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

 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

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 traders
1954SCR371 – Harnam Singh Vs. RTA
8. Does not confer right to hold particular job or post
1981SCR344(para 14) – fertilizer corporation Union vs.
Union of India

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

C. 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 non-
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 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

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.
 Objects
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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

 Tests of reasonable restriction same as those under

19(6) and ‘purpose’

 Against public interest if it effects

 Public health
 Safety
 Morals
 Territory and property

 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)

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