Case: Association Of Registration Plates Vs. Union Of India

public property. This requirement is necessary to avoid unreasonable and arbitrary decisions being taken by public authorities whose actions are amenable to judicial review. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution..." 26. I am of the opinion that in the fact situation of the present case especially having regard to the requirement contained in second para of clause (v) of sub-rule (1) of Rule 50 of obtaining approval from Central Road Research Institute or from any of the authorised agencies, the further condition in the NITs regarding turn over of a particular amount in the preceding year coupled with 15 or 25 per cent of the said turn over in the business of manufacturing licence plates and also the condition regarding experience in 3 to 5 countries are wholly arbitrary and have no rationale basis. The said condition is accordingly struck down. 27. Shri Ganesh has also submitted that clause 4 (x) of the Motor Vehicles (New High Security Registration Plates) Order, 2001 which lays down that the manufacturer or the vendor selected by the State for supply of such registration plates may be for the State as a whole or any region of the State is ultra vies as no such order can be made in the exercise of power conferred by sub-section (3) of Section 109 of the Act. Section 109 finds place in Chapter VII of the Act and the title of the said Chapter is - Construction, Equipment and Maintenance of Motor Vehicles. Section 109 of the Act reads as under: Section 109: General provision regarding construction and maintenance of vehicles: (1) Every motor vehicle shall be so constructed and so maintained as to be at all times under the effective control of the person driving the vehicle.(2) Every motor vehicle shall be so constructed as to have right hand steering control unless it is equipped with a mechanical or electrical signaling device of a prescribed nature.(3) If the Central Government is of the opinion that it is necessary or expedient so to do, in public interest, it may, by order published in the Official Gazette, notify that any article or process used by a manufacturer shall conform to such standard as may be specified in that order. 28. Section 2 (21-A) defines manufacturer shall and it means a person who is engaged in the manufacture of motor vehicles. Section 2(28) defines motor vehicles or vehicle and it means any mechanically propelled vehicle adapted for use upon roads. A motor vehicle manufactured by a manufacturer is sold without a registration plate. Thereafter the dealer sells the motor vehicle to a customer again without the registration plate. This position will be clear from the proviso to Section 39 of the Act which says that nothing in the section shall apply to a 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 as it enjoins an application on behalf of the owner of a motor vehicle for its registration. The question of issuing a certificate of registration and assigning it a registration mark arises only after sale of a motor vehicle. Therefore until the motor vehicle has been sold to a person by a dealer, the registering authority would not come into picture and there is no occasion for assigning it a registration mark. A manufacturer of vehicle is not at all concerned with registration thereof by the registering authority or assignment of a registration mark as contemplated by section 41 of the Act. Under sub-section (3) of section 109 the Central Government can prescribe the standards for any article or process used by a manufacturer. The power under this provision can, therefore, be exercised by the Central Government for prescribing the standard of the materials or articles or any process used as such in the manufacturing of the vehicle. Reading of sub-section (3) along with sub-sections (1) and (2) will show that it basically deals with the mechanical construction of the vehicle and to ensure safety both of the passengers travelling therein and also of others who are on the road. No order concerning a number plate simplicitor can, therefore, be issued by the Central Government in exercise of power conferred by sub-section (3) of Section 109 of the Act. Shri Rohtagi has submitted that power to issue such kind of notification can be traced to sections 41(6) and 64 (b & d) of the Act. It is not possible to accept the submission made. Section 41(6) empowers the Central Government to allot group of letters and figures to a State for the purpose of assignment of registration mark by making a notification in the Official Gazette. Therefore, there is no scope for issuing the impugned notification in exercise of power conferred by this provision. Section 64 confers rule-making power upon the Central Government but in view of section 212 the power to make rules under the Act is subject to the condition of the rules being made after previous publication. It is not the case of the respondents that the previous publication of the notification dated 22nd August, 2001 had been made. The Central Government has also never treated it to be a rule. Consequently the impugned notification cannot be held to have been made by the Central Government in exercise of power under Section 64(d) of the Act. In fact the Central Government has always treated it to be an Order issued under sub-section (3) of section 109 of the Act. The inevitable conclusion is that clause 4(x) of the notification dated 22nd August, 2001 could not be issued by the Central Government in exercise of the power conferred by section 109(3) of the Act and therefore the said notification is ultra vires.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]13. The statutory provisions namely, the Act and the Rules do not lay down that there has to be only manufacturer for the entire State. The question which requires consideration is whether in view of these statutory provisions is it permissible for the Central Government, while exercising power under Section 109(3) of the Act, to issue an Order to the affect that the manufacturer or the vendor selected by the State for supply of such registration plates may be for whole of the State or any region of the State which in affect means selection of a single manufacturer for supply of registration plates in the entire State. Similarly the competence of the State Government to select a single manufacturer for supply of licence plates for the whole State has to be judged in that light. It is important to emphasise that in the case in hand the registration authority of the State Government has not undertaken to supply the licence plates. It is not a case where the State Government is either granting a largesse or selling its property where it can do so in favour of the single individual by inviting tenders. Similarly it is not a case where the State Government maybe buying some property which it may be so from a single individual by inviting tenders. Here the job of supplying HSVRP to all the existing owners of the vehicles and new buyers for a period of 15 years is being entrusted to a single licence plates manufacturer. Such HSVRP have to be bought by all those who own a vehicle. By selection of a single manufacturer a monopoly is sought to be created in his favour and all the owners of vehicles would be compelled to purchase HSVRP from than single manufacturer or his dealers even though in the matter of purchase of vehicle they have have a side range of choice without any kind of compulsion by the Government. This action of the State Government whereby all other licence plates manufacturers, who are satisfying the statutory requirement, namely, of second para of clause (v) of(1) of Rule 50 of the Rules, (have got Type Approval Certificate from the Central Road Research Institute or authorised agency) are totally excluded clearly violates the fundamental right of the writ petitioner as guaranteed under Article 19(1)(g) of the Constitution.14. The first decision touching the creation of a monopoly in favour of a private individual to carry on business to the exclusion of all others was rendered by Six Judges of this Court (the Court then consisted of six Judges only) in Rasheed Ahmed vs. Municipal Board Kairana, AIR 1950 SC 163 . In this case the Municipal Board, on the basis of an auction gave the exclusive contract, for carrying on whole sale business in vegetables, in favour of one H. The writ petitioner Rasheed Ahmad, who was earlier carrying on wholesale business as commission agent in vegetable applied for a licence but his application was rejected and the stand of the Municipal Board was that except for H, no one else can carry on the said wholesale business. It was held that the action of the Municipal Board in granting monopoly rights in favour of H violated the fundamental right of the writ petitioner guaranteed under Article 19(1)(g) of the Constitution.In view of Article 19(6)(ii) the carrying of any trade, business, industry or service by the State, would not be questionable on the ground that it infringes the right guaranteed by Article 19(1)(g) even though by law the State excludes the citizens, wholly or partially, from the trade or business entered upon by the State. The State is, therefore, free to create a monopoly in favour of itself. In Akadash Padhan vs. State of Orissa, AIR 1963 SC 1047 the vires of Orissa Kendu Leaves (Control of Trade) Act came up for consideration. Section 3 of the Act provides that no person other than (a) the Government; (b) an officer of government authorised in that behalf; (c) an agent in respect of the unit in which the leaves have grown shall purchase or transport Kendu leaves. Section 4 empowered the government to fix the price at which Kendu leaves shall be purchased by any officer or agent from the growers of Kendu leaves and section 8 empowered the government to appoint agents for different units to purchase Kendu leaves. Section 10 provides that Kendu leaves purchased by government or by their officers or agents under the Act shall be sold or otherwise disposed of in such manner as government may direct". Agents were appointed by the government to purchase Kendu leaves and they were authorised under the agreements to purchase Kendu leaves and also to trade in the Kendu leaves so purchased. After examining the provisions of the Act this Court held that sections 3 and 4 of the Act were valid but declined in substance to give effect to the monopoly because the agents appointed were not agents of the government merely for purchasing Kendu leaves but were authorised to carry on trade in leaves purchased on their own account. It was held that the operation of the State monopoly was also to give rise to a monopoly in favour of the agents which did not had the protection of Article 19(6)(ii). It was further held that the law cannot be used by the State for the private benefit of agents, it must only be administered for the benefit of the general public and any arrangement in which under the guise of monopoly the State permitted a set of persons to make profit for themselves by carrying on business in Kendu leaves on their own behalf was invalid. After the decision in Akadasi Padhan (supra) the Government of Orissa made some changes in the machinery for the implementation of the monopoly and entered into an agreement of sale of Kendu leaves after inviting tenders from traders. This was again challenged and in Rashbihari Panda vs. State of Orissa (1969(1) SCC 414 which was decided by a Constitution Bench. It was held that the validity of the law by which the State assumed the monopoly to trade in a given monopoly has to be judged by the test whether the entire benefit arising there from is to enure to the State, and the monopoly is not used as a cloak for conferring private benefit upon a limited class of persons. It was also held that the action of the government if conceived and executed in the interest of the general public is not open to judicial scrutiny but it is not open to judicial scrutiny but it is not open to the government thereby to create a monopoly in favour of third parties from their own monopoly. It was accordingly held that both the Schemes evolved by the government were violative of the fundamental right of the writ petitioners under Article 19(1)(g) and Article 14 because the schemes give rise to a monopoly in the trade in Kendu leaves to certain traders, and singled out other traders for discriminatorymentioned earlier the eligibility criteria in the NIT issued by the Union Territory of Daman and Diu contains a clause that the bidder or the promoter of the joint venture partner should have experience in at least three countries in the field of registration plates having security features, their minimum net worth should be Rs. 40 crores, annual turnover in the immediately proceeding last year should be Rs. 50 crores and at least 15 per cent of this turnover must be from the registration plates business. The eligibility condition in the NIT issued by the State of Tamil Nadu requires the bidder, promoter or any member of the joint venture should have sufficient experience of working in at least five countries; must have a minimum net worth of Rs. 50 crores; and must have annual turnover of Rs. 100 crores in the immediately preceding last year. Similar is the case for State of Pondicherry which requires working experience in five countries; minimum annual turn over of Rs. 75 crores in the immediately preceding year and at least 15 per cent of this turn over must be from registration plates business. The State of West Bengal requires minimum net worth of Rs. 50 crores; must have a minimum annual turn over of Rs. 50 crores during the yearand 25 per cent of this amount should have from the High Security Registration Platescondition requiring certain percentage of turn over in registration plates business and experience in three to five countries, it is submitted, has been deliberately introduced in order to oust all Indian companies at the threshold and to ensure that the contract is awarded only to respondent nos. 5,6,7 and 89 to the conclusion of all others as they alone would be able to meet the eligibility qualification.21. In my opinion there is substance in the contention raised on behalf of the writ petitioners. The legislature has taken care in making a specific provisions regarding eligibility of manufacturers of licence plates. The second para of clause (v) of(1) of Rule 50 of the Rules says that the Central Road Research Institute, New Delhi or any of the agency authorised by the Central Government shall approve licence plates manufactures to the specifications given in clauses (i) to (iv) of theTherefore in terms of the Rules once approval is given to a licence plates manufacturer by Central Road Research Institute, New Delhi or any other agency authorised by the Central Government, it becomes eligible to supply HSVRP (licence plates). The HSVRP are sought to be introduced for the first time in the country after Rule 50 had been amended on 28.3.2001. Any clause in NIT which requires that the tenders or bidder or joint venture partner should have a turnover of Rs. 50 crores in the immediately preceding last year and at least 25 per cent of this turnover must be from the licence plates business, inevitably means that it would be a foreign company. The HSVRP having not been introduced in India so far it is obvious that no Indian company can have a turn over of that magnitude in the preceding year. The clear impact of this condition is that all Indian companies must be ousted even though they may be technically competent to manufacture HSVRP and have the requisite approval from the body or agencies mentioned in second para of clause (v) of(1) of Rule 50 of the Rules. The petitioners have placed on record the reply given by Hon. Minister for Road Transport and Highways in the Rajya Sabha on 29th November, 2001 in response to a question put to him regarding the details of the countries where holographic vehicle number plates have been made mandatory and the names of such countries are as under:(a) Armenia (b) Columbia (c) Congo (d) Curacao (e) Ethiopia (f) Georgia (g) Iraq (h) Mali (i) Maalta (j) Oman (k) Palestine (1) Srilanka (m) Tanzania (n) Uganda (o) Uruguay (p) Zambia.I am of the opinion that in the fact situation of the present case especially having regard to the requirement contained in second para of clause (v) of(1) of Rule 50 of obtaining approval from Central Road Research Institute or from any of the authorised agencies, the further condition in the NITs regarding turn over of a particular amount in the preceding year coupled with 15 or 25 per cent of the said turn over in the business of manufacturing licence plates and also the condition regarding experience in 3 to 5 countries are wholly arbitrary and have no rationale basis. The said condition is accordingly struck down.defines manufacturer shall and it means a person who is engaged in the manufacture of motor vehicles. Section 2(28) defines motor vehicles or vehicle and it means any mechanically propelled vehicle adapted for use upon roads. A motor vehicle manufactured by a manufacturer is sold without a registration plate. Thereafter the dealer sells the motor vehicle to a customer again without the registration plate. This position will be clear from the proviso to Section 39 of the Act which says that nothing in the section shall apply to a 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 as it enjoins an application on behalf of the owner of a motor vehicle for its registration. The question of issuing a certificate of registration and assigning it a registration mark arises only after sale of a motor vehicle. Therefore until the motor vehicle has been sold to a person by a dealer, the registering authority would not come into picture and there is no occasion for assigning it a registration mark. A manufacturer of vehicle is not at all concerned with registration thereof by the registering authority or assignment of a registration mark as contemplated by section 41 of the Act. Under(3) of section 109 the Central Government can prescribe the standards for any article or process used by a manufacturer. The power under this provision can, therefore, be exercised by the Central Government for prescribing the standard of the materials or articles or any process used as such in the manufacturing of the vehicle. Reading of(3) along with(1) and (2) will show that it basically deals with the mechanical construction of the vehicle and to ensure safety both of the passengers travelling therein and also of others who are on the road. No order concerning a number plate simplicitor can, therefore, be issued by the Central Government in exercise of power conferred by(3) of Section 109 of the Act.Shri Rohtagi has submitted that power to issue such kind of notification can be traced to sections 41(6) and 64 (b & d) of the Act. It is not possible to accept the submission made. Section 41(6) empowers the Central Government to allot group of letters and figures to a State for the purpose of assignment of registration mark by making a notification in the Official Gazette. Therefore, there is no scope for issuing the impugned notification in exercise of power conferred by this provision. Section 64 conferspower upon the Central Government but in view of section 212 the power to make rules under the Act is subject to the condition of the rules being made after previous publication. It is not the case of the respondents that the previous publication of the notification dated 22nd August, 2001 had been made. The Central Government has also never treated it to be a rule. Consequently the impugned notification cannot be held to have been made by the Central Government in exercise of power under Section 64(d) of the Act. In fact the Central Government has always treated it to be an Order issued under(3) of section 109 of the Act. The inevitable conclusion is that clause 4(x) of the notification dated 22nd August, 2001 could not be issued by the Central Government in exercise of the power conferred by section 109(3) of the Act and therefore the said notification is ultra vires.