IN THE HIGH COURT OF KARNATAKA AT BENGALURU …judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/90779/1/WP... · in compliance with the AIS 018/2001 norms and certified by

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 02ND

DAY OF DECEMBER, 2015

BEFORE:

THE HON’BLE MR. JUSTICE ANAND BYRAREDDY

WRIT PETITION No.41561 OF 2015 (GM-RES)

CONNECTED WITH

WRIT PETITION No.44658 OF 2015,

WRIT PETITION No.43244 OF 2015 AND

WRIT PETITION No.47497 OF 2015 (GM-RES)

In W.P.No.41561/2015:

BETWEEN:

AUTOGRADE INTERNATIONAL PRIVATE LIMITED,

(Formerly Aasma Techno Products Private Limited),

35/334, Mamangalam Church Road,

Kochi-682 025.

Kerala State, Represented by its

Authorised signatory

Mr. T. Mohammed Ashraf.

…PETITIONER

(By Shri N. Khetty, Advocate)

AND:

1. The State of Karnataka,

By its Secretary for Transport,

M.S. Building, Bangalore-1.

2

2. The Commissioner for Transport

And Road Safety,

M.S. Building,

Dr. B.R. Ambedkar Veedhi,

Bangalore-1.

3. Rosmerta Autotech Pvt. Ltd.,

Formerly known as Multispeed Gears Pvt. Ltd.,

Having its registered office at

Khasra No.19/28, Kapashera,

New Delhi-122 016.

And Corporate office at

137, Udyog Vihar Phase-I,

Gurgaon-122 016.

Haryana, Represented by its

General Manager

Mr. Joy Joseph.

… RESPONDENTS

(By Shri A.S. Ponnanna, Additional Advocate General for Shri

M.I. Arun, Additional Government Advocate for Respondents 1

and 2,

Shri Jayakumar S. Patil, Senior Advocate for Shri Joseph

Anthony, Advocate for Respondent No.3)

*****

W.P.41561/2015 is filed under Articles 226 and 227 of the

Constitution of India, praying to quash the impugned public notice

dated 29.8.2015 at Annexure-B published in the newspaper on

5.9.2015, and etc.

3

In W.P.No.44658/2015:

BETWEEN:

DIGILA DEVICES INDIA (PVT) LTD.

NH 212, Industrial Layout,

Near Government Technical School,

Sulthan Bathery, North Kerala,

Represented by its Managing Director

Mr. Biju Polouse.

…PETITIONER


AND:





And Road Safety,

M.S. Building,


Bangalore-1.





New Delhi-122 016.



Gurgaon-122 016.


4

Authorised Signatory and General Manager

Mr. Joy Joseph.

… RESPONDENTS



and 2,



*****



dated 29.8.2015 at Annexure-B published in the Times of India

newspaper on 5.9.2015, and etc.

In W.P.No.43244/2015:

BETWEEN:

CRAYSOL TECHNOLOGIES (INDIA) PVT. LTD.

Craysol Building, XVIII / 498,

Cochin University Road,

Cusot P.O., Kalamassery,

Kochi-682 022, Kerala,

Represented by its

Managing Director

Mr. Noby E.A. …PETITIONER


AND:



5



And Road Safety,

M.S. Building,


Bangalore-1.





New Delhi-122 016.



Gurgaon-122 016.


Authorised Signatory & General Manager

Mr. Joy Joseph.

… RESPONDENTS



and 2,



*****



dated 29.8.2015 at Annexure-B published in the Times of India

newspaper on 5.9.2015, and etc.

6

In W.P.No.47497/2015:

BETWEEN:

M/s. Sriyash Technologies Pvt. Ltd.,

6th

Floor, Poddar Point, 113,

Park Street,

Kolkata-700 016,

Represented by its

Director, Anil Kishorepuria. …PETITIONER

(By Smt. Kavitha H.C., Advocate)

AND:


Represented by its

Under Secretary to Government,

Department of Transport,

M.S. Buildings,

Bangalore-560 001.


And Road Safety,

Government of Karnataka,

M.S. Building,


Bangalore-1.

… RESPONDENTS



and 2)

*****

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Constitution of India, praying to quash the checklist / eligibility

criterion at Annexure-C, prescribed by the respondents and etc.

These Writ Petitions having been heard and reserved on

25/11/2015 and coming on for pronouncement of Orders this day,

the Court delivered the following:-

O R D E R

These petitions are heard and disposed of by this common

order.

2. The petitioner in the first of these petitions in WP

41561/2015, M/s Autograde International Private Limited, is said

to be a private limited company engaged in the manufacture of

Speed Limiting Devices, also known as Speed Governors. The

said devices are intended to confine the maximum speed of the

motor vehicle, to which it is fitted, to the speed limit set on the

device. The speed limit so set is as notified by the Central

Government under the Motor Vehicles Act, 1988. (Hereinafter

referred to as ‘the MV Act, for brevity)

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The installation of the speed governors is made mandatory

under Rule 118 of the Central Motor Vehicle Rules, 1989

(Hereinafter referred to as ‘the CMV Rules’, for brevity). Though

it was in vogue since the year 2003, the State of Karnataka had

issued a notification in March, 2005 for the installation of speed

governors for specified vehicles. The actual installation was

however, postponed from time to time. This extension being

granted indefinitely, was challenged in public interest before this

court. By a judgment dated 30.6.2008, in the case of Y. N.

Nanjappa v. State of Karnataka in W.P.10416/2007, this court

had quashed the extension orders and directed the respondents to

strictly implement the rule. The said order having been

challenged by the State itself, in a special leave petition before the

Apex Court, the said petition was ultimately dismissed as on

18.8.2011, on an undertaking by the State that a notification

would be issued to implement the rule for installation of speed

governors.

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On 15.4.2015, the amended Rule 118 of the CMV Rules

was notified, making it mandatory for every transport vehicle, as

notified by the Central Government, under Section 4 of the MV

Act, to be equipped, by the manufacturer of those vehicles - even

at the dealership stage, with a speed governor - with effect from

1.10.2015. The pre-set speed limit was to be 80 kilometres per

hour (kmph). The devices were to conform to the Standard AIS

(Automotive Industry Standard ) 018/2001.

The said amended Rule 118 reads as follows :

“118. Speed Governor – (1) Every transport vehicle

notified by the Central Government under sub-section (4)

of Section 41 of the Motor Vehicles Act, 1988 (59 of

1988), save as provided herein, and manufactured on or

after the 1st October, 2015 shall be equipped or fitted by the

vehicle manufacturer, either in the manufacturing stage or

at the dealership stage, with a speed governor (speed

limiting device or speed limiting function) having

maximum pre-set speed of 80 kilometres per hour

conforming to the Standard AIS 018/2001, as amended

from time to time:

Provided further that the transport vehicles that

are—

(i) Two wheelers;

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(ii) Three wheelers;

(iii) Quadricycles;

(iv) Four wheeled and used for carriage of

passengers and their luggage, with seating capacity not

exceeding eight passengers in addition to driver seat (M1

Category) and not exceeding 3500 kilogram gross vehicle

weight;

(v) Fire tenders;

(vi) Ambulances;

(vii) Police vehicles;

(viii) Verified and certified by a testing agency

specified in rule 126 to have maximum rated speed of not

more than 80 kilometre per hour, shall not be required to be

equipped or fitted with speed governor (speed limiting

device or speed limiting function);

Provided further that the transport vehicles

manufactured on or after 1st of October, 2015 that are

dumpers, tankers, school buses, those carrying hazardous

goods or any other category or vehicle, as may be specified

by the Central Government by notification in the Official

Gazette from time to time, shall be equipped or fitted by the

vehicle manufacturer, either in the manufacturing stage or

at the dealership stage, with a speed governor (speed

limiting device or speed limiting function) having

maximum speed of 60 kilometre per hour conforming to

the Standard AIS 018/2001, as amended from time to time.

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(2) The State Government shall, by notification in

the Official Gazette, specify on or before 1st October 2015,

the categories of transport vehicles registered prior to the

1st October, 2015 which are not already fitted with a speed

governor (speed limiting device or speed limiting function),

and are not covered under the first proviso to sub-rule 1

above, that such transport vehicles shall be equipped or

fitted by the operators of those vehicles on or before 1st

April, 2016 with a speed governor (speed limiting device or

speed limiting function), having maximum pre-set speed of

80 kilometres per hour or such lower speed limit as

specified by the State Government from time to time,

conforming to the Standard AIS: 018/2001, as amended

from time to time;

Provided that the categories of transport vehicles

carrying hazardous goods and those transport vehicles that

are dumpers, tankers or school buses, registered prior to the

1st October, 2015 and not already fitted with a speed

governor (speed limiting device or speed limiting function),

shall be equipped or fitted by the operator of such vehicle,

with a speed governor (speed limiting device or speed

limiting function) having maximum pre-set speed of 60

kilometres per hour or such other lower speed limit as may

be specified by the State Government, conforming to the

Standard AIS: 018/2001, as amended from time to time.”

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In terms of Sub-rule (2) above, the State Government had

issued a notification dated 11.8.2015, specifying the categories of

vehicles to be fitted with the devices. Thereafter, the

Commissioner for Road Safety and Transport, the second

respondent herein, is said to have invited applications from

manufacturers of speed governors - possessing the requisite Type

Approval Certificates and Conformity of Production - which were

in compliance with the AIS 018/2001 norms and certified by the

testing agencies as required under Rule 126 of the CMV Rules, to

be considered for fitment of the devices to the specified categories

of vehicles. The notice indicated a checklist of documents that

were to be submitted along with the details of eligibility and other

criteria.

The petitioner claims that on having studied the check list,

it was found that the conditions prescribed were in the nature of an

invitation to tender for supply of goods to a government or its

undertakings. And that such conditions were out of place in

respect of devices to be sold in the open market, which have the

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requisite approval under the MV Act and the CMV Rules. And

that the conditions had no nexus with the object sought to be

achieved - in terms of ensuring the quality of the speed governors.

The petitioner had hence, by a letter dated 18.9.2015,

questioned the authority of the second respondent to issue a

checklist prescribing the several eligibility criteria and is said to

have called upon the authority to withdraw the same. It is said

that there was no response to the same.

However, the second respondent is said to have passed an

order dated 26.9.2015 permitting two manufacturers, exclusively,

to sell their products in the entire State of Karnataka on the ground

that they are the only ones who qualify in terms of the checklist.

The said manufacturers are said to have been chosen from

amongst seven, including the petitioner. It is said that though the

petitioner had not filed any application to be considered, he is

shown as one of the contenders. The first of these petitions is thus

filed questioning the propriety and legality of the actions of the

respondents.

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3. The petitioners in the writ petitions in WP 44658/2015,

WP 43244/2015 and WP 47497/2015 are all by other

manufacturers of speed governors, who are similarly aggrieved.

4. Shri N. Khetty, the learned counsel appearing for three of

the petitioners would contend as follows:

That the second respondent has no authority to impose

eligibility criteria in the form of a check list seeking documents

from manufacturers of speed governors as a pre-requisite for them

to be registered and to sell their products in Karnataka State.

Neither the notification issued by the Central Government dated

15.4.2015, nor the notification issued by the State Government

dated 11.8.2015 mention any eligibility criteria for registration.

The second respondent has, by imposing such a check list,

negated the CMV Rules and has travelled beyond the scope of the

said Rules and has exceeded the role envisaged therein for the

State Government. By such an administrative Order, even the

Notification issued by the State Government is overshadowed.

15

It is emphasized that the only requirement of law is that the

speed governors must be approved by the four competent

authorities mentioned in Rule 126 of the CMV Rules, including

the ARAI.

The prohibition of multiple manufacturers to freely compete

in the open market and freely conduct their business in any place

in India by imposing artificial barriers created in the form of

checklist, which is not sanctioned in law, blatantly violates the

fundamental right under Article 19 of the Constitution of India to

carry on their business in accordance with law. The impugned

check list carries conditions to arrive at the eligibility, which are

of a business nature, where as the conditions imposed by the

Central Government’s requirements are purely technical in nature.

The impugned Check list is apparently tailored to ensure a

monopoly for select manufacturers in the business and to

eliminate manufacturers such as the petitioners who are not in a

position to meet the high financial turnover and other such

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conditions or criteria - prescribed in the checklist. It is pointed out

that the rule being implemented throughout the country only at

this point of time, all manufacturers being expected to have a large

turnover and volume of sales, is an illogical pre-requisite.

That in a federal set up, if the mandate of Rule 118 of the

CMV Rules is complied with, then no separate registrations

should be required in the State based on further extraneous

conditions, because it would create an anomalous situation

whereby a Central law and its mandate would be obviated by an

administrative order of a departmental head. Besides, an

incongruous situation of the same speed governor being a valid

item for sale in one State, yet would not be permitted to be sold in

another State.

By fixing a time frame for the registration of manufacturers

of speed governors, is again an ingenious manner of eliminating

the several manufacturers situated all over the country, every one

of whom may not even have been aware of the notice issued by

the second respondent in a local newspaper, of the unusual

17

procedure adopted, is another aspect that would vividly disclose

the mala fides and the evil designs of the second respondent.

The learned counsel hence seeks that the petitions be

allowed as prayed for.

5. The learned Additional Advocate General, Shri

A.S.Ponanna, appearing for respondents nos.1 and 2, would on

the other hand, contend that it is indeed a fact that pursuant to the

amendment to Rule 118 of the CMV Rules, the State Government

had issued the notification dated 11.8.2015, specifying the

category of vehicles which are registered before 1.10.2015 and are

not already fitted with speed governors shall be equipped with the

same, with a pre-set speed limit of 80 kmph, confirming to the

Standard AIS 018.

It is stated that the provisions of the MV Act, which

provides for limits of speed, does grant powers to the respondent -

State Government to frame Rules for the purpose of carrying into

effect the said provisions. Fixing the eligibility criteria for

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registration of manufacturers for supply and installation of speed

governors was a step in aid of ensuring the effective

implementation of the same. It is further claimed that the Ministry

of Road Transport and Highways, had by a communication dated

21.8.2009, issued directions to all the State Governments, inter-

alia, as hereunder :

“4. The whole issue has been examined in this

Ministry and it is felt that the fitment of speed governors

can take place in an effective manner if the following steps

are taken:-

a) That the adequate numbers are made available

uniformly all over the State.

b) That the good quality product is available for the

vehicle owners as directed by Hon’ble High Court.

c) That fly by night operators and sub-standard

manufacturers are avoided.

d) That consistent and uninterrupted supply is

maintained.

e) That full system of transparency is maintained by

incorporation of efficient MIS system.

f) That the vehicle so selected can be made

obligated to meet the requirement failing which a stiff

penalty can be imposed on the vendor which will safeguard

the State Government obligations.

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g) That the accountability will thus increase and the

State Government can focus on the effective monitoring

and enforcement of the legislation for public safety.

h) That MIS data / reports can be generated for

effective implementation of the speed governors through

software to be provided by the selected vendors.

i) Tampering issues are curtained with proper

technological developments and implementation.

j) That AMC is properly undertaken.

5. The above process can take place, if a suitable

tender is invited with suitable eligibility criteria keeping in

view the above mentioned points.”

In the absence of a mechanism or other guidelines to

implement the speed governor regime, the State Government

having taken the initiative to prescribe criteria for the selection of

eligible manufacturers, is in line with the above directions of the

Ministry.

The petitioners had all obtained check lists prescribing the

criteria and conditions, including the petitioner in the first of the

petitions. It transpires except two of them, the rest had submitted

particulars. It was found that only two entities met all the

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requirements. The result of the verification carried out by the

second respondent is disclosed in a tabular form thus:

Sl.No. Name & address of

the Company /

Organisation

Whether the

conditions of

check list

have been

fulfilled?

If not, which

are the

conditions

not fulfilled

Whether

eligible to

permit for

fitment of

speed

governors as

per the check

list?

1) M/s. Hovel Scale &

Systems E/1,

Maharani Plaza,

102, Hari Nagar,

Ashram,

New Delhi

-110 014.

No Sl.No.1(a)

(b) (f), 2, 3,

4, 8, 9, 10,

11 & 12

No

2) M/s. Micro Autotech,

31, FIE, Patpargunj

Indl. Area, Delhi-110

092.

No Sl.No.1(a)

(b)(f), 2, 3, 4,

8, 10, 11, 13,

14 & 15

No

3) M/s. CONVERTZ

Technologies (I) Pvt.

Ltd., Plot 794, 37-

18/28, Rajyalakshmi

Complex, 1st Floor,

Defence Colony,

Sainikpuri,

Secunderabad.

No Sl.No.1(f), 2,

3, 8, 10 and

11

No

4) M/s. PRICOL

Limited, Plant No.1,

Perianaickenapalyam,

Coimbatore.

Yes -- Yes

5) M/s. Rosmerta

Autotech Pvt. Ltd.,

Khasara, No.19/28,

Kapshera, New

Delhi-110 037.

Yes -- Yes

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6) M/s. Ecogas Impex

Pvt. Ltd., Factory

Address: Shop No.5,

Plot No.43, DLF

Indl. Area, Phase-I,

Faridabad, Haryana –

121 003.

No Sl.No.1(f), 2,

3, 4, 5(a), 8,

10 & 11

No

7) M/s. Autograde

International Pvt.

Ltd., 35/334,

Mamangalam,

Church Road,

Palarivattom, Kochi-

682 025, Kerala.

No

documents

have been

submitted.

No No

Accordingly, the companies named at serial nos.4 and 5

above were identified as being eligible for fitment of speed

governors to transport vehicles in the State of Karnataka.

It is further stated that the following issues were to be

addressed in the wisdom of the State by putting in place a fool

proof mechanism to strictly implement the Rule regarding speed

limit.

To ensure road safety and keeping in view the issues faced

in the past, during implementation of Speed Governors in various

States where Speed Governors were already mandatory, namely:

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1) Non fitment and Issue of Fake Fitment Certificates:

Speed Governors were fitted only with a view to obtain

registration and fitness certification. As there was no proper

checking for want of personnel at the RTO level to ensure that the

Speed Governors were really fitted, many were found engaged in

issuing fake fitment certificates based on which vehicles were

registered or fitness certified.

2) Tampering and Removal of Speed Governors after

Registration: After registration/fitness certification, the Speed

Governors fitted were either tampered or disconnected. With lack

of enforcement, the operators of such vehicles who had either

tampered or disconnected the Speed Governors went unnoticed

and unaccounted for.

3) Recycling of Speed Governors already fitted: Speed

Governors fitted on one vehicle would be removed and fitted on

another vehicle to enable registration and to obtain a fitness

certificate. There was no control and monitoring mechanism to

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link the Serial No. of the Speed Governor to the Registration No.

of the Vehicle.

4) Improper and Incomplete Fitment of Speed Governors:

As the vehicles fitted with Speed Governors were not subject to

any functional tests, “Fly by Night” manufacturers of Speed

Governors involved in fitting incomplete and non functional

Speed Governors had mushroomed. Road side mechanics and

untrained people were found installing the Speed Governors

eventually resulting in the Speed Governors not functioning

properly. There was no control mechanism to ensure that the

fitment was done only at Authorised Fitment Centres which

would maintain the records of Fitment and Servicing which could

be made subject to inspection.

5. Fitment of Speed Governors Models different from the

Type Approved Model: As per AIS 037, only a Type Approved

Speed Governor was allowed for fitment. Many unscrupulous

operators would obtain a particular speed governor type approved

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and manufacture a wholly different version of the same

compromising on the quality of the components which was

critical to quality, like the sensor, solenoid valves, motor actuators

etc. and the same were sold. The changes made in the product

was neither communicated nor validated by the Testing Agencies.

There was no mechanism to ensure that only the Type Approved

Speed Governors were made available in the market.

6. Fitment of Non Approved Speed Governors: According

to AIS-018, a particular make and model of Speed Governors that

had been tested and approved by an authorized testing agency on

a particular make and model of the vehicle at a pre-set speed was

only allowed for fitment of that specific make and model of

vehicle for that pre-set speed. As there was no proper mechanism

for the implementing agencies to check if a particular

manufacturer had the requisite approval, non approved speed

governors were routinely fitted on vehicles by unscrupulous

manufacturers. This defeated the whole purpose of the Speed

25

Governors legislation which required that the Speed Governors

must conform to AIS 018 Standard amended from time to time.

7. Lack of Stringent Type Approval & COP norms: While

the testing agencies issue the type approval certificates based on

testing the samples for the provisions in AIS-018, the lack of

proper pre-qualification criteria allowed any company to obtain a

type approval. In many cases, the companies that had secured the

Type Approval did not even have a proper design and

manufacturing facility. This lead to manufacture and supply of

sub standard speed governors. The COP period was 2 years and

did not consider the number of Speed Governors manufactured.

There was no provision or empowerment for the Testing Agencies

to collect samples from the market or do surprise inspections on

suspect manufactures, based on market feedback to ensure that

only the Type Approved Products were manufactured and

supplied.

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8. Lack of After-sales Warranty and Service Support:

Manufacturers selling sub standard Speed Governors to the

vehicle operators at low costs did not provide any after-sales

service support nor did provide a warranty. Because of this, the

Vehicle Operators suffered, sometimes to the extent of their

vehicle becoming inoperable. There was no mechanism to ensure

that servicing was undertaken by authorized service centers of the

manufacturer and no service records were maintained. Moreover,

there was no mechanism or guideline to ensure that maintenance

was undertaken and honoured to ensure that the speed governors

fitted on vehicles remained operational.

9. No Centralised Data base: There was no integration of

the Speed Governors information with the National Data base of

vehicles (VAHAN) and there was also no mechanism to capture

and integrate the vehicle data base and the Speed Governors

information at State Levels. In such a scenario, when the rule

was applicable all over the country, it was essential to have a

27

centralized database for enabling better enforcement and

implementation.

10. Loss of Revenue to the Governments 1and non

accountability of the manufacturers: Many of the manufacturers

involved sold Speed Governors without any proper invoices or

bills, to avoid taxation. Such vendors were also not registered for

purposes of taxation and did not provide any information about

their dealer network and service and maintenance network. This

had resulted in loss of revenue to the Governments and

additionally the manufacturer was totally unaccountable as there

was no documentary evidence of the sales.

In the light of the above , it is contended that the action of

the State was prompted by the best of intentions to ensure road

safety and effective enforcement of the law.

It is also pointed out that the first of the petitioners had not

furnished any particulars as to its eligibility. However, from the

28

material now brought on record would indicate that the said

petitioner does not even meet the minimum requirement of

specification relating to the speed governors required and

admittedly cannot match the other criteria prescribed.

Hence, the learned Additional Advocate General seeks the

dismissal of the petitions.

6. The learned Senior Advocate, Shri Udaya Holla,

appearing for the counsel for the third respondent contends as

follows.

That the speed governors manufactured by the third

Respondent are tested and approved by the International Centre

for Automotive Technology, Manesar, which is one of the testing

agencies approved by the Central Government under Rule 126 of

the Central Motor Vehicle Rules, 1989.

Further, it is contended that pursuant to the order dated 26th

September 2015, the third Respondent has submitted a bank

guarantee of Rs.50 Lakh to the Transport Department. The third

29

Respondent has also appointed distributors and dealers in the

entire State of Karnataka and has provided such distributors and

dealers with sufficient stock of speed governors to ensure smooth

supply and fitment of speed Governors in the State.

On having come to know of the filing of this petition, it is

stated that the third Respondent filed an impleading application

dated 5th October 2015, which came to be allowed on 9

th

November 2015.

Further, it is contended that the State of Karnataka has laid

down fifteen mandatory eligibility criteria and terms and

conditions for selecting speed governor manufacturers in

pursuance of the Central Government Notification dated 15th April

2015 and that the said eligibility criteria has been duly followed

by all the manufacturers except the petitioners herein. The

petitioners have failed to submit any documents and are presently

seeking the indulgence of this Court to allow their entry, in

30

violation of the eligibility criteria laid down by the second

Respondent.

Further, it is contended that the petitioners herein are

attempting to gain a backdoor entry into the selection process after

having admittedly failed to submit any documents as mandated

under the checklist. Hence, if the petitions are allowed, the same

would lead to denudation of the third Respondent’s rights that

were vested and concluded pursuant to the selection process and

would lead to discrimination between other manufacturers, since

the third respondent along with the other selected manufacturer

had followed the mandates of the checklist, whereas the

petitioners have admittedly failed to comply with the checklist

conditions.

It is pointed out that it is settled law that if the Court is

satisfied that there is nothing arbitrary or unfair in a selection

process, it cannot substitute its wisdom to a technical committee

and find out whether the act of the State is within the regulatory

31

framework, when such regulation is towards proper

implementation of the Notification. After all, the object of

eligibility criteria in a selection process in most matters is to

satisfy the implementing authority that persons who undertake to

execute the work would be really competent to implement the

work, to the best of their ability. In view of the aforesaid reasons,

it is contended that the petitioners have filed the instant writ

petitions with the mala fide intention of gaining ulterior advantage

of the jurisdiction of this Court into interfering with first and

second Respondent’s valid and legitimate selection process and

thereby illegally paving way into being selected as one of the

manufacturers.

Further, it is contended that it is also settled law in India

that if a decision relating to a selection process is bona fide and is

in public interest, courts will not, in exercise of power of judicial

review, interfere even if a procedural aberration or error in

assessment or prejudice to a manufacturer is made out and that

32

power of judicial review should not be permitted to be invoked to

protect private interest at the cost of public interest.

Further, it is contended that the petitioners have failed to

fulfill the requirements of the eligibility criteria. The Petitioners,

only to make good the financial loss that they may incur due to

their failure to submit the requisite documents, have approached

this Court to satisfy their private interest at the cost of the public

and other eligible manufacturers, thereby delaying the

implementation of the Notification dated 11th

August 2015

bearing No.SARIE 107 SAESE 2014. Thus, it is clear that the

Petitioners have approached this Court with unclean hands and the

petitions are a pedestal of mala fide intention.

Further it is contended that it is the settled position of law

that the Government and its undertakings must have a free hand in

setting terms of a selection procedure and the jurisdiction of the

courts ought not be invoked to interfere with the terms of the

33

selection prescribed by the Government. The first and second

Respondents, as implementing authorities, are required to ensure

that the scheme of fitment of speed governors is effectively

implemented. It is with this sole objective that the State had

issued a check-list with eligibility criteria for registration of

manufacturers for supply and installation of speed governors in

the State of Karnataka. The right of the State to choose the most

competent manufacturer is its prerogative. Further, that for

effective implementation of the Rule, the manufacturer must

inter-alia possess sound financial and technical capacity. And

that the conditions are prescribed by the State only to adjudge the

capability of a particular manufacturer who can provide fail-safe

and sustainable delivery capacity.

Hence, it is contended that the power of judicial review of

the courts must not be permitted to be invoked to protect private

interest, at the cost of public interest. And that the present

petitions are a clear attempt by unsuccessful manufacturers with

34

an imaginary grievance and business rivalry to persuade this

Court to interfere with the terms of the selection procedure by

exercising the power of judicial review. Such interference should

be resisted, as the ultimatum of such an action would result in

holding up public works for years, or delay relief and aid to

thousands and millions and may increase the project cost

manifold.

Lastly, it is contended that where the State is dealing with

the public, the same has to be conducted by way of a prescribed

set of rules and procedures which are required to be satisfied by

every interested manufacturer and where a manufacturer is unable

to satisfy the prescribed requirements, they cannot approach the

courts as a last resort, with the mala fide intent of obtaining a

backdoor entry into the already concluded selection process, to

interfere with the procedure determined by the implementing

authority. As a result, the interest of the public at large is at stake

and also that of the other qualified manufacturers who are

discriminatorily affected to their detriment.

35

Shri Holla would support the arguments on behalf of the

State and seek dismissal of the petitions.

7. By way of reply, Shri Khetty would contend that the

contention of respondents nos. 1 and 2 that they trace their power

to fix the eligibility criteria for registration of manufacturers for

supply and installation of speed governors, to the provisions of the

MV Act and the CMV Rules, it is pointed out is not tenable. On

the other hand, by virtue of Section 111(1), the power of the State

Government is specifically excluded with regard to Section 110(1)

of the Act. Besides, the notification issued by the second

respondent was an administrative Order and not even a rule.

It is contended that it is also misleading that the criteria has

been fixed pursuant to directions issued by the Ministry of Road

Transport as per circular dated 21.8.2009. The said Circular has

been superceded by a further communication dated 6.4.2011, to

particularly clarify that it was advisory in nature. And in any

36

event, the said guidelines did not contain conditions such as the

requirement of a minimum turnover of the manufacturer to be a

minimum of Rs.50 Crore, nor did it contemplate the minimum net

worth of the entity to be a certain amount. These and other such

conditions introduced by the second respondent as if imposing

conditions which may have been relevant even while inviting

tenders, which again would have been questionable, were totally

out of place.

It is sought to be demonstrated that in so far as the third

respondent is concerned, with reference to its Balance Sheet for

the year 2013-14 that it has sold speed governors of a value of

Rs.24.23 crore and going by the price of its speed governors, at

approximately Rs.10,000/- each, it had produced and sold a little

over 24,000 units in the entire year. This is only one month’s

production as stipulated in the Check list issued by the second

respondent. In that, it is contended, that the production capacity

being a criterion is hardly met by the third respondent. And

37

further, for a private sale in the open market the production

capacity of a manufacturer of speed governors duly approved

under AIS 018/2001 is of no concern to the Respondent nos. 1

and 2, as it has no bearing on the quality of the product.

It is emphasized that one important feature, namely, the

price of the speed governor is not at all a consideration in the

check list that is provided by the second respondent. In the result,

the two manufacturers that are now chosen by the said respondent

have a free rein on the market and have been enabled to dictate a

price at which every transport operator, who is required to install a

speed governor, is compelled to pay whatever the price is.

As regards the several factors named by respondent nos.1

and 2 as regards the need for stringent conditions being imposed

in the selection of manufacturers, it is argued that the same are

either the making of the office of the second respondent or are

trivial in nature which could be addressed with minimal effort.

38

8. On a consideration of the rival contentions, the points for

consideration are:

1. Whether the second respondent had the authority

sanctioned by law, to invite applications for registration of

manufacturers to exclusively supply and install speed governors

on the vehicles specified in terms of Rule 118 of the CMV Rules

and notifications issued pursuant thereto.

2. Whether the conditions and criteria prescribed in the

Check list issued by the Commissioner for Transport & Road

Safety, had any nexus with the object sought to be achieved in

terms of ensuring the quality of speed governors.

3. Whether the said exercise has resulted in the petitioners

being deprived of their fundamental right to carry on their

business in the State of Karnataka.

4. Whether the respondents 1 and 2 have created artificial

barriers to eliminate the petitioners from selling their products in

Karnataka.

39

5. Whether it could be said that there is any apparent intent

on the part of the second respondent to appease and favour

selected manufacturers.

9. In so far as the relevant provisions of the Act and Rules

are concerned, it is to be noticed that on 15.4.2015, the Central

Government notified in the Gazette the amended Rule 118 of the

CMV Rules. By virtue of the same, it was made mandatory, after

1.10.2015 for every transport vehicle, notified by the Central

Government under Section 41(4) of the MV Act, to be equipped

or fitted with a speed governor by the manufacturer of the vehicle,

having a pre-set speed limit of 80 kmph, conforming to the

Standard AIS 018/ 2001.

Certain transport vehicles namely, two wheelers, three

wheelers, quadricycles, four wheeled passenger vehicles with a

gross weight below 3500 kg, fire tenders, ambulances and police

vehicles, were exempted and were not required to be so fitted with

a speed governor.

40

Certain transport vehicles, manufactured after 1.10.2015,

namely, dumpers, tankers, school buses and vehicles carrying

hazardous goods, were to be fitted with a speed governor by the

manufacturer of the vehicle, with a pre-set speed limit of 60 kmph.

The State Government was required to notify in the Official

Gazette, on or before 1.10.2015, the categories of vehicles - other

than the exempted vehicles mentioned above, which shall be fitted

with a speed governor, on or before 1.4.2016, with a pre-set speed

limit of 80 kmph.

Transport vehicles carrying hazardous goods, dumpers,

tankers or school buses, registered prior to 1.10.2015 and not

already fitted with a speed governor, were required to be fitted

with one, by the operator of the vehicle, with a pre-set speed limit

of 60 kmph.

The State government was thus required to specify the

categories of vehicles registered prior to 1.10.2015, which were

required to be fitted with a speed governor.

41

By a notification dated 11.8.2015, the Karnataka State has

specified the transport vehicles, registered before 1.10.2015,

which were to be fitted with a speed governor by the operator of

the vehicle, before 1.4.2016.

At the hearing, the learned Additional Advocate General

has furnished the following particulars of the number of vehicles

(as on 31.8.2015) in each category so notified which would

require to be fitted with a speed governor.

Sl.No. Class of Vehicles No. of vehicles

1. Omni Buses 125121

2. Multi Axled Articulated Vehicles 62743

3. Trucks and Lorries 218536

4. Stage Carriages 39837

5. Contract Carriages 2594

6. Private Service Vehicles 15245

7. Educational Institution Buses 17352

8. Other Buses 8981

9. Maxi Cab 78221

10. LMV – Goods Vehicles 4 wheeler 217721

TOTAL 786351

Thereafter, a public notice dated 19.8.2015 was issued by

the Commissioner of Transport, also published in a daily

newspaper dated 5.9.2015, inviting speed governor manufacturers

42

holding Type Approval Certificates and Conformity of

Production, complying with AIS 018/2001 norms. The applicants

were required to meet conditions and eligibility criteria as per a

Check list prescribed by the said authority.

The said check list is reproduced hereunder for ready

reference.

ELIGIBILITY CRITERIA FOR REGISTRATION OF

MANUFACTURERS FOR SUPPLY AND INSTALLATION OF SPEED

GOVERNORS IN THE STATE OF KARNATAKA.

Sl.

No. Eligibility Criteria

1. The Manufacturer must be an Indian Company and registered with the

Registrar of Companies as per Companies Act, 1956.

1. Copy of Company Incorporation

2. Copy of Memorandum of Association.

3. Copy of PAN Card.

4. Copy of Sales Tax / VAT Registration of the Manufacturing

Plant and Karnataka Branch

5. Manufacturing Address

6. Copy of Excise Registration

2. TURNOVER OF THE COMPANY – Rs. 50 Crores in the last three

financial years from the business of manufacturing, sales and service

of Speed Governors.

1. Details of Turn-over from the business of manufacturing and

selling Speed Governors.

2. Copy of Audited Balance Sheet and IT Returns for 2 years for

2012-13 and 2013-14 and statement of accounts certified by Auditor

for 2014-15.

3. NET WORTH OF THE MANUFACTURER: Net Worth of the

Manufacturer must not be less than Rs.20 Crores as on the financial

year ending March 2015.

1. Certificate from Chartered Accountant certifying the net worth.

43

2. The Manufacturer who on being selected in the State of

Karnataka for supply of Speed Governors must provide a bank

guarantee (Any National Bank) for Rs.50 Lakhs.

4. The Company be an ISO /TS 16949 Company

5. SALES & SERVICE NETWORK IN KARNATAKA: The Company

must have sales, Fitment and Service Network in Karnataka.

1. Details of Branch Address with Contact person

2. Details of Dealer Network with contact details

6. Type Approval as per AIS 018: Manufacturers should have Speed

Governors models suitable for fitment in mechanically and

electronically controlled engines and different fuel types.

1. Type Approval Certificates for the different models of Speed

Governors manufactured by the Company.

2. Suitability needs to be demonstrated to the Department of

Transport (if required).

7. Type Approval as per AIS 037:

1. Valid COP Certificates for the Type Approved Speed Governors

to be furnished.

8. Experience Certificate for award of Tender by STU / Govt.

Department excluding Public Sector Undertakings: The Manufacturer

must have supplied and fitted Speed Governors to at least one STU /

Govt. Department by means of tender directly or through its

authorized dealer for a minimum quantity of 1000 Nos.

1. Copy of the Purchase Orders along with Sales Invoices as Proof

of supply to be submitted.

9. Installed Production Capacity: Minimum 25,000 Nos. / Month.

1. Declaration regarding installed Production capacity to be

furnished.

10. Proof of Sales – Sales Statement Certificate for a minimum of 50,000

Speed Governors sold in India in the last 3 financial years (2012-13,

2013-14 and 2014-15) certified by Auditor.

11. List of Vehicle Based Approvals for Speed Governors for Vehicles

covered under the MORTH Notification dated 15th

April 2015.

1. Minimum 125 base approvals for speed limits of 60 / 80 Kmph

out of which minimum 50 Base Model Approvals required for a speed

limit of 80 Kmph.

12. Sample of Speed Governors: The manufacturer has to submit the

samples of different models of Speed Governors intended for fitment

in the State of Karnataka.

44

13. Any manufacturer whose approval / operations with respect to Speed

Governors have been suspended / cancelled / black listed by any State

Government / Central Government would not be considered in the

registration process.

14. The Manufacturer must not have been prosecuted or convicted and no

investigation should be pending against such manufacturer for

infringement of Intellectual Property Rights of any third party or entity

under the provisions of Patent Act, Copyright Act and / or Trademark

Act, as the case may be with regard to Speed Governor being

manufactured by it.

1. An undertaking in the form of an affidavit to this effect to be

submitted.

15. The Transport Department reserves the right to cancel / suspend the

approval / permission granted to the manufacturer for supply and

fitment of Speed Governors in the state if the details / information

provided by the manufacturer at the time of registration is found to be

false, misrepresented or suppressed and the selected manufacturer does

not meet the terms and conditions of the registration.

It is noticed that the petitioner in the first of these petitions

was earlier known as, M/s Aasma Techno Products Private

Limited. And during the year 2011, the very second respondent is

said to have specified eligibility criteria and a checklist to be met

with by manufacturers of speed governors to be registered as

vendors and the petitioner had submitted his particulars against

such criteria. However, the petitioner had challenged the action of

the second respondent in seeking certain additional information,

other than was prescribed. The writ petition was disposed of with

45

appropriate directions to the respondent. But the fact remains that

the petitioner had acquiesced in the modality adopted by the

second respondent in identifying the most suitable manufacturers,

with regard to many criteria apart from the quality of the speed

governor manufactured by that entity. This may not strictly be

construed as being an arbitrary action or being an overreach by

the second respondent.

The second respondent has also been prompted to proceed

in the most prudent fashion in formulating a modality of selection

of vendors of speed governors by virtue of the tenor of the

communication dated 21.8.2009, which has been cited by the State

and produced as Annexure R-3 to the Statement of Objections.

Though the learned counsel for the petitioner has alleged

that it was fraudulent on the part of the State to place reliance on

the said communication in view of the same having been

superceded by a further communication dated 6.4.2011, a copy of

which is produced as Annexure AF-1.

46

The relevant portion of the said communication reads as

follows :

“As far as the contents of the letter are concerned,

the matter has been reconsidered in this Ministry. In this

regard it may be clarified that the letter issued by this

Ministry in August, 2009 was only to express the concern

of this Ministry regarding non-implementation of law by

the States. Besides, certain suggestions were also tendered

such as ensuring the quality of the product, availability of

adequate number of speed governors for the States,

selection of a vendor capable of producing speed governors

of specified standard, fixing the responsibility and

accountability of the vendor, tamper proof installation of

speed governor and upkeep of proper record etc.

It may be further noted that the letter dated 21.8.09,

issued by the Ministry was only advisory in nature and

certainly not binding on any State. It is always the

prerogative of the States to decide the manner in which

they would like to implement the provision in the Central

Motor Vehicles Rules, 1989. In case any State decides to

go for a tender, they may decide the terms and conditions

of the tender, as they deem appropriate.”

This would indicate that the State and its Departments were

given a free hand to effectively implement the Rule while still

47

bearing in view the concern of the Ministry and its advise.

Viewed in that light, the prescription of eligibility criteria and the

invitation for applications from manufacturers of speed governors

by the second respondent cannot be termed as illegal or

unauthorized.

Incidentally, the petitioner in the first of these petitions had

not submitted any application against the public notice issued by

the second respondent. On the other hand, it was only to protest

against the modality adopted the petitioner had written to the

second respondent questioning his authority to do so.

Insofar as the time limit prescribed by the second

respondent, in the public notice, for the manufacturers to furnish

particulars is concerned, the contention that the same may not

have received wide publicity for many manufacturers to

participate, is not tenable as it is seen that manufacturers from

Delhi, Haryana, Secunderabad, Coimbatore and Kochi have

responded. And they have not found it difficult to furnish

particulars in time.

48

In considering the question whether there is a nexus

between the eligibility criteria prescribed and the object sought to

be achieved, it would be unwise for this court to substitute its

wisdom for that of the competent authority, who would have the

benefit of technical and financial advisors as to the most effective

manner of implementation of a Rule. When under a regulatory

frame work, the action of an authority is questioned, and when the

action complained of is purportedly aimed at better

implementation of the Rule, this court would refrain from

interfering with such action. The insistence of the State to search

for an experienced manufacturer with sound financial and

technical capacity cannot be misunderstood.

Even otherwise, it is seen that the petitioners are not in a

position to claim that they are on par with the selected

manufacturers. It is noticed that the petitioners do not appear to

be manufacturing speed governors, duly certified, with a pre-set

speed limit of 80 kmph. They would therefore be ineligible even

on a primary technical requirement, even if the check list was

49

restricted to address the quality and specifications of the speed

governors manufactured by the petitioners.

Having regard to the above circumstances, it cannot be said

that there is any willful denial of the right of the petitioners to

carry on their business in the State of Karnataka. Such a situation

is a fall out of the modality that is adopted by the respondents in

identifying the more eligible manufacturer to meet the

requirement. In the process, the petitioners having been found

less qualified, cannot be a ground to claim mala fides on the part

of the respondents. The second respondent cannot also be accused

of creating artificial barriers to eliminate the petitioners from

carrying on business in Karnataka State.

There are no apparent circumstances to indicate that there is

an unholy nexus between the second respondent and the selected

manufacturers.

50

The writ petitions are accordingly dismissed as being

devoid of merit.

Sd/-

JUDGE

KS *

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