Constitutional Law

Shrikant Bhalchandra Karulkar v. State of Gujarat

(1994) 5 SCC 459

Facts

The Gujarat Agricultural Lands Ceiling Act, 1960 fixed the maximum agricultural land that a person could hold in Gujarat.
Section 6(3-A) required authorities, while calculating the holder’s permissible ceiling in Gujarat, to take into account agricultural land owned by that person elsewhere in India.
Land situated outside Gujarat could not itself be declared surplus under the Gujarat Act.
However, the outside holding could reduce the amount of land that the person was entitled to retain within Gujarat.
The appellants owned agricultural land in Gujarat as well as in other States.
They challenged Sections 4, 6(3-A), 10 and 11.
They argued that Gujarat was attempting to legislate concerning land outside its territorial jurisdiction in violation of Article 245(1).

Whether a State Legislature can consider property situated outside the State while applying its own ceiling law.
Whether Section 6(3-A) had unconstitutional extra-territorial operation.
Whether a sufficient territorial nexus existed between the affected landholder and Gujarat.
Whether the statute directly regulated outside land or merely used it as a relevant fact.

Article 245(1) authorises a State Legislature to make laws for the whole or any part of the State.
A State law is not invalid merely because it produces some consequences outside the State.
Unlike Parliament, a State Legislature does not possess general extra-territorial legislative power.
Its law must therefore have a real territorial nexus with:
the person;
property;
transaction; or
subject regulated.
No single mechanical formula determines sufficient nexus.
The connection must be real, substantial and relevant to the liability imposed.
A State may use an extra-State fact to calculate or define liability concerning persons or property properly within its jurisdiction.

The Act operated directly upon agricultural land situated in Gujarat.
Only land within Gujarat could be:
subjected to ceiling proceedings;
selected as surplus; or
acquired under the Act.
The State did not claim authority to take possession of agricultural land situated in another State.
Ownership of outside land was relevant only for determining how much additional land the same person needed to retain within Gujarat.
The legislative object was to distribute agricultural land and prevent concentration of large holdings.
A person already owning substantial land elsewhere was differently placed from a person whose only holding was in Gujarat.
Ignoring land held outside Gujarat would allow one person to retain the full Gujarat ceiling in addition to extensive holdings elsewhere.
The person’s ownership of land within Gujarat created the direct territorial connection.
The consideration of outside holdings was pertinent to calculating the ceiling applicable to that Gujarat land.
The Court therefore held that the outside land was not the object of regulation; it was merely a factor in determining liability within Gujarat.
The resulting territorial effect was incidental and constitutionally permissible.
The Court also rejected the argument that Article 245(2), which expressly protects parliamentary laws having extra-territorial operation, implied a complete prohibition upon every State law referring to matters outside its boundaries.

The challenged provisions of the Gujarat Agricultural Lands Ceiling Act were upheld.
The law possessed a sufficient territorial nexus because it directly regulated land and landholders within Gujarat.