Constitution Of India - Economic Principles

Constitution of India – Economic Principles A.

Preamble  Justice, Social, Economic and Political 1. To remove economic and political inequalities Lingappa Vs. State of Maharashtra 1986SC389 (paras 14, 16, 18, 20) 2. To provide a decent standard of living to the working people Nakara Vs. Union of India 1983SC130 (paras 33-34) 3. To protect the interests of weaker sections of the society Sadhuram Vs. Pulin 1984SC1471 (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 Or 2. 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

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

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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 India 2. Right not lost by express waiver or express agreement with State 1971UJSC222(223) – State of Rajasthan Vs. Vyas 3. Right to practise before any court of law 1962SC201 – Devatha Singh Vs. Chief Justice 4. Does not grant a right to do something which arises only out of contract Eg. 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 dangerous 1954SCR873 – Cooverjee Vs. Excise Commissioner Eg. Dealing in liquor 1975(SC)360(3 judges) – Nashirwar Vs. State 6. No right to carry on business wherever he choses Eg. On the street 1968SC133(138) – Pyare Lal vs. Delhi Municipality 1953SCR290(299) – Ibrahim vs. RTA

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Reasonable restriction can be imposed by executive in public interest and convenience No right of existing traders to be free from competition of new traders 1954SCR371 – Harnam Singh Vs. RTA Does not confer right to hold particular job or post 1981SCR344(para 14) – fertilizer corporation Union vs. Union of India 2

9. 10. 11. 12. 13. 14.

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C.

Does not confer monopoly right to carry on business 1954SCR371 – Harnan Singh vs. RTA Includes all avenues and modes to earn a livelihood excluding anti-social activities 1989(4)SCC155(para 28) – Saudan vs. NDMC No right to insist upon government or other individuals to do business with him 1953SCR290(299) – Ibrahim vs. RTA No right to carry on business in properties or rights belonging to government 1972SC1816 – State of Orissa vs. Harinarayan Includes right to close business 1979SC25(para 20) – Excel Wear vs. Union of India Restriction includes total prohibition in case of inherently dangerous trade or business 1954SCR873 – Cooverjee vs. Excise Commissioner Eg. Liquor But exercise of right not subject to absolute discretion of administrative authority 1970SC93(96) – Faruk vs. State of MP  License and permits

Part XIII – TRADE, COMMERCE AND INTERCOURSE WITHIN THE TERRITORY OF INDIA Articles 301-307 1) 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 Assam Freedom subject to restrictions imposed by law under Articles 302 and 204 and cannot be taken away by executive action 1970(1)SCC386(391) – District Collector vs. Ibrahim

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Article 19(1)(A) and Article 301 appear to overlap Points of distinction ARTICLE 19(1)(g) ARTICLE 301 Fundamental right Justiciable right Only to citizens Extends to all individuals Violated only by regulated Violated also by nonlaws regulatory laws

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When this freedom is impaired  When a Legislative or Executive action operates in restriction  Regulatory and Compensatory measures cannot be considered as violative Eg. Traffic regulation Licensing of vehicles Charging for maintenance of goods Marketing and health regulations Price control Economic and social planning Prescribing 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

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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. (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

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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.  Objects 5

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Power 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 manufactured 1969(2)SCC710(712) – State of Rajasthan vs. Mangilal Similarity – depends on nature and quality of goods

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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

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President’s sanction maybe subsequent assent 1962SC1406(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)

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Article 306 – Omitted

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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 6

authority so appointed such powers and such duties as it thinks necessary

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