Binding precedent and territorial nexus principles confirm a ceiling law cannot count land outside the State.

Binding precedent turns on the ratio decidendi of the superior court, not stray observations, and a smaller Bench cannot disregard an earlier binding declaration of law; if doubt remains, the proper course is reference to a larger Bench. Applying that principle, the earlier Full Bench view on the Maharashtra ceiling law remained binding because the later Supreme Court decision did not actually overrule it. On legislative competence, a State law may operate only where there is a real and sufficient territorial nexus; Section 3(2) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 was invalid to the extent it required land held outside the State to be counted in ceiling computation, as that gave it extraterritorial operation.

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Issues: (i) whether the earlier Full Bench view on the Maharashtra ceiling law continued to govern the field in light of the Supreme Court decision; (ii) whether Section 3(2) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, to the extent it took into account land held outside the State, was beyond legislative competence as having extraterritorial operation.

Issue (i): whether the earlier Full Bench view on the Maharashtra ceiling law continued to govern the field in light of the Supreme Court decision.

Analysis: The binding force of precedent depended on the ratio decidendi of the superior court, not on stray observations. A coordinate or smaller Bench could not disregard an earlier binding declaration of law and, if it considered the earlier view doubtful, the proper course was to seek reference to a larger Bench. The Supreme Court decision relied upon had to be read on its actual holding, and the earlier Full Bench ruling could not be treated as displaced merely because the later judgment dealt with a different statute and used some broader language.

Conclusion: The Full Bench ruling remained binding to the extent of the issue actually decided, and the Supreme Court decision did not overrule it.

Issue (ii): whether Section 3(2) of the Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961, to the extent it took into account land held outside the State, was beyond legislative competence as having extraterritorial operation.

Analysis: A State law is valid when there is a real and sufficient territorial nexus between the subject matter and the State, but it becomes vulnerable when it directly regulates land or persons beyond the State's territorial field. Section 3(2), as enacted, expressly brought within the ceiling computation land held by a person or family unit in any other part of India, and the explanation required such outside-State land to be taken into consideration while determining surplus land. The provision therefore travelled beyond the State's legislative field and could not be sustained merely by invoking the doctrine of territorial nexus.

Conclusion: The offending part of Section 3(2) was beyond the legislative competence of the State Legislature and could not be given effect to.

Final Conclusion: The reference was answered by reaffirming the controlling law on precedent and by holding that the impugned ceiling provision, insofar as it operated extraterritorially, remained unconstitutional; the matter was then sent back for disposal in accordance with law.

Ratio Decidendi: A State statute that directly makes land outside the State part of the ceiling computation has extraterritorial operation and is invalid to that extent unless a real and sufficient territorial nexus justifies the legislative burden.

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