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  • Section 5, Subsection 2 of the 1983 Income Tax Act
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  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

In Second Appeal No. 63 of 1969, a Single Judge referred a question of law to a Division Bench concerning whether an order dated January 21, 1963 by the Chief Settlement Commissioner was final and binding, and what effect it had on the controversy. The Division Bench answered the referred question by judgment dated April 7, 1980, holding that the Chief Settlement Commissioner’s order was not final and binding in civil proceedings and did not exclude the civil court’s jurisdiction to decide an alleged encroachment by the respondent on property conveyed to the appellant under a sale certificate dated June 7, 1963, read with a corrigendum dated September 22, 1964, issued pursuant to an auction sale held on September 25, 1955. However, the Division Bench went further and disposed of the second appeal on merits, dismissing it with costs. The present opinion addresses the correctness of that procedural course.

Legal Issues Presented

  1. Whether the Division Bench, after answering only the question of law referred by the Single Judge, erred in disposing of the second appeal on merits instead of remitting it to the Single Judge for disposal according to law.
  2. Whether the order dated January 21, 1963 made by the Chief Settlement Commissioner was final and binding in the civil proceeding and, if not, whether civil court jurisdiction to decide the alleged encroachment remained available.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court noted that the Single Judge had referred only a specific question of law to the Division Bench. While the Division Bench decided that question (holding the Chief Settlement Commissioner’s order was not final and binding in civil proceedings and did not oust civil court jurisdiction over the encroachment dispute), it was procedurally improper for the Division Bench to proceed to decide the second appeal on merits. Because the reference was limited to the question of law, the proper course was to return the matter to the Single Judge with the answer to the referred question, leaving the Single Judge to dispose of the second appeal according to law. The Court therefore treated the Division Bench’s merits dismissal as an error of procedure requiring correction.

Holding and Implications

ALLOWED; SET ASIDE; REMANDED: The appeal was allowed, the Division Bench’s order dismissing the second appeal with costs was set aside, and the second appeal was directed to be disposed of by the Single Judge of the High Court in accordance with law.

The Single Judge was directed to decide the second appeal without being influenced by any observations made by the Division Bench on merits, but on the basis that the Chief Settlement Commissioner’s order dated January 21, 1963 was not final and binding on the parties. The Single Judge was to consider, with reference to the boundaries and area stated in the sale certificate dated June 7, 1963 read with the corrigendum dated September 22, 1964, whether any portion of the property conveyed to the appellant was illegally in the possession of the respondents. There was no order as to costs of the appeal, and the opinion indicates no broader precedential implications beyond directing the proper procedural course in this matter.

    Kesho Nath Khurana v. Union Of India And Others

    P.N Bhagwati, J.— It appears from the record that the Single Judge before whom Second Appeal No. 63 of 1969 came up for hearing referred the following question of law for the opinion of the Division Bench:

    “Whether the order dated January 21, 1963 made by the Chief Settlement Commissioner was final and binding in the present appeal, and if so, what is its effect upon the point in controversy in the present appeal?”
    It was this question which was referred by the Single Judge to the Division Bench and the Division Bench disposed it of by its judgment dated April 7, 1980. The Division Bench held that the order dated January 21, 1963 made by the Chief Settlement Commissioner was not final and binding in the civil proceeding and it did not exclude the jurisdiction of the civil court to decide whether there was any encroachment by the respondent on the property conveyed to the appellant under the sale certificate dated June 7, 1963 read with the corrigendum dated September 22, 1964 issued by the District Rent and Managing Officer, Simla, pursuant to the auction sale held on September 25, 1955. Now it is obvious that since only the aforesaid question of law was referred by the Single Judge to the Division Bench, the Division Bench should have sent the matter back to the Single Judge after deciding the question of law referred to them. But instead the Division Bench proceeded to dispose of the second appeal on merits and dismissed it with costs. We think that the Division Bench was in error in following this procedure. The Division Bench ought to have sent the appeal back to the Single Judge with the answer rendered by them to the question referred by the Single Judge and left it to the Single Judge to dispose of the second appeal according to law.

    2. We accordingly allow the appeal, set aside the order passed by the Division Bench dismissing the second appeal with costs and direct that the second appeal shall be disposed of by the Single Judge of the High Court in accordance with law without being influenced by any observations made by the Division Bench on merits but on the basis that the order dated January 21, 1963 made by the Chief Settlement Commissioner was not final and binding on the parties. The Single Judge will consider whether having regard to the boundaries and the area specified in the sale certificate dated June 7, 1963 read with the corrigendum dated September 22, 1964, any portion of the property conveyed to the appellant was illegally in the possession of the respondents. There will be no order as to costs of the appeal.

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    Comments

    Kesho Nath Khurana v. Union Of India And Others
    (Apr 10, 1981)