G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr. (2011) 4 SCC 36
(S.H. Kapadia, C.J. and B. Sudershan Reddy, K.S.P. Radhakrishnan, S.S. Nijjar and Swatantra Kumar, JJ.)
Case Summary
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LB-301-Constitutional Law-I |2022
Factual Background:
The Appellant by way of a writ petition filed in Andhra Pradesh High Court, had challenged an order of the Respondents which decided that the Appellant was liable to 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 Section9(1)(vii)(b) of the Income Tax Act (1961) for want of legislative competence and violation of Article 14 of the Constitution. The High Court having upheld that Section 9(1)(i) did not apply inthe circumstances of the facts of the case, nevertheless upheld the applicability of Section9(1)(vii)(b) on the facts and also upheld the constitutional validity of the said provision. The HighCourt mainly relied on the ratio of the judgment by a three judge bench of this court in ECIL[1989 Supp(2) SCC 642]. Hence, the appeal.
The Judgment of the Court was delivered by
B. SUDERSHAN REDDY, J. 1. In any federal or quasi 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 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. While the purpose of legislation could be seen narrowly or purely in terms of intended effects on such aspects or causes, obviously the powers have to be exercised in order to enhance or protect the interests of, the welfare of, the well-being of, or the security of the territory, and the inhabitants therein, for which the legislature has been charged with the responsibility of making laws.
2. Paraphrasing President Abraham Lincoln, we can say that the State and its Government, though of the people, and constituted by the people, has to always function “for” the people, indicating 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 democratic republics, those expectations are also transformed into limitations as to how, in what manner, and for what purposes the collective powers of the people are to be used.
3. The central constitutional themes before us relate to whether the Parliament’s powers to legislate, pursuant to Article 245, include legislative competence with respect to aspects or causesthat 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 laws with
259 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr.
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 power to effectuate some impact or effect on aspects or causes that occur, arise or exist or may be expectedto do so, outside the territory of India.
4.. Two divergent, and dichotomous, views present themselves before us. The first one arises from a rigid reading of the ratio in Electronics Corporation of India Ltd., v. Commissioner of Income Tax & Anr., [(1989) (2) SCC 642-646] (ECIL) and suggests that Parliament’s powers to legislate incorporate only 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 or causes would be constitutionally permissibleif and only if they have or are expected to have significant or sufficient impact on or effect in or consequence for India. An even weaker form of the territorial nexus restriction would be that as long as some impact or nexus with India is established or expected, then the Parliament would be empowered to enact legislation with respect to such extra-territorial aspects or causes.
5. 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 powers to legislate “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 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.
6.. Juxtaposing the two divergent views outlined above, we have framed the following questions:
(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 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?
7. 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 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.
(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, 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; (b) the Union territories
260 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr.
specified in the First Schedule; and (c) such other territories as may be acquired.” II
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 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:
“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 or may be expected to do so, naturally or on account of some human agency.
“Extra-territorial aspects or causes”:
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”:
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 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.:
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.
IV
The ratio in ECIL
20. 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: “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: (SCC p, 646, para 9)
“But the question is whether a nexus with something in India is necessary. It seems to us that unless such nexus 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 law must be found within India itself. Such a law may have extra-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 India.”
261 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr. (emphasis added).
21.. 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 turnour attention to the propositions of the learned Attorney General.
V
The propositions of the learned Attorney General
27.. The main propositions are that the Parliament is a “sovereign legislature”, and that sucha “sovereign legislature has full power to make extra-territorial laws.” …
28.. 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 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 be 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 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.
29. The implication of the proposed disability is not merely that the judiciary, under our Constitution, is limited from exercising the powers of judicial review, on specific grounds, over a clearly defined set of laws, with a limited number of enactments; rather, it would be thatthe 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 of its essential role even where such extra-territorial laws may be damaging to the interests of India.
30.. In addition the learned Attorney General has also placed reliance on the fact that the Clause 179 of the Draft 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 one seemed to be that the Drafting Committee intended Clause 179(2), and hence Clause (2) of Article 245, to be an independent, and a separate, source of legislative powers to 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 tomake “extra-territorial laws”, the implications of which have been more particularly explicated above.
31. The learned Attorney General relied on the following case law in support his propositions and arguments: …, British Columbia Electric Railway Company Ltd. v. The King, [1946] A.C. 527; Governor General in Council v. Raleigh Investment Co. Ltd., [1944] 12 ITR 265 Wallace Brothers and Co. v. Commissioner of Income Tax, Bombay, [1948] 16 ITR 240; A.H. Wadia v. Commissioner of Income Tax, Bombay, [1949] 17 ITR 63; … Shrikant Karulkar Bhalchandra v. State of Gujarat, (1994) 5 SCC 459; and State of A.P. v. N.T.P.C., (2002) 5 SCC 203.
VI
262 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr. Constitutional Interpretation:
32.. We are acutely aware that what we are interpreting is a provision of the Constitution.[…] 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 certitude.
33.. 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 consequence ofnot 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 that are constituted by it.
34. 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 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, (1973) 4 SCC 225 and I.R. Coelho v. State of Tamil Nadu, (2007) 2 SCC 1). One of the foundational elements of the concept of basic structure is it would give the stability of purpose, and machinery of government to be able to pursue the constitutional vision into the indeterminate and unforeseeable future.
VII
Textual Analysis of Article 245
42.. 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 words or phrases therein to the status of mere surplussage ought to be avoided.
43.. 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 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.
44.. 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 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…”
(SeeConcise Oxford English Dictionary, 8th Edn.OUP (Oxford, 1990))
46.. Consequently, the range of senses in which the word “for” is ordinarily used would suggest that, pursuant to Clause (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 orappropriate to, in respect of or with reference to “the whole or any part of the territory of India”.
47.. The above understanding comports with the contemporary understanding, that emerged in
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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 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 is to benefit the people of that nation-State.
51.. 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 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 whichinternalsovereigntywasconceivedofasbeingabsoluteandvestedinoneorsomeorgans of governance, and external 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.
52. Oppenheim’s International Law (9th edn.) states as follows:
“The concept of sovereignty was introduced and 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 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 also inappropriate….. no state has supreme legal power and authority over other states in general, nor are states generally subservient to the legal power and authority of other states. Thus the relationship of states on the international plane is characterized by their equality, independence, and in fact, by their interdependence.”
55. Within international law, the principles of strict territorial jurisdiction have 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 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 certainly no State attempts to exercise jurisdiction over matters, persons, or things with whichit has absolutely no concern.” (See Trustees Executors & Agency Co Ltd v. Federal Commissioner of Taxation (1933) 49 CLR. 220 at 239). The reasons are not too far to grasp.
56. To claim the power to legislate with respect to extra-territorial aspects or causes, that haveno 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 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
264 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr. international peace, and consequently detrimental to the interests, welfare and security of the very
nation-state, and its people, that the national legislature is charged with the responsibility for.
57.. Because of interdependencies and the fact that many extra- territorial aspects or causes havean 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 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, 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 the domain of legislative competence of the Parliament, except to the extent the Constitution itself specifies otherwise.
58.. A question still remains, in light of the extreme conclusions that may arise on account of the propositions 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.
59.. The word “for” again provides the clue. To legislate for a territory implies being responsible for the welfare 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 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 limitations that flow from this.
60. 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 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 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 condition. Consequently, we must holdthat 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.
61. For a legislature to make laws for some other territory 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 territoryof India to the legislative powers of the Parliament in Clause (1) of Article 245, when viewedfrom 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. 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 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.
62. While the people of India may repose, and continue to maintain their trust in the State,
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notwithstanding the abysmal conditions that many live in, and notwithstanding the 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 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.
63. The grant of the power to legislate, to the Parliament, in Clause (1) of Article 245 comes with a limitation that arises out of the very purpose for which it has been 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. Whatever else may be the merits or demerits of the Hobbesian notion of absolute sovereignty, even the Leviathan, within the 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.
64. No organ of the Indian State can be the repository of the collective powers of the people of India, 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 moral, material, spiritual or in some other tangible or intangible manner – to the people who constitute India.
65. 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 Policy, though not enforceable, nevertheless fundamental in the governance of the country. …
66.. To enact 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 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 honourable relations, by fostering respect for international and treaty obligations etc., as recognized in Article 51.
67. 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 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. …
69.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. 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. Thisis not just a matter of the structure of our Constitution; but the very foundation.
70.. The arguments that India inherited the claimed absolute or illimitable powers of the British parliament are unacceptable. …
72.. We now turn our attention to other arguments put forward by the learned Attorney General with regard to the implications of permissibility of making laws that may operate extra-
266 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr.
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 position, he also seems to be arguing that Clause (2) ofArticle 245 be seen as an independent source of power. Finally, the thread of that logic then seeksto draw the inference that in as much as Clause (2) prohibits the invalidation of laws on accountof their extra- territorial operation, it should be deemed that the courts do not have the power to invalidate, – i.e., strike down as ultra vires -, those laws enacted by Parliament that relate to any extra- territorial aspects or causes, notwithstanding the fact that many of such aspects or causes have no impact on or nexus with India.
73.. 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 enactinglaws. The phrase operation of law, in its ordinary sense, means the effectuation or implementationof the laws. 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.
74. Invalidation of laws falls exclusively within the functions of 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 organs ofthe state – the legislature, the executive and the judiciary respectively, unless the context or specific text, in the Constitution, unambiguously points to some other association.
75.. In Article 245 we find that the words and phrases “make laws” “extra-territorial operation”, and “invalidate” have been 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 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, 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.
76. 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-vires 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 to make laws beyondthe pale of judicial scrutiny have been expanded over and above that which has been specified.
77. 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 impermissible, but also an interpretation that places those vaguely defined laws, which by definition and implication can 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.
78.Clause (2) of Article 245 acts as an exception, of a particular and a limited kind, to
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the inherent power of the judiciary to invalidate, if ultra-vires, any of the laws made by any organ of the State. Generally, an exception can logically be read 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 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 carvesout 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 India may not be invalidated on the ground that such a law may need to be operated extraterritorially. Nothing more.
79. 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 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.
80.. If one were to read Clause (2) of Article 245 as an 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 245 specifies that it is the territory of India or a 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 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.
81. In this case it is the territory of India that is specified by the phrase “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 part thereof; by implication, one may not read that the Parliament has been granted powers to make laws “for” territories beyond India.
82.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 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. …
VIII
Analysis of Constitutional Topological Space: Chapter 1, Part XI:
86. 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 245that we have discerned and explained above. In particular, the search is also for any support that may exist for the propositions of the learned Attorney General that the Parliament may make lawsfor any territory outside India.
87.. As is well known, Article 246 provides for the division of legislative competence, as between the Parliament and the 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
268 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr.
India not included in a State” with respect to any 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 of which Parliament has been empowered to make laws, it is obvious that in Article 246 legislative powers, whether of Parliament or of State legislatures, are visualized as being “for” the territory of India or some partof it.
IX
Wider Structural Analysis:
94.. 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 […]
95.. It is clear from the above text of Article 260 that it is the 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 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.
98.. 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 Article 1 provides that territories not a part of India may be acquired. The purport of said Sub-Clause (c) ofClause 3 of Article 1, pace Berubari Union and Exchange of Enclaves, In re (AIR 1960 SC 845) is that such acquired territory, automatically becomes a part of India.
99. It was held in Berubari, that the mode of 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 such acquired territory in the Union or establish a new state. The crucial aspect is that it is only when the foreignterritory becomes a part of the territory of India, by acquisition in terms of relevant international laws, is the Parliament empowered to make laws for such a hitherto foreign territory.
100. 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 may notexercise its legislative powers in respect of such a territory. In the constitutional schema it is clearthat the Parliament may not make laws for a territory, as a first order condition, unless that territory is a part of India.
XI
Conclusion:
124.. We now turn to answering the two questions that we set out with:
(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 India, orany part of India; or (b) the interests of, welfare of, wellbeing of, or security of inhabitants of
269 G. V. K. Industries Ltd. & Anr. V. Income Tax Officer & Anr. India, and Indians?
The answer to the above would be yes. However, the 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, 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 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.
125. 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 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 “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.
126. WhetheraparticularlawenactedbyParliamentdoesshowsucharealconnection,orexpected 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 matterof facts and of law. Obviously, where the Parliament itself posits 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.
127. (2)DoestheParliamenthavethepowerstolegislate“for”anyterritory,otherthantheterritory 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 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 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 Parliament with respect to extra- territorial aspects or causes that have no impact on or nexus with India would be ultra-vires, as answered in response to Question 1 above, and would be laws made “for” a foreign territory.
128. Let the appeal be listed before an appropriate bench for disposal. Ordered accordingly.
