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Santdas Idanmal and Company Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtDelhi High Court
Decided On
Case NumberWrit Petition No. 113 of 1969
Judge
Reported in1981(8)ELT561(Del)
AppellantSantdas Idanmal and Company
RespondentUnion of India and Others
Cases ReferredJ.C.C. of Imports and Exports v. Aminchand
Excerpt:
.....firm not entitled to quota of original firm until transfer of quota rights in their favor by chief controller - reference to precedents - approval of transfer of quota rights to reconstituted firm related back to date of reconstitution of firm - petitioner-firm entitled to quota rights from date of reconstitution of firm - respondents not right in making quota licenses effective without grant of license for earlier period - order of chief controller so far it makes transfer effective without taking into consideration earlier period quashed. - - october 1961-march 1962. the petitioner preferred an appeal to the joint chief controller of imports and exports, bombay but the same was rejected on 23-24th may, 1967. on a further appeal to chief controller of imports & exports, the..........petitioner contends that they made requisition of that firm together with all the documents to the chief controller of imports and exports, new delhi. pending decision on the transfer of quota rights, the petitioner made an application for import licenses for the relevant licencing period i.e. april-september, 1960, october 1960/march, 1961 and april 1961 - september, 1961. it appears that the office of the chief controller of imports and exports needed some additional information and documents and formally by their letter no. s. 40/1951/tor/1726, dated 21st may, 1962, the transfer of quota rights was made in favor of the reconstituted firm. 2. the petitioner contends that thereafter they wrote to the joint chief controller of imports & exports, bombay to endorse the quota certificate.....
Judgment:

1. The petitioner here is a partnership firm. On 18th December, 1959 one of its partner Mr. Sant Dass Idanmal died and the firm was reconstituted by introducing a new partner Shri Paras Ram J. Mirchandani on 1-4-1960. Since 1954 the firm was importing printing paper and had a quota certificate in its name for the value of Rs. 1,65,160/- for such import. It was getting the licenses for import from time to time on the basis of that quota certificate. After reconstitution, the firm applied for the transfer of quota rights in the name of new firm on September 27, 1960. The petitioner contends that they made requisition of that firm together with all the documents to the Chief Controller of Imports and Exports, New Delhi. Pending decision on the transfer of Quota Rights, the petitioner made an application for import licenses for the relevant licencing period i.e. April-September, 1960, October 1960/March, 1961 and April 1961 - September, 1961. It appears that the office of the Chief Controller of Imports and Exports needed some additional information and documents and formally by their letter No. S. 40/1951/tor/1726, dated 21st May, 1962, the transfer of quota rights was made in favor of the reconstituted firm.

2. The petitioner contends that thereafter they wrote to the Joint Chief Controller of Imports & Exports, Bombay to endorse the quota certificate which was already submitted to them in connection with the issue of licenses for the period April/September, 1959. The respondent claimed that the said quota certificate was already returned to the petitioner. As the petitioners claimed that they had not received the quota certificate back, duplicate quota certificate was granted to the firm. The firm then approached the Licensing Authority at Bombay for endorsement on their Quota Certificate and for validating the same for previous periods and with regard to their pending applications. The issue of licenses including those for the following periods :

1. April/September, 1960

2. October/March, 1961

3. April/September, 1961

was also requested.

3. The Chief Controller of Imports and Exports, New Delhi, sanctioned the licenses effective from October 1961 - March 1962 and a request of grant of licenses for the earlier period was rejected. The firm moved the Joint Chief Controller, Bombay but the Joint Chief Controller vide order dated 30-11-1966 rejected the representation of the petitioner and held that the quota certificate was valid w.e.f. October 1961-March 1962. The petitioner preferred an appeal to the Joint Chief Controller of Imports and Exports, Bombay but the same was rejected on 23-24th May, 1967. On a further appeal to Chief Controller of Imports & Exports, the petitioner did not get any success as on 6-1-1968 the Chief Controller informed that order passed on 30-11-1966 could not be revised. The petitioner sought revision of this order but that was also rejected on August 19, 1968.

4. The main question for decision in this petition is whether the revalidation of the Quota Certificate should take effect from October 1961-March, 1962 or from the date of the reconstitution of the firm. In other words whether the revalidation would cover the licencing periods from April-September 1960, October 1960, March 1961 and April 1961-September 1961 as claimed by the firm.

5. The respondents justified their decision on the ground that the petitioner did not furnish the required documents in time and thus delayed the validation of the Quota Certificate. In para 5 of the Counter Affidavit it is stated that the petitioners furnished four documents through the letter of their Solicitors dated 14/23-2-1961. It was found on a careful scrutiny of the documents that the same were still incomplete. The department wrote to the petitioners on 27-3-1961 regarding the additional documents. The documents were furnished but even now all the requisite documents were not produced. It is not clear from these averments as to what documents were furnished by the petitioner and what were the documents which they failed to furnish. However, in para 20 of the Counter. Affidavit the respondents state that they needed partnership deed of the reconstituted concern and also the partnership deed of the outgoing concern. They also needed the affidavit to show as to what was the position between 18-12-1959 and 1-4-1960 - the period between the dissolution of the earlier partnership on death of Shri Santdas and reconstitution of the firm. It does not appear from the original requisition made by the department on 24-9-1960 that they needed any such information. Counsel for the petitioner contends that the partnership deed of the outgoing firm was already supplied to the department. But, to my mind, the controversy as to which documents were supplied at what time and whether the department asked for all the documents at one time or kept on asking for additional documents up to April 1962, or not is not so relevant. It does not stand to reason, however, that the petitioner was interested in delaying the matter as it was seriously prejudicial to its own interest. It is a matter of common experience that delays to take place in the Government Departments due to the procedures and multiplicity of the authorities dealing with those matters. The legal question as to the date from which the transfer of Quota Certificate is effective in law is no more open for fresh decision. It is concluded by a decision of the Supreme Court.

6. The question as to whether the transfer of quota rights becomes effective from the date of dissolution of partnership or from the date on which the Export-Import Authorities approve of such a transfer, was a matter of some controversy. There was divergence of opinion expressed by Madras High Court and Bombay High Court. In Joint Chief Controller v. H. V. Zein, : AIR1959Mad534 , the Division Bench of Madras High Court took the view that once the approval is given by such authorities, the rights of partners would date from the time when the firm is dissolved. This view was reiterated by Madras High Court in Rangaswami Goundar and others v. Ramana Goundar, : AIR1966Mad308 . But in Jagannath vs. Varadkar, : AIR1961Bom244 , the Bombay High Court held that the person, in whose favor such a transfer had been recognised or sanctioned was consequently entitled to rely upon that transfer only for a period subsequent to such sanction or recognition and not for any ulterior period. This conflict was resolved by Constitution Bench of the Supreme Court in J.C.C. of Imports and Exports v. Aminchand : [1966]1SCR262 . The Supreme Court preferred Madras view. The Supreme Court held : 'We have already pointed out that on a proper interpretation of instruction 71, there is no doubt that the Chief Controller is bound to divide the quota of a firm consisting of partners which has been dissolved in accordance with the provisions of the agreement between the partners provided the necessary evidence has been 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, ...... In such circumstances it would in our opinion be fair to hold that the Chief Controller's approval dates back to the data of agreement so that such persons may not suffer on account of the delay in the Chief Controller's office in the matter of according approval.'

7. Reconstituted firm is not entitled to the quota of the original firm until the transfer of quota rights in their favor are approved by the Chief Controller. Perhaps in the present case, when the approval for transfer was given by the authorities in 1962, they had preferred Bombay view to that of Madras view. However, after the decision of the Supreme Court such a view is not tenable. There is no doubt that after the approval of the transfer of quota rights to the reconstituted firm, the approval relates back to the date of the reconstitution of the firm. I, thereforee, hold that the petitioner-firm is entitled to quota rights and, thereforee, the licenses from 1-4-1964, that is, from the date of the reconstitution of the firm. The respondents were not right in making the quota licenses effective from October 1961-March, 1962 licencing period. The petitioners are thus entitled to licenses for the three periods in the writ petition, namely April/September, 1960, October/March, 1961 and April/September, 1961.

8. The order of the Chief Controller of Imports and Exports, New Delhi, dated 21-5-1962 in so far as it makes the transfer effective from October 1961-March, 1962 period is quashed and set aside. The consequent orders of the Joint Chief Controller of Imports and Exports, Bombay, dated 30th November, 1966, the order of the Chief Controller of Imports and Exports dated 8th January, 1968, the order of the Chief Controller of Imports and Exports dated 19th August, 1969 (on the revision petition) are quashed and set aside. The respondents are directed to give effect to the transfer of the quota rights from 1-4-1960 and to issue licenses to the petitioner firm for periods : (1) April/September, 1960, (2) October/March, 1961 and (3) April/September, 1961.

9. The writ petition is allowed with costs. The Rule is made absolute.


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