The Hindu : National : Parliament can legislate in respect of extraterritorial aspects

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National

Parliament can legislate in respect of extraterritorial aspects

J. Venkatesan

Supreme Court: But it has no such powers over any territory other than India or any part of it

Laws regarding extraterritorial aspects that have no impact on India ultra vires: Court
Laws are okay only when activities, such as terror, in another territory can impact India

NEW DELHI: The Supreme Court has held that Parliament has ample powers to enact legislation with respect to extra-territorial aspects in the interests of the well-being or security of inhabitants of India but it did not have powers to legislate for any territory other than the territory of India or any part of it.

Giving this ruling, a five-judge Constitution Bench comprising Chief Justice S.H. Kapadia, Justice B. Sudershan Reddy, Justice K.S. Radhakrishnan, Justice S.S. Nijjar and Justice Swatanter Kumar, however, held that “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.”

Writing the judgment, Mr. Justice Reddy said: “The existence of economic, business, social and political organisations and forms, of more or less determinate structure, and both recognised and unrecognised, that operate across borders, implies that their activities, even though conducted in one territory, may have an impact on or in another territory. Global criminal and terror networks are also examples of how events and activities in a territory outside one's own borders could affect the interests, welfare, well-being and security within.”

Agrees with AG

Agreeing with the submissions of Attorney General G.E. Vahanvati in this regard, the Bench said: “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, 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.”

It said: “Because of interdependencies and the fact that many extraterritorial 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 expected to do so, within the territory of its own nation-state.

Empowered

“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 extraterritorial aspects or causes that have an impact on or nexus with India.”

The Bench said the Parliament could do so “only when such extra-territorial aspects or causes are expected to have, some impact on, or effect in, or consequences for: the territory of India, or any part of India; or the interests of, welfare of, wellbeing of, or security of inhabitants of India, and Indians.”

The instant case

In this case, a private company in Andhra Pradesh had challenged in the Andhra Pradesh High Court an order of the Income Tax department that it was liable to withhold a certain portion of monies paid to a foreign company. The High Court while upholding the power of the department also upheld the relevant provisions in the IT Act. The present appeal is directed against this judgment.

While answering the issues, the Bench directed that the matter be placed before an appropriate Bench for disposal of the appeal in the light of this judgment.

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