(1) If, in the course of proceedings under section 37, a question of proprietary right arises, the collector shall decide the dispute and submit the record of the case for confirmation of the order passed by him to the Chief Commissioner:
     Provided that the collector may, if he deems fit, instead of deciding such dispute, grant to any party a certificate declaring that the matter is fit to be determined by a civil court and dismiss the application for acquisition of land.
     (2) The person to whom such certificate is granted may, within three months of the grant thereof, institute a suit to establish his right in a court of competent jurisdiction, and such court may, upon the production of such certificate, entertain such suit.
     (3) Where a party, to whom such certificate has been granted, fails to institute a suit within the time allowed, he shall be deemed to have instituted such suit and lost it.
     (4) The dismissal of an application under the proviso to sub-section (1) shall be no bar to the entertainment of a second application for acquisition filed by the landlord, if--
         (i) in the civil suit, instituted under the provisions of the said proviso, the question of proprietary right is determined in his favour; or
         (ii) in case a certificate to file a suit has been granted to a person other than the landlord, no such suit has been filed within the period allowed under sub-section (2).