Though the expression “substantial question of law” has not been defined in any of the Act or in any of the statutes where this expression appears, e.g., section 100 of the Code of Civil Procedure. The true meaning and connotation of this expression is now well settled by various judicial pronouncements. It was observed by the Supreme Court in Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. & Mfg. Co. Ltd., that “a question of law would be a substantial question of law if it directly or indirectly affects the rights of parties and/or there is some doubt or difference of opinion on the issue”. But “if the question is settled by the Apex Court or the general principles to be applied in determining the question are well-settled, mere application of it to a particular set of facts would not constitute a substantial question of law” – Krishna Kumar Aggarwal v. Assessing Officer.
Section 100 of CPC deals with “Second Appeal” moreover it includes the Substantial Question of Law as well. The proviso reads as follows:
“Section 100 – Second Appeal:
Save as otherwise expressly provided in the body of this Code or by any other law for the time being in force, an appeal shall lie to the High Court from every decree passed in appeal by any Court subordinate to the High Court, If the High Court is satisfied that the case involves a substantial question of law.
An appeal may lie under this section from an appellate decree passed ex parte.
In an appeal under this Section, the memorandum of appeal shall precisely state the substantial question of law involved in the appeal.
Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question.
The appeal shall be heard on the question so formulated and the respondent shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question:
Provided that nothing takes away or abridges the power of the question of law, not formulated by it, if it is satisfied that the case involves such question.” 
Question of Law and Question of Fact:
Here dissimilarity between question of law and substantial question of law be required to understood i.e. what can be the subject matter of an appeal under Section 100 can only be a substantial question of law. It should involve a matter of general public importance or affect the rights of the parties substantially. Where the determination of the issue depended upon the appreciation of evidence or materials resulting in ascertainment of basic facts without application of any principle of law, the issue merely raises a question of fact. Court observed in Mahavir Woollen Mills v. CIT A question of fact becomes a question of law, if the finding is either without any evidence or material, or if the finding is contrary to the evidence, or is perverse or there is no direct nexus between the conclusion of fact and the primary fact upon which that conclusion is based. But, it is not possible to turn a mere question of fact into a question of law by asking whether as a matter of law the authority came to a correct conclusion upon a matter of fact. In Sree Meenakshi Mills Ltd. v CIT the apex Court has held that where the determination of an issue depends upon the appreciation of evidence or materials resulting in ascertainment of basic facts without application of any principle of law, the issue raises a mere question of fact.
The Delhi High Court laid down in DCIT v. Marudhar the following four tests to determine whether the question involved is one of fact or law:
As the Tribunal is the ultimate fact-finding authority, if it has reached certain findings upon examination of all relevant evidence and materials before it, the existence or otherwise of certain facts at issue is a question of fact.
Any inference from certain facts is also a question of fact. If a finding of fact is arrived at by the Tribunal after improperly rejecting evidence, a question of law can arise.
While the Tribunal acts on materials partly relevant and partly irrelevant, it can give rise to a question of law if it is impossible to say to what extent the irrelevant material was used to arrive at the finding. Such a finding is vitiated because of the use of inadmissible material.
Where any finding is based on no evidence or material, it involves a question of law.
Judicial Analysis of Substantial Question of Law:
Second appeals can arise before the High Courts only on substantial question of law as certified by the courts. The Supreme Court had regretted that in a number of cases, no efforts were being made to differentiate between the ‘question of law” and ‘substantial question of law”. A right of appeal is neither natural nor an inherent right attached to the litigation. It is a substantive statutory right to be regulated in accordance with law.
A question of law will be a substantial of law if it directly and substantially affects the rights of the parties. In order to be “substantial” it must be such that there may be some doubt or difference of opinion or there is room for difference of opinion. If the law is well-settled by the Supreme Court, the mere application of it to particular facts would not constitute a substantial question of law (M/s Neek Ram Sharma & Co. vs Income Tax Appellate Tribunal and others).
The Delhi High Court pointed out that the term ‘substantial question of law” has not been defined. But it has acquired a definite connotation through a catena of judicial pronouncements.
Test laid down in Sir Chunilal V. Mehta and Sons Ltd. v Century Spinning and Manufacturing Co. Ltd. to determine whether a substantial question of law is involved are:
Whether directly or indirectly it affects the substantial rights of the parties;
Whether the question is of general public importance;
Whether it is an open question in the sense that the issue has not been settled by pronouncement of the highest court in the land;
The issue is not free from difficulty; or
It calls for a discussion for alternative view.
In Hero Vinoth v. Seshammal, it was laid down that a question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents, and, involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is not clear, either on account of express provisions of law or binding precedents,
The proper test for determining whether a question of law raised in the case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects the rights of the parties and if so whether it is either an open question in the sense that it is not finally settled by this court or by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd, the question would not be a substantial question of law (Sir Chunilal V Mehta & Sons Ltd v Century Spinning and Manufacturing Co Ltd).
Court affirmed in Ishwar Dass Jain v. Sohan Lal, that:
“Now under Section 100 CPC, after the 1976 Amendment, it is essential for the High Court to formulate a substantial question of law and it is not permissible to reverse the doing so.” [Para 10]
However for a second time in Roop Singh v. Ram Singh, this Court has expressed that the jurisdiction of a High Court is confined to appeals involving substantial question of law. SC held that:
“It is to be reiterated that under Section 100 CPC of the High Court to entertain a second appeal is confined only to such appeals which involve a substantial question of law and it does not confer any jurisdiction on the High Court to interfere with pure questions of fact while exercising its jurisdiction under section 100 CPC.”[Para 7]
Subsequent to the above observation SC affirmed that “No question of law much less any substantial question of law (Commissioner of Income Tax vs. P. Mohanakala). Except “where a point of law has not been pleaded or is found to be arising between the parties in the absence of any factual format, a litigant should not be allowed to raise that question as a substantial question of law in second appeal. The mere appreciation of the facts, the documentary evidence or the meaning of entries and the contents of the document cannot be held to be raising a substantial question of law.”( Kondiba Dagadu Kadam v Savitribai Sopangujar & Ors) Furthermore “No question of law much less any substantial question, was involved in the second appeal requiring interference by the High Court in exercise of its jurisdiction under s 100 of the Code of Civil Procedure.” (Karuppiah Ravichandran v GDS Engineering Pte Ltd and Another)
The Supreme Court held that the High Court may decline to answer any question of law which is purely academic and the answer to which would have no bearing on any actual right or liability of the taxpayer, or if the answer would not dispose of the real questions in issue between the parties, or if the question is unnecessary or irrelevant. (CIT v Anusuya Devi)
The Delhi High Court quoted Lord Simonds to point out that even a pure finding of fact may be set aside by the court if it appears that the Commissioner had acted without any evidence or on a view of the facts which could not be reasonably entertained. The court may also intervene if it appears that no person acting judicially, and properly instructed as to the relevant law, could have come to the determination under appeal.
The appeal is required to be heard only on the question so formulated includes Substantial Q of law. The Court found that, in a number of cases, no efforts are made to differentiate between the “question of law” and “substantial question of law”. A right of appeal is neither natural nor an inherent right attached to the litigation. Being a substantive statutory right, it has to be regulated in accordance with the law in force at the relevant time. In Ishwar Dass Jain v. Sohan Lal this Court in, has stated that, “Now under Section 100 CPC, after the 1976 Amendment, it is essential for the High Court to formulate a substantial question of law and it is not permissible to reverse the judgment of the first appellate Court without doing so.” (Para 10)
Yet again in Roop Singh v. Ram Singh this Court has expressed that the jurisdiction of a High Court is confined to appeals involving substantial question of law of the said judgment reads: “It is to be reiterated that under section 100 CPC jurisdiction of the High Court to entertain a second appeal is confined only to such appeals which involve a substantial question of law and it does not confer any jurisdiction on the High Court to interfere with pure questions of fact while exercising its jurisdiction under section 100 CPC.” (Para 7)
The position has been reiterated in Kanahaiyalal and Ors. v. Anupkumar and Ors. (2003 (1) SCC 430) and Ram Sakhi Devi (Smt.) v. Chhatra Devi and Others (2005 (6) SCC 181).
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