Kerala HC Quashes Notification To Set Up High-Security Number Plate Manufacturing Plants, Calls For Fair Tender Process

The government introduced the HSRP scheme, which provides standardised registration plates and chromium-based holograms to vehicles for enhanced security, facilitates their identification, and reduces motor vehicle-related offences.

The single bench of Justice D K Singh also rejected the permission to license plate manufacturers and their dealers, who have a Type Approval Certificate from the central agency, to affix HSRP plates without further approval or selection by the State Government since that would affect the integrity and object behind implementation of the HSRP scheme.

However, the Court clarified that Original Equipment Manufacturers (OEMs) and their dealers are allowed to affix HSRP on vehicles manufactured before 01.04.2019, until the state government takes steps to select, approve, and authorize HSRP manufacturers and suppliers through a fair and just tendering process like in other states.

Court stated, “As the State Government has not invited tenders to select one or more license plate manufacturers having the requisite qualification for affixing the HSRP on the vehicles manufactured prior to 01.04.2019, this Court is of the considered view that till the Government undertakes an open, fair, and transparent tender process for selecting one or more license plate manufacturers and their dealers for affixing HSRPs on vehicles manufactured prior to 01.04.2019, the OEM should be allowed to affix the number plates on the old vehicles by their dealers as is done in several other States such as West Bengal, Rajasthan, Karnataka, Gujarat, Assam, Madhya Pradesh, Andhra Pradesh, Sikkim, Bihar, Odisha, Andaman and Nicobar, Himachal Pradesh, NCT Delhi, Uttar Pradesh.”

Background

The Court issued the above directions in petitions seeking issuance of high- security registration number plates (HSRP) on old motor vehicles registered prior to April 1, 2019.

The petitioners are in the business of conducting the affixation of HSRP as an Original Equipment Manufacturer (OEM). They allege that unless they get approval from state government, they are not allowed to affix, sell or supply HSRP on the old vehicles.

The petitioners thus challenged the advisory letter issued by the Ministry of Road Transport and Highways mandating that only manufacturers or suppliers of HSRP 'approved by the State Government or Union Territories' should be allowed to affix the number plates. The petitioner also challenged an order issued by the Kerala Government Transport Commissioner, pursuant to the Union's advisory, warning punitive action against HSRP manufacturers that do not have approval from State Government or Union Territories.

Observations

The Court relying upon various precedents noted that the Apex Court had directed the central government to issue directions to the state government to conduct a transparent tender process for allowing manufacturers for supplying and fixing HSRP plates.

The Court stated that the state government must conduct a fair and transparent procedure for choosing HSRP manufacturers or suppliers for the implementation of the HSRP scheme.

It observed that if HSRP manufacturers who have TAC are allowed to affix number plates freely in the market without approval or authorization from state government, then it would affect the safety and integrity of the HSRP scheme.

“This being a State subject of the Seventh Schedule of the Constitution of India, the State cannot be ousted to have no control over such business and I am of the considered view that such procedure for choosing one or more license plate manufacturer and their dealers for affixing HSRP scheme on the older vehicles manufactured prior to 01.04.2019 would not be in any manner violative of Article 19(1)(g) of the Constitution of India.”

The Court thus concluded that HSRP plates cannot be affixed without stringent control and proper regulations from the state government, for which authorization is necessary and that would not violate the petitioners fundamental rights guaranteed under the Constitution.

The Court thus did not quash the notification of the Central government dated 09.06.2023 which directed State governments and Union Territories to take action against HSRP manufacturers fixing number plates without authorisation from the State Government. As such, the Court rejected the prayer of the petitioners to affix HSRP without further authorization from the State government.

However, the Court quashed the notification issued by the state government dated 30.07.2024 which permitted RTO offices in the State to call for tenders to buy machinery for setting up HSRP plants, instead of calling for tenders to select and give approval to manufactures for affixing the HSRP. The Court observed that most state governments are conducting tender process for choosing HSRP manufacturers and Kerala Government have not taken steps to select approved license plate manufacturers or its dealers having TAC by transparent and fair tender process for implementing HSRP scheme.

It stated, “The notification dated 30.07.2024, issued by the State Government, provides that all 85 Regional Transport Officers (RTOs) in Kerala would be open to float global tenders for purchasing machinery to set up a plant and obtain TAC. This Court fails to understand the underlying intent of the State Government for such a notification. This notification is nothing but a devise not to implement the HSRP Scheme in the State of Kerala. Therefore, the said notification, which is in the teeth of the Supreme Court direction, is hereby set aside and quashed.”

Further, the Court permitted Original Equipment Manufacturers and their dealers to affix the HSRP on old vehicles manufactured prior to 01.04.2019 until the State government takes the necessary steps to selects and authorize licence plate manufactures through tendering process.

“The Original Equipment Manufacturers and their dealers are permitted to affix the HSRP on old vehicles manufactured prior to 01.04.2019 till the Government takes the necessary steps to select/approve/authorise one or more licence plate manufacturers/their dealers for affixing HSRP on the old vehicles by carrying out the selection/authorization process by an open, transparent, and fair tendering process.”

Case Number: WP(C) NOS. 10761 OF 2022 & Connected Matters

Case Title: Motorsigns India v State of Kerala & Connected Matters

Citation: 2024 LiveLaw (Ker) 768