SHADI LAL versus NAGIN CHAND & ORS.

Citation: [1973] 2 S.C.R. 598 · Decided: 09-10-1972 · Supreme Court of India · Bench: A.N. RAY · Disposal: Appeal(s) allowed
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Judgment (excerpt)

598 
SHAD! LAL 
\'. 
NAGIN CHAND & ORS. 
October 9, 1972 
IA. N. RAY, D. Ci.. PALEK.AR, M. H. BEG AND s. N. DWIVEDI, JJ.J 
PaJ'111ership-Allotn1etrt of quot" hy 
Go1·ernn1ent-Dissolution 
of 
par111t.•rship <Uld firnr nanre giren to one partner-A llot'111ent of quota to 
thar partner--7! other partners can lay a clabn. 
U:nder cl. 6 of the Woollen Yarn (Production 
and 
Distribution) 
Control Ord:.!r, 1960, .th~ Textile 
Commissioner. 
\~:ith a vie\\' to scc.ure 
proper distribution of woollen yarn, issues directions to a manufacturer 
of or dealer in yarn to sell woollen yarn to manufacturers of hosiery to 
whom quotas arc allotted. The quotas are allotted on the hasis of con-
sumption during the basic period 1956-1959. 
The ;:.?pcllant,\ first respondent and another \\'Crc 
partners doing 
hosiery business. and the partnership was dissolved on 31-3-1959. After 
the dissolution, the three partners were doing hosiery busines; separately. 
The firm name belonged to the appellant under the deed of dissolution and 
he obtained quota in the firm :r.ame. The first respondent filed a suit 
for a declaration that he was entitled to draw 1-1/3 of the auota allotted 
to the appellant. 
The High Court. in Lcttl.!rs Patent Appeal. <lccrcc<l the suit. 
Allowing the appeal to this Court, 
HELD : A declaration can only be founded on a legal right and the 
first respondent had no such legal right. [602C-DJ 
(a) After the dissolution of the partnership each partner was entitled 
to ask for a quota for himself which would be considered on its merits. 
[602A-BI 
(b) Even if the appellant claimed the quota on the basis of past per-
formance during the years 1956.59. it lay within the power of the Textile 
Commissioner to allot to the appellant the qua;ntity he thinks fit and pro-
per and the respondent can have no proprietary claim to the appellant's 
quota. 160 I H; 602A, B-Cl 
.A 
B 
c 
D 
F 
( c) The quota granted to the appellant was in his individual business 
right and was his own property. It was not a:nd could not be an asset 
G 
of the partnership. 
Quota is a licence and a matter of privilege. The 
fact that it was granted in the firm name does not convert it into a 
partnership "'sset, because, the name belongs to the appellant. [6010-Hl 
CIVIL APPEf,l..\11: JURISDICTION : 
Civil Appeals Nos. 1419-
1420 of 1970. 
Appeals by certificates from the judgment and decre.: dated 
Januaf\ 19. 1970 of the Punjab & Haryana High Court at 
Chandigarh in LP.A. Nos. 273 and 274 of 1964. 
H 
A 
8 
c 
SHAD! LAL V. NAGIN CHAND (Ray, J.) 
599 
B. Sen, IJ. P. Maheshwari, Maya Krishnan, N. K. Jain 
arrd 
R. K. Maheshwari, for the appellant. 
M. C. Stla/vad, D. N. Misra, J.B. Dadachanji, 0. C. :'vlatlwr 
and Ravinder N araitl, for the respondents. 
The Judgment ot the Court was delivered by. 
RAY J.-These two appeals are by certificate against the judg-
ment dated i 9 January 1970 of the Punjab and Haryana High 
Court. 
The question which falls for consideration in these appeals is 
whether the respondent is entitled to a declaratory decree to draw 
I/3rd quota of the woollen yarn allotted to the business of the 
appellant under the name and style of Jain Bodh Hosiery. 
Ludhiana. 
The appellant and the respondents are partners. They carried 
on hosiery business in Ludhiana under the name of Jain Bodh 
D 
Hosiery. 
The three persons were partners in the. aforesaid busi-
ness. 
On 31 March 1959 the partnership was dissolved. After 
the dissolution the three partners started hosiery business separa-
tely and individually. Shadi Lal carried on the hosiery business 
under the name and style of Jain Bodh Hosiery. 
E 
F 
Under the deed of dissolution of partnership the entire busi-
ness assets of the firm along with goodwill and liabilities were 
taken over by Shadi Lal. 
The respondent Nagin Chand filed a suit against the Hosiery 
Industrial Federation and Shadi Lal and Ran1esh . Chand. The 
Federation was authorised by the Government to distribute wool-
len yarn amongst the members of the Federation. The parties pro-
ceeded on the admitted procedure of allotment of quota. 
In 
order to be eligible for quota a manufacturer is required to be a 
member of any of the five associations registered with the Hosiery 
Industry Federation. The quota is to be allotted to the manufac-
turer members on the basis of figures of consumption of woollen 
yarn by the members during the years 1956 to 1959 called the 
G basic period. 
H 
The respondent Nagin Chand's caus
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