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A Project Work In FUNDAMENTAL RIGHTS (HONOURS II)

FREEDOM OF TRADE, BUSINESS AND PROFESSION

SUBMITTED TO: Ms. VINI SINGH


FACULTY: - CONSTITUTIONAL LAW

SUBMITTED BY: PRANAV KHANDELWAL


SEMESTER 8
SECTION A
ROLL NO. 94

SUBMITTED ON:
4th APRIL, 2016

HIDAYATULLAH NATIONAL LAW UNIVERSITY


Raipur, Chhattisgarh

Freedom of Trade, Business and Profession


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ACKNOWLEDGEMENTS
Thanks to the Almighty who gave me the strength to accomplish the project with sheer hard
work and honesty.

I would like to sincerely thank my faculty for Fundamental Rights Ms. Vini Singh Mam for
giving me this topic and guiding me throughout the project. Through this project I have
learned a lot about the aforesaid topic and this in turn has helped me grow as a student.

My heartfelt gratitude also goes out to the staff and administration of HNLU for the
infrastructure in the form of our library and IT lab that was a source of great help in the
completion of this project.

PRANAV KHANDELWAL

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TABLE OF CONTENTS
Acknowledgements .................................................................................................................... 2

Introduction ................................................................................................................................ 4

Research Methodology .............................................................................................................. 5

Objectives .................................................................................................................................. 5

Chapterisation ............................................................................................................................ 6

CHAPTER 1: MEANING OF AND DIFFERENCE BETWEEN TRADE, BUSINESS


AND PROFESSION .............................................................................................................. 6

Trade .................................................................................................................................. 6

Business ............................................................................................................................. 6

Profession ........................................................................................................................... 7

CHAPTER 2: SCOPE OF ARTICLE 19(1)(g) ..................................................................... 9

Freedom to carry on any occupation .................................................................................. 9

Article 19 (1) (g) is Available against the State and Not Against the Private Individuals 9

Locus Standi..................................................................................................................... 10

CHAPTER 3: RELATION BETWEEN ARTICLE 19(1)(g) AND ARTICLE 301 ........... 13

CHAPTER 4: ARTICLE 19(1)(G) WITH REASONABLE RESTRICTION UNDER


ARTICLE 19 (6) .................................................................................................................. 17

Reasonable Restrictions ................................................................................................... 19

Instances of Reasonable and Unreasonable Restrictions ................................................. 21

Conclusion ............................................................................................................................... 24

References ................................................................................................................................ 25

Acts/Statutes ........................................................................................................................ 25

Books ................................................................................................................................... 25

Cases Referred ..................................................................................................................... 25

Websites ............................................................................................................................... 27

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INTRODUCTION

Article 19 (1) (g) guarantees the freedom to practice any profession, or to carry on any
occupation, trade or business. Under Article 19(6), however, the state is not prevented from
making a law imposing, in the interests of the general public, reasonable restrictions on the
exercise of the above right. A doubt was expressed in the Constituent Assembly whether
these were fundamental rights at all. Perhaps the only other Constitutions which have given
them the Status of fundamental rights are those of Ireland and Switzerland.

It seems that the framers of the Indian Constitution had been influenced by the complex
social system that prevailed in India, in seeking to guarantee rights such as these. It has been
a bane of India's social life that professions were inherited rather than acquired.

A society dominated by caste, and professions based upon caste or religion, have little to
offer for the building up of a community enlivened by social mobility and dynamism. Such a
society is often intolerant to persons who change the traditional profession of their ancestors
and is eager to maintain a petrified social order.

A constitutional guarantee of the right to take up the profession, calling, trade or business of
one's choice is indeed a significant aid to the building up of a dynamic and democratic
society. The framers of the Constitution have done well to incorporate these rights in the
chapter on Fundamental Rights and have thereby helped the evolution of a truly democratic
society.

The State's power to restrict the enjoyment of these freedoms is limited to the making of any
law imposing reasonable restrictions in the interests of the general public in so far as it relates
to (a) the prescribing of professional or technical qualifications necessary for practicing any
profession or carrying of any occupation, trade or business or (b) the carrying on by the State
or by a corporation owned or controlled by the State, of any trade, business, industry or
service.

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RESEARCH METHODOLOGY

This research is descriptive and analytical in nature. Secondary and Electronic resources have
been largely used to gather information about the topic.

Websites, books, journals, articles and reports have been primarily helpful in giving this
project a firm structure.

Footnotes have been provided wherever needed to acknowledge the source.

OBJECTIVES

To discuss about freedom of trade, profession and business as given under Article
19(1)(g) of Constitution of India.
To study and discuss about the meaning and difference between the term trade,
profession and business.
To discuss the scope of Article 19(1)(g).
To study the relation between Article 19(1)(g) and Article 301.
To discuss the scope of Article 19(1)(g) in light of restrictions placed under Article
19(6).

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CHAPTERISATION

CHAPTER 1: MEANING OF AND DIFFERENCE BETWEEN TRADE, BUSINESS


AND PROFESSION

Trade

The word trade means exchange of goods for goods or goods for money or any business
carried on with a view for profit, whether manual or mercantile distinguished from liberal arts
or learned professions and from agriculture(Industrial Disputes Act, 1947 ).1

Trade in its primary meaning is the exchanging of goods for goods or goods for money, in its
secondary meaning for goods, it is repeated activity in the nature of business carried on with
a profit motive, the activity manual or mercantile, as distinguished from the liberal arts or
learned professions or agriculture.2

Trade is an exchange of goods for goods or for money with the object of making profits in the
widest sense; it includes any business carried on with a view to earn profit.

Business

The word businesses must be interpreted in the context of the statue in which it occurs and not
in the context of the other statutes or in a manner alien to the context of the statute concerned.3

Business includes any trade, commerce or manufacture or any adventure in the nature of trade,
commerce or manufacture, or any profession or vocation, calling an immediate task or objective ;
a commercial or industrial enterprise; and means practically anything which is an occupation as
distinguished from pleasure.

1
Madras Gymkhana Club Employees Union v. Management of the Gymkhana Club; AIR (1968) SC 554
2
State of Punjab and Others. v M/s. Bajaj Electricals Limited; AIR 1968 SC 739
3
S. Mohan Lal v. R. Kondiah; AIR (1979)SC 1132

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The expression business is a word of indefinite import. In taxing statutes it is used in the sense
of an occupation or profession which occupies the time, attention and labour of a person normally
with the object of making profit.4

Profession

Profession defined in Concise Oxford Dictionary means, among other things, vocation and
calling, especially one that involves some branch of learning or science, as the learned
profession (divinity, law, and medicine). A profession is normally associated with the
exercise of intellectual or technical equipment resulting from learning or science.5

The term profession involves the idea of an occupation requiring either purely intellectual
skill or manual skill controlled, as in painting and sculpture, or surgery, by the intellectual
skill of the operator, as distinguished from an operation which is substantially the production
or sale of arrangements for the production or sale of commodities.6 The term originally
contemplate only theology, law and medicine, but as applications of science and learning are
extended to other departments of affairs, other vocations also receive the name, which
implies professed attainments in special knowledge as distinguished from mere skill.

The words trade, business, profession in Article 19 (1) (g) have been interpreted
varyingly. The word trade as used in Article 19 (1) (g), has been held in Safdarjung
Hospital Case7 is of the widest scope. It includes the occupation of men in buying and
selling, barter or commerce, work, especially skilled e.g. the trade of gold smiths. It even
includes persons in a line of business in which persons are employed as workmen.

The word business it is said, is ordinarily more comprehensive than the word trade but one
is used as synonymous with other. In Safdarjung Hospital case again the Court said that the
word business too is a word of wide importance. In one sense it includes all occupations
and professions. But in the collocation of the terms and their definitions these terms have a
definite economic content of a particular type and have been uniformly accepted as excluding

4
State of Andhra Pradesh v. Abdul Bakhi; AIR 1965 SC 531:
5
Sundranarayana Pillai v. Executive Officer; AIR 1966 Mad 262
6
I.R.C. v. Maxse,(1919)1 KB 647 (657)
7
The Management of Safdarjung Hospital v. Kuldip Singh Sethi; AIR 1970 SC 1407

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professions and are only concerned with the production, distribution and consumption of
wealth and the production and availability of material services. In Narain Swadeshi Weaving
Mills v. Commissioner of Excess Profits Tax8 the Supreme Court observed that the word
business connotes some real, substantial and systematic or organized center of activity or
conduct with a set purpose but no general principle could be laid down which would be
applicable to all cases and that each case must be decided on its own circumstances according
to ordinary common sense principles as to what business is. A profession on the other hand,
has been held ordinarily as an occupation requiring intellectual skill, often coupled with
manual skill.9

In the case of T.M.A. Pai,10 it was held that Article 19 (1) (g) employs four expressions viz.
profession, occupation, trade and business. Their fields may overlap, but each of them does
have a content of its own. They cover all activities of a citizen in respect of which income or
profit is generated, and which can consequently be regulated under Article 19 (6). Education
has so far not been regarded as a trade or business where profit is the motive. Even if there is
any doubt about whether education is a profession or not, it does appear that education will
fall within the meaning of the expression occupation. The establishment and running of an
educational institution where a large number of persons are employed as teachers or
administrative staff, and an activity is carried on that results in the imparting of knowledge to
the students, must necessarily be regarded as an occupation, even if there is no element of
profit generation. It is difficult to comprehend that education, per se, will not fall under any
of the four expressions in Article 19(1) (g). Occupation would be an activity of a person
undertaken as a means of livelihood or a mission in life.

8
AIR 1955 SC 176
9
Krishan Kumar v. State of J&K; AIR 1967 SC 1368
10
T.M.A.Foundation v. State of Karnataka (2002) 8 SCC 481

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CHAPTER 2: SCOPE OF ARTICLE 19(1)(g)

Freedom to carry on any occupation

Article 19 (1) (g) confers a broad and general right which is available to all persons to do
work of any particular kind and of their choice. It does not confer the right to hold a
particular job or to occupy a particular post of ones choice. The right to pursue a calling or to
carry on an occupation is not the same thing as the right to work in any particular post under
a contract of employment. In Fertilizer Corporation v. Union of India11 the workmen
challenged the validity of sale of certain plants and equipments on the ground that they will
be deprived of their employment and their constitutional right under Article 19 (1) (g) will be
violated. The court held that Article 19 (1) (g) does not protect the right to work in a
particular post under a contract or employment as such Article 19 (1) (g) cannot be invoked
against the loss of a job or removal from service. But this does not confer the right to do
anything considered illegal in the eyes of law or to hold a particular job or to occupy a
particular post of the choice of any particular person.12 Further Article 19 (1) (g) does not
mean that conditions be created by the State or any statutory body to make any trade lucrative
or to procure customers to the business/ businessman.13 Moreover Eviction of a person in
unauthorized occupation or premises belonging to Municipality or Panchayat is not illegal as
a citizen whose occupation at a place is unlawful cannot claim fundamental right to carry on
business in such place since the fundamental rights can not be availed in the justification of
an unlawful act or in preventing a statutory authority from lawful discharging its statutory
functions.14

Article 19 (1) (g) is Available against the State and Not Against the Private Individuals

For a considerable period, the approach of the Judiciary had been that the rights which are
given to the citizens by way of fundamental rights as included in Part III of the Constitution
are the guarantee to the citizens against State. But actions as distinguished from violation of

11
AIR 1981 SC 344
12
Fertilizer Corporation Kamgar Union, Sindri v. UOI; AIR 1981 SC 344.
13
Chaitanya Prakash v. Board of Secondary Education Rajasthan; 1960 Raj. L.W. 209.3
14
Footpath Khyudra Byabasai Sangh Bhubaneswar.v.State of Orissa & Ors; AIR NOC 2010 Ori. 125

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such rights from private parties is the private action and is sufficiently protected by the
ordinary law. Article 19 (1) (g) does not abrogate the law under torts relating to private
business between individuals and individuals, and in case of individual disputes between
individuals, inter se, involving trade or business, the subject matter of disputes can be made
liable to an injunction from the Civil Court.15

A dispute between individuals concerning their civil rights has nothing to do with
infringement of fundamental right.16 The principle which follows is that in case of
infringement of any fundamental right on the part of the State, the aggrieved party has three
remedies; one at the ordinary law Courts; the second at the High Court under Article 226, and
the third at the Supreme Court under Article 32. It has been accepted in Maneka Gandhi case
that the rights, which though not named in Article 19, are yet such as would form an integral
part of any of the rights specifically named in Article 19, will be protected from infringement
in the same ways as a fundamental right.

Locus Standi

In A.B.S.K. Sangh (Rely) v. Union of India17 it has been held that even an unregistered
association can maintain a petition for relief under Article 32 of the Constitution if there is a
common grievance i.e. Article 32 is not to protect only individuals fundamental rights but is
capable of doing justice wherever it is found and the society has an interest in it. In the
historic judgment in Judges Transfer case,18 the seven judges Constitution Bench of the
Supreme Court has set at rest the controversy whether a person not directly involved can
move the court for the redressal of grievances. The court held that any member of the public
having sufficient interest can approach the court for enforcing constitutional or legal rights
of such persons or group of persons even through a letter. In the same case the Honble Court
has held that it cannot be said that lawyers only have the right of locus standi to file a petition
in respect of every matter concerning judges, courts and administration of justice. Again in

15
Dattamal Chiranjilal (M/s) v. Lodhi Prasad; AIR 1960 All 622.
16
Paika Padhani v. Pindiko Petro; AIR 1958 Orissa 15
17
AIR 1981 SC 298
18
S.P. Gupta v. President of India and Others; AIR 1982 SC 149

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Rice and Flour Mills v. N.T. Gowda19 the Supreme Court held that a rice mill owner has no
locus standi to challenge under Article 226 for setting up of a new rice mill even if the setting
up of such rice mill is in contravention of the rule because no right vested in the applicant has
been infringed.

The Freedom under Article 19 (1) (g) is available only to the Citizens of India and it
cannot be claimed by Non-citizens.

The fundamental rights guaranteed under Article 19 are available to citizens, i.e., living
natural persons having Indian citizenship. A non-citizen cannot challenge validity of laws
under Article 19.20 For the purpose of Article 19 (1) (g), the following entities have been held
to be non-citizens. A company incorporated under the company Act. However, the
fundamental rights of the shareholders of a company are not lost when they associate to form
a company21, a religious denomination or a section thereof,22 Municipal committee,23 a
juristic person like a Union, a deity, an association registered under the Societies Registration
Act.

Doubts were raised as to whether a corporation doing business can claim protection of Article
19 (1) (g) of the Constitution. Corporations and companies, not being citizens, can make a
petition under Article 32. It was held though a company has no fundamental right under
Article 19, a shareholder and the managing director have the right under the Article19 (1)
(g).24 Court pronounced following in this case:

i. The scope of Article 19 (1) (g) is restricted merely to those natural human beings who
are Indian citizens.

19
AIR 1971 SC 246
20
Martiner Monstant Joan v. Union of India; AIR NOC 2010 AP 87
21
Bennett Coleman & Co. v. Union of India; AIR 1972 SC 106
22
Acharya Maharajshri Narendra Prasad Ji Angad Prasad Ji Maharaj v. State of Gujarat; AIR 1974 SC 2098
23
Municipal Committee, Amritsar v. State of Punjab; (1969)1 SCC 475
24
Ghodra Electricity Co. Ltd. V. State of Gujarat; AIR 1975 SC 32

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ii. The state can regulate private business corporations in a major way without caring for
limits prescribed by the Article 19 (1) (g) of the Constitution. This affords greater
leeway to the government to regulate private enterprises to promote national interests.

It has been held though Article 19 grants rights to citizens as such associations of citizens,
corporations can lay claim to the fundamental right guaranteed under Article 19 solely on the
basis of their being aggregations of citizens. As the stream can rise no longer than the source,
associations of citizens/corporations cannot lay claim to right not open to citizens or claim
freedom from restrictions to which the citizens composing them are subject. Conversely, a
restriction on the activities of the association is not a restriction on the activities of the
individual citizens forming membership of the association.25

25
Dharam Dutt and others v. Union of India and others; (2004) 1 SCC 712

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CHAPTER 3: RELATION BETWEEN ARTICLE 19(1)(g) AND ARTICLE 301

Regarding the inter relation of Article 19 (1) and Article 301, the view that Aricle. 19(1)(g)
deals with the right of the individuals and Article 301 provides safeguards for the carrying on
trade as a whole distinguished from an individuals right to do the same is hardly tenable.26
The Supreme Court has denounced the theory that Art 301 guarantee freedom in the
abstract.27

Another way of projecting the same idea is that art 301 aims at preventing restrictions on the
volume of trade flowing and therefore the effect of a law on individuals is irrelevant. The test
of total volume has been criticized several times as unreal and unpractical. For it is
unpredictable because it interferes with the individual flow of the total trade volume and for
the individual right therefore, the volume of trade theory is also untenable.28 In a taxing
stature, the reasonableness of its provisions has to be tested not only in view of the provisions
of Articles 14 and 19 but also those of Article 304B Levying entry tax in a case of the State of
Assam & Ors. v. Chhotabhai Jethabhai Patel Tobacco Products Co. Ltd.29 higher than
prevailing in other states is not obstruction of free flow of trade and the levy is not
discriminatory.

The controversy has arisen about the relationship of Article 19 (1) (g) with Article 301 and
their scope in the light of each other. Thus the major differences between the two are:

1. Article 19 (1) (g) is a fundamental right, and enforceable directly in the Supreme
Court under Article 32 while Article 301 is a constitutional right.30
2. The proclamation of emergency suspends Article 19 (1) g) but Article 301 remains
unaffected whereby the courts may take recourse to Art. 301 to adjudge the validity of
a restriction on commerce.31

26
Saghir Ahmed v. U.P.; AIR 1954 SC 728
27
Distt. Collector Hyderabad v. Ibrahim; AIR 1970 SC 1278
28
Commonwealth of Australia v. Bank of New South Wale; 1950 AC 235
29
AIR NOC 2008 Gau 663
30
Ram Chandra v. Orissa; AIR 1956 SC 298
31
Bapubhai v. State of Bombay; AIR 1956 Born 21

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3. Article 19 (1) (g) refers to profession, occupation, trade or business. While Article
301, speaks of trade, commerce or intercourse.
4. Freedom of trade and commerce under article 301 is a wider concept than that of an
individuals freedom to trade guaranteed by Article 19 (1) (g) as Article 19 (1) (g) as
is confined to a citizen, as distinct from an alien or even corporation; the languages of
Article 301 is quite general and it can be invoked by a non-citizen, corporation and
even by a state on complaints of discrimination or preference which are outlawed by
Article 303;
5. Article 19 (1) (g) does not contain the words throughout the territory of India,
which occur in Article 301. In this sense, Article 19 (1) (g) may be relevant for
international trade unlike Article 301.
6. While restriction of the right under Article 19 (1) (g) must be reasonable whether
imposed by Parliament or by a state legislature, it need not be regarded freedom under
Article 301 if the restriction imposed by a state law is examined under the procedure
laid down in the provisions of the Article 301(b).
7. Article 301 could be invoked only when an individual is prevented from sending his
goods across the state, or from one point to another in the same state, while Article 19
(1) (g) can be invoked when the complaint is with regard to the right of an individual
to carry on business unrelated to or irrespective of, the movement of goods while Art
301 contemplate the right of trade in motion. Article 19 (1) (g) Secures the right at
rest it is true that the movement aspect of commerce is significant, and one of the
dominant purposes underlying Article 301 is to keep interstate movement of goods
and persons free and unhampered. Though the Supreme Court has placed emphasis on
the movement. Yet it is difficult to accept the theory that Art 301 is limited only to
movement and not to trade at rest. The concept of trade at rest has been countered by
the statement that there is no rest for the businessmen; the essence of intercourse is
coursing not sitting.32
8. Article 19 (1) (g) though it is subject to Article 19 (6), is not made subject to any
other expressed qualifications. But Article 301 is made subject to Article 302 to 307.
9. Article 301 covers much interference with trade by commerce which may not
ordinarily come within Article 19 (1) (g), e.g., Levy of octroi. An individual who is

32
A. Ahmed v. Mysore; AIR 1975 SC 1443

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affected by the violation of Article 301 and 304 can also complain of an infringement
of Article 19 (1) (g) and bring an application under Article 32, even though Articles
301,304 also ordinarily constitute an infringement of the fundamental right to trade
which is granted by Article 19 (1) (g) but a tax which is compensatory in character
cannot be held to constitute a restriction.33
10. Article 19 is primarily intended to restrict legislative or executive action, but has no
direct relevance to the concept of federalism. In contrast Article 301-307 have a direct
relevance to the concept of federalism. In many proceedings invoking Article 301-307
disputes can arise between the Union and a State, or between States, thus attracting
Article 131 of the Constitution.

In Moti Lals Case34 observations were made on the scope of Article 19 (1) (g) and 301.
Malick C.J. said:

Article 19 lays down the right of the citizen, while Art 301 deals with how the trade,
commerce and intercourse are to be carried on between one place and another.

Similar observation are made in State of Bombay v. R.M.D.C.35 wherein Das, C.J; said that

Article 19 (1) (g) and 301, are two facets of the same thing the freedom of trade,
Article 19 (1) (g) looks at the matter from the point of view of the individual citizen and
protect their individual right to carry on their trade or business. Article 301 looks at the
matter from the point of view of the countrys trade and commerce as whole, as distinct from
the individual interests of the citizens and it relates to trade, commerce or intercourse both
with and within the states.

Thus it is clear that according to one line of approach taken to distinguish Article 19 (1) (g)
from Article 301, the former looks at the matter from the point of view of an individual while
the latter looks from the point of view of general volume of trade and commerce. As per the

33
Distt .Collector v. Ibrahim; AIR 1970 SC 125
34
Moti Lal v. Govt. of U.P.; AIR 1951 All 257
35
AIR 1957 SC 699

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other line of approach, Article 301 is limited to the freedom of traders, commerce and
intercourse though out the territory of India while Article 19 (1) (g) applies to the rest of the
trading activities.

It may reasonable be assumed that two provisions of the Constitution cannot be read to repeat
the same thing. On this principle Article 301 must not cover that has already been covered by
the Art 19 (1) (g) so as to avoid overlapping between the two. Actually, Article 301 is
confined to very limited types of trade activities, it is very particular and specific while
Article 19 (1) (g) is the quite general. The particular must undoubtedly reduce the scope of
the general to avoid overlapping.36

36
Manik Chand v. Union of India; (1984) 3 SCC 65

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CHAPTER 4: ARTICLE 19(1)(G) WITH REASONABLE RESTRICTION UNDER


ARTICLE 19 (6)

Article 19(1)(g) guarantees to all citizens the right to practise any profession, or to carry on
any occupation, trade or business. Nor is the state prevented from making-

i. a law relating to professional or technical qualifications necessary for practicing a


profession or carrying on any occupation, trade or business; or
ii. a law relating to the carrying on by the state, or by corporation owned or controlled by
it, of any trade, business, industry or service, whether to the exclusion, complete or
partial, of citizens or otherwise.

For long India has believed in a regulated and planned economy and not in a laissez faire
economy. A number of constitutional provisions made under the title of Directive Principles
of State Policy bear testimony to this economic philosophy. Reasonable restrictions on
trade, commerce or business have to be assessed keeping this factor in mind. Consequently,
the right to carry on trade is very much regulated in India and the Courts have upheld, in
course of time, a good deal of social control over private enterprise. By and large it is correct
to say that despite Article 19(1)(g), the government enjoys power to regulate and order the
economy in any way it pleases.

Article 19 (1) (g) of Constitution of India provides Right to practice any profession or to
carry on any occupation, trade or business to all citizens subject to Article 19(6) which
enumerates the nature of restriction that can be imposed by the state upon the above right of
the citizens. Sub clause (g) of Article 19(1) confers a general and vast right available to all
persons to do any particular type of business of their choice. But this does not confer the right
to do anything consider illegal in eyes of law or to hold a particular job or to occupy a
particular post of the choice of any particular person. Further Art 19(1) (g) does not mean that
conditions be created by the state or any statutory body to make any trade lucrative or to
procure customers to the business/businesssman. Moreover a citizen whose occupation of a
place is unlawful cannot claim fundamental right to carry on business in such place since the

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fundamental rights cannot be availed in the justification of an unlawful act or in preventing a


statutory authority from lawfully discharging its statutory functions.37

Keeping in view of controlled and planned economy the Supreme Court in a series of cases
upheld the socially controlled legislation in the light of directive principles and the activities
of the private enterprises have been restricted to a great extent. However under Article 19(6),
the state is not prevented from making a law imposing reasonable restrictions on the exercise
of the fundamental right in the interest of the general public or,
i. A law relating to professional or technical qualifications is necessary for practicing a
profession. A law laying down professional qualification will be protected under
Article 19(6). No person can claim as of right to possess a certificate for the
profession of acting as guide, and the certificate once granted can be cancelled
without hearing the person concerned.
ii. A law relating to the carrying on by the state, or by any corporation owned or
controlled by it, of any trade, business, industry or service, whether to the exclusion,
complete or partial, of citizens or otherwise.

Under article 19(6)(ii) nothing contained in Sub-clause(g) of Clause (1) of Article 19 shall
affect carrying on by the State any trade, business, industry or service, whether to the
exclusion, complete or partial of citizens or otherwise if it is not in the interest of general
public. Article 19(6)(ii) will have no application if the State is not carrying on any trade.
Clause 19(6) of the Constitution authorizes the state to impose reasonable restrictions on

i. The freedom of trade, business, occupation and profession, in the interest of the
general public.
ii. Professional and technical qualifications necessary for practicing any profession or
carrying on any trade, occupation or business.

The state also has power to carrying on by the state, or by a corporation owned or controlled
by the state, of any trade, business, industry or service, whether to the exclusion, complete or
partial, of citizens or otherwise.

37
State of Gujarat v. Dharamdass; AIR 1982 SC 781

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Reasonable Restrictions

In several cases, the Courts have upheld measures affecting trade and commerce to some
extent, on the ground that they do not constitute restrictions on the Fundamental Right
concerned.

Reasonableness of restriction is to be determined in an objective manner and from the


standpoint of interest of the general public and not from the standpoint of the interests of
persons upon whom the restrictions have been imposed or upon abstract considerations. A
restriction cannot be said to be unreasonable merely because in a given case, it operates
harshly. In determining whether there is any unfairness involved, the nature of the right
alleged to have been infringed, the underlying purpose of the restriction imposed, the extent
and urgency of the evil sought to be remedied thereby, the disproportion of the imposition,
the prevailing condition at the relevant time enter into judicial verdict. The reasonableness of
the legitimate expectation has to be determined with respect to the circumstances relating to
the trade or business in question. Canalisation of a particular business in favour of even a
specified individual is reasonable where the interest of the country are concerned or where
the business affects the economy of the country.38

In Ram Jawaya v. State of Punjab,39 the government scheme to nationalize school text books
was held valid under Art. 19(1)(g) because the private publishers right to print and publish
any book they liked and offer the same for sale, was not curtailed. The choice of text books
for the recognised schools lay with the government and the publishers had no Fundamental
Right to have any of their books prescribed as a text book by the school authorities.

A regulation of trade and commerce becomes challengeable under Art. 19(1)(g), if it is shown
that it directly and proximately interferes in praesenti with the exercise of freedom of trade. If
the alleged restriction does not directly or proximately interfere with the exercise of freedom
of trade, the freedom guaranteed by Article 19(1)(g) is not violated.40 Once it is assumed that
the impugned legislation imposes a restriction on the freedom of trade, the burden is on those

38
Bannari Amman Sugars Ltd. v. CTO, (2005) 1 SCC 625
39
AIR 1955 SC 549
40
Sukhnandan Saran Dinesh Kumar v. Union of India, AIR 1982 SC 902

Freedom of Trade, Business and Profession


20

who support it to show that the restriction imposed is reasonable and in the interest of general
public. The burden is on those who seek the protection of Art. 19(6) and not on the citizen
who challenges the restriction as invalid. The Supreme Court has also emphasized that the
greater the restriction, the more the need for strict scrutiny by the Court.41

Under Article 19(6) reasonableness of a restriction has to be tested both from procedural as
well as substantive aspects of the law. In order to determine the reasonableness of the
restrictions, regard must be had to the nature of the business and the conditions prevailing in
the trade. These factors differ from trade to trade and no hard and fast rules concerning all
trades can be laid down. Further, a restriction on a trade or business is unreasonable if it is
arbitrary or drastic and has no relation to, or goes much in excess of, the objective of the law
which seeks to impose it.

The Court has further explained the concept of reasonableness as envisaged in Art. 19(6) in
Krishnan:42

The reasonableness of restriction is to be determined in an objective manner and


from the standpoint of the interests of general public and not from the standpoint of the
interests of the persons upon whom the restrictions are imposed or upon abstract
consideration. A restriction cannot be said to be unreasonable merely because in a given
case, it operates harshly..In determining the infringement of the right guaranteed under
Art. 19(1)(g), the nature of right alleged to have been infringed, the underlying purpose of the
restriction imposed, the extent and urgency of the evil sought to be remedied thereby, the
disproportion of the imposition, the prevailing conditions at the time, enter into judicial
verdict.

Thus, restrictions to be reasonable must not be arbitrary or excessive in nature so as to go


beyond the interest of general public. This formulation involves a balancing of private
interest vis-a-vis public interest. In this process, the Courts have leaned towards the
consumers interests. Thus, while far-reaching restrictions are imposed on trade and
commerce, only rarely will a restriction be held as unreasonable.

41
Narendra Kumar v. Union of India, AIR 1960 SC 430
42
Krishnan Kakkanth v. Govt. of Kerala, AIR 1997 SC 128

Freedom of Trade, Business and Profession


21

Instances of Reasonable and Unreasonable Restrictions

Miscellaneous

A law prohibiting advertisements relating to magic remedies was held valid because the
underlying purpose of the law was to prevent objectionable and unethical advertisements in
order to discourage self-medication and self-treatment.43

Street Hawkers

In Bombay Hawkers Union v. Bombay Municipal Corporation,44 the Supreme Court ruled, in
answer to the claim of the hawkers that under Art. 19(1)(g) they have a Fundamental Right to
carry on their trade on public streets, that no one has a right to do business so as to cause
annoyance or inconvenience to members of the public. Public streets are meant for use by the
general public; they are not meant to facilitate the carrying on of private trade or business.
But the hawkers ought not to be completely deprived of their right to carry on trade. So, the
Court directed that there should be hawking zones in the city where licenses should not be
refused to the hawkers except for good reasons.

In Sodan Singh v. New Delhi Municipality,(I)45 the Supreme Court again considered the
question: how far the hawkers have a right to ply their trade on pavements meant for
pedestrians? In the instant case, the Court has come to the conclusion that the right to carry
on trade or business mentioned in Art. 19(1)(g) on street pavements, if properly regulated,
cannot be denied on the ground that the street pavements are meant exclusively for
pedestrians and cannot be put to any other use. Proper regulation is, however, a necessary
condition, for otherwise the very object of laying roads would be defeated. The State holds all
public roads and streets in the country as a trustee on behalf of the public and the members of
the public are entitled as beneficiaries to use them for trading as a matter of right subject to
the right of others including pedestrians. The right of hawkers is subject to reasonable
restrictions under Article 19(6). The Court has however negative the contention of the

43
Hamdard Dawakhana v. Union of India, AIR 1960 SC 554
44
AIR 1985 SC 1206
45
AIR 1989 SC 1988

Freedom of Trade, Business and Profession


22

hawkers that they have a Fundamental Right to occupy a particular place on the pavement
where they can squat and do business. The petitioners do have a Fundamental Right to
carry on a trade or business of their choice but not do so at a particular place, said the
Court. The Court has conceded to the hawkers the right to do business while going from
place to place subject to proper regulation in the interest of general convenience of the public.

The Sodan ruling has been reiterated by the Court in Sodan Singh v. NDMC (II).46 The Court
has said that every citizen has a right to the use of a public street vested in the state as a
beneficiary but this right is subject to reasonable restrictions as the state may choose to
impose. Street trading is albeit a Fundamental Right under Art. 19(1)(g) of the Constitution
but it is subject to reasonable restrictions which the state may choose to impose by virtue of
Article 19(6). This right includes hawking on the street pavements by moving from one
place to another without being stationary on any part of the pavement. This does not include a
citizen occupying or squatting on any specific place of his choice on the pavement, regardless
of the rights of others, including the pedestrians, to use the pavements. The Court has
emphasized in this connection: Proper regulation is, however a necessary condition, for
otherwise the very object of laying roads would be defeated.

Wages, Gratuity, Labour Disputes

There is a close relationship between the right to carry on trade and wages payable to the
employees in a trade or industry. Too high wages may affect the economic viability of an
industry; but too low wages may amount to exploitation of human labour. A balance has to be
drawn between the two conflicting values and the Supreme Court has sought to do so in
several cases. The Court has held that the technique of appointing a wage board consisting
equally of the representatives of the employers and employees with a few neutral members
and a neutral chairman for fixing wages in an industry according to factors laid down and
according to natural justice, does not amount to an unreasonable restriction on trade and
commerce.47

46
AIR 1992 SC 1153
47
Express Newspapers v. Union of India, AIR 1958 SC 578

Freedom of Trade, Business and Profession


23

Slaughter of Animals

To reconcile the right of butchers to carry on their trade, and restrictions imposed on killing
of animals through several State laws, the Supreme Court has adopted an economic approach,
viz., killing of useful animals could be prohibited but not of those animals who have become
economically useless to the society. The Court has emphasized that a prohibition imposed on
the Fundamental Right to carry on trade and commerce cannot be regarded as reasonable if it
is imposed not in the interest of general public, but merely to respect the susceptibilities and
sentiments of a section of the people. Thus, it is reasonable to prohibit slaughter of cows of
all ages and male or female calves of cows or buffaloes; prohibition of slaughter of bulls,
bullocks and she-buffaloes below the age of twenty-five years is an unreasonable restriction
on the butchers right to carry on their trade as well as not in public interest as these animals
cease to be useful after the age of 15 years.48 The Court observed in this connection in
Quareshi:
The maintenance of useless cattle involves a wasteful drain on the nations cattle
feed. To maintain them is to deprive the useful cattle of the much needed nourishment. The
presence of so many useless animals tends to deteriorate the breed.

A municipal corporation issued a standing order under a statute directing closure of slaughter
houses for seven holidays in a year. The order was challenged as putting an unreasonable
restriction on the trade of the butchers. The question before the Court was whether the
restriction was reasonable in the interest of the general public. The question before the Court
was whether the restriction was reasonable in the interest of the general public. The Supreme
Court took the view that the expression in the interest of general public found in Art. 19(6)
is of wide import comprehending public order, public health, public security, morals,
economic welfare of the community and the objects mentioned in the Directive Principles.
The Court ruled that the order in question did not put any unreasonable restrictions on the
Fundamental Right of the petitioners under Art. 19(1)(g).49

48
M.H. Quareshi v. State of Bihar; AIR 1958 SC 731
49
Municipal Corporation, Ahmedabad v. Jan Mohammed, AIR 1986 SC 1205

Freedom of Trade, Business and Profession


24

CONCLUSION

As a whole, the tendency of the judiciary with regard to the freedom of profession has been
not to block in any way the increasing State activity that is bound to take place in a welfare
State but, at the same time, to give the individual maximum protection from high-handed
executive actions or discriminatory legislative enactments.

Whenever the action of the State was in the interest of the general public, even if it involved
the restriction of the individual's freedom of action in the economic sphere, the Courts did not
seem hesitant to support it.

This was the main reason that impelled them to uphold many legislative enactments of
nationalisation of public utilities such as road transport, electricity, etc., even before the First
Amendment had made a special provision in support of such State actions and the consequent
expansion of the economic and commercial activities of the State.

The right to carry on a business includes the right not to start any business or if he chooses,
he has the right to close it down at any time he likes. Thus the state cannot compel a citizen to
carry on business against his will. A citizen cannot insist upon the government or any other
individual for doing business with him. However like rights, the right to close down a
business is not an absolute right and can be restricted, regulated, and controlled by the state in
the interests of general public. Thus the right to close down a business cannot be equated or
placed at per as high as the right not to start and carry on business. If a person does not start
a business at all, he cannot be compelled to start it. But if he was started and has been
carrying on business, his right to close it down may be restricted by imposing reasonable
restrictions.

Freedom of Trade, Business and Profession


25

REFERENCES

Acts/Statutes

1. Constitution Of India, 1950

Books

1. JAIN, M.P., INDIAN CONSTITUTIONAL LAW, SIXTH EDITION (2013 REPRINT),


LEXIS NEXIS BUTTERWORTH WADHWA, NAGPUR
2. UDAI RAJ RAI, FUNDAMENTAL RIGHTS AND ITS ENFORCEMENT, FIRST
EDITION (2011), PHI LEARNING PRIVATE LIMITED, NEW DELHI

Cases Referred

1. A. Ahmed v. Mysore; AIR 1975 SC 1443


2. A.B.S.K. Sangh (Rely) v. Union of India; AIR 1981 SC 298
3. Acharya Maharajshri Narendra Prasad Ji Angad Prasad Ji Maharaj v. State of
Gujarat; AIR 1974 SC 2098
4. Bannari Amman Sugars Ltd. v. CTO; (2005) 1 SCC 625
5. Bapubhai v. State of Bombay; AIR 1956 Born 21
6. Bennett Coleman & Co. v. Union of India; AIR 1972 SC 106
7. Bombay Hawkers Union v. Bombay Municipal Corporation; AIR 1985 SC 1206
8. Chaitanya Prakash v. Board of Secondary Education Rajasthan; 1960 Raj. L.W.
209.3
9. Commonwealth of Australia v. Bank of New South Wale; 1950 AC 235
10. Dattamal Chiranjilal (M/s) v. Lodhi Prasad; AIR 1960 All 622.
11. Dharam Dutt and others v. Union of India and others; (2004) 1 SCC 712
12. Distt. Collector Hyderabad v. Ibrahim; AIR 1970 SC 1278
13. Express Newspapers v. Union of India, AIR 1958 SC 578
14. Fertilizer Corporation Kamgar Union, Sindri v. UOI; AIR 1981 SC 344.
15. Footpath Khudra Byabasai Sangh Bhubaneswar.v.State of Orissa & Ors; AIR NOC
2010 Ori. 125
16. Ghodra Electricity Co. Ltd. V. State of Gujarat; AIR 1975 SC 32

Freedom of Trade, Business and Profession


26

17. Hamdard Dawakhana v. Union of India, AIR 1960 SC 554


18. I.R.C. v. Maxse,(1919)1 KB 647 (657)
19. Krishnan Kakkanth v. Govt. of Kerala, AIR 1997 SC 128
20. Krishan Kumar v. State of J&K; AIR 1967 SC 1368
21. M.H. Quareshi v. State of Bihar; AIR 1958 SC 731
22. Madras Gymkhana Club Employees Union v. Management of the Gymkhana Club;
AIR (1968) SC 554
23. Manik Chand v. Union of India; (1984) 3 SCC 65
24. Martiner Monstant Joan v. Union of India; AIR NOC 2010 AP 87
25. Moti Lal v. Govt. of U.P.; AIR 1951 All 257
26. Municipal Corporation, Ahmedabad v. Jan Mohammed, AIR 1986 SC 1205
27. Municipal Committee, Amritsar v. State of Punjab; (1969)1 SCC 475
28. Narain Swadeshi Weaving Mills v. Commissioner of Excess Profits Tax; AIR 1955
SC 176
29. Narendra Kumar v. Union of India, AIR 1960 SC 430
30. Paika Padhani v. Pindiko Petro; AIR 1958 Orissa 15
31. Ram Chandra v. Orissa; AIR 1956 SC 298
32. Ram Jawaya v. State of Punjab; AIR 1955 SC 549
33. Rice and Flour Mills v. N.T. Gowda; AIR 1971 SC 246
34. S. Mohan Lal v. R. Kondiah; AIR (1979)SC 1132
35. S.P. Gupta v. President of India and Others; AIR 1982 SC 149
36. Saghir Ahmed v. U.P.; AIR 1954 SC 728
37. Sodan Singh v. New Delhi Municipality(I); AIR 1989 SC 1988
38. Sodan Singh v. NDMC (II); AIR 1992 SC 1153
39. State of Andhra Pradesh v. Abdul Bakhi; AIR 1965 SC 531
40. State of Assam & Ors. v. Chhotabhai Jethabhai Patel Tobacco Products Co. Ltd.;
AIR NOC 2008 Gau 663
41. State of Bombay v. R.M.D.C.; AIR 1957 SC 699
42. State of Gujarat v. Dharamdass; AIR 1982 SC 781
43. State of Punjab and Others. v M/s. Bajaj Electricals Limited; AIR 1968 SC 739
44. Sukhnandan Saran Dinesh Kumar v. Union of India; AIR 1982 SC 902
45. Sundranarayana Pillai v. Executive Officer; AIR 1966 Mad 262
46. T.M.A.Foundation v. State of Karnataka (2002) 8 SCC 481

Freedom of Trade, Business and Profession


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47. The Management of Safdarjung Hospital v. Kuldip Singh Sethi; AIR 1970 SC 1407

Websites

1. www.indiakanoon.org
2. http://www.legalservicesindia.com/articles/tradeci.htm
3. http://www.legalservicesindia.com/article/article/freedom-of-trade-&-commerce-148-
1.html
4. http://www.preservearticles.com/2011111216888/the-freedom-of-profession-
occupation-trade-or-business-as-specified-by-indian-constitution.html
5. http://www.srdlawnotes.com/2015/11/freedom-of-profession-occupation-trade.html
6. http://shodhganga.inflibnet.ac.in/bitstream/10603/7957/9/09_chapter203.pdf

Freedom of Trade, Business and Profession

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