JUDGMENT P. Govindan Nair, J. 1. This is an appeal from the judgment of Mathew. J., dismissing O. P. No. 1171 of 1967. The petitioner in the Original Petition contended that the Kerala Electricity Duty (Validation) Act 3 of 1965 (shortly stated the Act) is beyond the competence of the State Legislature, and that, therefore, the demand notice Ext. P-1 produced along with the Original Petition was issued without authority of law and prayed for a declaration that the Act was ultra vires the powers of the Legislature and further prayed that the notice Ext. P-1 be set aside. The learned Judge held that there was sufficient territorial nexus to give competency to the State Legislature to pass the Act and accordingly dismissed the petition. 2. Before us learned counsel for the petitioner has raised various points, which may be formulated as under: (i) No liability had accrued or had been incurred by the petitioner so as to attract section 4 of the Travancore-Cochin Interpretation and General Clauses Act, 1125, and there being no such liability there could be no validating Act; (ii) The petitioner was engaged in supply and distribution of electrical energy in Shenkottah, an area that formed part of the T. C. State; but which ceased to be part of Kerala State after the re-organisation of the States in 1956, This being so, the Act that was passed in 1965 after the re-organisation of the States cannot impose liability, which it purported to do in relation to an area outside the State; (iii) The Act was in substance and in effect an Act to set aside a decision of a competent court and therefore is invalid; (iv) The agency that distributed and supplied electrical energy was a firm and the petitioner cannot be made responsible for the demand in Ext. P-1; and (v) Finally it was contended that there has been violation of the principles of natural justice. 3. Before we deal with these questions, it is necessary to refer to the relevant statutes and a few more facts. From the pleadings in the case, it is clear that the petitioner himself was a licensee under the Travancore-Cochin Electricity Duty ActAct IV of 1950. We directed the Advocate-General to make available to us the licence issued to the petitioner and the Advocate-General has produced the licence. We marked this as a court document as Ext. From the pleadings in the case, it is clear that the petitioner himself was a licensee under the Travancore-Cochin Electricity Duty ActAct IV of 1950. We directed the Advocate-General to make available to us the licence issued to the petitioner and the Advocate-General has produced the licence. We marked this as a court document as Ext. X and from the terms of Ext. X it is clear that the petitioner was a licensee under the T.C. Electricity Duty Act. The terms of the licence also show that the State Government was to supply electricity to the petitioner for distribution, supply and sale to the consumers in the area in which he was operating. Further the licence indicate that the supply was to be from a point in Punalur, a place that remained inside the territorial limits of the Kerala State after the re-organisation of the States. It is also seen that it was the State that was supplying the electricity which was produced by the Hydro-electrical Projects of the State. After the licence was issued the Travancore-Cochin State passed the T.C. Electricity Duty Act, 1950. It is only neccessary for our purpose to read sub-section (1) of section 3 of that Act. "3 (1) Save as otherwise provided in sub-section (2) every licensee in the State of Travancore-Cochin shall pay every month to the Government in the prescribed manner, a duty calculated at the prescribed rate on and in respect of all sales of energy effected by the licensee during the previous month, at a price of more than two annas per unit." 4. Section 9 enables Government to make rules to carry out the purposes of the T. C. Electricity Duty Act. "Prescribed" has been defined in this Act to mean "prescribed by rules made under this Act". And the rates at which the duty was to be charged was according to the terms of section 3(1) to be prescribed. So the State Government prescribed a duty of nine pies per unit of electricity sold at a price over two annas and on the basis of those rules, a demand for Rs. 47,667.19 was made on the petitioner. The petitioner then instituted a suit before the District Court, Trivandrum (O.S. 104 of 1955) and contended that section 3(1) of the Travancore-Cochin Electricity Duty Act, which we have read is bad for excessive delegation. 47,667.19 was made on the petitioner. The petitioner then instituted a suit before the District Court, Trivandrum (O.S. 104 of 1955) and contended that section 3(1) of the Travancore-Cochin Electricity Duty Act, which we have read is bad for excessive delegation. This contention was accepted by the court and the State was injuncted from recovering the amount demanded from the petitioner. Before the suit was decided, the Legislature passed the Kerala Electricity Duty Act, 1963, which repealed the T.C. Electricity Duty Act. 1950. The judgment of the District Court in O.S. 104 of 1955 was on 9th September 1963 and the Act of 1963 came into operation on the 10th of April, 1963. The State Government seems to have examined the position after the judgment was rendered by the District Court and came to the conclusion that the view taken by the District Judge was in accordance with the view expressed by the Kerala High Court and, therefore, decided to pass the Act. The preamble to the Act states that it is "an Act to validate the levy and collection of duty on sales of electrical energy under the Travancore-Cochin Electricity Duty Act, 1950," and after defining "duty" and "repealed Act", section 3 of the Act provides for the "validation of levy and collection of duty on sales of electrical energy''. It is necessary to read that section: "3. It is necessary to read that section: "3. Validation of levy and collection of duty on sales of electrical energy.(1) Notwithstanding any judgment, decree or order of any court, all duties levied or collected or purporting to have been levied or collected under the repealed Act and the rules made thereunder before the 15th day of April, 1963, shall be deemed to have been validly levied or collected in accordance with law as if the provisions of the repealed Act and of the rules mad thereunder, in so far as such provisions relate to the levy and collection of such duty had been included in, and formed part of, this section and this section had been in force at all meterial times when such duty was levied or collected; and accordingly, (a) no suit or other proceeding shall be maintained or continued, in any court for the refund of any duty paid under the repealed Act and the rules made thereunder; (b) no court shall enforce a decree or order directing the refund of any duty paid under the repealed Act and the rules made thereunder, and (c) any duty levied under the repealed Act and the rules made thereunder before the 15th day of April, 1963, but not collected, may be recovered in the manner provided under the repealed Act and the rules made thereunder. (2) For the removal of doubts, it is hereby declared that nothing in sub-section (1) shall be construed as preventing any person from claiming refund of any duty paid by him in excess of the amount due from him under the repealed Act and the rules made thereunder.� 5. We may mention here that it is not disputed that electrical energy made available under the licence Ext. X had been sold by the licensee to consumers. 6. We do not think that it is necessary for us to consider the question whether the petitioner had incurred any liability by virtue of section 3 of Act 4 of 1950 and the rules framed thereunder by the State Government or whether there was an accrued liability which could be said to subsist after the repeal of Act 4 of 1950 by Act 23 of 1963. We say so, because even if there was no accrued liability and the petitioner had not incurred any liability at all, if the State Legislature had competence to pass the law and passed that law and with retrospective effect so as to cover the period for which the duty had been demanded that law by its own vigour unaided and unsupported by a pre-existing liability would sustain die demand that has been made. In this view we express no opinion on the question as to whether the petitioner had incurred any liability under section 3 (1) of Act 4 of 1950 and the rules framed thereunder by the State Government under section 9 of that Act. This leads us to the question as to whether the State Legislature had competence to pass the Act. Learned counsel, on behalf of the petitioner, urged before us that this legislation, if at all, can be passed only under item 53, List II of the Seventh Schedule to the Constitution, and that the provision therein being "taxes on the consumption or sale of electricity", sale of electricity is the incidence or occasion for taxation. He further contended that the sale or consumption must also necessarily take place inside the territorial limits of the State as it existed at the time the statute was passed. Learned Advocate-General who appeared on behalf of the State did not contest the proposition that the competence of the State Legislature must be determined with reference to the state of affairs as they existed at the time the impugned Act was passed. Indeed this proposition is settled by the pronouncement of the Supreme Court, relied on by counsel for the petitioner, in A. Hajee Abdul Shukoor and Co, v. The State of Madras A.I.R. 1964 S.C.1729 and in M/s Chandrana and Co, v. The Slate of Mysore and others A.I.R. 1972 S.C. 217. So the question pointedly arises, whether the State Legislature, at the time it passed the Act, had the competence to pass the Act. Regarding the contention of the petitioner that the sale itself must take place within the State we have only to refer to two decisions of the Supreme Court to negative it. We may refer to a passage from the judgment of B. K. Mukerjee, J., in Poppatlal Shah, Partner of M/s Indo Malayan Trading Co. v. The Stale of Madras A.I.R. 1953. S.C. 274. We may refer to a passage from the judgment of B. K. Mukerjee, J., in Poppatlal Shah, Partner of M/s Indo Malayan Trading Co. v. The Stale of Madras A.I.R. 1953. S.C. 274. The passage runs: "The entry in the Provincial List that is relevant for our purpose is Entry No. 48 and that speaks of 'taxes on the sale of goods and on advertisements'. The entry does not suggest that a legislation imposing tax on sale of goods can be made only in respect of sales taking place within the boundaries of the province" In an earlier judgment of the Supreme Court in State of Bombay v. The United Motors A.I.R. 1953 S.C. 252 dealing with Entry 54, List II of the Seventh Schedule to the Constitution, Their Lordships of the Supreme Court observed: "The Legislature of any State has, under these provisions, the exclusive power to make laws 'for such State or any part thereof with respect to 'taxes on the sale or purchase or goods other than newspapers'. The expression 'for such State or any part thereof cannot, in our view, be taken to import into Entry 54 the restriction that the sale or purchase referred to must take place within the territory of that State." Applying these principles, we find it impossible to hold that when section 3 (1) of Act 4 of 1950 speaks of a duty in respect of sales of energy effected by the licensee, the duty is imposable only in relation to sales that took place inside the State. The true principle is, what has been stated in a number of decisions, the existence of sufficient territorial connection between the taxing State and what it seeks to tax. A passage from the decision of Dixon, J., in Broken Hill South Ltd. v. Commissioner of Taxation, N.S.W. 1977 (56) C.L.R. 337 at 375 had been oft quotedquoted by the Judicial Committee of the Privy Council and by our own Supreme Court and we cannot do better than quote it ourselves. The passage runs thus: "The power to make laws for the peace, order and good government of a State does not enable the State Parliament to impose by reference to some act, matter or thing occurring outside the State a liability upon a person unconnected with the State whether by domicile, residence or otherwise. The passage runs thus: "The power to make laws for the peace, order and good government of a State does not enable the State Parliament to impose by reference to some act, matter or thing occurring outside the State a liability upon a person unconnected with the State whether by domicile, residence or otherwise. But it is within the competence of the State Legislature to make any fact, circumstance, occurrence or thing in or connected with the territory the occasion of the imposition upon any person concerned therein of a liability to taxation or of any other liability. It is also within the competence of the legislature to base the imposition of liability on no more than the relation of the person to the territory. The relation may consist in presence within the territory, residence, domicile, carrying on business there, or even remoter connections. If a connection exists, it is for the legislature to decide how far it should go in the exercise of its powers. As in other matters of jurisdiction or authority courts must be exact in distinguishing between ascertaining that the circumstances over which the power extends exist and examining the mode in which the power has been exercised. No doubt there must be some relevance to the circumstances in the exercise of the power. But it is of no importance upon the question of validity that the liability imposed is, or may be, altogether disproportionate to the territorial connection or that it includes many cases that cannot have been foreseen." 7. The Judicial Committee of the Privy Council approved these observations. It approved the decision in Johnson v. Commissioner of Stamp Duties 1956 (1) All E.R. 502, wherein Lord Keith referred to the decision in Broken Hill South Lid. v. Commissioner of Taxation, N.S.W. 1937 (56) C.L.R. 337 at 375 in these terms: "In contrast with this decision is the decision in Broken Hill South, Ltd. v. Comr. It approved the decision in Johnson v. Commissioner of Stamp Duties 1956 (1) All E.R. 502, wherein Lord Keith referred to the decision in Broken Hill South Lid. v. Commissioner of Taxation, N.S.W. 1937 (56) C.L.R. 337 at 375 in these terms: "In contrast with this decision is the decision in Broken Hill South, Ltd. v. Comr. of Taxation, New South Wales, [1937 (56) C.L.R. 337], where, in the matter of certain income-tax legislation of New South Wales, it was held that income-tax on a foreign company in respect of interest on money secured by mortgage of property in New South Wales was within the constitutional power of the State legislature, Latham, C. J., said (ibid., at p. 358): 'The circumstance in respect of which the law operates must be something which really appertains to New South Wales,' And Dixon, J. said (ibid at p. 375): 'But it is within the competence of the State legislature to make any fact, circumstance, occurrence or thing in or connected with the territory the occasion of the imposition upon any person concerned therein of a libiality to taxation or of any other liability.' In Their Lordships' opinion, these judgments proceeded on the right principle and are in accordance with the conclusion which Their Lordships have reached in the present case." 8. The decision in Broken Hill South Ltd. v. Commissioner of Taxation, N.S.W. 1937 (56) C.L.R. 337 at 375 has been approved by our own Supreme Court in the decisions in Poppatlal Shah, Partner of Indo Malayan Trading Co. v. The State of Madras A.I.R. 1953 S.C. 274, State of Bombay v. The United Motors (India) Ltd. A.I.R. 1953 S.C. 252 (cited supra), and Tata Iron and Steel Co. v. Bihar State A.I.R. 1958 S.C. 452 and a number of other decisions of the same Court, to which we need not refer. Tata Iron and Steel Co. v. Bihar State A.I.R. 1958 S.C. 452 is also specific authority for the proposition that the theory nexus is applicable to a taxing State as well; in fact it has never been doubted by the Supreme Court though there is a passage in an earlier judgment of the Supreme Court, where Bhagavati, J., made certain observations, obiter as they were, which created some doubt. This was resolved by a judgment of Das, C. J., in Tata Iron and Steel Co. v. Bihar State A.I.R. 1958 S.C.452. This was resolved by a judgment of Das, C. J., in Tata Iron and Steel Co. v. Bihar State A.I.R. 1958 S.C.452. We shall extract a part of the judgment: "The learned Attorney-General points out that the three last mentioned cases in which the nexus theory was applied were income-tax cases and submits that that principle cannot be extended to salestax laws. He points out that in Bengal Immunity Co. Ltd. v. State of Bihar [ 1955 (2) SCR 603 =A.I.R. 1955 S.C. 661]. this court expressly left open the question, whether the theory of nexus applied to legislation with respect to salestax. The passage at p. 639 of SCR (at p. 677 of A.I.R.), relied upon by the learned Attorney-General only refers to the fact that the different State Legislatures considers themselve free to make a law imposing tax on sales or purchases of goods provided the State concerned had some territorial nexus with such sales or purchases and went on to say that the question whether they were right or wrong in so doing had not been finally decided by the courts. That passage, properly understood, can hardly be said to indicate that the theory of nexus does not apply to salestax legislation at all. The drift of the meaning of she passage was that the sufficiency of the different nexi relied on by the different States had not been tested by the courts. The passage strongly relied upon by the learned Attorney-General is to be found at p. 708 (of S.C.R.); (at p. 704 of A.I.R.) where Bhagwati, J., after referring to the earlier cases observed: 'It is a moot point whether this theory of territorial connection or nexus which has been mainly applied in income-tax cases, is also applicable to salestax legislation, the sphere of income-tax legislation and salestax legislation being quite distinct. Where as in the case of income-tax legislation the tax is levied either on a person who is within the territory by exercising jurisdiction over him in personam or upon income which has accrued or arisen to him or is deemed to have or arisen to him or has been derived by him from sources within the territory and it is, therefore, germane to enquire whether any part of such income has accrued or arisen or has been derived from a source within the territory, in the case of salestax legislation it is the sale or purchase of goods which is the subject matter of taxation and it cannot be predicated that the sale or purchase takes place at one or more places where the necessary ingrediants of sale happen to be located. The theory of territorial connection or nexus was not put to the test at any time prior to the enactment of the Constitution and it is not necessary also for us to give a definite pronouncement on the subject.' Apart from the fact that the concluding words in the passage quoted above may be read as indicating that the observations were obiter, it appears to us to be too late in the day to contend that the theory of nexus does not apply to salestax legislation at all. Indeed on examination of the decisions of this court will clearly show that the applicability of the theory of nexus to salestax legisalation has been clearly recognised by this court. In 1953 S.C.R. 1069 (A.I.R. 1953 S.C. 252), this Court had to interpret the true meaning of the explanation to Article 286 (1) (a) of the Constitution. That explanation created a fiction locating the situs of a sale or purchase in the State in which the goods had actually been delivered as a result of such sale or purchase for the purpose of consumpsion in that State notwithstanding the fact that, under the general law relating to sale of goods, the property in the goods had, by reason of such sale or purchase, passed in another State. This court by a majority then held that in view of the fiction created by the explanation the sale which was in reality an interstate sale became an intra-state sale and consequently the delivery and consuming State had the right to impose tax on that sale. This court by a majority then held that in view of the fiction created by the explanation the sale which was in reality an interstate sale became an intra-state sale and consequently the delivery and consuming State had the right to impose tax on that sale. It is true that that decision has been departed from in 1955 (2) S.C.R. 603: A.I R. 1955 S.C. 661, on the question of the interpretation of Article 286 of the Constitution, but on the point we are now discussing that decision clearly implies a recognition of the applicability of the nexus theory to the imposition of salestax. The observations of Patanjali Sastri, C.J., on the question of nexus in that case cannot, therefore, be said to be unnecessary for the decision of that case. In Popatlal Shah v. State of Madras (1953 S.C.R. 677: A.I.R. 1953 S.C. 274), Mukerjea, J. delivering the unanimous judgment of the Constitution Bench of this court definitely applied the theory of nexus to salestax legislation. Support for that conclusion was found directly in the decision of the Judicial Committee in 1948 F.C.R. 1: A.I.R. 1948 P.C. 118, which it was said, had been applied by this court to salestax legislation in the United Motor's case, but it is quite clear that the decision had, independently of the United Motor's case, adopted the principle of Wallace Brothers and Co.'s case to salestax legislation. In a recent case, State of Bombay v. R.M.D. Chamarbaugwala (A.I.R. 1957 S.C. 699), which was concerned with tax on cross-word competition, this court applied the theory of nexus and upheld the legislative competency of the Bombay Legislature to impose tax on the gambling competitions. At page 711 this court said: 'The doctrine of territorial nexus is well established and there is no dispute as to the principles. As enunciated by learned counsel for the petitioners, if there is a territorial nexus between the person sought to be charged and the State seeking to tax him the taxing statute may be upheld. Sufficiency of the territorial connection involves a consideration of two elements, namely, (a) the connection must be real and not illusory and (b) the liability sought to be imposed must be pertinent to that connection. It is conceded that it is of no importance on the question of validity that the liability imposed is or may be altogether disproportionate to the territorial connection. It is conceded that it is of no importance on the question of validity that the liability imposed is or may be altogether disproportionate to the territorial connection. In other words, if the connection is sufficient in the sense mentioned above the extent of such connection affects merely the policy and not the validity of the legislation.' Applying these principles to the facts of that case this court came to the conclusion that they constituted sufficient territorial nexus which entitled the State of Bombay to impose a tax on the gambling that took place within its boundaries and that the law could not be struck down on the ground of extra territoriality. It is not necessary for us on this occasion to lay down any broad proposition as to whether the theory of nexus, as a principle of legislation, is applicable to all kinds of legislation, It will be enough, for disposing of the point now under consideration to say that this court has found no apparent reason to confine its application to income-tax legislation but has extended it to salestax and to tax on gambling and that we see no cogent reason why the nexus theory should not be applied to salestax legislation. The learned Attorney-General submits that the theory of nexus cannot be applied to salestax legislation because such legislation is concerned with a tax on the transaction of sale, that is to say, a completed sale and to break up a sale into its component parts and to take one or more of such parts and to apply the theory to it will mean that the State will be entitled to impose a tax on one or more of the ingredients or constituent elements of the transaction of sale which by itself or themselves will not amount to a sale. This argument overlooks the fact that the provisions of the salestax legislation we are considering limit its charging section to 'sale'. In order to attract the charging section there must be a completed sale involving the transfer of property in the goods sold from the seller to the buyer. The nexus theory does not impose the tax. This argument overlooks the fact that the provisions of the salestax legislation we are considering limit its charging section to 'sale'. In order to attract the charging section there must be a completed sale involving the transfer of property in the goods sold from the seller to the buyer. The nexus theory does not impose the tax. It only indicates the circumstance in which a tax imposed by an act of the legislature may be enforced in a particular case and unless eventually there is a concluded sale in the sense of passing of the property in the goods no tax liability attaches under the Act. One or more of the several ingredients constituting a sale only furnished the connection between the taxing State and the 'sale' 9. The enquiry must, therefore, be limited to the question whether there has been a real or only a supposed illusory nexus. Once nexus is established, the courts are not concerned with the further question as to whether the law is disproportionate to the connection. These principles have been well settled. From above, which may be summarised at the risk of repetition, it cannot be gain said that there has been real nexus in this case. The electricity that was made available to the licensee-petitioner was State-owned. It was generated within the State and it was supplied from a point in the State to the licensee. He sold that energy. Apart from these facts, one other significant fact which has beer, dealt with by the learned Judge in the judgment under appeal, which we omitted to mention earlier is that the petitioner has all along been a resident at Trivandrum, an area which always remained within the State, T. C. or Kerala. There can be no doubt that the Act cannot be impugned on the ground of lack of legislative competence. 10. It was next contended that this Act is only for the purpose of abrogating the decision of the court which was said to be inconvenient to the State. This is so; but that will not make the law bad because the judgment rested on considerations which had ceased to exist as a result of the new law. 10. It was next contended that this Act is only for the purpose of abrogating the decision of the court which was said to be inconvenient to the State. This is so; but that will not make the law bad because the judgment rested on considerations which had ceased to exist as a result of the new law. There has been a number of decisions of the Supreme Court on this aspect, some upholding the contention that the law was bad as it interfered with a judicial pronouncement of a competent court and others holding that the law was good because there was no direct interference with the decision of any court; but the law only removed the foundation on which the decision was rested, thus rendering the decisions ineffective. To the former class belong the decisions relied on by learned counsel for the petitioner, Shri Prithvi Cotton Mills Ltd., etc. v. Broach Borough Municipality and others A.I.R. 1970 S.C. 192, Sree Raja Kandregula Srinivasa Jagannadharao Panthulu Bahadur Guru v. The State of Andhra Pradesh and others A.I.R. 1971 S.C. 71 and State of Tamil Nadu and another v. M. Rqyappa Gounder and another A.I.R. 1971 S.C. 231. We have had occasion to deal with this (question in more than one decision recently and it seems to us unnecessary to survey the decision again. This court in Haji Shaik Abdul Khader v. Union of India I.L.R. 1972 (1) Kerala 522 to which one of us was a party, referred to some of the important decisions on this aspect. This court again dealt with this matter in Mayilvahanam Motor Service v. State 1972 K.I.T. 564. We may summarise the principle thus: No legislature has competence to declare a judicial pronouncement of a competent court within its jurisdiction as invalid or set at naught or interfere with that decision. All the same the legislature has full competence to supply the lacuna in a statute which formed the foundation for the decision of the court, or to rectify a mistake in a statute, which was relied on in support of the decision. It is also well settled that these can be done by the legislature with retrospective effect. It is in the light of these principles that we will have to examine the provisions of section 3 of the Act, which we have already extracted. It is also well settled that these can be done by the legislature with retrospective effect. It is in the light of these principles that we will have to examine the provisions of section 3 of the Act, which we have already extracted. When we read the section, we have to picture in our minds the existence not only of section 3 (1) of Act 4 of 1950 from the commencement of the period with which we are concerned; but we have to imagine the rules that have been framed by the State Government as having been in existence from that time covering the period with which we are concerned; the law enacted by Act 4 of 1950 and the rules framed thereunder having been made a part of Act 3 of 1955, by section 3 thereof and made applicable with retrospective effect to cover the period in question. Therefore, it cannot be said that the legislature has directly interfered with the judicial decision. There is only one other point to be considered. This arises from the argument that has been advanced for the first time before this court, not having been taken in the Original Petition, and relates to alleged violation of the principles of natural justice. How natural justice has been violated has not been stated. There was not at any time any complaint over the quantum of the amount alleged to be due from the petitioner. The only contention had been that the under which it was claimed was bad as it contained excessive delegation. The calculation of the amount, the amount of energy that has been sold to the licensee and such other possible disputes regarding all these matters had never been raised. It has not been urged at any time mentioned in Ext. P-1, Rs. 47,667.19 is not the amount due from the petitioner if the Act is to be applied to the petitioner. To Ext. P-1 notice, the petitioner has given a reply notice Ext. P-2. Even in this reply nothing is stated about the correctness of the amount nor is there any indication of any dispute regarding the quantum of the amount; the only contention was that the State Legislature had no competence to pass the law. The petitioner was given notice and had an opportunity to raise his contentions. The contentions raised by him in Ext. P-2 had been dealt with elaborately. The petitioner was given notice and had an opportunity to raise his contentions. The contentions raised by him in Ext. P-2 had been dealt with elaborately. There has been no violation of natural justice. 11. We dismiss this appeal and direct the parties to bear their respective costs.