provisions of the Act, the submissiorr made B
is that under section 109(3), the Central Government can only prescribe
standards for any article or process used by the manufacturer in the
manufacturing of the vehicle and not for selecting any manufacturer of
registration plates to the exclusion of others. It is submitted that reading sub-
section (3) with sub-section (I) & (2) of section I 09 of the Act, the position
is that the provisions have nothing to do with registration plates of the
c
vehicles.

It is further submitted that power to issue directions as contained in
para 4(x) of the statutory order of200l, cannot be traced to any provision
in chapter IV of the Act dealing with registration of motor vehicles or to D
the rule making power under section 64(d). It is submitted that any provision
regarding registration plates can only be made by rule framed by Central
Government in accordance with provisions of the Act. 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 E
para 4(x) of the statutory order of2001, 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
F
displayed on the motor vehicles. On the above ground, it is submitted that
para 4(x) of the statutory order of2001 deserves to be struck down as ultra
vires the Act. It is violative of the Article 19(1 )(g) of the Constitution.

The above argument based on section 109(3) and the other provisions G
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) H
528 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 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(2 lA) 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
B the context of sub-section (3) of section 109, an article to be affixed to the
motor vehicle like a high security registration plates is covered by the use
of expression "any article or process used by a manufacturer". 'In the
context' if the provision contained in sub-section 3 is read reasonably, an
article' which is adjunct or necessarily attachable to a motor vehicle, would
C also be covered in the said expression. The statutory order of 2001 is
published in the official gazette. It does not fall outside the scope of sub-
section (3) of section 109 of the Act. The expression 'any article or process
used by a manufacturer' has to be construed 'in the context' as not to restrict
the expression 'manufacturer' to only manufacturer of motor vehicles as
defined under section 2 (21A) of the Act. The definition in the Act has to
D be construed according to the 'context' and if the 'context' otherwise
indicates a meaningful interpretation is to be given to the words 'any article
or process used by any manufacturer' as used in sub-section 3 of section
I 09 of the Act. Registration plates are not manufactured by the manufacturer
.of motor vehicles but for maintenance and operations of motor vehicles,
E 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 ofleamed Brother G.P. Mathur J., in these cases. For
F the reasons mentioned by us above, 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 I 09 of the Act. Clause 4(x) of the statutory order
of 200 I, 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
G power of the State to issue order containing clause 4(x) is not only supported
by sub-section 3 of section I 09 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
H be supported as having been issued in exercise of executive power of the
ASSON. OF REGISTRATION PLATES v. U.O.I. [DHARMADHIKARI, J.) 529

Central Government which is co-extensive with its legislative power. A

For the above reasons, 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.
B
In the circumstances, we direct that the parties shall bear their own..
costs in all these cases.

K.K.T. Petition dissmised.