Constitution of India – Economic Principles

A. Preamble Justice, Social, Economic and Political

1. To remove economic and political inequalitiesLingappa Vs. State of Maharashtra1986SC389 (paras 14, 16, 18, 20)

2. To provide a decent standard of living to the working peopleNakara Vs. Union of India1983SC130 (paras 33-34)

3. To protect the interests of weaker sections of the societySadhuram Vs. Pulin1984SC1471 (paras 2970, 73)

Economic justice in the Socialistic sense

B. Fundamental Rights (Part III of Constitution) Article 19 (1) All the citizens shall have the right...

(g) To practice any profession, to carry on any occupation, trade or business

(6) Nothing in sub-clause(g) of the said clause shall effect the operation of any existing law in so far as it imposes or prevents the State from making any law imposing in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub-clause and in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it relates to, or prevents the State from making any law relating to:

1. The professional or technical qualifications necessary for practising any profession or carrying on any trades, occupation or business

Or2. The carrying on by the State, or by a corporation

owned or controlled by the State, of any trade, business, industry of service whether to the exclusion, complete or partial of citizens or otherwise

Object of Article 19(1) Guarantees Fundamental Rights subject to reasonable

restriction

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Nature of rights guaranteed Civil rights as against political rights Natural or common law rights as against those

created by statute Not in the nature of contractual rights

Reasonable restriction – to strike a balance between individual freedom and social control

Connotations of the Right in light of Supreme Court decisions:1. Right not to carry on business against his Will

1960SC924(928) - Hathising Mfg_Co. Union of India2. Right not lost by express waiver or express agreement

with State1971UJSC222(223) – State of Rajasthan Vs. Vyas

3. Right to practise before any court of law1962SC201 – Devatha Singh Vs. Chief Justice

4. Does not grant a right to do something which arises only out of contractEg. Right to enter into another’s land to catch and carry away fish(1955)2SCR919/1956SC17 – Ananda Vs. State of Orissa

5. No right to carry on business inherently dangerous1954SCR873 – Cooverjee Vs. Excise CommissionerEg. Dealing in liquor1975(SC)360(3 judges) – Nashirwar Vs. State

6. No right to carry on business wherever he chosesEg. On the street1968SC133(138) – Pyare Lal vs. Delhi Municipality1953SCR290(299) – Ibrahim vs. RTA

Reasonable restriction can be imposed by executive in public interest and convenience

7. No right of existing traders to be free from competition of new traders1954SCR371 – Harnam Singh Vs. RTA

8. Does not confer right to hold particular job or post1981SCR344(para 14) – fertilizer corporation Union vs. Union of India

9. Does not confer monopoly right to carry on business1954SCR371 – Harnan Singh vs. RTA

10. Includes all avenues and modes to earn a livelihood excluding anti-social activities1989(4)SCC155(para 28) – Saudan vs. NDMC

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11. No right to insist upon government or other individuals to do business with him1953SCR290(299) – Ibrahim vs. RTA

12. No right to carry on business in properties or rights belonging to government1972SC1816 – State of Orissa vs. Harinarayan

13. Includes right to close business1979SC25(para 20) – Excel Wear vs. Union of India

14. Restriction includes total prohibition in case of inherently dangerous trade or business1954SCR873 – Cooverjee vs. Excise CommissionerEg. Liquor

15. But exercise of right not subject to absolute discretion of administrative authority1970SC93(96) – Faruk vs. State of MP License and permits

C. Part XIII – TRADE, COMMERCE AND INTERCOURSE WITHIN THE TERRITORY OF INDIAArticles 301-3071) Article 301 – (freedom of trade, commerce and

intercourse) Subject to the other provisions of this part, trade,

commerce and intercourse throughout the territory of India shall be free

Object - Ensure that the economic unity of India may not be broken up by internal barriers 1961SC232(247) – Atiabari Tea Co. Vs. State of AssamFreedom subject to restrictions imposed by law under Articles 302 and 204 and cannot be taken away by executive action1970(1)SCC386(391) – District Collector vs. Ibrahim

Article 19(1)(A) and Article 301 appear to overlapPoints of distinction

ARTICLE 19(1)(g) ARTICLE 301Fundamental right Justiciable rightOnly to citizens Extends to all individualsViolated only by regulated Violated also by non-

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laws regulatory laws When this freedom is impaired

When a Legislative or Executive action operates in restriction

Regulatory and Compensatory measures cannot be considered as violativeEg. Traffic regulation

Licensing of vehiclesCharging for maintenance of goodsMarketing and health regulationsPrice controlEconomic and social planningPrescribing minimum wages

Taxation and Article 301 Impediment when it effects movement of goods

and services and person within the State Can be used to regulate trade activity and

eliminate competition

2) Article 302 – Power of Parliament to impose restrictions on trade, commerce and intercourse Parliament may by law impose such restrictions on the

freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in public interest Restriction and Regulation distinguished

Restriction – obstructs freedom of movement Regulation – promotes movement

Example Restriction - Total prohibition of movement of

certain goods during specified period Regulation - Licensing provisions with

compensatory fees

3) Article 303 – Restrictions on the legislative powers of the Union and of the States with regard to Trade and Commerce(1) Notwithstanding anything in Article 302 neither

Parliament nor the Legislature of a State shall have power to make any Law giving, or authorizing the giving of, any preference to one State over another, or making or authorizing the making of, any discrimination between one State and another, by virtue of any entry relating to Trade and Commerce in any of the Lists in the Seventh Schedule.

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(2) Nothing in Clause (1) shall prevent Parliament from making any Law giving, or authorizing the giving of, any preference or making, or authorizing the making of any discrimination if it is declared by such Law that it is necessary to do so, for the purpose of dealing with a situation arising from scarcity of goods in any part of the territory of India.

Scope Exception to Article 302 Parliament has no power to make laws or entries in

lists so as to cause discrimination among States unless it is dealing with a scarcity situation in any part of India

4) Article 304 – Restriction on Trade, Commerce and intercourse among States Notwithstanding anything in Articles 301 or 303 the

legislature of a State may by law:a) Impose on goods imported from other States of the

Union Territories any Tax to which similar goods manufacture or produced in that State subject to, so, however, as not to discriminate between goods so imported and goods so manufactured or produced and

b) Impose such reasonable restrictions on the freedom of Trade, Commerce or intercourse with or within that State as maybe required in the public interest:

Provided that no bill or amendment for the purposes of Clause (b) shall be introduced or moved in the Legislature of a State without the previous sanction of the President.

ObjectsPower of States to impose similar taxes on goods coming into the States as those levied by them on goods manufactured within

Article 301 is subordinated to power of State to impose taxes

No discrimination of imposition of taxes on imported good and similar goods manufactured1969(2)SCC710(712) – State of Rajasthan vs. Mangilal

Similarity – depends on nature and quality of goods

Tests of reasonable restriction same as those under 19(6) and ‘purpose’

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Against public interest if it effects Public health Safety Morals Territory and property

President’s sanction maybe subsequent assent1962SC1406(1416) – Automobile transport vs. State of Rajasthan

5) Article 305 – Saving of existing laws providing for State monopolies Nothing in Articles 301 and 303 shall effect the

provisions of any existing Law except in so far as the President may by order otherwise direct and nothing in article 301 shall affect the operation of any Law made before the commencement of the Constitution (4th

Amendment) Act 1955, in so far as it relates to or prevent parliament or the Legislature of a State from making any Law relating to any such matter is referred to in 19(6)(iv)

6) Article 306 – Omitted

7) Article 307 – Appointing of Authority for carrying out the purposes of Articles 301 to 304 Parliament may by Law appoint such Authority as it

considers appropriate for carrying out the purposes of Articles 301, 302, 303 and 304, and confer on the authority so appointed such powers and such duties as it thinks necessary

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