SHRIKANT BHALCHANDRA KARULKAR AND ORS. ETC. ETC.

STATE OF GUJARAT AND ANR. ETC. ETC.

JULY 13, 1994

(KULDIP SINGH AND YOGESHWAR DAYAL, JJ.]

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

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

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

Dismissing the appeals, this Court

HELD : 1. 1. The State legislature bas no competence to make laws which have extra-territorial operation. (573-H)

1.2. If there is a territorial nexus between the persons/property subject matter of the State seek to comply with the provisions of the Act H then the Act and the statute cannot be considered .as having ~-ter

S.B. KARULKAR v. STATE OF GUJARAT 569

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

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

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

CIVIL APPELLATE JURISDICTION : Interlocutory Application G Nos.1-9.

CIVIL APPEAL Nos. 5161-69 of 1993.

From the Judgment and Order dated 3.3.93 of the Gujarat High H

A Court in S.C.A. Nos. 5769/89, 1042/81, 1043/83, 5368/89, 5768/89, 5770,

5772, 5771/89 and 8570 of 1991.

WITH

CIVIL APPEAL No, 5170 of 1993 ..

From the Judgment and Order dated .3.3.93 of the Gujfilal High Court in S.C.A. No. 534 of 1981.

G. Ramaswamy, R.F. Nfiliman, P.H. P<!rekh, S.H. Sanjanwalla, U.

Sagfil, Sudhir Walia, .and H.A. Richura for the Appellants.

S.K. Dholakia, Anip Sachthey, Ms. W ahi and Ms. Meenakshi Arora,

 for the Respondents;

The judgment of the Court was delivered by .

D KULDIP SINGH, J. The appellants challenged the validity of Sec-. !ions 6(3A), 4, 10 and 11 of the Gujarat Agricultural Lands Ceiling Act

1960 (the Act) by wèy of. writ petitions under Article 226 of the Constitu tion of India before the Gujarat High Court on the ground that these provisions were eXtra-territorial in their operation .aud, .as such., were beyond the legislative competence of the State Legislature under Article E 245(1) of the Constitution of India. The High Court upheld the validity of. the provisions and dismissed the éit petitions. T)lese appeals by ':Nay . of special leave are against the judgment of the High Court..

The appellants are the owners of agricultural lands in the State of F Gujarat. They also hold agricultural land in another part of India outside the State of Gujarat. Section 6(3A) of the Act was inserted by the Gujarat • Agricultural Lands Ceiling (Amendment) Act 1972 which provides for computing the ceiling area of a person who also owns land in another part. of India outside the State of Gujarat. It lays down that for computing the ceiling area of such a person in the State of Gujarat, his holding in another G part of India has also to be taken into account. In respect of some of the appellants notices werê issued by the State of Gujarat for reopening the ceiling cases under the amended provisions. In respect of other petitioners either notices were issued under the amended provisions to enable them to file their objections or final orders were passed pursuant to the said B provisions.

S.B.KARULKAR v. STATEOFGUJARAT[KULDIPSINGH, J.) 571

Section 6(3A) of the Act is reproduced hereunder ;_ A

"6(3A). Where any person holds any land in any other part of the

India, outside the state, then of the area of land so held by him in

such other part, not exceeding the maximum area of land :which

such person is entitled to hold in such other part of India under

any law, if any, relating to ceiling on land, used or capable of being B

used for agricultural purposes, shall be excluded frooi the :ceiling

area in excess of which a person is not entitled to hold land under

this section and the extent of land determined after so excluding

such area shall in relation to such person, be deemed to be the ceiling area, tobe held by him in this State.

Provided that where any such person disposes cif, at any ·(ime

before the determination of ceiling area under ihis Act, any land

or part thereof so held by him any other part of India outsid.e the

state in aceordance with the provisions of law in force in such part,

the area equal to the land or part thereof so disposed of. shall° nqt D be excluded while determining the ceiling area, to be held by him

in this State."

 ·· ' .

It is clear from the plain language of Section 6(3A)of the Act that for the purpose of computing the permissible area of a person in the State of Gujarat the area: held by him in any other part of India, not exceeding E

the maximum area of land which such person is entitled to hold there, is to be excluded from the permissible ceiling area udder the Act. In other words, the ceiling area of land permissible under the Act is reduced by deducting the area of the land owned by a person in another State - not

exceeding the maximum area .of land which such person is entitled to hold

in the other State - and whatever is the balance would be the ceiling area F

in the State of Gujarat uoder the Act. If a person already holds land in

other State/States in excess of the ceiling provided uoder the Act, he

becomes disentitled to hold any land in the State of Gujarat. Holding

agricultural land outside the State of Gujarat is, thus, considered as a

relevant factor for deciding whether a person can. hold agricultural land in G

the State of Gujarat and if so,. to what extent.

: Mr. G:Rarnswarny and Mr. R.F. Nariman, senior advocates, appear

ing for the appellants, have vehemently contendedthat.in pith•and sub

stance Section .6 (3A) of the Act has extra-territorial operation in the sense

that the land owned by a person outside the State of Gujarat is taken into H

. B

consideration while deter.mining the ceiling area of a land-owner in the State of Gujarat. Mr. Nari.man further contended that while examining the question . of extra-territorial operation of a statute the effect of the provisions of the statute on the rights of a citizen has to be taken into

considerationc We have given our thoughtful consideration to the arguments adanced by the learned Counsel. We are not inclined to agree.

The Act has been enacted to fix a ceiling on the agricultural holding and to provide for the acquisition and disposal of surplus agricultural lands.

The Act provides a restriction upon holding agricultural land in excess of the ceiling With the purpose of securing the distribution of agricultural C lands s best "to subserve the common good and to provide for acquisition of surplus agricultural land for distribution amongst the landless farmers.

Section 6 (3A)"rif th~ Act has been enacted - as stated in the declaration contained in Section 2 . of the Amendment Act - for giving effect to the policy of tlie State iowards securing principles specified in clauses (b) and D , (c) of Article 39 of the Constitution of India and in particular f?r providing tliat the ownership and control of the agricultural resources of the commun.ity ae so distributed as best to subserve the common good, and also that the operation of the agricultural economic system not result in the coneent; ation of wealih and means of agricultural production to the detriment Of the common j, eople. The Act and the Amendment Act have been E included in the Ninth Schedule to the Constitution of India and as such are tin; Iiune from challenge on the ground that !he provisions thereunder irifract a'ny of the rights conferred by Part III of the. Constitution of India.

The Constitutional validity of the Act was upheld by ibis Court in Hasmukh Lal v. State of Gujarat,. AIR (1976) SC 2316. The question of legislative

F competence,. however, was not pointell!y raised before this Court in the

said'e.

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

G 'List II

18. Land, that is to say, rights in or over land, tenures including the relation of landlord and tenant, and the collection of rents, transfer and alternation of agricultural land, land improvement and H agricultural loans, colonization.

' i I-

S.B. KARULKAR v. STATE OFGUJARATIKULDIP SINGH, J.] ~-73

List-III A

42. Acquisition and requisitioning of property".

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

It is no doubt correct that under Articles 245 & 246 of the Constitution of India the legislapire of a Stale can make law for the State or any part thereof. It would lie overstepping the limits of its legislative field when it purports to affect men and property outside the State. In other words

the State Legislature has no legislative competence to make laws which have extra-territorial operation. Meaning of the words "extra-territorial operation" have been authoritatively laid down by this Court in various D judgments. A State Legislature has plenary jurisdiction to enact laws in respect of subjects in Lists-II and III Schedule 7th Constitution of India.

Such laws may be in respect of persons within the territory, of property - immovable or movable - situation within the State, or of acts and event:-. which occur within its borders. So long as the law made by the Slate Legislature is applicable to the persons residing within its territory oml '" all things and acts within its territory, it cannot be considered extra-territorial. This Court - over a period of three decades - has evolved a principle called "doctrine of territorial nexus" to find out whether the provisions of a particular State law have extra-territorial operation. The doctrine is well-established and there is no dispute as to its principles. It there is a territorial nexus between the persons/property subject-matter of the Act and the State seeking to comply with the provisions of the Act then the Statute cannot be considered as having extra-territorial operation.

Sufficiency of the territorial connection involves consideration of two elements, the connection must be real and not illusory and the liability sought

to be imposed under the Act must be relevant to that connection. The Act G has to satisfy the principles of territorial nexus which are essentially discernible from the factual application of the provisions of the Act.

The State Legislature has the legislative competence to enact the Act under Entry 18 List-II read with Entry 42 List-III 7th Schedule Constitution of Inc!ia. The lands - governed by the provisions of the Act - are situated H

A within the territory of the State of Gujarat. The provisions of the Act provide for fixation of ceiling in respect of'the agricultural lands which are within the territory of the State of Gujarat. The declaration of the surplus land under the Act is also in respect of the lands held by various persons in the State of Gujarat. The territorial nexus is obvious. It is the land and B the persons holding such land within the territory of Gujarat to which the provisions of the Act are applicable. If a person has no land within the State of Gujarat the provisions of the Act are not applicable to him or to the land which he owns outside the territory of the State of Gujarat. The sine qua non for the application of the provisions of the Act is the holding of the land within the State of Gujarat. The territorial connection is thus, C real and sufficient and the liability sought to be imposed under Section 6 (3A) of the Act is directly in relation to that connection. The factum of a person holding land outside the State of Gujarat is undoubtedly an aspect pertinent to the question of his entitlement under the Act to hold land in State of Gujarat. There is no dispute that within the State a ceiling can be . D fixed by law beyond which no person can hold agricultural land, and if for determining the extent of said ceiling, the land held by a person outside the State is taken into consideration, the law pertaining to fixation of ceiling would not become extra-territorial. In pith and substance the law remains to be a legislation imposing the ceiling on holding of land within the State under Entry 18 List II read with 42 List III 7th Schedule Constitution of E India. Mere consideration of some factors which exist outside the State, for the purpose of legislating in respect of the subject for which the legislature is competent to make law, would not amount to extra territorial legislation.

Such considerations are part of the plenary legislative function of the State Legislature. The legislative entries not only indicate the subjects for the F exercise of legislative power but their scope is much wider in the sense that they specify a field for legislation on the subject concerned. Therefore, when a statute fixes a ceiling on agricultural land holding within the State, it would not become extra territorial simply because it provides that while determining the permissible area of a person under the said Statute the land owned by him outside the State is to be taken into consideration. We G are, therefore, of the view that the impugned provisions are within the legislative competence of the State Legislature and have been validly enacted.

The learned counsel for the appellants have placed reliance on the H Full Bench judgment of the Bombay High Court in Shankar Rao v. State

S.B. KARULKAR v. STATE OF GUJARAT [KULDIP SINGH, J.] 575

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

"All land held by a person or as the case may be a family unit B whether in this state or any other patt of India in excess of the ceiling area shall notwit.hstanding anything contained in any law for the time being in force or usage be deemed to be surplus land and shall be dealt. with in the manner hereinafter provided for surplus land ........ " C

It is obvious that the proVisions of Section 6(3A) of the Act and Section 3(2) of the Bombay Act are entirely different. On the plain reading of Section 3(2) of the Bombay Act it is patent that the Maharashtra Legislature was making law in respect of the land held by a person anywhere in India. The expression "all land held by a person or as the case may be by D a family unit whether in this State or any other part of India ......... " clearly indicate the intention on the part of the Maharashtra Legislature to make extra-territorial law. No assistance catt, . thus, be taken by the learned couosel from the Full-Bench judgment of the Bombay High Court. Even otherwise we are of the view that various observations made by the Learned E Judges of the Bombay High Court are, rather, broadly stated and require to be straightened, if necessary, in some appropriate proceedings.

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

AG.

Appeals dismissed. F