1. Dissolution of partnership firm — Application for division of import quota rights — Refusal of import licenses due to delayed approval of quota transfer. (Para 1 , 2 , 15 )
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1965 Supreme(SC) 168
SUPREME COURT OF INDIA
P.B. GAJENDRAGADKAR, C.J.I., K.N. WANCHOO, J.C. SHAH, J.R. MUDHOLKAR AND S.M. SIKRI, JJ.
The Joint Chief Controller of Imports and Exports, Madras (In all the Appeals) Appellant
Versus
M/s. Aminchand Mutha etc., Respondents.
Civil Appeals Nos. 60 to 62 and 316 to 320 of 1965.
Advocates appeared
Mr. C. K. Daphtary, Attorney General for India, (Mr. K. P. R. Shankar Dass, Advocate and M/s. R. H. Dhebar and R. N. Sachthey, Advocates, with him), for Appellant (In All the Appeals); Mr. A. V. Viswanatha Sastri, Senior Advocate, (M/s. S. Balakrishnan and B. R. Dolia, Advocates and M/s. R. K. Garg, S. C. Agarwal, D. P. Singh and M. K. Ramamurthi, Advocates of M/s. Ramamurthi and Co., with him), for Respondents (In Civil Appeals Nos. 60 to 62 of 1965): Miss Lily Thomas, Advocate, for Respondent (In Civil Appeal No. 316 of 1965), M/s. B. R. Dolia, E. C. Agarwala and P. C. Agarwala, Advocates, for Respondents (In Civil Appeals Nos. 317 to 320 of 1965).
Advocates:
A.V.VISHWANATHA SASTRI, B.B.DOLIA, B.R.DOLIA, C.K.DAFTARY, D.P.Singh, E.C.AGARWAL, K.P.R.SHANKAR DASS, LILY ISABLE THOMAS, M.R.RAMAMURTHY, P.C.AGRAWAL, R.H.Dhebar, R.K.GARG, R.N.SACH, S.BALAKRISHNAN, S.C.AGRAWAL
A.V.VISHWANATHA SASTRI, B.B.DOLIA, B.R.DOLIA, C.K.DAFTARY, D.P.Singh, E.C.AGARWAL, K.P.R.SHANKAR DASS, LILY ISABLE THOMAS, M.R.RAMAMURTHY, P.C.AGRAWAL, R.H.Dhebar, R.K.GARG, R.N.SACH, S.BALAKRISHNAN, S.C.AGRAWAL
Approval for the division of import quota rights among partners of a dissolved firm relates back to the date of the dissolution agreement, ensuring partners are not penalized for administrative delays in granting such approval.
Headnote:(A) Imports and Exports (Control) Act, 1947 - Section 3 - Imports (Control) Order, 1955 - Rules 3 and 6 - Division of import quota rights of a dissolved partnership firm - Whether approval of the division of quota rights by the authority relates back to the date of the dissolution agreement - Administrative instructions providing for the division of quota rights among partners of a dissolved firm are for the guidance of authorities - Once the authority is satisfied that the firm was dissolved and an agreement exists for division of quota, the function of approving such division is ministerial in nature - Such approval relates back to the date of the agreement between the partners to ensure that the partners do not suffer due to administrative delays in the office of the authority (Paras 6, 9, 11).
(B) Distinction between quotas and licences - Quotas serve to inform the licensing authority that a person is an established importer, whereas licences are issued based on the licensing policy for a specific period - Approval of quota division is a recognition of the agreement between partners and thus relates back to the date of said agreement (Para 11).
(C) Prohibition of imports - A ban on the import of specific goods must be through an order published in the official gazette under the Act; a mere policy declaration of "nil" does not amount to a statutory prohibition (Para 13).
Facts of the case:
A partnership firm, recognized as an established importer with a specific import quota, was dissolved. One of the partners applied for an import licence for a specific half-year period, while an application for the division of the firm's quota rights among the partners was pending. The authority approved the division of the quota rights only after the expiry of the licensing period for which the application had been made. The licensing authority subsequently refused to grant the licence on the ground that the approval was granted after the period had ended.
Findings of Court:
The approval granted by the authority for the division of quota rights among partners of a dissolved firm relates back to the date of the agreement of dissolution. The licensing authority cannot refuse a licence solely on the ground that the formal approval was issued after the import period expired, provided the application was made within the prescribed time.
Issues: Whether the approval of the division of quota rights of a dissolved firm by the authority relates back to the date of the dissolution agreement, and whether a licence can be refused if such approval is granted after the expiry of the licensing period.
Ratio Decidendi: The function of the authority in dividing quota rights upon the dissolution of a firm, based on an agreement between partners, is ministerial. Since the authority is bound to divide the quota once satisfied with the evidence of dissolution and agreement, the approval must relate back to the date of the agreement to prevent injustice caused by administrative delays.
Result: Appeals dismissed.
Legal Category Hierarchy
Table of Contents
2. Whether approval of quota division relates back to the date of dissolution agreement or takes effect only from the date of sanction. (Para 2 , 7 , 8 , 16 , 22 )
3. Chief Controller's role in dividing quotas is ministerial; approval must relate back to the agreement date to avoid prejudice caused by administrative delays. (Para 6 , 9 , 10 , 11 , 12 )
4. Approval of quota division by the Chief Controller relates back to the date of the dissolution agreement between partners. (Para 9 , 11 )
5. Appeals dismissed; High Court judgment upheld. (Para 14 , 28 )
6. Does the Chief Controller's approval for the division of import quota rights among partners of a dissolved firm relate back to the date of the dissolution agreement?
Yes. Since the Chief Controller's function is ministerial upon satisfaction of dissolution, the approval relates back to the date of the agreement to ensure partners do not suffer due to administrative delays in the office. (Para 6 , 9 , 10 , 11 )
7. What is the legal distinction between import quotas and import licenses?
Quotas are used to inform the licensing authority that a person is recognized as an established importer. Licenses are separate grants issued by the licensing authority in accordance with the specific licensing policy for the relevant period. (Para 11 )
8. Does a policy declaration stating 'nil' against a commodity constitute a legal prohibition of imports under the Imports and Exports (Control) Act?
No. A prohibition of imports can only be legally effected by an order published in the official gazette by the Central Government under Section 3 of the Act. (Para 13 )
Judgement
WANCHOO, J.: These eight appeals by special leave against the judgment of the Madras High Court raise a common question of law and will be dealt with together. It will be enough if we give the facts of one case (Jt. Chief Controller v. Amin Chand Mutha-C. A. 60/1965), for the facts in the other cases are more or less similar. It appears that there was a partnership firm known as Nainmull Juthmull. This firm had a quota for import of certain things, as it was an "established importer". Established importers used to be given quotas every year and thereafter licences used to be issued to such importers on the basis of the quota allotted to them. The quota was not inheritable or transferable, but under certain circumstances to which we shall refer later it could be divided between partners where the quota holder was a firm. The firm in the present case had three partners, namely. Amin Chand Mutha, Nainmull Nathumull and Juthmull Mutha. On January 1, 1957, the firm was dissolved. Consequently in accordance with the instructions contained in what is known as the Red Book, application was made on March 25, 1957 by one of the partners (Amin Chand Mutha) for the grant of a licence with respect to the period January-June 1957. It was noted in the application that quota certificates had been issued in favour of the firm Nainmull Juthmull of which the applicant was a partner. That firm had been dissolved and application had been made to the Chief Controller of Imports, New Delhi for division of the quota of the firm between the three partners of the firm who had separated. It may be mentioned that application for licence had to be made before the 31st of March of the January-June 1957 period.
2. It was stated that the application had already been made to the Chief Controller on behalf of the dissolved firm on March 4, 1957 for division of the quota between the three partners and was pending when the application for licence was made by Amin Chand Mutha on March 25, 1957. The application for licence had to be made to the Joint Chief Controller of Imports at Madras where the partners of the dissolved firm were carrying on business. The Joint Chief Controller informed the respondent on April 8, 1957 that before any licence could be given to him he should get the approval of the Chief Controller about the division of the quota rights of the dissolved firm. It appears that there was some delay in the office of the Chief Controller for reasons into which it is unnecessary to go, and the Chief Controller informed the partner concerned in September 1957 that instructions had been issued to the licensing authority to the effect that quota certificates admissible to the dissolved partnership firm should in future be divided between the three partners in certain proportions which it is unnecessary to set out. Thereafter the Joint Chief Controller was approached to grant a licence. But on January 9, 1958, the Joint Chief Controller informed the partner concerned that it was regretted that his request for the issue of licence for the period January-June 1957 could not be acceded to since the transfer of quota rights in his favour had been recognised by the Chief Controller only after the expiry of the licensing period to which the application related. It appears that there was then an appeal from this order of the Joint Chief Controller which failed. Then came the writ petition to the High Court in December 1958 or January 1959, and the main contention on behalf of the respondents was that the Joint Chief Controller could not refuse the issue of licences on the ground that the Chief Controller s approval as to the division had been made after the period of January-June 1957 had come to an end. The High Court allowed the petition holding, on the basis of an earlier decision of that court in the Joint Chief Controller of Imports and Exports Madras 1 v. H. V. Jain, ILR (1959) Mad 850:, that the approval of the Chief Controller to the provision of
