ASSOCIATION OF REGISTRATION PLATES versus UNION OF INDIA AND ORS.

Citation: [2004] SUPP. 2 S.C.R. 783 · Decided: 26-05-2004 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Matter referred to larger bench

Judgment (excerpt)

ASSOCIATION OF REGISTRATION PLATES 
A 
v. 
UNION OF INDIA AND ORS. 
MAY 26, 2004 
[RAJENDRA BABU, CJ. AND G.P. MATHUR, J.] 
B 
Motor Vehicles (New High Security Vehicle Registration Plates) 
Order, 2001--Clause 4(x)-Selection of single manufacturer for High 
Security Vehicle Registration Plates (HSVRP) for motor vehicles for whole 
of State under, and procedure adopted by various State Governments in C 
inviting bids for the purpose-Validity of-Held: Per Mathur, J.: Clause 
4(x) is liable to be quashed as selection of single manufacturer creates 
monopoly in his favour-Eligibility conditions mentioned by various State 
Government also quashed-Furthermore, Central Government cannot 
issue Order of 2001 in exercise of power under section 109(3), as such D 
ultra vires-Per Rajendra Babu, J.: No monopoly is sought to be created 
and hence, clause 4(x) not liable to be quashed-In view of difference of 
opinion, matter referred to larger Bench-Motor Vehicles Act, 1988-
Section I 09(3). 
E 
The question which arose for consideration in these matters is 
with regard to the validity of clause 4(x) of the Motor Vehicles (New 
High Security Registration Plates) Order, 2001 issued by the Central 
Government in exercise of power under section 109(3) of the Motor 
Vehicles Act, 1988 that the State Government is to select a single 
manufacturer for supply of High Security Vehicle Registration Plates F 
(HSVRP) for motor vehicles for the whole of the State, and the 
eligibility conditions imposed in the notice inviting tenders (NITs) 
issued by various State Governments regarding turnover of Rs. 50 
crores or so with 15 to 25 per cent thereof in the business of 
manufacture of registration plates in the immediately preceding year, G 
and experience of manufacturing registration plates in 3/5 countries, 
for appointment of manufacturer for supply of HSVRP. 
Petitioners contended that clause 4(x) of the Order and the notices 
inviting tenders by the variious State Governments for selection of one H 
783 
784 
SUPREME COURT REPORTS [2004] SUPP. 2 S.C.R. 
A manufacturer for whole of the State violates the fundamental right of 
the writ petitioner guaranteed under Article 19(1 )(g) of the Constitution 
as a monopoly is being created in favour of a single private operator; 
that the licence plate manufacturers having the requisite approval 
from the bodies mentioned in,second para to clause (v) of sub-rule (l) 
B of Rule 50 of the Central Motor Vehicles Rules, 1989 are entitled to 
supply HSRVP; that the eligibility conditions mentioned in the NITs 
that there should be a turnover of Rs. 50 crores or so with 15 to 25 
per cent thereof in the business of manufacture of registration plates 
in the immediately preceding year and experience of manufacturing 
C registration plates in 3/5 countries are wholly arbitrary, irrelevant and 
discriminatory against the Indian manufacturers of HSVRP; and that 
clause 4(x) of the Order made in exercise of power conferred by section 
I 09(3) is ultra vires. 
Respondents inter alia contended that clause 4(x) of the order 
D issued by State Government and also the procedure adopted by the 
State Government cannot be faulted with; that Article 19(6) of the 
Constitution does not prohibit giving of a contract to single individual 
and selection of a person does not create a monopoly; that Rule 40(1 )(v) 
lays down only the eligibility criteria for a manufacturer or dealer of 
E HSVRP and it is not possible to read it in a literal manner; and that 
the conditions set out in the Order of 2001 are in addition to the 
requirements of Rules 50 and it lays down how the new policy will be 
implemented. 
F 
Referring the matter to a larger Bench, the Court 
HELD : Per Mathur J. 
1.1. 
Under Article 19(6)(ii) of the Constitution of India, the 
Sti!te is free to create a monopoly in favour of itself with regard to 
G carrying of any trade, business, industry or service but the entire 
benefit. arising therefrom is to enure to the State and the monopoly 
itself is not used as clock for conferring private benefit upon a limited 
class of persons. The action of the government if conceived and 
executed in the interest of the general public is not open to judicial 
H scrutiny but it is not open to the government thereby to create a 
ASSON. OF REGISTRATION PLATES. v. U.0.1. 
785 
monopoly in favour of third parties from their own monopoly. 
A 
[801-C; 802-B-D) 
Rashf!ed Ahmed v. Municipal Board Kairana, AIR (1950) SC 163; 

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