Doctrine of Territorial Nexus

Definition

The rule that a State legislature can make a law operating on persons, property or objects located outside its territory, provided there is a real and sufficient connection (nexus) between the State and that subject matter.

Key points

• Flows from Article 245: Parliament can legislate for the whole or any part of India, while a State legislature legislates for the whole or any part of that State.
• Article 245(2) makes a Parliamentary law valid even if it has extra-territorial operation; this freedom does not extend to State legislatures, which need a territorial nexus.
• Two conditions: the connection must be real (not illusory) and the liability sought to be imposed must be relevant to that connection.
• Leading cases: State of Bombay v. R.M.D. Chamarbaugwala (1957), upholding tax on a prize competition run from outside the State because of a sufficient nexus, and Tata Iron and Steel Co. v. State of Bihar (1958) on sales tax.

Why it matters for CAPF

It is a clean federalism and Article 245 concept, often tested through the extent of State legislative power and the validity of State taxes touching out-of-State activity.

Common confusion

Extra-territorial operation is freely available to Parliament under Article 245(2); a State law needs a genuine territorial nexus to bind out-of-State subject matter.

Parent note

federalism and centre state relations