Statutory settlement procedure must be followed strictly; interim directions cannot replace mandatory examination of records and investigation.
Territorial jurisdiction existed where part of the cause of action arose from the assessment and search proceedings in Chhattisgarh, even though the Settlement Commission was located in Kolkata, so the writ petitions were maintainable. A settlement order under Section 245D(4) cannot stand unless the Commission follows the statutory procedure, including examination of records, calling for the Commissioner's report, and proper investigation. The Commission recorded that such examination and investigation were not practicable, yet proceeded only because of an interim court direction, which could not override the Act. The settlement order was therefore unsustainable, quashed, and the matter remitted for fresh decision in accordance with law.
Issues: (i) Whether the writ petitions challenging the Settlement Commission's order were maintainable before the Chhattisgarh High Court on territorial jurisdiction. (ii) Whether the Settlement Commission's order under Section 245D(4) was legally sustainable when it was passed without examining the records and investigating the case as required by the Act.
Issue (i): Whether the writ petitions challenging the Settlement Commission's order were maintainable before the Chhattisgarh High Court on territorial jurisdiction.
Analysis: The impugned order under Section 245D(4) was an independent statutory order giving rise to a fresh cause of action. The assessment proceedings and the search and seizure action were connected with the territorial jurisdiction of Chhattisgarh, while the Settlement Commission was situated at Kolkata. In such circumstances, part of the cause of action arose in both places, giving the petitioners a choice of forum.
Conclusion: The writ petitions were maintainable before the Chhattisgarh High Court and the objection to jurisdiction failed.
Issue (ii): Whether the Settlement Commission's order under Section 245D(4) was legally sustainable when it was passed without examining the records and investigating the case as required by the Act.
Analysis: The statutory scheme under Section 245D required the Commission to follow the prescribed procedure, call for the Commissioner's report, consider the records, and then proceed on merits. The Commission itself recorded that it was not practicable to examine the records and investigate the case, yet it proceeded to pass the settlement order merely because of the Kolkata High Court's interim direction. That direction did not authorize bypassing the mandatory statutory requirements. An order passed without proper examination and investigation, and without due application of mind to the statutory mandate, could not be sustained.
Conclusion: The settlement order was unsustainable and was set aside.
Final Conclusion: The challenge to territorial jurisdiction was rejected, but the settlement order was quashed for non-compliance with the statutory procedure and the matter was sent back for fresh decision in accordance with law.
Ratio Decidendi: A statutory settlement order must be passed strictly in accordance with the procedure prescribed by the Act, and a court direction to dispose of the matter cannot justify departure from mandatory examination of records and investigation required by law.
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