Holding

Section 6(3A) of the Gujarat Agricultural Lands Ceiling Act, 1960, is intra‑territorial and falls within the Gujarat Legislature’s constitutional competence.

Summary

The appellants, owners of agricultural land in Gujarat as well as land in other Indian states, challenged Sections 6(3A), 4, 10 and 11 of the Gujarat Agricultural Lands Ceiling Act, 1960, on the ground that the provision which requires the land held outside Gujarat to be taken into account while computing the ceiling area is extra‑territorial and beyond the Gujarat Legislature’s competence under Articles 245 and 246 of the Constitution. The Gujarat High Court upheld the provisions; the appellants appealed to the Supreme Court. The Court examined the doctrine of territorial nexus and held that the Act’s nexus with land and persons situated within Gujarat is real and sufficient, and that merely considering land owned elsewhere for the purpose of fixing a ceiling on land within Gujarat does not make the law extra‑territorial. Consequently, the provisions are within the legislative competence of the State Legislature and are valid. The appeals were dismissed with costs.

Issues considered

Whether Section 6(3A) of the Gujarat Agricultural Lands Ceiling Act, 1960, which factors land owned outside Gujarat for computing the ceiling area, amounts to extra‑territorial legislation beyond the Gujarat State Legislature’s competence under Articles 245 and 246 of the Constitution.
Whether the doctrine of territorial nexus validates the inclusion of out‑of‑state land holdings in the ceiling calculation.

Legislation cited

Constitution of Indias. Article 245, s. Article 246, s. Article 39, s. Entry 18 List II, s. Entry 42 List III (7th Schedule)
Gujarat Agricultural Lands Ceiling Act, 1960s. 10, s. 11, s. 4, s. 6(3A)
Gujarat Agricultural Lands Ceiling (Amendment) Act, 1972

Subjects

legislative competenceextra‑territorial operationdoctrine of territorial nexusland ceilingagricultural landstate legislationConstitution of IndiaArticle 245Article 246

Judgment

A SHRIKANT BHALCHANDRA KARULKAR AND ORS. ETC. ETC.
v.
STATE OF GUJARAT AND ANR. ETC. ETC.

JULY 13, 1994

B (KULDIP SINGH AND YOGESHWAR DAYAL, JJ.]

Gujarat Agricultural Lands Ceiling Act, 1960-Sections 6(3A)4, JO and
I I-Fixation of ceiling in respect of agricultural lands within the State-Com-
puting ceiling area of a person who also owns land outside the State- Per-
C missible under section 6(3Af-Extra territorial operation of Act-Legislative
competence-Doctrine of territorial nexus-Applicability of

Constitution of India-Articles 245 and 246-Land Ceiling-Comput-
ing ceiling area of a person also owning land in another part of India outside
State of Gujarar-Permissible u/s 6(3A) of the Gujarat Agricultural Lands
D Ceiling Act, 1961>-Extra territorial operation of Act-Legislative competence
of State Legislature-Doctrine of territorial nexus-Applicability of.

The appellants, owners of agricultural lands in the State of Gujarat,
also held agricultural land outside the State of Gujarat. Notice were issued
E by the State for reopening the ceiling cases under the amended provisions
of Section 6(3A) of the Gujarat Agricultural Lands Ceiling Act, 1960,
taking into consideration the land owned by a person outside the State of
Gujarat while determining the ceiling area of a land owner in the State of
Gujarat. Appellants challenged the impugned provisions alleging that the
State Legislature has transgressed its legislative powers by making
F provisions orthe Act to operate in respect of persons and property beyond
the territorial jurisdiction of the State of Gujarat. The High Court having
dismissed the writ petitions, appellants preferred the present appeals.

Dismissing the appeals, this Court
G HELD : 1. 1. The State legislature bas no competence to make laws
which have extra-territorial operation. (573-H)

1.2. If there is a territorial nexus between the persons/property
subject matter of the State seek to comply with the provisions of the Act
H then the Act and the statute cannot be considered .as having ~-ter·
568
S.B. KARULKAR v. STATE OF GUJARAT 569

ritorial operation. Sufficiency of the territorial connection involves con- A
sideration of two elements, the connection must be real and not illusory
and the liability sought to be imposed under the Act must be relevant to
that connection. [573-F-G]

1.3. The provisions of the Act provide Jor fixation of ceiling in respect B
of the agricultural lauds which are within the territory of the State of
Gujarat. The declaration of the surplus land under the Act is also in respect
of the lands held by various persons in the State of Gujarat. The territorial
nexus is obvious. It is the land and the persons holding such land within the
territory of Gujarat to which the provisions of the Act are applicable. The
territorial connection is thus, real and sufficient and the liability sought to C
. be imposed under Section 6(3A) of the Act is directly in relation to that
connection. The factum of a person holding land outside the State of
Gujarat is undoubtedly an aspect pertinent to the question of his entitle·
ment under the Act to hold land iirthe State of Gujarat. There is no dispute
that within the State a ceiling can be rixed by law beyond which no person
can bold agricultural land, and if for determining the extent of said ceiling, D
the land held by a person outside the State is taken Into consideration, the
law pertaining to fixation of ceiling would not ~ome extra territorial. In
pith and substance the law remains to be a legislation Imposing the celling
on holding ofland within the State under Entry 18, List II read with Entry
42 List II, 7th Schedule to the Constitution of India. Therefore, when a E
statute fixes a celling on agricultural land holding within the State, It would
not become extra-territorial simply because it provides that while determin·
Ing the permissible area of a person under the said Statute the land owned
by him outside the State is to be taken into consideration. The impugned
provisions are within the legislative competence of the State legislature and F
have been validly enacted. [574-A-G]

Shankar Rao v. State of Maharashtra, W.P. No. 1527n5; decided on
02.10.1980 (Born) FB (Unreported), distinguished

CIVIL APPELLATE JURISDICTION : Interlocutory Application G
Nos.1-9.
IN
CIVIL APPEAL Nos. 5161-69 of 1993.

From the Judgment and Order dated 3.3.93 of the Gujarat High H
570 SUPREMECOURT REPORTS (1994] SUPP. 1 S.CR.

A Court in S.C.A. Nos. 5769/89, 1042/81, 1043/83, 5368/89, 5768/89, 5770,
5772, 5771/89 and 8570 of 1991.

WITH

CIVIL APPEAL No, 5170 of 1993..
B
From the Judgment and Order dated .3.3.93 of the Gujfilal High
Court in S.C.A. No. 534 of 1981.

G. Ramaswamy, R.F. Nfiliman, P.H. P<!rekh, S.H. Sanjanwalla, U.
Sagfil, Sudhir Walia, .and H.A. Richura for the Appellants.
c
S.K. Dholakia, Anip Sachthey, Ms. Wahi and Ms. Meenakshi Arora,
· for the Respondents;

The judgment of the Court was delivered by .

D KULDIP SINGH, J. The appellants challenged the validity of Sec-.
!ions 6(3A), 4, 10 and 11 of the Gujarat Agricultural Lands Ceiling Act
1960 (the Act) by w�y of. writ petitions under Article 226 of the Constitu
tion of India before the Gujarat High Court on the ground that these
provisions were eXtra-territorial in their operation .aud, .as such., were
beyond the legislative competence of the State Legislature under Article
E
245(1) of the Constitution of India. The High Court upheld the validity . of.
the provisions and dismissed the �it petitions. T)lese appeals by ':Nay of
special leave are against the judgment of the High Court..
·

The appellants are the owners of agricultural lands in the State of
F Gujarat. They also hold agricultural land in another part of India outside
the State of Gujarat. Section 6(3A) of the Act was inserted by the Gujarat •

Agricultural Lands Ceiling (Amendment) Act 1972 which provides for
computing the ceiling area of a person who also owns land in another part.
of India outside the State of Gujarat. It lays down that for computing the
ceiling area of such a person in the State of Gujarat, his holding in another
G part·of India has also to be taken into account. In respect of some of the
appellants notices wer� issued by the State of Gujarat for reopening the
ceiling cases under the amended provisions. In respect of other petitioners
either notices were issued under the amended provisions to enable them
to file their objections or final orders were passed pursuant to the said
� provisions.
S.B.KARULKAR v. STATEOFGUJARAT[KULDIPSINGH,J.) 571

Section 6(3A) of the Act is reproduced hereunder ;_· A
"6(3A). Where any person holds any land in any other part of the
India, outside the state, then of 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 on land, used or capable of being B
used for agricultural purposes, shall be excluded frooi 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.
c
Provided that where any such person disposes cif, at any ·(ime
before the determination of ceiling area under ihis Act, any land
or part thereof so held by him any other part of India outsid.e the
state in aceordance with the provisions of law in force in such part,
the area equal to the land or part thereof so disposed of. shall° nqt D
·
be excluded while determining the ceiling area, to be held by him .

in this State."
· ·· ' ·

It is clear from the plain language of Section 6(3A)of the Act that
for the purpose of computing the permissible area of a person in the State
of Gujarat the area: held by him in any other part of India, not exceeding E
the maximum area of land which such person is entitled to hold there, is
to be excluded from the permissible ceiling area udder the Act. In other
words, the ceiling area of land permissible under the Act is reduced by
deducting the area of the land owned by a person in another State - not
exceeding the maximum area .of land which such person is entitled to hold
in the other State - and whatever is the balance would be the ceiling area
F
in the State of Gujarat uoder the Act. If a person already holds land in
other State/States in excess of the ceiling provided uoder the Act, he
becomes disentitled to hold any land in the State of Gujarat. Holding
agricultural land outside the State of Gujarat is, thus, considered as a
relevant factor for deciding whether a person can. hold agricultural land in G
the State of Gujarat and if so,. to what extent.

·: Mr. G:Rarnswarny and Mr. R.F. Nariman, senior advocates, appear
ing for the· appellants, have vehemently contended·that.in pith•and sub
stance Section .6 (3A) of the Act has extra-territorial operation in the sense
that the land owned by a person outside the State of Gujarat is taken into H
i'
I-

572 SUPREME COURT REPORTS [1994) SUPP. l S.C.R.

consideration while deter.mining the ceiling area of a land-owner in the
State of Gujarat. Mr. Nari.man further contended that while examining the
question . of extra-territorial operation of a statute the effect of the
provisions of the statute on the rights of a citizen has to be taken into
considerationc We have given our thoughtful consideration to the argu-
ments ad~anced by the learned Counsel. We are not inclined to agree.
. B
The Act has been enacted to fix a ceiling on the agricultural holding
and to provide for the acquisition and disposal of surplus agricultural lands.
The Act provides a restriction upon holding agricultural land in excess of
the ceiling With the purpose of securing the distribution of agricultural
C lands ~s best "to subserve the common good and to provide for acquisition
of surplus agricultural land for distribution amongst the landless farmers.
Section· 6 (3A)"rif th~ Act has been enacted - as stated in the declaration
contained in Section 2 .of the Amendment Act - for giving effect to the
policy of tlie State iowards securing principles specified in clauses (b) and
D ,(c) of Article 39 of the Constitution of India and in particular f?r providing
tliat the ownership and control of the agricultural resources of the com-
mun.ity a~e so distributed as best to subserve the common good, and also
that the· operation of the agricultural economic system not result in the
coneent;ation of wealih and means of agricultural production to the detri-
ment Of the common j,eople. The Act and the Amendment Act have been
E included in the Ninth Schedule to the Constitution of India and as such
are ·tin;Iiune from challenge on the ground that !he provisions thereunder
irifract a'ny of the rights conferred by Part III of the. Constitution of India.
The Constitutional validity of the Act was upheld by ibis Court in Hasmukh
Lal v. ·State of Gujarat,. AIR (1976) SC 2316. The question of legislative
·competence,. however, was not pointell!y raised before this Court in the
F said'~e.

Entries 18 - List II - 42 List III, 7th Schedule Constitution of India
are as ilildet : -

G 'List II

18. Land, that is to say, rights in or over land, tenures including
the relation of landlord and tenant, and the collection of rents,
transfer andalternation of agricultural land, land improvement and
H agricultural loans, colonization.
S.B. KARULKAR v. STATE OFGUJARATIKULDIP SINGH, J.] ~-73

List-III A
42. Acquisition and requisitioning of property".

It is not disputed that the State Legislature derives the legislative com-
petence to enact the Act from the aforesaid entries. The grievance of the
appellants is that while enacting the impugned provisions the State Legis- B
lature has transgressed its legislative powers by making provisions of the
Act to operate in respect of persons and property beyond the territorial
jurisdiction of the State of Gujarat.

It is no doubt correct that under Articles 245 & 246 of the Constitu-
(_
tion of India the legislapire of a Stale can make law for the State or any
part thereof. It would lie overstepping the limits of its legislative field when
it purports to affect men and property outside the State. In other words
the State Legislature has no legislative competence to make laws which
have extra-territorial operation. Meaning of the words "extra-territorial
operation" have been authoritatively laid down by this Court in various D
judgments. A State Legislature has plenary jurisdiction to enact laws in
respect of subjects in Lists-II and III Schedule 7th Constitution of India.
Such laws may be in respect of persons within the territory, of property -
immovable or movable - situation within the State, or of acts and event:-.
which occur within its borders. So long as the law made by the Slate
Legislature is applicable to the persons residing within its territory oml '"
all things and acts within its territory, it cannot be considered extra-ter-
ritorial. This Court - over a period of three decades - has evolved a
principle called "doctrine of territorial nexus" to find out whether the
provisions of a particular State law have extra-territorial operation. The
doctrine is well-established and there is no dispute as to its principles. It
there is a territorial nexus between the persons/property subject-matter of F
the Act and the State seeking to comply with the provisions of the Act then
the Statute cannot be considered as having extra-territorial operation.
Sufficiency of the territorial connection involves consideration of two ele-
ments, the connection must be real and not illusory and the liability sought
to be imposed under the Act must be relevant to that connection. The Act G
has to satisfy the principles of territorial nexus which are essentially dis-
cernible from the factual application of the provisions of the Act.

The State Legislature has the legislative competence to enact the Act
under Entry 18 List-II read with Entry 42 List-III 7th Schedule Constitution
of Inc!ia. The lands - governed by the provisions of the Act - are situated H
574 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A within the territory of the State of Gujarat. The provisions of the Act
provide for fixation of ceiling in respect of'the agricultural lands which are
within the territory of the State of Gujarat. The declaration of the surplus
land under the Act is also in respect of the lands held by various persons
in the State of Gujarat. The territorial nexus is obvious. It is the land and
B the persons holding such land within the territory of Gujarat to which the
provisions of the Act are applicable. If a person has no land within the
State of Gujarat the provisions of the Act are not applicable to him or to
the land which he owns outside the territory of the State of Gujarat. The
sine qua non for the application of the provisions of the Act is the holding
of the land within the State of Gujarat. The territorial connection is thus,
C real and sufficient and the liability sought to be imposed under Section 6
(3A) of the Act is directly in relation to that connection. The factum of a
person holding land outside the State of Gujarat is undoubtedly an aspect
pertinent to the question of his entitlement under the Act to hold land in
State of Gujarat. There is no dispute that within the State a ceiling can be
. D fixed by law beyond which no person can hold agricultural land, and if for
determining the extent of said ceiling, the land held by a person outside
the State is taken into consideration, the law pertaining to fixation of ceiling
would not become extra-territorial. In pith and substance the law remains
to be a legislation imposing the ceiling on holding of land within the State
under Entry 18 List II read with 42 List III 7th Schedule Constitution of
E India. Mere consideration of some factors which exist 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 plenary legislative function of the State
Legislature. The legislative entries not only indicate the subjects for the
F exercise of legislative power but their scope is much wider in the sense that
they specify a field for legislation on the subject concerned. Therefore,
when a statute fixes a ceiling on agricultural land holding within the State,
it would not become extra territorial simply because it provides that while
determining the permissible area of a person under the said Statute the
land owned by him outside the State is to be taken into consideration. We
G are, therefore, of the view that the impugned provisions are within the
legislative competence of the State Legislature and have been validly
enacted.

The learned counsel for the appellants have placed reliance on the
H Full Bench judgment of the Bombay High Court in Shankar Rao v. State
S.B. KARULKAR v. STATE OF GUJARAT [KULDIP SINGH,J.] 575

of Maharashtra, Writ Petition No. 1572n5 and other connected matters A
decided on October 2, 1980. We have been taken through the judgment of
the Full Bench. Section 3(2) of the Maharashtra Agricultural Lands Act,
1961 (Bombay Act) which was struck down by the Bombay High Court was
as under:-

"All land held by a person or as the case may be a family unit B
whether in this state or any other patt of India in excess of the
ceiling area shall notwit.hstanding anything contained in any law
for the time being in force or usage be deemed to be surplus land
and shall be dealt. with in the manner hereinafter provided for
surplus land........" C
It is obvious that the proVisions of Section 6(3A) of the Act and Section
3(2) of the Bombay Act are entirely different. On the plain reading of
Section 3(2) of the Bombay Act it is patent that the Maharashtra Legisla-
ture was making law in respect of the land held by a person anywhere in
India. The expression "all land held by a person or as the case may be by D
a family unit whether in this State or any other part of India ......... " clearly
indicate the intention on the part of the Maharashtra Legislature to make
extra-territorial law. No assistance catt, . thus, be taken by the learned
couosel from the Full-Bench judgment of the Bombay High Court. Even
otherwise we are of the view that various observations made by the Learned E
Judges of the Bombay High Court are, rather, broadly stated and require
to be straightened, if necessary, in some appropriate proceedings.

The appeals are dismissed with costs. We quantify the costs as Rs.
10,000 in each appeal to be paid by each of the appellants.

AG. Appeals dismissed.
F