Supreme Court of India
GVK INDS. LTD. & ANR.versusTHE INCOME TAX OFFICER & ANR.
- Citation
- 2011 INSC 167
- Decided
- 1 March 2011
- Disposal
- Reference answered
- Bench
- S H KAPADIA
Holding
Parliament may legislate on extra‑territorial matters only if they have a real or expected nexus with India; it cannot make laws "for" foreign territories, and such laws are ultra vires.
Summary
GVK Industries Ltd. challenged a tax order that invoked sections 9(1)(i) and 9(1)(vii)(b) of the Income Tax Act, 1961, arguing that the provisions were unconstitutional for lacking a nexus with India. The High Court upheld the tax provision, relying on the ECIL judgment, prompting a Supreme Court reference to a Constitution Bench. The Bench examined whether Parliament can legislate on extra‑territorial matters without any impact on India and whether it can make laws "for" territories outside India. It held that Parliament's legislative competence under Article 245 is limited to matters that have a real or expected nexus with India and that laws without such nexus are ultra vires. Consequently, Parliament cannot enact laws "for" foreign territories, and any such legislation would be invalid. The Court answered the two constitutional questions and ordered the appeal to be listed for further disposal.
Issues considered
- Is Parliament constitutionally restricted from enacting legislation concerning extra‑territorial aspects or causes that have no direct or indirect impact on the territory of India or its inhabitants?
- Does Parliament have the power to legislate "for" any territory other than the whole or any part of India?
Legislation cited
- Constitution of Indias. Article 1, s. Article 2, s. Article 245(1), s. Article 245(2), s. Article 246, s. Article 248, s. Article 249, s. Article 250, s. Article 260, s. Article 51
- Income Tax Act, 1961s. 9(1)(i), s. 9(1)(vii)(b)
Subjects
Constitutional lawParliamentary legislative competenceExtra‑territorial legislationArticle 245Nexus doctrineIncome Tax ActJudicial reviewBasic structure doctrine
Judgment
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[2011] 3 S.C.R. 366
A GVK INDS. LTD. & ANR.
V.
THE INCOME TAX OFFICER & ANR.
(Civil Appeal No. 7796 of 1997}
MARCH 1, 2011
B
[S.H. KAPADIA CJI., B. SUDERSHAN REDDY, K. S.
RADHAKRISHNAN, SURINDER SINGH NIJJAR, AND
SWATANTER KUMAR, JJ.]
C CONSTITUTION OF IND/A, 1950:
Articles 245(1) and 245(2) read with Articles 51, 246, 248,
· 249, 250, 253 and 262 - Seventh Schedule Lists I and Ill -
Power of Parliament to legislate in respect of extra-territorial
0 aspects or causes - Held : Parliament has been constituted,
and empowered to, and that its core role would be to enact
laws to protect the interests, welfare and securif'/ of India -
Therefore, even those extra-territorial aspects or causes,
provided they have nexus with India, should be deemed to
E be within the domain of legislative competence of Parliament
except to the extent the Constitution itself specifies otherwise
- Parliament may exercise its legislative powers with respect
to extra-territorial aspects or causes - events, things,
phenomena (howsoever commonplace they may be),
resources, actions or transactions, and the like - that occur,
F arise or exist or may be expected to do so, naturally or on
account of some human agency, in the social, political,
economic, cultural, biological, environmental or physical
spheres outside the territory of lnd.'a, and seek to control,
modulate, mitigate or transform the effects of such extra-
G territorial aspects or causes, or in appropriate cases, eliminate
or engender such extra-territorial aspects or causes, only
when such extra-territorial aspects or causes have, or are
expected to have, some impact on, or effect in, or
H 366
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corsequences for: (a) the territory of India, or any part of India; A
or (b) the interests of, welfare of, wellbeing of, or security of
inhabitants of India, and Indians - Consequently, Parliament's
power to enact legislation, pursuant to clause (1) of Article 245
may not extend to those extra-territorial aspects or causes that
have no impact on or nexus with India -Any laws enacted by B
Parliament with respect to extra-territorial aspects or causes
that have no impact on or nexus with India, would be ultra
vires, and would be Jaws made for a foreign territory- Income
Tax Act, 1961 - ss.9(1)(1) and 9(1)(vii)(4).
Article 245(1) -Expression "for" "the whole or any part of C
the territory of India" - Connotation of- Explained.
Article 245(2) - Judicial review of an enactment - The
subject of Clause (2) of Article 245 is the law made by
Parliament, pursuant to Clause (1) of Article 245, and the D
object, or purpose, of Clause (2) of Article 245 is to specify
that a law so made by Parliament, for the whole or any part of
territory of India, should not be held to be invalid solely on
the ground that such laws require extra-territorial operation -
Clause (2) of Article 245 acts as an exception, of a particular E
and a limited kind, to the inherent power of the judiciary to
invalidate, if ultra-vires, any of the Jaws made by any organ
of the State - Clause (2) of Article 245 carves out a specific
exception that a law made by Parliament, pursuant to Clause
(1) of Article 245, for the whole or any part of the territory of F
India may not be invalidated on the ground that such a law
may need to be operated extraterritorially - Nothing more -
The power of the judiciary to invalidate laws that are ultra-vires
flows from its essential functions, constitutional structure,
values ana ~cheme, and indeed to ensure that the powers G
vested in the o. ~:ms of the State are not being transgressed,
and that they are being used to realise a public purpose that
subserves the general welfare of the people .... It is one of the
essential defences of the people in a constitutional
democracy. H
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368 SUPREME COURT REPORTS [2011] 3 S.C.R.
A INTERPRETATION OF CONSTITUTION :
Constitutional provision - Interpretation of - Held : In
interpreting any law, including the Constitution, the text of the
provision under consideration would be the primary source for
8 discerning the meanings that inhere in the enactment -
However, in the light of the serious issues it would always be
prudent, as a matter of constitutional necessity, to widen the
search for the true meaning, purport and ambit of the provision
under consideration - No provision, and indeed no word or
c expression, of the Constitution exists in isolation - They are
necessarily related to, transforming and in turn being
transformed by, other provisions, words and phrases in t.~'3
Constitution - Our Constitution is both long and also an
intricate matrix of meanings, purposes and structures - ff i~
0 only by locating a particular constitutional provision under
consideration within that constitutional matrix could one hope
to be able to discern its true meaning, purport and ambit -
When something is specified in an Article of the Constitution,
it is to be taken, as a matter of initial assessment, as nothing
E more was intended - Further, it is well known dicutum of
statutory and constitutional interpretation that when the same
words or phrases are used in different parts of the Constitution,
the same meaning should be ascribed, unless the context
demands otherwise.
F INTERPRETA T/ON OF STATUTES :
Interpretation of a statutory provision - Held : A
construction of provisions in a manner that renders words or
phrases therein to the status of mere surplt.;ssage ought to
G be avoided.
MAXIM:
'Expressio unius est exclusion alterius' - Applicability of.
H WORDS AND PHRASES:
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Expressions "aspects" and "causes", "object" and A
"provocation", "extraterritorial aspects or causes",
"extraterritorial law", "extraterritorial operation", "nexus with
India" - Connotation of in the context of article 245 of
Constitution of India.
B
The appellant filed a writ petition before the High
Court che''"11ging an order of the respondents whereby
the appellant was held liable for withholding a certain
portion of .monies being paid to a foreign company under
either of ss. 9(1){i) or 9(1)(vii){b) of the Income Tax Act, C
1961. T.he appellant also challenged the vires of s.
9(1 )(vii)(b) of the Income Tax Act, 1961 for want of
legislative competence and violation of Article 14 of the
Constitution of· 1ndia. The High Court held that s.
9(1)(vii)(b) and nots. 9(1)(i) applied to the facts of the case .
. and also upheld constitutional validity of the said 0
provision. The High Court mainly relied on the ratio of the
judgment of a three-Judge Bench of the Supreme Court
in ECIL1• The appeal challenging the said judgment was
listed before a two Judge Bench of the Supreme Court.
Keeping, in view that the far reaching issues of great E
constitutional purport and the fact that such issues had
been previously raised in ECIL, the matter, ultimately, was
referred to the Constitution Bench.
The questions for consideration before the Court F
were : (1) "Is the Parliament constitutionally restricted
from enacting legislation with respect to extra-territorial
aspects or causes that do not have, nor expected to have
any, direct or indirect, tangible or intangible impact(s) on,
or effect{s) in, or consequences for: (a) the territory of G
India, or any part of India; or (b) the interests of, welfare
of, wellbeing of, or security of inhabitants of India, and
Indians?" 2) "Does the Parliament have the powers to
legislate "for'' any territory, other .than the territory of India
or any part of it?" H
370 SUPREME COURT REPORTS [2011] 3 S.C.R.
A Answering the reference, the Court
HELD : 1.1 Our Constitution charges the various
organs of the State with affirmative responsibilities of
protecting the interests of, the welfare of and the security
B. oj the nation. Legislative powers are granted to enable
the accomplishment of the goals of the nation. The
powers of judicial review are granted in order to ensure
that legislative and executive powers are used within the
bounds specified in the Constitution. Consequently, it is
c imperative that the powers so granted to various organs
of the state are not restricted impermissibly by judicial fiat
such that it leads to inabilities of the organs of the State
in discharging their constitutional responsibilities.
Powers that have been granted, and implied by, and
0 borne by the Constitutional text have to be perforce
admitted. Neverthel~ss, the very essence of
constitutionalism is also that no organ of the state may
arrogate to itself powers beyond what is specified in the
Constitution. [para 27) [405-A-D]
E 1.2 It is the Constitution that is supreme, with true
sovereignty vesting in the people. In as much as that true
sovereign has vested some of their collective powers in
the various organs of the state, including Parliament,
· there cannot be the legal capacity to exercise that power
F in a manner that is not related to their interests, benefits,
welfare and security. [para 49) [417-A-B]
The Changing Constitution, Ed. Jowell & Oliver 2nd Edn.
Clarendon Press, Oxford (1989) by A.W. Bradley; and
G Studies in Constitutional Law by Colin R. Munro, 2nd Ed.
Butterworths, OUP (2005) -referred to.
1.3 Under our Constitution, while some features are
capable of being amended by Parliament, pursuant to the
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amending power granted by Article 368, the essential A
features - the basic structure - of the Constitution is
beyond such powers of Parliament. The power to make
changes to the basic structure of the Constitution vests
only in the people sitting, as a nation, through its
representatives in a Constituent Assembly. One of the B
foundational elements of the concept of basic structure
is it .would b: ... the stability of purpose, and machinery
of government to be able to pursue the constitutional
vision in to the indeterminate and unforeseeable future.
[para 26] [404-F-G; 405-A] C
Keshavanadna Bharati v. State of Kera/a 1973 Suppl.
SCR 1_= (1973) 4 SCC 225 and l.R. Coelho v. State of Tamil
Nadu 2007 (1 ) SCR 706 = (2007) 2 SCC 1 - relied on
1.4 In interpreting any law, including the Constitution, D
the text of the provision under consideration would be
the primary source for discerning the meanings that
inhere in the enactment. However, in the light of the
serious issues it would always be prudent, as a matter
of constitutional necessity, to widen the search for the E
true meaning, purport and ambit of the provision under
consideration. No provision, and indeed no word or
expression, of the Constitution exists in isolation - they
are necessarily related to, transforming and in turn being F
transformed by, other provisions, words and phrases in
the Constitution. Our Constitution is both long and also
an intricate matrix of meanings, purposes and structures.
It is only by locating a particular constitutional provision
under consideration within that constitutional matrix
could one hope to be able to discern its true meaning, G
purport and ambit. [para 28] [405-F-H; 406-A]
1.5 A construction of provisions in a manner that
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372 SUPREME COURT REPORTS [2011] 3 S.C.R.
A renders words or phrases therein to the status of mere
surplussage ought to be avoided. [para 31] [407-F]
2.1 The text of Clause (2) of Article 245, when read
together with Clause (1) of Article 245 of the Constitution
8 of India makes it sufficiently clear that the laws made by
Parliament relating to aspects or causes that occur, arise
or exist or may be expected to occur, arise or come into
existence within the territory of India may not be
invalidated on the ground that such laws require to be
c operated outside the territory of India. [para 10] [394-D-
E]
2.2 The implication of the nexus requirement is that
a law that is enacted by Parliament, whose "objects" or
"provocations" do not arise within the territory of India,
D would be unconstitutional. The words "object" and
"provocation", and their plural forms, may be conceived
as having been used in ECIL as synonyms for the words
"aspect" and "cause", and their plural forms, as used in
this judgment. In ECIL, the Court while interpreting
E Clauses (1) and (2) of Article 245, drew a distinction
between the phrases "make laws" and "extraterritorial
operation" - i.e., the acts and functions of making laws
versus the acts and functions of effectuating a law
already made. In drawing the distinction, two analytically
F separable, albeit related issues were considered. They
relate to the potential conflict between the fact that, in the
international context, the "principle of Sovereignty of
States" (i.e., nation-states) would normally be "that the
laws made by one State can have no operation in
G another State" (i.e., they may not be enforceable), and the
prohibition in Clauses (2) of Article 245 that laws made
by Parliament may not be invalidated on the ground that
they may need to be or are being operated extra-
H territorially. [para 11-12] [394-H; A-F]
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GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 373
ANR.
Electronics Corporation of lndiaLtd., v. Commissioner of A
Income Tax & Anr. (1989) 2 SCC 642 -referred· to. .
British Columbia Railway Company Limited v. King
[1946) A.C. 527-referred to.
8
2.3 The subject in focus in the first part of Clause (1)
of Article 245 is "the whole or any part of the territory of
India", and the object is to specify that it is Parliament
which is empowered to make laws in respect of the same.
[para 32] [407-G]
c
2.4 The word that links the subject, "the whole or any
part of the territory of India" with the phrase that grants
legislative powers to Parliament, is "for". It is used as a
preposition. The word "for", when ordinarily used as a
preposition, can signify a range of meanings between the D
subject, that it is a preposition for, and that which
preceded it. [para 33] [408-A-B]
2.5 Consequently, the range of senses in which the
word "for" is ordinarily used would suggest that, E
pursuant to Clause (j) of Article 245, Parliament is
empowered to enact those laws that are in the interest
of, to the benefit of, in defence of, in support or favour
of, suitable or appropriate to, in respect of or with
reference to "the whole or any part of the territory of F
India". [para 34) [408-D]
2.6 In as much as many extra-territorial aspects or
causes may have an impact on or nexus with the nation-
state, they would legitimately, and indeed necessarily, be G
within the domain of legislative competence of the
national parliament, so long as the purpose or object of
such legislation is to benefit the people of that nation ·
state. [para 35] [408-F-G]
2.7 Because of interdependencies and the fact that H
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374 SUPREME COURT REPORTS [2011] 3 S.C.R.
A many extra-territorial aspects or causes have an impact
on or nexus with the territory of the nation-state, it would
be impossible to conceive legislative powers and
competence of national parliaments as being limited only
to aspects or causes that arise, occur or exist or may be
B expected to do so, within the territory of its own nation-
state. Our Constitution has to be necessarily understood
as imposing affirmative obligations on all the organs of
the State to protect the interests, welfare and security of
India. Consequently, it has to be understood that
C Parliament has been constituted, and empowered to, and
that its core role would be to, enact laws that serve such
purposes. Therefore, even those extra-territorial aspects
or causes, provided they have a nexus with India, should
be deemed to be within the domain of legislative
D competence of Parliament, except to the extent the
Constitution itself specifies otherwise. [para 41) [412-0-
E]
3.1 In order to discern as to whether Parliament is
E empowered to enact laws in respect of extra-territorial
aspects or causes that have no nexus with India, and
furthermore could such laws be bereft of any benefit to
India, the word "for" again provides the clue. 'To legislate
for a territory' implies being responsible for the welfare
F of the people inhabiting that territory, deriving the powers
to legislate from the same people, and acting in a capacity
of trust. In that sense, Parliament belongs only to India;
and its chief and sole responsibility is to act as
Parliament of India and of no other territory, nation or
G people. There are two related limitations that flow from
this. The first one is with regard to the necessity, and the
absolute base line condition, that all powers vested in any
organ of the State, including Parliament, may only be
exercised for the benefit of India. All of its energies and
H focus ought to be directed only to that end. It may be the
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case that an external aspect or cause, or welfare of the A
people elsewhere may also benefit the people of lnd.ia.
The laws enacted by Parliament may enhance the welfare
of people in other territories too; nevertheless, the
fundamental condition - the benefit to or of India -
remains the central and primary purpose. That being the B
case, the logical corollary and, therefore, the second
limitation that flows thereof, would be that an exercise of
legislative powers by Parliament with regard to extra-
territorial aspects or causes that do not have, or may be
expected not to have any nexus with India, would C
transgress the first condition. Consequently, Parliament's
powers to enact legislation, pursuant to Clause (1) of
Article 245 may not extend to those extra-territorial
aspects or causes that have no impact on or nexus with
India. The word "for", that connects the territory of India D
to the legislative powers of Parliament in Clause (1) of
Article 245, when viewed from the perspective of the
people of India, implies that it is "our" Parliament, a
jealously possessive construct that may not be tinkered
with in any manner or form. [para 43-44] [412-H; 413-A- E
H]
3.2 The grant of the power to Parliament, in Clause
(1) of Article 245, to legislate, comes with a limitation that
arises out of the very purpose for which it has been F
constituted. That purpose is to continuously, and forever
be acting in the interests of the people of India. It is a
primordial condition and limitation. [para 45] [414-D]
3.3 No organ of the Indian State can be the repository
of the collective powers of the people of India, unless that G
power is being used exclusively for the welfare of India.
Incidentally, the said power may be used to protect, or
enhance, the welfare of some other people, also;
however, even that goal has to relate to, and be justified
H
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376 SUPREME COURT REPORTS [2011) 3 S.C.R.
A by, the fact that such an exercise of power ultimately
results in a benefit - either moral, material, spiritual or in
some other tangible or intangible manner - to the people
.
who constitute India. [para 45] [414-E-G)
3.4 The conclusion that Parliament may not legislate
8
for territories beyond India also derives interpretational
support from Article 51, a Directive Principle of State
Policy, though not enforceable, nevertheless,
fundamental in the governance of the country. To enact
C legislation with respect to extra-territorial aspects or
causes, without any nexus to India, would in many
measures be an abdication of the responsibility that has
been cast upon Parliament under Article 51. International
peace and security has been recognised as being vital
for the interests of India. This is to be achieved by India
0
maintaining just and honourable relations, by fostering
respect for international and treaty obligations etc., as
recogniZed in Article 51. It is one matter to say that
because certain extra-territorial aspects or causes have
E an impact on or nexus with India, Parliament may enact
laws with respect to such aspects or causes. That is
clearly a role that has been set forth in the Constitution,
and a power that the people of India can claim. How
those laws are to be effectuated, and with what degree
F of force or diplomacy, may very well lie in the domain of
pragmatic, and indeed ethical, statecraft that may, though
not necessarily always, be left to the discretion of the
Executive by Parliament. Nevertheless, that position is
very different from claiming that India has the power to
G interfere in matters that have no nexus with India at all.
To claim such powers, would be to make such powers·
available. Invariably available powers are used, and in this
case with a direct Impact on the moral force of India, and
its interests, welfare and security, by shattering the very
H concepts that under-gird peace between nations. By
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recognizing international peace to be sine qua non for A
India's welfare and security, the framers have charged the
State, and all of its organs, with responsibility to
endeavour to achieve the goals set forth in Article 51. To
claim the power to legislate for some other territories,
...
even though aspects or causes arising, occurring or 8
existing there have no connection to India, would be to
\
demolish the very· basis on which international peace
and security can be premised. [paras 46-47] [414-H; 415-
A-D-H; 416-A-B] ,/'
3.5 If one were to read Clause (2) of Article 245 as an
c
independent source of legislative power of Parliament to
enact laws for territories beyond India wherein, neither the
aspects or causes of such laws have a nexus with India,
nor the purposes of such laws are for the benefit of India,
it would immediately call into question as to why Clause D
(1) of Article 245 specifies that it is the territory of India
or a part thereof "for" which Parliament may make laws.
If the power to enact laws for any territory, including a
foreign territory, were to be read into Clause (2) of Article
245, the phrase "for the whole or any part of the territory E
of India" in Cl&;.cse (1) of Article 245 would become a mere
surplassage. When something is specified in an Article
of the Constitution it is to be taken, as a matter of initial
assessment, as nothing more was intended. In this case
it is the territory of India that is specified by the phrase F
"for the whole or any part of the territory of India."
"Expressio unius est exclusio alterius"- the express
mention of one thing implies the exclusion of another. In
this case, Parliament has been granted powers to make
laws "for" a specific territory - and that is India or any G
part thereof; by implication, one may not read. that
Parliament has been granted powers to make laws "for"
territories beyond India. [para 54] [419-F-H; 420-A-C]
3.6 It would be pertinent to note, that List I - Union H
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378 SUPREME COURT REPORTS [2011] 3 S.C.R.
A List of the Seventh Schedule clearly lists out many
matters that could be deemed to implicate aspects or
causes that arise beyond the territory of India. In
particular, but not limited to, note may be made of Entries
9 through 21 thereof. Combining the fact that Parliament
e has been granted residuary legislative powers and
competence with respect to matters that are not
enumerated in Concurrent and State Lists, [Article 248],
the fact that Parliament has been granted legislative
powers and competence over various matters, as listed
c in List I of the Seventh Schedule, many of which may
clearly be seen to be falling in the class of extra-territorial
aspects or causes, [Article 246], and the powers to make
laws "for the whole or any part of the territory of India",
[Article 245], it must be concluded that, contrary to the
o rigid reading of the ratio in ECIL, Parliament's legislative
powers and competence with respect to extra-territorial
aspects or causes that have a nexus with India was
considered and provided for by the framers of the
Constitution. Further, in as much as Article 245, and by
E implication Articles 246 and 248, specify that it is "for the
whole or any part of the territory of India" that such
legislative powers have been given to Parliament, it
logically follows that Parliament is not empowered to
legislate with respect to extra-territorial aspects or causes
F that have no nexus whatsoever with India. [para 59) [422-
D-H; 423-A]
3.7 When one looks at Articles 249 (conditions under
which Parliament may legislate with respect to matters in
List II of Seventh Schedule, wherein the Council of States
G has deemed it to be in national interest to do so) and 250
(ambit of Parliamentary powers as inclusive of
competence to legislate with respect to matters in the
State List while a Proclamation of Emergency is in
operation), one finds that legislative powers of Parliament
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are spoken of, in the said articles also, only in terms of A
as being "for the whole or any part of the territory of
India". Article 253 deals with legislation that may be
needed to give effect to various international agreements,
and again the powers are specified only in terms· of
making laws "for the whole or any part of the territory of B
India." It is a well known dictum of statutory and
constitutional interpretation that when the same words or
phrases are used in different parts of the Constitution, the
same meaning should be ascribed, unless the context
demands otherwise. In this case, there do not seem to be C
contextual reasons that would require reading a different
meaning into the expr:ession "for the whole or any part
of the territory" in the context of Articles 249, 250 or 253,
than what has been gathered from the text of Article 245.
[para 60] [423-C-G] D
3.8 Article 260, in Chapter II of Part XI is arguably the
only provision in the Constitution that explicitly deals
with the jurisdiction of the Union in relation to territories
outside India, with respect to all three functions of E
governance - legislative, executive and judicial. On
closer examination, Article 260 appears to further support
the conclusions arrived at by this Court with respect to
Article 245. [para 61]. [424-A-B]
3.9 It is clear from the text of Article 260 that it is the F
Government of India which may exercise legislative,
executive, and judicial functions with respect of certain
specified foreign territories, the Governments of which,
and in whom such powers have been vested, have
entered into an agreement with Government of India G
asking it do the same. Indeed, from Article 260, it is clear
that Parliament may enact laws, whereby it specifies the
conditions under which the Government of India may
enter into such agreements, and how such agreements
are actually implemented. [para 62] [424-E-F] H
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380 SUPREME COURT REPORTS [2011] 3 S.C.R.
A 3.10 Nevertheless, the fact, even in the sole instance
in the Constitution where it is conceived that India may
exercise full jurisdiction - i.e., executive, legislative and
judicial - over a foreign territory, is that such a jurisdiction
can be exercised only upon an agreement with the
B foreign government (thereby comporting with
international laws and principles such as "comity of
nations" and respect for "territorial sovereignty" of other
nation-states), and the manner of entering into such
agreements, and the manner of effectuating such an
C agreement has to be in conformity with a law specifically
enacted by Parliament (whereby the control of the people
of India over the actions of the Government of India, even
extra-territorially is retained), implies that it is only "for"
India that Parliament may make laws. In this regard
D support can also be drawn from the text of Articles 1 and
2. Consequently, the positive affirmation, in the phrase in
Clause (1) of Article 245, that Parliament "may make laws
for the whole or any part of the territory of India" has to
be understood as meaning that unless a territory is a part
E of the territory of India, Parliament may not exercise its
legislative powers in respect of such a territory. In the
constitutional scheme it is clear that Parliament may not
make laws for a territory, as a first order condition, unless
that territory is a part of India. [para 63, 64] [424-G-H; 425-
F A-B-E; 426-A-B]
Berubari Union and Exchange of Enclaves, Re AIR 1960
SC 845 - referred to.
3.11 Clearly, the statements that under our
G Constitution, Parliament has been given absolute powers
and, therefore, it can enact extra-territorial laws, are not
in comport with present day constitutional jurisprudence
in India that the powers of every organ of the State are
as provided for in the Constitution and not absolute. [para
H 67] [428-F]
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3.12 Indeed, it may be necessary for the State to A
possess some extraordinary powers, and exert
considerable force to tackle situation with regard to
foreign affairs or situations, both within and outside the
territory, in which the government claims the existence
of serious security risks or law and order problems. B
Nevertheless, all such powers, competence, and extent
of force have to be locatable, either explicitly or implicitly,
within the Constitution, and exercised within the four
corners of constitutional permissibility, values and
scheme. [para 68] C
3.13 In granting Parliament the powers to legislate
"for'' India, and consequently also with respect to extra-
territoria I aspects or causes, the framers of our
Constitution certainly intended that there be limits as to D
the manner in which, and the extent to which, the organs
of the State, including Parliament, may take cognizance
of extra-territorial aspects or causes, and exert the State
powers (which are the powers of the collective) on such
aspects or causes. The working of the principles of public E
trust, the requirement that all legislation by Parliament
with respect to extra-territorial aspects or causes be
imbued with the purpose of protecting the interests of,
the welfare of and the security of India, along with Article
51, a Directive Principle of State Policy, though not F
enforceable in a court of law, nevertheless fundamental
to governance, lends unambiguous support to the
conclusion that Parliament may not enact laws with
respect to extra-territorial aspects or causes, wherein
such c..:;pects or causes have no nexus whatsoever with G
India. [par."' 73] [432-G; 433-A-D]
3.14 Thus, Parliament is constitutionally restricted
from enacting legislation with respect to extra-territorial
aspects or causes that do not have, nor expected to have
H
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382 SUPREME COURT REPORTS [2011] 3 S.C.R.
A any, direct or indirect, tangible or intangible impact(s) on
or. effect(s) in or consequences for: (a) the territory of
India, or any part of India; or (b) the interests of, welfare
of, wellbeing of, or security of inhabitants of India, and
Indians. However, Parliament may exercise its legislative
B powers with respect to extra-territorial aspects or causes,
- events, things, phenomena (howsoever commonplace
they may be), resources, actions or transactions, and the
like - that occur, arise or exist or may be expected to do
so, naturally or on account of some human agency, in the
C social, political, economic, cultural, biological,
environmental or physical spheres outside the territory
of India, and seek to control, modulate, mitigate or
transform the effects of such extra-territorial aspects or
causes, or in appropriate cases, eliminate or engender
D such extra-territorial aspects or causes, only when such
extra-territorial aspects or causes have, or are expected
to have, some impact on, or effect in, or consequences
for: (a) the territory of India, or any part of India; or (b) the
interests of, welfare of, wellbeing of, or security of
E inhabitants of India, and Indians. [para 76) [435-A-F]
3.15 It is important to state and hold that the powers
of legislation of Parliament with regard to all aspects or
causes that are within the purview of its competence,
F including with respect to extra-territorial aspects or
causes as delineated above, and as specified by the
Constitution, or implied by its essential role in the
constitutional scheme, ought not to be subjected to some
a-priori quantitative tests, such as "sufficiency" or
G "significance" or in any other manner requiring a pre-
determined degree of strength. All that would be required
would be that tho connection to India be real or expected
to be real, and not illusory or fanciful. Whether a particular
law enacted by Parliament does show such a real
H connection, or expected real connection, between the
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extra-territorial aspect or cause and something in India A
or related to India and Indians, in terms of impact, effect
or consequence, would be a mixed matter of fact and of
law. Obviously, where Parliament itself posits a degree
of such relationship, beyond the constitutional
requirement that it be real and not fanciful, then the B
courts would have to enforce such a requirement in the ·
operation of the law as a matter of that law itself, and not
of the Constitution. [para 76] [435-G-H; 436-A-C]
Governor General in Council v. Raleigh Investment Co. c
Ltd. [1944] 12 ITR 265, Wallace Brothers and Co. v.
Commissioner of Income Tax, Bombay [1948] 16 ITR 240
and State v. Narayandas Mangilal Dayame AIR 1958 Born
68 - referred to.
Emmanuel Mortensen v. David Peters [1906]8 F (J.) 93, D
Croft v. Dunphy [1933] A.C. 156 - referred to.
4.1 The distinction drawn in ECIL between "make
laws" and "operation" of law is a valid one, and leads to
a correct assessment of the relationship between E
Clauses (1) and (2) of Article 245. [para 16] [397-E-F]
4.2 It is important to draw a clear distinction between
the acts & functions of making laws and the acts &
functions of operating the laws. Making laws implies the F
acts of changing and enacting laws. The phrase
operation of law, in its ordinary sense, means the
effectuation or implementation of the. laws. The acts and
functions of implementing the laws, made by the
legisla~.:"e, fall within the domain of the executive. G
Moreover, l."ie essential nature of the act of invalidating
a law is differE-•. : from both the act of making a law, and
the act of operating a law. Invalidation of laws falls
exclusively within the functions of the judiciary, and
occurs after examination of the vires of a particular law. H
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384 SUPREME COURT REPORTS [2011) 3 S.C.R.
A While there may be some overlap of functions, the
essential cores of the functions delineated by the
meanings of the phrases "make laws" "operation of laws"
and "invalidate laws" are ordinarily and essentially
associated with separate organs of the state - the
B legislature, the executive and the judiciary respectively,
unless the context or specific text, in the Constitution,
unambiguously points to some other association. [para
51] [417-F-H; 418-A-B]
c 4.3 In Article 245 the words and phrases "make laws"
"extra-territorial operation", and "invalidate" have been
used in a manner that clearly suggests that t::e
addressees implicated are the legislature, the executive
and the judiciary respectively. While Clause (1) uses th~
0 verb "make" with respect to laws, thereby signifying the
grant of powers, Clause (Z) uses the past tense of make,
"made", signifying laws that have already been enacted
by Parliament. The subject of Clause (2) of Article 245 is
the law made by Parliament, pursuant to Clause (1) of
E Article 245, and the object, or purpose, of Clause (2) of
Article 245 is to specify that a law so made by Parliament,
for the whole or any part of territory of India, should not
be held to be invalid solely on the ground that such laws
require extra-territorial operation. The only organ of the
F state which may invalidate laws is the judiciary. [para 52]
[418-C-E]
4.4 Consequently, the text of Clause (2) of Article 245
should be read to mean that it reduces the general and
inherent powers of the judiciary to declare a law ultra-
G vires only to the extent of that one ground of invalidation.
However, it must be noted, as regards the judiciary's
jurisdiction, that an a-priori, and a strained inference that
is unsupported by the plain meaning of the text may not
be made that the powers of the legislature to make laws
H
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ANR.
beyond the pale of judicial scrutir have been expanded A
over and above that which has been specified. [para 52]
[418-E-G]
4.5 Clause (2) of Article 245 acts as an exception, of
a particular and a limited kind, to the inherent power of B
the judiciary to invalidate, if ultra-vires, any of the laws
made by any organ of the State. It carves out a specific
exceptli:m that a law made by Parliament, pursuant to
Clause (1) of Article 245, for the whole or any part of the
territory of India may not be invalidated on the ground c
that such a law may need to be operated extraterritorially.
Nothing more. The power of the judiciary to invalidate
laws that are ultra-vires flows from its essential functions,
Constitutional structure, values and scheme, and indeed
to ensure that the powers vested in the organs of the o
State are not being transgressed, and that they are being
used to realise a public purpose that subserves the
general welfare of the people. It is one of the essential
defences of the people in a constitutional democracy.
[para 53] (419-B-E] E
4.6 Courts should always be very careful when vast
powers are being claimed, especially when those claims
are cast in terms of enactment and .implementation of
laws that are completely beyond the pale of judicial .
scrutiny and which the Constitutional text does -not F
unambiguously support. To readily accede to demands
for a reading of such powers in the constitutional matrix
might inevitably lead to a destruction of the complex
matrix that our Constitution is. A thorough textual
analysis, combined with wider analysis of constitutional G
topology, structure, values and scheme has revealed a
much more intricately provisioned set of powers to
Parliament Indeed, all the powers necessary for an organ
of the State to perform its role completely and to H
--
386 SUPREME COURT REPORTS [2011) 3 S.C.R.
A effectuate the Constitutional mandate, can be gathered
from the text of the Constitution, properly analysed and
understood in the wider context in which it is located. To
give in to such demands, would be to run the risk of
importing meanings and possibilities unsupportable by
B the entire text and structure of the Constitution. In the
cases dealing with external affairs, or with some claimed
grave danger or a serious law and order problem,
external or Internal, to or in India, It is even more important
that courts be extra careful. [para 74] [433-D-H; 434-A-B]
c
Woods v. Cloyd W. Miller Co., 333 U.S. 138- referred
to.
4.7 The point is about how much care should be
exercised in interpreting the provisions of the
D Constitution. Very often, what the text of the Constitution
says, when interpreted in light of the plain meaning,
constitutional topology, structure, values and scheme,
reveals the presence of all the necessary powers to
conduct the affairs of the State even in circumstances
E that are fraught with grave danger. [para 75] [434-G-H;
435-A]
4.8 Parliament has no powers to legislate "for" any
territory, other than the territory of India, or any part of it
F It is obvious that Parliament is empowered to make laws
with respect to aspects or causes that occur, arise or
exist, or may be expected to do so, within the territory of
India, and also with respect to extra-territorial aspects or
causes that have an impact on or nexus with India. Such
G laws would fall within the meaning, purport and ambit of
the grant of powers to Parliament to make laws "for the
whole or any part of the territory of India", and they may
not be invalidated on the ground that they may require
extra-territorial operation. Any laws enacted by
H Parliament with respect to extra-territorial aspects or
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ANR.
causes that have no impact on or nexus with India would A
be ultra-vires and would be laws made "for" a foreign
territory. [para 76] [435-D-G]
A.H. Wadia v. Commissioner of Income Tax,
Bombay[1949] 17 ITR 63 Rao Shiv Bahadur v. State of 8
Vindhya Pradesh AIR 1953 SC 394, Clark v. Oceanic
Contractors '"~ . [1983] A.C. 130 Shrikant Bhalchandra v.
=
State of Gujarat 1994 ( 1 ) Suppl. SCR 569 (1994) 5 SCC
459, and State of A.P. v. N. T.P.C. 2002 ( 3) SCR 278 =
(2002) 5 sec 203 - cited c
Ashbury v. Ellis [1893] A.C. 339 - cited.
Case Law Reference:
(1989) 2 sec 642 referred to para 3
D
[1946) A.C. 527 referred to para 13
[1944] 12 ITR 265 referred to para 24
[1948] 16 ITR 240 referred to para 24
E
[1906) 8 F (J.) 93 referred to para 24
[1933) A.C. 156 referred to para 24
AIR 1958 Born 68 referred to para 24
[1949) 17 ITR 63 cited para 24 F
AIR 1953 SC 394 cited para 24
[1983) A.C. 130 cited para 24
1994 (1) Suppl. SCR 569 cited para 24 G
2002 (3) SCR 278 cited para 24.
[1893) A.C. 339 cited para 24
i
1973 Suppl. SCR 1 relied on para 26
H
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388 SUPREME COURT REPORTS [2011) 3 S.C.R.
A 2CJ7 (1) SCR 706 relied on para 26
AIR 1960 SC 845 referred to para 64
333 U.S. 138 referred to para 74
B CIVIL APPELLATE JURISDICTION : Civil Appeal No.
7796 of 1997.
From the Judgment & Order dated 02.05.1997 of the High
Court of Andra Pradesh at Hyderabad in Writ Petition No. 6866
of 1995.
c
S. Ganesh, U.A. Rana, Mrinal Majumdar, Devina Seghal
(for Gagrat & Co.) for the Appellants.
Goolam E. Vahanvati, AG, Rupesh Kumar, Arijit Prasad,
D.D. Kamat, Rohit Sharma, Mihir Chatterjee, Nishanth Patil,
D Naila Jung, Anoopam Prasad, B.V. Balaram Das, Sushma
Suri for the Respondents.
The Judgment of the Court was delivered by
B.SUDERSHAN REDDY,J: 1. In any federal or quasi
E federal nation-state, legislative powers are distributed
territorially, and legislative competence is often delineated in
terms of matters or fields. The latter may be thought of as
comprising of aspects or causes that exist independently in the
world, such as events, things, phenomena (howsoever
F commonplace they may be), resources, actions or transactions,
and the like, that occur, arise or exist or may be expected to
do so, naturally or on account of some human agency, in the
social, political, economic, cultural, biological, environmental or
physical spheres. The purpose of legislation would be to seek
G the exertion of the State power to control, modulate, transform,
eliminate or engender such aspects or causes or the effects
or consequences of such aspects or causes. While the purpose
of legislation could be seen narrowly or purely in terms of
intended effects on such aspects or causes, obviously the
H powers have to be exercised in order to enhance or protect the
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GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 389
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interests of, the welfare of, the well-being of, or the security of A
the territory, and the inhabitants therein, for which the legislature
has been charged with the responsibility of making laws.
Paraphrasing President Abraham Lincoln, we can say that
State and its government, though of the people, and constituted
by the people, has to always function "for" the people, indicating B
that the mere fact that the state is organized as a democracy
does not necessarily mean that its government would always
act "for" the people. Many instances of, and vast potentialities
for, the flouting of that norm can be easily visualized. In
Constitutions that establish nation-states as sovereign C
democratic republics, those expectations are also transformed
into limitations as to how, in what manner, and for what
purposes the collective powers of th; people are to be used.
2. The central constitutional themes before us relate to D
whether the Parliament's powers to legislate, pursuant to Article
245, include legislative competence with respect to aspects or
causes that occur, arise or exist or may be expected to do so,
outside the territory of India. It is obvious that legislative powers .
of the Parliament incorporate legislative competence to enact E
laws with respect to aspects or causes that occur, arise or exist,
or may be expected to do so, within India, subject to the division
of legislative powers as set forth in the Constitution. It is also
equally obvious and accepted that only Parliament may have
the legislative competence, and not the state legislatures, to
enact laws with respect to matters that implicate the use of state F
power to effectuate some impact or effect on aspects or causes
that occur, arise or exist or may be expected to do so, outside
the territory of India. '
3. Two divergent, and dichotomous, views present G
themselves before us. ihe first one arises from a rigid reading
of the ratio in Electronics Corporation of India Ltd., v.
Commissioner of Income Tax & An'r., 1 ("ECIL") and suggests
that Parliaments powers to legislate incorporate only a
1. (1989) (2) sec 642-646. H
--
390 SUPREME COURT REPORTS [2011] 3 S.C.R.
A competence to enact laws with respect to aspects or causes
that occur, arise or exist, or may be expected to do so, solely
within India. A slightly weaker form of the foregoing strict
territorial nexus restriction would be that the Parliament's
competence to legislate with respect to extra-territorial aspects
B or causes would be constitutionally permissible if and only if
they have or are expected to have significant or sufficient impact
on or effect in or consequence for litfla. An even weaker form
of the territorial nexus restriction wouftl be that as long as some
impact or nexus with India is established or expected, then the
c Parliament would be empowered to. enact legislation with
respect to such extra-territorial aspects or causes. The polar
opposite of the territorial nexus theory, which emerges also as
a logical consequence of the propositions of the learned
Attorney General, specifies that the Parliament has inherent
0 powers to l~'gislate "for" any territory, including territories
beyond India, and that no court in India may question or
invalidate such laws on the ground that they are extra-territorial
laws. Such a position incorporates the views that Parliament
may enact legislation even with respect to extra-territorial
aspects or causes that have no impact on, effect in or
E consequence for India, any part of it, its inhabitants or Indians,
their interests, welfare, or security, and further that the purpose
of such legislation need not in any manner or form be intended
to benefit India.
F 4. Juxtaposing the two divergent views outlined above. we
have framed the following questions:
(1) Is the Parliament constitutionally restricted from enacting
legislation with respe::t to extra-territorial aspects or
causes that do not have, nor expected to have any, direct
G
or indirect, tangible or intangible impact(s) on, or effect(s}
in, or consequences for: (a} the territory of India, or any part
of India; or (b} the interests of, welfare of, wellbeing of, or
security of inhabitants of India, and Indians?
H (2) Does the Parliament have the powers to legislate "for"
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GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 391
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any territory, other than the territory of India or any part of A
it?
5. It is necessary to note the text of Article 245 and Article
1 at this stage itself:
"Article 245. Extent of laws made by Parliament and B
by the Legislatures of States - (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. C
(2) No law made by Parliament shall be deemed to be
invalid on the ground that it would have extra-territorial
operation."
"Article 1. Name and territory of the Union:- (1) India, D
that is Bharat, shall be a Union of States. (2) The States
and the territories thereof shall be as specified in the First
Schedule. (3) The territory of India shall comprise -
(a) The territories of the States; E
(b) the Union territories specified in tile First Schedule; and
{c) such other territories as may be acquired.~
II F
Meanings of some phrases and expressions used hereinafter:
6. Many expressions and phrases, that are used
contextually in the flow of language, involving words such as
"interest", "benefit", ''welfare", "security" and the like in order to G
specify the purposes of laws, and their consequences can,
have a range of meanings. In as much as some of those
expressions will be used in this judgment, we are setting forth
below a range of meanings that may be ascribable to such
expressions and phrases: H
392 SUPREME COURT REPORTS [2011] 3 S.C.R.
. '
A "aspects or causes" "aspects and causes":
events, things, phenomena (howsoever commonplace they
may be), resources, actions or transactions, and the like,
in the social, political, economic, cultural, biological,
environmental or physical spheres, that occur, arise, exist
8
or may be expected to do so, naturally or on account of
some human agency.
'
"extra-territorial aspects or causes•:"'
c aspects or causes that occur, arise, or exist, or may be
expected to do so, outside the territory of India.
"nexus with India", "impact on India", "effect in India", "effect on
India", "consequence for India" or "impact on or nexus with India"
D any impact(s)on, or effect(s) in, or consequences for, or
expected impact(s) on, or effect(s) in, or consequence(s)
for: (a) the territory of India, or any part of India; or (b)the
interests of, welfare of, wellbeing of or security of
inhabitants of India, and Indians in general, that arise on
E account of aspects or causes.
"benefit to India" or "for the benefit of India", "to the benefit of
India", "in the benefit of India" or " to benefit India" or "the
interests of India", "welfare of India", "well-being of India" etc.:
F protection of and/or enhancement of the interests of,
welfare of, well-being of, or the security of India (i.e., the
whole territory of India), or any part of it, its inhabitants and
Indians.
G Ill
Factual Background as to how the matter arose before us.
7. The Appellant by way of a writ petition filed in Andhra
Pradesh High Court had challenged an order of the
H
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Respondents which decided that the Appellant was liable to A
withhold a certain portion of monies being paid to a foreign
company, under either one of Sections 9(1)(i) or 9(1)(vii)(b) of
the Income Tax Act (1961). The Appellant had also challenged
the vires of Section 9(1)(vii)(b) of the Income Tax Act (1961)
for want of legislative competence .and violation of Article 14 B
of the Constitution. The High Court having upheld that Section
9(1 )(i) did not apply in the. circumstances of the facts of the
case, nevertheless upheld the applicability of Section 9(1)(vii)(b)
on the facts and also upheld the constitutional validity of the said
provision. The High Court mainly relied on the ratio of the c
judgment by a three judge bench of this court in ECIL. Hence,
the appeal.
8. The matter came up for consideration before a two judge
bench of this Court. In light of the far reaching issues of great
constitutional purport raised in this matter, the fact that such D
issues had been raised previously in ECIL, the referencing of
some of those issues by the three judge bench in ECIL to a
constitutional bench, and the fact that the civil appeals in the
ECIL case had also been withdrawn, a two judge bench of this
Court vide its order dated November 28, 2000, also referred E
the instant matts::r to a constitutional bench. On July 13, 2010,
the matter again came up for consideration before another three
judge bench of this court, and vide its order of the same date,
this matter came to be placed before us.
F
9. It is necessary for purposes of clarity that a brief
recounting be undertaken at this stage itself as to what was
conclusively decided in ECIL, and what was referred to a
constitutional bench. After conclusively determining that Clauses
(1) and (2) of Article 245, read together, impose a requirement G
that the laws made by the Parliament should bear a nexus with
India, the three judge bench in ECIL asked that a constitutional
bench be constituted to consider whether the ingredients of the
impugned provision, i.e., Section 9(1 )(vii) of the Income Tax Act
(1961) indicate such a nexus. In the proceedings before us, the
H
--
394 SUPREME COURT REPORTS [2011] 3 S.C.R.
A appellant withdrew its challenge of the constitutional validity of
Section 9(1)(vii)(b) of the Income Tax Act (1961), and elected
to proceed only on the factual matrix as to the applicability of
the said section. Nevertheless, the learned Attorney General
appearing for the Respondent pressed U:JOn this Constitutional
B Bench to reconsider the decision of the three judge bench in
the ECIL case. In light of the constitutional importance of the
·issues we agreed to consider the validity of the requirement of
a relationship to or nexus with the territory of India as a limitation
on the powers of the Parliament to enact laws pursuant to
c Clause (1) of Article 245 of the Constitution.
10. A further clarification needs to be made before we
proceed. The issue of whether laws that deal entirely with
aspects or causes that occur, arise or exist, or may be
expected to do so, within India, and yet require to be operated
D outside the territory of India could be invalidated on the grounds
of such extra-territorial operation is not before us. The text of
Clause (2/ of Article 245, when read together with Clause (1)
of Article 245 makes it sufficiently clear that the laws made by
the Parliament relating to aspects or causes that occur, arise
E or exist or may be expected to occur, arise or come into
existence within the territory of India may not be invalidated on
the ground that such laws require to be operated outside the
territory of India. We will of course deal with this aspect to the
extent that it is required for a proper appreciation of Clause (1)
F of Article 245, and to the extent the permissibility of such extra-
territorial operation has been sought to be, by the learned
Attorney General, extrapolated into a power to make any extra-
territorial laws.
IV
G
The ratio in ECIL:
11. The requirement of a nexus with the territory of India
was first explicitly articulated in the decision by a three judge
H Bench of this court in ECIL. The implication of the nexus
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requirement is that a law that is enacted by the Parliament, A
whose "objects" or "provocations" do not arise within the territory
of India, would be unconstitutional. The words "object" and
"provocation", and their plural forms, may be conceived as
having been used in ECIL as synonyms for the words "aspect"
and "cause", and their plural forms, as used in this judgment. B
.,., 12. The issue under consideration in ECIL was whether
Section 9(1 )(vii)(b) of the Income Tax Act (1961) was
unconstitutional on the ground that it constitutes a law with
respect to objects or provocations outside the territory of India, C
thereby being ultra-vires the powers granted by Clause (1) of
Article 245. Interpreting Clauses (1) and (2) of·Ar:ticle 245, Chief
Justice Pathak (as he then was) drew a distinction between the
phrases "make laws" and "extraterritorial operation" - i.e., the
acts and functions of making laws versus the acts and functions
of effectuating a law already made. D
In drawing the distinction as described above, the decision
in ECIL considered two analytically separable, albeit related,
issues. They relate to the potential conflict between the fact that,
in the international context, the "principle of Sovereignty of E
States" (i.e., nation-states) ~<;>uld."normally be "that the laws
made by one State can hsive no operation in another State"
(i.e., they may not be enfor~able), ang the prohibition in Clause
(2) of Article 245 that laws:..t!'~de .l:)y the Parliament may not
be invalidated on the ground lnat they may need to be or are F
being operated extra-territorially.
13. The above is of course a well recognized problem that
has been grappled with by courts across many jurisdictions in
the world; and in fact, many of the cases cited by the learned
Attorney General attest to the same. Relying on the ratio of G
British Columbia Railway Company Limited v. King, 2 the
principle that was enunciated in ECIL was that the problems
of inability to enforce the laws outside the territory of a nation
2. [1946] A.C. 527. H
396 SUPREME COURT REPORTS [2011) 3 S.C.R.
-
,...
A state cannot be grounds to hold such laws invalid. It was further
held that the courts in the territory of the nation-state, whose
legislature enacted the law, ought to nevertheless order that a
law requiring extra-ferritorial operation be implemented to the
extent possible with the machinery availab!~. It can of course
s be clearly appreciated that the said principle falls within the
. ambit of the prohibition of Clause (2) of Article 245. The same
was stated by Chief Justice Pathak (as he then was} thus:
"Now it is perfectly clear that it is envisaged under our
constitutional scheme that Parliament in India may make
c laws which operate extra-territorially. Art. 245(1} of the
Constitution prescribes the extent of laws made by the
Parliament. They may be made for the whole or any part
of the territory of India. Article 245(2} declares that no law
made by the Parliament shall be deemed to be invalid
D on the ground that it would have extra-territorial operation.
Therefore, a Parliamentary statute having extra-territorial
operation cannot be ruled out from contemplation. The
operation of the law can extend to persons, things and acts
outside the territory of lndia"3 (emph. added}.
E
14. However, the principle enunciated above does not
address the question as to whether the Parliament may enact
a law "for" a territory outside the boundaries of India. To enact
laws "for" a foreign territory could be conceived of in two forms.
F The first form would be, where the laws so enacted, would deal
with or be in respect of extra-territorial aspects or causes, and
the laws would seek to control, modulate or transform or in some
manner direct the executive of the legislating State to act upon
such extra-territorial aspects or causes because: (a) such extra-
territorial aspects or causes have some impact on or nexus with
G or to India; and (b) such laws are intended to benefit India. The
second form would be when the extra-territorial aspects do not
have, and neither are expected to have, any nexus whatsoever
H 3. Supra Note 1.
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ANR. [B. SUDERSHAN REDDY, J.]
with India, and the purpose of such legislation wou!d serve no A
purpose or goal that would be beneficial to India.
15. It was concluded in ECIL that the Parliament does not
have the powers to make laws that bear no relationship to or
nexus with India. The obvious question that springs to mind is: 8
''what kind of nexus?" Chief Justice Pathak's words in ECIL are
instructive in this regard, both as to the principle and also the
reasoning:
"But the question is whether a nexus with something in
India is necessary. It seems to us that unless such nexus C
exists Parliament will have no competence to make the
law. It will be noted that Article 245(1) empowers
Parliament to enact laws for the whole or any part of the
territory of India. The provocation for the Jaw must be
found within India itself. Such a iaw may have extra- D
territorial operation in order to subserve the object, and
that object must be related to something in India. It is
inconceivable that a law should be made by parliament
which has no relationship with anything in lndia." 4 ·
(emphasis added). E
16. We are of the opinion that the distinction drawn in ECIL
between "make laws" and "operation" of law is a valid one, and
leads to a correct assessment of the relationship between
Clauses (1) and {2) of Article 245. We will have more to say
about this, when we turn our attention to the propositions of the F
learned Attorney General.
17. We are, in this matter, concerned with what the
implications might be, due to use of words "provocation",
"objecl··, "in" and "within" in connection with Parliament's G
legislative ::iowers regarding "the whole or any part of the
territory of lno1" , on the understanding as to what aspects and/
or causes that the Parliament may legitimately take into
consideration in exercise of its legislative powers. A particularly
4. Supra note 1. H
398 SUPREME COURT REPORTS [2011) 3 S.C.R.
A narrow reading or understanding of the words used could lead
to a strict territorial nexus requirement wherein the Parliament
may only make laws with respect to objects or provocations -
or alternately, in terms of the words we have used "aspects and
causes" - that occur, arise or exist or may be expected to
B occur, arise or exist, solely within the territory of India,
notwithstanding the fact that many extra-territorial objects or
provocations may have an impact or nexus with India. Two
other forms of the foregoing territorial nexus theory, with weaker
nexus requirements, but differing as to the applicable tests for
c a finding of nexus, have been noted earlier.
v
The Propositions of the learned Attorney General:
18. It appeared that the learned Attorney General we.::.
D concerned by the fact that the narrow reading of Article 245,
pace the ratio in ECIL, could significantly incapacitate the one
legislative body, the Parliament, charged with the responsibility
of legislating for the entire nation, in dealing with extra-territorial
aspects or causes that have an impact on or nexus with India.
E India has a parliamentary system of governance, wherein the
Executive, notwithstanding its own domain of exclusive
operation, is a part of, and answerable to, the Parliament.
Further, given that the Executive's powers are co-extensive with
that of the Parliament's law making powers, such a narrow
F reading of Article 245 could significantly reduce the national
capacity to make laws in dealing with extra-territorial aspects
that have an impact on or nexus with India. Clearly, that would
be an anomalous construction.
G 19. In attacking such a construction, the learned Attorney
General appeared to have moved to another extreme. The
·1ritten propositions of the learned Attorney General, with
respect to the meaning, purport and ambit of Article 245,
quoted verbatim, were the following:
H 1. "There is clear distinction between a Sovereign
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Legislature and a Subordinate Legislature. A
2. It cannot be disputed that a Sovereign Legislature
has full power to make extra-territorial laws.
3. The fact that it may not do so or that it will exercise
restraint in this behalf arises not from a B
Constitutional limitation on its powers but from a
consideration of applicability.
4. This does not detract from its inherent rights to
make extra-territorial laws. c
5. In any case, the domestic Courts of the country
cannot set aside the legislation passed by a
Sovereign Legislature on the ground that it has
extra-territorial effect or that it would offend some
principle of international law. D
6. The theory of nexus was evolved essentially from
Australia to rebut a challenge to Income Tax laws
on the ground of extra-territoriality.
E
7. The principle of nexus was urged as a matter of
construction to show that the law in fact was not
extra-territorial because it had a nexus with the
territory of the legislating State.
8. The theory of nexus and the necessity to show the F
nexus arose with regard to State Legislature under
the Constitution since the power to make extra-
territorial laws is reserved only for the Parliamenr.
21. 11. as much as the issues with regard to operation of G
laws enactea '1y the various state legislatures are not before
us, we decline to .......press our opinion with respect to historical
antecedents of nexus theory in the context of division of powers
between a federation and the federal provinces. Given the fact
that the learned Attorney General has not further refined or
H
--
400 SUPREME COURT REPORTS [2011) 3 S.C.R.
A explicated the propositions as set forth above, we are
compelled to assume that he intended us to take it that the
Parliament should be deemed to have the powers and
competence as set forth below, which arise out of a rigorous
analysis of his propositions, and consequently examine them
8 in light of the text of Article 245.
22. The main propositions are that the Parliament is a
"sovereign legislature", and that such a "sovereign legislature
has full power to make extra-territorial laws." They can be
analysed in the following two ways:
c
(i) As a matter of first level of assessment, the phrase
"full power to make extra-territorial laws" wo1.ild
implicate the competence to legislate with respect
to extra-territorial aspects or causes that haw· ~n
D impact on or nexus with India, wherein the State
machinery is directed to achieve the goals of such
legislation by exerting force on such extra-territorial
aspects or causes to modulate, change, transform,
eliminate or engender them or their effects. At the
E next level, such powers would also implicate
legislative competence to make laws that direct the
state machinery, in order to achieve the goals of
such legislation, to exert force on extra-territorial
aspects or causes that do not have any impact on
or nexus with India to modulate, change, transform,
F
eliminate or engender them or their effects. We
take it that the learned Attorney General has
proposed that both the forms outlined above are
within the constitutionally permissible limits of
legislative powers and competence of the
G Parliament.
(ii) The same proposition can also be viewed from the
perspective of the goals that such •extra-territorial
laws" seek to accomplish, and the relationship of
H such goals to the territory for which such laws are
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intended to affect, as well as India. Modern A
jurisprudence, and not just international law. or
international ethics, does not support the view that
legislative commands that are devoid of justice can
be given the status of being "law". The extent of
abuse of the theory of "rule of law'', in its absolutist · B
sense, in history, and particularly in the 20th
Century, has effectively undermined the legitimacy
. of the notion that whatever the purpose that law
·seeks to achieve is justice. Consequently, we will
assume that the learned Attorney General did not C
mean that Parliament would have powers to enact
extra-territorial laws with respect to foreign
territories that are devoid of justice i.e., they serve
no benefits to the denizens of such foreign
territories. Arguably India, as a nation-state, has not D
been established, nor has it developed, with an
intent to be an expansionary or an imperialist power
. on the international stage; consequently we will also
not be examining the proposition that the extra-
territorial laws enacted the Parliament, and hence E
"for" that foreign territory, could be exploitative of the
denizens of another territory, and yet be beneficial
to India in its narrow sense. A valid argument can
also be made that such an exploitative situation
would be harmful to India's moral stature on the F
international plane, and also possibly deleterious to .
international peace, and consequently damaging to'
India's long run interests. To the extent that extra-
territorial laws enacted have to be beneficial to the
denizens of another territory, three implications G
arise. The first one is when such laws do benefit the
foreign territory, and benefit India too. The second
one is that they benefit the denizens of that foreign
territory, but do not adversely affect India's interests.
The third one would be when such extra-territorial
\; laws benefit the denizens of the foreign territory, but H
402 SUPREME COURT REPORTS [2011] 3 S.C.R.
A are damaging to the interests of India. We take it
that the learned Attorney General has proposed that
all three possibilities are within constitutionally
permissible limits of legislative powers and
competence of the Parliament.
B
23. The further proposition of the learned Attorney General,
is that courts in India do not have the powers to declare the
"extra-territorial laws" enacted by the Parliament invalid, on the
ground that they have an "extra-territorial effect", notwithstanding
C the fact: (a) that such extra-territorial laws are with respect to
extra-territorial aspects or causes that have no impact on or
nexus with India; (b) that such extra-territorial laws do not in any
manner or form work to, or intended to be or hew to the benefit
of India; and (c) that such extra-territorial laws might even be
detrimental to India. The word "extra-territorial-effect" is of a
D much wider purport than "extra-territorial operation", and would
also be expected to include within itself all the meanings of
"extra-territorial law" as explained above. The implication of the
prop6sed disability is not merely that the judiciary, under our
constitution, is limited from exercising the powers of judicial
E review, on specific grounds, over a clearly defined set of laws,
with a limited number of enactments; rather, it would be that the
judiciary would be so disabled with regard to an entire universe
of laws, that are undefined, and unspecified. Further, the
implication would also be that the judiciary has been stripped
F of its essential role even where such extra-territorial laws may
be damaging to the interests of India.
24. In addition the learned Attorney General has also
placed reliance on the fact that the Cl~use 179 of the Draft
G Constitution, was split up into .two separate clauses, Clause
179(1) and Clause 179(2), by the Constitution Drafting
Committee, and adopted as Clauses (1) and (2) of Article 245
in the Constitution. It seemed to us that the learned Attorney
General was seeking to draw two inferences from this. The first
H one seemed to be that the Drafting Committee intended Clause
179(2), and hence Clause (2) of Article 245, to be an
-- . GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 403
ANR. [B. SUDERSHAN REDDY, J.]
independent, and a separate, source of legislative powers to A
the Parliament to make "extra-territorial laws". The second
inference that we have been asked to make is that in as much
as Parliament has been explicitly permitted to make .laws
having "extra-territorial operation", Parliament should be
deemed to possess powers to make "extra-territorial laws", the e
implications of w:1ich have been more par:ticularly explicated
above. The learned Attorney General relied on the following
case law in support his propositions and arguments: Ashbury
v. Ellis 5 , Emmanuel Martens.en v. David Peters6 , Croft v.
Dunphy7, British Columbia Electric Railway Company Ltd. V. c
The King8, Governor General in Council v. Raleigh Investment
Co. Ltd. 9 , Wallace Brothers and Co. v. Commissioner of
Income Tax, Bombay1°, A.H. Wadia v. Commissioner of
Income Tax, Bombay11 and State v. Narayandas Mangilal
Dayame, 12 Rao Shiv Bahadur v. State of Vindhya Pradesh, 13 D
Clark v. Oceanic Contractors Inc., 14 Shrikant Bhalchandra v.
State of Gujarat, 15 and State of A.P. v. N. T.P.C. 16
VI
Constitutional Interpretation: E
25. We are acutely aware that what we are interpreting is
a provision of the Constitution. Indeed the Constitution is law,
5. [1893] A. c. 339.
6. [1906) 8 F (J.) 93. F
7. [1933) A.C. 156.
- 8. (1946) A.C. 527.
9. [1944] 12 ITR 265.
10. [1948) 16 !TR 240.
11. [1949) 17 ITR 63. G
12. AIR 1958 Bom 63.
13. AIR 1953 394.
14. [1983) A.C. 130.
15. (1994) 5 sec 459.
· 16. c2002) 5 sec 203. H
404 SUPREME COURT REPORTS [2011] 3 S.C.R.
--
A in its ordinary sense too; however, it is also a law made by the
people as a nation, through its Constituent Assembly, in a
foundational and a constitutive moment. Written constitutions
seek to delineate the spheres of actions of, with more or less
strictness, and the extent of powers exercisable therein by,
B various organs of the state. Such institutional arrangements,
though political at the time they were made, are also legal once
made. They are legal, inter-alia, in the sense that they are
susceptible to judicial review with regard to determination of
vires of any of the actions of the organs of the State constituted.
c The actions of such organs are also justiciable, in appropriate
cases, where the values or the scheme of the Constitution may
have been transgressed. Hence clarity is necessary with
respect to the extent of powers granted and the limits on them,
so that the organs of the State charged with the working of the
mandate of the Constitution can proceed with some degree of
0
certitude.
26. In such exercises we are of the opinion that a liberal
and more extensive interpretative analysis be undertaken to
ensure that the court does not, inadvertently and as a
E consequence of not considering as many relevant issues as
possible, unnecessarily restrict the powers of another
coordinate organ of the State. Moreover, the essential features
of such arrangements, that give the Constitution its identity,
cannot be changed by the amending powers of the very organs
F that are constituted by it. Under our Constitution, while some
features are capable of being amended by Parliament,
pursuant to the amending power granted by Article 368, the
essential features - the basic structure - of the Constitution is
beyond such powers of Parliament. The power to make
G changes to the basic structure of the Constitution vests only in
the people sitting, as a nation, through its representatives in a
Constituent Assembly. (See Keshavanadna Bharati v. State
of Kerala 11 and l.R. Coelho v. State of Tamil Nadu18). One of
11. (1973) 4 sec 22s.
H 1a. c2001) 2 sec 1.
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the foundational elements of the concept of basic structure is A
it would give the stability of purpose, and machinery of
government to be able to pursue the constitutional vision in to
the indeterminate and unforeseeable future.
27. Our Constitution charges the various organs of the
8
state with affirmative responsibilities of protecting the interests
of, the welfare of and the security of the nation. Legislative
powers are granted to enable the accomplishment of the goals
of the nation. The powers of judicial review are granted in order
to ensure that legislative and executive powers are used within
the bounds specified in the Constitution. Consequently, it is C
imperative that the powers so granted to various organs of the
state are not restricted impermissibly by judicial fiat such that
it leads to inabilities of the organs of the State in discharging
their constitutional responsibilities. Powers that have been
granted, and implied by, and borne by the Constitutional text D
have to be perforce admitted. Nevertheless, the very essence
of constitutionalism is also that no organ of the state may
arrogate to itself powers beyond what is specified in the
Constitution. Walking on that razors edge is the duty of the
judiciary. Judicial restraint is necessary in dealing with the E
powers of another coordinate branch of the government; but
restraint cannot imply abdication of the responsibility of walking
on that edge.
28. In interpreting any law, including the Constitution, the F
text of the provision under consideration would be the primary
source for discerning the meanings that inhere in the enactment.
However, in light of the serious issues it would always be
prudent, as a matter of constitutional necessity, to widen the
search for the true meaning, purport and ambit of the provision G
under consideration. No provision, and indeed no word or
expression, of the Constitution exists in isolation - they are
necessarily related to, transforming and in turn being
transformed by, other provisions, words and phrases in the
Constitution. Our Constitution is both long and also an intricate H
matrix of meanings, purposes and structures. It is only by
--
406 SUPREME COURT REPORTS (2011] 3 S.C.R.
A locating a particular constitutional provision under consideration
within that constitutional matrix could one hope to be able to
discern its true meaning, purport and ambit. As Prof. Laurence
Tribe points out:
"[T)o understand the Constitution as a legal text, it is
B
essential to recognize the ... sort of text it is: a constitutive
text that purports, in the name of the people ..... , to bring
into being a number of distinct but inter-related institutions
and practices, at once legal and political, and to define the
rules governing those institutions and practices." (See:
c Reflections on Free-Form Method in Constitutional
Interpretation)19
29. It has been repeatedly appreciated by this Court that
our Constitution is one of the most carefully drafted ones, where
D every situation conceivable, within the vast experience,
expertise and knowledge of our framers, was considered,
deliberate~ upon, and appropriate features and text chosen to
enable the organs of the State in discharging their roles. While
indeed dynamic interpretation is necessary, if the meaning
E necessary to fit the changed circumstances could be found in
the text itself, we would always be better served by treading a
path as close as possible to the text, by gathering the plain
ordinary meaning, and by sweeping our vision and
comprehension across the entire document to see whether that
F meaning is validated by constitutional values and scheme.
30. However, it can also be appreciated that given the
complexity and the length of our Constitution, the above task
would be gargantuan. One method that may be adopted would
be to view the Constitution as composed of constitutional
G topological spaces. Each Part of the Constitution deals with
certain core functions and purposes, though aspects outside
such a core, which are contextually necessary to be included,
also find place in such Parts. In the instant case Chapter 1, Part
XI, in which Article 245 is located, is one such constitutional
H 19. 108 Harv. L. Rev. 1221, 1235 (1995).
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topological space. Within such a constitutional topological A
space, one would expect each provision therein to be intimately
related to, gathering meaning from, and in turn transforming the
meaning of, other provisions therein. By locating the·
transformative effects within such constitutional topological
space, we would then be able to gather what the core, and B
untransformed features are. However, this method needs to be
carefully used - constitutional topological spaces are not to be
taken as water tight compartments, which when studied in
isolation would return necessarily unerring truths about the
Constitution. The potential that a transformative, or even a c
confirniative, understanding can emerge directly from any other
part of the Constitution is something that we must always be
cognizant of. Nevertheless, to the extent that the Constitution
has been arranged in a particular manner by our framers,
thereby giving us some guide posts for navigation of the text
0
and its implications for our socio-political lives, such
constitutional topological spaces, when primarily u5-ed for
validation of unambiguous textual meanings, would eas& our .
epistemological burdens.
VII E
Textual Analysis of Article 245:
31. Prior to embarking upon a textual analysis of Clauses
(1) and (2) of Article 245, it is also imperative that we bear in
mind that a construction of provisions in a manner that renders F
words or phrases therein to the status of mere surplussage
ought to be avoided. ·
32. The subject in focus in the first part of Clause (1) of
Article 245 is "the whole or any part of the territory of India", · G
and the object is to specify that it is the Parliament which is
empowered to make laws in respect of the same. The second
part of Clause (1) of Article 245 deals with the legislative
powers of State legislatures.
H
--
408 SUPREME COURT REPORTS [2011) 3 S.C.R.
A 33. The word that links the subject, "the whole or any part
of the territory of India" with the phrase that grants legislative
powers to the Parliament, is "for". It is used as a preposition.
The word "for'', when ordinarily used as a preposition, can signify
a range of meanings between the subject, that it is a preposition
B for, and that which preceded it:
"-prep 1 in the interest or to the benefit of; intended to go
to; 2 in defence, support or favour of 3 suitable or
appropriate to 4 in respect of or with reference to 5
representing or in place of.. ... 14. conducive or
conducively to; in order to achieve ... " (See: Concise
Oxford English Dictionary)20
34. Consequently, the range of senses in which the word
"for" is ordinarily used would suggest that, pursuant to Clause
D (1) of Article 245, the Parliament is empowered to enact those
laws that are in the interest of, to the benefit of, in defence of,
in support or favour of, suitable or appropriate to, in respect of
or with reference to "the whole or any part of the territory of
India".
E
35. The above understanding comports with the
contemporary understanding, that emerged in the 20th Century,
after hundreds of years of struggle of humanity in general, and
nearly a century long struggle for freedom in India, that the State
is charged with the responsibility to always act in the interest
F of the people at large. In as much as many extra-territorial
aspects or causes may have an impact on or nexus with the
nation-state, they would legitimately, and indeed necessarily,
be within the domain of legislative competence of the national
parliament, so long as the purpose or object of such legislation
G is to benefit the people of that nation state.
36. The problem with the manner in which Article 245 has
been explained in the ratio of ECIL relates to the use of the
words "provocation", and "object" as the principal qualifiers of
H 20. 8111 Ed., OUP (Oxford, 1990).
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"laws,· and then specifying that they need to arise "in" or "within" A
India. The word "provocation" generally implies a cause - i.e.,
an inciting or a motivating factor - for an action or a reaction
that seeks to control, eliminate, mitigate, modulate or otherwise
transform both the independently existing aspects in the world
and also their effects which had provoked or provokes the B
action or reaction. "Provocation" may also be used, in a
proactive sense, to signify the end or goal sought to be
achieved rather than in the reactive sense - as a response to
independently occurring aspects in the world. Similarly, the word
"object" can mean any aspect that exists independently in the c
world, of which a human agency takes cognizance of, and then
• . decides to take some action. In this sense the word "object"
would carry the same meaning as "provocation" in the first
'sense of that word delineated above. The word "object" can also
mean the end goal or purpose to be achieved by an action or D
a reaction to an independent aspect or cause in the world. In
legal discourse, particularly in the task of interpreting statutes,
and the law, the said words could be used in both the senses.
The tools of "purposive interpretation" and the "mischief rule"
ought to come to mind.
E
37. Consequently, the ratio of ECIL could wrongly be read
to mean that both the "provocations" and "objects" - in terms
_ of independent aspects or causes in the world - of the law
enacted by Parliament. pursuant to Article 245, must arise
· solely "in" or "within" the territory of India. Such a narrowing of F
the ambit of Clause (1) of Article 245 would arise by substituting
"in" or "within", as prepositions, in the place of "for" in the text
·of Article 245. The word "in", used as a preposition, has a much
narrower meaning, expressing inclusion or position within limits
· of space, time or circumstance, than the word "for". The G
consequence of such a substitution would be that Parliament
could be deemed· to not have the powers to enact laws with
respect to extra-territorial aspects or causes, even though such
aspects or causes may be expected to have an impact on or
nexus with India, and laws with respect to such aspects or H
causes would be beneficial to India ..
--
410 SUPREME COURT REPORTS (2011] 3 S.C.R.
A 38. The notion that a nation-state, including its organs of
governance such as the national legislature, must be concerned
only with respect to persons, property, things, phenomenon,
acts or events within its own territory emerged in the context of
development of nation-states in an era when external aspects
B and causes were thought to be only of marginal significance, if
at all. This also relates to early versions of sovereignty that
emerged along with early forms of nation-states, in which
internal sovereignty was conceived of as being absolute and
vested in one or some organs of governance, and external
c sovereignty was conceived of in terms of co-equal status and
absolute non-interference with respect to aspects or causes that
occur, arise or exist, or may be expected to do so, in other
territories. Oppenheim's International Law21 states as follows:
"The concept of sovereignty was introduced and
D developed in political theory in the context of the power of
the ruler of the state over everything within the state.
Sovereignty was, in other words, primarily a matter of
internal constitutional power .... The 20th century has seen
the attempt, particularly through the emergence in some
E instances of extreme nationalism, to transpose this
essentially internal concept of sovereignty on to the
international plane. In its extreme forms such a
transposition is inimical to the normal functioning and
development of international law and organization. It is als~
F inappropriate ..... no state has supreme legal power a ,d
authority over other states in general, nor are statHt.
generally subservient to the legal power and authority C'f
other states. Thus the relationship of states on the
international plane is characterized by their equality,
G independence, and in fact, by their interdependence."
39. On account of scientific and technological
developments the magnitude of cross border travel and
transactions has increased tremendously. Moreover, existence
H 21. Vol 1, "PEACE' 9th ed., page 125, 9 (Longman Group, UK, 1992).
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of economic, business, social and political organizations and · A
forms, of more or less determinate structure, and both
recognized and unrecognized, that operate across borders,
implies that their activities, even though conducted in one
territory may have an impact on or in another territory.
Externalities arising from economic activities, including but not B
limited to large scale exploitation of natural resources, and
consequent pressure on delicate global environmental balance,
are being recognized to be global in scope and impact. Global
criminal and terror networks are also examples of how events
and activities in a territory outside one's owri borders could c
affect the interests, welfare, well-being and secu•ity within. Many
other examples could also· be adduced. For instance, the
enablement, by law, of participation of the State in many joint,
multilateral or bilateral efforts at coordination of economic,
fiscal, monetary, trade, social, law enforcement activities, 0
reduction of carbon emissions, prevention or mitigation of war
in another region or maintenance of peace and security, etc.,
may be cited as additional examples of such inter-territorial
dependence.
40. Within international law, the principles of strict territorial E
jurisdiction hcde been relaxed, in light of greater
interdependencies, and acknowledgement of the necessity of.
taking cognizance and acting upon extra-territorial aspects or
causes, by principles such as subjective territorial principle,
objective territorial principle, the effects doctrine that the United F
States uses, active personality principle, protective principle
etc. However, one singular aspect of territoriality remains, and
it was best stated by Justice H.V. Evatt: "The extent of extra-
territorial jurisdiction permitted, or rather not forbidden, by
international law cannot always be stated with precision. But G
certainly no State attempts to exercise jurisdiction over matters,
persons, or things with which it has absolutely no concern." (See
Trustees Executors & Agency Co Ltd v. Federal
Commissioner of Taxation22). The reasons are not too far to
22. (1933) 49 CLR. 220 at 239. H
--
412 SUPREME COURT REPORTS [2011) 3 S.C.R.
A grasp. To claim the power to legislate with respect to extra-
territorial aspects or causes, that have no nexus with the territory
for which the national legislature is responsible for, would be
to claim dominion over such a foreign territory, and negation
of the principle of self-determination of the people who are
B nationals of such foreign territory, peaceful co-existence of
nations, and co-equal sovereignty of nation-states. Such claims
have, and invariably lead to, shattering of international peace,
and consequently detrimental to the interests, welfare and
security of the very nation-state, and its people, that the national
c legislature is charged with the responsibility for.
41. Because of interdependencies and the fact that many
extra-territorial aspects or causes have an impact on or nexus
with the territory of the nation-state, it would be impossible to
conceive legislative powers and competence of national
D · parliaments as being limited only to aspects or causes that
arise, occur or exist or may be expected to do so, within the
territory of its own nation-state. Our Constitution has to be
necessarily understood as imposing affirmative obligations on
all the organs of the State to protect the interests, welfare and
E security of India. Consequently, we have to understand that the
Parliament has been constituted, and empowered to, and that
its core role would be to, enact laws that serve such purposes.
Hence even those extra-territorial aspects or causes, provided
they have a nexus with India, should be deemed to be within
F the domain of legislative competence of the Parliament, except
to the extent the Constitution itself specifies otherwise.
42. A question still remains, in light of the extreme
conclusions that may arise on account of the propositions
G made by the learned Attorney General. Is the Parliament
empowered to enact .laws in respect of extra-territorial aspects
or causes that have no nexus with India, and furthermore could
such laws be bereft of any benefit to India? The answer would
have to be no.
H 43. The word "for" again provides the clue. To legislate for
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a territory implies being responsible for the welfare of the A
people inhabiting that territory, deriving the powers to legislate
from the.same people, and acting in a capacity of trust. In that
sense the Parliament belongs only to India; and its chief and
sole responsibility is to act as the Parliament of India and of
no other territory, nation or people. There are two related B
limitations that flow from this. The first one is with regard to the
necessity, and the absolute base line condition, that all powers
vested in any organ of the State, including Parliament, may only
be exercised for the benefit of India. All of its energies and
focus ought to only be directed to that end. It may be the case c
that an external aspect or cause, or welfare of the people
elsewhere may also benefit the people of India. The laws
enacted by Parliament may enhance the welfare of people in
other territories too; nevertheless, the fundamental condition
remains: that the benefit to or of India remain the central and D :a
primary purpose. That being the case, the logical corollary, and
hence the second limitation that flows thereof, would be that an
exercise of legislative powers by Parliament with regard to
extra-territorial aspects or causes that do not have any, or may
be expected to not have nexus with India, transgress the first
E
condition. Consequently, we must hold that the Parliament's
powers to enact legislation, pursuant to Clause (1) of Article
245 may not extend to those extra-territorial aspects or causes
that have no impact on or nexus with India.
44. For a legislature to make laws for some other territory F
would be to act in a representative capacity of the people of
such a territory. That would be an immediate transgression of
the condition that the Parliament be a parliament for India. The
word "for", that connects the territory of India to the legislative
powers of the Parliament in Clause (1) of Article 245, when G
viewed from tile perspective of the people of India, implies that
it is "our" Parliar.-::.-:it, a jealously possessive construct that may
not be tinkered with in any manner or form. The formation of
the State, and its organs, implies the vesting of the powers of
the people in trust; and that trust demands, and its continued H
--
414 SUPREME COURT REPORTS [2011] 3 S.C.R.
A existence is predicated upon the belief, that the institutions of
the State shall always act completely, and only, on behalf of the
people of India. While the people of India may repose, and
continue to maintain their trust in the State, notwithstanding the
abysmal conditions that many live in, and notwithstanding the
B differences the people may have with respect to socio-political
choices being made within the country, the notion of the
collective powers of the people of India being used for the
benefit of some other people, including situations in which the
interests of those other people may conflict with India's
c interests, is of an entirely different order. It is destructive of the
very essence of the reason for which Parliament has been
constituted: to act as the Parliament for, and only of, India.
45. The grant of the power to legislate, to the Parliament,
in Clause (1) of Article 245 comes with a limitation that arises
D out of the very purpose for which it has been constituted. That
purpose is to continuously, a11d forever be acting in the interests i
of the people of India. It is a primordial condition and limitation.
Whatever else may be the merits or demerits of the Hobbesian
notion of absolute sovereignty, even the leviathan, within the
E scope of Hobbesian logic itself, sooner rather than later, has
to realize that the legitimacy of his or her powers, and its actual
continuance, is premised on such powers only being used for
the welfare of the people. No organ of the Indian State can be
the repository of the collective powers of the people of India,
F unless that power is being used exclusively for the welfare of
India. Incidentally, the said power may be used to protect, or
enhance, the welfare of some other people, also; however, even
that goal has to relate to, and be justified by, the fact that such
an exercise of power ultimately results in a benefit - either
G moral, material, spiritual or in some other tangible or intangible
manner - to the people who constitute India.
46. We also derive interpretational support for our
conclusion that Parliament may not legislate for territories
beyond India from Article 51, a Directive Principle of State
H Policy, though not enforceable, nevertheless fundamental in the
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governance of the country. It is specified therein that: A
"Article 51. Promotion of international peace
and security-"State shall endeavour to -
(a) to promote international peace and security;
B
(b) maintain just and honourable relations between
nations;
(c) foster respect for international law and treaty
obligations in the dealings of organized peoples C
with one another; and
(d) encourage settlement if international disputes by
arbitration."
47. To enact legislation with respect to extra-territorial D
aspects or causes, without any nexus to India, would in many
measures be an abdication of the responsibility that lias been
cast upon Parliament as above. International peace and
security has been recognised as being vital for the interests of
India. This is to be achieved by India maintaining just and E
honourable relations, by fostering respect for international and
treaty obligations etc., as recognized in Article 51. It is one
matter to say that because certain extra-territorial aspects or
causes have an impact on or nexus with India, Parliament may
enact laws with respect to such aspects or causes. That is F
clearly a role that has been set forth in the Constitution, and a
power that the people of India can claim. How those laws are
to be effectuated, and with what degree of force or diplomacy,
may very well lie in the domain of pragmatic, and indeed ethical,
statecraft that may, though not necessarily always, be left to the
discretion of the Executive by Parliament. Nevertheless, that G
position is verv different from claiming that India has the power
to interfere in matters that have no nexus with India at all. To
claim such powers, would be to make such powers available.
Invariably available powers are used, and in this case with a
direct impact on the moral force of ,,.. ... ;a, and its interests, H
416 SUPREME COURT REPORTS [2011) 3 S.C.R.
--
A welfare and security, by shattering the very concepts that under-
gird peace between nations. By recognizing international
peace to be sine qua non for India's welfare and security, the
framers have charged the State, and all of its organs, with
responsibility to endeavour to achieve the goals set forth in
B Article 51. To claim the power to legislate for some other
territories, even though aspects or causes arising, occurring or
existing there have no connection, to India would be to demolish
the very basis on which international peace and security can
be premised.
c 48. For the aforesaid reasons we are unable to agree that
Parliament, on account of an alleged absolute legislative
sovereignty being vested in it, should be deemed to have the
powers to enact any and all legislation, de hors the requirement
that the purpose of such legislation be for the benefit of India.
D The absolute requirement is that all legislation of the Parliament
has to be imbued with, and at the core only be filled with, the
purpose of effectuating benefits to India. This is not just a
matter of the structure of our Constitution; but the very
foundation.
E
49. The arguments that India inherited the claimed
absolute or illimitable powers of the British parliament are
unacceptable. One need not go into a lengthy or academic
debate about whether in fact the British parliament always did,
F or as a matter of absolute necessity needs to, possess such
powers. There is a healthy debate about that, casting serious
doubts about the legal efficacy of such arguments. (See
Chapter 2: "The Sovereignty of Parliament - in Perpetuity?",
by A.W. Bradley in The Changing Constitution, Ed. Jowell &
G Oliver23 and Studies in Constitutional Law by Colin R. Munro24 }.
It is now a well accepted part of our constitutional jurisprudence
that by virtue of having a written constitution we have effectively
severed our links with the Austinian notion that law as specified
23. 2nc1 Ed. Clarendon Press, Oxford (1989).
H 24. 2nc1 Ed. Butterworths, OUP (2005)
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by a sovereign is necessarily just, and the Diceyan notion of A
parliamentary sovereignty. It is the Constitution that is supreme,
with true sovereignty vesting in the people. In as much as that
true sovereign· has vested some of their collective powers in
·the various organs of the state, including the Parliament, there
cannot be the IPgal capacity to exercise that power in a manner B
that is not related to their interests, benefits, welfare and
security.
50. We now turn our attention to other arguments put
forward by the learned Attorney General with regard to the C
implications of permissibility of making laws that may operate
extra-territorially, pursuant to Clause (2) of Article 245. In the
first measure, the learned Attorney General seems to be
arguing that the act and function of making laws is the same
as the act and function of "operating" the law. From that
posiUon, he also seems to be arguing that Clause (2) of Article D
· . 245 be seen as an independent source of power. Finally, the
thread of that logic then seeks to draw the inference that in as
much as Clause (2) prohibits the invalidation of laws on account
of their extra-territorial operation, it should be deemed that the
courts do not have the power to invalidate, - i.e., strike down E
as ultra vires -, those laws enacted by Parliament tbat relate to
any extra-territorial aspects or causes, not withstanding the fact
that many of such aspects or causes have no impact on or
nexus with India.
F
51. It is important to draw a clear distinction between the
acts & functions of making laws and the acts & functions of
operating the laws. Making laws implies the acts of changing
and enacting laws. The phrase operation of law, in its ordinary
sense, means the effectuation or implementation of the laws. G
The acts and functions of implementing the laws, made by the
legislature, fall within the domain of the executive. Moreover,
the essential nature of the act of invalidating a law is different
from both the act of making a law, and the act of operating a
law. Invalidation of laws falls exclusively within the functions of H
418 SUPREME COURT REPORTS [2011] 3 S.C.R.
--
A the judiciary, and occurs after examination of the vires of a
particular law. While there may be some overlap of functions,
the essential cores of the functions delineated by the meanings
of the phrases "make laws" "operation of laws" and "invalidate
laws" are ordinarily and essentially associated with separate
B organs of the state - the legislature, the executive and the
judiciary respectively, unless the context or specific text, in the
Constitution, unambiguously points to some other association.
52. In Article 245 we find that the words and phrases "make
laws" "extra-territorial operation", and "invalidate" have been
C used in a manner that clearly suggests that the addressees
implicated are the legislature, the executive and the judiciary
respectively. While Clause (1) uses the verb "make" with
respect to laws, thereby signifying the grant of powers, Clause
(2) uses the past tense of make, "made", signifying laws that
D have already been enacted by the Parliament. The subject of
Clause (2) of Article 245 is the law made by the Parliament,
pursuant to Clause (1) of Article 245, and the object, or purpose,
of Clause (2) of Article 245 is to specify that a law so made by
the Parliament, for the whole or any part of territory of India,
E should not be held to be invalid solely on the ground that such
laws require extra-territorial operation. The only organ of the
state which may invalidate laws is the judiciary. Consequently,
the text of Clause (2) of Article 245 should be read to mean
that it reduces the general and inherent powers of the judiciary
F to declare a law ultra-vi res only to the extent of that one ground
of invalidation. One thing must be noted here. In as much as
the judiciary's jurisdiction is in question here, an a-priori, and
a strained, inference that is unsupported by the plain meaning
of the text may not be made that the powers of the legislature
G to make laws beyond the pale of judicial scrutiny have been
expanded over and above that which has been specified. The
learned Attorney General is not only seeking an interpretation
of Article 245 wherein the Parliament is empowered to make
laws "for" a foreign territory, which we have seen above is
H impermissible, but also an interpretation that places those
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vaguely defined laws, which by definition and implication can A
range over an indefinite, and possibly even an infinite number,
of fields beyond judicial scrutiny, even in terms of the
examination of their vires. That would be contrary to the basic ·
structure of the Constitution. 25
8
53. Clause (2) of Ar.icle 245 acts as an exception, of a
particular and a limited kind, to the inherent power of the
judiciary to invalidate, if ultra-vires, ciny of the laws made by any
organ of the State. Generally, an exception can logically be re(ld
as only operating within the ambit of the clause to which it is
an exception. It acts upon the main limb of the Article - the more C
general clause - but the more general clause in turn acts upon
it. The relationship is mutually synergistic in engendering the
meaning. In this case, Clause (2) of Article 245 carves out a
specific exception that a law made by Parliament, pµrsuant to
Clause (1) of Article 245, for the whole or any part of the territory D
of India may not be invalidated on the ground that such a law
may need to be operated extraterritorially. Nothing more. The
power of the judiciary to invalidate laws that are ultra-vires flows
from its essential functions, Constitutional structure, values and
scheme.• and indeed to ensure that the powers vested in the E
organs of the State are not being transgressed, and that they
are being used to realise a public purpose that subserves the
general welfare of the people. It is one of the essential defences
of the people in a constitutional democracy.
54. If one were to read Clause (2) of Article 245 as an F
independent source of legislative power of the Parliament to
enact laws for territories beyond India wherein, neither the
aspects or causes of such laws have a nexus with India, nor
the purposes of such laws are for the benefit of India, it would
immediately call into question as to why Clause (1) of Article G
245 specifies that it is the territory of India or Ci part thereof"for"
which the Parliament may make laws. If the power to enact laws
for any territory, including a foreign territory, were to be read
into Clause (2) of Article 245, the phrase "for the whole or any .
25. Supra note 18. H
420 SUPREME COURT REPORTS [2011) 3 S.C.R. ··
--
A part of the territory of India" in Clause (1) of Article 245 would
become a mere surplassage. When something is specified in
an Article of the Constitution it is to be taken, as a matter of
initial assessment, as nothing more was intended. In this case
it is the territory of India that is specified by the phrase "for the
B whole or any part of the territory of India." "Expressio uni us est
exclusio alterius"- the express mention of one thing implies the
exclusion of another. In this case Parliament has been granted
powers to make laws "for'' a specific territory - and that is India
or any part thereof; by implication, one may not read that the
c Parliament has been granted powers to make laws "for"
territories beyond India.
55. The reliance placed by the learned Attorney General
on the history of changes to the pre-cursors of Article 245, in
the Draft Constitution, in support of his propositions is also
D inapposite. In fact one can clearly discern that the history of
changes, to Clause 179 of the Draft Constitution (which became
Article 245 In our Constitution), supports the conclusions we
have arrived at as to the meaning, purport and ambit of Article
245. The first iteration of Clause 179 of the Draft Constitution
E read, in part, as follows: "Subject to the provisions of this
Constitution, the Federal Parliament may make laws, including
laws having extra-territorial operation, for the whole or any part
of the territories of the Federation ...... " Clearly the foregoing
iteration shows that what was under consideration were the
F entire class of laws that the Parliament was to be empowered
to make "for the whole or any part of the territories of the
Federation ..... ", and included within that class were the laws
"having extra-territorial operation." Subsequently Clause 179 of
the Draft Constitution was split into two separate clauses 179
G (1) and 179(2). The learned Attorney General's arguments
suggest that the conversion of Draft Clause 179 into two
separate draft clauses, 179(1) and 179(2), should be
interpreted to mean that the framers of the Constitution intended
the two clauses to have a separate existence, independent of
H each other. We are not persuaded. The retention of the phrase
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"extra-territorial operation" as opposed to the phrase "extra- A
territorial laws" implies that the drafters were acutely aware.of
the difference between the meaning of the phrase "operation
of law" and the "making of law". Further, by beginning Clause
(2) of Article 245 with the phrase "No law made by the
Parliament...", it is clear that the drafting committee intended B
to retain the link with Clause (1) of Article 245. (See: The
Framing of India's Constitution, by The Project Committee,
Chairman B. Shiva Rao) 26 Thus we cannot view Clause (2) of
Article 245 as an independent source of legislative powers on
account of the history of various iterations of the pre-cursor to c
Article 245 in the Constituent Assembly.
VIII
Analysis of Constitutional Topological Space: Chapter 1, Part
~: D
56. We now turn to Chapter 1 Part XI, in which Article 245
is located, to examine other provisions that may be expected
to transform or be transformed by the meaning of Article 245
that we have discerned and explained above. In particular, the E
search is also for any support that may exist for the propositions
• of the learned Attorney General that the Parliament may make
laws for any territory outside India.
57. As is well known, Article 246 provides for the division
of legislative competence, as between the Parliament and the F
State legislatures, in terms of subjects or topics of legislation.
Clauses (1 ), (2) and (3) of Article 246 do not mention the word
territory. However, Clause (4) of Article 246 specifies that
Parliament has the. power to "make laws for any part of the
territory of India not included in a State" with respect to any G
matter, notwithstanding that a particular matter is included in
the State List. In as much as Clause (1) of Article 245 specifies
that it is for "the whole or any part of the territory of India" with
respect o'f which Parliament has been empowered to make
26. Vol. 3, Universal Law Publichsing Co. H
--
422 SUPREME COURT REPORTS [2011] 3 S.C.R.
A laws, it is obvious that in Article 246 legislative powers, whether
of Parliament or of State legiS!atures, are visualized as being
"for" the territory of India or some part of it.
'·"
58. Article 248 provides for the residuary power of
B legislation. However, in this instance, the Constitution speaks
of the powers of Parliament in terms of the subject matters or
fields of legislative competence not enumerated in Concurrent
and State lists in the Seventh Schedule, etc. Article 248 does
not mention any specific territory. Nevertheless, in as much as
it retains the link to Article 246, it can only be deemed that the
C original condition that all legislation be "for" the whole or some
territory of India has been retained.
59. It would be pertinent to note, at this stage that List I -
Union List of the Seventh Schedule clearly lists out many
D matters that could be deemed to implicate aspects or causes
that arise beyond the territory of India. In particular, but not
limited to, note may be made of Entries 9 through 21 thereof.
Combining the fact that the Parliament has been granted
residuary legislative powers and competence with respect to
E matters that are not enumerated in Concurrent and State Lists,
vide Article 248, the fact that Parliament has been granted
legislative powers and competence over various matters, as
listed in List I of the Seventh Schedule, many of which may
clearly be seen to be falling in the class of extra-territorial
F aspects or causes, vide Article 246, and the powers to make
laws "for the whole or any part of the territory of India", vide
Article 245, we must conclude that, contrary to the rigid reading
of the ratio in ECIL, Parliament's legislative powers and
competence with respect to extra-territorial aspects or causes
G that have a nexus with India was considered and provided for
by the framers of the Constitution. Further, in as much as Article
245, and by implication Articles 246 and 248, specify that it is
"for the whole or any part of the territory of India" that such
legislative powers have been given to the Parliament, it logically
H follows that Parliament is not empowered to legislate with
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respect to extra-territorial aspects or causes that have no nexus A
whatsoever with India. To the extent that some of the
implications of learned Attorney General's propositions only
reach such a limited reading of the legislative powers of the
Parliament, which nevertheless are not as restricted as the
narrow understanding of the ratio in ECIL may suggest, we are B
in partial agreement with the same.
60. When we look at Articles 249 (conditions under which
Parliament may legislate with respect to matters in List II of
Seventh Schedule, wherein the Council of States has deemed C
it to be in national interest to do so) and 250 (ambit of
Parliamentary powers as inclusive of competence to legislate
with respect to matters in the State List while a Proclamation
of Emergency is in operation) we find that legislative powers
of the Parliament are spoken of, in the said articles also, only
in terms of as being "for the whole or any part of the territory of D
India". Article 253 deals with legislation that may be needed to
give effect to various international agreements, and again the
powers are specified only in terms of making laws "for the whole
or any part of the territory of India." Nowhere within Chapter 1,
Part XI do we find support for the propositions of the learned E
Attorney General that the Parliament may make laws "for" any
territory other than the "whole or any part of the territory of India."
To the contrary, we only find a repeated use of the expression
"for the whole or any part of the territory of India." It is a well
known dictum of statutory and constitutional interpretation that F-
when the same words or phrases are used in different parts of
the Constitution, the same meaning should be ascribed, unless
the context demands otherwise. In this case, we do not see any
contextual reasons that would require reading a different
meaning into the expression "for the whole or any part of the G
territory" in the context of Articles 249, 250 or 253, than what
we have gathered from the text of Article 245.
•• IX
. Wider Structural Analysis: H
--
424 SUPREME COURT REPORTS [2011] 3 S.C.R. •
A 61" Article 260, in Chapter II of Part XI is arguably the only
provision in the Constitution that explicitly deals with the
jurisdiction of the Union in relation to territories outside India,
with respect to all three functions of governance - legislative,
executive and judicial. Learned Attorney General did not point
s to this Article as lending particular support for his propositions.
However, on closer examination, Article 260 appears to further
support the conclusions we have arrived at with respect to
Article 245. It provides as follows:
"Article 260. Jurisdiction of the Union in relation to
c territories outside India - The Government of India may
by agreement with the Government of any territory not
being part of the territory of India undertake any executive,
legislative or judicial functions vested in the Government
of such territory, but every such agreement shall be subject
D to, and governed by, any law relating to the exercise of ·
foreign jurisdiction for the time being in force."
62. It is clear from the above text of Article 260 that it is
the Government of India which may exercise legislative,
E executive, and judicial functions with respect of certain specified
foreign territories, the Governments of which, and in whom such
powers have been vested, have entered into an agreement with
Government of India asking it do the same. Indeed, from Article
260, it is clear that Parliament may enact laws, whereby it
F specifies the conditions under which-the Government of India
may enter into such agreements, and how such agreements are
actually implemented,
63. Nevertheless, the fact even in the sole instance, in the
Constitution, where it is conceived that India may exercise full
G jurisdiction - i.e., executive, legislative and judicial - over a
foreign territory, that such a jurisdiction can be exercised only
upon an agreement with the foreign government (thereby
comporting with international laws and principles such as
"comity of nations" and respect for "territorial sovereignty" of
H other nation-states), and the manner of entering into such
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agreements, and the manner of effectuating such an agreement A
has to be in conformity with a law specifically enacted QY the
Parliament (whereby the control of the people of India ovef the
actions of the Government of India, even extra-territorially is
retained), implies that it is only "for'' India that Parliament may
make laws. The Parliament still remains ours, and exclusiveiy B
ours. Though the Government of India, pursuant to Article 260,
acts on behalf of a foreign territory, there is always the
Parliament to make sure that the Government of India does not
act in a manner that is contrary to the interests of, welfare of,
well-being of, or the security of India. The foregoing is a very c
different state of affairs from a situation in which the Parliament
itself acts on behalf of a foreign territory, as implicated by the
expression "make extra-territorial laws". The former comports
with the notions of parliamentary democracy in which the people
ultimately control the .Executive through their Parliament; while 0
the latter indicates the loss of control of the people themselves
over their elected representatives. ·
64. The text of Articles 1 and 2 leads us to an irresistible
conclusion that the meaning, purport and ambit of Article 245
is as we have gathered above. Sub-clause (c) of Clause (3) of E
Article 1 provides that territories not a part of India may be
acquired. The purport of said Sub-Clause (c) of Clause 3 of
Article 1, pace Berubari Union and Exchange of Enclaves,
. Re27is that such acquired territory, automatically becomes a
·.part of India. It was held in Berubari, that the mode· of F
acquisition of such territory, and the specific time when such
acquired territory becomes a part of the territory of India, are
determined in accordance with international law. It is only upon
such acquired territory becoming a part of the territory of India
would the Parliament have the power, under Article 2, to admit G
such acquired territory in the Union or establish a new ~tate.
The crucial aspect is that it is only when the foreign territory
becomes a part of the territory of India, by acquisition in terms
of relevant international laws, is the Parliament empowered to
27. AIR 1960 SC 845. H
--
426 SUPREME COURT REPORTS [2011] 3 S.C.R.
A make laws for such a hitherto foreign territory. Consequently,
the positive affirmation, in the phrase in Clause (1) of Article
245, that the Parliament "may make laws for the whole or any
part of the territory of India" has to be understood as meaning
that unless a territory is a part of the territory of India, Parliament
B may not exercise its legislative powers in respect of such a
territory. In the constitutional schema it is clear that the
Parliament may not make laws for a territory, as a first order
condition, unless that territory is a part of India.
c x
Relevance of Case Law Cited by the learned Attorney General:
65. The learned Attorney General cited and relied on many
decisions in support of his arguments. We find that none of the
0 cases so cited have considered the issues of what the impact
of constitutional text, wider constitutional topological and
structural spaces, the representative capacity of a parliament
and the like would be on the extent of powers of the parliament.
Moreover, having gone through the cases, we do note that none
E stand for the proposition that the powers of a parliament are
unfettered and that our Parliament possesses a capacity to
make laws that have no connection whatsoever with India.
66. Nevertheless, we will address a few of the cases relied
on by the learned Attorney General primarily for limited purpose
F of locating their rationale and reasoning. In Governor General
in Council v. Raleigh lnvestments28 , the key issue was about ..
extra-territorial operation of a law, and not whether the law as
made was with respect to aspects or causes outside the
territory of British India and bearing no nexus with it. In this
G regard the Privy Council's observations about the Appellant's
contention are pertinent: "The appellant's arguments .....
comprised two contentions. It was first argued that these
provisions were not extra-territorial. It was also argued that even
if they should be found in any degree to operate extra-
H 28. Supra note 9.
--
GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 427
ANR. [B. SUDERSHAN REDDY, J.]
te"itorial/y, that would be no ground of holding them to be A
invalid, so far as municipal courts called upon to deal with them
are concerned", 29 and finally "in our judgment therefore, the
extent, if any, of extra-territorial operation which is to be found
in the impugned provisions, is within the legislative powers
given to the Indian Legislature by the Constitution Act." 30 It is B
clear that in the cited case, the Privy Council was dealing with
the issue of extra-territorial operation of the law, and not extra-
territorial law. In Wallace Brothers v. CIT, Bombay City and
Bombay Suburban District31 also the issue was with regard to .
sufficiency of territorial connection, and it was held that the c
principle - sufficient territorial connection - not the rule giving
effect to that principle - residence - is implicit in the power
conferred by the Government of India Act, 1935. In Emmanuel
Mortenssen32 , the Court of Justiciary upheld the jurisdiction of
the local Sheriff with respect to the owners and operator of a D
trawler boat used for fishing inside the estuary. However,
jurisdiction was not extended on the basis of parliamentary
supremacy or of powers to enact extra-territorial laws. Rather,
the principle enunciated was that an estuary, under international
law, falls within the territory of Scotland, and that the North Sea E
Fisheries Convention of 1883 did not derogate from the
foregoina general principle of international law. Consequently
in as much as the operator or owner of that fishing trawler
engaged in acts that were prohibited within the territorial limits
over which the legislature that enacted the applicable statute
had jurisdiction, the local sheriff exercised proper jurisdiction. F
Croft v. Dunphy33 was with regard to domestic laws operating
beyond the territorial limits, and it was recognized that a law
which protects the revenue of the states may necessarily have
to. be operated outside the territorial limits, but that such
operation does not violate the principle that legislatures enact G
29. Ibid, p. 273.
30. Ibid, p. 284.
31. Supra note 10.
32. Supra note 6.
33. Supra note 7. H
--
428 SUPREME COURT REPORTS [2011] 3 S.C.R.
A laws with respect to aspects or causes that have a nexus with
the territory for which the legislature has the law making
responsibility for. The control of smuggling activities and
revenue collection were seen necessarily as related to the
territorial interests, and it was in furtherance of such territorial
B interests, was extra-territorial operation permissible. In State v.
Narayandas34 the issue considered by the Bombay High Court
was with regard to the vires of a law enacted by a state
legislature declaring a bigamous marriage contracted outside
the territory of the state to be unlawful. The main issue was with
c regard to the power of a state to legislate beyond its territory,
and Chief Justice Chagla held that it could not. One paragraph
in that decision that could be deemed to be supportive of the
learned Attorney General's propositions is:
"Now under our present Constitution, Parliament has been
D given absolute powers. Therefore, today Parliament may
enact an extra-territorial law. The only limitation on its
powers is the practicability of the law. If an extra-territorial
law cannot be enforced, then it is useless to enact it but
no one can suggest today that a law is void or ultra-vires
E which is passed by the Parliament on the ground of its
extra-territoriality".
67. Clearly, the statements that under our Constitution
Parliament has been given absolute powers, and therefore it
F can enact extra-territorial laws, are not in comport with present
day constitutional jurisprudence in India that the powers of every
organ of the State are as provided for in the Constitution and
not absolute. We discern that the second half of the excerpt
cited above provides the clue to the fact that Chief Justice
Chagla was concerned more with laws that require an operation
G outside India, and not in terms of laws that have no connection
with India whatsoever. At best the comment reveals the concern
of the learned jurist about the Parliament having the
competence to enact laws with respect to objects and
H 34. Supra note 12.
-- I
GVK INDS. LTD. & Af\JR. v. INCOME TAX OFFICER &429
ANR. [B. SUDERSHAN REDDY, J.]
provocations·lying outside the territory, but whose effect is felt A
inside the territory. Hence, that broad statement does not
derogate from the textual meaning, purport and ambit of Article
245 that we have exp~unded hereinabove.
XI
B
Conclusion:
68. There are some important concerns that we wish to
share our thoughts on, before we proceed to answering the·
questions that we set out with. Very oftenarguments are made
claiming supremacy or sovereignty for various organs to act in· C
a manner that is essentially unchecked and uncontrolled.
Invariably such claims are made with regard to foreign affairs
or situations, both within and outside the territory, in which the
government claims the existence of serious secturity risks or law
and order problems. Indeed, it may be necessary for the State D
to possess some extraordinary powers, and exert considerable
force to tackle such situations. Nevertheless, all such powers,
competence, and extent of force have to be locatable, either
explicitly or implicitly, within the Constitution, and exercised
within the four corners of constitutional permissibility, values and E
scheme.
69. There are two aspects, of such extreme arguments
claiming absolute powers, which are worrisome. The first one
relates to a misconception of the concepts of sovereignty and
of power, and a predilection to oust judicial scrutiny even at the F
minimal level, such as examination of the vires of legislation or
other types of state action. The second one r&lates to
predilections of counsel of asking for powers that are undefined,
un~pecified, vague and illimitable be read into the constitutional
text, as matter of some principle of inherent design or implied G
necessity.
70. The modern concept of sovereignty emerged in a
troubled era of civil wars within thE! territories of, and incessant
conflict between, nation-states. At one end of the spectrum
H
political philosophers such as Thomas Hobbes and Jean Bodin
--
430 SUPREME COURT REPORTS (2011) 3 S.C.R.
A postulated the necessit~ of absolute power within the territory,
arguing that failure of order was inimical to the well being of
the people, and further arguing that if the governments were to
not have such absolute powers invariably leads to internal
disorder. While it is generally and uncritically argued that
B Hobbes and Bodin stood for blind political absolutism, when
viewed from a historical perspective, they can also be seen as
the starting points of human beings quest for greater
accountability of states and governments, which were to be
increasingly viewed as the repositories of collective powers of
c the people. Hobbes specifically recognized that governments
would become unstable and lose their legitimacy if they failed
to protect the welfare of the subjects. For Bodin, the absolute
sovereign was tempered by divine law (or "natural law"}, and
the customary laws of the community. Alan James states that
"[ijrom this basis it could be argued that sovereignty lay not with
0
the ruler but with the ruled. In this way ihe ultimate authority could
be claimed for the people, with the government simply acting
as their agent." (See: Sovereign Statehood - The Basis of
International Society35}. These seeds of accountability, carried
within them the incipient forms of arguments that would
E inexorably lead to the modern notion of self-determination by
the people: that each nation state, formed by the people, and
answerable to the people through the organs of the State, would
act in accordance with the wishes of the people - both in terms
of ordinary moments of polity, and also in terms of constitutional
F moments, with the latter setting forth, in greater or lesser
specificity, the acts that may or may not be done by the organs
of the state.
71. The path to modern constitutionalism, with notions of
G divided and checked powers, fundamental rights and
affirmative duties of the State to protect and enhance the
interests of, welfare of, and security of the people, and a
realization that "comity amongst nations" and international
peace were sine qua non for the welfare of the people was
H 35. Allen & Unwin, London (1986).
-- GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 431
ANR. [B. SUDERSHAN REDDY, J.]
neither straight forward, nor inevitable. It took much suffering, A
bloodshed, toil, tears and exploitation ofthe people by their own
governments and by foreign governments, both in times of
peace and in times of war, before humanity began to arrive at
the conclusion that unchecked power would sooner, rather than
later, turn tyrannical against the very people who have granted B
such power, and also harmful to the peaceful existence of other
people in other territories. Imperial expansion, as a result of
thirst for markets and resources that the underlying economy
demanded, with colonial exploitation as the inevitable result of
that competition, and two horrific world wars are but some of c
the more prominent markers along that ::iathway. The most
tendentic:.is use of the word sovereignty, wherein the principles
of self-determination were accepted within a nation-state but
not deemed to be available to others, was the rhetorical
question raised by Adolf Hitler at the time of annexation of D
Austria in 1938: "What can words like 'independence' or
'sovereignty' mean for a state of only six million?"36 We must
recognize the fact that history is replete with instances of
sovereigns who, while exercising authority on behalf of even
those people who claimed to be masters of their own realm,
contradictorily claimed the authority to exercise suzerain rights E
over another territory, its people and its resources, inviting
ultimately the ruin of large swaths of humanity and also the very
people such sovereigns, whether a despot or a representative
organ, claimed to represent.
F
72. India's emergence as a free nation, through a non-
violent struggle, presaged the emergence of a moral voice: that
while we claim our right to self-determination, we claim it as a
matter of our national genius, our status as human beings in
the wider swath of humanity, with rights that are ascribable to G
us on account of our human dignity. Such a morality arguably
does not brook the claims of absolute sovereignty to act in any
manner or form, on the international stage or within .the country.
36. · De Smith, Stanley A. : "Microstates and Micronesia" (New York, NYU Press
- 1970), p. 19. H
--
432 SUPREME COURT REPORTS (2011] 3 S.C.R.
A To make laws "for another territory" is to denigrate the principle
of self-determination with respect to those people, and a
denigration of the dignity of all human beings, including our own.
The debates in the Constituent Assembly with regard to the
wording of Article 51, which was cited earlier in this judgment,
B gives the true spirit with which we the people of this country
have vested our collective powers in the organs of governance.
This is so particularly because they were made in the aftermath
of World War II, arguably the most brutal that mankind has ever
fought, and the dawn of the atomic age. In particular the
c statements of Prof. Khardekar, are worth being quoted in
extenso:
"Mr. Austin, a great jurist, says that there is no such thing
as international law at all - if there is anything it is only
positive morality .... In saying that there may be positive
D morality I think even there he is wrong. If there were to be
morality amongst nations, well we would not have all that
has been going about. If there is a morality amongst
nations today, it is the morality of robbers. If there is any
law today it is the law of the jungle where might is right. .....
E The part that India is to play is certainly very important
because foundations of international morality have to be
laid and only a country like India with its spiritual heritage
can do it.. .... Therefore it is in keeping with our history,
with our tradition, with our culture, that we are a nation of
F peace and we are going to see that peace prevails in the
World." 37
73. In granting the Parliament the powers to legislate "for"
India, and consequently also with respect to extra-territorial
aspects or causes, the framers of our Constitution certainly
G intended that there be limits as to the manner in which, and the
extent to which, the organs of the State, including the
Parliament, may take cognizance of extra-territorial aspects or
37. Constituent Assembly Debates Official Report, 1948-49, page 601 (Lok
H Sabha Secretariat, New Delhi).
--
GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 433
ANR. [B. SUDERSHAN REDDY, J.]
causes, and exert the State powers (which are the powers of A
the collective) on such aspects or causes. Obviously, some of
those limits were expected to work at the level of ideas and of
morals, which can be inculcated· by a proper appreciation of
our own history, and the ideas of the framers of our constitution.
They were also intended to have a legal effect. The working of B
the principles of public trust, the requirement that all legislation
by the Parliament with respect to extra-territorial aspects or
causes be imbued with the purpose of protecting the interests
of, the welfare of and the security of India, along with Article 51,
a Directive Principle of State Policy, though not enforceable in c
a court of law, nevertheless fundamental to governance, lends
unambiguous support to the conclusion that Parliament may not
enact laws with respect to extra-territorial aspects or causes,
wherein such aspects or causes have no nexus whatsoever with
India. D
74. Courts should always be very careful when vast powers
are being claimed, especially when those claims are cast in
terms of enactment and implementation of laws that are
completely beyond the pale of judicial scrutiny and which the
Constitutional text does not unambiguously support. To readily E
accede to demands for a reading of such powers in the
constitutional matrix might inevitably lead to a destruction of the
complex matrix that our Constitution is. Take the instant case
itself. It would appear that the concerns of learned Attorney
General may have been more· with whether the ratio in ECIL F
could lead to a reading down of the legislative powers granted
to the Parliament by Article 245. A thorough textual analysis,
combined with wider analysis of constitutional topology,
structure, values and scheme has revealed a much more
intricately provisioned set of powers to the Parliament. Indeed, G
when all the powers necessary for an organ of the State to
perform its role completely and to effectuate the Constitutional
mandate, can be gathered from the text of the Constitution, ·
properly analysed and understood in the wider context in which
it is located, why should such unnecessarily imprecise H
434 SUPREME COURT REPORTS [2011] 3 S.C.R.
--
A arrogation of powers be claimed? To give in to such demands,
would be to run the risk of importing meanings and possibilities
unsupportable by the entire text and structure of the Constitution.
Invariably such demands are made in seeking to deal with
external affairs, or with some claimed grave danger or a serious
B law and order problem, external or internal, to or in.India. In such
circumstances, it is even more important that courts be extra
careful. The words of Justice Jackson in Woods v. Cloyd W.
Miller Co., 38 in dealing with war powers, may be used as a
constant reminder to be on guard:
C "I agree with the result in this case, but the arguments that
have been addressed to us lead me to utter more explicit
misgivings ..... The Government asserts no constitutional
basis for this legislation other than this vague, undefined
and undefinable "war power." ..... It usually is invoked in
D haste and excitement when calm legislative consideration
of constitutional limitation is difficult. It is executed in a time
of patriotic fervor that makes moderation unpopular. And,
worst of all, it is interpreted by judges under the influence
of the same passions and pressures. Always, as in this
E case, the Government urges hasty decisions to forestall
some emergency or serve some purpose and pleads that
paralysis will result if its claims to power are denied or their
confirmation delayed. Particularly when the war power is
invoked to do things to the liberties of the people, ....... that
F only indirectly affect conduct of war and do not relate to
the management of war itself, the constitutional basis
should be scrutinized with care."
75. The point is not whether and how India's constitution
grants war powers. The point is about how much care should
G be exercised in interpreting the provisions of the Constitution.
Very often, what the text of the Constitution says, when
interpreted in light of the plain meaning, constitutional topology,
structure, values and scheme, reveals the presence of all the
necessary powers to conduct the affairs of the State even in
H 38. 333 U.S. 138.
--
GVK INDS. LTD. & ANR. v. INCOME TAX OFFICER & 435
ANR. [B. SUDERSHAN REDDY, J.]
circumstances that are fraught with grave danger. We do not A
need to go looking for powers that the text of the Constitution,
so analysed, does not reveal.
76. We now turn to answering the two questions that we
set out with:
B
(1) Is the Parliament constitutionally restricted from
enactlrg legislation with respect to extra-territorial
aspects or causes that do not have, nor expected
to have any, direct or indirect, tangible or intangible
impact(s) on or effect(s) in or consequences for: (a) c
the territory of India, or any part of India; or (b) the
interests of, welfare of, wellbeing of, or security of
inhabitants of India, and Indians?
The answer to the above would be yes. However, the
Parliament may exercise its legislative powers with respect to D
extra-territorial aspects or causes, - events, things, phenomena
(howsoever commonplace they may be), resources, actions or
transactions, and the like -, that occur, arise or exist or may be
expected to do so, naturally or on account of some human
agency, in the social, political, economic, cultural, biological, E
environmental or physical spheres outside the territory of India,
and seek to control, modulate, mitigate or transform the effects
of such extra-territorial aspects or causes, or in appropriate
cases, eliminate or engender such extra-territorial aspects or
causes, only when such extra-territorial aspects or causes have,
or are expected to have, some impact on, or effect in, or
consequences for: (a) the territory of India, or any part of India;
or (b) the interests of, welfare of, wellbeing of, or security of
inhabitants of India, and Indians.
It is important for us to state and hold here that the powers of
legislation of the Parliament with regard to all aspects or causes
that are within the purview of its competence, including with
fespect to extra-territorial aspects or causes as delineated
above, and as specified by the Constitution, or i_mplied by its
essential role in the constitutional scheme, ought not to be
--
436 SUPREME COURT REPORTS [2011) 3 S.C.R.
A subjected to some a-priori quantitative tests, such as
"sufficiency" or "significance" or in any other manner requiring
a pre-determined degree of strength. All that would be required
would be that the connection to India be real or expected to be
real, and not illusory or fanciful. Whether a particular law enacted
B by Parliament does show such a real connection, or expected
real connection, between the extra-territorial aspect or cause
and something in India or related to India and Indians, in terms
of impact, effect or consequence, would be a mixed matter of
facts and of law. Obviously, where the Parliament itself posits
c a degree of such relationship, beyond the constitutional
requirement that it be real and not fanciful, then the courts would
have to enforce such a requirement in the operation of the law
as a matter of that law itself, and not of the Constitution.
(2) Does the Parliament have the powers to legislate
D "for" any territory, other than the territory of India or
any part of it?
The answer to the above would be no. It is obvious that
Parliament is empowered to make laws with respect to aspects
or causes that occur, arise or exist, or may be expected to do
E so, within the territory of India, and also with respect to extra-
territorial aspects or causes that have an impact on or nexus
with India as explained above in the answer to Question 1
above. Such laws would fail within the meaning, purport and
ambit of the grant of powers to Parliament to make laws "for
F the whole or any part of the territory of India", and they may not
be invalidated on the ground that they may require extra-
territorial operation. Any laws enacted by Parliament with
respect to extra-territorial aspects or causes that have no
impact on or nexus with India would be ultra-vires, as answered
G in response to Question 1 above, and would be laws made "for"
a foreign territory.
77. Let the appeal be listed before an appropriate bench
for disposal. Ordered accordingly.
H R.P. Reference answered.
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