Doctrine of Territorial Nexus: Concept, Case Example, Exceptions

The Doctrine of Territorial Nexus is a legal principle that describes the scope and application of laws by different legislative bodies within India, especially the Parliament and State Legislatures. This Doctrine guarantees a clear and justifiable connection between the State and the subject matter of the legislation. Furthermore, it addresses the Territorial jurisdiction of laws and is particularly significant in understanding the limits of State legislative powers and the extent of extra-territorial legislation by Parliament. Read on to learn more about the Concept of the Doctrine of Territorial Nexus, a Case Example, and the Exceptions to the Doctrine. 

What is the Concept of Territorial Nexus?

The Doctrine of Territorial Nexus is a part of Article 245 of the Indian Constitution. It addresses the extent of laws made by the Parliament and State Legislatures. Moreover, the key provisions are:

• Parliament’s Authority: Parliament has the power to make laws for the whole or any part of the territory of India.
  • Additionally, it can enact “extra-territorial legislation,” which means that its laws apply not only to persons and property within India but also to Indian citizens and their property anywhere in the world.

• State Legislature’s Authority: A State Legislature can make laws for the whole or any part of the state. Unlike the Parliament, a State Legislature cannot enact “extra-territorial legislation.”

Therefore, it is clear that State laws are usually only applicable within the State. However, an exception exists. A state law with extra-territorial operation is valid if a sufficient nexus exists between the State and the object. Thus, this is known as the Doctrine of Territorial Nexus.

Also Read: What is the Doctrine of Eclipse?

Doctrine of Territorial Nexus Case Example

In Wallace v. Income Tax Commissioner of 1948, the Madras High Court’s decision highlighted the importance of economic activities and their territorial impact in deciding the applicability of taxation laws. 

• The case established that the Doctrine of Territorial Nexus is not solely reliant on physical presence.
• However, it also considers the economic footprint and significant business dealings within the State as valid grounds for taxation. 
• Hence, this ruling clarified the scope of state authority in taxation matters. 
• Thus, highlighting the evolving understanding of Territorial jurisdiction in Indian law.

Also Read: What is Doctrine of Pith and Substance?

Exceptions to the Doctrine 

The Doctrine of Territorial Nexus is not applicable in certain scenarios and here are the two cases. 

• The Khazan Singh case of 1973: The Supreme Court of India ruled that when a State government is operating under the Motor Vehicles Act it approves a scheme for inter-state routes for the State Transport Undertaking, the Doctrine does not restrict its authority.
  • For instance, the Court upheld the validity of a Uttar Pradesh scheme nationalising certain routes between UP and Rajasthan. 

• Article 298: The Supreme Court explained in the same case that States engaging in trade and business are not confined to their territorial boundaries. 

Thus, this ruling means that the Doctrine’s rules do not hinder a State’s ability to conduct trade beyond its borders.

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