Gujarat High Court
Vrandavandas Kikabhai Shroff And Anr. vs Shri Khan, Mamlatdar And Agricultural ... on 2 March, 1993
Equivalent citations: (1993)2GLR1202
JUDGMENT R.K. Abichandani, J.
1. In this group of writ petitions, there is a challenge against the constitutionality of Section 6(3-A), 4, 10 and 11 of the Gujarat Agricultural Lands Ceiling Act, 1960 (hereinafter referred to as "the said Act") on the ground that these provisions have extra-territorial operation and are ultra vires the powers of the State Legislature under Article 245(1) of the Constitution of India.
2. Agricultural land is a limited and inflexible thing. India is predominantly an agricultural country. The ownership and holding of agricultural land is required to be-regulated and rationed. Ceiling on agricultural land holding is accepted to be necessary in order lo make available the surplus land (in excess of ceiling limit) to landless agricultural labourers. The constitutional validity of the land reforms to that effect has been upheld by the Supreme Court in the context of the chapter of fundamental rights Hasmukhlal v. State of Gujarat . Therefore, ceiling on holding of agricultural land can be validly imposed. Since land is a State subject (Entry 18 of the State List), it can be imposed by the State Legislature only. Each State can decide for its territory the ceiling limit upto which a person can hold the agricultural land in the State. No State can do it for the land in the other State. So far, there cannot be any dispute. If a person holds agricultural lands at different places in Gujarat, all such lands will be taken into consideration for computing his holding, and he will be allowed to hold upto the ceiling limit only. If the State Legislature thinks it desirable that persons holding lands in different parts of Gujarat and persons holding lands in different parts of India should be treated equally so far as holding land in Gujarat is concerned can it do so? Whether the Gujarat Act, which takes into consideration the agricultural land holdings elsewhere in India of a person holding agricultural land in Gujarat for the purpose of finding out the extent to which he can hold agricultural lands in Gujarat, trespasses into the field of other State Legislatures? These are the basic questions raised in these petitions.
3. The petitioners are owners of certain agricultural lands in me State of Gujarat. They also hold lands in other parts of India, outside the State of Gujarat. It appears that the concerned authorities started taking action in light of the provisions of Section 6(3A) of the said Act and other consequential provisions which were inserted in the said Act by the Gujarat Agricultural Lands Ceiling (Amendment) Act, 1972. The effect of the provisions of Sub-Sections (3A) and (3B) of Section 6 which were inserted by the said amendment which came into effect from 2-3-1972, was that for computing the ceiling area that a person would be entitled to hold in the State of Gujarat, his holding in other parts of India was also to be taken into account. The amended provisions had, therefore, a direct effect on the extent of holding of land by a person in the State of Gujarat, if he also held land in other State.
4. In some of the petitions, notices have been issued for reopening the 7 ceiling cases in light of these amended provisions; in some, notices have been issued to enable the petitioners to file their objections in connection with the proceedings in accordance with the amended provisions and in a few cases, orders have been passed pursuant to the amended provisions. The petitioners seek to challenge the action which is sought to be initiated against ^them in consequence of the amended provisions of the said Act.
5. It was contended by the Learned Counsel Mr. Arun H. Mehta, appearing for the petitioners that though, ostensibly die amended provisions of the Act deal with the lands in Gujarat, in reality, they affect die land holding outside the State of Gujarat, of persons who also hold land in Gujarat. He argued that in view of the provisions of Section 6(3A), the holding of a person who happens to hold land outside Gujarat is also taken into account. The provisions operate by virtue of an act or event taking place outside die State of Gujarat. Since extra-territorial factors were taken into account for affecting die holding of land by a person in this State, the Legislature had transgressed its confines under Article 245 of the Constitution of India in the guise of legislating on the question of holdings in Gujarat. Moreover, these provisions of the Act may leave a person without any land in Gujarat if he holds areas of land in other parts of India in excess of the ceiling area prescribsd under this Act. It was contended that the purpose of the law was to impose a ceiling and not to deprive a parson altogether of his holding by such process. It was, therefore, argued that the impugned provisions were a colourable peace of legislation and amounted to a fraud on the Constitution. Mr. Mehta further submitted that if the State wanted to legislate in a manner that would take into account the events occurring outside Gujarat and to affect persons residing outside Gujarat, who may be holding land in Gujarat, then the only course open to the State Legislature was to resort to the provisions of Article 252(1) of the Constitution under which States could approach the Parliament to enact a law which would have uniform applicability as was done while enacting the provisions of the Urban Land (Ceiling and Regulation) Act, 1976. He submitted that hi such an event, the subject would have stood transferred to Parliament and even if the enactment was made by the Parliament at the instance of two or more State Legislatures the other State Legislatures would have been denuded of their legislative powers on the same subject. Mr. Mehta placed heavy reliance on the Full Bench decision of the Bombay High Court in Shankarrao v. State of Maharashtra reported in 1980 Mah. LJ 888 (Special Civil Application No, 1571 of 1975, decided on 2-10-1980) by which the High Court declared certain provisions of Sections 3(2) and 43-A of the Maharashtra Agricultural Lands (Ceiling on Holidings) Act, 1961 as beyond the legislative competence of the State Legislature. The Full Bench decision was followed by the learned Judge in a later decision of that High Court in Tatoba Bhau Savagave v. Vasantrao Dhlndhiraj Deshpande and Ors. AIR 1992 Bom. 358, 363. The other Learned Counsel appearing for the petitioners in this group adopted the submissions of Mr. Aran Mebta.
6. The learned Advocate General appearing for the respondents, instructed by Mr. R.M. Chhaya, the learned Assistant Government Pleader, contended mat in view of the nature of Entry 18 of List II and Entry No. 42 of List III of the 7th Schedule to the Constitution, it was evident that the State Legislature had legislative competence to enact the provisions for prescribing the ceiling on holding agricultural lands and for providing for acquisition and disposal of surplus agricultural lands. He submitted that once the legislature had competence to enact the law on the subject, then its powers were plenary. He further argued that the principle of territorial nexus had to be applied and if sufficient nexus existed, then then would be no question of any extra-territorial operation of the law. He submitted that in the instant case, the amended provisions which are clialiengcd are applicable to lands in Gujarat and to the persons who hold in Gujarat. He submitted that this constituted adequate nexus to enable the legislature to make the impugned provisions. He argued that it was not accessary for the State Legislature to resort to the provisions of Article 252(1), even when the extent of holding of a person outside the State was taken into account for the purpose of computing the ceiling area that he can hold within the State. He submitted that even if two or more States were to approach the Parliament to make law under Section 252(1) on this subject, the powers of the other States, who do not choose to adopt that course, would remain intact under the said legislative Entry No. 18 of List II. It was further contended by him that the judgment of the Bombay High Court was based on innumerable illustrations and the constitutionality of law ought not to be decided by taking illustrations, but should be decided on the basis of principles, which in the instant case, would be the principle of territorial nexus, as can be discerned from various judgments of the Apex Court. He submitted that the agricultural economy is different in different parts of India and some Stales may not agree to a uniform approach like the approach which may be adopted in respsct of the urban areas, where the problems may be common. He also submitted that the question of colourable legislation would not arise, once it is found that Legislature has the legislative competence to make the law on the subject.
7. As perits Preamble, the said Act is an Act enacted to fix a ceiling I on holding agricultural land and to provide for the acquisition and disposal of surplus agricultural lands. The Bombay Tenancy and Agricultural Lands Act, 1948 imposed restriction upon holding agricultural lands in excess of certain limits in the State of Gajarat and as it was found expedient in the public interest to make a uniform provision for the whole State in respect of the restriction upon holding agricultural land in excess of certain limits and to secure the distribution of agricultural lands as best to subserve the common good to provide for acquisition of surplus agricultural land for the allotment thereof to persons who are in need of lands for agriculture and to provide for other consequential and incidental matters, the provisions of the said Act were enacted as proclaimed in the Preamble. The Amendment Act by which the impugned provisions were inserted was, as per its declaration contained in Section 2 of the Amendment Act, enacted for giving effect to the policy of the State towards securing principles specified in Clauses (b) and (c) of Article 39 of me Constitution of India and in particular, but without prejudice to the generality of the declaration, for providing that the ownership and control of the agricultural resources of the community are so distributed as best to subserve the common good, and also that the operation of the agricultural economic system does not result in the concentration of wealth and means of agricultural production to the common detriments It may be noted that the provisions of the said Act were included in Schedule IX to the Constitution of India at item No. 31 and of the Amendment Act at item No. 71 and therefore, the impugned provisions are immune from any attack on the ground of any inconsistency or abridgement of any rights conferred by Part III of the Constitution as provided in Article 3 IB. The constitutionality of the said Act was challenged before the Supreme Court in Hasmukhlul v. State of Gujarat reported in AIR 1976 SC 2316, wherein, of course the question of legislative competence was not pointedly raised and the Supreme Court holding that there was nothing to bar any statute from receiving a dual protection of both Articles 31A and 32B, if conditions of each are satisfied upheld the validity of the said Act.
8. For the purpose of ascertaining the legislative competence of the State Legislature, in respect of the provisions of the said Act, in so far as it legislates in respect of the land and rights in or over the land, Entry No. 18 of the State List II of the 7th Schedule to the Constitution would be relevant and the said Entry reads as under:
18. Land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents, transfer and alternation of agricultural land, land improvement and agricultural loans, colonization.
The other entry which may have bearing on the aspect of acquisition, of surplus agricultural land for the purpose of allotment to persons who are in need of lands for agriculture, as envisaged in the Preamble of the Act, would be Entry No. 42 of List III (Concurrent List) in the 7th Schedule to the Constitution and the said Entry No. 42 is as follows:
42. Acquisition and requisitioning of property.
The provisions of the said Act fixing a ceiling on holding agricultural land in the State of Gajarat and providing for acquisition and disposal of surplus agricultural lands, have their source of legislative competence in the aforesaid entries. The grievance voiced on behalf of the petitioners is that while making the impugned provisions, the State Legislature has transgressed its limits for eventhough it may enact the legislative provisions, for fixation of a ceiling on holding agricultural land and for providing for acquisition and disposal of such surplus agricultural lands, it could not legislate a provision which would operate in the territory of any other State and the provisions of Section 6(3A) of the Act operate in a manner that would affect the persons and events in other States. The provisions of Section 6(3A) of the Act which are assailed read as under:
6(3A). Where any person holds any land in any other part of the India, outside the Stale, then the area of land so held by him in such other part, not exceeding the maximum area of land which such person is entitled to hold in such other part of India under any law, if any, relating to ceiling of land, used or capable of being used for agricultural purposes, shall be excluded from the ceiling area in excess of which a person is not entitled to hold land under this section and the extent of land determined after so excluding such area shall in relation to such person, be deemed to be the ceiling area, to be held by him in this State:
Provided that where any such person disposes of, at any time before the determination of ceiling area under this Act, any land or part thereof so held by him in any other part of India outside the State in accordance with the provisions of law in force in such part, the area equal to the land or part thereof so disposed of shall not be excluded while determining the ceiling area, to be held by him in this State.
From Uie reading of the aforesaid provisions, it is clear that they are intended to compute ceiling area which could be held by a person in this State if he happened to bold any land in other parts of India. For the purpose of computing the ceiling area for the land that he can hold in the State, the area held by him in other parts of India, not exceeding the maximum area of land which such person is entitled to hold there, is to be excluded from the ceiling area that can otherwise be held under the provisions of the said Act. As per the proviso, such a person has an opportunity to dispose of, at any time before determination of ceiling area under this Act, any land or part thereof which may be held by him in any other part of India, in which event, such land would not be excluded while determining the ceiling area which he would be entitled to hold in this State under Sub-section (3A). As provided in Sub-section (4) of Section 6, the land in this State which, under the provisions of Section 6, a person is not entitled to hold shall be deemed to be surplus land held by such person. The purpose underlying the provision of Sub-section (3A) of Section 6 is to impose restriction on a holding of a person in the State if he also happens to hold agricultural lands in other parts of India. The provision is calculated to weed out those who are already having agricultural land in other parts of India, which is in excess of the ceiling area which he can hold under this Act. The provisions are in the nature of an eligibility criteria for holding land in this State. If a person already holds the land in excess of land that he could hold in the State, he is made disentitled from holding any land in Gujarat. If however, such person holds lands elsewhere which are less than the area that he could hold under this Act in the State of Gujarat, then he can hold in Gujarat the difference so as to reach the ceiling area as calculated for this purpose under Section 6(3A) of the Act. Possessing of agricultural land outside the State of Gujarat is therefore, considered as a relevant factor for deciding whether a person can hold agricultural land in this State and if so, to what extent. This his been assailed on behalf of the petitioners on the ground that it amounts to extra¬territorial operation of the State law. Expanding the contention on the basis of the Bombay High Court in Special Civil Application No. 1571 of 1975, rendered on 2-10-1980 (reported in 1980 Mah.LJ 888), it was contended that the Parliament is sovereign in the real sense of the term and it alone could legislate extra-territorial legislation. It was further argued on the basis of the decision of the Bombay High Court that mere accident of owning the lands in two States by the same person does not provide any connection between a holding in one State with the holding in the other State and two entirely unconnected events are being clubbed together for depriving a person from holding the land in Gujarat, upto the ceiling area which otherwise would have been available to the holder, but for the provisiuuy of Sub-section (3A) of Section 6 of the Act. It was further submitted that an event such as inheritance or partition which may take place outside the State of Gujarat will have an impact on the extent of the holding of a person in the State of Gujarat by virtue of the impugned provisions and this amounts to extra-territorial operation of the said Act. Relying further on the decision of the Bombay High Court, it was contended that a person who is not domiciled in Gujarat and resides in any other State is made criminally liable, if proper returns are not furnished in the event of his holding land in Gujarat.
9. The Full Bench of the Bombay High Court in the aforesaid decision, while construing the provisions of Sections 3(1)(2) and (3), 6, 10(3), 21A, 40A and 43 A of the Maharashtra Agricultural Lands Ceiling Act, 1961 struck down a portion of the provisions of Section 3(2) of that Act and a portion of Section 43A and the effect of that decision was to ignore the holding of a person in any other part of India. The High Court held that two entirely unconnected events of holding lands in two States were clubbed together and operation of the Act was upon properly, persons and events which were entirely beyond the territorial limits of Maharashtra. It was held that phenomenon of owning or acquiring property in other State directly resulted in losing a part of the property in the State of Maharashtra and therefore, the impugned provisions of Maharashtra Act operated upon the property outside the State, which amounted to extra-territorial operation of the provisions. The Full Bench, for the purpose of deciding the question of territorial nexus relied upon the decision of the Full Bench of the Bombay High Court rendered in the case of State v. Narayandas Mangilal . It was held that the operation of the impugned provisions of the Maharashtra Act had the effect of declaring an all India ceiling on land prescribed for a person which can be done only by a Central piece of legislation such as the Urban Land Ceiling Act. Comparing the provisions of the Maharashtra Act and the Gujarat Act, the Full Bench, reasoning on the basis of illustrations, observed that a person was likely to lose land in both the States.
10. The State Legislatures have exclusive powers to make laws in respect of matters which are enumerated in List IT of the 7th Schedule to the Constitution. The power of the State Legislatures of various States to make law on a particular subject included in the State List is plenary and might vary with the policy of the State as regards that subject. The exercise of legislative powers in respect of such subject would depend upon diverse regional factors and would be an aspect of legislative policy. It is quite likely that a State may pursue a legislative policy on the same subject quite different from the one pursued by the other States. However, no question of repugnancy arises in such matters because each State is competent to enact a provision which may differ from the provision of law made by the other State on the subject specially for the purpose of its own territory. Therefore, a comparison of the provisions of laws enacted by two States on the same subject with a view to demonstrate possible conflicts is not warranted. It is a matter of legislative policy whether to allow a person to hold land in the State when he already owns it in another State and not a matter of validity of the legislation. It is well settled that to determine whether a law is extra-territorial, the doctrine of territorial nexus must be applied. It must be seen whether the statute has selected some fact or circumstances which provides some real relation or connection with the territory in respect of which the legislature is entitled to legislate and has adopted this as a ground of its interference. If the legislation satisfies this test, its validity would not be open to question. Any fact, circumstance, occurrence or thing connected with the State could be made a basis of liability. Once real connection with the State of Gujarat appears, the Legislature of the State may make such connection, the occasion or subject of imposition of a liability. The connection with the territory of Gujarat must be a real one and the liability sought to be imposed must he pertinent to that connection. It will be seen from the provisions of the Act including the impugned provisions that the land in respect of which ceiling area is to be determined, are the lands situate in this State and the declaration of the surplus land is also in respect of the lands held in this State, The connection here is of a person holding lands in Gujarat. If ha does not hold land in Gujarat, the question of applicability of the provisions of the Act does not arise. Therefore, it is a real connection. Once he holds lands in Gujarat, the factor pertinent to that connection is as to how much of land he can hold here, if he holds lands elsewhere also. The consideration of his holding elsewhere in India, in our view, is undoubtedly an aspect pertinent to his entitlement of holding land in Gujarat. When within the State, a person is not allowed to keep land in excess of the ceiling determined, holding of a person elsewhere in India would be a relevant factor to decide whether he should be allowed to hold land and if so, how much of it. In pith and substance, the provisions of the Act including the impugned provisions are intended to operate in the field of holding land in the State. Indication of factors, which should be considered while assessing the ceiling upto which a person can hold land in the State would not, in our view, amount to legislation in respect of the land in the territory of other State. The method of computing of the ceiling area upto which a person can hold land as provided in Sub-section (3A) of Section 6 which takes into account his holding else wherein India is adopted only for the purpose of ultimately finding out whether such person can hold land in this State and to lake over die surplus land in this State for distribution to his less fortunate brethren in the State. In our view, therefore, there is sufficient nexus to entitle the State Legislature to make the impugned provisions. With utmost respect, we are unable to subscribe to the view expressed by the Bombay High Court in die Full Bench judgment that consideration of holding of a land by a person in another State for the purpose of computing the area that he can hold in this State would amount to clubbing together of two unconnected events or that it would amount to extra-territonaj legislation. The question whether a State can take into account the holding of a person elsewhere while legislating or imposing the ceiling on holding of land within the State under Entry 18 of the List II, has a bearing on the aspect of interpretation of its legislative power rather than raising any question of extra-territo-riality which may relate to legislative powers generally as is incorporated in Article 245(2) of the Constitution of India. For effective and just operation of the law, in respect of the subject for which undoubtedly the Legislature has competence to enact the law relevant factors can be taken into account and such factors may be operative from outside the territorial limits of the State. Mere consideration of such factors which existed outside the State, for the purpose of legislating in respect of the subject for which the Legislature is competent to make law, would not amount to extra-territorial legislation. Such considerations are part of the exercise of plenary legislative functions of the State. A legislative entry does not merely enunciate powers, it specifies a field of legislation and the widest import and significance should be attached to it. The power to legislate a specific topic includes the power to legislate in respect of the matters which may fairly and reasonably be said to be comprehended therein. Therefore, when the object of the law is to fix a ceiling on holding agricultural land in the State and to provide for the acquisition and disposal of surplus agricultural lands within the State, it cannot be said that such law cannot reasonably comprehend as to how much land a person holds elsewhere for ascertaining his entitlement to hold land within the State. By enacting the impugned provisions, it cannot, therefore, be said that in the form of exercise of its own power, the State has carried out an object which is beyond its powers or has committed a trespass on the exclusive powers of any other State. It cannot therefore, be said that there is any colourable exercise of legislative powers by the State of Gujarat in making the impugned provisions. In our view, the impugned provisions are within the legislative sphere of the State and have been validly enacted.
11. It was contended that under Section 9 of the Act the subsequent acquisition of excess land outside the State becomes illegal and the excess land is forfeited to the Stats Government. Therefore, even if land is acquired in other parts of India, it would be forfeited to the State Government and this would amount to extra-territorial operation of the State law. We are unable to agree with this argument. The provision regarding forfeiture under Section 9 was on the Statute book even before the amendment that introduced Sub-section (3A) in Section 6 was made and it is obviously intended to apply to the excess land held in this State which alone can be forfeited. The provision is not at all intended to effect forfeiture of laud held in any other part of India. That is the meaning which in our view should be attributed to the provisions of Section 9.
12. The earlier Full Bench decision in State v. Narayandas Mangilal Dayame on which reliance was placed by the Bombay High Court in Shankarrao's case (supra) dealt with the provisions of Sections 4(b) and 5 of the Bombay Prevention of Hindu Bigamous Marriages Act, 1946. The subject-matter of the said legislation was firstly marriage and secondly crime. The legislature had attempted to legislate with regard to marriages contracted beyond the limits of the State, though it could legislate only with regard to that marriage which is contracted with the territorial limits of the State. The marriage which was valid according to the law applicable to Bikaner was rendered void by Section 4 of the Bombay Act. The Full Bench held that if the legislature legislates with regard to marriages contracted beyond its limits, a territorial nexus has got to be discovered between the State and the marriage contracted outside the limits. The Court rejected the contention that domicile of a party to the marriage provided sufficient nexus. As regards Section 5 which constituted the bigamous marriage contracted beyond State limits as an offence, the Full Bench held that all crime is local and the fact that the offender lived in particular territory did not constitute a nexus between the crime and the State. The State legislature cannot declare that a particular act done outside the State should be a crime and the person committing it should be punished if he resides in the State of Bombay. The provisions of Section 4(b) of that Act were therefore declared as ultra vires the Bombay Legislature. This decision cannot help the petitioners as its ratio would apply to cases where there is no territorial nexus and yet the legislature attempts to legislate for regulating the acts done beyond its limits. In the present case there is sufficient territorial nexus between the State and the subject-matter of the legislation.
13. The question of extra-territorial operation of Stale Laws came to be considered by the Apex Court in its various important pronouncements. In the State of Karnataka v. Ranganatha Reddy , the Supreme Court in para 34 of it's judgment referred to the judgment of Justice Venkatarama Iyyer in the case of Bengal Immunity Co. Ltd. v. State of Bihar , 744, and observed that although Venkatarama lyyer, J. had dissented in regard to main controversy in that case, in his judgment, he had discussed very lucidly the concept of extra-territorial operation of a law. The concept has two connotations. It "...means a law of a State with reference to its citizens in respect of acts or events which take place outside the State. In discussing questions relating to extra-territorial operation, it is desirable that the two connotations of the words should be kept distinct and separate." The other connotation is the operation of the law itself to subjects or properties outside the territory of the State which has made the law. The Supreme Court held that the pith and substance of the Act has to be looked into and an incidental trespass would not invalidate the law. In para 200 of the separate judgment delivered by Vankataram lyyer, J. in Bengal Immunity Co. Ltd. (supra), the observations which has been approvingly referred to by the Supreme Court in the State of Karnataka v. Ranganatha Reddy (supra) are as under:
200. Coming now to the second contenton. the argument of the appellant is that in enacting that "No law of Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation" Article 245(2) prohibits by implication the enactment of such laws by the States. This contention is unsound. The words "extra-territorial operation" are used, as already stated, in two different senses as connoting firstly, laws in respect of acts or events which take place inside the State but have operation outside, and secondly, laws with reference to the nationals of a State in respect of their acts outside: that in its former sense, the laws are strictly speaking intra-territorial though loosely termed "extraterritorial", and that under Article 245(1) it is within the competence of the Parliament and of the State legislatures to enact laws with extra-territorial operation in that sense. The words "laws with extra-territorial operation" in Article 245(2) must be understood in their second and strict sense as having reference to the laws of a State for their nationals in respect of acts done outside the State. Otherwise, the provision would be redundant as regards the legislation by Parliament and inconsistent as regards laws enacted by Stales.
In State of Bihar v. Charusila Dasi , the Supreme Court held that it is wall-settled that there is a general presumption that legislature does not intend to exceed its jurisdiction and it is a sound principle of construction that the Act of a sovereign legislature should, if possible, receive such an interpretation as will make it, operative and not inoperative. The Supreme Court found that the circumstance that the temples where deities were installed were situated in Bihar, that the hospital and charitable dispensaries were to be established in Bihar, for the benefit of the public in Bihar gave enough territorial connection to enable the legislature of Bihar to make a law with respect to Trust situated in Bihar which may affect the trust property outside Bihar. It took note of the fact that the Supreme Court in its earlier decision had applied doctrine of territorial connection of nexus to income-tax legislation, sales tax legislation and also legislation imposing tax on gambling.
In Tata Iron & Steel Co. Ltd. v. State of Bihar AIR 1958 SC 452, it was pointed out that sufficiency of the territorial connection involved a consideration of two elements, namely (a) the connection must be a real and not illusory and (b) the liability sought to be imposed must be pertinent to that connection. In State of Bombay v. R.M.D. Chamarbaugwalla and Anr. , it was found that though the respondent who was the organiser of a prize competition was outside the State of Bombay, the paper, published from Bangalore, through which the prize competition was conducted had a wide circulation in the State of Bombay. It was also found that the activities which the gambler was ordinarily expected to undertake took place mostly in the State. In these circumstances, it was held that there was sufficient territorial nexus which entitled the State of Bombay to impose a tax on the gambling that took place within its boundaries and the law could not be struck down on the ground of extra-territorialiiy.
In Anandprasad L. Ganeriwal v. State of Andhra Pradesh and Ors. relying upon die decision in Charusila Dasi (supra), the Supreme Court found that where the Trust was situated in a particular State, the Liw of that State would apply to the Trust eventhough any part of the trust property, whether large or small, is situated outside the State where the Trust is situated.
In Arvind Mills Ltd. v. State of Gujarat , a Division Bench of This Court, considering the question as to whether the provisions of the Bombay Labour Welfare Fund Act, 1953, affecting the unclaimed dues of some employees who may have gone outside the State, was extra-territorial in operation, held that the unpaid accumulations defined under the Act would be earned by the employees within the Stale and the situs of the unpaid accumulations would also be within the State and these facts constituted sufficient territorial nexus to entitle the State legislature to make the impugned law providing for taking over and vesting of unpaid accumulations as bona vacmtia even in cases where the employees, to whom the unpaid accumulations are due, may be resident outside the State at the relevant time. Relying on the decisions of the Apex Court in context of the doctrine of territorial nexus, it was held that the theory of nexus as a principle of legislation must, now be held to be applicable to all kinds of legislations and the challenge to the constitutionality of the legislation must be tested by a reference to this principle. As pointed out hereinabove by us, sufficiency, of territorial connection which involves consideration of two elements, namely that the connection must be real and that the liability sought to be imposed must be pertinent to that connection has been established in the instant case. The impugned provisions, therefore, cannot be challenged on the ground of extra-territoriality. In our opinion, the Legislature is competent to enact these provisions.
Reliance was also placed on the decision in R.S.D.B. Finance Company Pvt. Ltd. v. Vallabh Glass Works Ltd. in which it is held that Gujarat Legislature was not competent to regulate, modify or extinguish obligations and liabilities incurred by a "relief undertaking" (declared as such under Section 3 of the Bombay Relief Undertaking (Special Provisions) Act, 1958) outside the State of Gujarat nor can it suspend or stay the suit or other proceedings relating to such obligations and liabilities. It was held that Section 4(1)(a)(iv) is not effective to suspend the plaintiffs right to money nor can it operate to stay the proceedings in the suit which was filed in the Bombay Court. It will be noticed that the said decision was rendered in the context of a summary suit which was filed against the company in the Original Civil Jurisdiction of the High Court of Bombay for the recovery of Rs. 10 lac as the principal amount with interest. The Supreme Court set aside the judgment of the Division Bench of the High Court and restored the judgment and decree passed by the learned single Judge by which a decree was passed in favour of the plaintiff. It appears that during the course of hearing of the appeal before the Supreme Court, it was brought to the notice of the Supreme Court that by a notification dated May 5, 1992, (issued subsequent to the filing of the S.L.P.) the defendant was declared a Relief Undertaking under Section 3 of the Bombay Relief Undertakings (Special Provisions) Act, 1958 as amended and applied to the Stale of Gujarat. It was sought to be contended that by virtue of the said declaration, the suit against the defendant undertaking shall have to remain suspended during the period of operation of the Notification as provided in Section 4(1)(a)(iv) of the said Act. It is in this context that the Supreme Court held that Section 4(1)(a)(iv) was not effective to suspend the plaintiff's right 10 money nor could it operate to stay the proceedings in the suit which were filed in the Bombay Court. If and when any execution was levied in the State of Gujarat and/or against the properties of the relief undertaking, situte within the State of Gujarat, they can be interdicted by the said Notification read with Section 4(1)(a)(iv) of that Act. In our opinion, this decision of the Supreme Court does not in any manner, support the case of the petitioners on their attack against constitutionality of the impugned provisions on the ground tint they are extra-territorial. There can be no dispute about the proposition that the State Legislatures do not possess power to make a law having extra-territorial effect and only the Parlianaint his that power under Article 245(2) of the Constitution. The Gujarat Legislature obviously cannot say that the obligations and liabilities incurred by a relief undertaking outside the State of Gujarat shall remain suspended during the period, the notification under Section 3 read with Section 4 of the Bombay Relief Under taken; (Amendment) Act is in operation and/or tint no suit or other proceedings can go on in a Court outside the State of Gajarat in respect of such an obligation/liability, as held by the Supreme Court. The Legislature could confer community upon a relief undertaking within State of Gujarat, but it cannot extend that immunity beyond its territorial bounds. This proposition laid down by the Supreme Court, does not help the petitioners because as we have held hereinabove, the impugned provisions of the said Act have no extra-territorial operation and they do not affect the holding of a person outside the State of Gujarat: They have a bearing only on the question of computing the ceiling area that a person can hold in Gujarat, when he also possesses lands elsewhere and it is only the lands in this State that can be declared surplus and be distributed in this State. Therefore, reliance ON the said decision of the Supreme Court is misplaced.
14. As regards the contention which was strenuously raised on behalf of the petitioners that if a State wants to legislate on a subject in the State List, while taking into account the factors or events outside the limits of the State, the only course available to it was to resort to the provisions of Article 252(1) of the Constitution, and it has no option but to approach the Parliament for such purpose as was done in the case of enacting the Urban Land Ceiling Act It was submitted that if this was not dune, then the exercise of enacting the provisions of Article 252(1) in the Constitution would be a futile exercise. It was submitted that if the State legislature had power to legislate on the subject contained to it by taking into account factors prevailed beyond its territorial limits, then there was no need to make tile provisions contained in Article 252(1) and even the Urban Land Ceiling Act could have been enacted by each Slate. In our view, this submission is fallacious and ignores the doctrine of territorial nexus which has been exclusively in the decisions of the Apex Court. If the subject falls exclusively 111 List 11 and in no other List, then the power of the Stale legislature is supreme. It would be wrong to say that the Parliament alone is sovereign. The very premises that the Parliament is sovereign and the States are something less, even as regards the powers which have been exclusively entrusted to them, will be incorrect in View of our constitutional scheme winch does not envisage that the parliament alone should be sovereign. As leeards the subjects exclusively eriirustcd to the States the States have plenary powers and if legislation is validly made on the doctrine of territorial nexus, ii cannot be questioned on the ground of exti-a-territonaliiy. The contention canvassed on behalf of the petitioners that when two States approach the Parliament to legislate in respect of any of the matter enumerated in the State List for which the Parliament has no powers to make laws, except as provided under Articles 249 and 250, the said subject stands transferred to the Parliament and thereafter, even order States will have no power to make law on that subject and their option would only be to adopt the law roads by the Parliament under Article 252(1), is against our Constitutional Scheme and devoid of any substance. The proposition canvassed will produce a startling result as it cannot he the intention behind the provisions of Article 252(1) to denude the other State Legislatures who do not approach the Parliament of their power to make laws, on the State subjects and to have the effect of transferring the entry from the State List to the Concurrent list. No such proposition emerges from the decision of the Supreme Court on which much reliance was placed on behalf of the petitioners, in Union of India v. Basavahia AIR. 1979 SC 1419, which was rendered in the context of the Urban Land (Ceiling and Regulation) Act. On the contrary die observations made in para 1 of the judgment to the effect that "In a Law relating to the imposition of ceiling on vacant land in urban agglomerations throughout the territory of India, it was competent for the parliament under Entry 18, List II of the Seventh Schedule not only to have the States specified in the Schedule to the Act where the law will extend, but also include the categorisation of urban agglomerations in respect of the whole of the territory of India" would go against the petitioners. The decision, of the Supreme Court in Union of India v. Basavahia (supra) in no way, detracts from the doctrine of territorial nexus on the basis of which the State Legislature, in our opinion, was competent to make, the impugned provisions. Moreover, in the instant case, there is no consider to consider any law made under Article 252(1) of the Constitution and therefore, the question which is sought to be raised on behalf of the petitioners is only a hypothetical one and does not really arise on the facts of this case. However, the contention that the State Legislature has no option but to approach the Parliament under Article 251(1) was seriously raised, but we have not found any merit in it and we are of the view that the power of the State Legislature which docs not subscribe to the Act of the Parliament made under Article 252(1), is in no way, affected and the legislature of the State in which the Act of Parliament enacted under Article 252(1) does not apply, is free to exercise its own legislative powers.
15. In view of the above discussion, we arc unable to accept the submissions made on behalf of the petitioners or to subscribe to the views of the Bombay High Court, on which reliance was placed on behalf of die petitioners for the purpose of assailing the impugned provisions. In our view, the impugned provisions arc within the legislative competeiice of the State legislature and these petitions must fail. The petitions are, therefore, rejected. Rule discharged with no order as to costs.
16. At this stage, the Learned Counsel for the petitioners apply for the certificate of fitness under the provisions of Articles 132 and 133 of the Constitution of India. In our opinion, the case does not involve any substantial question of law as to interpretation of the Constitution or any substantial question of law of general importance which is required to be decided by the Supreme Court. We, therefore, reject this oral request for a certificate of fitness.
17. The Learned Counsel appearing for the petitioners submits that taking of possession may be stayed for some time. It appears that the question of taking possession is not likely to arise in immediate future and proceedings have yet to go on in accordance with the provisions of the said Act. The learned Assistant Government Pleader also submits that the proceedings are not likely to get over in near future and the question of taking possession may not arise at this stage. It is, therefore, understood that the possession of the lands in dispute pursuant to the proceedings under the impugned Act will not be disturbed for a period of two months from today to enable the petitioners to approach the higher forum.