Sabira Tannery and Others v. Union of India — 1975 DIGILAW 60 (MAD)

Judgment :- RAMANUJAM, J. As the point involved in all the above petitions is the same they are dealt with together, since the fact in all these cases are more or less the same, it is sufficient to deal with the facts in W.P. No. 567 of 1974. 2. The petitioners in W.P. No. 567 of 1974, are a firm of tanners having their tannery at Vaniyambadi, North Arcot District. As the firm did not export hides and skins in the past, it came under the category of non-exporting tanners. The firm consisted of four partners, one of whom is one A. M. Seleem having 20 per cent interest in the firm. He is also a partner in another firm called 'Messrs. A. A. Rasheed & Co. "who are exporters of hides and skins. 3. The Government of India decided to permit the export of semi-processed hides and skins and, therefore, brought the exports of semi-processed hides and skins under the Export Control Order on 4th December, 1972. As a result of this, all categories of semi-processed hides and skins were to be canalised through the State Trading Corporation of India Limited. By E.T.C. circular No. 14 of 1973 dt. 3rd February, 1973, all the tanners were informed that the Government of India had decided to place quantitative restrictions on exports of semi-processed hides and skins w.e.f 1st April, 1973. By another E.T.C. circular No. 31 of 1973 dt. 29th March, 1973, the aforesaid quantitative restrictions were brought into force from 1st April, 1973 and all exports made from April, 1973 were debited against the quotas for 1973-74 to be fixed in respect of individual exporters. 4. The tanners were informed in the end of June, 1973 that the non-exporting tanners, without export quota from the Joint Chief Controller of Imports & Exports for semi-processed hides and skins, interested in export of the same may submit the details of actual production and sales during the last three years for each item indicated in the communication along with supporting documentary evidence to the respective branch managers of the State Trading Corporation in their areas within 15th July, 1973. Later, by circular E.T.C. No. 105 of 1973 dt. Later, by circular E.T.C. No. 105 of 1973 dt. 7th August, 1973 it was clearly made known to the trade that for fixation of quota the calendar year 1972 has been taken as the base year for pegging the level of exports for the year 1973-74 in respect of each type of semi-processed hides and skins (including crust leather). But of the quantities earmarked for exporting tanners, that the work of allotment of quota for such tanners would bone by the State Trading Corporation of India while the balance of 90 per cent has to be allowed to be exported on account of the State Trading Corporation of India, by manufacturers and merchant exporters having export performances during the period 1968-72. 5. In pursuance of the above circulars, the petitioners firm filed applications on 30th July, 1973 along with the required details for allotment of export quota out of the 10 per cent reserved for non exporting tanners. After several reminders, the petitioners received a communication dt. 28th November, 1973 from the 4th respondent stating that they were not entitled to any quota as they were only "cooly tanners", and that the non-exporting tanners' quota is meant only for genuine tanners who are buying hides and skins in raw form and tanning them in their tanneries for sale in their mandies. 6. Aggrieved against the said order of the 4th Respondent dt. 28th November, 1973, the petitioners filed W.P. No. 6323 of 1973 before this Court on the ground that the forth respondent's refusal to grant quota was arbitrary, illegal and discriminatory, while the said Writ Petition was pending the petitioners received another communication dt. 11th February, 1974 stating that the fourth respondent has decided to allot quota to cooly tanners as well on certain conditions. One of the conditions is that the firm should produce a certificate to the effect that none of this partners has a quota for export of semi-processed hides and skins from the Chief Controller of Imports and Exports. The petitioners immediately complained to the 4th respondent that the said condition providing for such a Certificate is illegal and that the grant of the quota to the petitioners cannot be subjected to such a condition. The petitioners immediately complained to the 4th respondent that the said condition providing for such a Certificate is illegal and that the grant of the quota to the petitioners cannot be subjected to such a condition. The petitioners later made repeated representations to the State Trading Corporation of India and they were ultimately informed orally that they will not be given a quota because one of the partners of the firm namely A. M. Saleem is a partner in another firm called M/s. A. A. Rasheed and Company which has been allotted an export quota out of the 90 per cent under the category of exporting tanners. The petitioners have, therefore, come to this Court praying for a Writ of Mandamus directing the fourth respondent to issue to them an export quota for semi-processed hides and skins as per the E.T.C. Circular No. 105 of 1973 dt. 7th August, 1973 issued by the Government of India. 7. According to the petitioners, under the E.T.C. Circular No. 105 of 1973 dt. 7th August, 1973 they are entitled to an allotment of export quota out of the 10 per cent of the exports reserved for non-exporting tanners, that the imposition of the condition by the fourth respondent for the grant of an export quota which virtually excludes some of the non-exporting tanners like the petitioners from the benefit of the said circular is clearly discriminatory and violative of Art. 14 of the Constitution, that the mere circumstance that one of the partners of the petitioner's concern happened to be a partner in another firm of exporters who had been granted an export quota out of 90 per cent cannot be taken to deprive the petitioners' firm which is a separate legal entity of the benefit of the said circular, that at the imposition of such a condition by the fourth respondent that none of the partners should have an interest in any firm which has been granted export quota which has no nexus to the policy sought to be achieve, is arbitrary, and that the fourth respondent has no jurisdiction to introduce a condition which was not thought of by the Import & Export Controller in his earlier circular dt. 7th August, 1973. 8. 7th August, 1973. 8. In the counter affidavit filed by respondents 1 to 3 it has been stated that as the petitioners have no absolute or vested right to the grant of an export licence a writ of mandamus directing the issue of export quota is not maintainable, that the export quota for semi-processed leather was fixed for individual exporters by the Chief Controller of Imports & Exports on the basis of the guidelines laid by the Ministry of Commerce, the first respondent that as per the guidelines laid down by the Ministry of Commerce, non-exporting tanners are not entitled to the quota at all that it is only with a view to see that the non-exporting tanners may not be placed at the mercy of the big exporters a quota 10 per cent was allotted by the Ministry to the State Trading Corporation of India Limited to be distributed to genuine non-exporting tanners as a special case by circular E.T.C. Circular No. 105 of 1973 dt. 7th August, 1973, that the distribution of quota to non-exporting tanners by the State Trading Corporation of India Limited is based on their actual production either for own sales or for job works, that if the State Trading Corporation of India Limited in consultation with the Ministry decided that those non-exporting firms having common partners in other firms holding export quota obtained from the Chief Controller of Import & Exports will not be eligible for Export quota from and out of the 10 per cent reserved for the non-exporting tanners, and that such a condition was thought of to ensure that exporters do not obtain double benefit. They also contend that there is a reasonable nexus between the object sought to be achieved and the classification made, that the partnership firm not being a separate juristice person apart from the partners constituting the same if some of the partners of non-exporting firm have the benefit of export quota in their capacity as partners in other firms, they have to be excluded from consideration for the grant of export quota which is intended to benefit small non-exporting tanners who have not so far participated in the export trade. 9. The fourth respondent practically adopts the contentions set out in the counter affidavit filed by respondent 1 to 3. 10. 9. The fourth respondent practically adopts the contentions set out in the counter affidavit filed by respondent 1 to 3. 10. Form the facts set out above, it is clear that the first respondent decided to allot 10 per cent of the exports of semi-processed hide and skins (including crust leather) for non-exporting tanners, while the balance of 90 per cent went to the benefit of established exporters who obtain export quotas on the basis of their export performance during the period 1968 to 1972. The circular does not, however, say as to how the 10 per cent is to be allotted as amongst the non-exporting tanners who apply for export quota. It left the work of allotment to such non-exporting tanners to the State Trading Corporation of India, which by its circular dt. 11th February, 1974 has stated that it has been decided to allot the quota to the non-exporting tanners subject to certain conditions, one of them being that none of the partners of any exporting tannery-firm who as a quota for semi processed hides and skins from the Chief Controller of Imports and Exports is entitled to a quota out of the 10 per cent reserved. The question is whether the State Trading Corporation of India is entitled to impose such a condition and whether such a condition is arbitrary, illegal and discriminatory as contended for by the petitioners. 11. The learned counsel for the petitioners contends that such a restriction imposed by the fourth respondent in the grant of quota out of the 10 per cent reserved for non-exporting tanners is contrary to the policy the first respondent laid down in their circular dt. 7th August, 1973, that the imposition of such a restriction is quite arbitrary as it virtually takes as way the benefit granted in the above circular, that the restriction creates a discrimination not only between exporting tanners and another set of non-exporting tanners but also among one set of non-exporting tanners and another set of non-exporting tanners. The learned counsel develops his case as follows :The Government of India having announced its policy in its circular dt. 7th August, 1973 that the non-exporting tanners are entitled to apply for quota out of the 10 per cent of the exports reserved for them, the State Trading Corporation of India cannot take away that right by imposing the restriction aforesaid. 7th August, 1973 that the non-exporting tanners are entitled to apply for quota out of the 10 per cent of the exports reserved for them, the State Trading Corporation of India cannot take away that right by imposing the restriction aforesaid. The imposition of such a restriction and depriving tanners like the petitioners of the benefit of the policy contained in that circular is quite contrary to the said policy. Even otherwise the restriction imposed is quite arbitrary as also discriminatory in that (1) such a restriction is not imposed in respect of the established exporters and (2) that only the firms which have a partner having also an interest in another exporting firm having a quota for export out of the 90 per cent are discriminated as against the other non-exporting firms. 12. The learned counsel refers to the decision in B.C. & Co. vs. Union of India to substantiate his stand that the right to get an export licence is an enforceable right. In that case, import policy for newsprint for the year April, 1972 to March, 1973 was impeached as infringing fundamental rights to freedom of speech and expression protected by Art. 19(1)(a) of the Constitution. It was contended that the import newspring policy is not law, that it is only an administrative direction with no statutory backing and so the restrictions which the policy imposes are not binding. The Court, however, held that even if the now spring policy is administrative in character, it is capable of founding rights and liabilities, that even administrative orders can confer rights and impose duties which will be recognised and endorsed subject to certain limitation. The learned counsel for the respondents would, however, rely on the decision in Andhra Industrial Works vs. Chief Controller, Imports 1974 AIR(SC) 1539, wherein it has been held, that the import control policy statement known as Red Book was not a statutory document, that no person merely on the basis of such a statement can claim a right to the grant of licence enforceable in law and that such a policy can be changed, rescinded or altered by mere administrative orders or executive instructions issued at any time. In Dy. Asst. In Dy. Asst. Iron & Steel Controller vs. L. Manichand Proprietor K.M. Corporation an importer had asked for the issue of a mandamus requiring the authorise to consider his application for licence to import stainless steel in terms of 1968-69 policy wen the application was made and not in accordance with 1970-71 policy. The Supreme Court held that the petitioner has no vested right to import licence in terms of the policy in force at the time of the application and, therefore, he is not entitled to a mandamus prayed for especially when the delay in disposing of the application for licence was not due to the fault to the licensing authority.13, It is true that normally an administrative order can neither confer justifiable right nor impose duties enforceable in a Court but where the State announces a policy of granting of import licences under the provisions of the Imports and Exports Control Act, 1947 or any order or rule made thereunder, the person who are entitled to get an import or export quota under the said policy can approach the Court to see that the policy is administered fairly and reasonable without arbitrariness so long as the policy is administered fairly and reasonably without arbitrages so long as the policy had not been changed, rescinded or altered by any subsequent administrative orders of executive instructions. Having announced a policy on the basis of which export licences are to be granted, it is not open to the authorities who are to give effect to the said policy not to give to the same with reference to an applicant if he is otherwise entitled to the benefit of the said policy so long as the policy is operative. This is the view taken by the Supreme Court in Union vs. Indo-Afghan Agencies In that case the Central Government evolved an import trade policy to facilitate the working of the Imports and Exports control Act, 1947 and the Imports (Control) Order, 1955. The said policy provided incentives to exporters of woollen textiles by giving them an import licence for raw materials equal to 100 per cent of the F.O.B. value of his exports. The said policy provided incentives to exporters of woollen textiles by giving them an import licence for raw materials equal to 100 per cent of the F.O.B. value of his exports. It also provided that the Textile CIT could grant an import certificate for a lesser amount if he is satisfied, after holding an enquiry, that the declared value of the goods exported is higher than the real value of the goods. Some of the exporters contended that they are entitled to obtain import licences for the entire 100 per cent of the F.O.B. value of their exports and that the Textile CIT the was not justified in proceeding on the basis that they have over-invoiced the goods exported. The Union of India contended that the import trade policy under which the promotion scheme was contemplated was administrative in character, that they are merely executive instructions issued by the Central Government to the Textile CIT and created no enforceable rights in the exports who exported their goods in pursuance of the policy and that it imposed no obligations upon the Government to issue import licence. The Supreme Court held that whether the schemes for implementing the Import trade Policy are merely executive or administrative, or are legislative depends not on their form, or the method of publication or the source of their authority but it is their substance that determines their true character, that even if the policy is only executive or administrative in character, Court have power in appropriate cases to compel performance of the obligations imposed by the scheme upon the Departmental authorities, and that the Government and its Officers at their mere whim cannot go contrary to the policy and decline to grant the import licence to an exporter who has acted in pursuance of or on the basis of the policy. 14. Thus the main question to be considered is whether the refusal to grant an export quota to the petitioners out of 10 per cent reserved, on the ground that one of its partners had an interest in a firm which got export quota out of 90 per cent is contrary to the policy declared by the Government by its circular dt. 7th August, 1973. According to the said circular 10 per cent of the exports of semi-processed leather is reserved for "non-exporting tanners". 7th August, 1973. According to the said circular 10 per cent of the exports of semi-processed leather is reserved for "non-exporting tanners". But the circular does not say as to how the said 10 per cent case has to be allotted as between all the non-exporting tanners who apply for export quota and the actual allotment of export quota to the non-exporting tanners out of the 10 per cent reserved has been left to the State Trading Corporation of India Normally the State Trading Corporation of India has to make the allotment as between the non-exporting tanners on relevant considerations. According to the respondents certain guidelines or agreed criteria were laid down as a result of the discussion between the officials of the State Trading Corporation of India and the Ministry concerned, and that those criteria are necessary to ensure that no established tanner who gets an export quota out of the 90 per cent gets again an allocation out of the 10 per cent intended for non-exporting tanners. Therefore fixing certain guidelines by the State trading Corporation of India with the concurrence of the Ministry in relation to the allotment of quota out of the 10 per cent of exports to non-exporting was not contrary to the Policy laid sown in the circular dt. 7th August, 1973. In my view so long as the criteria adopted by the State Trading corporation of India are relevant, it cannot be said to have contravened the policy laid down in the circular. When the Circular gives the State Trading Corporation of India the power to allot export quota out of the 10 per cent to non-exporting tanners, it has naturally to adopt certain guidelines or criteria to make the allotment as between the various applicants for export quota, and in adopting certain criteria or guidelines, which are not specifically referred to in the circular, it cannot be said that it has contravened the circular. In the nature of things it is not possible for the State Trading Corporation of India to give export quota to all the applicants who are non-exporting tanners. If the applicants are too may, it is not possible to allot all of them export quota. In such an event the State Trading corporation can prescribe relevant criteria for making the selection. This leads us to the question whether the criteria laid down are relevant for making the allotment. If the applicants are too may, it is not possible to allot all of them export quota. In such an event the State Trading corporation can prescribe relevant criteria for making the selection. This leads us to the question whether the criteria laid down are relevant for making the allotment. 15. According to the respondents the reservation of 10 per cent is only to benefit the non-exporting tanners and this object will be defeated if some of the exporting tanners are enabled to get the said benefit. Therefore, a safeguard was necessary to see that none of the exporting firms or any of the partners constituting the said firms does not get the benefit of the reservation of 10 per cent. It is for that reason one of the criteria laid down by the State Trading Corporation in consultation with the Ministry was to see that none of the partners of any exporting firm which has a quota for semi-processed hides and skins from the Chief Controller of Imports and Exports out of the 90 per cent will be entitled to seek an allotment out of the 10 per cent reserved for non-exporting tanners. This criterion has been laid down on the basis that a partnership firm is not a separate juristic person apart from the partners constituting the same and as such the export quota given to a firm is one granted in favour of all the partners constituting the firm. In this case one of the partners of the petitioners firm is admittedly a partner in another firm who are established exporters of hides and skins and who had been granted an export quota by the Chief Controller of Imports and Exports out of the 90 per cent of the exports. It is the contention of the respondents that as one of the partners of the petitioners firm has been granted an export quota he is not entitled to seek an allotment of quota out of the 10 per cent either individually or as a partner of the petitioners firm. 16. It is the contention of the respondents that as one of the partners of the petitioners firm has been granted an export quota he is not entitled to seek an allotment of quota out of the 10 per cent either individually or as a partner of the petitioners firm. 16. The learned counsel for the petitioners submits that this approach is legally erroneous, that the petitioners' firm as an applicant for allotment of an export quota is different from the partners constituting the firm, that the mere fact that one of the partners had the benefit of export quota as a partner in another firm will not disentitle the petitioners firm from seeking the benefit of the circular as non-exporting tanners, and that in law the firm is recognised as a separate legal entity apart from the partners constituting it and as such the rights and liabilities of the partnership should be considered independently of the rights and liabilities of its members. But it is well established that a firm is only a collective name or an alias for all the partners, that it not a juristic entity distinct from the partners, that the partnership is merely an association of persons for carrying on the business of partnership and that in law the firm name is a compendious method of describing the partners. 17. In J.C.C. of Imports & Export vs. M/s. Aminchand.