Introduction

The Doctrine of Territorial Nexus states that the laws made by a State Legislature are not applicable outside the State, except when there is a sufficient nexus between the state and the object.

• This doctrine derives its power from Article 245 of the Constitution of India, 1950 (COI).

What is Article 245 of the COI?

• This Article deals with the extent of laws made by Parliament and by the Legislatures of States.
• It States that—

(1) Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State.

(2) No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation.

• This Article is concerned exclusively with the territorial division of law-making power of the Union and the States.
  • The State Legislatur cannot make extra territorial laws, except when there is sufficient connection between the State and object. It means that the State laws would be void if it is given extra-territorial operation.
• This doctrine was first applied in the case of State of Bombay v. RMDC (1957).

What are the Salient Features of Doctrine of Territorial Nexus?

• As per this doctrine, the State’s legislature may make laws for the entire state or for any part of it.
• The state legislature cannot adopt extraterritorial legislation unless there is a significant connection or nexus between the state and the object.
• This doctrine governs the taxation of non-residents in India.

When can the Doctrine of Territorial Nexus be Invoked?

• The Doctrine of Territorial nexus can be invoked under the following circumstances:
  • Whether a particular State has extra-territorial operation.
  • If there is a territorial nexus between the subject- matter of the Act and the state making the law.

What are the Landmark Case Laws of Doctrine of Territorial Nexus?

• In A.H. Wadia v. Income Tax Commissioner (1948), the Bombay High Court held that a question of extraterritoriality of enactment can never be raised against a Supreme Legislative Authority on the grounds of questioning its validity.
• In State of Bombay v. RMDC (1952), the Supreme Court held that there existed a sufficient Territorial Nexus to enable the Bombay Legislature to tax the respondent as all the activities which the competitor is ordinarily expected to undertake took place mostly within Bombay.