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Judgment
Sathiadev, J.—Petitioner in W.P.No. 4613 of 1986 is the appellant herein and respondents 1 and 2 therein are respondents herein.
Appellant preferred the writ petition to quash the order of the first respondent, dated 13th May, 1986 and signed by him on 12th May, 1986 and
transferring the licence issued in the name of appellant in Form XI under the Arms Act, in favour of the Second respondent. It was claimed by
appellant among other grounds that no provision is made either under Arms Act or in the Rules framed thereunder to transfer such a licence. This
claim was neither disputed before the learned single Judge nor in this Court by the counsel appearing for first respondent. Learned Judge while
disposing of the writ petition, also stated that though S.17 of Arms Act read with R.53 does not confer power to pass an order transferring an
arms licence, yet, the authority could invoke S.21 of General Clauses Act, 1897. He also took note of the fact that the actual order passed was
one of transfer, and that Mr. S. Govind Swarainathan appearing for second respondent had characterised the nature of the order as a substitution
along with original holder of licence. Hence, by holding that S.21 of the General Clauses Act would apply, the impugned order was set aside and
the matter was remitted to the authority for considering whether second respondent could be included in the licence originally issued in favour of
the writ petitioner, and whether the same is permissible in law. It is by being aggrieved with the said order, this writ appeal is preferred.
Mr. C. Chinnasamy, Special Government Pleader appearing for first respondent, would refer to S.17, which deals with variation, suspension,
and revocation of licence and submits that the impugned order is one in which the licence earlier issued had been cancelled, and therefore, licence
had been given to second respondent. If for any reason; it cannot be so construed, then, it could be only a variation. Section 15 read with Rule 51
deals with the prescribed procedure for grant of licence, and it is the admitted case that second respondent had not resorted to the said procedure.
As for S.17 read with rule 53 is concerned, it only deals with changing of conditions subject to which licence had been granted, and as to how it
could be suspended or revoked. The impugned order was neither an order of suspension nor revocation of licence nor any conditions pertaining to
the licence had been changed or varied. As for Rule 53 (a) (1) it deals with extension of the area of the validity of the licence and clause (2) deals
with only Form XI licence. Hence, none of the provisions relied upon by him could have any applicability to the impugned order.
A feeble attempt was also made to claim that the order bad only resulted in substitution of the name of another partner. The resultant effect of
the order is that in the place of the name of appellant, second respondent''s name having been inducted, the rights, to which the appellant had in the
licence had ceased to exist. It tantamount to deprivation of the licence issued to him. Except by a process known to law, i.e. the licence when it
could not last be revoked as provided under S.17 this contention was not further pressed into service.
Learned Judge haying relied upon S. 21 of the General Clauses Act, Mr. K. Alsgiriswamy, learned Counsel for the appellant, relies upon the
following decisions to claim that it could be invoked only when subordinate legislation is contemplated, and not in respect of orders of this nature,
wherein ''rights of parties are involved.
A Division Bench of this Court in Municipal Council v. M. & S.M. Ry. Co., Ltd, 1944-I-M.L.J. 76. held as follows:-
...Ss. 20 to 24 of the General Clauses Act relate to powers conferred upon, what we may call, a subordinate Legislative authority. In several
cases, the Legislature instead of making orders and rules and notifications in the Act, itself, enacts that a particular authority shall have, subject to
the conditions mentioned in the enactment, the power to issue or make notifications, orders, or rules. In such cases the authority to which the
power to issue or make orders or notifications is given to have the power to modify, vary or rescind them. Some cases of delegated authority to
issue orders and rules are set out in ""Local rules and orders in the Madras Presidency,"" published from time to time. It does not apply to a decision
as to the rights of parties made by the particular judicial or quasi-judicial or administrative authority. If S. 21 is held to apply to all cases where an
order is passed under an enactment, the result would be startling....
A Full Bench of Nagpur High Court in Venkatesh Yeshwant v. Emperor AIR 1938 Nagpur 513. field as follows :--
... It is well recognized rule of construction that the words used in a stature must be interpreted according to their context. S.21, General Clauses
Act, must therefore be read in the light of Ss. 14 to 20 which precede and Ss 22 to 24 which follow. S. 21 occurs among sections which are
grouped under the heading ""Provision as to orders, rules, etc.. made under enactments"".. The meaning of the word ""orders"" becomes clear when
S. 21 is read in conjunction with S. 24. These considerations make it clear that the word (''order'' used in S.21, General Clauses Act. Is a
legislative or statutory order, that is an order having the force of law...
A Division Bench of Patna High Court in Bhola. Prasad v. U.A. Goswami AIR 1963 Patna 437 (F.B.) in construing S. 24 of Bihar and Orissa
General Clauses Act, which corresponds to Ss. 20 to 24 of General Clauses Act, 1897 held as follows :--
...leading S. 24 by itself or in the context of the other Sections under the said heading it is clear that the power to make or issue orders spoken of in
the said section is of a legislative nature and not of a judicial nature as the order passed under S. 9(4) of the Act. The expression ""to make or issue
orders"" has got to be read ejusdem generis, and when so read it is manifest that the ''orders'' spoken of in S. 24 of the Act are orders made or
issued in exercise of the power of a kind of subordinate legislation conferred by any Act. to wit the various Control Orders made under the
Defence of India Act within the meaning of S. 21 of the Central Act. The power under S. 8(4) of the Act is exercisable ""by order in writing, but is
not a power ''to make an order'' within the meaning of the said provision of the Bihar and Orissa General Clauses Act. If that were not so, all
authorities and Courts will derive their power to add, to amend, vary or rescind any order judicial quasi-judicial or administrative of the like nature
at any time or any number of times they chose to exercise it....
In dealing with the notification issued by a competent authority under East Punjab Public Safety Act. 1949, it was held by the Supreme Court in
Gopi Chand Vs. The Delhi Administration, that
S 9 of the Punjab General Clauses Act, like S.21 of the General Clauses Act, embodies a rule of construction, the nature and extent of the
application which must inevitably be governed by the relevant provisions of the statute which confers the power to issue the notification....
The power to cancel or modify must be exercised in reference to the areas of the Province which it is competent for the Provincial Government to
specify as dangerously disturbed. The power to modify cannot obviously include the power to treat the same area as dangerously disturbed for
persons accused of Crimes committed in the past and not disturbed for others accused of the same or similar offences committed later. That clearly
is a legislative function which is wholly outside the authority conferred on the delegate by S. 20 or S. 36(1). We must, therefore, hold that the third
and the fourth notification are invalid and as a result of the second notification the whole of the Province of Delhi ceased to be a dangerously
disturbed area from 1st October, 1950.
Lachmi Narain and Others Vs. Union of India (UOI) and Others, reiterates the view taken in Gopi Chand v. Delhi Administration AIR 1959 S.C.
609: 1959 Supp. (2) S.C.R. 87.
These decisions make it quite clear that the word ''order'' in S.21 of General Clauses Act could be referable only to subordinate legislation, and
not in respect of administrative or quasi-judicial orders, passed under Arms Act.
Yet, Mr. Govind Swaminathan, Learned counsel for the second respondent, would refer to K.P. Khetan v. Union of India AIR 1976 S.C.
976 in which a notified order passed under S. 18A of the Industries Development and Regulation Act, 1951 was amended relating to its duration,
and therefore, it was held that the amending order was made in the same manner as original order, i.e., by means of notified order, and hence, S.
21 of General Clauses Act could be applied.
Mohd. Yunus Saleem Vs. Shiv Kumar Shastri and Others, dealt with the amendment of the date of poll by virtue of power under S.39 of the
Representation of the Peoples Act, read with S. 21 of General Clauses Act and it was held that the said section confers power for the amendment
to be carried out. In construing the scope of S.14 of Maintenance of Internal Security Act, which makes a specific provision to S.21 of General
Classes Act, it was held in Ram Bali Rajbhar Vs. The State of West Bengal and Others, that it is left to the State Government in the exercise of its
discretion either to exercise the power read with provisions of S.21 of the General Clauses Act or without the aid of S.21.
In Bapurao Dhondiba v. The State AIR 1956 Bombay 300 (D.B.) it was held that Commissioner of Police under Bombay Police Act can
extend the duration of the original order before it came to an end by relying upon S.21 of General Clauses Act. None of these decisions deal with
an order passed by the statutory authority pertaining to inter se disputes, between private parties; and therefore, as pointed out by the Division
Bench of this Court in Municipal Council v. M & S.M. Ry. Co., Ltd. 1944-1-M.L.J. 76 S.21 of the General clauses Act cannot apply to a
decision in which the rights of parties are deter mined by a particular judicial or quasi judicial or administrative authority. Hence, learned Judge was
not correct in holding that first respondent could invoke S.21, and dispose of the application filed by second respondent. Therefore, in the light of
the accepted stand taken by first respondent that there is no provision made in the Arms Act and the Rules framed thereunder for a transfer of
licence, and as S.21 of General Clauses Act cannot be invoked to bring about such a transfer the impugned order passed by first respondent was
without jurisdiction This would suffice to dispose of this appeal, but as Mr. Govind Swaminathan, learned counsel for the second respondent has
touched upon certain other aspects, they are dealt with hereunder.
He submits that the licence belongs to the partnership firm, and therefore, anyone of the partners could ask for their names to be included
therein. Form XI licence is not for running an industry but confined to drawal and handling of sulphur and chlorate of potash. The licence was first
granted only to the appellant herein on 12th July, 1970. It had been extended from time to time and the present licence is valid upto 31st
December, 1986. For the purpose of exploiting the licence, and as he was not possessed of sufficient funds, he entered into a partnership with the
second respondent and two others under a registered partnership deed dated 30th August, 1980. The other two are his wife and sister. In the
preamble to the partnership deed, it is stated that it was the appellant, who had taken efforts by obtaining all the necessary licences to commence
the production of safety matches under the name and style of ""The Swastic Match Works"". It was a partnership at will w.e.f. 3rd August, 1978.
His contribution was nil, and all the other three partners contributed Rs. 2,000 each. His share in the profits was 1% and second respondent was
to be is active management of the partnership. On 31st March, 1984, a release deed was executed by which the appellant''s sister and wife retired
from the partnership, and they had stated that all that assets like stock-in-trade, licences, tenancy rights, etc., belong to the continuing partners
absolutely; and this was followed by a new partnership deed, dated 1st April, 1984 being brought into existence, and in which second
respondent''s mother was included as a partner. This partnership was also one at will w.e.f. 1st April, 1984. Appellant''s contribution was nil, and
the other two partners contributed Rs. 3,000 each. Appellant''s share in profit continued to be 1% and second respondent was to be in active
management of the partnership. On 5th March, 1986, appellant issued a notice for dissolution of the partnership from 31st March, 1986. It is only
thereafter, second respondent had presented an undated application to first respondent, for transfer of licence in his favour. Appellant has
contended that along with second respondent and others, other partnerships were constituted in the name and style of Vellaiappa Match Works,
Vanithamani Match Works, Swastic Industries and Panchavarnam Match Industry, and that misunderstandings arose, and therefore, all the four
businesses referred to above except Swastic Match Works, were placed at the disposal of second respondent and others, and it was agreed to
that appellant should be in exclusive management of Swastic Match Works and he was also permitted to shift the place of manufacture. In spite of
it, as second respondent and his mother have instituted O.S. No. 24 of 1986 on the file of Sub-Court, Srivilliputhur seeking injunction to prevent
the appellant from transferring the place of business, the further proceedings ensued, and they are pending.
Relying upon Cl.6 in the release deed, Mr. Govind Swaminathan, learned counsel for the second respondent, submits that the licence having
been treated as part of the partnership business, the appellant cannot any longer claim that it stood only in his name. He refers to S.14 of
Partnership Act to claim that the property of the firm includes all properties originally brought into stock of the firm, subject to contract between the
parties. Mr. K. Alagiriswami, learned counsel for the appellant, would refer to Velu Padayachi v. Sivasaooriam Pillai AIR 1950 Mad. 444 1950 1
M.L.J., 131 : 63 L.W. 234(F.B.) wherein a Full Bench of this Court has held that:
Even when immovable property is acquired, the legal ownership would be in the partner who had purchased the property, though equity would
require that he should hold it on behalf of the partnership. Afortiori, when a licence, which is a personal privilege to vend, is acquired by one
partner it is certainty his licence and not the licence of the partnership. Since it was granted to him on the express understanding that it was to be
used by him and by him atone, its use by the partnership would involve a transfer in precisely the same way as it would if the partnership were
entered into after the licence was issued.
He would then refer to Muthukumaran A v. The Commr. of L.R. 1984 Writ L.R. 252 which refers to this decision and claim that even though
their decision had been overruled by the Supreme Court in Jer and Co. Vs. Commissioner of Income Tax, U.P., but this portion of the judgment
still continues to be good law. A Division Bench of this Court therefore hold that:
......As the law stands as on date pronounced by the Supreme Court there cannot be any illegality in taking in a partner to exploit a licence......
Hence, in a partnership business, if anyone of the partners holds a licence, then in so far as other partners are concerned, they are interested only in
sharing the profits and they have nothing to do with the licence as such.
In his turn, Addanki Narayanappa and Another Vs. Bhaskara Krishtappa and Others, but. it does not deal with the rights centering round a
licence, but deals with acquisition of certain immovable properties by the partnership. Hence, licence having been issued only to appellant, and the
partnership firm having been constituted to exploit the licence with the financial assistance of other partners, it never became the asset of the
partnership firm, nor could it be deemed in law as licence issued in favour of the partnership firm. It must be remembered that the partnership firm
stood dissolved on 31st March, 1966, and thereafter there is no scope for anyone of the partners to ask for his name to be included in the licence.
Mr. Govind Swaminathan would then refer to the various factors as mentioned in para 3 of the counter-affidavit of second respondent and
plead that the licence having been dealt with as belonging to the firm, merely because it was initially granted in the name of the appellant or
continues to bear his name, it would not mean, that the licence did not belong to the partnership firm. He also produces copies of two licences
issued in the names of Companies and firms.
As already stated, factually when the licence had been issued only in favour of appellant, and he having got it renewed from time to time in his
name, and the partnership firm having been constituted only for the purpose of exploiting the licence with the financial aid of other partners, it was
never issued by the authority in favour of the partnership firm. To prevent such licences being traded upon, evidently a provision relating to transfer
having not been incorporated in the Act, it would be just and proper to hold that at no point of time, the licence stood transferred in favour of the
partnership firm. Hence, there is no scope either to transfer the licence; or as ingeniously pleaded by Mr. Govind Swaminathan to treat what had
been done by first respondent as a substitution of the name of second respondent therein, or to retain the name of the appellant and also and the
names of other partners. Only in the event of the licence being treated as one issued to the partnership firm, it could result in names of other
partners being mentioned, because those names could have got into the licence even when it was originally issued. In the instant case, the licence
having been issued only to the appellant, and at no point of time, it having stood transferred to the partnership firm because such a transfer is not
contemplated and where the firm had been dissolved on 31st March, 1986, thereafter the application having been filed the first respondent had
acted without jurisdiction in passing the impugned order.
Hence, for all the reasons stated above, the impugned order of first respondent is hereby quashed resulting in the appeal being allowed with
costs. Counsel fee Rs. 500. An oral application for leave to appeal to Supreme Court is sought. But, as the subject-matter does not involve any
point of substantial question of law of general importance and as the question involved herein does not need to be decided by the Supreme Court,
leave is refused.