Doctrine of Territorial Nexus under Constitution5 min read

-Ayush Srivastava

Introduction- (The doctrine of Territorial Nexus)

The distribution of powers is an essential feature of federalism. The object for which a federal state is formed involves the distribution of powers between Centre and States. The essence of federalism is that it involves splitting the action as well as the authority of the State into independent and co-ordinate units, these units are themselves hold the authoritative trait. A Federal Constitution involves the setting up of the Government at the Centre and collateral to that independent government at the States each of them endowed with their respective functions assigned to them by the Constitution. The one is not subordinate to other in its own field; the authority of one is co-ordinated to that of the other. The basic principle of federation that the legislative, executive and financial authority is divided between them not by any law passed by the Centre but by the Constitution itself.

Legislative Relations-

The Indian Constitution makes the two-fold distribution of legislative powers-

  • With respect to the territory.
  • With respect to the subject matter.

Territorial Jurisdiction (with respect to territory)-

As with respect to territory Article 245 (1) of the Indian Constitution provides that- “Subject to the provisions of this Constitution, Parliament may make laws for the whole or any part of the territory of India.

Article 245 (2) of the Indian Constitution provides that-“A law made by Parliament shall not be deemed to be invalid on the ground that it has extra-territorial operation i.e. takes effect outside the territory of India.

In the case of A.H. Wadia vs. Income Tax Commissioner, it has been held by the Hon’ble Apex Court that- “In case of sovereign legislation question of extraterritoriality of any enactment can never be raised in the municipal court as a ground for challenging its validity. The enacted legislation may offend the rule of International Law, may not be enforced by the foreign courts, or there may be difficulty in enforcing them but these are the issues of policy legislation with which domiciliary tribunals are not concerned.

The legislative power and its distribution between the Centre and the States are subjected to  the following ingredients:

  • Scheme of distribution of powers.
  • Fundamental Rights.
  • Other provisions of the Constitution.


Theory of Territorial Nexus-

As stated in Article 245 (1) as described earlier in this article, the Legislature of State may make laws for the whole or any part of the State. This means that State Laws would be void if it has extra-territorial operation i.e. takes enforcement outside the State. However, there is one exception to this general rule. State law of extra-territorial operation will be valid if there is sufficient nexus between the object and the State.

This doctrine can be better understood through the following cases-

  • Wallace vs. Income-tax Commissioner Bombay– In this case, a company that was a registered firm in England was having a partnership with a firm in India. The Indian Income-Tax authorities sought to tax the firm. The firm takes the defense that it being a firm registered in England and hence Indian authorities do not have any authority to levy the tax.

The Privy Council held that the levy of tax by the Indian Authority was a valid act in the light of Doctrine of Territorial Nexus. Further, the Privy Council made it clear that the firm derived its major part of the income from which attracts sufficient nexus of doing so, and hence the company has sufficient territorial connection and was eligible for being levied the tax.

  • Sondur Gopal vs. Sondur Rajni- In this case, the husband questioned the maintainability of the petition of a judicial separation initiated by his wife on the ground that they acquired the citizenship of Sweden. The wife contended if they had acquired the citizenship of Sweden but when the couple shifted to Australia, the Indian Citizenship got revived.

The Hon’ble Apex Court held that since S.1 (2) of Hindu Marriage Act states that the Act extends to the Hindus to the whole of India except the State of Jammu and Kashmir and also it applies to the Hindus domiciled in India although they reside outside India or have acquired the Citizenship of another country, the Court held that the act applies to them.

  • State of Bombay vs. R.M.D.C- In this case, the Bombay State levied the tax on lotteries competitions conducted in the State. A newspaper that is printed in Bangalore but had wide circulation in Bombay conducted a lottery competition and thereby taxed by the Bombay Tax Authorities.

The Hon’ble Apex Court held that there existed sufficient territorial nexus which enables the Bombay Tax Authorities to levy the tax. The Court further ordained that if there is sufficient nexus between the people sought to be charged and the State seeking to him, the taxing statute would be upheld.

Conclusion- (The doctrine of Territorial Nexus)

The main characteristics of a federal Constitution are the distribution of powers and the doctrine of Territorial Nexus is one exception to it.

The Indian Constitution contains an elaborate scheme of distribution of powers. But from the scheme of distribution of powers between the Centre and the States, it appears that the framers of our Indian Constitution have opted for a strong Centre. The reasons for this are obvious.


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