Chandi Prasad Chokhani vs The State Of Bihar
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Civil Appeals Nos. 170 to 172 of 1959
Decision Date: 24 April 1961
Coram: S.K. Das, J.L. Kapur, M. Hidayatullah, J.C. Shah
In the matter titled Chandi Prasad Chokhani versus The State of Bihar, the judgment was delivered on the twenty‑fourth day of April, 1961 by a Bench of the Supreme Court of India consisting of Justice S K Das, Justice J L Kapur, Justice M Hidayatullah and Justice J C Shah. The petitioner in this proceeding was Chandi Prasad Chokhani and the respondent was the State of Bihar. The case is reported in the 1961 volume of the All India Reporter at page 1708 and also appears in the 1962 Supreme Court Reports (Second Series) at page 276, together with several subsequent citations that reference the decision in various law reports.
The factual background set out that the appellant firm was assessed to sales tax under the Bihar Sales Tax Act of 1944 for three assessment periods beginning on the first of October, 1947 and ending on the thirty‑first of March, 1950. The firm’s claim for certain deductions was rejected, and it lodged applications for revision under section 24 of the Act with the Board of Revenue, Bihar. These revision applications were dismissed by three separate orders dated 20 August 1953, 3 September 1953 and 30 April 1954. Pursuant to section 25(1) of the same Act, the appellant then applied to the Board for permission to state a case before the High Court of Patna on several questions of law; these applications were dismissed by an order dated 30 August 1954 on the ground that no legal questions arose. Subsequently, the appellant moved the High Court seeking a direction that the Board should state a case on the asserted questions of law. The High Court rejected the applications concerning the first two assessment periods, but by an order dated 17 November 1954 directed the Board to state a case regarding the third period on one question of law that it considered had arisen. The High Court rendered a judgment on 21 January 1957 answering the question against the appellant.
Thereafter, on 17 February 1955, the appellant filed applications before the Supreme Court seeking special leave to appeal the Board’s orders of 20 August 1953 and 3 September 1953 relating to the first two periods. A further application for special leave concerning the third period was filed on 12 April 1955. The Supreme Court granted special leave to appeal all three applications by an order dated 23 December 1955, with the leave for the third period being limited to the Board’s order of 30 August 1954. When the appeals were presented for hearing, a question arose as to whether the appeals were maintainable, given that no applications for leave to appeal had been filed against the Board’s orders and the High Court’s subsequent orders in respect of the periods for which only special leave had been granted.
The Court observed that no applications for leave to appeal had been filed against the orders of the Board of Revenue and the High Court after the Board’s orders, the only orders for which special leave had been granted. It held that although Article 136 of the Constitution of India uses very broad language, the Supreme Court has consistently treated the exercise of discretion under that article as an exception that requires special and extraordinary circumstances. The Court relied upon the precedents set in Pritam Singh v. The State, [1950] S.C.R. 453; V. Govindarajulu Mudaliar v. The Commissioner of Income‑tax, Hyderabad, A.I.R. 1959 S.C. 248; and Messrs Chimmonlall Rameshwarlal v. Commissioner of Income‑tax (Central), Calcutta, A.I.R. 1960 S.C. 280. It further explained the principles laid down in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income‑tax, West Bengal, [1955] 1 S.C.R. 941 and Baldev Singh v. Commissioner of Income‑tax, Delhi and Ajmer, [1960] 40 I.T.R. 605. Applying these authorities, the Court held that in the present matter the appellant could not obtain special leave against the Board of Revenue’s orders because doing so would bypass the High Court and disregard its earlier judgments. The Court also noted that even when special leave is initially granted under Article 136, the Court retains the power to reconsider at the hearing of the appeal and conclude that such leave should not have been granted, following the decision in Baldota Brothers v. Libra Mining Works, A.I.R. 1961 S.C.C. 100.
The judgment proceeded under the civil appellate jurisdiction for Civil Appeals Nos. 170 to 172 of 1959. The appeals were by special leave from the Board of Revenue, Bihar at Patna, dated 20 August 1953, 3 September 1953, and 30 August 1954, corresponding to Reference Cases 461, 462 of 1952 and 430 of 1954 respectively. Counsel for the appellant were Veda Vyas and B. P. Maheshwari, while the respondent was represented by R. C. Prasad. The judgment was delivered on 24 April 1961 by Justice S. K. Das. The Court noted that the three appeals, each having been granted special leave under Article 136, were heard together and that a single judgment would govern all of them. Before addressing the substantive legal question, the Court set out the factual background necessary to understand the issue. The appellant, the firm of Messrs Durga Dutt Chandi Prasad, was engaged in the trade of various goods, primarily raw jute, at Sahebganj in Bihar. The firm had been registered as a dealer under section 4 of the Bihar Sales Tax Act, 1944, effective from 1 July 1946. It had been assessed for sales tax for three consecutive periods beginning on 1 October 1947 and ending on 31 March 1950, based on its turnover during those periods, which consisted of inter‑state purchases and dispatches as detailed in the preceding material.
In the present case the appellant alleged that it had undertaken purchases on behalf of two jute mills situated outside Bihar, namely the Raigarh Jute Mills and the Bengal Jute Mills, and that it had also dispatched jute to its own firm in Calcutta for sale there. For the assessment period that began on 1 October 1947 and ended on 31 March 1948 the appellant claimed a deduction of Rs 6,58,880‑5‑9 on the basis that this sum represented purchases made for the two out‑of‑state jute mills, and a further deduction of Rs 1,62,662‑13‑3 on the ground that it corresponded to the dispatches of jute to the appellant’s own Calcutta firm. In the subsequent assessment period, running from 1 April 1948 to 31 March 1949, the appellant made a similar claim of deductions on the same two grounds, although the precise amounts were not specified because they are immaterial to the present discussion. The appellant contended that both the purchases effected for the two external jute mills and the dispatches of jute to its Calcutta agency did not constitute “sales” within the definition provided by the Bihar Sales Tax Act, 1947 (hereinafter referred to as the Act). For the third assessment period, covering 1 April 1949 to 31 March 1950, the appellant again asserted comparable deductions and, in addition, sought a deduction for the sale of mustard seed valued at Rs 1,00,513‑11‑9 to Messrs Panna Lal Binjraj.
On 7 June 1951 the Sales Tax Officer disallowed the appellant’s deduction claims for the first two assessment periods, and by an order dated 17 April 1953 the same officer also disallowed the claim relating to the third period. The appellant consequently filed appeals under the relevant provisions of the Act, which were heard by the Deputy Commissioner of Commercial Taxes, Bihar, who dismissed them. Thereafter, the appellant pursued revision applications under section 24 of the Act before the Board of Revenue, Bihar. The Board, by orders dated 20 August 1953 and 3 September 1953, rejected the revision petitions concerning the first two periods, and by an order dated 30 April 1954 likewise dismissed the petition concerning the third period.
Invoking section 25(1) of the Act, the appellant then moved the Board to state a case to the High Court of Patna on certain questions of law that, in the appellant’s view, arose from the Board’s orders. The Board refused to state a case, holding that no legal questions were involved because the matters had been resolved on factual findings. Specifically, the Board expressed the opinion that the two issues—whether the dispatch of jute outside the State of Bihar amounted to a sale within the meaning of the Act, and whether the purchases made on behalf of the two out‑of‑state jute mills were liable to tax—had been conclusively determined by the factual findings of the authorities and therefore were not open to judicial review.
The competent authorities had examined the relevant materials in the record and their findings were deemed no longer open to challenge. Subsequently, the appellant approached the High Court and requested that the Board of Revenue be required to state a case on the legal questions that, in the appellant’s view, arose from the orders pertaining to the first two assessment periods. The High Court, by an order dated 17 November 1954, dismissed both applications that sought a direction for the Board to state a case with respect to those two periods. In a later, similar application concerning the third assessment period, the High Court directed the Board of Revenue to state a case on a specific question: whether the petitioner could claim a deduction for the sale of mustard seed amounting to Rs 1,00,513‑11‑9 to Messrs Panna Lal Binjraj, treating that sale as one made to a registered dealer under the Schedule to Bihar Finance Act No 11 of 1949 read with the Bihar Sales Tax Act (Bihar Act XIX of 1947). By an order dated 21 January 1957, the High Court answered this question adversely to the appellant. The Court’s finding was expressed as follows: it was satisfied that the petitioner was not entitled to a deduction of the price of mustard seed sold to Messrs Panna Lal Binjraj for manufacturing purposes because the registration certificate issued to Messrs Panna Lal Binjraj did not mention that mustard seed could be sold to them for manufacture free of tax. Since the conditions imposed by the proviso to section 5 were not satisfied, the sales‑tax authorities were correct in refusing the deduction of the mustard‑seed price to the petitioner. On 17 February 1955, the appellant filed an application before this Court seeking special leave to appeal against the Board of Revenue’s orders that had been passed on the two revision applications relating to the first two periods. This Court granted the special leave by an order dated 23 December 1955. It is important to emphasize that the appellant had specifically sought and obtained leave to appeal the Board’s orders dated 20 August 1953 and 3 September 1953, which concerned the two revision applications. No application for leave to appeal was made, nor was any leave granted, concerning the later Board orders that refused to state a case, nor the High Court orders that rejected the appellant’s request that the Board be directed to state a case. With respect to the third assessment period, for which the High Court had directed the Board to state a case on a particular point of law and had subsequently answered that point, the appellant again filed an application for special leave to appeal on 12 April 1955, and
In this case, the Court observed that it had granted leave to the appellant by an order dated 23 December 1955, but that the grant of leave was limited to the order of the Board of Revenue dated 30 August 1954. That Board order concluded that no questions of law existed that would justify a reference to the High Court. The Court further noted that the appellant neither requested nor obtained any leave to appeal from the later orders of the High Court. The first of those later orders held that only a single question of law arose from the orders concerning the third period of assessment and directed the Board to state a case on that question. The second later order, dated 21 January 1957, was the judgment and order of the High Court in which the Court answered the one referred question adversely to the appellant.
The Court then framed the issue that arose from these facts. It asked whether, as a matter of the Court’s own practice, the appellant could be invited to be heard on the merits in the three appeals when special leave had neither been sought nor granted for the subsequent High Court orders that had become final between the parties. In other words, the Court questioned whether the appellant could bypass the High Court by seeking a merits hearing on the Board’s orders for the first two periods of assessment, as well as the Board’s decision in the reference case that no question of law arose from the assessment order for the third period. The Court found the position to be clear: for the first two assessment orders the High Court had held that no questions of law arose at all; for the third assessment order the High Court had held that only one question of law arose and had answered that question against the appellant. The Court therefore asked whether the appellant could now ignore those High Court orders and ask this Court to consider, on the merits, the Board’s orders on the two revision applications and the Board’s reference‑case ruling.
The Court explained that this preliminary point had to be decided before proceeding to the main question of the appeals. To decide the preliminary issue, the Court said it must examine (a) the scope and ambit of Article 136 of the Constitution, (b) the established practice of this Court, and (c) the scheme of the Act under which the assessments were made, the procedure for appeals and revisions, and the effect of section 25 of that Act, which authorised the Board to refer alleged questions of law to the High Court and authorised the High Court to direct the Board to state a case on those questions. The Court therefore intended to dispose of this initial objection raised on behalf of the appellant before turning to the substantive merits of the three appeals.
In this case the appellant argued that, because this Court had already granted special leave, the preliminary objection to the hearing of the appeals should no longer be considered and the appeals ought to be decided on their merits. The Court could not accept that submission. It observed that in the earlier proceedings the leave had been granted without the respondents being heard and without the complete record being placed before the Court at the time leave was granted. The Court referred to the decision in Baldota Brothers v. Libra Mining Works, where it was held that the scope of the power exercised under Article 136 is the same at the stage of applying for special leave as it is at the stage when the appeal is finally disposed of, and that the Court may examine the propriety of the leave even at the hearing of the appeal. The Court noted that this view is consistent with earlier decisions cited in the Baldota case. Accordingly, the Court affirmed that it was open to consider now whether the leave had been properly granted in these appeals and whether the appellant was entitled to a merits hearing, in line with the established practice of this Court in similar situations. Having addressed that preliminary point, the Court turned to the main question. As a prelude to that discussion, the Court set out the relevant provisions of the Act to clarify its scheme and purpose. Section 4, the charging provision, provides that any dealer whose gross turnover exceeds a specified amount in a year shall be liable to pay tax under the Act on sales made in Bihar. Section 5 prescribes the rate of tax applicable to such dealers. Section 13, the assessment provision, enumerates the circumstances in which the assessing authority may make an assessment. Section 24 deals with the procedure for appeal, revision, or review of an assessment. Section 25, whose scheme parallels Section 66 of the Indian Income‑Tax Act, 1922, allows a dealer or the Commissioner who is aggrieved by an order of the Board made under subsection (4) of Section 24 to file a written application requiring the Board to refer any question of law arising from that order to the High Court. If the Board refuses to make such a reference, the aggrieved party may, under subsection (2) of Section 25, apply to the High Court against that refusal. Should the High Court find the refusal unjustified, it may direct the Board to state a case and refer the matter to the High Court. When a case is referred, the High Court decides the question of law and the Board subsequently disposes of the case in accordance with the High Court’s decision. This outlines the complete framework of Section 25.
When a question of law is raised, the High Court may issue a judgment that sets out the reasons on which its decision is based. After receiving that judgment, the Board disposes of the case in accordance with the High Court’s decision. This arrangement constitutes the scheme of section 25. Under this scheme, questions of fact are dealt with by the assessing authorities, subject to appeal and revision, whereas questions of law must be resolved according to the decision of the High Court, which then governs the final disposal of the case. Section 23 of the Act provides that, except as authorized by section 25, no assessment made and no order passed under the Act or its rules by the Commissioner or any person appointed under section 3 to assist him may be called into question in any court, and, except as provided in section 24, no appeal or application for revision or review may lie against any such assessment or order. It is clear that sections 23, 24 and 25 of the Act cannot override the provisions of the Constitution, nor can they affect the power of this Court under article 136 of the Constitution. The decision of the High Court rendered under section 25 is unquestionably subject to the Supreme Court’s power under article 136, as is any determination or order of the assessing authorities, which are tribunals within the meaning of article 136. Article 136 states: “Notwithstanding anything in this Chapter, the Supreme Court may, in its discretion, grant special leave to appeal from any judgment, decree, determination, sentence or order in any cause or matter passed or made by any court or tribunal in the territory of India.” The language of the article is broad and expressly authorises the Supreme Court, at its discretion, to grant special leave to appeal from any judgment, decree, determination, sentence or order of any court or tribunal. The question before the Court is not whether it possesses this power – it unquestionably does – but whether, in the present circumstances, it is proper to exercise that discretion to allow the appellant to invoke article 136. This determination must be made on the facts of each case, taking into account the Court’s own practice and the limitations it has laid down for exercising discretion under article 136. In Pritam Singh v. The State, the Court explained that these limitations require the wide discretionary power granted by article 136 to be exercised sparingly and only in exceptional cases.
In exercising the power conferred by Article 136, the Court emphasized that a more or less uniform standard should be applied when granting special leave, even though the matters that may arise under this provision are extremely varied. By virtue of Article 136, the Court may entertain special leave applications arising out of civil suits, criminal prosecutions, income‑tax disputes, proceedings before assorted tribunals, and many other categories of cases. Despite this breadth, the Court held that the only consistent rule that can be articulated is that special leave to appeal should be granted solely in those cases where the existence of special circumstances is demonstrably established. In general, the Court will not entertain a special leave application unless it is shown that exceptional and special circumstances exist, that a substantial and grave injustice has been suffered, and that the matter in question possesses sufficient gravity to justify a review of the decision being appealed.
The Court referred to the earlier decision in Pritam Singh v. State, a criminal appeal, to illustrate this principle, and noted that the same approach was reiterated in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income‑tax, West Bengal, an income‑tax matter. In the latter case, the Court observed that any limitations on the exercise of the power under Article 136 are inherent in the nature and character of the power itself. Because the power is exceptional and overriding, it must be exercised sparingly, with caution, and only in special and extraordinary situations. The Court further stated that it is not possible to bind the exercise of this power by any fixed formula or rule. Although the Court will address the decision in Dhakeswari Cotton Mills in greater detail later, it is sufficient at this stage to record that the Supreme Court has consistently held that the exercise of discretion under Article 136 must be predicated on the presence of exceptional and special circumstances. The cited authorities are Pritam Singh v. State, [1950] S.C.R. 453 and Dhakeswari Cotton Mills Ltd. v. Commissioner of Income‑tax, [1955] 1 S.C.R. 941.
Turning to the appeals before the Court, it was clear that no such exceptional circumstances existed. Under the scheme of the statute previously discussed, the appellant could not now contest the factual findings made by the assessing authorities. Regarding questions of law, the appellant had already approached the High Court, which held that no legal questions arose from two of the assessment orders, and that only a single legal question arose from the third assessment order, a question which the High Court decided against the appellant. As noted earlier, the High Court’s decisions on all three assessment orders were, in principle, subject to further appeal to this Court if special leave under Article 136 had been granted. However, the appellant did not apply to this Court for special leave against any of the High Court’s orders, and consequently those orders have become final and binding on the parties. The appellant’s present attempt, therefore, is to bypass the High Court’s determinations, an approach that the Court cannot permit.
The Court observed that the appellant could not be permitted to disregard the orders of the High Court. No special circumstances existed in the appellant’s favour; on the contrary, many circumstances weighed against him. The appellant was in fact attempting to circumvent the High Court’s orders by filing appeals directly against the orders of the Board of Revenue, and in one instance by appealing against a Board order that refused to refer the matter to the High Court. The Court also noted that the usual practice of this Court was contrary to the appellant’s approach. The earliest authority on this point was the decision in Dhakeswari Cotton Mills Ltd. (1). Counsel for the appellant relied on that case to argue that this Court had, in previous instances, interfered with a tribunal order under Article 136 even though the assessee had not filed a petition against the High Court’s order. In Dhakeswari’s case (1) the facts were that the assessee had exhausted every remedy available under the Income‑Tax Act, 1922, including the remedy under section 66(2) for issuing a mandamus to the Tribunal, and then made an application to this Court for special leave to appeal the Tribunal’s order. This Court granted the special leave and, in the subsequent appeal, set aside the Tribunal’s order. However, the Court stressed that the decision in Dhakeswari must be read in the context of the special circumstances that existed there. In that case the Tribunal was found to have violated fundamental rules of justice, the assessee had not been afforded a fair hearing, and the principles of natural justice had been breached; consequently, the matter was deemed suitable for the exercise of power under Article 136. The Court clarified that in the present appeals no similar ground has been raised that would justify invoking Article 136. In the earlier case of Moti Ram v. Commissioner of Income‑tax (2) the appellant had not filed any application under section 66(2) of the Income‑Tax Act, 1922, but had obtained special leave from this Court to challenge the Tribunal’s order on the special fact that his property had been attached and proceeded against for tax recovery. The propriety of granting that special leave was not examined, and the appeal was dismissed on its merits. The decision in Jogta Coal Co. Ltd. v. Commissioner of Income‑tax, West Bengal (3) was based on its own factual matrix and has been subject to extensive discussion. The issue in that case concerned the calculation of depreciation under section 10(2)(vi) of the Indian Income‑Tax Act, 1922, specifically the amount on which the appellant could claim a deduction allowance for depreciation. The Income‑Tax Officer had made an estimate which was …
In the matter presently considered, the estimate prepared by the Income‑tax Officer received acceptance from the Appellate Assistant Commissioner. The dispute was subsequently taken before the Appellate Tribunal, which formulated its own independent estimate of the taxable amount. The appellant then filed an application under section 66(1) of the Indian Income‑tax Act, but this application was rejected by the Tribunal. An additional effort was made to approach the High Court under section 66(2), yet that attempt also failed to obtain relief. Thereafter, a petition for special leave to appeal the Tribunal’s orders was presented before this Court. The petition cited the authorities (1) [1955] 1 S.C.R. 941, (2) [1958] 34 I.T.R. 646 and (3) [1959] 36 I.T.R. 521. This Court granted special leave to appeal and remitted the case back to the Tribunal, directing the Tribunal to refer two specific questions of law to the High Court under section 66(2). The Court observed that it was somewhat puzzling how a direction under section 66(2) could be issued in the context of an appeal from the Tribunal’s appellate orders, suggesting that this procedural nuance may have been overlooked. Nevertheless, the Court emphatically stated that the decision should not be interpreted as establishing a general rule in favour of the appellant concerning the practice of this Court.
The Court then examined several earlier decisions for guidance. In Omar Salay Mohammed Sait v. Commissioner of Income‑tax, Madras (1), the Tribunal based its findings on suspicions, conjectures or surmises, following the principle set out in Dhakeswari’s case (2). The decision in Sardar Baldev Singh v. Commissioner of Income‑tax, Delhi & Ajmer (1) was similarly fact‑specific; in that case the appellant’s application to the Tribunal was barred by limitation because the delay was caused by circumstances beyond the appellant’s control. The Tribunal dismissed the request for a reference on the ground of limitation, and the High Court was held to have no authority to extend the prescribed period. Consequently, the appellant sought special leave and condonation of delay, which were granted by this Court. A further relevant authority is V. Govindarajulu Mudaliar v. Commissioner of Income‑tax, Hyderabad (4), which concerned appeals from a Tribunal decision by special leave after an application under section 66(2) had been rejected by the High Court. The Court quoted the earlier judgment, noting: “We must mention that against the order of the Tribunal the appellant applied for reference to the High Court under section 66(2) of the Indian Income‑tax Act and the learned Judges of the High Court dismissed that application. No appeal has been preferred against that at all. The present appeal is against the decision of the Tribunal itself.” The Court also recalled its earlier decision in Dhakeswari Cotton Mills Ltd. v. Commissioner of Income‑tax, West Bengal, 1955 (1) S.C.R. 941, which held that an appeal under Article 136 of the Constitution lies against a decision of the Appellate Tribunal. However, because in the present circumstances the appellant had already moved the High Court and obtained an adverse decision that had become final, it was not permissible for the appellant to now challenge the correctness of the Tribunal’s decision on grounds that could have been raised in an appeal against the High Court judgment.
In the case of Messrs Chimmonlall Rameshwarlal v. Commissioner of Income‑tax (Central), Calcutta, the Court described the facts as follows: four appeals had been granted special leave under Article 136 of the Constitution and each appeal targeted the orders of the Appellate Tribunal that refused to state a case on an application made under section 66(1) of the Income‑tax Act. No appeal had been filed against the Tribunal’s orders made under section 33(4), nor against the High Court’s orders made under section 66(2). This factual situation closely resembled the present appeal concerning the assessment for the third period.
In that precedent the Court observed that a material and significant circumstance confronted the appellants: the High Court had already delivered a considered judgment on the appellants’ applications under section 66(2) and had concluded that no question of law arose from the Tribunal’s order. That High Court judgment remained unchallenged by the appellants in any form. The Court explained that to consider the present appeals on their merits would inevitably lead to either confirming the High Court’s judgment or overturning it. If the Court were to confirm the High Court’s decision, the appellants would be out of court; if, however, the Court were to depart from the High Court’s view and hold that the High Court was wrong in denying the applications under section 66(2), there would arise two contradictory decisions—one by the High Court and another by this Court—effectively setting aside the High Court’s judgment without following the proper procedural route. The Court stated that such an outcome could not be accepted because it would be contrary to the principles governing the relationship of the courts. Although this Court possesses the authority, in certain circumstances, to set aside and overrule High Court decisions, it cannot bypass the normal procedural mechanism and achieve such a result indirectly as suggested by the appellants. Consequently, the Court held that it would be inappropriate to adjudicate these appeals on their merits and therefore dismissed them without further proceedings.
The Court further indicated that the observations made in Chimmonlall Rameshwarlal apply with equal force to the present matter. A careful review of earlier decisions of this Court demonstrates that, except in exceptional and special circumstances such as those identified in the Dhakeswari case or the Baldev Singh case, the Court does not exercise its power under Article 136 to bypass the High Court and disregard a decision that has become final and binding on the parties by entertaining appeals directly from tribunal orders. Such a use of power would be especially inadvisable where it could create a conflict between two competent courts—a situation not contemplated by sections 23, 24 and 25 of the Income‑tax Act. The purpose of those sections is to prevent such conflict by making the assessing authority’s decision final on facts, subject to appeal, revision or review under section 24, and the High Court’s decision final on questions of law, subject to appeal to this Court under section 25. Ignoring the High Court’s decision on a question of law would effectively nullify the statutory provisions of section 25.
The Court observed that invoking Article 136 in a manner that bypasses the High Court and disregards the High Court’s decision would be improper because that decision has already become final and binding on the parties. It warned that allowing direct appeals from a tribunal’s orders would create a risk of conflicting judgments issued by two courts of competent jurisdiction, a situation that is not foreseen by sections 23, 24 and 25 of the governing Act. The Court explained that the purpose of those sections is precisely to avoid such conflict. Section 24 makes the findings of the assessing authorities on questions of fact final, subject only to appeal, revision or review as provided, while section 25 renders the High Court’s decision on questions of law final, subject only to an appeal to this Court. Consequently, ignoring the High Court’s ruling on a question of law would effectively nullify the statutory effect of section 25. The Court cited earlier authorities, namely (1) [1955] 1 S.C.R. 941 and (2) [1960] 40 I.T.R. 605, to support this view. The Court then turned to the final argument presented on behalf of the appellant. Counsel for the appellant drew the Court’s attention to Article 133 of the Constitution and argued that when a High Court refuses to grant a certificate under that article, this Court may still grant special leave to appeal from the High Court’s principal decision, even if the certificate is denied. The appellant suggested that the same reasoning should permit this Court, notwithstanding the High Court’s order under section 25, to grant special leave to appeal from the tribunal’s orders. The Court rejected that analogy. First, it observed that in an application under Article 133 the High Court merely decides whether to issue a certificate of fitness for its own judgment and does not resolve any substantive question of law, which is the subject matter of section 25. Second, the Court noted that an order under Article 133 does not create the type of conflict previously described, because special leave to appeal from the High Court’s decision does not produce two separate decisions by two different courts or tribunals, nor does it bypass any court. Moreover, the Court emphasized that the issue before it was not a question of the Court’s power to entertain an appeal, but rather the proper exercise of its discretion in granting special leave under Article 136. After considering these points, the Court concluded, for the reasons already set out, that the appellant was not entitled to request that this Court exercise its power under Article 136 in the present circumstances.
The Court observed that no special circumstances existed which could justify the exercise of the constitutional power of granting special leave in the present matters, and that the factual matrix was contrary to any such justification.
It further held that allowing the appellant to evade the orders of the High Court would be erroneous both on the basis of legal principle and established authority, as it would effectively permit the appellant to disregard the High Court’s directions.
Accordingly, the Court concluded that the grant of special leave in these cases had not been made in accordance with the proper legal standards and therefore could not be sustained.
On this basis, the Court decided to dismiss the appeals, ordering that the appellant bear the costs of the proceedings, and expressly declined to examine the substantive merits of the underlying disputes.
The judgment also stipulated that a single hearing fee would be payable, reflecting the procedural expenses incurred during the hearing of these applications.
Consequently, the appeals were dismissed in their entirety, and the Court’s order affirmed the necessity of respecting the High Court’s adjudicative process.