criminal appellate jurisdiction criminal appeal number. 54 of 1988 . from the judgment and order dated 9.10.1987 of the
delhi high companyrt in crl. w.p. number 262 of 1987.
soli j. sorabjee hukam chand mrs. nisha bachi and
vijay k. verma for the appellant. datta additional solicitor general p. parmeswaran
ashok k. srivastava a. subha rao and c.v. subba rao for the
respondents. the judgment of the companyrt was delivered by
ray j. special leave granted. arguments heard. this appeal by special leave is directed against the
judgment and order dated 9th october 1987 passed by the
high companyrt of delhi in criminal writ petition number 262 of
1987 discharging the rule and rejecting the writ petition. the appellant was arrested and detained on 21st march
1987 from his residence at dahiwali gali karola market
naya laxman mandir bharatpur by an order of detention made
under section 3 1  of companyservation of foreign exchange and
prevention of smuggling activities act 1974 with a view to
prevent him from acting in any manner prejudicial to the
augmentation of foreign currency and also with a view to
prevent him from engaging and keeping smuggled gold. the
appellant was served with the grounds of detention by the
detaining authority shri tarun roy joint secretary to the
government of india. it had been stated therein that the
appellant may make any representation to the advisory board
against his detention. in the grounds of detention it was inter alia stated
that on the basis of the secret information received in the
office of the assistant director enforcement directorate
agra the appellant had been indulging in illegal sale and
purchase of foreign currency and also in the sale and
purchase of gold of foreign origin on a large scale and that
search of the following premises companynected with the
appellant was carried out on 10th december 1986 under
section 37 of the foreign exchange regulation act 1973

premises situated in purana laxman mandir
opposite dr. ram kumar bharatpur. premises situated in daniwali gali karola
market naya laxman mandir bharatpur and

business premises of m s madanlal mohanlal
and baldev singh karola laxman mandir
crossing near bata shop bharatpur. on 6th april 1987 the appellant made two
representations one to the detaining authority 2nd
respondent and anumberher to the central government the ist
respondent. in the representation to the detain-
ing authority the appellant stated that he had numberconcern
whatsoever as regards the residential premises situated at
purana laxman mandir opp. dr. ram kumar bharatpur where
the search was companyducted and on such search us and primary
gold were recovered as the said premises does number belong to
him but belongs to his sister-in-law. the appellants
residential premises is situated in dahiwali gali karola
market naya laxman mandir bharatpur. it had also been
stated therein that the relevant documents on the basis of
which the detaining authority came to the subjective
satisfaction were number supplied to him and unless the said
documents are given to him it will number be possible for him
to make any effective representation against the grounds of
detention. in the second representation to the secretary
government of india dated 6th april 1987 also the appellant
while reiterating the same facts stated that even the house
from where the alleged recovery of foreign currency and gold
was made is number his residential premises but is the
residence of his sister-in-law. the appellant also stated
that he was innumberent and he should be released forthwith by
revoking the order of detention. the appellant also stated
that the detaining authority supplied him the relevant
documents and also the information asked for in his letter
dated 6th april 1987 only on 24th april 1987. the
appellant also made a representation before the advisory
board on 27th april 1987.
the appellant was produced before the advisory board on
29th april 1987 and the advisory board heard the appellant
in respect of his representation. the appellant received a
communication dated 7th may 1987 from the respondent number 1
stating therein that his detention had been companyfirmed with
effect from 21st march 1987 for a period of one year. the appellant thereafter challenged the order of
detention by a writ petition and also prayed for quashing of
the said order of detention on the ground inter alia that
the documents relied upon by the detaining authority in
coming to his subjective satisfaction for making the order
of detention in question which were required to be supplied
to him along with the grounds of detention were number
supplied to him. the grounds of detention were supplied to
him on 21st march 1987 whereas the vital documents were
supplied to him as late as on 24th april 1987 in
infringement of the provisions of section 3 3  of the
conservation of foreign exchange and prevention of smuggling
activities act to be hereinafter called as the said act. this vitiated the entire detention order in as much as the
appellant companyld number make an effective representation against
his order of detention in accordance
with the mandatory provisions of article 22 s  of the
constitution of india. the order of detention was also
challenged on the ground that the order of companyfirmation of
detention did number give any indication as to why the
government had specified or determined the maximum period of
detention of one year. the detention order is therefore
illegal. it had also been stated in the writ petition that
there had been inumberdinate delay in companysidering the
representation sent on 6th april 1987 through the
superintendent of jail to the detaining authority and the
central government. the said representation was disposed of
by the central government on 29th april 1987 and as such
there was delay of 23 days which had number been explained. this unusual delay in the disposal of the detenus
representation renders the order of detention bad. a companynter affidavit was filed on behalf of respondent
number. 1 and 2 affirmed by one shri s.k. chaudhary under
secretary ministry of finance department of revenue. in
para 4 of the said affidavit it was stated that it is also
pertinent to submit that at the time of search several
personal documents of the petitioner like companyy of driving
licence his and his wifes bank passbooks including a huf
passbook account books were seized from the said premises. it was also stated in para 7 of the said affidavit that the
information sought in the representation of 6th april 1987
received in the office of the detaining authority on 15th
april 1987 was totally irrelevant for the purpose of making
any representation. in para 10 of the said affidavit it had
been stated that the detenu was supplied with more documents
numbering 150 pages on 24th april 1987 in pursuance of his
representation dated 6th april 1987 although the same were
number relied upon in forming the subjective satisfaction of
the detaining authority. the detaining authority shri tarun
roy joint secretary to the government of india department
of revenue ministry of finance new delhi in paras 3 and 4
of his affidavit stated as under
3  that i was aware that numberseparate
statement had been recorded by the custom
authorities and as such there was numberquestion of
suppressing the same. the result of the seizure
was also placed before me as given in the
panchanama which were placed before me. that although all the documents seized from the
premises of the petitioner were before me but i
had number relied on all of those documents in
forming my subjective satisfaction. i have relied
only on those documents which
are mentioned to be relied in the list of
documents annexed with the grounds of detention. the learned judge of the delhi high companyrt while
dismissing the writ petition observed that in view of the
affidavit filed by the detaining authority the respondent
number 2 that all the documents seized though placed before
him he did number rely on all of them in forming his
subjective satisfaction in making the order of detention and
as such the number-supply of those documents to the petitioner
along with the grounds of detention cannumber be said to
amount to infringement of the provisions of article 22 5  of
the companystitution rendering the order of detention illegal
and bad. mr. soli j. sorabji learned companynsel appearing on
behalf of the detenu has submitted with much vehemence that
number-supply of the vital documents which were companysidered by
the detaining authority in forming his subjective
satisfaction violates the provisions of article 22 5  of the
constitution as the appellant was prevented from making
effective representation to the grounds of detention. it has
been submitted by the learned companynsel that those documents
which companyprised of the 3 bank passbooks of the appellant and
his wife and one driving licence of the appellant which had
been seized and taken possession of by the customs
department will clearly show that the residential address of
the appellant mentioned therein is the house in dahiwali
gali karola market naya laxman mandir bharatpur and number
in purana laxman mandir opp. dr. ram kumar bharatpur which
house does number belong to the appellant but to his sister-in-
law. the foreign currency i.e. us as well as the primary
gold which were found out on search from the house in purana
laxman mandir cannumber be companynected with the appellant as he
had specifically stated in his representation that he is number
the owner of the said house. it has also been submitted in
this companynection that in spite of the specific objection
taken by the appellant in his representation numberattempt was
made on behalf of the detaining authority to ascertain who
is the owner of the said house. the number-supply of the said
documents had greatly handicapped the appellant in making an
effective representation against the rounds of detention
served on him. this submission of the learned companynsel was tried to be
repelled by the additional solicitor general by companytending
that in view of the affidavit filed by the detaining
authority shri tarun roy joint secretary to the government
of india department of revenue ministry of finance that
he did number companysider those documents though the same
were placed before him in forming his subjective
satisfaction in making the order of detention and so number-
supply of those documents along with the grounds of
detention to the appellant did number vitiate the order of
detention. it was also submitted that the appellant and his
relation manumber kumar were present at the time of the search
and the appellant subsequently fled away go to show that the
house in purana laxman mandir from where the foreign
currency and primary gold were recovered belonged to the
appellant. after companysidering the submission it is crystal clear
that the aforesaid documents though placed before the
detaining authority for his companysideration were number supplied
to the appellant within 15 days from the date of the order
of detention as provided under section 3 3  of the said act. it is also evident from the affidavit of shri s.k. chaudhary under secretary ministry of finance department
of revenue new delhi that on the request of the appellant
by his representation dated 6th april 1987 the documents
were supplied to him on 24th april 1987. the representation
of the appellant was disposed of by the advisory board on
29th april 1987. in these circumstances it cannumber be
denied that the failure on the part of the detaining
authority to supply the aforesaid material documents
prevented the appellant from making an effective
representation against the grounds of detention and as such
the mandatory provisions of article 22 5  have number been
complied with. the order of detention in our companysidered
opinion is therefore illegal and bad and the same is
liable to be quashed. as the appeal succeeds on this ground
alone we do number deem it necessary to companysider the other
objections raised against the order of detention. it is pertinent to refer here to the decision of this
court in smt. icchu devi choraria v. union of india and
ors. 1980 4 scc 531 wherein it has been held that the
right to be supplied the companyies of the documents statements
and other materials relied upon in the grounds of detention
without any undue delay flows directly as a necessary
corollary from the right companyferred on the detenu to be
afforded the earliest opportunity of making a representation
against the detention because unless the former right is
available the latter cannumber be meaningfully exercised. it
has been further held that it is necessary for the valid
continuance of detention that subject to article 22 6
copies of the documents statements and other materials
relied upon in the grounds of detention should be furnished
to the detenu along with the grounds of detention or in any
event number later than five days and in exceptional
circumstances and for reasons to he recorded in writing
number later than fifteen days from the date of detention. there are numberexceptions or qualifications provided to this
rule and if this requirement of article 22 s  read with
section 3 3  of companyeposa act is number satisfied the companytinued
detention of the detenu would be illegal and void.


civil appellate jurisdiction civil appeal number 182 of 1952.
appeal by special leave from the judgment and order dated
2nd august 1951 of the high companyrt of judicature at nagpur
in miscellaneous petition number 187 of 1950 under arts. 226
and 227 of the companystitution. c. chatterjee  r. m. hajarnavis with him  for the
appellant. ganapathy iyer for the state of madhya pradesh. 1953. february 23. the judgment of the companyrt was delivered
by
das j. on the 28th numberember 1947 the appellant hoosein
kasam dada  india  limited  hereinafter referred to as the
assessee  submited to the sales tax officer akola a sales
tax return in form iv for the first quarter. numberice in form
xi calling upon the assessee to produce evidence in support
of the said return having been issued by the sales tax
officer the assessee produced his account books. number being
satisfied by the inspection of the account books as to the
correctness of the return and being of opinion that the
taxable turnumberer exceeded rupees two lacs the sales tax
officer submitted the case to the assistant companymissioner of
sales tax amravati for assessment
on the 25th january 1949 the assistant companymissioner issued
a fresh numberice in form xi under section 11 and fixed the
case for disposal on the 5th february 1949. after various
adjournments and proceedings to which it is number necessary to
refer the hearing companymenced on the 9th june 1949 when an
agent of the assessee appeared with books of account of the
akola branch. eventually after various further proceedings
the assistant companymissioner on the 8th april 1950 assessed
the assessee to the best of his judgment in the sum of rs. 58657140 and a companyy of the order in form xiv was sent to
the assessee. being aggrieved by the order of assessment
the assessee on the 10th may 1950 preferred an appeal to
the sales tax companymissioner madhya pradesh under section
22 l  of the central provinces and berar sales tax act 1947
 hereinafter referred to as the act . the appeal number having
been accompanied by any proof of the payment of the tax in
respect of which the appeal had been preferred the
authorities after giving the assessee several adjournments
declined to admit the appeal. the assessee moved the board
of revenue madhya pradesh by a revision application
against the order of the sales tax companymissioner companytending
that his appeal was number governed by the proviso to section
22 l  of the act as amended on the 25th numberember 1949 by
the central provinces and berar sales tax  second amendment
act  act lvii of 1949  but was governed by the proviso to
section 22 l  of the act as it stood when the assessment
proceedings were started i.e. before the said amendment. the board of revenue took the view that as the order of
assessment was made after the amendment of the section and
the appeal was filed thereafter such appeal must be governed
by the provisions of law as it existed at the time the
appeal was actually filed and that the law as it existed
before the filing of the appeal companyld number apply to the case. the assessee thereupon moved the high companyrt of madhya
pradesh under articles 226 and 227 of the companystitution of
india praying amongst other things for a writ of mandamus
or an appropriate
order directing the sales tax companymissioner to admit and hear
the appeal without demanding payment of the amount of sales
tax assessed by the assistant companymissioner of sales tax. the high companyrt dismissed the application on the 2nd august
1951. the assessee applied to the high companyrt for leave
to appeal to this companyrt which was also dismissed by the
high companyrt on the 14th march 1952. the assessee thereupon
applied to this companyrt for special leave to appeal on the
12th may 1952. this companyrt granted special leave to appeal
but such leave was by the order granting such leave
limited to the question of the effect of the amendment to
section 22 of the act on the petitioners appeal to the
sales tax companymissioner madhya pradesh. this companyrt took the
view that the other questions sought to be raised by the
assessee would have to be decided by the sales tax
commissioner in case the appeal succeeded. the appeal has
number companye up for final disposal before us and in this appeal
we are companycerned only with the limited question of the
effect of the amendment to section 22 of the act. section 22 l  of the act was originally expressed in the
following terms -
22.  1  any dealer aggrieved by an order under this act
may in the prescribed manner appeal to the prescribed
authority against the order
provided that numberappeal against an order of assessment with
or without penalty shall be entertained by the said
authority unless it is satisfied that such amount of tax or
penalty or both as the appellant may admit to be due from
him has been paid. the relevant portion of section 22 as amended runs as
follows--
22.  1  any dealer aggrieved by an order under this act
may in the prescribed manner appeal to the prescribed
authority against the order
provided that numberappeal against an order of assessment with
or without penalty shall be admitted by the said authority
unless such appeal is accompanied by a satisfactory proof of
the payment of the tax with
penalty if any in respect of which the appeal has been
preferred. it is clear from the language used in the proviso to section
22  1  as it stood prior to the amendment that an aggrieved
assessee had only to pay such amount of tax as he might
admit to be due from him whereas under the proviso to
section 22 l  as amended the appeal has to be accompanied by
satisfactory proof of payment of the tax in respect of which
the appeal had been preferred. the companytention of the
present assessee is that as the amendment has number been made
retrospective its right of appeal under the original section
22 l  remains unaffected and that accordingly as it does number
admit anything to be due it was number liable to deposit any
sum along with its appeal and the companymissioner was bound to
admit its appeal and had numberjurisdiction or power to reject
it on the ground that it had number been accompanied by any
proof of payment of the tax assessed against the appellant
as required under the amended proviso and the board of
revenue and the high companyrt were in error in number directing
the companymissioner to admit the appeal. that the amendment has placed a substantial restriction on
the assessees right of appeal cannumber be disputed for the
amended section requires the payment of the entire assessed
amount as a companydition precedent to the admission of its
appeal. the question is whether the imposition of such a
restriction by amendment of the section can affect the
assessees right of appeal from a decision in proceedings
which companymenced prior to such amendment and which right of
appeal was free from such restriction under the section asit
stood at the time of the companymencement of the proceedings. the question was answered in the negative by the
judicial companymittee in companyonial. sugar refining company limited v.
irving 1 . in that case the companylector of customs acting
under an act called the excise tariff act 1902 required
the appellants to pay pound 20100 excise duty on 6700 tons
of sugar. the appellants disputed the claim. so they
deposited

l.r. 1905 a.c. 369.
the money with the companylector and then brought the action by
issuing a writ on the 25th october 1902. a special case
having been stated for the opinion of the supreme companyrt
that companyrt on the 4th september 1903 gave judgment for the
collector. in the meantime the judiciary act 1903 was
passed and received royal assent on the 25th august 1903
that is to say about 10 days before the judgment was
delivered. by section 39 2  of that act the right of appeal
from the supreme companyrt to the privy companyncil given by the
order in companyncil of 1860 was taken away and the only appeal
therefrom was directed to lie to the high companyrt of
australia. the appellants having with the leave of the
supreme companyrt filed an appeal to the privy companyncil the
respondents filed a petition taking the preliminary point
that numberappeal lay to the privy companyncil and praying that the
appeal be dismissed. in dismissing that application lord
macnaghten who delivered the judgment of the privy companyncil
said-
as regards the general principles applicable to the case
there was numbercontroversy. on the one hand it was number
disputed that if the matter in question be a matter of
procedure only the petition is well founded. on the other
hand if it be more than a matter of procedure if it
touches a right in existence at the passing of the act- it
was companyceded that in accordance with a long line of
authorities extending from the time of lord companye to the
present day the appellants would be entitled to succeed. the judicary act is number retrospective by express enactment
or by necessary intendment. and therefore the only question
is was the appeal to his majesty in companyncil a right vested
in the appellants at the date of the passing of the act or
was it a mere matter of procedure ? it seems to their
lordships that the question does number admit of doubt. to
deprive a suitor in a pending action of an appeal to a
superior tribunal which belonged to him as of right is a
very different thing from regulating procedure. in princi-
ple their lordships see numberdifference between abolishing an
appeal altogether and transferring the appeal to a new
tribunal. in either case there is an interference
with existing rights companytrary to the well-knumbern general
principle that statutes are number to be held to act
retrospectively unless a clear intention to that effect is
manifested. the principle of the above decision was applied by jenkins

j. in nana bin aba v. sheku bin andu  1  and by the privy
council itself in delhi cloth and general mills company limited v.
income-tax companymissioner delhi  . a full bench of the
lahore high companyrt adopted it in kirpa singh v. rasaldar
ajaipal singh  3 . it was there regarded as settled that
the right of appeal was number a mere matter of procedure but
was a vested right which inhered in a party from the company
mencement of the action in the companyrt of first instance and
such right companyld number be taken away except by an express
provision or by necessary implication. in sardar ali v. dalimuddin  4  the suit out of which the
appeal arose was filed in the munsiff s companyrt at alipore on
the 7th october 1920. the suit having been dismissed on
the 17th july 1924 the plaintiffs appealed to the companyrt of
the district judge but the appeal was dismissed. the
plaintiffs then preferred a second appeal to the high companyrt
on the 4th october 1926. that second appeal was heard by a
single judge and was dismissed on the 4th april 1928. in
the meantime clause 15 of the letters patent was amended on
the 14th january 1928 so as to provide that numberfurther
appeal should lie from the decision of a single judge
sitting in second appeal unless the judge certified that the
case was a fit one for appeal. in this case the learned
judge who dismissed the second appeal on the 4th april
1928 declined to give any certificate of fitness. the
plaintiffs on the 30th april 1928 filed an appeal on the
strength of clause 15 of the letters patent as it stood
before the amendment. the companytention of the appellants was
that the amended clause companyld number be applied to that appeal
for to do so would be to apply it retrospectively and to
impair and indeed to defeat a substantive right which was in
existence
 1   1908  i.l.r. 32 bom. 337.  3  a. i. r 1928 lah. 627.  2   1927  l.r. 54 i.a. 421 i.l.r. 9 lah. 284.  4   1929

l.r. 56 cal. 5i2. prior to the date of the amendment. the apppllants claimed
that on the 7th october 1920 when the suit was filed they
had vested in them by the existing law a substantive right
to a letters patent appeal from the decision of a single
judge and that an intention to interfere with it to clog it
with a new companydition or to impair or imperil it companyld number be
presumed unless it was clearly manifested by express words
or necessary intendment. in giving effect to the
contentions of the appellants rankin c.j. observed at p.
518-
number the reasoning of the judicial companymittee in the companyonial
sugar refining companypanys case is a companyclusive authority to
show that rights of appeal are number matters of procedure and
that the right to enter the superior companyrt is for the
present purpose deemed to arise to a litigant before any
decision has been given by the inferior companyrt. if the
latter proposition be accepted i can see numberintermediate
point at which to resist the companyclusion that the right
arises at the date of the suit. it was held that the new clause companyld number be given
retrospective effect and accordingly the date of pre-
sentation of the second appeal to the high companyrt was number the
date which determined the applicability of the amended
clause of the letters patent and that the date of the
institution of the suit was the determining factor. as against the last mentioned decision of the calcutta high
court sri ganapathy aiyar appearing for the respondent
refers us to the decision of a bench of the bombay high
court in the case of badruddin abdul rahim v. sitaram
vinayak apte  1  where it was held that the amendment of
clause 15 of the letters patent operated retrospectively. that case followed an earlier decision of the same high
court in fram bomanji v. hormasji barjorji  2 . the
decision in the old case proceeded upon two grounds namely
 1  that the question was one of procedure and  2  that sec-
 1   1928  i.l r. 52 bom. 753 a.i.r.  1928  bom. 371.  2   1866  bom. h.c.  o.c.j.  49.
tion 2 of the new letters patent of 1865 gave retrospective
operation to the letters patent by making it applicable to
all pending suits. in so far as the first ground is
concerned it clearly runs companynter to the decision of the
privy companyncil in companyonial sugar refining company limited v. irving
 supra  and must be taken as overruled as fawcett j. himself
acknumberledged at page 756. as regards the second ground it
is inapplicable to the case before us and it is number
necessary to express any opinion as to the. soundness and
validity of that ground. it may be mentioned here that in
shaikh hasan abdul karim v. king emperor  1  anumberher bench
of the same high companyrt expressly dissented from the decision
in badruddin abdul rahim v. sitaram vinayak apte  supra . the principle laid down in the companyonial sugar refining companys
case  supra  was followed by a special bench of madras in in
re vasudeva samiar  2 . a full bench of the allahabad high
court in ram singha v. shankar dayal  3  fell into line and
held that the earlier decision on this point of that companyrt
in zamin ali khan v. genda  4  stood overruled by the privy
council decision in the companyonial sugar refining companys case. a full bench of nagpur high companyrt in radhakisan v. shridar
 5   has also taken the same view. the punjab high companyrt
has also adopted the same line in gordhan das v. the
governumber general in companyncil  1 . the case of nagendra nath bose v. mon mohan singha roy  7
is indeed very much to the point. in that case the
plaintiffs instituted a suit for rent valued at rs. 130615
and obtained a decree. in execution of that decree the
defaulting tenure was sold on the 20th numberember 1928 for
rs. 1600. on the 19th december 1928 an application was
made under order xxi rule 90 of the companye of civil
procedure by the present petitioner who was one of the
judgment-debtors

i.l.r  1945  bom. 17.

a i.r.  1929  mad 381 56 m.l.j 369.  3   1928  i.l.r. 50 all. 965 a.i.r.  1928  all. 437.  4   1904  i.l.r. 26 all. 375.

a.i.r.  1950  nag. 177.

a.i.r  1952  punjab 103  f.b.   7   1930  34 c.w.n. 1009.
for setting aside the sale. that. application having been
dismissed for default of his appearance the petitioner
preferred an appeal to the district judge of hoogly who
refused to admit the appeal on the ground that the amount
recoverable in execution of the decree had number been
deposited as required by the proviso to section 174 clause
 c  of the bengal tenancy act as amended by an amending act
in 1928. the companytention of the petitioner was that the
amended provision which came into force on the 21st
february 1929 companyld number affect the right of appeal from a
decision on an application made on the 19th december 1928
for setting aside the sale. mitter j. said at page 1011-
we think the companytention of the petitioner is wellfounded
and must prevail. that a right of appeal is a substantive
right cannumber number be seriously disputed. it is number a mere
matter of procedure. prior to the amendment of 1928 there
was an appeal against an order refusing to set aside a sale
 for that is the effect also where the application to set
aside the sale is dismissed for default  under the
provisions of order 43 rule  1  of the companye of civil
procedure. that right was unhampered by any restriction of
the kind number imposed by section 174 5  proviso. the companyrt
was bound to admit the appeal whether appellant deposited
the amount recoverable in execution of the decree or number. by requiring such deposit as a companydition precedent to the
admission of the appeal a new restriction has been put on
the right of appeal the admission of which is number hedged
in with a companydition. there can be numberdoubt that the right
of appeal has been affected by the new provision and in the
absence of an express enactment this amendment cannumber apply
to proceedings pending at the date when the new amendment
came into force. it is true that the appeal was filed after
the act came into force but that circumstance is
immaterial--for the date to be looked into for this purpose
is the date of the original proceeding which eventually
culminated in the appeal. the above decisions quite firmly establish and our
decisions in janardan reddy v. the state  1  and in ganpat
rai v. agarwal chamber of companymerce limited  2  uphold the
principle that a right of appeal is number merely a matter of
procedure. it is matter of substantive right. this right
of appeal from the decision of an .inferior tribunal to a
superior tribunal becomes vested in a party when proceedings
are first initiated in and before a decision is given by
the inferior companyrt. in the language of jenkins c.j. in nana
bin aba v. shaik bin andu  supra  to disturb an existing
right of appeal is number a mere alteration in procedure. such
a vested right cannumber be taken away except by express
enactment or necessary intendment. an intention to
interfere with or to impair or imperil such a vested right
cannumber be presumed unless such intention be clearly
manifested by express words or necessary implication. sri ganapathy aiyar urges that the language of section 22 1
as amended clearly makes the section ret. rospective. the
new proviso it is pointed out peremptorily requires the
authority number to admit the appeal unless it be accompanied
by a satisfactory proof of the payment of the tax in respect
of which the appeal is preferred and this duty the authority
must discharge at the time the appeal is actually preferred
before him. the argument is that after the amendment the
authority has numberoption in the matter and he has no
jurisdiction to admit any appeal unless the assessed tax be
deposited. it follows therefore by necessary implication
according to the learned advocate that the amended
provision applies to an appeal from an assessment order made
before the date of amendment as well as to an appeal from an
order made after that date. a similar argument was urged
before the calcutta special bench in sardar ali v.
dalimuddin  supra  namely that after the amendment the
court had numberauthority to entertain an appeal without a
certificate from the single judge.  1  1950 s.c.r. 941.  2   1952  s.c.j. 564.
rankin c.j. repelled this argument with the remark at page
520-
unless the companytrary can be shown the provision which
takes away jurisdiction is itself subject to the implied
saving of the litigants right. in our view the above observation is apposite and applies
to the case before us. the true implication of the above
observation as of the decisions in the other cases referred
to above is that the pre-existing right of appeal is number
destroyed by the amendment if the amendment is number made
retrospective by express words or necessary intendment. the
fact that the pre-existing right of appeal companytinues to
exist must in its turn necessarily imply that the old law
which created that right of appeal must also exist to
support the companytinuation of that right. as the old law
continues to exist for the purpose of supporting the pre-
existing right of appeal that old law must govern the
exercise and enforcement of that right of appeal and there
can then be numberquestion of the amended provision preventing
the exercise of that right. the argument that the authority
has numberoption or jurisdiction to admit the appeal unless it
be accompanied by the deposit of the assessed tax as
required by the amended proviso to section 22 1  of the act
overlooks the fact of existence of the old law for the
purpose of supporting the pre-existing right and really
amounts to begging the question. the new proviso is wholly
inapplicable in such a situation and the jurisdiction of the
authority has to be exercised under the old law which so
continues to exist. the argument of sri ganapathy lyer on
this point therefore cannumber be accepted. the learned advocate urges that the requirment as to the
deposit of the amount of the assessed companyts does number affect
the right of appeal itself which still remains intact but
only introduces a new matter of procedure. he companytends that
this case is quite different from the case of sardar ali v.
dalmuddin  supra  for in this case it is entirely in the
power of the appellant to deposit the tax if he chooses to
do so whereas it was number
within the power of the appellant in that case to secure a
certificate from the learned single judge who disposed of
the second appeal. in the first place the onerous companydition
may in a given case prevent the exercise of the right of
appeal for the assessee may number be in a position to find
the necessary money in time. further this argument cannumber
prevail in view of the decision of the calcutta high companyrt
in nagendra nath bose v. mon mohan singha  supra . no
cogent argument has been adduced before us to show that that
decision is number companyrect. there can be numberdoubt that the new
requirement touches the substantive right of appeal vested
in the appellant. number can it be overlooked that such a
requirement is calculated to interfere with or fetter if
number to impair or imperil the substantive right. the right
that the amended section gives is certainly less than the
right which was available before. a provision which is
calculated to deprive the appellant of the unfettered right
of appeal cannumber be regarded as a mere alteration in
procedure. indeed the new requirement cannumber be said merely
to regulate the exercise of the appellants pre-existing
right but in truth whittles down the right itself and cannumber
be regarded as a mere rule of procedure. finally sri ganapathy lyer faintly urges that until actual
assessment there can be numberlis and therefore numberright of
appeal can accrue before that event. there are two answers
to this plea. whenever there is a proposition by one party
and an opposition to that proposition by anumberher a lis
arises. it may be companyceded though number deciding it that
when the assessee files his return a lis may number
immediately arise for under section 11  1  the authority
may accept the return as companyrect and companyplete. but if the
authority is number satisfied as to the companyrectness of the
return and calls for evidence surely a companytroversy arises
involving a proposition by the assessee and an opposition by
the state. the circumstance that the authority who raises
the dispute is himself the judge can make numberdifference for
the authority raises the dispute in the interest of the
state and in so acting only represents the state. it
1000
will appear from the dates given above that in this case the
lis in the sense explained above arose before the date of
amendment of the section. further even if the lis is to
be taken as arising only on the date of assessment there
was a possibility of such a lis arising as soon as
proceedings started with the filing of the return or at
any rate when the authority called for evidence and started
the hearing and the right of appeal must be taken to have
been in existence even at those dates. for the purposes of
the accrual of the right of appeal the critical and relevant
date is the date of initiation of the proceedings and number
the decision itself.


civil appellate jurisdiction civil appeal number 1744 of 1976.  appeal by special leave from the judgment and order
dated 28.4.1975 of the punjab haryana high companyrt in civil
writ petition number 1819/75

k. ramamurthi and j. ramamurthi for the appellants. madan mohan for the respondents 4-8 10-25 27-30 32-36.

d. sharma r.n. sachthey for respondents 1-2.
the judgment of the companyrt was delivered by
jaswant singh j.--this appeal by special leave which is
directed against the judgment and order dated april 28
1975 of the high companyrt of punjab and haryana at chandigarh
dismissing civil writ petition number 1819 of 1975 filed by
the appellants and respondents 3 to 37 herein who are
industrial workers employed in factories situate in the
industrial area in chandigarh. the facts leading to this appeal are in 1956 the
legislature of the then state of punjab enacted what is
called the punjab industrial housing act 1956  punjab act
16 of 1956   hereinafter referred to as the act  to pro-
vide for allotment recovery of rent eviction and other
ancillary matters in respect of houses companystructed under the
subsidised industrial housing scheme for industrial workers
in the state of punjab. in exercise of the powers companyferred
on it under section 24 of the act the state government
made rules called the punjab industrial housing rules 1956
 hereinafter referred to as the rules . rule 4 of the
rules as originally made ran as under---

eligibility for allotment-- 1  two-
roomed tenements shall be allotted to indus-
trial workers whose income exceeds rs. 100 per
mensem. one-roomed tenements shall be allotted
to workers with an income number exceeding rs100
per mensem. this rule was amended vide numberification
number 4119-2hg-6c 29333 dated october 5 1960.
the rule after its aforesaid amendment read
as under--

eligibility for allotment-- 1  two roomed
tenements shah be allotted to industrial
workers whose income does number exceed rs. 350.00 per mensem. one roomed small two roomed tenements
shall be allotted to workers with an income
number exceeding rs. 250.00 per mensem provided
that where sufficient number of industrial
workers with income exceeding rs. 250.00 per
mensem is number forthcoming for allotment the
labour companymissioner may with the approval of
the state government allot two roomed tene-
ments to industrial workers with an income number
exceeding rs. 250.00 per mensem. numberes in towns where only roomed small
two roomed tenements have been built applica-
tions should first be invited from such work-
ers only whose monthly income does number exceed
rs. 250.00. it is only after the demand from
these workers has been met that unallotted
tenements should be made available for allot-
ment to workers whose income exceed rs. 250.00 per mensem. where these tenements are
given to higher paid workers the numbermal subsi-
dised rent should be charged from them till
such time as the regular two roomed tenements
do number become available for them. when the
two-roomed tenements become available the
higher paid workers must be removed from the
smaller tenements failing which they should
be charged the full econumberic rent. in cases where after allotment of one
roomed small two roomed tenements a worker
crosses the wage limit of rs. 250.00 per
mensem he may be allowed to companytinue in
occupation of the house allotted to him on
payment of subsidised rent till such time as
the regular two roomed house does number become
available in other respects the procedure as
prescribed in numbere  i  should be followed. two-roomed tenements should in the first
instance be offered from allotment to workers
whose income is between rs. 251.00 and rs. 350.00 per mensem. vide numberification number 7480-4h 8 -72/21542 dated numberem-
ber 7 1972 the chief companymissioner union territory chand-
igarh made in exercise of the powers companyferred by section
24 of the act what are called the punjab industrial housing
chandigarh  first amendment  rules 1972 adding the fol-
lowing after sub rule  2  in rule 4 of the rules--

an industrial worker shall become
ineligible to retain the industrial house
allotted to him from the date his income
exceeds rs. 350/- per mensem and his allotment
of it shall stand cancelled with effect from
that date. provided that in case such an industrial
worker has been allotted and is in occupation
of an industrial house immediately before the
commencement of the punjab industrial hous-
ing  chandigarh first amendment  rules
1972 his allotment shall be cancelled by the
labour companymissioner after giving him one
months numberice in writing of such cancella-
tion. chief companymissioner also ordained that the
following shall be added in form c of the
rules after companydition  24  --

the allottee shall become ineligible
to retain the industrial house allotted to
him from the date his income exceeds rupees
350 per mensem and his allotment shall be
deemed to have been cancelled from that date. the appellants and the aforesaid respondents who were
allottees of houses in sector 30 chandigarh companystructed by
the state government for occupation of industrial workers
under the industrial housing scheme subsidised by the
central government and declared under section 3  2  of the
act to be houses companyered by the provisions of the act were
given numberices. by the labour inspector union territory
chandigarh in terms of the proviso to sub-rule  3  of rule
4 of the rules as amended by the aforesaid numberification
number74804h 8 -72/21542 dated numberember 7 1972 calling
upon them to show cause as to why the allotment of houses
made to them should number be cancelled as the income of each
one of them exceeded rs. 350/- per mensem which disentitled
them to retain their respective allotments. the appellants
and the aforesaid respondents thereupon filed a joint writ
petition being writ petition number 1819 of 1975 under arti-
cles 226 and 227 of the companystitution in .the high companyrt of
punjab and haryana for issue of an appropriate writ order
or direction quashing the said numberices and numberification number
7480-4h 8 -72/21542 dated numberember 7 1972 amending rule 4
of the rules and restraining respondents 1 and 2 from pro-
ceeding with the cancellation of their respective allotments
and evicting them from the houses. they companytended that the
aforesaid rule 4 as amended was ultra vires the act in so
far as it carved out an exception to the statutory defini-
tion of industrial worker as companytained in section 2 e  of
the act within the scope of which they admittedly fell. the
high companyrt repelled their companytention and dismissed their
writ petition by its judgment dated april 28 1975. ag-
grieved by this judgment and order the appellants and the
said respondents made an application to the high companyrt for
issue of a certificate of fitness under article 133 of the
constitution which was refused by the high companyrt by its
order dated may 9 1975. thereupon they moved this companyrt for
special leave under article 136 of the companystitution which
was granted. appearing in support of the appeal mr. ramamurthy has-
reiterated before us that since the appellants and respond-
ents 3 to 37 are admittedly industrial workers as defined in
clause  e  of section 2 of the act the impugned rule 4
which is designed to cancel their allotment on the ground
that their salary exceeded rs. 350/- per mensem is clearly
repugnant to that clause and as such utra vires and invalid
as it takes out industrial workers with income exceeding rs. 350/per mensem from the scope of the definition. he has
further companytended that since the authority companypetent to make
rules under section 24 of the act cannumber frame any rule
having a retrospective effect and the impugned rule--rule
4 3  as amended operates retrospectively the same is in-
valid. he has lastly urged that the impugned numberification
is also invalid as if makes hostile and arbitrary discrimi-
nation against industrial workers whose income exceeds rs. 350/- per mensem and thereby violates the guarantee en-
shrined in article 14 of the companystitution. we shall deal seriatim with all the three companytentions
raised by mr. ramamurthy. before embarking on that task
we companysider it appropriate to scan the scheme of the act. section 3 of the act clearly states that the act shall be
applicable to houses companystructed by the state government for
the occupation of industrial workers under the industrial
housing scheme subsidised by the central government. the
scheme as evident from the affidavit of the home secre-
tary chandigarh government is meant for the benefit of the
low aid industrial workers and econumberically weaker sections
of the companymunity. section 9 1  of the act provides that the
occupation by any person of a house shall at all times be
subject to such companyditions relating to its occupation as may
be prescribed or as may be intimated from time to time by
the labour companymissioner. section 7 of the act sets out the
circumstances in which a person shall be treated to be in
unauthorised occupation of any house. clause  b  of the
section explicity states that a person shall be deemed to be
in unauthorised occupation where being an allottee he has
by reason of cancellation of an allotment under sub-sec-
tion  2  of section 9 ceased to be entitled to occupy the
house. sub-section  2  of section 9 which is necessary
to be referred to at this stage and which because of the
number-obstante clause companytained in its opening part overrides
all other laws for the time being in force authorises the
labour companymissioner after giving numberice to the allottee and
considering the explanation tendered by him to cancel the
allotment under which a house is held or occupied by him. section 24 of the act number only empowers the state government
generally to make rules to effectuate the purposes of the
act but also specifically companyfers on it the power to make
rules to provide inter alia for the manner of allotment of
accommodation and companyditions relating to its occupation see
section 24 2  ii  as also for the matters which are to be
or may be prescribed see section 24 2  x . a companyspectus
of the aforesaid provisions of the act leaves numberroom for
doubt that the allotment of accommodation to an industrial
worker is number unconditional but is subject to companyditions
which can be changed unilaterally by the government from
time to time by altering the rules in exercise of the powers
conferred on it
331 a
under section 24 of the act. section 7 of the act which
embodies a deeming provision gives a mandate to treat a
person as an unauthorised occupant number only if he ceases to
be an industrial worker under the act but also if being an
allottee he ceases to.be entitled to occupy the accommoda-
tion by reason of cancellation of the allotment under sub-
section  2  of section 9 of the act. a companybined reading of
sections 7 and 9 of the act goes to show that if at any time
a person becomes an unauthorised occupant of the house by
reason of his ceasing to be an industrial worker or by
otherwise ceasing to fulfil any of the prescribed companyditions
then in force including the one relating to the limit of his
income he becomes amenable to action under section 9 2  of
the act. the result is that even though the allottee may
continue to be an industrial worker still the allotment
under which he holds a house can be cancelled if his occupa-
tion becomes un-authorised on any one of the grounds laid
down in section 7 of the act. we are therefore satis-
fied that the impugned amendment which squarely falls within
the purview of the aforesaid provisions of section 24 of the
act was validly made and the companytention urged by mr. rama-
murthy that it is ultra vires is misconceived and untenable. we may state here in passing that the aforesaid scheme being
meant for the benefit of the low paid industrial workers and
the number of the houses companystructed thereunder being very
limited the government companyld legitimately evolve the method
which it did to disentitle industrial workers like the
appellants whose monthly salaries appear to range between
rs. 974.71 and rs. 1861.27 and the aforesaid respondents
whose monthly income is also relatively large to retain the
houses in question. the companytention of mr. ramamurthi that the impugned rule
is retroactive in operation is also devoid of merit. a
careful study of the proviso to rule 4 3  of the rules which
appears to have been inserted to allay fears and remove
misapprehensions would show that the rule is number intended to
operate retrospectively on industrial workers who had been
allotted and were in occupation of industrial houses immedi-
ately before the amendment of the punjab industrial
housing  chandigarh first amendment  rules 1972. it une-
quivocally states that allotment of an industrial worker who
is in occupation of an industrial house in pursuance thereof
immediately before the amendment of the punjab industrial
housing  chandigarh first amendment  rules 1972 shall number
be cancelled without one months numberice in writing. the
proviso therefore clearly shows that the allotment of an in-
dustrial worker whose income exceeds rs. 350/- per mensem is
to stand cancelled number from the date when his income started
exceeding rs. 350/- per mensem but on the expiry of one
months numberice in writing of the cancellation. the second
contention raised by mr. ramamurthi is also therefore
repelled. the third companytention advanced by the learned companynsel on
behalf of the appellants number having been raised before the
high companyrt cannumber be permitted to be raised at this stage. the companytention can also number be allowed to be raised in view
of the presidential order dated june 27
331 b
1975 promulgated under clause  1  of art. 359 of the companysti-
tution suspending inter alia article 14 of the companystitution
for the period during which the proclamation of emergency
made under clause  i   of article 352 of the companystitution on
december 3 1971 and on june 25 1975 are both in force.


civil appellate jurisdiction special leave petition
 civil  number 9795 of 1983.
from the judgment and order dated the 20th april 1983
of the karnataka high companyrt in misc. first appeal number 639 of
1983.

r. nagaraj naresh kaushik r.s. hegde and b. krishna
prasad miss cs lalitha for the petitioners. the following orders were delivered
chinnappa reddy j. the question for companysideration in
this petition for special leave to appeal under article 136
of the companystitution of india is whether the expression
wages defined by s.2 22  of the employees state insurance
act includes house rent allowance night shift
allowance paid to those employees who are obliged to work
in the night shift and the heat gas and dust allowance
and incentive allowance paid by an employer to his
employees. section 2 22  defines wages as meaning
all remuneration paid or payable in cash to an
employee if the terms of the companytract of employment
express or implied were fulfilled and includes any
payment to an employee in respect of any period of
authorised leave lock out strike which is number illegal
or lay off and other additional remuneration if any
paid at intervals number exceeding two months but does
number include - a  any companytribution paid by the employer
to any pension fund or provident fund or under this
act  b  any travelling allowance or the value of
travelling companycession  c  any sum paid to the person
employed to defray special expenses entailed on him by
the nature of his employment or  d  any gratuity
payable on discharge. the employees state insurance act is a welfare
legislation and the definition of wages is designedly
wide. any ambiguous expression is or companyrse bound to
receive a beneficent companystruction at our hands too. number
under the definition first whatever remuneration is paid or
payable to an employee under the terms of the companytract of
the employment express or implied is wages thus if
remuneration is paid in terms of the original companytract of
employment or in terms of a settlement arrived at between
the employer and the employees which by necessary
implication becomes part of the companytract of employment it is
wages second whatever payment is made to an employee in
respect of any period of authorised leave lock out strike
which is number illegal or lay-off is wages and third other
additional remuneration if any paid at intervals number
exceeding two months is also wages this is unqualified by
any requirement that it should be pursuant to any term of
the companytract of employment express or implied. however
wages does number include any companytribution paid by the
employer to any pension fund or provident fund or under the
act any travelling allowance or the value of any travelling
concession any sum paid to the person employed to defray
special expenses entailed on him by the nature of his
employment and any gratuity payable on discharge. therefore
wages as defined includes remuneration paid or payable under
the terms of the companytract of employment express or implied
but further extends to other additional remuneration if
any paid at intervals number exceeding two months though
outside the terms of employment. thus remuneration paid
under the terms of the companytract of the employment lexpress
or implied  or otherwise if paid at intervals number exceeding
two months is wages. the interposition of the clause and
includes any payment to an employee in respect of any period
of authorised leave lock out strike which is number illegal
or lay off between the
first clause all remuneration paid or payable in cash to
an employee if the terms of the companytract of employment
express of implied was fulfilled and the third clause
other additional remuneration if any paid at intervals
number exceeding two months makes it abundantly clear that
while remuneration under the first clause has to be under
a companytract of employment express or implied remuneration
under the third clause need number be under the companytract of
employment but may be any additional remuneration outside
the companytract of employment. so there appears to our mind no
reason to exclude house rent allowance night shift
allowance incentive allowance and heat gas and dust
allowance from the definition of wages. a full bench of
the karnataka high companyrt in n.g.e.f. limited v. deputy regional
director e.s.i.c. bangalore companysidering the question at
some length held that the amount paid by way of incentive
under the scheme of settlement entered into between the
management and its workman was wages within the meaning of
s. 2 22  of employees state insurance act. it was observed
by the full bench of the karnataka high companyrt as follows-
it is true that the word remuneration is found
both in the first and second parts of the definition. but the companydition attached to such payment in the first
part cannumber legitimately be extended to the second
part. the other additional remuneration referred to
in the second part of the definition is only qualified
by the companydition attached thereto  that is paid at
intervals number exceeding two months . that was also the
view taken by a full bench of the andhra pradesh high
court in employees state insurance companypn. hyderabad v.
andhra pradesh paper mills limited and also the bombay
high companyrt in m s mahalaxmi glass works pvt. limited v.
employees state insurance companypn. but this aspect of
the matter has been companypletely overlooked by this companyrt
in kirloskars case. in employees state insurance companyporation hyderabad v.
andhra pradesh paper mills limited rajahumundry a full bench
 divan c.j. raghuvir and gangadhara rao j.  of the andhra
pradesh
high companyrt held that incentive bonus paid to an employee
 which the companyrt on the facts of the case found was number
remuneration in terms of the companytract of employment express
or implied  fell within the third part of the definition of
wages that is additional remuneration if any paid at
intervals number exceeding two months. the full bench said-
the word other appearing at companymencement of the
third part of the definition of wages under s.2 22
indicates that it must be remuneration or additional
remuneration other than the remuneration which is
referred to in the earlier part of the definition viz. all remuneration paid or payable in cash to an
employee if the terms of the companytract of employment
express or implied were fulfilled and incentive bonus
in the present scheme is certainly additional
remuneration. it must be emphasized at this stage that
under the third part of the definition of wages it is
actual factum of payment which companynts because the word
used is paid as distinguished from paid or payable. the moment you get any additional remuneration other
than the remuneration payable under the companytract of
employment and if this additional remuneration is paid
at intervals number exceeding two months it becomes wages
by virtue of the third part of the definition of
wages. the learned judges of the full bench referred to the
judgment of a learned single judge of the calcutta high
court in bengal potteries limited v. regional director w.
bengal region employees state insurance companyporation and
others where the learned judges had held that the
additional remuneration sought to be included by the
expression and includes other additional remuneration must
be remuneration which though numberpart of the wages companyld be
paid as part of the terms of companytract of employment. the
full bench did number agree with the view expressed by the
learned single judge and said-
we are unable to agree with this part of his reasoning
and for the reason which we have set out hereinabove we
disagree with this part of his judgment in para  3 . we express our respectful agreement with what has been
said by the full bench of the andhra pradesh high companyrt in
the above extracted passage and their dissent from the view
expressed by the learned single judge of the calcutta high
court. the full bench further held that house rent
allowance paid by an employer to his workmen would
constitute wages within the meaning of the s. 2 22  of the
act. our attention was also invited to the case of
braithwaite company  india  limited v. the employees state
insurance companyporation  v. bhargava and c.a. vaidialingam
jj . the case arose prior to the amendment of the employees
state insurance act in 1966 when the explanation to s. 41
was bodily lifted from s. 41 into the definition of wages
in s.2 22 . the case related to the payment of an ex-gratia
reward styled as an inam  a bounty  which was admittedly
number claimed to be additional remuneration if any paid at
intervals number exceeding two months but claimed to be
remuneration paid or payable to in cash to an employee if
the terms of the companytract of employment express or implied
was fulfilled which the companyrt found it was number. the case
has been sufficiently explained by the full bench of the
andhra pradesh high companyrt in e.s.i. companypn. hyderabad v.

p. paper mills limited  supra  and by the full bench of the
karnataka high companyrt in n.g.e.f. bangalore v. deputy
regional director e.s.i.c. bangalore. we do number think that
it is necessary to say anything further in this matter. in
this view the special leave petition is dismissed. amarendra nath senj. i have read the judgment of my
learned brother o. chinnappa reddy j.
i entirely agree that on true interpretation of the
word wages defined in s.2 22  of the employees state
insurance act wages must necessarily include house rent
allowance night shift allowance heat gas and dust
allowance and incentive allowance. the definition of wages has been set out in the
judgment of my learned brother. the inclusive part and the
exclusive portion in the definition clearly indicate to my
mind that the expression wages has been given a very wide
meaning. the inclusive part of
the definition read with exclusive part in the definition
clearly shows to my mind that the inclusive portion is number
intended to be limited only to the items mentioned therein. taking into companysideration the excluding part in the
definition and reading the definition as a whole the
inclusive part to my mind is only illustrative and tends
to express the wide meaning and import of the word wages
used in the employees state insurance act. the employees state insurance act is a piece of social
welfare legislation enacted for the benefit of the
employees. the act has to be necessarily so companystrued as
will serve its purpose and objects. i entirely agree with my learned brother that on a
proper interpretation of the term wages the legislative
intent is made manifestly clear that the term wages as
used in the act will include house rent allowance night
shift allowance heat gas and dust allowance and incentive
allowance. the definition to my mind on its plain reading
is clear and unambiguous. even if any ambiguity companyld have
been suggested the expression must be given a liberal
interpretation beneficial to the interests of the employees
for whose benefit the employees state insurance act has been
passed.


civil appellate jurisdiction civil appeal number 159 of
1974.
from the judgment and order dated 4-4-1973 of the
punjab and haryana high companyrt at chandigarh in r.s.a. number
1482 of 1961.

n. goswamy and arvind minumberha for the appellant. kapil sibbal and d. probir mitra for respondents. the judgment of the companyrt was delivered by
mathew j.-this is an appeal by special leave against a
decree passed by the high companyrt of punjab and haryana
holding that the appeal filed by the plaintiff-appellant has
abated and dismissing his suit. the appellant brought the suit on the allegation that
there was one shiromani nirankari dera at patiala that this
institution had two-branches-one at landeke in moga tehsil
and the other at nanga kheri in the erstwhile patiala state
and that he as mahant-in-charge of the shiromani dera at
patiala had the right to manage the properties attached to
the dera at landeke. the prayer in the plaint was for
recovery of possession of the dera and the properties
attached to it. som dass the defendant companytended that the dera at
landeke was an independent dera and that he was in
possession of the properties of the dera as its lawfully
appointed mahant. the trial companyrt decreed the suit. in appeal by the
defendant the decree was reversed. against that decree an
appeal was preferred by the appellant to the high companyrt. while the appeal was pending in the high companyrt som dass
the defendant died on 13-10-1970. numberapplication was made
by the appellant to bring on record his legal
representatives within the period prescribed. an application
was made on 1-2-1971 by the appellant stating that som dass
died on 26-11-1970 leaving behind him shiam dass as his
chela and for impleading him. the companyrectness of the date of
death of som dass was companytested by shiam dass. the high
court referred the question to the trial companyrt for enquiry
and decision. the trial companyrt after taking evidence found
that som dass died on 13-10-1970. thereafter the appellant
prayed before the high companyrt that his application dated 1-2-
1971 might be treated as an application for setting aside
the abatement of the appeal and the ground for setting aside
the abatement was that the appellant did number knumber about the
death of som dass at the time he died. the high companyrt found
numbersubstance in the plea that the appellant had numberknumberledge
about the date of the death of som dass and held that the
appeal had abated and that there was numberground for setting
aside the abatement. the appellant had raised an alternative companytention
before the high companyrt that there was numberabatement of the
appeal even if som dass was number impleaded within the period
prescribed as he claimed to represent the dera as its duly
elected chela. the high companyrt held that after the death of
som dass shiam dass as his chela inherited the sum-total
of the rights which earlier vested in som dass and when a
controversy is raised about such rights then the appellant
was bound to bring on record the legal representatives of
the deceased within the time prescribed by law. we do number think that the view of the high companyrt was
correct. the suit was filed on the basis that the appellant
as the lawfully appointed mahant was entitled to manage the
properties of the dera at landeke that the defendant was
unlawfully claiming to be the mahant of the dera and
entitled to manage the properties of the dera and that the
appellant was entitled to be in possession of the
properties. as already stated the companytention of the
defendant was that though the properties belonged to the
dera he was its lawfully appointed mahant and that the
appellant had numberright to recover possession of the property
of the dera. when som dass died the interest which was the
subject matter of the suit devolved upon shiam das as he
was elected to be the mahant of the dera and the appeal
could be companytinued under q. 22 r. 10 of the civil
procedure companye against the person upon whom the interest had
devolved. order 22 rule 10 reads
r. 10 1  in other cases of an assignment
creation or devolution of any interest during the
pendency of suit the suit may by leave of the companyrt
be companytinued by or against the person to or upon whom
such interest has companye or devolved. the attachment of a decree pending an appeal
there from shall be deemed to be an interest entitling
the person who procured such attachment to the benefit
of sub-rule  1 . this rule is based on the principle that trial of a
suit cannumber be brought to an end merely because the interest
of a party in the subject matter of the suit has devolved
upon anumberher during the pendency of the suit but that suit
may be companytinued against the person acquiring the interest
with the leave of the companyrt. when a suit is brought by or
against a person in a representative capacity and there is a
devolution of the interest of the representative the rule
that has to be applied is order 22 rule 10 and number rule 3
or 4 whether the devolution takes place as a companysequence of
death or for any other reason. order 22 rule 10 is number
confined to devolution of interest of a party by death it
also applies if the head of the mutt or manager of the
temple resigns his office or is removed from office. in such
a case the successor to the head of the mutt or to the
manager of the temple may be substituted as a party under
this rule. the word interest which is mentioned in this
rule means interest in the property i.e. the subject matter
of the suit and the interest is the interest of the person
who was the party to the suit. it was however companytended on behalf of the respondent
that there was numberdevolution of the interest in the subject
matter of the suit on the death of som dass since there was
numbercertainty as to the person who would be elected as mahant
to succeed him. the argument was that it was uncertain on
the death of som dass as to who would become the mahant by
election that it was only when a person succeeded to the
mahantship on the death of a previous mahant by virtue of
law
or custom that there would be devolution of interest in the
subject matter of the suit and therefore order 22 rule
10 would number be attracted. we see numberforce in this
argument. we are of the view that devolution of the interest
in the subject matter of the suit took place when shiam dass
was elected as mahant of the dera after the death of som
dass. som dass was sued in his capacity as a person who
claimed  though illegally according to the appellant  as
mahant of the dera. som dass companytended that he was lawfully
appointed as mahant of the dera. he never set up any claim
which was adverse to the dera or its properties. the suit
against som dass was number in his personal capacity but in his
capacity as de facto mahant. in other words the suit was
for possession and management of the dera and the properties
appertaining to it by the appellant purporting to be the de
jure mahant against som dass as de facto mahant. the fact
that it was after som dass died that shiam dass was elected
to be the mahant of the dera can make numberdifference when we
are dealing with the question whether the interest in the
subject matter of the suit devolved upon him. the subject
matter of the suit was the interest of som dass in the dera
and its properties and it devolved upon shiam dass by virtue
of his election as mahant subsequent to the death of som
dass. and as it was in a representative capacity that som
dass was sued and as it was in the same representative
capacity that the appeal was sought to be companytinued against
shiam dass order 22 rule 10 will apply 1 . in thirumalai

arunachella  2  the companyrt held that a succeeding trustee
of a trustee who filed a suit and thereafter died during its
pendency was number legal representative of the predecessor in
office. the companyrt said that where some of the trustees die
or retire during the pendency of a suit and new persons are
elected to fill their place it is a case of devolution of
interest during the pendency of a suit and the elected
persons can be added as parties under order 22 rule 10
numberwithstanding that the period of limitation for impleading
them had expired. in roshan lal v. kapur chand the companyrt took the view
that newly appointed trustees are number legal representatives
of the trustees who had filed the suit and thereafter died
during the pendency of the suit that they can be added as
parties under order 22 rule 10 numberwithstanding the fact
that the period of limitation for an application to
impleaded them under order 22 rule 3 had elapsed. the companyrt
said  at p. 384
such an application is obviously number an
application under o. 22 r. 3 civil procedure companye.


civil appellate jurisdiction civil appeal number. 1371-
72  nt  of 1974.
from the judgment and order dated 4th august 1972 of
the allahabad high companyrt in i.t. reference number 426 of 1963.

c. manchanda and miss a. subhashini for the
appellant. s. desai and m.m. kashtriya for the respondent. the judgment of the companyrt was delivered by
sabyasachi mukharji j. these appeals by special leave
are from the judgment and order of the division bench of the
allahabad high companyrt dated 4th august 1972.
m s j.k. hosiery factory kanpur the assessee firm
herein originally companysisted of sir padampat singhania l.
lakshmipat singhania and l. kailashpat singhania and one

p. agarwal as partners. in january 1946 the three
singhania brothers appeared to have retired from the firm
and in their place the kamla town trust was alleged to have
become partner. the revenue challenged this reconstitution of the firm
and according to the revenue the singhania brothers never
retired and the trust never became a partner. four questions
were referred by the tribunal to the high companyrt under
section 66 1  of the indian income-tax act 1922
 hereinafter called the act . the question number 4 is the
only question canvassed before us and survives for these
appeals. the same is as follows
whether under the provisions of section
10 2  vi  proviso  b  of the income-tax act the
unabsorbed depreciation of the unregistered firm
in 1949-50 can be allowed as a deduction in the
assessments of the partners of the registered firm
in the assessment year 1950-51? question number 4 is relevant only for the assessment year
1950-51. for the previous assessment year 1949-50 the firm
had been allowed an unabsorbed depreciation of rs. 43963.
the firm claimed a set off thereof in the assessment year
1950-51.the tribunal refused to grant this set off on the
view that in the year 1949-50 the assessee firm was an
unregistered firm while it had been registered under the
income-tax act for the year 1950-51. according to the
tribunal the loss on account of depreciation of an
unregistered firm companyld number be carried forward to the
succeeding year in case the firm got registered. it was so
held by the tribunal. the high companyrt by reference to section 10 2  vi  and
proviso  b  to section 24 2  of the act and on
interpretation of the provisions and scheme of the sections
held that the tribunal was number right and answered the
question in favour of the assessee. these appeals are from
that decision. in order to appreciate this question it is necessary
to bear in mind the relevant provisions of the act. at the
relevant time sub-section  2  of section 2 was as follows
assessee means a person by whom income tax is
payable. the relevant provisions of section 10 were as follows
10.  1  the tax shall be payable by an assessee
under the head profits and gains of business
profession or vocation in respect of the profits
or gains of any business profession or vocation
carried on by him. such profits or gains shall be companyputed after
making the following allowances namely -

in respect of depreciation
provided that -   b  where in the
assessment of the assessee or if the assessee is a
registered firm in the assessment of its
partners full effect cannumber be given to any such
allowance in any year number being a year which ended
prior to the 1st day of april 1939 owing to
their being numberprofits or gains chargeable for
that year or owing to the profits or gains
chargeable being less than the allowance then
subject to the provisions of clause  b  of the
proviso to sub-section  2  of section 24 the
allowance or part of the allowance to which effect
has number been given as the case may be shall be
added to the amount of the allowance for
depreciation for the following year and deemed to
be part of that allowance or if there is numbersuch
allowance for that year be deemed to be the
allowance for the next year and so on for
succeeding years. it is apparent as the high companyrt numbered that the
proviso dealt with every assessee. it specified that where
the assessee was a registered firm then in the assessment
of its partners if full effect companyld number be given to any
depreciation allowance and where the assessee was an
unregistered firm where there was numberquestion of its
partners being assessed the depreciation which companyld be
carried forward was the unabsorbed depreciation in the
assessment of the firm itself. the assessee in the first
year being an
unregistered firm was entitled to carry forward the
unabsorbed depreciation under this proviso. there was
numberhing in the section which indicated that unregistered
firm companyld number get that benefit of the carry-forward. it
must be borne in mind that the firm which suffered
depreciation was unregistered in the accounting year i.e. 1949-50 and it is the very same firm which got itself
registered in the subsequent year. if section 24 is properly
read in companyjunction with clause  b  of the proviso to sub-
section  2  of section 24 which gives the right to carry
forward the loss then the effect would be that loss had to
be carried forward and adjusted first against the profits of
the next year. neither of the provisions prohibited that
carry-forward unabsorbed depreciation in case the firm
became registered in the subsequent year. this appears in
our opinion on a plain reading of the different provisions
of the section. the entity is the firm registration makes
numberdifference to that entity. by registration the firm gets
certain additional qualifications and puts upon itself
certain additional burden. the assessee in both the cases
however is the same. we were referred to the provisions of
section 23 5  b  and section 24 to section 71 of the income-
tax act 1961. we do number think that on this aspect the
scheme of the act indicates any intention to deprive the
subsequently registered firm of its right to carry forward
the unabsorbed depreciation. depreciation is given to the
person who becomes entitled to it. the subsequently
registered firm is companyposed of him also. therefore in
principle there is numberbasis for proposition that he should
number be entitled to get the benefit of depreciation. our attention was drawn to certain observations of the
judicial companymittee of the privy companyncil in the case of
indian iron steel company limited v. companymissioner of income-tax
bengal 11 i.t.r. 328. there the privy companyncil dealt with
entirely different set of circumstances. by an agreement
dated 8th september 1936 made between the appellant
company and anumberher companypany named the bengal iron companypany
ltd. the former had agreed to acquire and take over the
whole of the property and assets of the latter as existing
on the date of transfer.in pursuance of this agreement the
bengal companypany transferred all its property and assets on
the 2nd december 1936 to the appellant companypany which
continued to carry on the business of the bengal companypany as
part of and in companybination with its
existing business. the agreement companytained a clause
assigning so far as capable of being assigned any claim
which the bengal companypany may have in respect of unabsorbed
depreciation allowances. at the time of the amalgamation
the bengal companypany had to its credit unabsorbed depreciation
allowance to the extent of rs. 8545150 which it companyld set
off against its future profits. similarly the appellant
company had an unabsorbed depreciation allowance of rs. 6200775. it was held by the judicial companymittee affirming
the decision of the high companyrt of calcutta  i  that the
appellant companypany was number entitled to have the depreciation
allowance of the bengal companypany companyputed on the original
cost of such assets to the bengal companypany for the whole of
the previous year but only up to the date of succession and
that after that date it had to be companyputed on the original
cost to the appellant companypany and  ii  that the appellant
company was number in law entitled to carry forward the
unabsorbed depreciation allowance of the bengal companypany. it
was further held that the word assessee in section 10 2
must when there is a successor to the business charged to
tax be read in certain of the paragraphs as including both
predecessor and successor but it does number follow as a
consequence that the unabsorbed depreciation of the
predecessor must be added to that of the successor or that
even in a case when the only business companycerned is that
which is transferred. the business when transferred carries
to the purchaser its unabsorbed depreciation. here numbersuch problem arises. here we have a situation
where the same person previously carrying on business as
unregistered firm is number carrying on business as registered
firm. our attention was drawn to the observations of the
division bench of the bombay high companyrt in the case of
ballarpur companylieries company v. companymissioner of income-tax
poona 92 i.t.r. 219. but the said observations are number
relevant for our present purposes. similarly reliance was placed on the observations of
the division bench of the allahabad high companyrt in k.t. wire
products v. union of india ors. 92 i.t.r. 459. it may be
mentioned that there it was numbered that under the general
scheme of the income-tax act losses and profits under
different heads had to be aggregated and the net income
arrived at which was liable to tax. if the resultant figure
was a loss it was carried forward and set off against the
business profits of the succeeding year. this is the
position in the case of all assessees except registered
firms. in the case of registered firms the net loss
including depreciation allowance if any is allocated to
the partners who alone were entitled to set off the loss
allocated to them in their individual assessments and to
carry forward any loss which remained unabsorbed as
provided in sections 32 2  and 75 2  of the income-tax act
1961. the firm as such was number entitled to carry forward the
losses determined in the assessment. it companyld number be
contended that since a registered firm was liable to a
separate tax called the firm tax which is over and above
the tax payable by the partners the registered firm should
be treated like an ordinary assessee for the purposes of the
assessment of firm tax and the losses of the earlier years
computed in the assessment of the firm should be carried
forward and set off against its business profits of the
subsequent years. though the firm tax was levied under the
finance act each year it was a part and parcel of the
incometax which was levied under the provisions of the
income-tax act. if the companytentions were accepted it would
lead to an anumberalous position inasmuch as there would be two
assessments in the case of registered firms one for
purposes of levy of firm tax and the other for purposes of
levy of income-tax and the quantum of income in the two
assessments would be different. such a result is number
contemplated under the incometax act. imposition of tax was
on the registered firm as well as on unregistered firm. the
manner of levy and realisation is different in case of
registered firm. a case companyverse to the instant case was before the
division bench of the bombay high companyrt in the case of
commissioner of incometax bombay city ii v. estate and
finance limited 111 i.t.r. 119. where the division bench
observed that when enacting the provision regarding carry
forward and set off of unabsorbed depreciation under section
32 2  of the income-tax act 1961 the legislature companyld
have imposed a companydition that unabsorbed depreciation companyld
be set off against the profits of a subsequent year only if
the business in relation to which depreciation was allowed
continued to exist in such year. the absence of such a
restriction had to be companystrued in favour of the assessee. where two interpretations were possible the companyrt should
take the interpretation that is favourable to the assessee
bearing in mind that a taxing statute is being companystrued. therefore under the provisions of section 32 2  for the
purpose of setting off unabsorbed depreciation carried
forward from a proceeding year it was number necessary that
the business in respect of which the depreciation allowance
was originally worked out should remain in existence in such
succeeding year. it dealt with some other aspect with which
we are number presently companycerned. having regard to the scheme of the relevant provisions
and in view of the provisions of section 10 2  vi  read with
section 24 1  and section 24 2  of the 1922 act we are of
the opinion that the deduction of the unabsorbed
depreciation should have been allowed. it is necessary to
bear in mind that in both the years the firm companytinued - in
one year it was unregistered in the next year it got itself
transferred into registered but its identity was number lost. the firm was one. in any event as has been mentioned in case of doubt
the assessee is entitled to an interpretation which is
favourable to him though we are of the opinion that in the
instant case there is numberscope of any doubt. therefore there was numberloss of the right to carry
forward the unabsorbed depreciation.


civil appellate jurisdiction civil appeal number 177 of 1962.
appeal by special leave from the judgment and order dated
august 8 1961 of the madhya pradesh high companyrt in misc. petition number 81 of 1961.
naunit lal for the appellant. n. shroff for respondents number. 14.
rajani patel and 1. n. shroff for the intervener. february 3 1964. the judgment of the companyrt was delivered
by
wanchoo j.-this is an appeal by special leave against the
judgment of the madhya pradesh high companyrt. the appellants
filed a writ petition in the high companyrt challenging the
validity of a numberification issued under s. 6 of the land
acquisition act number 1 of 1894  hereinafter referred to as
the act  their case was that they were owners of certain
lands in chhaparwah. on july 8 1960. a numberification was
issued under s. 4 of the act to the effect that certain land
in village chhaparwah was required for a
public purpose namely for the companystruction of buildings
for godowns and administrative office. thereafter proceed-
ings appear to have been taken under s. 5-a of the act and
an inquiry was made by the companylector. it may be mentioned
that the acquisition proceedings were taken at the instance
of the premier refractories of india private limited katni. which is a companypany. the companylector reported that the land
was essential for the companypany and was needed for a public
purpose and the objections of the land-owners has numbersubst-
ance. he therefore recommended that a declaration under s.
6 of the act might be made. he also reported that a draft
agreement to be executed between the companypany and the
government as required by s. 41 of the act was being sub-
mitted along with a draft numberification under s. 6. this
report was made on october 17 1960. on december 3. 1960
the numberification under s. 6 was issued stating that the
state government was satisfied that the land described in
the annexure to the numberification was required for a public
purpose namely for the companystruction of buildings for
godowns and administrative office and hence the
numberification was issued. it may be numbericed that the
numberification under s. 6 did number say that the land was
required for a companypany. thereupon the appellants filed a
writ petition in the high companyrt on march 20 1960 and their
main companytentions were two namely.  1  that the numberification
under s. 6 did number describe the land to be acquired with
sufficient particularity and was therefore of numbereffect and
 2  that the numberification mentioned that the land was
required for a public purpose though in actual fact the
land was required for a companypany which was entirely
different from government and therefore was invalid. soon
after the writ petition was filed the state government
issued a fresh numberification on april 19 1961. this
numberification was mainly under s. 17  1  read with s. 17 4
of the act which provides that in case of urgency the
state government may direct the companylector before the award
is made under certain circumstances to take possession of
any waste or arable land needed for a public purpose or for
a companypany. curiously enumbergh this numberification stated that
the state government also directed that the provisions of s.
5-a would number apply though as we have already stated. an
inquiry under s. 5-a had already been made before the numberi-
fication of december 3 1960 was issued. the numberification
further stated that it was declared under s. 6 of the act
that the land was required for a public purpose namely
for the premier refractory factory and work companynected
therewith. it appears however that the real reason for
issuing this numberification in this form was to make good the
lacuna which appeared in the numberification of december 3
1960 inasmuch as the property to be acquired was number
specified with sufficient particularity in that
numberification. it may be numbericed that this numberification of
april 19 1961 treating it as a numberification under s. 6 as
well numberhere specified that the land was required for a
company it only stated that the land was required for a
public purpose namely for the premier refractory factory
and work companynected therewith. when the matter came to be argued before the high companyrt the
main point that was urged was that both the numberifications
under s. 6 of december 3 1960 and april 19 1961 were
invalid because he acquisition was number for a public
purpose as started therein in fact the acquisition was for
a companypany which was entirely different from government. the
high companyrt apparently held that the substance of the
numberifications showed that the land was being required for a
public purpose as well as for the purpose of a companypany. the
high companyrt was further of the view that insofar as the
declaration spoke of the acquisition of land for a public
purpose it was ineffective as admittedly the companypensation
for the property was to be paid wholly by the companypany and no
part of it was to be paid out of public funds. even so the
high companyrt held that the declaration must be read in
substance and in law as one for acquisition of land for a
company namely the premier refractories of india private
limited. in this view of the matter the high companyrt
dismissed the writ petition. the only question that has been urged before us on behalf of
the appellants is that the high companyrt was in error in
reading the two numberifications as in substance amounting to a
declaration that the land was required for a companypany. section 6 1  of the act requires that whenever any land
isneeded for a public purpose or for a companypany a
declaration shall be made to that effect.further the proviso
to s.6 1 provides that numbersuch declaration shall be made
unless the
compensation to be awarded for such property is to be paid
by a companypany or wholly or partly out of public revenues or
some fund companytrolled or managed by a local authority. this
clearly companytemplates two kinds of declarations. in the
first place a declaration may be made that land is required
for a public purpose in which case in view of the proviso
the companypensation to be awarded for the property to be
acquired must companye wholly or partly out of public revenues
or some fund companytrolled or managed by a local authority. no
declaration under s. 6 for acquisition of land for a public
purpose can be made unless either the whole or part of the
compensation for the property to be acquired is to companye out
of public revenues or some fund companytrolled or managed by a
local authority see pandit jhandu lal v. state of
punjab 1 . in the second place the declaration under s. 6
may be made that land is needed for a companypany in which case
the entire companypensation has to be paid by the companypany. it
is clear therefore that where the entire companypensation is to
be paid by a companypany the numberification under g. 6 must
contain a declaration that the land is needed for a companypany. numbernumberification under s. 6 can be made where the entire
compensation is to be paid by a companypany declaring that the
acquisition is for a public purpose for such a declaration
requires that either wholly or in part companypensation must
come out of public revenues or some fund companytrolled or
managed by a local authority. in the present case it is number
in dispute that numberpart of the companypensation is to companye out
of public revenues or some fund companytrolled or managed by a
local authority on the other hand the whole companypensation
was to be paid by the companypany. therefore the numberification
under s. 6 if it was to be valid in the circumstances of the
present case had to declare that the land was needed for a
company. numbervalid numberification under s. 6 companyld be made in
the circumstances of this case declaring that the land was
needed for a public purpose for numberpart of companypensation was
to be paid out of public revenues or some fund companytrolled or
managed by a local authority. that is why the high companyrt
felt that the numberification under s. 6 declaring that the
land was needed for a public purpose
 1  1961 2 s.c.r. 359.
would in the circumstances of this case be ineffective. but
the high companyrt went on to hold that the numberifications under
s. 6 must in substance and in law be deemed to be for
acquisition of land for a companypany in the present case. we
are of opinion that this view of the high companyrt is
incorrect. there is numberhing in either of the two
numberifications dated december 3 1960 and april 19 1961 to
show that the land was needed for a companypany. the
numberification of december 3 1960 says in so many words that
it was required for a public purpose namely for the
construction of buildings for godowns and administrative
office. numberone reading this numberification can possibly think
that the land was needed for a companypany. similarly the
numberification of april 19 1961 says that the land was needed
for a public purpose namely for the premier refractory
factory and work companynected therewith. number the companypany for
which the land in this case was in fact required is the
premier refractories of india private limted katni. there
is numberhing in the numberification of april 19 1961 to show
that the land was needed for this companypany or any other
company. all that the numberification of april 19 1961 says
is that the land was needed for a public purpose and the
public purpose mentioned there was that the land was
required for the premier refractory factory and work
connected therewith. the high companyrt thought that in
substance this purpose showed that the land was required for
the companypany mentioned above. but we do number see how because
the purpose specified was for the premier refractory factory
and work companynected therewith it can be said that the
numberification declared that the land was needed for the
company. it is number impossible for the government or for a
local body to own such a factory and companystruct works in
connection therewith. the mere fact that the public purpose
mentioned was for the premier refractory factory and work
connected therewith therefore cannumber mean that the land
was needed for a companypany as one reads the numberification of
april 19 1961 one can only companye to the companyclusion that the
land was needed for a public purpose namely for the
construction of some work for a factory. there is no
mention of any companypany anywhere in this numberification and it
cannumber necessarily be companycluded that the premier refractory
factory was a company-
134-159 s.c.-41
pany for a factory is something very different from a
company and may belong to a companypany or to government or to
a local body or even to an individual. the mere fact that
the public purpose declared in the numberification was for the
premier refractory factory and work companynected therewith
cannumber therefore lead to the inference that the acquisition
was for a companypany.