Constitutional Provisions

Regulating Trade
 Introduction

• The provisions regarding the freedom of trade,

commerce and intercourse were adopted from the
Constitution of Australia.
• According to Section 92 of the Australian Constitution,
there should be freedom of trade, commerce and
intercourse which may be carried out by ocean
navigation or internal carriage.
The Preamble of Indian Constitutional
Socialist
• The term Socialist implies “social” and “economic” equality among
the people.
• Social equality means – Absence of discrimination on the grounds
only of caste, colour, creed, sex, religion or religion
• Economic equality- Government endeavors to make the distributions
of wealth more equal.
• India is a welfare state. The fact that the preamble of the Constitution itself
envisages India to be a ‘socialist’ state bears enough evidence for this.
• Socialism in India is not understood in the Russian context where all
resources are owned by the state and the state secures the welfare of all.
Socialism, as envisioned in the Indian Constitution, aims at the elimination
of inequality in income, status and standards of life. In many decisions,
courts have interpreted ‘socialism’ to mean a kind of social democracy
which comes closer to the conception of a social welfare state as seen in
the Constitutions of France and Germany. The Constitution itself,
however, does not define the term, but merely implies the above meaning
through the rest of its provisions.
Article 38
• Article 38 of the Indian Constitution directs the State to secure a social
order for the promotion of the welfare of the people. In this regard, it
provides for two provisions as follows:
1.The State shall strive to promote the welfare of the people by securing
and protecting as effectively as it may a social order in which justice,
social, economic and political, shall inform all the institutions of the
national life
2.The State shall, in particular, strive to minimize the inequalities in
income, and endeavour to eliminate inequalities in status, facilities and
opportunities, not only amongst individuals but also amongst groups of
people residing in different areas or engaged in different vocations.
Article 39 of the Indian Constitution

• Article 39 of the Indian Constitution, specifically deals with

the provisions or principles of policy that shall be
undertaken by the state. Article 39 contains six sub-
clauses, that are:
1.That all the citizens irrespective of their sex whether men
or women shall equally have the right to adequate means
of livelihood. [Article 39(a) of the Indian Constitution]
2.That the resources and the ownership of those resources
and materials shall be distributed in such a way that it
fulfils the common goal. [Article 39(b) of the Indian
Constitution]
1.That the economic system shall be executed in such a way that the
concentration of wealth and means of production shall not result in
a common detriment. [Article 39(c) of the Indian Constitution]
2.That equal pay for equal work shall be promoted. [Article 39(d) of
the Indian Constitution]
3.That the health and strength of workers irrespective of whether
men, women or children shall not be abused or manipulated.
Further, economic necessity/condition shall not be the reason for
entering such avocation that is unsuitable for specific age or
strength. [Article 39(e) of the Indian Constitution]
4.That appropriate opportunities shall be given to children that would
help them in building in a healthy manner, and in the condition of
freedom and dignity. Further, childhood and youth shall be
protected from any kind of exploitation and against moral and
material abandonment. [Article 39(f) of the Indian Constitution]
• The sole purpose of this Article is to ensure that the
people or the citizens of India are provided with
adequate means of livelihood, fair distribution of
wealth, equal pay for equal work, protection of children
and labour. The responsibility of ensuring all this is upon
the state.
• In Kesavananda Bharati v. The State of Kerala (1973)
the Supreme Court of India stated that in the process
of development in any field like social, economic, and
political, then such development shall not be in
contravention to the individual’s right to dignity. Hence,
here the Supreme Court observed that even the
framers of the Indian Constitution were of the opinion
that to not have such a society where the individuals
have not ensured any sort of dignity.
PART XIII TRADE, COMMERCE AND INTERCOURSE WITHIN THE
TERRITORY OF INDIA

• 301. Subject to the other provisions of this Part, trade, commerce

and intercourse throughout the territory of India shall be free.
• In trade, goods and services are exchanged between
the buyer and the seller and it also includes the
transportation of these goods.
• In commerce, the focus is more towards the element of
transmission of goods as well as that of men and
animals. Thus in commerce, the element of profit is not
the primary concern.
• The word “intercourse” was included to remove any
ambiguity about the intention of the Constitution
makers and thus it has been used to express the
intention that, free flow of goods throughout the
country is part of the freedom under Article 301 of the
Indian Constitution.
If A, a seller lives in Maharashtra wants to sell his
goods to B who lives in Madhya Pradesh, Can he do
so?

• Answer- Under Article 301 of the Constitution, they

have the freedom to do so and cannot be restricted
from selling or buying the goods.
• While the freedom under Article 301 is provided for
carrying out trade and commerce freely, this right
cannot be allowed to be exercised in those
activities which do not fall within the category of
trade or business.
Restrictions…………
• In the case of State of Bombay v. RMDC, the Bombay
Lotteries and Prize Competitions Control and Tax
(Amendment) Act, 1952 was held to be valid and it was
stated that it did not violate Article 301 of the Indian
Constitution because the act was imposing restrictions
on prize competition which was in the nature of
gambling and therefore it did not require any skill and
thus it could not be said that it was restricting trade.
• Any unlawful trade is not protected by the provisions of
Article 301
The object of Article 301

• Article 301 has been included in the Constitution in order to ensure

that the unity of the nation is maintained by removing the geographical
barriers which exist in various parts of the country. Also, by removing
the imposition of any restrictions which may be put up, it ensures the
free flow of goods throughout the country.
• So, the main objective of this provision is to bring the feeling of one
nation among all the Indians which may not be possible if the
economic activities face many barriers and which have already been
facing problems due to the existence of regionalism and the language
barrier.
The relation between Article 301 and 19(1)(g)

• There is a complex relationship which exists between

Article 301 and 19(1)(g). While both provide the right
of trade and commerce, there have been arguments
which state that the rights under Article 301 are for the
trade as a whole whereas, the right under Article 19(1)
(g) is provided only to the individual. But this view is
wrong and it cannot be maintained because
Article 301 is derived from Section 92 of the
Australian Constitution which includes the rights
of the individual as well.
• The relation between the two cannot be explained, they
both are interrelated because, during the proclamation
of emergency, the rights under Article 19 are suspended
and in such cases, the Courts can look towards the
provisions of Article 301 for finding out if any violation
of freedom of trade has taken place or not. So, it can be
said that both these articles are interrelated with each
other.
Atiabari Tea Co. vs the State of Assam (1961)

• Facts
In this case of Atiabari Tea Co.Ltd
. v/s the State of Assam, Assam Taxation Act levies a tax
on goods transmitted through Inland Waterways and
road. The petitioner in the present case carried on the
business of transporting tea to Calcutta (now Kolkata) via
Assam. Now while passing through Assam for the
purpose of transportation to Calcutta, the tea was liable
to tax under the said Act.
 Judgment
• The Supreme Court said that the disputed law undeniably
levied a tax that directly and immediately infringed the
movement of goods and therefore it comes under the
purview of Article 301. The Supreme Court further clarified
that these taxes can only be levied after fulfilling the
conditions of Article 304(b) which states that the sanction
by the President is required before any State enacts such a
law. In this case, the requirements of Article 304(b) were
also not fulfilled. Freedom assured under Article 301 would
become non-existent or imaginary if transmission of goods
is obstructed without meeting the criteria set out by Article
302 to Article 304 of the Constitution.