UNION OF INDIA & ORS. versus M/S EXEN INDUSTRIES

Citation: [1975] 2 S.C.R. 364 · Decided: 09-10-1974 · Supreme Court of India · Bench: KUTTYIL KURIEN MATHEW · Disposal: Appeal(s) allowed

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Judgment (excerpt)

364 
UNION OF INDIA & ORS. 
v. 
MIS EXEN INDUSTRIES 
October 9, 1974 
[K. K. MATHEW AND A. ALAG!RISWAMI, JJ.] 
Import Trade Control Po/Jcy-Licences ·10 partnership-Licence entitlement of 
quondam partners after disso/11tlon. 
A 
B 
A partnership was dissolved and the deed of dissolution provided that the 
machinery, raw-materials and finished goods in stock as also other assets and liabi· 
lities were to be divided equally between the two partners. The respondent was to 
have the advantage of continuing the firm name, the benefit of the existing import 
licences, and of pending applications for import licences. Thereafter the respon· C 
dent-firm applied for import licences for necessary raw-materials and was granted 
50% of'what the original firm was getting. The respondent filed a writ petition 
in the .High Court, contending that the installed capacity of "the factorY was 
double that of the actual production before dissolution, that in the division,. the 
respondent got the actual production capacity whereas the other partner got the 
unutilized spare capacity, and that therefore, the respondent was entitled to get 
import licences after dissolution as before. 
The l:ligh Court allowed the petition and directed the Govermnent to consider D 
the claim of th~ respondent 011 the basis of its own production. · 
N!owing the appeal to this Court, 
HELD : The respondent was not entitled to anything more than what was 
gra!lled to him by the Govenunent. [369 A·B] 
(1) 
Ao~ordfug to para 71 of the Hand-book of the Rules and Prooedure in 
relation to Import Trade Control, in the case of industries borne on the r~ters E 
of the Directorate General of Technical Development licences are normally tsSued 
on the basis of the recommendations of the Directorate General of Technical Deve-
lopment and the respondent. was given import licences on that basis. [368 0-369A] 
(2) Under para 88(2)(c) of the Hand-book if there is a division of a factory 
amongst partners~ a joint application by all the suoceeding parties had to be made 
for re-issue of separate liceiiees in their favour in proportion to theiI: share. So 
also if division takes place after importation. If that is so in respect of the impor-
tation of goods against cum:nt licences, the same principle should apply for future 
licences also. [368 E-G] 
· 
· 
F 
Controller v. Aminchind, [1966] 1 S.C.R. 262, followed. 
(3) In the circumstar.c:is, the most equitable way of dealing With the matter 
was to divide the old import entitlement equally betweer. the two partners which 
is what the appellant did. Ir the petitioner's contention is accepted it follows logi-
cally that if should apply to t.he other partner also. Merely because there was delay 
in the other partner starting his production, he cannot be denied.his import entitle-
ment, which would mean, that between them 'they would be entitled for import. G 
licence at twice what the partnership was originally getting. [366 E-F] 
· 
(4) The fact that after dissolution the new finn was able to take advantage 
of its inbuilt installed capacity cannot entitle it to /Jet the whole. of the quantity 
issued to the former firm, for that would mean depnving the other partner. Such 
a contention C'annot be considered unless the other partn~ is also made a party to 
the proceedings. [367 F-0] 
(5) Paragraph 73 of the Hand-book shows that a licence is issued on the basis 
of certified. requirements fpr 12 months consumption after scrutiny by the licensing H 
authorlty. In the present <:al{e. the respondent was not the. SlllIIO finn as the ol d 
one. There were no tmports by t/luespondent during the past licelising period, because, 
th« imports and production in the past were only by the former fil')ll. [367 D·F) 
A 
B 
., 
c 
D 
E 
F 
G 
H 
UNION V. EXEN INDUSTall!S (AlagiriswamJ, 1.) 
365 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. ~612 of 1972. 
Appeal by Special Leave from the Judgment & Order dattd the 
16th November, 1971 of the Delhi High Court in C.W. No. 25-I> 
of 1966. 
L. N. Sinha Solicitor General of India 
and 
Girish Chandra, 
for the appellants. . 
G. L. Sanghi, Praveen Kumar and B. R. Agarwal, for the respondent. 
The Judgment of the Court was delivered by· 
ALAGIRISWAMI, J.-One H. T. Vora and another G. J. Mehta 
formed a partnership under the name of Exen Industritis ar.d wf.le 
manufacturing fountain pens. In December 1963 the partnerd1ip 
was dissolved and Vora ·took in ancther partnm and ccntinmd the 
industry 

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