Explanation:

 The question about Does the power of Parliament to diminish the areas of a state (under Article 3) include also the power to cede Indian territory to a foreign country came up for examination before the Supreme Court in a reference made by the President in 1960. The decision of the Central government to cede part of a territory known as Berubari Union (West Bengal) to Pakistan led to political agitation and controversy and thereby necessitated the Presidential reference. The Supreme Court held that the power of Parliament to diminish the area of a state (under Article 3) does not cover cession of Indian territory to a foreign country. Hence, Indian territory can be ceded to a foreign state only by amending the Constitution under Article 368. Consequently, the 9th Constitutional Amendment Act (1960) was enacted to transfer the said territory to Pakistan.
On the other hand, the Supreme Court in 1969 ruled that, settlement of a boundary dispute between
India and another country does not require a constitutional amendment. It can be done by executive
action as it does not involve cession of Indian territory to a foreign country.