229

CHAPTER-VII
FUNDAMENTAL FREEDOM OF TRADE AND COMMERCE
IN INDIA AND RESTRICTIONS

I. Introduction:
The fundamental freedom of trade and commerce has been enshrined
under Article 19(1) (g) of the Constitution of India. It guarantees all the citizens
the right to freedom of . trade and commerce. But the guaranteed right is not
absolute. The Constitution allows the appropriate government, to put reasonable
restrictions on the exercise of this right in the interest of the general public.394 The
Freedom under Article 19(l)(g) is granted only to the citizen of India, and it can
not be claimed by non-citizen. A company registered under Indian Companies
Act, 1956 was not a citizen for purpose of Article 19(l)(g).395 Restriction may be
imposed by any of the authorities who are included in the definition of State in
Article 12 and competent to make a law. State may create a monopoly in its
favour. There is no limitation upon this power. Restriction on trade may
amount even to prohibition in certain circumstances. State has the power to
prohibit the trades which are immoral or illegal or injurious to public health and
welfare of the public.398 Restrictions to be imposed by State should be reasonable
and in the interest of the general public the constitution of India also makes
provisions for social control under Article 19(6). The word reasonable is elusive
and vague and it implies intelligent care and deliberation that is the choice of
course which reason dictates. There cannot be any absolute standard of what
constitutes reasonableness. It may obviously depend upon the nature of the right
claimed, the object to be achieved, the means employed and limitation imposed

394 Indian Constitution (First Amendment) Act, 1951.

395 State Trading Corporation of India v. C.T.O., AIR 1963 SC 1811; (1963) 3 SCR 792;
Krishangarh Mills.v. State of Rajasthan, AIR 1963 Raj. 363; T.D. Mumar & Bros. v. Iron &
Steel Controller, AIR 1961 Cal. 258
396 State of Karnataka v. Hansa Corporation. AIR 1981 SC 463.
397 Kandola Rao v. A.P.S.R.T.C., AIR 1961 SC 82.
398 Cooverjee v. Excise Commr. Ajmer, AIR 1954 SC 220; (1954) SCJ 246; Bharat Sevashram
Sangh v. State of Gujarat, (1986) 4 SCC 51.
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the standard of reasonableness laid down in one case may not be applicable in
another case with relation to another clause.
The freedom of trade and commerce guaranteed in Article 19(l)(g) differs
from that under Article 301. of the Constitution. Article 19(1 )(g) is a fundamental
right and enforceable directly in the Supreme Court under Article 32, while
Article 301 is Constitutional Right. Article 19(6) of the Constitution allows
reasonable restrictions on the exercise of the right in the interest of the general
public. Public interest is vague. However, the courts have pointed out that
restrictions are in the interest of general public, even they are meant for the people
of particular or a particular state. It does not mean that the interest must be of the
public of the whole India.399 The Supreme Court decided in number of cases that
whether a particular activity was a trade but prize competitions. The surrounding
circumstances are to be taken into serious consideration under which the law
comes to be made along with the underlying purpose of the enactment and extent
and the urgency of the evil sought to be remedied. The power of the state to
regulate private enterprises and business in the public interest is significant. The
public policy has been the measuring rod in this matter, e.g., according to
Gambling Act, gambling is not to be business or profession.400 In this chapter,
fundamental freedom of trade and commerce : limits and scope and constitutional
provisions, reasonable and unreasonable restrictions : a conceptual analysis,
power of judicial review and freedom of trade and commerce; in England, U.S.A.
and India, relationship of Article 19(l)(g) with other Articles of the Constitution
and fundamental freedom of trade and commerce and public interest: have been
discussed.

II. Fundamental freedom of trade and commerce and limitations:

The fundamental freedom of trade and commerce is not absolute. The
appropriate Government may put reasonable restrictions on the exercise of this
right in the public interest.

399 Narendra v. Union of India, AIR 1960 SC 430.

400 State of Bombay v. R.M.D. Chamar Baugwala, AIR 1957 SC 699.
 231

A. Freedom of Trade and Commerce and Constitutional provisions :

Article 19(l)(g) of the Constitution guarantees to all citizens the right 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
fundamental right.401 Or
(i) A law relating to professional or technical qualifications necessary for
practicing a profession.
(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. :
The Constitution allows reasonable restrictions on the exercise of the right
in the interest of general public.402 The concept of absolute right is conceivable in
a modern State which has to reconcile the rights of the individual with the interest
of the community. In America though the constitution expressed the rights in
general terms, certain restrictions had to put on them by the judiciary to give them
a practical content in their application to individuals. The universal declaration of
human rights is also in general terms but Article 29 (2) permits imposition of
limits and limitations were placed on them in the covenant on civil and political
rights. In India, the Constitution itself has put certain restrictions on fundamental
rights and enables parliament by law to impose reasonable restrictions. In a
modem State, rights must be subject to social control and “it is a question of
policy as to whether the legislature or judiciary makers deliberately decided to
place these powers in the hands of the legislature.”403 The judiciary can exercise
their powers only in the restricted field allotted to them.
. The expression ‘reasonable restriction’ seeks to strike a balance between
the freedom guaranteed by sub-Clause (l)(g) of the Article 19 and the social
control permitted by the Clause (6). It cannot be said that the limitation imposed
on a person in the enjoyment of a right should not be arbitrary or of an excessive

401 Fundamental Right guaranteed under Article 19(l)(g) and (6). '
402 Indian Constitution (First Amendment) Act, 1951.
403 A.K. Gopalan v. State of Madras, (1950), Vol. I SCR 88.
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nature,404 beyond what is required in the interest of public. In order to be

reasonable the restriction must have a reasonable relation to the object which the
legislation seeks to achieve, and must not go in excess of that object.405 The

reasonableness of a restriction has to be determined in an objective manner and

the standpoint of the interest of the general public and not from the point of view
of the person upon whom the restrictions are imposed or upon abstract
consideration.406 In other words, a law cannot be said to be unreasonable merely
because, in a given case, it operate harshly,407 even of the persons affected be
petty traders.408 The freedom under Article 19(1 )(g) is available only to citizens of

India, and it cannot be claimed by non-citizens. Doubts were raised as to whether

a corporation doing business can claim protection of Article 19(l)(g) of the
Constitution. There was however, a conflict of opinion among the High Courts of
India. Punjab and Allahabad409 High Courts held that the corporations are citizens

for the purpose of every article of the constitution including Article 19(l)(g). A
contrary view was taken by Rajasthan410 and Calcutta411 High Courts. The

Supreme Court held that a company registered under the Indian Companies Act,
1956 was not a citizen for purpose of Article 19(1 )(g) of the Constitution.412

The interpretation laid down by the Supreme Court was not effected by the
decision in the Bank Nationalization case,413 though a company has no

fundamental right under Article 19, a share-holder and the managing director have
the right under that Article414 The question whether a religious denomination of a

Section is a citizen of India for the purpose of Article 19 was answered in the

404 P.P. Enterprises v. Union of India, AIR 1982 SC 1016. Kirshan v. State of Rajasthan, AIR 1982
SC 29.
405 Kochuni v. State of Madras, (1960) 3 SCR S87 (1914). .
406 Pathumma v. State of Kerala, AIR 1978 SC 771 (Para 14)
407 Ardnachala v. State of Madras, AIR 1959 SC 306-3 .
408 State of Gujarat v. Shanti Lai, AIR .1969 SC 634 (Para 63)
409 Amrit Bazar Partika Ltd., v. Board of High School and Intermediate Education, AIR 1955 All.
595.
410 Krishangarh Mills v. State of Rajasthan, AIR 1963 Raj. 363.
411 T.D. Mumar & Bros. v. Iron and Steel Controller, AIR 1961 Col. 258.
417 State Trading Corporation oflndia v. CTO, AIR 1963 SC 1811; (1963) 3 SCR 792.
4b R.C. Cooper v. Union oflndia, AIR 1970 SC p. 564.
Varajlal M & Co. v. Madhya Pradesh, AIR 1970 SC 129.
414 Godhra Electricity Co. Ltd. v. State of Gujarat; (1975) SC 199; AIR 1975 SC 32.
 233

negative by the Supreme Court415 The implications of the pronouncements thus

pretend to show that (i) the scope of Article 19(l)(g) is restricted merely to those
natural human beings who are Indian citizens and that (ii) the State can regulate
private business corporations in a major way without caring for limits prescribed
by Article 19(l)(g) of the Constitution except that the protection such corporation
would enjoy will be limited to Article (3) of the Constitution. Resultantly, this
affords greater lee way to the government to regulate private enterprises to
promote national interests.

B. Who can Impose Restrictions:

The authority who are competent to make law and included in the
definition of state in Article 12 may impose restrictions The Amendment of 1951
exempt the State from that condition or reasonableness, by laying down that the
carrying on of any trade, business, industry or survive by the State would not be
questionable on the ground that it is an infringement of the right guaranteed by
Article 19(1 )(g) even though by law the state excludes the citizens, wholly or
partially from the trade or business entered upon by the State.416 Hence, the state
shall now be free either to complete with any private traders or to create a
monopoly in favour of itself without being called upon to justify its action in court
as ‘reasonable’.417 The state may enter into trade or industry causing a partial or
complete elimination of private traders not . only for reasons of administrative
policy, e.g. manufacture of salt or alcohol, for mitigating the evils arising from the
competitive system, e.g. for the better control of prices or quality of products or
for the administration of public utility services, but also simply for making of
profit just as a private trader would do, e.g. carrying on the business of motor
transport.418 There is no infringement of the right guaranteed by Article 19(l)(g)
where the state enters a trade merely as a competitor.419

415 Narendra Pd J v. State of Gujarat, (1975) ISCC 1J; AIR 1974 SC 2093.
416 Shiva Rao, B., The Framing of India’s Constitution : A Study, 1969, p. 228.
417 Narayanappa v. State of Mysore, AIR 1960 SC 1073 (1078)
418 Saghir Ahmad v. State of U.P. (1955) SCR 787.
419 Ram Chandra v. State of Orissa, (1950) Vol. I, SCR 28.
 234

It is open to the State to make laws for creating state monopolies either
partially or complete in respect of any trade or business or industry or service.
The state may enter into trade like any other person either for administrative
reasons or with the object of mitigating the evils in the trade, or even for the
purpose of making profits in order to enrich the state exchequer. The law relating
to such trading activities must be presumed to be reasonable and in the interest of
general public.420 There are no limitations upon this power of the State is to create
a monopoly in its favour.421 Hence, the law can provide for the exclusion from a
service of all citizens or some of them only it may do business in the entire state
or in a specified part thereof. The question as to how much discretion can be
conferred on the executive to control and regulate trade and commerce has been
raised in a large number of cases. The general principle is that “it should not be
left entirely to the discretion of any authority to do anything it likes without any
check or control by any higher authority.” Law or order which confers arbitrary
and uncontrolled power upon the executive in the matter of regulating trade or
business in normally available commodities can not but be held to be
unreasonable.423 Generally, speaking discretion is not unregulated or arbitrary if
the circumstances in or the grounds on which it can be exercised are stated, or if
the law lays down the policy to achieve which the discretion is to be exercised, or
if there are enough procedural safeguards in the law to provide security against
the misuse of the discretion.424 In the case of trades which are illegal, dangerous,
immoral or injurious to health and welfare of the people, some standard discretion
apply as to it and a greater discretionary authority may be left with the executive
to regulate such traders than permissible in normal traders.425

420 Utkal Contractors and Joinery (P) Ltd. v. State of Orissa, 1987 Supp. SCC 751; AIR 1957, SC
2310.
421 Kandola Rao v. A.P.S.R.T.C., AIR 1961 SC 2280.
422 Satyanrrayan Murthy v. A.P.S.R.T.C. (1961) 1 SCR (643) (649).
423 Dwarka Parsad v. State of U.P., AIR 1954, SC 224, 227.
424 Rajasthan v. Nathman, AIR 1954 SC 307.
425 Krishna Kumar Narnia v. J & K, AIR 1967 SC 1368.
 235

C. Restriction on freedom of trade and commerce may include

Prohibition
The restriction on the freedom of trade and commerce may also include
total prohibition or ban. Earlier the cases of Supreme Court were not clear but
now it is settled that the restriction may also mean total prohibition or ban. In the
Narendra Kumar’s Case the Supreme Court reviewed all the earlier cases and
held426 that
“There can be no doubt that Constitution Makers intended the word
‘restriction’ to include ‘prohibition’ also. The contention that a law
prohibiting the exercise of a fundamental right is in case saved and
cannot therefore be accepted. It is, however, for the Court to decide
whether in a given case, having regard to the nature of the subject
matter and the circumstances of the case, restriction may reasonably
include total prohibition or ban”.
In certain circumstances restriction on trade may amount even to
prohibition. Protection of Article 19(l)(g) has already been withdrawn from trade
<197
in intoxicants. No person has any fundamental right to carry on trade in any
toxious or dangerous goods like intoxicating drugs or intoxicating liquors.428 The
state cannot be compelled to part with its exclusive right or privilege of
manufacturing and selling liquor. But when the state decides to grant such right or
privilege to others the state cannot escape the rigour of Article 14. It cannot act
arbitrarily on its sweet will. Traders in certain commodities (designated as
essential commodities) may be more drastically regulated than trade in other
commodities. To assess the reasonableness of a restriction, the nature of the
business and conditions prevailing there in are important factors to be considered.
As these factors differ from trade to trade, no hard and fast rules to concerning all
trades can be laid down. The result of this approach is that courts may hold drastic

426 Chintaman Rao v. State of M.P. (1950) SCR 759; Union of India v. Bhanmal, (1960)2 SCR
627 Narendra Kumar v. Union of India (1960) 2 SCR 375.
427 Krishna Kumar v. J & K, AIR 1967 SC 1386. See also, Goodwill Paint and Chemical
Industries v. Union of India, 1992 Supp. (1) SCC 16, 21.
428 Southern Pharmaceuticals and Chemicals v. Kerala, AIR 1981 SC 1862; State of M.P. v. Nand
Lai Jaiswal, (1986) 4 SCC, 566,604.
 236

restrictions on certain trades in certain circumstances as reasonable.429 To

reconcile the right of butchers to carry on their trade and restriction imposed on
killing of animals through several state laws, the Supreme Court adopted an
economic approach viz. killing of useful animals could be prohibited but not of
those animals who have 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 sensible and sentiments of a section of
the people.430
The closure of slaughter houses on seven days specified in the impugned
standing orders did not in any way put an unreasonable restriction on right of the
respondent beef dealer under Article 19(l)(g). It was open to the legislature or the
authority concerned to, to ensure proper holidays for the Municipal staff working
in the Municipal slaughter houses and provided certain closed days in the year.
The seven holidays were not ill-chosen. Generally, these days are observed by
people not merely as days of festivity but also as days of abstinence from meat
and therefore the closure of the slaughter houses on these days was in the interest
of general public.431 In the United States of America432 it has been held that
restriction does not include the idea of prohibition. It is for the Court to consider,
having regard to the circumstances whether restriction or prohibition was
reasonable exercise of the police power. In Australia v. Bank of N.S.W 433 the
Privy Council while interpreting Section 92 of the Australian Constitution
observed that “The regulation of trade may clearly take the form of denying
certain activities to person who by age or circumstances unfit to perform them or

429 Viklad Coal Merchant v. Union of India (1984) SCC 619, 641,642; AIR 1984 95; Indian
Express Newspaper v. Union of India (1985) 1 SCC 641 : 1985 SCC (Tax) 121 : 1985 Tax
L.R. 2451; Olga Tellis v. Bombay Municipal Corpn. (1985) 3 SCC 545, 579; Sodan Singh v.
New Delhi Municipal Committee (1989) 4 SCC 155; AIR 1989 SC 1988.
430 M.H. Quareshi v. Bihar, AIR 1958 SC 731; Abdut Hakim v. Bihar AIR 1961 SC 448; Md.
Faruk v. M.P. AIR 1970 SC 93 , Agarwal S.K., Standard of Reasonableness in Article 19 of the
Constitution, SCJ, Vol. xviii, 1955, p. 196.
4jl Municipal Corporation v. Jan. Mohd. Usmanbhai, (1986) 3 SCC 20.
4j2 Mugler v. Kansas, (1987) 123 US 623; Crowley v. Cherestensen, (1890) 137, U.S. 86 Clarke v.
Deckebach (1927) 274 274 US 392.
433 (1949) A.Y.E.R. 755 (772)
 237

excluding from passage across the frontier of a State Creatures or things

calculated to injure its citizens.”
The Supreme Court of India also reiterated the same principle in Coverjee
v. Excise Commissioner, Ajmer434 and observed that “It can also not be denied
that the State has the power to prohibit trades which are illegal or immoral or
injurious to the health and welfare of the public. Laws prohibiting trade in
intoxious or dangerous goods or trafficking in women cannot be held to be illegal
as enacting a prohibition and not a mere regulation.” But outside the above
exceptional categories a total prohibition of the right to carry on a business would
be regarded as ‘unreasonable’ restriction,435and, greater the restriction, the more
the need for strict scrutiny by the Courts.436

D. Freedom of trade and commerce and discretion of an Administrating

Authority:
In the absence of exceptional circumstances, the exercise of fundamental
right guaranteed by the Constitution can be made to depend upon the absolute
discretion of an administrative authority.437 If, therefore, a law confers powers on
an administrative authority absolute discretion to grant or withhold or revoke438 a
permit for the carrying on of a business, the restriction imposed by such laws is
‘unreasonable’439 except in the case of trade or business which is inherently
dangerous,440 to the community and which the State is entitled either to prohibit
entirely or to permit only under such conditions as will limit to the utmost its evils
or in a. time of emergency, when it is necessary to impose control on the
production, supply and distribution of commodities essential to the life of
community or in respect of trade or business which affects the national economy,

434 (1954) SCJ 246; AIR 1954 SC 220

435 Cooper v. Union of India, AIR 1970 SC 564; Chintaman Rao v. State of M.P., (1950) Vol. I,
SCR, 759.
436 Narendra v. Union of India, (1960) 2 SCR 375.
437 State of Madras v. V.G. Rao, (1952) Vol. Ill SCR 587.
438 Ganapati v. State of Ajmer, AIR 1955 SC 188 (190)
439 Hari Shankar v. State of M.P., AIR 1954 SC 465, Kirshan v. State of Rajasthan; AIR 1982 SC
29 (Para 5)
440 Cooverjee v. Excise Commissioner, AIR 1961 SC 1614.
 238

such as import441 or export.442 An existing permit cannot be cancelled or revoked

without giving an opportunity to the Jicenseee to be heared,443-444 except in the
case of inherently dangerous trade or calling which a person has no common law
right to carry on, or the commodities which are essential to the community. But
on interim order of suspension of a permit or licence, without a notice or hearing
could not be unreasonable if it is made pending the holding of an inquiry against
the licences as to the alleged breach of its conditions 445
The state has, in the interest of the public, the right to lay down reasonable
condition subject to which a business may be carried on, and if power is conferred
by the legislature upon an administrative authority to proceed to grant or refuse
the licence, not in an arbitrary manner but in a quasi judicial manner,446 having
regard to the conditions447 laid down by the legislature, and in accordance with
the principle of natural justice, the restrictions cannot be said to be unreasonable
licencing may be restored in order to maintain government monopoly over a
particular business, which is valid under Article 19(6) e.g. over broadcasting.
When the Government issue an administrative statement of policy relating to the
grant of licences relating to a controlled business, no person can claim legal right
to obtain a licence on the strength of such administrative policy statement, which
may be changed at any time.

III. Fundamental Freedom of trade and commerce and reasonable

restrictions :
The state may impose restrictions on the fundamental freedom of trade
and commerce. The restrictions which are imposed by State should be reasonable
and in the interest of the general public. Permissible restrictions on any

441 Glass Chatons v. Union of India, AIR 1961 SC 1614.

442 Daya v. Joint Chief Controller, AIR 1962 SC 1796 (1804); Shiv Rajan v. Union of India, AIR
1959 SC 556 (563)
443 Fed-Co. v. Bilgrami, AIR 1960 SC 415.
444 Narayanan v. State of Kerala, (1973) 11 SC W.R. 609(621)
445 Sukhwinder v. State of Punjab, AIR 1982 SC 65 (Para 9, 11) .
446 Chaturbhai v. Union of India, AIR 1960 SC 424.
447 Mineral Development Co. V. State of Bihar, AIR 1960 SC 468 (472) See also Orient Paper and
Industries Ltd. v. State of Orissa, 1991 Supp 1 SCC 81 AIR 1991 SC 672
 239

fundamental right, even where they are imposed by duly enacted law must not be
excessive or in other words they must not go beyond what is necessary to achieve
the object of the law under which they are sought to be imposed. The power to
impose restrictions essentially a power to regulate the exercise of these rights. The
guaranteed freedom under Article 19 (l)(g) is one of the basic values which form
basis of the democratic order of Society. During the pioneering days of economic
transition when liberalism was popular and the doctrine of laissez-faire was
accepted as the principle of government policy, the economic activity was on the
whole left to the individual. Today under the impact of the philosophy of
socialistic pattern of society and welfare state, the government is directly
interested in economics and industry and consequently cannot leave the function
of the administration of economic justice as much alone as before. The
Constitution of India also makes provision for social control under Article 19(6).
It is all on account of the modem public opinion which requires the State to
discharge positive social functions in carrying out the administration of socio­
economic justice, with the view to eliminate the excesses and injustice, with the
view to eliminate the excesses , and injustice arising from a wholly unrestrained
economy.
The word ‘reasonable’ is elusive and vague. It has no place in Draft
Constitution. Pt. Bhargava proposed the inclusion of this word preceding the word
‘restriction’ in Article 13 in Draft Constitution now is Article 19. Pt. Bhargava in
his speech told about the significance and meaning of the word as “its object to
serve the interest of the, public or protect public order, then the Courts would be
helpless to come to the rescue of the nationals of this country in respect of the
restriction...... the Court will have to see whether a particular Act is in-the
interest of the public and secondly whether the restriction imposed by the
legislature are reasonable, proper and necessary in the circumstances of the case.
The Court shall have to go into the question and it will not be the legislature and
the executive who could play with the fundamental right of the people. It is the
Court who will have the final says.”
 240

The word ‘reasonable’ comes to be interpreted by Justice Mahajan in

Chintaman Rao’s case448 and by C.J., P. Shastri in V.G, Rad’s case.449
According to Justice Mahajan :
“The word reasonable implies intelligent care and deliberation, that is the
choice of course which reason dictates. Legislation which arbitrarily or ‘
\

excessively invades the right cannot be said to contain the quality of

reasonableness and unless it strikes a proper balance between the freedom
guaranteed in Article 19(l)(g), and the social control permitted by Clause (6) of
Article 19, it must be held to be wanting in that quality.”
The test of reasonableness, wherever prescribed, should be applied to each
individual statute impugned, and no abstract or general pattern of reasonableness
can be laid down as applicable to all cases; 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 time should all enter into the judicial
verdict. The meaning so assigned by C.J. Shastri and J. Mahajan has been.
unqualified followed by the Court as a working tool for the enforcement of the
rights under Article 19, and this has taken within, in what was intended by the '
mover of the Amendment. The word proper of Pt. Bhargava means not arbitrary
or excessive and striking the balance between restriction and the right (as
understood by Justice Mahajan) and proportion of the Imposition (0.8 with
Shastri, J); and the word ‘necessary’ involves the consideration of elements e.g.
nature of the right purpose of restriction, urgency of the evil to be, reminded and
the prevailing conditions as elaborated by Chief Justice.
A caution was administered by Chief Justice Das, with reference to the
Commerce Clause of the Constitution that:
“In construing the provisions of our Constitution the decisions of the
American Supreme Court on the Commerce Clause and the decisions of the
Australian High Court and the Privy Council on Section 92 of the Australian

448 Chintaman Rao v. State of M.P. (1950), Vol. 1, SCR 750

449 State of Madras v. V.G. Rao (1952) Vol. Ill, SCR 597 (607).
 241

Constitution, should.......be used with Caution Circumspection our Constitution

differs from both from American and Australian Constitutions there is nothing in
the American Constitution Corresponding to Article 19(l)(g) of Article
301.....”450
The Freedom of choice of occupation is subject to the requirement of
social interest. It is true that there is a social interest in the maintenance to the
freedom of choice of occupation; but this freedom may have to be restrained, as
for instance, in the United State of America, for the protection of other social
interest.”

A. Meaning of‘reasonable restrictions :

The phrase ‘reasonable restriction’ can not mean that the limitation
imposed upon a person in enjoyment of a right should not be arbitrary or of an
excessive nature beyond what is required in the interest of the public, legislation
which arbitrarily or excessively invades the right, cannot be said to contain the
quality of reasonableness. There can not be any absolute standards of what
constitutes reasonableness. It is obvious, therefore, that the standard of
reasonableness laid down in one case with relation to Clause cannot be applicable
in another case with relation to another Clause. An analysis of the case law on the
subject bears further testimony to the fact that no attempt has been made by the
Judge at generalizations and that they have contended themselves merely with
adjudging on the reasonableness or unreasonableness of the particular impugned
statute, reiterating the same general principle, time and again, that there can be no
absolute standard of reasonableness.451 In deciding on the reasonableness of the
restriction, it is not possible to think only in the abstract. Several circumstances
must be taken in consideration and in particular:
(a) the purpose of the Act;
(b) the conditions prevailing in the country at the time;
(c) the duration of the restriction;

450 State of Bombay v. United Motors, AIR 1957 SC 699(717)

451 V.G. Rao v. State of Madras, AIR 1951 Mad. 147; N.B. Khare v. State of Delhi, (1950) SCJ
328; AIR 1950 SC 211 at 217.
 242

(d) its extent and nature.

But, perhaps it would be erroneous to suggest that these considerations are
objective standards or the touch stone on the basis of which a restriction may be
adjudged as reasonable or unreasonable per se because, they are neither, objective
nor absolute. The element of subjectivity imperceptibly enters through the judicial
verdict for what may be an emergency for the executive authority may not be so
far the judge; and what may be an emergency for the judge and the question
would finally be decided not according to the existence or non-existence of the
emergency but according to whether the majority of the Judges think that the
emergency exists Similarly, in the case of duration, what may be reasonable
duration according to one Judge would be unreasonable one according to another.
What is reasonable is a complex question, not easy to answer. There is no fix
standard or a hard and fast rule for the same. It may obviously depend upon the
nature of the right claimed, the object to be achieved the means employed and'
limitations imposed the standard of reasonableness is nothing but the judicial
view as to how the individual rights should be harmonized with collective interest
under given set of circumstances. In a number of cases, Courts have considered
the permissible scope of the licencing power of the administration with reference
to Article 19(1 )(g) and 19(6). It is now clearly settled that a system of licencing of
a trade is not unreasonable provided that the licencing are not left with
uncontrolled power to grant, revoke or cancel a licence. There should be
reasonable norms, policy or principle to guide administrative power as well as
some procedural safe guards. A provision conferring wide power to grant or
cancel a licence on an administrator, without mentioning the grounds on which he
could exercise his power was held unreasonable in Dwarka Parsad Case.452 The
Supreme Court held in Seshadri’s case453 that condition 4(a) in Sec, 8
Cinematiograph Act 1898 enabled government to compel a licence to exhibit a
film of any length without reference to the time occupied. Again, there were no
guiding principles for the exercise of that discretion. The special condition 3 of

452 Dwarka Parsad v. Union of India, AIR 1954 SC 224.

453 R.M. Seshadri v. D.M. Tanjore, (1985) 1 SCR 686.
 243

the same Act enabled the Government to compel the exhibition of a film of not
less than 2,000 feet without specifying the maximum length of the film. Condition
4(a) and special condition 3 thus imposed unreasonable restriction and were void
as infringing Article 19(1 )(g).454
It is thus evident that the reasonableness of a restriction is to be adjudged
in the light of the totality of the circumstances surrounding the matter in which
that question raised455and no enumeration of it can be hoped to be exhaustive. In
contract with the variety in the other dimensions the basic philosophy
unemploying. The Constitution may also be realized by the Court while
answering the question of reasonableness of a particular restriction. The answer to
question whether a restriction is reasonable or not require a two dimensional scale
wherein he represented the variety of factors as well as the identity of the values
which the Constitution enshrines. It is onerous responsibility of the Court to see
that there is in accord with those basic values and that is probably the reason why
the Court have always unhesitatingly upheld a restriction imposed for securing the
object enjoined by the Directive Principles of State Policy.456 It may, however, be
submitted that the word ‘reasonable had come in handy for the Courts to veto
social and economic legislation on the ground and that such legislation did not
satisfy the required tests of reasonableness and thus checkmate for reaching social
and economic experiments launched the remedy the male adjustment which
hamper the progress of the poorer weaker sections of the society. Freedom in each
of its phases has its history and connotation. The freedom safe guarded in the
Constitution is freedom in a social organisation which requires the protection of
law against the evils which menace the health, safety, morals and welfare of the
people.457

454 In M.A. Baig v. State, (61) A.P. 126.

455 Commissioner of Police, Madras v. Murryaco, AIR (1965) Mad. 301 : A.K. Gopalan v. State of
Madras, AIR 1950 SC 27.
456 State of Bombay-v. Balsara, (1951), Vol. II SCR 682.
457 Paint and Chemical Industries v. Union of India, 1992 Supp. (1) SCC 16,21.
 244

B. Theories of Reasonableness :
In considering the reasonableness of a restrictive policy of legislation,
Court should consider both the substantive and the procedural aspects of the
impugned law.458 The social dimensions of judicial process in the area of
reasonableness can be studied with reference to the theory of pragmatism and that
of socialism. Indian Court apply these two sociological theories in determining
the reasonableness of the restriction imposed upon the fundamental right,
i) The Theory of Pragmatism:
It is a well recognized principle that the society is something more than '
the individuals comprised in it carries a corollary that individuals composing a
community have also a social facet to their personalities. An individual’s
personality has both private and public aspects, and this is in addition to the .
public personality of the community concerned. It is in the interest of a
community to foster the private and public elements of an individual’s personality
of the community should be protected. There has got to be personal liberties, but
as Denning observes, they must be matched with social security, by which he
means, “The peace and good order of the community.” Seervai suggests, these
restrictions may as well be looked upon as social rights, although negatively
phrased, provided it be recognized that the concept of social rights, does not note
merely the rights of the community as a whole, or public rights, but also includes
certain rights appertaining to the social, or public, aspect of the personality of any
individual in the community.
The theory of pragmatism is applied by the Courts in sense of ‘balancing
of social claims’ with the view of strike a balance between individual and social
interest, the interest of the individual are sunburned into social interests for the
take of comparison. In doing so, the courts weigh the conflicting interest with
reference to the standard of reasonableness derived from the values of life in the
society and seek to strike such a balance as will reduce friction and be most useful
for the public good.459 The view of Supreme Court in Hari v. Dy. Commr. of

458 N.B. Khare v. State of Delhi, (1950) SCJ, 328; AIR 1950 SC 211 at 214.
459 Ram Singh v. State of Delhi (1951) II SCR, 451; Narendra Kumar v. Union of India, (1960)2
 245

Police.460 that clause (6) of Article 19 recognise the right of the State to make
laws putting reasonable restrictions on these rights in the interest of general
public, security of State, public order, decency or morality and for other reasons
set out in those Sub-Clauses so that there'has to be a balance between individual
rights guaranteed under Article (l)(g) and the exigencies of the State which is
custodian of the interest of general public, decency of morality and all other
public interest which may compendiously be described as social welfare.461
In formulating the standard of reasonableness the Supreme Court of India
has taken into account the preamble to the Constitution and the Directive
Principle of State Policy which aim at creation of an ideal social order. The
judicial philosophy in this regard is that a law which imposes restriction upon a
fundamental right for carrying out the objectives of the Directive Principles of
State Policy cannot be challenged as imposing unreasonable restriction because
what the State is required to do by the Constitution itself can not be regarded
unreasonable. Standard of reasonableness are relative and not absolute. They are
related with time and place. The reason for this is that the sociological theory of
reasonableness is relativist and absolutist as natural law theory was. The natural
law theory believed in absolute values. But according to modem relative theories
of law there are no absolute values and there are only relative values.

ii) The Theory of Socialism

The schemes of socialisation which are introduced for social welfare and
social development can be justified as reasonable under pragmatism as well as
under socialism. But there is difference in the application of the two.
Nationalization or State ownership can be upheld as reasonable under the
pragmatic theory if there are social interests for its support that is national
expediency, economic efficiency and increased output of production, whereas

460 AIR 1956 SC 559 at 565.

461 Dwarka Prasad v. Union of India, AIR 1954 SC 224; also see Indian Express Newspaper v.
Union of India, (19S5) I SCC 641; 1985 SCC (Tax) 121; Municipal Corpn. V. Jan Mohd.
Usmanbhai, (1986) 3 SCC 20, 30, 31, 32; AIR 1986 SC 1205.
 246

nationalization and state ownership are justified under socialism as a matter of

principle.462
Article 19(6) clearly indicates that State Monopoly in respect of any trade
or business must be presumed to be reasonable and in the interest of general
public so far as Article 19(l)(g) is concerned.463 Socialism may, however, be
explained not only from the point of view of principle but from the point of view
of individual also. According to this view, socialism aims at realization of
individual’s ideal in social and economic reality.
Read Bruch, a great German Philosopher, has also offered individualistic
interpretation of socialism. According to him, socialism is a call for justice and a
system designed to ensure free development of the individual. Pt. J.L. Nehru also
has interpreted socialism from individualistic point of view. He said, socialism to
some people means two things distribution which mean cutting of the pockets of
the people who have too much money and nationalization. Both these are
desirable objectives but neither is by itself socialism. Nationalization is dangerous
merely to nationalize something without being prepared to work it properly. To
nationalize we have to select things. In socialism every individual in the State
should have equal opportunity for progress.

C. Test of reasonableness :
It is the effect of the law and of the action upon the rights of citizen which
attract the jurisdiction of the Court to grant relief.464 The true test is whether the
effect of the impugned action to take away or abridge fundamental rights.465 The
effect of the State action however must be direct and inevitable and remote or
problematical and not dependent upon various factors which may or may not
come into play.466 The doctrine of direct and inevitable effect has been described
as the doctrine of intended and real effect has been described as the doctrine of

462 Akadsi Padhan v. State of Orissa, AIR 1963 SC 1047 at 1053.

463 Karan Singh v. State of M.P., 1986 Supp. SCC 305 AIR 1986 SC 1506.
464 R.C. Cooper v. Union of India, AIR 1970 SC 564
465 Benett Colemans Co. v. Union of India, AIR 1973 SC 106; Maneka Gandhi v. Union of India,
AIR 1978 SC 597 at 635.
466 Express Newspapers Ltd. v. Union of India, AIR 1985 SC 578 at 620.
 247

intended and real effect or as the test of proximate effect and operation of the
Statute.467 The object of the test of the legislation, pith and substance of the
subject matter and of direct or incidental effect of legislation are irrelevant to the
question of infringement of fundamental rights. The Constitution of India does not
lay down any test for reasonable restriction. It is left to the judiciary to scrutinize
the law which proposes to impose a reasonable restriction and to see whether the
restriction is really reasonable. The function of the judiciary in this field is very
important and delicate, as it has to appraise the success which the citizens have to
make and the benefit which the society is to derive by the imposition of these
restrictions. In V.G. Rao’s Case,468Shastri, C.J, laid down a general test of
reasonableness has been repeatedly cited with approval in subsequent cases. He
pointed out that the test of reasonableness which whenever prescribed, should be
applied to each and individual statute impugned, and no abstract standard could
be prescribed as applicable in all cases. He further observed that 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 and the prevailing condition at the time, should all
enter into the judicial verdict, moreover, the court requires that a restriction to be
reasonable should be reasonable from the substantive as well as the procedural
standpoint.469 .
No set pattern of reasonableness can be laid down as applicable to all
cases.479 The standard of reasonableness must also vary from age to age and be
related to the adjustments necessary to solve the problems which communities
face from time to time.471 Courts power to enquire into reasonableness of
restriction in law restrictive of the fundamental freedoms conferred by this article
in exception to the general principle that courts are not concerned with the
reasonableness of the policy of the legislature in making a law but are only

467 Maneka Gandhi v. Union of India AIR 1978 SC 597 at 635.

468 State of Madras v. V.G. Rao, AIR 1952 SC 196, 200.
469 Dwarka Parsad v. State of U.P., AIR 1954 SC 224.
470 Pathamma v. State of Kerala, AIR 1978 SC 771.
471 Jayoti Parshad v. Union of Territory of Delhi, AIR 1961 AC 1692 (1613).
 248

concerned with the interpretation of the law and its application and with
479
constitutionality or legality.
In Katashailiya’s Case473 Subba Rao, C.J. elaborated that “the
reasonableness of restriction depends upon the values of life in society the
circumstances obtaining at a particular point of time the degree and urgency of the
evil sought to be controlled.” In the words of V.N. Shukla474 “There is no absolute
or fixed standard conformity to which would be test for determining
reasonableness of restriction. It, therefore, follows that the determinations of
reasonableness depends upon a valuation derived from social facts and conditions.
The Constitutional validity of a statute is to be detennined on the basis of its
provisions and on the ambit of its operation as reasonably construed; if so judged
it passes the test of reasonableness, more possibility of the powers conferred
being abused is no ground for pronouncing it invalid, just a statute which is
otherwise unreasonable cannot be saved by its being administered reasonably 475
Where the text is capable of bearing two interpretations, that which would make
the restriction reasonable and constitutional should be adopted by the Court476
The restriction must be reasonable from the substantive as well as
procedural standpoint. It is not possible to formulate an effective test which would,
enable the Court to pronounce any particular restriction to be reasonable or
unreasonable perse. All the attendant circumstances must be taken into
consideration one can not dissociate the actual contents of restrictions from the
manner of the imposition or the mode of putting them into practice. In considering
the reasonableness of a restrictive piece of legislation, Court should consider both
the substantive as well as procedural aspects of the impugned law.

472 Nabhakumar Seal v. State of W.B., AIR 1962 Cal, 870 (1874),
State of U.P. v. Renu Sagar Power Co., AIR 1988 SC i737.
473 State of U.P. v. Katashiliya, AIR 1964 AC 416
474 Shukla, V.N., The Constitution of India, 1964, p. 49 .
475 Collector of Customs v, Sompathu, AIR 1962 AC 316.
476 Govind v. State of M.P., AIR 1975 SC 1378 (1385-86)
 249

i) Substantive Aspect of Reasonableness :

In determining the substantive reasonableness, the Court has to take into
consideration various factors, such as the nature of the right alleged to have been
infringed, the underlying purpose of the restriction imposed, the extent and
urgency of evil sought to be remedied there by the disproportion of the imposition
- the prevailing conditions,477 including the social values whose needs are sought
Ano
to be satisfied by means of the restrictions having all. the foregoing
circumstances in the background, the Court will have to be satisfied on the
following points in order to judge the restrictions to be reasonable. The restriction
imposed must have a rational connection with the object sought to be achieved by
the law.479 In other words, the Court has to see whether by virtue of the restriction
imposed on the right of the citizen, the object of the statute is really fulfilled or
frustrated 480 The restriction imposed must not be in excess of the mischief sought
to be prevented or the object sought to be achieved by the law. Restrictions which
are imposed for securing the object which are enjoined by the directive principles
of state policy included in Part IV of the Constitution, may be regarded as
yfO 1

‘reasonable’ restrictions within the meaning Clause (6) of Article 19.

So far as the substantive aspect of reasonableness is concerned, the
Supreme Court has not taken any fixed line of approach. It has varied from ease to
case. If the legislation which excessively invaded the right, the Supreme Court
held that it could not be said the quality of reasonableness, whereas other line
of cases the Court concentrated on the nature of business. If the trade was illegal,
immoral or injurious to the public health then excessive restriction would not be
called unreasonable restriction 483 The Court has further diluted this condition in
case of emergency drastic restriction is justified.484 In Cooper’s Case,485 the

477 Khare v. State of Delhi (1950) SCR 519.

478 State of Madras v. V.G. Rao, (1952) SCR 597 (607)
479 Pathuma v. State of Kerala, AIR 1978 SC 771.
480 Jyoti Parshad v. Union Territory of Delhi, AIR 1961 SC 16.
481 State of Bombay v. Balsara (1951) SCR 628.
482 Dwarka Parsad. v. State of U.P., AIR 1954 SC 224,227.
483 Cooverjee v. Excise Commr., Ajmer, AIR 1954 SC 220.
484 M.B. Cotton Ass. v. Union of India, AIR 1954 SC 634.
485 R.C. Cooper v. Union of India, AIR 1970SC 564.
 250

Supreme Court took the stand that where restrictions were so stringent that the
business could not in practice be carried on, the Court would regard such
impositions unreasonable. In Nazeria Motor’s Case486 the Court took the stand
that merely reduction of profit was no ground of attack under Article 19(l)(g).
This means that if the restriction is such that the trader is not getting protection of
Article 19(l)(g). If this is so, then the freedom of business which has the object of
earning profit or gain, would lose much of its importance.

ii) Procedural Aspect of Reasonableness ;

In general, natural justice is condition of procedural reasonableness.
Natural justice is an ingredient of reasonableness when civil rights of person are
affected. It would uphold the reasonableness of the restrictive law of the
administrative authority who is empowered to affect such right is required to act
quasi-judicially and to give his decision after giving an opportunity to be heared
to the party to be effected, in conformity with rule of natural justice.487 On the
other hand, if in such a case, in the absence of any emergency or extraordinary
circumstances is administrative authority is empowered to come to his
determination with giving any opportunity to the party effected to be learned, that
would constitute circumstance postulating unreasonableness.488 Reasonableness is
to be determined in the light of the facts and circumstances to the case. There is
not a static measure of reasonableness which can be applied to all situations alike.
The question is whether this procedure reasonably implies and prescribed is
reasonable in the circumstances of the case489
The Calcutta, Orissa and Rajasthan High Courts are unanimously held that
the procedure would be unreasonable if provision for the following minimum
requirements is not made in the enactment:
(a) A notice to the person against whom an order is made -

486 Nazeria Motor v. State of A.P., AIR 1960 SC 1964. .

487 Frauk v. State of M.P., AIR 1970 SC 92: Utkal Contractors and Joinery (P) Ltd, v. State of
Orissa, 1987 Supp. SCC 751 : AIR 1987 SC 2310.
488 Olga Tellis v. Bombay Municipal Corporation, (1985) 3 SCC, 545, 579.
489 District Controller Chittor v. Chittor District: Groundnut Traders Association, AIR 1988 A.P.
317.
 251

1 It is not only necessary that there may be notification but also that there
may be notification but also that there should be adequate publicity of the
notification.
2 The notice may be given either before or after the order is made, There
may be cases of emergency where it may not be possible to give notice to
a person before making an order against him, for instance in case of an
epidemic, earthquake flood, etc. It may not be possible under the
circumstances of the case to give notice.
The reasonableness of the situation in such cases would require that action.
is promptly taken without waiting to give a notice to a person against whom the
order is made. But after the order has been made he must be given an opportunity.
to make a representation.

(b) An opportunity to make representation :

A reasonable opportunity to be heard is the second essential of reasonable
procedure. But neither the Supreme Court nor any of the High Courts have
defined as to what opportunity would be reasonable and which would be
unreasonable. In Ismil v. State of Orissa490 Ray CJ. had only observed
that “one hearing is all that is required.”
(c) Some authority or tribunal to consider the representation. The general
principle is that is not necessary there should be judicial tribunal to hear
the representation. Any impartial authority, whether it is executive or
judicial might hear the representation. Any impartial authority, whether it
is executive or judicial might hear the representation.491 But in State of
Madras v. V.G. Rao,492 the Supreme Court declared the impugned
provisions (Sec. 15(2)(b) of Madras Act XI of 1950) as being
unreasonable which provided for the grounds of the order to be tested by
an advisory Board not in a judicial enquiry on the ground that the right to
‘ form associations or Union has very wide and varied scope for its

490 AIR 1951 Orissa 86.

491 Madan Lai v. State of Rajasthan , AIR 1953 Raj; 162 at 166.
492 AIR 1952 SC 196 at 200.
 252

exercise, and its curtailment is fraught with reactions in the religious

economic and political fields. - -
Trade must be directly affected by the restrictions. In the case of Viklad
Coal Merchant v. Union of India493 it was held that it is the direct impact of the
restriction on the freedom to carry on trade that has to be kept in view and not the
ancillary or incidental effect of the governmental action on the freedom to carry
on trade, factors to be considered by the Court, they should take into
consideration the nature of the right alleged have been infringed the underlying
purpose of the restrictions imposed, the disproportion of the imposition and the
prevailing conditions at the relevant time including the social values whose needs
are sought to be satisfied by means of the restrictions.494
Procedural reasonableness was also discussed in Dwarka Parshad’s
Case495 in the instant case the licencing authority was given absolute power of
granting or withholding licences or of fixing prices of goods in any way he
chooses for reasons to be recorded. The Supreme Court declared such a provision
unrestrained will of a single individual such a power and that there was nothing
which could ensure check on the licencing authority. Mukherjee J. speaking for
the Court made a distinction between vesting of discretionary power in case of
commodity essential to the community and the commodity normally available. He
pointed out that in case of commodity being essential to the community some
amount of discretionary power could be vested in certain public affairs or bodies,
where this could not be possible in the case of commodity normally available. In
Hari Shankar Bagla’s case496 the Supreme Court took the stand that even in the
normally available commodities the executive authorities could be vested with the
discretionary power provided that there were some principles or guidelines on
which the authorities were required to function. In the case the policy was laid
down and the executive authority was required to act thereon and so, the Court
held that the vesting of discretionary power was reasonable.

493 (1984) I SCC 619, 641, 642; AlR 1984 SC 95

494 Indian Express News Paper v. Union of India, (1985) 1 SCC 641,643, 647.
495 AIR 1954 SC 224.
496 Hari Shankar Bagla v. State of M.P., AIR 1954 SC 465
 253

Thus so far as the procedural aspect of the restrictions concerned, there is

no doubt a certain amount of objectivity about the three requirements. But it can
hardly be denied that those requirements lay down only the very basic and broad
principles and do not provide even the minimum working rules for the courts. The
fact is brought out by the observation of the court itself when it had to consider a
few more grounds of procedural unreasonableness and add qualifications to those
already recognised.
The Trend of Judiciary show that the restrictions imposed by the State
held to be more of reasonable nature than to unreasonable. There have been
provided no hard and fast guidelines by the judiciary for determining
reasonableness. But the Supreme Court has pointed out repeatedly that for
examining the court should consider all the surrounding conditions facts and
preamble of the statutes for determination of reasonableness of a restriction.

IV. Freedom of trade and commerce in England, U.S.A. and India : A

judicial review :
Article 19(l)(g) constitute the due process of law safeguard, on the
American pattern, for property and business rights in India. It is left to the
Supreme Court ultimately to decide whether the restriction imposed on the rights
by the State are reasonable or not. In a classical passage, quoted often by the
Supreme Court in subsequent decisions P. Shastri C.J., assessed the wide sweep
and finality of the powers of reserved to the judges under this “due process,
clause” in these words of buoyant optimism.497 The view generally held among
scholars in the light of decades of the Supreme Court decisions is that the
Supreme Court has virtually abdicated its role in relation to Article 19(l)(g) and
follows a policy of judicial difference to the legislative verdict in determining the
reasonableness of the restrictions imposed by the legislature and that consequently
‘Private economic interest do not enjoy much of a substantive protection under
the Constitution. Judicial Review has not become too limited is that the Supreme
Court examines in each case, the reasonableness of the restrictions with great

497 State of Bombay v. United Motors, AIR 1975 SC 699 (717) 1953 SCR 1089.
 254

care, and has in other cases restricted the scope for legislative interference with
the freedom under Article 19 (l)(g) by skillful interpretation. In Akadasi Padhan
v. State of Orissa498 the Court had to uphold the validity of an Orissa Law
conferring monopoly rights on the state in the matter of trade in Kendu Leaves, in
view of the constitution (First Amendment) Act.
In the United State of America also the right to trade, business etc. is
subject to restrictions. The restrictions are imposed under the due-process Clause.
The Supreme Court of America laid down that when a particular trade of business
becomes effected with public interest, the state gets the right to restrict it in
exercise of its ‘Police Power’ a doctrine which is not expected in the Indian
Constitution. William, O Douglas observes that the concept of ‘due process’ is
also embodied in Indian Constitutional Law where other Clauses do the service
for due process. The Courts in India have upheld many Laws on the ground that
they impose reasonable restrictions in the interests of general public.499 Many
statutes and others were also struck down by the courts on the ground that they
violated the fundamental right guaranteed by Art. 19(l)(g). The rule of
presumption in its American form was pressed for the commendation of the Court
in Khyerbari Tea Co. v. State of Assam500 (Justice Gajendra Gadkar). But for
the courts decision in Saghir Ahmad’s case501 was willing to held that since
freedom guaranteed to the individual is not absolute and its contents must be
determined by reading Article 19(l)(g) and Cl. (6) of Article 19 together, it can
perhaps be said that the initial presumption cannot be rebated merely by showing
that the freedom under Article 19 (l)(g) has, prima-facie been invaded, as such
the court should assume that the restrictions imposed are reasonable and in the
interest of the general public unless the contrary is shown.
The framers of the Constitution of India decided not to include the ‘due
process’ Clause in the Constitution. Hence, it was not necessary for them to
include the concept of ‘Police Power’ in the Constitution. This is a very important

498 (1964) IISCJ37.

499 M.C.V.S. Arunachala v. State of Madras, AIR 1959 SC 300 1959 SCJ 297.
500 AIR 1964 SC 925.
501 Saghir Ahmad v. State of U.P. (1955) 1 SCR 707
 255

point of distinction between the constitution of the United States of America and
that of India. This gave Indian Constitution a far more certainty than the
American Constitution. There is another point of distinction to be noted in this
behalf. The American Constitution is based on the doctrine of ‘Separation of
Powers’. But there is no rigid separation of power in the Indian Constitutions.
These differences naturally lead to the conclusion that the decisions of the
American Supreme Court should not be blindly followed in interpreting the
Indian Constitution. Moreover, social conditions and habits of the people are
different. As the doctrine of ‘Police Power’ has no place in Indian Constitution, so
also the doctrine of immunity of instrumentalities and political question have no
place in Indian Constitution. The doctrine of ‘Immunity of Instrumentalities was
first propounded by Marshall, C J.502 But it was later rejected in the United States
CA-J

itself. It was also not accepted by the Privy Council.

In Corlton Ltd. v. Commr. of works it was held that all the courts could
do was to see that an impugned exercise of this power fell within the power given
by the statute, and that it had been exercised in good faith (which would be
presumed and difficult to disapproved). The court could not enquire into the
reasonableness, the policy, the sense, or any other aspect of transaction. The
statutes are empowering licencing authorities to attach such conditions to licences
authorities to attach such conditions to licences as think it and the minister in
appeal in licencing case to make order as he thinks fit. In such cases the authority
must not act an irrelevant consideration nor make a decision which no reasonable
person could have reached.504 Where the statute authorized local authorities with
transport undertaking to charge such force and pay such wages as they thought fit,
it was held that they were bound to act as business principals.505
In the State Courts of the United States, the scope of judicial review varies
from state to state. In the Federal courts the Constitutional warrant for judicial
review is found in Para 1 of Sec. 2 of Article 3 of the Constitution defining the

502 Pathumma v. State of Kerala, (1978) 2 SCC 1.

503 A.G. for British Columbia v. A.G. for Canada, 1924 AC 222 (P.C.)
504 Associated Provincial Picture House Ltd. v. Wednesbury Corporation (1948) 1 KB 223.
505 Roberts v. Hoopwood, (1925) AC 378.
 256

judicial power of the United States in Para 2 of Article 6 which makes the
Constitution the Supreme Law of the land, though it is claimed to be of older
origin than the Constitution. Coke maintained that if a statute was against
common right and reason the common law would control it and adjudge it void
his was invoked to justify the resistance to the Stamp Act which led to the
American war of Independence to the invoke of United States Supreme Court as
late as 1874. Review has been granted in the absence of words in the statute. On
the ground and that the Act of official must be justified by law, and if an official
violates the law to the injury of an individual, the Courts generally have
jurisdiction to grant relief though he could not be interfered with unless he is
clearly wrong. While both in England and America it would seem that the
personal Opinions of the courts as to what is right and just have greater weight in
application for judicial review than in other branches for legislation, there seems
to be a wider discretion in the United States, where the Supreme Court is not
bound to stare decisis. If the Administrative Procedure Act in the United States
has had little effects on the jurisdiction assumed by the courts, it could seem that
the Tribunals and Enquiries Act has widened the scope of judicial review in
England.

Position in India:
The position in India differs from that in England. As it has no supreme or
paramount law like the Indian Constitution; it differs from that in United States
Constitution has no. provision corresponding to Articles 32 and 226 of the Indian
Constitution. The Constitution itself excludes many acts from judicial review.
Doubt and disputes connected with the election of the President and Vice
President are heard and determined by the Supreme Court whose decision is final,
If amendments have been made to bill in contravention of the rules of business506
or if members or even the speaker have not taken the oath,507 the court will not
hear the objection when the original bill had been signed and authenticated the

Ram Dubey v. Govt, of Madhya Bharat, AIR SC 1952,

507 Anand v. Ram Sahay, AIR 1952 M.B. 31 at 44.
 257

Speaker, its validity cannot be questioned on the ground that the official report of
the proceedings did not record that the question had been put and carried in
accordance with rules of business.508
The legislatures and their members have certain privileges, fundamental
right and; until others are defined by law the privileges of the House of Commons
in England. While such a law might be subjected to review as repugnant to
fundamental right, the privileges of the House of the Commons have the force of
a provision of the Constitution, so that anything done by virtue of them would not
be subjected to review as violative of a fundamental right. The employees
Provident Fund Act, 1952, provides for the institution of provident funds for
employees in factories, and Sec. 19A gave government power to decide whether
an establishment in a factory. The power is not unlimited, as ‘factory’ defined in
the Act as premises in which a, manufacturing process is carried on; this would
obviously involved disputes which might prejudice the implementation of the
object of the Act. Still the fact that an, owner of premises was liable to have the
obligations under the Act imposed on him by order of Government, without right
of recourse to the civil courts was held to be an unreasonable restriction on. the
right to carry on a business in Article 19( 1 )(g).

V. Relationship of Article 19(l)(g) and Article 301 :

Article 19(l)(g) and Art. 301 are equally granted right and operate in
different and separate fields. Some of the High Courts509 and Supreme Court have
tried to answer these questions. Article 19(1) (g) is a fundamental right, and
enforceable directly in the Supreme Court under Article 32,510 while Article 301
is constitutional right;511 secondly, during the operation of proclamation of
emergency Article 19 (l)(g) stands suspended while Article 301 remains
unaffected.512 Thirdly, while Article 19(1 )(g) is confined to a citizen, as distinct

508 State of Bihar v. Kameshwar Singh, 2(1952) SCR 889

509 State of Bombay v. R.M.D.C., AIR 1957 SC 699.
510 Phool Chand Gupta v. Regional Transport Authority (1985) 4 SCC 190.
511 Ram Chandra v. Orissa, AIR 1956 SC; 298, 305; Manik Chand Pal v. Union of India (1984) 3
SCC 65; AIR 1984 SC 1249.
512 A. Ahmad v. Mysore, AIR 1975 SC 1443 at 1446
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from an Allen or even corporation; the language of Article 301 is quite general;
fourthly, while restriction of the right under Article 19(l)(g) must be reasonable
whether imposed by Parliament or by a State Legislature, it need not be so as
regards freedom under Article 301 if the restriction is imposed by a State law
passes through the procedure laid down in the provision of the Article 304(b). An
individual who is affected by the violation of Article 301 and 304 can also
complain of an infringement of Article though Articles 301, 304 ordinarily
constitute an infringement also of the fundamental right to trade which is granted
by Article 19(l)(g), but a tax which is compensatory in character cannot be held
• • • sn
to constitute a restriction.
In Moti Lai’s Case514 wherein the question was whether the provision of
the Motor Vehicles Act, 1939 under which transport authority were empowered to
refuse to issue permits to private persons to operate their motor vehicles on
certain routes violated Article 19(l)(g) Article 301 of the Constitution neither of
the two provisions was found to have been violated, but observations were made
on the scope of Article 19(l)(g) and 301 Malick, C.J. said : Article 19 lays down
the rights of the citizen, while Art. 301 deals with how the trade, commerce and
intercourse is to be carried on between one place and another...., similar
observation of S.C. in State of Bombay v. R.M.D.C’s case515 Das, C.J. said that
“Article 19(l)(g) and 301, it is pointed out, are two facets of the same thing... the
freedom of trade, Article 19(l)(g) looks of the matter from the point of view of
the individual citizen and protect their individual right to carry on their trade or
business. Article 302 looks at the matter from .the point of view of the country’s
trade and commerce as a whole, as distinct from the individual interests of the
citizens and it relates to trade, commerce or intercourse both with and within the
states. Prof. Rice has rightly stated that rights protected under Article 19(1 )(g) are
much wider than “the activities protected by Article 301 But.....the Constitution
can not look at any matter from two points of view; and it is befogging to
personalize,”. ‘trade and commerce as a whole’ and attribute to it a point of view

513 Dy. Collector v. Ibrahim, AIR 1970 SC 1275.

514 Moti Lai v. U.P. Government, AIR 1951 All. 257 '
515 AIR 1957 SC 699. See also Automobiles Transport Ltd. v. Rajasthan, AIR 1958 Raj. 114(116)
 259

‘trade and commerce’ are nothing but non-trading and commencing. This view
has been endorsed by others, also.
To sum up the above discussion it may be said that two lines of approach
have been taken to distinguish Article 19(l)(g) from Article 301. According to
one, 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.
According to the other Article 301 is limited to the freedom of trades, commerce
and intercourse through the territory of India as defined earlier while Article 19(1)
(g) applies to the rest of the trading activities. It seems the latter view is correct. It
may reasonably be assumed that two provisions of the Constitution cannot be read
to repeat the something or little more or less. On this principle Article 301 much
not cover that has already been covered by the former. Hence, there must not be
any overlapping between the two. Actually, Article 301 is confined to very
limited types of trade activities and, therefore, 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.

VI. State Trading Laws and Reasonable Restriction:

State Trading is favoured so that the economic system may be cater to the
needs of the socialistic pattern of society. When there is concentration of wealth
in the individual hands it results in common detriment. This point of view was not
visualized in its broader perspective by the Constituent Assembly while framing
the free avocation clause. In Moti Lai’s Case the Allahabad High Court for the
first time pointed out the lacuna. The court held that the state trading law could
probably attract article 19 (l)(g), unless it satisfied the conditions in Article 19(6).
Immediately after this decision the constitution (First Amendment) Act, 1951
passed. The Amendment enables the state to nationalize partly or wholly any
industry or a trade without the risk of being declared unconstitutional for reason
of infringement of Article 19(l)(g).
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In Sagir Ahmad v. State of U.P.5'16 Mukherjee, J. explained the effect of

the amended Article, that the State monopoly law could not attract Article
19(l)(g) at all and so no question arose for the application of the test of
reasonableness. But in the instant case the court was not given any material to
establish that the state monopoly could be conducive to the general welfare of the
public. It is submitted that the court did not adopt a micro-balancing approach in
balancing the conflicting interests, Mere fact that some person families may be
effected by the state action can not be considered as the powerful factor to weigh
against the interest of public.
In Akadasi v. State of Orissa517 the Supreme Court did not follow the
observation of Mukherjee, J. that part of a law relating to state trading, which is
ancillary or incidental, may not attract the operation of the first part of Article
19(6). Moreover, this Article does not deal with legislative power. This
interpretation would protect the social interest against the private interest, which
was the intention of Parliament which passed the Amendment Act to protect the
CIO

social interests.

VII. Labour Law and Reasonable Restrictions:

Article 19(6) imposes in the judiciary a difficult task of balancing of
conflict interest. The Indian society is moving towards the socialistic pattern of
social structure: And this raises the question as to how far the Supreme Court of
India has successfully balanced the. competing interests as to suit the needs of
changing society. Article 19(l)(g) guarantees right to the employers to carry on
their business, at the same time the employees, being in profession, also get some
right. There are some directive in Part IV of the Constitution which imposes
obligations on the state to safeguard the interest of the working class of the
society.519

516 Sagir Ahmad v. State of U.P. AIR 1954 SC 728.

517 Akadasi v. State of Orissa AIR 1983 104.7.
518 Rasbihari v. State of Orissa, AIR 1969 SC 1081.
519 Bijai Cotton Mills v. State of Ajmer, AIR 1955 SC 33.
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In Bijay Cotton Mills Ltd. Case520 the employer was required under the
Minimum wages Act 1948 to pay of minimum wage to his employee. The
employer claimed protection of Article 19(l)(g) on the ground that if he paid
minimum wage, he would not be in a position to run his business; and moreover,
this would restrict the right of the employee to work on the terms agreed to
between the employer and employees. But the court rejected this contention on
the ground that in the light of the directive principle of state policy it could not be
disputed that securing of living wages to the labourers which recurred not only
bare physical subsistence and but also the maintenance of health and decency was
conductive to the general interest of the public.
In another case521 Justice Ganendragadkar rightly pointed that the
minimum wages should ensure for the employee not only his subsistence and that
of his family but also must preserve his efficiency as a worker. And so a
minimum wage which ensured subsistence and some measure of education,
medical requirement and amenities fulfilled the requirement of Article 19(l)(g).
In the Hathising Mfg. Co’s Case, the main question before the Court
took the stand that such a measure was protected under Article 19(6) and did not
attract Article 19(l)(g). This may be against the motion of the legislature, but in
the socialistic pattern of society such an approach will strive to attain social
justice.
Under Article 19(l)(g) every employer has the right to manage the internal
working of his business in such , a way that he gets maximum profit out of it. But
maximum profit is not only the factor. In Ram Dhan Das’s Case,523 Justice
Ayyangar, speaking for the court, held that to ameliorate the condition of the
employees was a problems of human relationship and social control for the
advancement of the community and the social interests demanded that the health
and efficiency of the workers should be protected.

520 Bijai Cotton Mills v. State of Ajmer, AIR 1955 SC 33

521 U.Unichoyi v. State of Kerala, AIR 1962 SC 12.
522 Hathi Singh Mfg. Co. v. Union of India, AIR 1960 SC 923.
523 Ram Dhan v. State of Punjab, AIR 1961 SC 1559
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In Manohar Lai v. State of Punjab524 the question before the court was
whether the regulation of working hours for the employer, could attract the
application of Article 19(l)(g). The court held that such regulation was reasonable
and it was in the social interest and it was immaterial whether the employees were
the family members of the employer.

VIH. Fundamental freedom of trade and commerce and public interest:

The Constitution of India allows reasonable restriction on the exercise of
the right in the interest of the general public, is vague and probably advisedly.
However, the Courts have pointed out that restrictions are in the interest of
general public, even if they are meant for the people of a particular or a particular
state. It does not mean that the interest must .be of the public of the whole India. It
may be even with reference to the interests of particular individual also.
The Court have decided that prohibition of immoral or dangerous
occupation such as gambling sale of so called wonder drugs etc. imposing of
restrictions upon business such as import or export of goods of or plying vehicles
on public roads, imposing regulations on public carriers, etc. would be all interest
of the general public. The Supreme Court decided a number of cases in which the
question was whether a particular activity was a trade, but prize competitions.
Surrounding circumstances are to be taken into serious consideration under which
the law came to be made along with the underlying purpose of the enactment and
extent and the urgency of the evil sought to be remedied, this government is
custodian of the nations welfare and is only in the possession of the material facts
which may determine the need of nation and there may be no objection or the
burden of proving that a total ban on the exercise of the right alone may ensure
and that the maintenance of general public interest is significant. The public
policy has been the measuring rod in this matter. Accordingly immoral Act of
gambling are not deemed to be business of profession, in

524 Manohar Lai v. State of Punjab AIR 1961 SC 419.

525 Narendar v. Union of India, AIR 1960 SC 430.
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Chamarbaugwala Case it was held that prize competition which was of

gambling nature could come within the legislative prohibition without violating
Article 19(l)(g). The Supreme Court after examining the issue through several
pronouncements of other courts, as well as by relying upon the scriptures
observed “we find it difficult to accept the contention, that those activities which
encourage a spirit of reckless propensity for making easy by a lot or chance which
lead to the loss of the hard earned money of the undisceming and improvement
common man and thereby lower his standard of living and drive him into a
chronic state of indebtedness and eventually disrupt the peace and happiness of
his humble home could possibly have been intended by our Constitution maker to
be raised to status of trade; commerce or intercourse and to be made the subject
matter of fundamental right guaranteed by Article 19(l)(g).
Das Gupta J. in Basti Sugar Mills v. Ramujagar.527 for the court decided
that the Word ‘workman’ in the industrial Dispute Act, 1947 included an
employees of the contractor and that the Act did not constitute an unreasonable
restriction on the right to carry on trade or business.
“for the interest of the general public require that the device of the
engagement of a contract or for doing work which is ordinarily part of the
industry should not be allowed to be availed of by owners of industry for
evading the provisions of Industrial Disputes Act.”
An interesting aspect of Article 19(1) (g) is witnessed in relation to
prohibition Article 47 of the Constitution directs the state to adopt a policy of
prohibition. In the Cooverjee’s Case Supreme Court held that state has power
to which prohibit trades which are illegal or immoral or which are injurious to the
health and welfare of the public. Chief Justice Mahajan approvingly cited the
decision Crowley v. Charistinsen for holding that there is no inherent right in a
citizen to sell intoxicating liquers by retail, it is not privilege of a citizen. His
Lordship want to the extent of holding that as it is a business attached with danger

526 State of Bombay v. R.M.D. Charmarbaugwala. AIR 1957 SC 699; State of M.P. v. Nand Lai
Jaiswal (1986) 4 SCC 560, 604.
527 AIR 1964 SC 355.
528 Cooverjee v. Excise Commr., Ajmer, AIR 1954 SC 220.
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to the community, it may entirely be prohibited or be permitted under such

conditions as well limit its evils. The court rules that the manner and extent of
regulation rests with the discretion of the governing of the authority. The Supreme
Court decision in the instant case is significant because it held that trade in liquors
can not be claimed as fundamental right and state can regulate it in the public
interest.529 The second requirement in the Article 19(6) is that the restriction
should be in the interest of the general public. This gives the state of wider power
to impose restriction on the freedom of trade and business. The words in the
interest of.general public ‘do mean that the restriction should be in the interest of
the total population of India or in the national interest. The American Supreme
Court had taken the stand that the state in the exercise of the public power had the
power to control a business where the public had interest. But the Supreme Court
of India did not follow the American precedent in the light of the specific
con
provision in the Constitution.
The expression in Clause (l)(g) and (6) of Article 19 authorizes the state,
to impose restriction not only on the ground of public order but also on ground of
social and economic policy, or on the Common, e.g. securing the objects
mentioned in Part IV of the Constitution. Thus it decides an economic policy that
the export or import of specified article or some other trade shall be carried on
only by a selected channel or through selected agencies. The court should proceed
on the assumption that the policy is in the interest of the general public unless the
contrary is shown, even though other traders are refused their right to carry on
that trade. The Court has taken the view that the phrase means nothing more in the
public interest. So far as the Word public is concerned no rigid number can be laid
down that if the restriction was for the benefit of the large number of population
in that case it would be considered in the interest of general public.

529 State of M.P. v. Nand Lai Jaiswal (1986) 4 SCC 566, 604.
530 Chintaman Rao v. State of M.P., AIR 1951 SC 118.
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IX. Review:
Normally the court did not interfere with the state action when it protected
and ensured social interest. But at the same time the court struck down any misuse
of the power either by the executive or the legislature, not leaving the individual’s
freedom completely at the mercy of the state. It can be said that the court, while
balancing the conflicting interests, made important contributions in building up
the socialistic pattern of society by leaning in favour of the social justice
C'J 1

approach. The Court had already enunciated the important principle, holding
that with regard to the equality clause the presumption may be general but its
application to art 19(l)(g) is very limited, limited in the sense that once the
invasion of right is ex-facie proved, the state must prove that its case comes under
some exception to Article 19(l)(g). The courts judgements have justified and
rationalized the state regulation of private trade. The operation of the judicial
process in this area has been considerably affected by the concept of welfare state.
It would seem to be clear that private economic interest do not enjoy much of a
substantive protection under the Constitution. The Court also, as we have seen,
has been reluctant to interfere with the legislative and administrative action in this
area except to insist on some procedural safeguards to aggrieved party. Thus
judicial review is only marginal.
The restriction must be proportionate to public need, a proper balance
between the guaranteed freedoms and the permissible social control must be
struck. The restriction may well be extended to the total prohibition of the nature
of the business so permits and both the substantive and procedural aspect of the
restrictions have to be examined by the courts. Reasonableness of the restrictions
which has to be examined by the courts not of the law and there can be no
absolute standard of law. The values of life in society and the current political
ideals should be taken in account in formulating the standard of reasonableness.
While determining the reasonableness, the judiciary must bear in mind that the
imposition of restriction upon the fundamental rights of the citizens involves re­
adjustment of values and consequently a shift in the balance of interest. The

531 Khyerbari tea Co. v. State of Assam, AIR 1963 SC 925.

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socialistic measures which are being adopted by law in India are meant for socio­
economic development. They are intended to create a new structure of interest
and a new scale of values of life in the society by carrying our for reaching social
and economic plans.