Dismissed

Digila Devices India (Pvt) Ltd. v. the State of Karnataka

Karnataka HC2 Dec 2015WP/44658/2015

Case brief

AI extract

What is this about?

Several manufacturers of speed governors challenged the State's public notice and eligibility checklist for registration to supply and fit speed governors in Karnataka, claiming want of authority, breach of the right to carry on business and artificial barriers favouring two selected manufacturers. The High Court upheld the criteria as within the State's power and dismissed the petitions.

What the court decided

AI extract

Digila Devices India (Pvt) Ltd. Vs the… — Public Procurement and Tenders | Karnataka HC (2015)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 02^ND DAY OF DECEMBER, 2015

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BEFORE:

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THE HON’BLE MR. JUSTICE ANAND BYRAREDDY

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

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CONNECTED WITH WRIT PETITION No.44658 OF 2015, WRIT PETITION No.43244 OF 2015 AND WRIT PETITION No.47497 OF 2015 (GM-RES)

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In W.P.No.41561/2015:

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BETWEEN:

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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.

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…PETITIONER

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(By Shri N. Khetty, Advocate)

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AND:

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The State of Karnataka, By its Secretary for Transport, M.S. Building, Bangalore-1.

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The Commissioner for Transport And Road Safety, M.S. Building, Dr. B.R. Ambedkar Veedhi, Bangalore-1.

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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.

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… RESPONDENTS

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(By Shri A.S. Ponnanna, Additional Advocate General for Shri M.I. Arun, Additional Government Advocate for Respondents 1 and 2,

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Shri Jayakumar S. Patil, Senior Advocate for Shri Joseph Anthony, Advocate for Respondent No.3)

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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.

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In W.P.No.44658/2015:

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BETWEEN:

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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.

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…PETITIONER

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(By Shri N. Khetty, Advocate)

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AND:

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The State of Karnataka, By its Secretary for Transport, M.S. Building, Bangalore-1.

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The Commissioner for Transport And Road Safety, M.S. Building, Dr. B.R. Ambedkar Veedhi, Bangalore-1.

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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

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Authorised Signatory and General Manager Mr. Joy Joseph.

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… RESPONDENTS

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(By Shri A.S. Ponnanna, Additional Advocate General for Shri M.I. Arun, Additional Government Advocate for Respondents 1 and 2,

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Shri Jayakumar S. Patil, Senior Advocate for Shri Joseph Anthony, Advocate for Respondent No.3)

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W.P.44658/2015 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 Times of India newspaper on 5.9.2015, and etc.

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In W.P.No.43244/2015:

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BETWEEN:

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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

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(By Shri N. Khetty, Advocate)

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AND:

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The State of Karnataka, By its Secretary for Transport,

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M.S. Building, Bangalore-1.

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The Commissioner for Transport And Road Safety, M.S. Building, Dr. B.R. Ambedkar Veedhi, Bangalore-1.

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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 Authorised Signatory & General Manager Mr. Joy Joseph.

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… RESPONDENTS

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(By Shri A.S. Ponnanna, Additional Advocate General for Shri M.I. Arun, Additional Government Advocate for Respondents 1 and 2,

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Shri Jayakumar S. Patil, Senior Advocate for Shri Joseph Anthony, Advocate for Respondent No.3)

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W.P.43244/2015 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 Times of India newspaper on 5.9.2015, and etc.

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In W.P.No.47497/2015:

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BETWEEN:

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M/s. Sriyash Technologies Pvt. Ltd., 6^th Floor, Poddar Point, 113, Park Street, Kolkata-700 016, Represented by its Director, Anil Kishorepuria. …PETITIONER

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

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AND:

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The State of Karnataka, Represented by its Under Secretary to Government, Department of Transport, M.S. Buildings, Bangalore-560 001.

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The Commissioner for Transport And Road Safety, Government of Karnataka, M.S. Building, Dr. B.R. Ambedkar Veedhi, Bangalore-1.

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… RESPONDENTS

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(By Shri A.S. Ponnanna, Additional Advocate General for Shri M.I. Arun, Additional Government Advocate for Respondents 1 and 2)

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W.P.47497/2015 is filed under Articles 226 and 227 of the Constitution of India, praying to quash the checklist / eligibility criterion at Annexure-C, prescribed by the respondents and etc.

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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:-

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O R D E R

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These petitions are heard and disposed of by this common

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order.

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The petitioner in the first of these petitions in WP 41561/2015, M/s Autograde International Private Limited, is said

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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.

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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

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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.

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The said amended Rule 118 reads as follows :

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“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 1^st 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:

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Provided further that the transport vehicles that

are—

(i) Two wheelers;

(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;

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(v) Fire tenders;

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(vi) Ambulances;

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(vii) Police vehicles;

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(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);

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Provided further that the transport vehicles manufactured on or after 1^st 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 1^st October 2015, the categories of transport vehicles registered prior to the 1^st 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 1^st 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;

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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 1^st 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.

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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.

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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.

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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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The petitioners in the writ petitions in WP 44658/2015, WP 43244/2015 and WP 47497/2015 are all by other

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manufacturers of speed governors, who are similarly aggrieved.

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Shri N. Khetty, the learned counsel appearing for three of the petitioners would contend as follows:

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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.

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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.

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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.

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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.

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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.

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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.

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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

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procedure adopted, is another aspect that would vividly disclose the mala fides and the evil designs of the second respondent.

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The learned counsel hence seeks that the petitions be allowed as prayed for.

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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.

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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

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implementation of the same. It is further claimed that the Ministry of Road Transport and Highways, had by a communication dated

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

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alia, as hereunder :

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“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:-

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a) That the adequate numbers are made available uniformly all over the State.

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b) That the good quality product is available for the vehicle owners as directed by Hon’ble High Court.

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c) That fly by night operators and sub-standard manufacturers are avoided.

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d) That consistent and uninterrupted supply is maintained.

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e) That full system of transparency is maintained by incorporation of efficient MIS system.

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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.

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h) That MIS data / reports can be generated for effective implementation of the speed governors through software to be provided by the selected vendors.

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i) Tampering issues are curtained with proper technological developments and implementation.

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j) That AMC is properly undertaken.

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The above process can take place, if a suitable tender is invited with suitable eligibility criteria keeping in view the above mentioned points.”

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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.

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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

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second respondent is disclosed in a tabular form thus:

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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, 1^stFloor, 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

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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.

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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.

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To ensure road safety and keeping in view the issues faced

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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:

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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.

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Tampering and Removal of Speed Governors after

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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.

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1. Recycling of Speed Governors already fitted: Speed

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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.

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Improper and Incomplete Fitment of Speed Governors:

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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.

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Fitment of Speed Governors Models different from the

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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.

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Fitment of Non Approved Speed Governors: According to AIS-018, a particular make and model of Speed Governors that

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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

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Governors legislation which required that the Speed Governors must conform to AIS 018 Standard amended from time to time.

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Lack of Stringent Type Approval & COP norms: While

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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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Lack of After-sales Warranty and Service Support:

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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

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was undertaken and honoured to ensure that the speed governors fitted on vehicles remained operational.

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No Centralised Data base: There was no integration of

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the Speed Governors information with the National Data base of vehicles (VAHAN) and there was also no mechanism to capture

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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

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centralized database for enabling better enforcement and implementation.

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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.

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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.

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It is also pointed out that the first of the petitioners had not furnished any particulars as to its eligibility. However, from the

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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.

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Hence, the learned Additional Advocate General seeks the

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dismissal of the petitions.

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The learned Senior Advocate, Shri Udaya Holla,

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appearing for the counsel for the third respondent contends as follows.

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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.

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Further, it is contended that pursuant to the order dated 26^th September 2015, the third Respondent has submitted a bank guarantee of Rs.50 Lakh to the Transport Department. The third

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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.

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On having come to know of the filing of this petition, it is stated that the third Respondent filed an impleading application dated 5^th October 2015, which came to be allowed on 9^th November 2015.

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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 15^th 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

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violation of the eligibility criteria laid down by the second Respondent.

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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.

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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

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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.

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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

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power of judicial review should not be permitted to be invoked to protect private interest at the cost of public interest.

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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 11^th 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.

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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

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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.

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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

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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.

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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.

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Shri Holla would support the arguments on behalf of the State and seek dismissal of the petitions.

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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.

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

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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

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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.

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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

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further, for a private sale in the open market the production capacity of a manufacturer of speed governors duly approved

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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.

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It is emphasized that one important feature, namely, the

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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

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price at which every transport operator, who is required to install a speed governor, is compelled to pay whatever the price is.

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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.

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On a consideration of the rival contentions, the points for

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consideration are:

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Whether the second respondent had the authority

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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.

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Whether the conditions and criteria prescribed in the

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Check list issued by the Commissioner for Transport & Road

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Safety, had any nexus with the object sought to be achieved in terms of ensuring the quality of speed governors.

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Whether the said exercise has resulted in the petitioners

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being deprived of their fundamental right to carry on their business in the State of Karnataka.

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Whether the respondents 1 and 2 have created artificial

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barriers to eliminate the petitioners from selling their products in Karnataka.

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Whether it could be said that there is any apparent intent

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on the part of the second respondent to appease and favour selected manufacturers.

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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.

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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.

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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.

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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.

¶249

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.

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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.

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By a notification dated 11.8.2015, the Karnataka State has specified the transport vehicles, registered before 1.10.2015,

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which were to be fitted with a speed governor by the operator of the vehicle, before 1.4.2016.

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At the hearing, the learned Additional Advocate General

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has furnished the following particulars of the number of vehicles (as on 31.8.2015) in each category so notified which would

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require to be fitted with a speed governor.

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Sl.No.	Class of Vehicles	No. of vehicles
1.	Omni Buses	125121
2.	Multi Axled Articulated Vehicles	62743
3.	Trucks andLorries	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

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Thereafter, a public notice dated 19.8.2015 was issued by

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the Commissioner of Transport, also published in a daily newspaper dated 5.9.2015, inviting speed governor manufacturers

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holding Type Approval Certificates and Conformity of

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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.

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The said check list is reproduced hereunder for ready reference.

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ELIGIBILITY CRITERIA FOR REGISTRATION OF MANUFACTURERS FOR SUPPLY AND INSTALLATION OF SPEED GOVERNORS IN THE STATE OF KARNATAKA.

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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. Copyof 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 certifyingthe net worth.

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	2. The Manufacturer who on being selected in the State of Karnataka for supply of Speed Governors must provide a bank guarantee(AnyNational Bank)for Rs.50 Lakhs.
4.	The Companybe an ISO /TS 16949Company
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 byAuditor.
11.	List of Vehicle Based Approvals for Speed Governors for Vehicles covered under the MORTH Notification dated 15^thApril 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.

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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 registrationprocess.
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.

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
registrationprocess.

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.

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

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

¶272

Limited. And during the year 2011, the very second respondent is said to have specified eligibility criteria and a checklist to be met

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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,

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

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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.

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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.

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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.

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The relevant portion of the said communication reads as

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follows :

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“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.

¶283

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.”

¶284

This would indicate that the State and its Departments were given a free hand to effectively implement the Rule while still

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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.

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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.

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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.

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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.

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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

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restricted to address the quality and specifications of the speed governors manufactured by the petitioners.

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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.

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There are no apparent circumstances to indicate that there is an unholy nexus between the second respondent and the selected manufacturers.

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The writ petitions are accordingly dismissed as being

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devoid of merit.

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Sd/JUDGE

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KS *