The Doctrine of Territorial Nexus

 Introduction

The Doctrine of Territorial Nexus asserts that laws made by a State Legislature are generally only applicable within the boundaries of that State, unless there is a sufficient connection or nexus between the State and the subject matter of the law.

This doctrine finds its foundation in Article 245 of the Constitution of India, 1950 (COI).

What is Article 245 of the COI?

Article 245 addresses the territorial extent of laws made by both Parliament and State Legislatures. It states:

1. Parliamentary Law: Parliament can make laws for the whole of India or any part of it.
2. State Legislative Law: A State Legislature can make laws for the whole or any part of the State.
3. Extra-territorial Operation: Laws made by Parliament are not invalid simply because they have extra-territorial operation, i.e., they may apply outside India or across state boundaries.

This article is crucial in defining the territorial jurisdiction of laws passed by both Parliament and State Legislatures. It emphasizes that while a State cannot make laws that have extra-territorial effect, it can do so if there is a sufficient connection between the State and the subject of the law. Without this connection, such laws will be deemed invalid.

The doctrine was first established in the case of State of Bombay v. RMDC (1957).

Salient Features 

• A State Legislature has the power to make laws for the entire State or for any part of it.
• However, the legislature cannot pass laws that have extra-territorial application unless there is a sufficient nexus between the State and the object of the law.
• This doctrine plays a significant role in taxation matters, particularly in determining the taxation of non-residents in India.

When Can the Doctrine of Territorial Nexus Be Invoked?

The Doctrine of Territorial Nexus may be invoked in the following situations:

• To determine whether a particular State law has extra-territorial application.
• To assess if there is a territorial connection between the subject matter of the law and the State making the law.

Landmark Cases 

1. A.H. Wadia v. Income Tax Commissioner (1948)
   In this case, the Bombay High Court held that the extra-territorial validity of a law cannot be questioned when the law is made by a Supreme Legislative Authority.

2. State of Bombay v. RMDC (1952)
   The Supreme Court ruled that there was a sufficient territorial nexus for the Bombay Legislature to tax the respondent. The court found that most of the activities related to the subject matter of the tax took place within Bombay, establishing the necessary connection between the State and the object of the law.

The Doctrine of Territorial Nexus ensures that laws made by State Legislatures are limited in scope to matters that have a genuine connection with the State, preventing overreach into matters that fall outside their territorial jurisdiction.