# CONTROLLER v. AMINCHAND (Wanchoo, !.)

- **Citation:** [1966] 1 S.C.R. 262
- **Court:** Supreme Court of India
- **Decided:** 1965-07-21
- **Bench:** P. 8. Gajendragadka.R, K. N. Wa'.'Ichoo, J. c. SHAH, J. R. Mudho!.Kar, S. M. Sikri
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/controller-v-aminchand-wanchoo-3543
- **Pages:** 22

## Headnote

B
Imports (Control) Order, r. 3 and lmpon Trade Control Policy Instructions, lnsrrucrion 7 l-Apprvva/ by Chief Control/er of transfer of quotasC
Date •vhen effective.
By s. 3 of the Imports and Exports (C<mtrol) Act, 1947 the Centzal
GO'Vernment was given power, . by means of an Order publisbcd in the
Gazette, to provide for prohibiting r~tricting or otherwise controlling
the import of goods into India. In pursuance of that power, the C'..cntral
Government issued the Imports (Control) Order. It provided for a system
of licensing and r. 3 thereof provided that no person shall import t.lte
goods specified in Schedule I cxc-.:pt under a licenc'e granted by the proper
authority. Rule 6 gave power to the licensing authority to rcfu~e to grant
a licence on the ground that the application was defective. In
order to
guide the licensing authorities in the matter of granting licences, the Cen·
tral Government iss~d adm'.nistrativc instrut.'tions.
The instructions pro·
vide for the granting of licences to "'cstJblished in1p<:>rtcrs", that is, per·
sons engaged in import trade for at least one financial year falJing within
a specified period called tile basic period.
ln•truction 71 of the Instructions provided for division of quota rights of a firm an1ong its partners,
when the firm was diswlved. It lays down that the partners shall get their
shares in the quota rights according to the provision of the agreement
between them. Quotas are for the purpose of informing the licensing authority that a particular person has been rcco1.!fliscd as an established importer,
and it is for the licensing authority to i55ue a licence to the quota holder
in accordance with the licensing policy for the period with which the
licence deals.
1be re•pondent was a panner of a firm which wa• an established
importer.
The firm was dissolved in January 1957 and on 4th March
1957, an application v.·as made to the Chief ConlroUer on behalf of the
dissolved firm, for a division of the quota between the partnors.
Since
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the application for a licence for January-June period should be made by
3 !st Marcb, the respondent applied for the grant of licence for the period
January-June 1957, on 25th March 1957 without mentioning his quota as
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required by the Instructions, because the Chief Controller had not by
then approved the division of quota rights among the partners.
Since
the application was defective the respondent was informed in April 1957
that before a licence could be given. the respondent should get such
approval.
Tn September 1957, the Chief Controller informed the respondent that instructions had been issued to the Joint Chief Controller,
who was the licensing authority; but the Joint Chief Controller informed
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the respondent that a licence cou1d not be jssued. since the transfer of
quota rights in respondent's favour was recognised by the Chief Controller
only after the expiry of the licensing period to which the application related.
After an un.<ucccssful appeal, the respondent moved the High Court
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CONTROLLER v. AMINCHAND (Wanchoo, !.)
263
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for the issue of an appropriate writ, and the High Court allowed the
petition.
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In his appeal to this Court,
the Joint Chief Controller contended that, since the transfer of quota rights was a condition precedent
to the grant of an import licence, the person in whose favour such a
transfer had been recognised or sanctioned was entitled to rely upon that
transfer only for a period subsequent to such sanction or recognition and
not for any anterior period.
HELD: (Per P. B. Gajendragadkar, C.J., K. N. Wanchoo, J. C. Shah
and S. M. Sikri, JJ.) The licensing authority had to deal with the application for a licence on the basis that the approyed quotas were given
to the partners of the dissolved firm from the date of the dissolution and
the agreement to divide, and could not refuse the licence solely on
the ground that the approval of the Chief Controller was granted after
the expiry of the import per

## Text

_Characters 0–39,727 of 59,059. This is a partial read: ask again with offset=39727 for what follows._

JOINT CHIEF CONTROLLER OF IMPORTS AND
A
EXPORTS, MADRAS
V,
M/S. AMJNCHAND MUTIIA ETC.
July 21, 1965
[P. 8. GAJENDRAGADKA.R, C.J., K. N. WA'.'ICHOO, J. c. SHAH,
J. R. MUDHO!.KAR AND S. M. SIKRI, JJ.]
B
Imports (Control) Order, r. 3 and lmpon Trade Control Policy Instructions, lnsrrucrion 7 l-Apprvva/ by Chief Control/er of transfer of quotasC
Date •vhen effective.
By s. 3 of the Imports and Exports (C<mtrol) Act, 1947 the Centzal
GO'Vernment was given power, . by means of an Order publisbcd in the
Gazette, to provide for prohibiting r~tricting or otherwise controlling
the import of goods into India. In pursuance of that power, the C'..cntral
Government issued the Imports (Control) Order. It provided for a system
of licensing and r. 3 thereof provided that no person shall import t.lte
goods specified in Schedule I cxc-.:pt under a licenc'e granted by the proper
authority. Rule 6 gave power to the licensing authority to rcfu~e to grant
a licence on the ground that the application was defective. In
order to
guide the licensing authorities in the matter of granting licences, the Cen·
tral Government iss~d adm'.nistrativc instrut.'tions.
The instructions pro·
vide for the granting of licences to "'cstJblished in1p<:>rtcrs", that is, per·
sons engaged in import trade for at least one financial year falJing within
a specified period called tile basic period.
ln•truction 71 of the Instructions provided for division of quota rights of a firm an1ong its partners,
when the firm was diswlved. It lays down that the partners shall get their
shares in the quota rights according to the provision of the agreement
between them. Quotas are for the purpose of informing the licensing authority that a particular person has been rcco1.!fliscd as an established importer,
and it is for the licensing authority to i55ue a licence to the quota holder
in accordance with the licensing policy for the period with which the
licence deals.
1be re•pondent was a panner of a firm which wa• an established
importer.
The firm was dissolved in January 1957 and on 4th March
1957, an application v.·as made to the Chief ConlroUer on behalf of the
dissolved firm, for a division of the quota between the partnors.
Since
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the application for a licence for January-June period should be made by
3 !st Marcb, the respondent applied for the grant of licence for the period
January-June 1957, on 25th March 1957 without mentioning his quota as
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required by the Instructions, because the Chief Controller had not by
then approved the division of quota rights among the partners.
Since
the application was defective the respondent was informed in April 1957
that before a licence could be given. the respondent should get such
approval.
Tn September 1957, the Chief Controller informed the respondent that instructions had been issued to the Joint Chief Controller,
who was the licensing authority; but the Joint Chief Controller informed
H
the respondent that a licence cou1d not be jssued. since the transfer of
quota rights in respondent's favour was recognised by the Chief Controller
only after the expiry of the licensing period to which the application related.
After an un.<ucccssful appeal, the respondent moved the High Court
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CONTROLLER v. AMINCHAND (Wanchoo, !.)
263
A
for the issue of an appropriate writ, and the High Court allowed the
petition.
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In his appeal to this Court,
the Joint Chief Controller contended that, since the transfer of quota rights was a condition precedent
to the grant of an import licence, the person in whose favour such a
transfer had been recognised or sanctioned was entitled to rely upon that
transfer only for a period subsequent to such sanction or recognition and
not for any anterior period.
HELD: (Per P. B. Gajendragadkar, C.J., K. N. Wanchoo, J. C. Shah
and S. M. Sikri, JJ.) The licensing authority had to deal with the application for a licence on the basis that the approyed quotas were given
to the partners of the dissolved firm from the date of the dissolution and
the agreement to divide, and could not refuse the licence solely on
the ground that the approval of the Chief Controller was granted after
the expiry of the import period. [269 E, G-Hl
Since the Chief Controller had no power to refuse division of the quota
rWits if he was satisfied as to the dissolution of a firm, it follows that
wlien he gives his approval it must take effect from the date of the
agreement.
Otherwise, it would mean that the partners would lose their
advantage on account of the delav of the Chief Controller. It is true that
Instruction 71 provides that there will not be a right to the quota till the
transfer of the quota rights is approved by the Chief Controller, but that
would not mean that such approval will not relate back to the date of
the agreement.
Further, the fact that the Chief Controller said in his
Jetter of approval that the quota rights should in future be divided between the partners would not mean that the quotas \Vere to take effect only
after the date of approval.
It only meant that the original quota of
the undissolved firm would, from the date of the agreement of dissolution,
be divided between the partners as provided thereunder. [269 H; 270 B, C,
E, G; 271 Al
Since the application in the present case was made before the approval
by 1he Chief Controller and did not mention what quota the respondent had,
the application was incomplete and defective, but that \Vas not the reason
for the rejection. [271 F; 272 Al
As no Order of the Central Government prohibiting the import of the
articles for which the licence was applied was published in the Gazette, it
was open to the licensing authority to issue a licence for the period JanuaryJune, 1957, eYen if there was a change in 1he import policy of the
Government of India with respect to those articles. [272 G]
Joint Chief Control/er v. H. V. Join, I.L.R. [1959] Mad. 850, approved.
Jagonnoth v. Voradker A.l.R. 1961 Born. 244, overruled.
Per Mudbolkar, J. (Dissenting) : The Joint Chief Controller's action
in refusing to grant a licence for the period January-June, 1957, was well
within his powers. On the respondent's own showing the Chief Controller
bad not recognised the division of the dissolved firm's quota rights by 1he
date on which he made his application.
The application was therefore
defective and liable to be rejected under cl. ( 6) of the Control Order. The
respondent's position was as if, upon that ground the licensing authority
refused to grant a licence for a period antecedent to the recognition of the
division of quota rights. [278 C, H; 279 A-Bl
The right to a quota is not a legal right and it is only in pursuance
of certain administrative instructions that the licensing authority allots
quotas to established importers. Where a quota had been allotted to a firm
264
SUPREME COURT REPORTS
[1966] I S.C.R.
the Chief Controllrr \V:1s cmpo\\·cred to recognise upon 1he dissolution of
that firm the di.,:ision of the quota allot'.cd to il amongst the members
of that firm,
hul that \VouI~ not create a legal right in favour of the
erSl\\'h1!e partners to u. share tn the quota. because, the Chief Conrrollcr
c0uld refuse to recogn!se a di.., .. i~ion in c1>ncci\"ahlc cases. {281 H; 282 1\-B,
l>J
Further. the instructions'p;ovide th;~I rhc di\'i'iion is to he recognised
by the Chief C.Ontroller ont' for the fun..1rc.
The plain n1caning of thi!!
is that the division is to be rnadc effective only from a date suhseq1Jent to
the approval of the division by the Chief Controller. [282 HJ
Even assuming tha! the Instructions confer .some kind of right upon
the partners of a dissol\'cd firm. it can tic exercised only in the manner
and to lhc extent provided in the instructions themselves.
Not only that
the instn1ctions <lo not provide for any rel:1tion hack of the recognition of
the division by the Chief Controller, to the date of dissolution of the firm,
but they clearly provide for the recognition tlf the divhion only in
future. [282 F-G J
Jagannnth v. Varudker, A.Lil. 1961 Rom. 244, approved.
CIVIL APPELLATE JllRISDtCTION : Civil Appeals Nos. 60 to 62
and 316 Io 320 of 1965.
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Appeals by special leave from the judgments and orders, dated
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December I 0, 1962 and March 18, 1963 of the Madras High Court
in Writ Appeals Nos. 27, 47 & 48 of 196 l, and 74 of I 963, 91 of
1960 and 26, 49 & 50 of 196 l.
C. K. Daphtary, Attorney-Genera/, R. K. P. Sha11kardars, R.H.
Dhebar and R. N. Sachthcy, for the appellant (in all the appeals).
A. V. Vis:i'(1!1<•1lw Sasrri, S. Balakrislman, B. R. Do/ia, R. K.
Garg, S. c~. Aganml, D. P. Singh and !>f. K. Ramamurrhi. for the
respondents (in C.As. "los. 60 to 62 of I 965).
Uly Tlwma,, for respondent (in C. A. No. 316 of I 965).
n. R. Do/ia, F. C. A!frawa/a and P. C. Agrawala, for the respondent (in C'. As. Nos. 317-320 of 1965).
The Judgment of Gajcndragadkar C.J., and Wanchoo, Shah and
Sikri JJ., w:;s delivered by Wanchoo, .I. Mudholkar, J. delivered
a dissenting Opinion.
Wanchoo, J,
These eight appeals by special leave agaimt the
judgment of the Madras High Court raise a common question of Jaw
and will be dealt with together. It will be enough if we give the
facts of one case (JI. Chil'f Controller v. A min Chand Muth~
C'. A. 60 of 1 965), for the facts in the other cases are more or less
similar. It appears that there was a partnership finn known as Nainmull Juthmull. This finn 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
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CONTROLLER v. AMINCHAND (Wanchoo, !.)
265
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-Nathmull and Juthmull Mutha. On January l, 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, l 957 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 Dellti 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. It was stated
D 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
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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
G 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
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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
266
SUPREME COURT REPORTS
(1966) l S.C.R.
1958 or January 1959, and the main contention on behalf of the
respondents wa~ 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
A
the petition holding, on the basis of an earlier decision of that
court in the Joint Chief Controller v. ff. V.
Jain('), tbat the
B
approval of the Chief Controller to the division of the quota
between partners of a dissolved fim1 related back to the date of
the dissolution of the firm and the partners would be entitled to
import licences on the basis of such approval subject to the licensing
order. Thereupon the Joint Chief Controller went in appeal and
the Division Bench of the High Court which heard the appeals
upheld the order of the learn~d Single Judge. The High Court
having refused leave to appeal, the appellant obtained special leave
from this Court; and that is how the matter has come up before us.
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Before we consider th.: point raised in the present appeals we
shall briefly refer to the system of licensing which came into force D
after the Imports and Eitports (Control) Act, No. 18 of 1947,
(hereinafter referred to as the Act). Bys. 3 of the Act, the Central
Government was given power to provide for prohibiting, restricting
or otherwise controlling in all cases or in specified classes of cases
and subject to such exceptions, if any, as may be made by or under
the order, the import, export, carriage coastwise or shipment as
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ship stores of goods of any specified description. This could be
done by means of order publi~hed in the official gazette. The Act
also made by s. 5 any contravention of any order made and deemed
to have been made under the Act punishable and by s. 6 provided
for cognizance of offences against the provisions of the Act.
In pursuance of the power granted to the Central Government,
the Imports (Control) Order was issued on December 7, 1955
(hereinafter referred to as the Order). Th is Order repealed the
earlier orders issued under the Act or the Defence of India Rules
1939. It provided for a system of licensing and r. 3 thereof provided that no person shall import any goods of the description
specified in Sch. I, except under and in accordance with a licence
or a customs clearance permit granted by the Central Government
or by any officer specified in Sch. n.
Form of application for
licences and fees payable therefor arc provided in r. 4 and r. 5
provides for conditions to be imposed on a liccncee at the time
of granting licences. Rule 6 gave power to the Central Government
or the Chief Controller to refuse to grant a licence or direct any
(I) I.LR. (1959] M•d. 850.
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CONTROLLER v. AMINCHAND (Wanchoo, J.)
267
A licensing authority not to grant licence for certain reasons. One
of the reasons for such refusal was if the application for import
licence was defective, and did not conform to the prescribed rules.
Rule 7 provided for amendment of licences and r. 8 gave power
to the Central Government or the Chief Controller to suspend the
issue of licences or debar a licencee from using a licence for certain
B reasons. Rule 9 provided for cancellation of licences by the Central
Government or any other officer authorised in this behalf. The
power under rr. 7, 8 and 9 was to be exercised after giving a
reasonable opportunity of being heard to the licencees.
These are the statutory provisions under the Act and the Rules
c for granting licences.
In order however to guide the licensing
authorities in the matter of granting import licences, the Central
Government issued certain administrative instructions to be followed by the licensing authorities.
These instructions provided for
grant of import licences to three kinds of persons-(i) established
importers, (ii) actual users, and (iii) new comers : (see the Red
D Book of Rules and Procedure for Import Trade Control for the
period January-June, 1957). We are in the present
appeals
concerned with established importers and may briefly indicate how
established importers were dealt with in the Red Book concerned.
"Established importers" were defined as persons or firms who had
been actually engaged in import trade of the articles comprised in
JI:
the schedule during at least one financial year falling within the
basic period. The basic period out of which the established importer
could select the best year for the purpose of calculating the quota
was from April 1, 1945 to March 31, 1952. Procedure was provided in these instructions for applications and for establishment
or refixation of quotas : (see Section I of the Red Book for the
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period January-June 1957, instruction 22).
After setting out the system of granting quotas to established
importers on the basis of their past imports, instructions 71 with
which we are particularly concerned, laid down that quotas were
granted on the pre-supposition that no change had taken place in the
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constitution of the firm. The expression "firm" included a partnership, a limited company and a proprietary business. It was further
provided that when a change occurred in the constitution or the
name of a firm or the business changed hands, the reconstituted
firm would not be entitled to the quota of the original firm until
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the transfer of the quota rights in their favour had been approved
by the Chief Controller or other licensing authority, as the case
may be. Instruction 71 also provided how the transfer of quota
rights would be recognised or approved. In the present case we
268
SUPREME COURT REPORTS
[ 1966] I S.C.R.
are concerned with cl. (b) of Instruction 71, which is in these A
terms:-
"Where a firm is dissolved, and the partners agree to
divide it~ business, assets and liabilities, and its goodwill
is taken over by one of the partners or none of them is
allowed to use it, the partners shall get their respective
share in the quota rights according to the provision of the
agreen1ent."
Instruction 72 provided for documentary c\'idcnce to be produced
by the applicants in support of their case for transfer cf quotas.
It will be seen that these administrative imtructions do not
create any right as such in favour of persons with whom they deal.
They arc for guidance of the authorities in the matter of granting
quotas for the purpose of the Ord·~r. That is why when cl. ( b)
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of Instruction 71 provide> for division of quota rights it lays down
that the partners shall get their respective share in the quota rights
according to the provision of the agreement between them. Once D
the Chief Controller is satisfied. on the evidence produced before
him that the finn had certain quota rights and had b~en dissolved,
he has to divide the quota rights between partners in accordance
with the provi~ions of the agreement bct1n~cn them. As we read
cl. (b), it i~ clear that where the conditions contained in Instruction
71 arc fulfilled, the Chief Controller must <livid·~ the quota rights
E
in accordance with the provisions of the agreement between the
partners of the firm that hns been dissolved. Clearly therefore these
administrative instruction$ provide a machinery for division of
quota rights in certain cases including the dissolution of a firm
consisting of a number of partners and all that the Chief Controller
has to do is to satisfy himself that there has been a dissolution in
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accordance with the provi~ions in cl. (b) and thereafter he is bound
to accord approval to the division of quota rights according to the
provision of the agreement between the partners. He cannot refuse
to divide the quota rights between the partners of a dissolved firm
where he is satisfied on the evidence produced before him that the
conditions contained in cl. (b) have hcen satisfied. The function
of the Chief Controller under Instruction 71 read with Instruction
72 appears more or less of a ministerial nature and he is hound to
divide the quota rights in accordance with the provisions of the
agreement between the partners of a dissolved finn, once he is
satisfied on the evidence produced before him of such dissolution
and the agreement leading to dissolution provides for the division
of quota rights.
The division of quota rights according to the
instructions is merely for the purpose of helping the licensing
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CONTROLLER v. AMINCHAND (Wanchoo, I.)
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auth-Ority under the Order in the matter of grant of licence to the
class of established importers with which this division is concerned.
The approval of the Chief Controller is provided by these instructions in order that the licensing authorities may have a clear guidance as to how they should deal with the quota allotted to a firm
consisting of a number of partners which has been dissolved. It
is in the background of this position that we have to consider
whether this approval granted by the Chief Controller relates back
to the date of the agreement relating to the dissolution of the firm
consisting of a number of partners.
Two views have been expressed by the High Courts in this
behalf. The Madras High Court took the view in Jain's case(')
that ''where a firm is dissolved and the partners agree to divide
the business, assets and liabilities, the partners shall get their
respective share in the quota rights according to the terms of the
agreement. Such rights would accrue to each of the partners from
the date of the agreement." The Madras High Court further held
that even where the approval of the Chief Controller is made after
the licensing period for which application has been made is over,
the approval dated back to the time when the firm was dissolved
and the agreement to divide the quota rights was made.
The
licensing authority therefore according to this view has to deal
with the application for licence on the basis that the approved
quotas were given to the partners of the dissolved firm from the
date of the agreement and cannot refuse the licence only on the
ground that the approval was granted after the import period had
expired.
The other view is taken by the Bombay High Court in Jagannath
v. Varadkar('). It was held in that case that the transfer of quota
rights was a condition precedent to the grant of an import licence.
The person in whose favour such a transfer had been recognised
or sanctioned was consequently entitled to rely upon that transfer
for a period subsequent to such sanction or recognition and not
for any anterior period, even though the application for licence
G might have been made in proper time before the import period
expired.
We have given the matter careful consideration and are of
opinion that the view taken by the Madras High Court is correct.
We have already pointed out that on a proper interpretation of
Instruction 71, there is no doubt that the Chief Controller is bound
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to divide the quota of a firm consisting of partners which has been
dissolved in accordance with the provisions of the agreement
(J) J.L.R. [19S9] Mad. SSO.
(l) A.LR. [1961) Bom. 244.
Ui&p.Cl/6S-3
270
SUPREME COURT
REPORTS
[1966] l S.C.R.
between the partners provided the necessary evidence has been A
produced before him, as required by Instruction 72 in that behalf.
Such being the nature of the proceeding before the Chief Controller
it follows that when he gives approval to the division of the quota
between the partners of a dissolved firm in accordance with the
agreement between them, the approval must take effect from the
date of the agreement between the partners. It might have been a B
different matter if the Chief Controller had the power to refuse
division of the quota rights under these instructions; but he has
no such power and must divide the quota in accordance with the
agreement if he is satisfied as to the dissolution on the evidence
produced in accordance with Instruction 72. If such approval by C
the Chief Controller were not to date back to the date of agreement it would mean that the partners who were otherwise entitled
to approval under Instructions 7 I and 72 might lose the advantage
that they would have before the licensing authority by delay in the
approval by the Chief Controller. In this connection our attention
was drawn to the opening words in Instruction 7 I which provided D
that "the reconstituted firm will not be entitled to the quotas of
the original firm until the transfer of the quota right~ in their
favour has been approved by the Chief Controller." It is true
that these words make it necessary that there should be approval
of the Chief Controller before a partner of a dissolved firm can
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say that he holds a quota. But these words do not mean that such
I!.
approval will not date back to the date of agreement dividing the
quota rights, for the Oiief Controller, as already indicated, bas to
divide the quota rights once he is satisfied as to dissolution on the
production of eviden~e mentioned in Instruction 72.
In such
circumstances it would in our opinion be fair to hold that the Chief
Controller's approval dates back to the date of agreement so that r
such persons may not suffer on account of the delay in the Chief
Controller's office in the matter of according approval.
The fact that in his letter of approval the Chief Controller
usually says that the quota rights admissible to the dissolved
partnership should in future be divided between the partners would G
not necessarily mean that the quotas for the partners were to take
effect only after the date of approval. If the division of quota
has to be recognised by the Chief Controller on production of
evidence required by Instruction 72 and this division has to be in
accordance with the agreement between the partners of a dissolved
firm, the approval must relate back to the date of agreement, for
H
it is the agreement that is being recognised by the Chief Controller.
In such a case the fact that the Chief Controller says that in future
•
CONTROLLER v. AMINCHAND (Wanchoo, J.)
271
A the quota would be divided, only means that the original quota of
the undissolved firm would from the date of the agreement of dissolution be divided between partners as provided thereunder.
B
c
D
Further we would like to make it clear that quotas should not
be confused with licences.
Quotas are merely for the purpose
of informing the licensing authority that a particular person has
been recognised as an established importer for import of certain
things.
Thereafter it is for the licensing authority to issue a
licence to the quota holder in accordance with the licensing policy
for the half year with which the licence deals. For example, if
in a particular half year there is an order of the Central Government prohibiting the import of certain goods which are within the
quota rights, the licensing authority would be entitled to refuse
the issue of licence for import of such goods whose import has
been banned by the Central Government under the Act by
notified order. Thus the approval of the Chief Controller under
Instruction 71 is a mere recognition of the division made by the
partners of a dissolved firm by agreement between themselves and
in that view the recognition must clearly relate back to the date
of the agreement. Further when the Chief Controller says in his
letter that in future the division would be recognised in a certain
ratio based on the agreement, it only means that the Chief ConE
troller has approved of the division made by the parties and such
approval then must relate back to the date of the agreement
between the parties. We therefore hold that the view taken by
the Madras High Court that the approval by the Chief Controller
relates back to the date of agreement is correct.
F
It was next urged that the application when it was made to the
Joint Chief Controller was not complete inasmuch as it did not
mention what quota the particular partner had. That is
undoubtedly so for the applications in the present cases stated that
the firm had been dissolved and application had been made to the
Chief Controller for division of the quota of the original firm
G between the partners according to the agreement between them.
To that extent the application was defective. It is pointed out that
under Instruction 13 application for licence has to be made before
a certain date and has to be complete in all respects.
It was
further urged that it is always open to the Joint Chief Controller
to reject an application which is defective and is thus incomplete.
H Assuming that is so, one should have expected such a defective
application being dismissed immediately after the last date for
making the application had expired and the Joint Chief C,ontroller
272
SUPRl!MI! COURT REPORTS
[1966] I S.C.R.
should have given that as the reason for the rejection of the appliA
cation for licence. But this was not done in the present cases and
the reason for rejection of the application was not that it was not
complete when made.
Further it appears that it is not unusual
for licences to be granted after the import period is over. It is
also not denied that it was open to the Chief Controller in his discretion to say that the division of quota rights would be recognised
B
from the date of the agreement even though the approval came
much later. If that is w, it would mean that the applicant for
division of quota would be entirely at the mercy of the Chief Controller because there is nothing in the Red Book to show under
what circumstances the Chief Controller can grant recognition
from the date of the agreement even though the approval comes
C
much later. On the whole therefore we arc of opinion that the
view taken by the Madras High Court is correct as the grant of
approval in accordance with the agreement is obligatory on the
Chief Controller if the evidence required under Instruction 72 has
been produced to his satisfaction.
D
The last point urged was that subsequent to October 1957,
Government of India changed its policy with respect to import
of fountain pens with which some of the present appeals are concerned. This it was urged amounted to a ban on the import of
fountain pens and it would not be open to the Joint Chief Controller to issue any licence for any period, be it January-June 1957,
E
after the import of fountain pens had been banned from October
1957. Now there is no doubt that it is open to the Central Government under s. 3 to prohibit the import of any article but that can
only be done by an order published in the official gazette by the
Central Government under s. 3. The High Court has found that
no such order under s. 3 of the Act has been published. Nor has F
any such order by the Central Government been brought to our
notice. All that has been said is that in the declaration of policy
as to import, the word "nil" appears against fountain pens. That
necessarily does not amount to prohibition of import of fountain
pens unless there is an order of the Central Government to that
effect published in the official gazette. We therefore agree with the G
High Court that unless such an order is produced it would be open
to the licensing authority to issue a licence for the period of
January-June 1957 even after October I, 1957.
The appeals therefore fail and arc hereby dismissed with costs.
There will be one set of hearing fee.
H
Modholkar, l. A common question of law arises for decision
in these appeals. The essential facts bearing on this question being
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CONTROLLER v. AMINCHAND (Mudholkar, J.)
273
A more or less similar it would be sufficient to state those which give
rise to Civil Appeal No. 60 of 1965. A partnership firm styled
as Nainmull Juthmull carried on, amongst other things, the business of importing goods from foreign countries. As an established
importer, the Joint Chief Controller of Imports and Exports
Madras had granted it a quota for import of certain commodities.
B
On the strength of this the firm used to be granted import licences
every half year. There were three partners in that firm, namely,
Aminchand Mutha, Nainmull Nathmull and Juthmu!l Mutha. On
January 1, 1957 the firm was dissolved. On March 25, 1957 Aminchand Mutha made an application to the appropriate authority
for the grant of an import licence in respect of the period JanuaryC June, 1957 stating in his application the facts that the firm
Nainmull Juthmull held a quota certificate, that the firm was dissolved and that an application was made to the Chief Controller
of Imports for the division of the quota amongst the erstwhile
partners of the firm. That application had in fact been made on
March 4, 1957 and was pending on the date on which an import
D licence was applied for by Aminchand to the Joint Chief Controller
of Imports and Exports at Madras. On April 8, 1957 the latter
informed Aminchand that before a licence would be granted to him
he should get the approval of the Chief Controller for the division
of quota rights of the dissolved firm. For certain reasons which
E are not material for the purpose of the appeal, there was delay
in the disposal of the aforesaid application. In September 1957
the Chief Controller informed Aminchand that instructions would
be issued to the Licensing Authority to the effect that quota certificates admissible to the dissolved firm should in future be divided
between the three partners in certain proportions. Aminchand
F thereupon approached the Joint Chief Controller for grant of a
licence and on January 9, 195 8 the latter informed him that no
licence could be issued to him for the period January-June, 1957
since the division of quota rights of the firm was recognised by the
Chief Controller only after the expiry of the licensing period to
which the application related.
Aminchand then preferred an
G appeal from the decision of the Joint Chief Controller but failed.
Thereupon he moved a writ petition in the High Court of Madras
for the issue of a writ of mandamus or any other appropriate writ
to the Joint Chief Controller for the issue of an import licence
to him for the period January-June, 1957. The High Court
following its earlier decision in the Joint Chief Controller v. H. V.
H Jain(') granted the application. It is against this decision of the
High Court that the Joint Chief Controller has come up in appeal
(I) I.L.R. [1959) Mad. 850.
274
SUPREME COURT REPORTS
[1966] l S.C.R.
before this Court as also against similar decisions in the other A
connected appeals.
The point which is urged on behalf of the respondents in these
appeals is that the Joint Chief Controller is bound to grant an
import licence for the period for which it was sought even though
the division of quota rights was. approved by the Chief Controller B
subsequent to the expiry of the licensing period provided that the
application for the grant of the licence was made within time and
an application for division of quota rights is made before the
expiry of the licensing period. The contention of Mr. Viswanatha
Sastri who appears for all these respondents is that in such cases
the approval of the Chief Controller of the division of quota rights c
even though accorded after the expiry of the licensing period would
relate back to the date of dissolution of the firm or at any rate to
the date of the application for approval.
It would be appropriate to advert now to the legal position
pertaining to the import of foreign goods. In the first place there D
is the Imports & Exports (Control) Act, 1947. Sub-section (I)
of s. 3 of that Act, amongst other things, provides that the Central
Government may by order published in the Gazette prohibit, restrict or otherwise control in all cases or in specified classes of
cases and subject to such exceptions, if any, as may be made by
or under the order "(a) the import .......... of goods of any
E
specified description".
Sub-section (2) makes the provisions of
s. 19, Sea Customs Act applicable to goods with respect to which
any order under sub-s. (I) of s. 3 of the Imports & Exports (Control) Act, 194 7 has been made. Sub-section (3) of that section
provides as follows :
"Notwithstanding anything contained in the aforesaid Act, the Central
Government
may,
by
order
published in tha Official Gazette, prohibit, restrict or
impose conditions on the clearance, whether for home
consumption or for shipment abroad of any goods or
class of goods imported into the Provinces of India."
Section 5 provides for certain penalties for contravention of any
order made or deemed to have been made under the Act.
In
exercise of the powers conferred by s. 3 the Governmnt of India
promulgated on December 7, 1955 an Order for the control of
import trade.
Clause ( 3) thereof runs thus :
"Restriction on import of certain goods.-Save as
otherwise provided in this Order, no person shall import
any goods of the description specified in Schedule I,
..
G
H
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CONTROLLER V. AMINCHAND (Mud/zo/kar;, J.)
275
A
except under, and in accordance with, a licence or a
customs clearance permit granted by the Central Government or by any officer specified in Schedule II."
B
c
D
E
F
Clause 4 (l) provides for making an application for grant of a
licence to import. Clause ( 5) provides for attaching conditions
to a licence issued under t.li.e Order. Clause ( 6) confers power
on the Government of India or the Chief Controller of Imports &
Exports to refuse to grant a licence for any of the reasons specified
in that clause. Clause 8 empowers these authorities to suspend the
issue of licences or de.l>ar a licensee from receiving licences and
clause 9 provides for cancellation of licences.
The grounds on
which action can be taken under either of these clauses are also
specified in them. It is not necessary to refer to the other clauses
of this Order. Appended to the Order are schedules contemplated
by cl. (3) of the Order.
Amongst the grounds for refusal of
licence under cl. (6) the following are relevant for the purpose
of deciding the poirit which arises before us :
" (a) if the application for a licence does not conform to any provision of this Order;
( e) if the application for an import licence is defective and does not conform to the prescri!>ed rules;
(g) if the applicant is not eligible for a licence in
accordance with the Import Trade Control Regulation;"
Reading the Act and the Import Control Order together it
would follow that no person is entitled to import into India goods
or commodities included in Schedule I of the Order except in
accordance with the provisions of the Act and of an Order promulgated thereunder by the Government of India or as permitted
by that Order. The Import Control Order, save in cases falling
G
within cl. ( 11) of that Order, prohibits the import of any commodity set out in Schedule I except under a licence issued under
the Order. The granting of licences for import of commodities
into India and the allotment of the requisite foreign exchange for
the purpose is regulated by the policy framed in that behalf from
H
time to time by the Government of India. The commodities sought
to be imported by each of the respondents are those included in
Schedule I and could be imported only under a licence.