Karnataka High Court: While deciding the instant petition challenging the notification/circular issued to implement the HSRP (High Security Registration Plate) Scheme which has been on the anvil for over two decades, the Bench of B.M. Shyam Prasad, J.*, rejected the petitioners’ request to stay the impugned notification/circular stating that the factors of balance of convenience and irreparable injury could be reasonably achieved if the State Government, subject to further orders of the Court and without prejudice to its case, is called upon to notify a detailed process to be followed to the vehicle manufacturers to grant approval across the board to all the license plate manufacturers with the necessary TAC and this exercise must be completed within a timeframe. The Court further stated that the petitioners, without prejudice to their case must be reserved liberty to participate in the process that is so finalized by the State Government pursuant to the instant order.
Background: A notification dated 17-08-2023 and the Circular dated 18-08-2023 [impugned Notification/ Circular] issued by the State Government. The petitioners raised grievances against the following stipulations in the impugned notification/circular-
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Only the High Security Registration Plate Manufacturers [the License Plate Manufacturers] authorized by the Original Equipment Manufacturers [vehicle manufacturers] shall supply the High Security Registration Plate [HSRP] for the old vehicles, and such HSRP shall be affixed by the authorized dealers of the vehicle manufacturers.
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The old vehicle owners shall have the HSRP affixed within three months from the date of the Notification.
In December 2018, provisions of Rule 50(1)(v) of the Motor Vehicle Rules, 1989 were amended. The proviso in Rule 50(1)(v) was substituted providing that the HSRP shall be supplied by the vehicle manufacturers along with the vehicles manufactured on or after 01.04.2019 to their dealers and the dealers shall affix the plates on the vehicle. Insofar as the vehicles registered before 01.04.2019 [‘old vehicles’]. The substituted provisions enabled the vehicle manufacturer to supply HSRP to their dealers stipulating that such dealers may affix HSRP. In February 2020 and August 2022, Rule 50(1)(v) was amended once again. Amendment of 2022 substituted the expression ‘approved license plate manufacturers or their dealers’ by the expression ‘license plate manufacturers or their dealers approved by the State Government or the Union Territory administration’.
The Central Government further communicated that HSRP Scheme is imperative to the country’s National Security, in aiding reduction of vehicular borne crime, in identification of all vehicles plying on the roads and in prevention of tampering and counterfeiting, and that if the manufacturers or their dealers are not approved by the vehicle manufacturers or authorized by the State, the affixture of HSRP would be unauthorized.
The Central Government had also clarified that the HSRP for the ‘old vehicles’ shall be issued by the registering authority, or the vehicle manufacturers/their dealers, or the license plate manufacturers/their dealers approved by the State Government/ Union Territory Administration.
Contentions: The petitioners contended that the MV Rules are formed by the Government of India in exercise of the powers under Section 64 of the MV Act. The State Government, which is conferred with the powers to frame Rules under Section 65 of the MV Act, can only frame Rules in respect of such subjects that are not covered under Section 64 of the MV Act.
The State Government, which does not have power even to frame Rules in respect of subjects that are covered under Section 64 of the MV Act, has issued an executive order in the impugned Notification/Circular excluding the license plate manufacturers and stipulating that only those who are approved by the vehicle manufacturers can supply the HSRP to the old vehicles. The subject in this regard is within the exclusive domain of the Central Government, and as such, the impugned notification/circular not just falls foul of the MV Rules and the statutory order, they are also without jurisdiction.
Per contra, the respondents argued that the license plate manufacturers cannot claim an absolute right to supply the HSRP and this falls from the ratio in Association of Registration Plates v. Union of India, (2005) 1 SCC 679.
The license plate manufacturers, especially with the amendment of Rule 50(1)(v) in the month of August 2022, cannot contend that because they hold TAC [Type Approval Certificate] they would be eligible to supply the HSRP without the approval of the State. The State Government is justified insisting upon approval for license plate manufacturers to supply HSRP and this is in consonance, and not in derogation of the provisions of Rule 50(1)(v) of the MV Rules.
Court’s Assessment: Perusing the contentions and facts of the case, the Court framed the following questions-
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Whether the petitioners/license plate manufacturers can justifiably contend that the State Government cannot insist upon approval for supply of HSRP for old vehicles as such requirement would only be for their dealers.
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Whether the State Government could have notified that the approval to license plate manufacturers for supply of HSRP for old vehicles under Rule 50[1][v] of the MV Rules, if justified, will be by the vehicle manufacturers, and whether there could be any arbitrariness in the matter of grant of such approval by the vehicle manufacturers.
The Court was of prima facie view that amendment of Rule 50(1)(v) of the MV Rules in August 2022, which will have to be read in conjunction with the terms of the statutory order dated 06-12-2018, that the insistence on approval for license plate manufacturers to supply HSRP for old vehicles may not be extraneous or beyond the requirements in law.
The Court stated that it is not persuaded at this stage that the petitioners have made out a case against approval by the State Government for supply HSRP to the old vehicles.
Vis-à-vis the petitioners’ grievance about the denial of a fair opportunity to participate in the HSRP implementation, the Court noted that it was repeatedly stated on behalf of the State Government that it would be open to the petitioners — license plate manufacturers to avail the approval from the vehicle manufacturers for supply of HSRP to the old vehicles. The Court stated that the question of arbitrariness in the implementation of the HSRP Scheme could have been mostly eliminated if the State Government had formulated a time bound process to be followed by the vehicle manufacturers to grant approval, especially with the stipulation that the owners of the old vehicles must have HSRP affixed on their vehicles within a period of ninety days from the date of the impugned Notification/Circular.
With the afore-stated assessment, the Court rejected the petitioners’ prayer to stay the impugned notification/circular, however, the State Government was ordered to finalize and publish the process that is to be followed by the vehicle manufactures to accord approval for every license plate manufacturer with Type Approval Certificate, within 15 days from this order.
[HSRP Manufacturers Association of India v. State of Karnataka, 2023 SCC OnLine Kar 62, decided on 20-09-2023]
*Order by Justice B.M. Shyam Prasad
Advocates who appeared in this case :
For petitioners- Dr. Aditya Sondhi and K N Phanindra, Senior Counsels
For respondent- Vikram Huilgol, Additional Advocate General for the State Government and Sajan Poovayya, Senior Counsel; Shravanth Arya Tandra and Vaibhav Malimath, Standing Counsel for the Central Government
