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Relation Between Part III And Part XIII

The framers of the Indian Constitution were fully aware of the importance of maintaining economic unity of the Union of India. Trade, free movement of goods and exchange of goods has always been important because it alone has the capability to sustain economy progress of the country, thus maintaining economic unity of the country. Laws relating to trade, commerce and occupation were made prior to integration of India, for its free flow.

The Constitution of India under Part III is backed with six major Fundamental Rights. Out of those six major Fundamental Rights, 'Freedom to Carry Trade, Occupation, Business and Profession as enshrined under Article 19(1) (g) is the one while 19(6) provide all reasonable restrictions. The basic intention of this article is to evolve socio-economic strengthening throughout the country.1

The freedom of trade, commerce, and intercourse is also provided under Part XIII of the Indian Constitution from Article 301 to Article 305. On one hand, Article 301 lays down the general principles of trade and commerce while on other hand, Article 302-305 lays down the restrictions to general principles of trade and commerce.2 Thus, the main objective of Article 301 was to, break-down the barriers of trade in state and create one unit for free flow of trade and commerce throughout the Union of India.3

Freedom Of Profession, Occupation, Trade, Or Business: Article 19(1) (G) Under Part Iii Of The Indian Constitution

Article 19(1) (g) guarantees that all citizens shall have the right "to practice any profession, or to carry on any occupation, trade or business".4 However, this right does not include the right to carry any trade, occupation or business which is immoral (human trafficking), dangerous in nature (drugs or any explosives), illegal or unqualified in nature.5

The rights under article 19(1) (g) are subject to reasonable restrictions. The state under clause (6) of Article 19 can impose restrictions on the following grounds; in the interest of general public, security of the state, public order, to uphold integrity and sovereignty of India and can make laws on following grounds:
  1. Imposing reasonable restriction on this right 'in interest of public'
  2. Prescribing professional or technical qualifications necessary for practicing any profession or carrying on any occupation, trade or business
  3. Enabling state to carry on any trade or business to the exclusion of citizens wholly or partially.6

Relevant Case Laws On Article 19(1) (G)

  1. P.A. Inamdar v. State of Maharastra 7
    Fact:
    In Islamic Academy case8, the court held to establish a permanent committee for regulating admissions and fixing fee structure in aided as well as unaided institution minority and non-minority institutions. A number of writ petitions were filed in the court. The petitioner contended that the directions on which the committee was to set up, violated article 30(1) and article 19(1) (g) in terms of unaided minority institution. The petitioner also contended that set up of a committee for regulating unaided institution does not fall under 19(6) i.e. reasonable restriction. The matter was referred to bench of 7 judges.

    Judgment:
    The Supreme Court held that right to establish educational institution either for charity or profit, being an occupation is guaranteed to all citizens under article 19(1) (g) and to minorities under article 30. The court further held that the committee violated both the articles and the right to regulate admission and fee structure of unaided professional institution is not a subject of reasonable restrictions under article 19(6) of Indian Constitution.
     
  2. Excel Wear v. Union of India 9
    Fact:
    In this case Excel Wear, the petitioner was a registered firm. The petitioner had a factory registered at Bombay. The factory manufactured garments for exports. Due to serious trouble regarding labour, the factory suffered a huge loss. The petitioner served a prior notice to the statefor its closure, finding it impossible to carry on the business of the factory. The State Government refused the approval in name of public interest. The notice was disapproved under:
    Sections 25-O
    10, 25-R
    11 of the Industrial Disputes Act, 1947. The Government could refuse the closure of the business if it feels that the reasons given by the employer is "inadequate" or "insufficient".

    Judgment:
    The Supreme Court in this case held that the grounds Section 25-O as a whole and Section 25-R is unconstitutional and invalid for violation of Article 19(1) (g) of the Indian Constitution. The Court also added that nobody has right to carry business, trade or any such occupation which he cannot pay even minimum wages to its employ. And the refusal of the State Government on the ground of reasonable restriction in the public interest within Article 19(6) is declared invalid by the court. The factory was given permission for its closure.
     
  3. Sukumar Mukerjee v. State of West Bengal 12
    Fact:
    In this case the appellant Sukumar Mukerjee challenged the validity of West Bengal State Health Service Act, 1990 and contended that it imposes unreasonable restriction on their right to carry on any occupation, trade or business under Article 19(1) (g). The appellant challenged that the Section 9 of the Act prohibited private practice by teacher, doctors of West Bengal Medical Education Service and not by the Doctors of West Bengal Heath Service. In this the doctors had either option to join WBMES or WBHS.

    Judgment:
    The court held that the action did not violate Article 19(1) (g) and the restriction is reasonable and it was in the interest of general public on the ground that the restriction was not on freedom to profess medical profession. The act simply clarifies that the doctors who wish to join government service will have no right to private practice.
     
  4. K Rajendra v. State of Tamil Nadu 13
    Fact:
    In this case Abolition of Posts of Part Time Village Officers Act, 1981 was challenged because it abolished the post of Part time village officers in the State of Tamil Nadu. The issue was whether the villagers should be employed with other job and whether such act violated Article 19(1) (g).
    Judgment:
    The court had no voice on the first issue but on the second issue it was held that the act did not violate Article 19(1) (g).

Cases Where Article 19(6) Was Held To Be Valid

  1. Sodan Singh v. New Delhi Municipal Committee 14
    Fact:
    In this case the petitioners were poor hawkers who carried their trade on the pavement of roads of Delhi and New Delhi. They alleged that they were allowed to carry their trade by paying certain amount (Tehbazari) to the Municipal Authorities, and since they were refused to carry out their trade it violated their rights guaranteed under Article 19(1) (g) and 21 of the Constitution.

    Judgment:
    The Supreme Court in this case held that, it's true that hawkers have fundamental right to carry trade on the pavement of roads under Article 19(1) (g), but it is subject to unreasonable restrictions under Article 19(6) of the Indian Constitution. The Court also made it clear that, Article 21 is not attracted in the case of trade and business.
     
  2. Kerela SMT Feb. v. Kerela T.B.O Association 15
    Fact:
    In this case the petitioner challenged the validity of two orders made by the Government of Kerala under Section 4 of the Kerala Marine Fishing Regulation Act, 1980. The act was challenged on the ground that it was violative of their rights to move freely under Article 19(1)(g) because it prohibited bottom trawling.

    Judgment:
    The Supreme Court held that the restriction was a reasonable under Article 19(6) because the act was passed in order to protect the livelihood of other poorer fisherman, and also to conserve fish wealth. The court justified the act of state as it fell under public interest and thea ct prohibited bottom trawling only during the monsoon period.
     
Freedom Of Trade, Commerce And Intercourse: Article 301 Under Part Xiii Of The Indian Constitution
The makers of the Constitution wished to promote free flow of trade in India because a country's economy should work as a unit which is free from all barriers. In, federation it is essential to reduce obstacle like tarrifs, non-tarrifs, quotas etc.16 Article 301 of the Indian Constitution lays down the following "Subject to the other provisions of this Part, trade, commerce and intercourse of India shall be free".17

The Three Main Pillar Of This Article Are:
  1. Trade:
    In normal sense trade means buying and selling of goods with the aim to make profit. In Article 301, the word trade means organized and structured activity with motive and some actual purpose.
     
  2. Commerce:
    It is the transmission or movement by air, telegraph, water or other medium. Transportation and transmission are the essential elements of commerce.
     
  3. Intercourse:
    It includes movement of goods both commercial and non commercial from one place to the other. However, it is argued that trade is not used in the widest sense. It must be noted that though Article 19(1) (g) and Article 301 of the Indian Constitution gives freedom of trade but illegal activities like human trafficking, hiring of terrorists, lottery and gambling cannot be protected under either of the article.18

    In the case of State of Bombay v. R.M.D. Chamarbaugwala19, the State of Bombay levied tax on lotteries and prize competitions. The tax was imposed on newspaper that had wide circulation on Bombay which had its publication on Bangalore. The respondent in this case conducted competition through newspaper. The Supreme Court held that activities which are undesirable or illegal would not be given protection under Section 301 of the Indian Constitution.20

    Article 302 gives "power to the Parliament to impose restriction on freedom of trade and commerce in public interest".21 In the case of Surajmal Roopchand and Co. v. State of Rajasthan 22 restrictions were imposed on the movement of grain under the Defense of India rules. The ground for the restriction was on the interest of general public.

    The court held it valid under article 302 of the Constitution. Article 303 of the Indian Constitution imposes, "restrictions on the legislative powers of the union and of the states with regard to trade or commerce".23 On the other hand Article 304 imposes, "restrictions on trade, commerce and intercourse among other States".24

    In the case of State of Madhya Pradesh v. Bhailal Bhai 25, tax was imposed on imported tobacco by the State of Madhya Pradesh, but the good was not subjected to tax even in the State of Madhya Pradesh. The Court held that act was discretionary in nature. Article 305 "Saving of existing laws and laws providing for State monopolies".26

    In the case of Saghir Ahmad v. State of U.P 27, the question regarding acts that provided monopoly to state was questioned in a particular trade, business or commerce, as it gets in conflict with the provision of Article 301, but the question remain unanswered.

Relevant Cases On Part Xiii Of The Indian Constitution
  1. Atiabari Tea Co. v. State of Assam 28
    Fact:
    The petitioner in this case had a business in which he transported tea to Calcutta via Assam. There was an act named, Assam Taxation Act levies a tax on the goods transported through inland waterways and road. Now, when the petitioner while passing through Assam for the purpose of transportation to Calcutta, the tea was liable for the tax under the said act. The validity of the act was questioned on two grounds:
    1. Whether the act violated Article 13 or not?
    2. Whether it can be protected under Article 304 (b) or not?
    Judgment:
    The Supreme Court held that the act which was challenged directly or indirectly restricted the free movement of goods and therefore it comes under Article 301. On the second issue the Supreme Court clarified that taxes can be imposed but after fulfilling all conditions of the Article 304(b), and the prime requirement for the same is sanction of President is required before any state enacts any law. This condition was not fulfilled. The Court finally held that freedom assured under Article 301 would be imaginary if the obstruction is made without meeting the criteria of Article 302 to Article 304 of the constitution.
     
  2. Automobile Transport Ltd. v. State of Rajasthan 29
    Fact:
    In this case the appellant challenged the validity of Rajasthan Motor Vehicles Act, 1951 under Article 301 of the Indian Constitution. The act imposed annual tax on motor vehicles (Rs 60 on a motor vehicle and Rs 2000 on a goods vehicle). Now the constitutional validity of the act was to be checked.

    Judgment:
    The Supreme Court in this case held that the tax imposed is a valid as it is only a regulatory measure or a compensatory tax for the free flow of trade, commerce and intercourse. The tax was to preserve the financial health of the state. The "Compensatory or Regulatory Taxes" has evolved to ensure that the objective of the state to impose such tax should be either for public interest or for necessary regulatory purpose. This is not an infringement of Article 301 and such measures do not require the validation of the provisions under Article 304(b).
     
  3. State of Mysore v. Sanjeeviah 30
    Fact:
    In this case the government of Mysore made a law banning the movement of forest produce between sunrise and sunset, under the Mysore Forest Act, 1900. The validity of the act was challenged on the ground that it violated the rights guaranteed under Article 301 of the constitution.

    Judgment:
    The Supreme Court held the act of the State Government void. It clarified that that�such an act was restrictive and not regulatory thus violative of the freedom provided under� Article 301.
     
  4. G.K. Krishna v. State of Tamil Nadu 31
    Fact:
    In this case the petitioner challenged the validity of validity of a Government Notification under the Madras Motor Vehicles Taxation Act, 1931. This act increased the tax on omnibuses from Rs. 30 to Rs. 100. When the petition was filed the government took plea that while imposing this tax was that, this act was to prevent the unhealthy competition between omnibuses and regular stage carriage buses and to reduce the misuse of omnibuses.

    The petitioner in this case raised two issues:
    1. Whether the tax was compensatory or regulatory?
    2. Whether the act is barrier to article 301 or not?
       
    Judgment:
    The Supreme Court in this case held that the act is not violative of article 301 because it was of compensatory as well as regulatory nature as it facilitated the trade. Here, in this case safe and efficient roads are required for smooth running of vehicles. The tax paid by the public will be directly used for them. Therefore, the imposition of tax is reasonable. If the tax would have been direct tax, then it would fall under the position of prohibited tax. The increase in tax was held to be valid in the eye of law.

Inter-Relation Between Article 19(1) (G) & Article 301:
Part III & Part XIII Of The Indian Constitution
Article 19(1) (g), a fundamental right, confers on the citizen the right to practice any profession or carry any occupation, trade or business subject to reasonable restrictions in public interest whereas Article 301 is exercised both by citizens and non-citizens. The question of inter-relation between Article 19(1) (g) and Article 301 is somewhat uncertain.
  1. The first view is that Article 19(1) (g) deals with the right of the individual whereas Article 301 provides all possible safeguards for carrying out free flow of trade as a whole, distinguished from an individual. However, this view is difficult to maintain. Article 301 of the Indian Constitution is based on Section 92 of the Australian Constitution. In the case of James v. Commonwealth of Australia32 a statute regarding a license for inter- state shipment of dried fruits was declared constitutionally invalid by the Privy Council. But the position for the same is much broader in India. While Article 92 deals with inter- state trade only. Article 301 includes both inter-state and intra-state trade and commerce. In actual this view has never been enforced and individuals have challenged the legislation on ground to effect on their right to carry trade and commerce. The Apex court has denied the theory that Article 301 guarantees freedom in abstract and not of the individual.33
     
  2. Article 301 under Part XIII of the Indian Constitution empowers free flow of trade throughout the country. On the other hand Article 19(1) (g) under Part III guarantees freedom to practice any occupation, trade or business in the interest of general public. It is clear that rights under Article 301 can be claimed by anyone that is citizen as well as non-citizens to move to court, if their rights have been infringed whereas rights under Article 19(1) (g) can be claimed only by the citizens. Thus, it can be stated that Article 301 is the expansionary part of Article 19(1) (g) which is limited in its scope.34
     
  3. Another view is that Article 19(6) imposes restrictions to freedom of occupation whereas Article 302-305 imposes restrictions on free flow of trade, commerce or intercourse. However it must be noted that Part XIII of the India Constitution should have such results that Article 19(1) (g) and Article 19(6) remains unaffected or the restriction should be such that, Part III of the Constitution remains unaffected. It can be clarified that the scope of Article 19(1) (g) is wider because Article 301 is only concerned with free flow of goods and services. 35
     
  4. It must be noted that Article 301 could be invoked only when an individual is prevented from sending goods within the state or from one state to the other whereas Article 19(1) (g) can be invoked when an individual is prevented from carrying business, irrespective of the movement of goods. Article 301 just deals with goods in motion whereas Article 19(1) (g) deals with the rest. So, it is viewed that in this context Article 19(1) (g) under Part III is expansion of Article 301 under Part XIII of the Indian Constitution.
     
  5. It is also argued that in some cases that are decided by the Supreme Court the condition mentioned in point 4 have been reversed. So, in those cases Article 301 act as the expansion of Article 19(1) (g).
     
  6. On one point of view restriction under trade can be challenged under both the constitutional provision. But with the passage of time it is noted that Article 301 covers many interferences of trade that is not covered under Article 19(1) (g) of the Indian Constitution. One such example is, levy of octroi. So, in some cases it can also be seen that Article 301 under Part XIII of the Indian Constitution has wider scope than Article 19(1) (g) under Part III of the Indian Constitution. 36
     
  7. With the above discussion it can be said that both the Articles i.e. 19(1) (g) and Article 301 is interrelated in some aspect. The inter-relation between both the Articles can be seen at the time of emergency. When emergency is declared the Article 19(1) (g) under Part III are suspended. At that time period of emergency, if any restrictions has been imposed on free flow of trade the looks for forward for the rights guaranteed in Article 301 under Part XIII of the Indian Constitution. The court checks under Article 301, whether any violation has occurred or not.
     
  8. The inter-relation between Article 19(1) (g) under Part III of the Indian Constitution and Article 301 under Part XIII of the Indian Constitution can be seen hypothetically under three situations. In the matter of S. Ahmad v. State of Mysore 37 it was held that the three possible alternatives where a petition will lie can be:
    The three alternative situations mentioned below are:
    1. A provision may be valid under Articles. 301 and Article 304, but may be invalid under 19(1) (g);
    2. It may invalid under Article 301 to Article 304 as well; or
    3. It may be invalid under Article 301 to Article 304, but not under Article 19.

Prior to the Supreme Court decision in the Automobile case,38 the consensus of opinion in the High Courts, broadly, was that while Art. 19(1) (g) looked at the freedom from the point of view of the individual, Art. 301 looked at it from the point of view of geographical barriers or restrictions against the movement of goods, while Art. 19(1) (g) lays down the rights of the citizen in the matter of profession, trade or business, Art. 301 deals with how the trade, commerce and intercourse is to be carried on between one place and another, whether the two places are situated in two States or are inside the same State.

The majority in the Automobile case, have held the distinction is not so simple. It was not correct to say that while Art. 19(1)(g) guaranteed an individual right to carry on his trade Art. 301 guaranteed a free flow of the volume of trade against geographical barriers. Art. 301 according to the majority, also aimed at the freedom of the individual from restrictions, not necessarily geographical, - but since regulatory measures were outside the purview of Art. 301, the scope of the two provisions was not identical.

In Bishamber Dayal Chandra Mohan v. State of U.P,39 the freedom under both Article 19(1)(g) and 301 is subject to restrictions imposed by the State in the collective interest, which must also be reasonable and not arbitrary or excessive. These limitations are inherent in both the freedoms. Regulatory measures do not constitute restrictions under either provision. However in the matter of Dist. Collector, Hyderabad v. Ibrahim,40 the Supreme Court denounced the theory that Art. 301 guarantees freedom in the abstract and not of the individuals.

Prima face, it appears that there is some overlapping between article 19(1) (g) and article 301, because both the articles aim at freedom of trade or business, and if either of the provisions are infringed, the aggrieved party can move can seek remedy from the Court against offending legislative action or executive action.41

Critical Analysis
From the discussion it is clear that free flow of trade is must for development of the economy of any country. Free flow goods, not only maintains the economy of a country but also it maintains good relation between different nation states. On the other hand, balance between right to trade and environmental protection should go hand in hand. Judiciary should not only resolve the conflict between trade and environment but also it must take unusual pro-environment stance.

Rights guaranteed under Article 19(1) (g) and Article 301 should go hand in hand with the right guaranteed under Article 21 of the Indian Constitution. If judiciary is able to maintain balance between the mentioned articles then, a healthy relationship can be maintained with infringement of any rights.

Free trade in India has increased efficiency among group of firms, specialization of firms in terms of producing goods and services, monopoly has been eliminated, increase in competition has lowered the prices and also increased the variety of goods in the market. In the matter of Saghir Ahmad v. State of U.P.,42 Mukherjea J. was of the view that while Art. 19(1) (g) deals with the rights of the individuals, Art. 301 provide safeguards for the carrying on trade as a whole distinguished from an individual's right to do the same.
 
Again in the matter of Motilal v. State of U.P.43 and Bapubhai v. State of Maharastra, 44 there was a view that the difference between Art. 19(1)(g) and Art. 301 is that Art. 301 could be invoked only when an individual is prevented from sending his goods across the State, or from one point to another in the same state, while Art. 19(1)(g) can be invoked only when the With the above discussion I am of the view that:
The inter-relation between Article 19(1) (g) under Part III and Article 301 under Part XIII of the Indian Constitution is somewhat uncertain.

Article 19(1) (g) confers fundamental rights on citizen to carry on trade, occupation or business whereas Article 301 confers statutory rights. The rights under Article 19(1) (g) can be claimed by citizens whereas the rights Article 301 can be claimed by anyone.45

Conclusion
The Constitution makers, therefore taking into consideration the need and importance of trade has enshrined and has guaranteed rights relating trade in Article 19(1) (g) and Article 301. On one hand when Constitution provides the free flow of trade while, on the other hand the Constitution also clarifies that the rights are not absolute. Article 19(6) imposes reasonable restriction on 19(1) (g) and Article 302-305 imposes restriction on Article 301 of the Indian Constitution. All these provisions together ensure the Constitutional status to maintain free flow of trade.

So, it can be concluded that:
The bonafide use of this freedom will surely help to foster healthy economy as well as relationship among everyone on society. But when these rights are used with malafide intention it will cause havoc, chaos and disturbance in the functioning of democracy and in return it will act as an obstacle to the growth and development of the economy.

References:
  1. Dr. J.N. Pandey, Constitutional Law of India 252 (Central Law Agency, Allahabad, 56th edn., 2019)
  2. Id. at 754
  3. Atiabari Tea Co. Ltd v. State of Assam, AIR 1961 SC 252; Indian Cement v. State of A.P.,(1988) 1 SCC 744
  4. The Constitution of India, art. 19(1) (g)
  5. Right to freedom, available at : (last visited on 1st November, 2020)
  6. Supra note 1
  7. AIR 2005 SC 3226
  8. AIR 2003 SC 3724
  9. AIR 1979 SC 25
  10. 25-O of the Industrial Disputes Act, requires an employer to take permission from the Government for closure of his industrial undertakings. The employer is required to give three months notice to the Government.
  11. 25-R provides punishment for the violation of Section 25-O.
  12. (1993) 3 SCC 724
  13. Part XIII of Indian Constitution, available at: https://www.legalbites.in/freedom-trade-commerce-intercourse/ (last visited on November 3, 2020)
  14. The Constitution of India, art., 301
  15. Supra note 4
  16. AIR 1957 SC 699
  17. Supra note 18
  18. The Constitution of India, art., 302
  19. AIR 1967 Raj. 104
  20. The Constitution of India, art., 303
  21. The Constitution of India, art., 304
  22. 1964 SCR (6) 261
  23. The Constitution of India, art., 305
  24. AIR 1964 SC 728
  25. AIR 1961 SC 252
  26. AIR 1962 SC 1406
  27. AIR 1967 SC 1189
  28. AIR 1975 SC 583.
  29. (1936) AC 578
  30. Supra note 1 at 754
  31. Supra note 17
  32. Supra note 1
  33. Supra note 29
  34. AIR 1975 SC 1443
  35. Supra note 29
  36. AIR 1982 SC 33
  37. AIR 1970 SC 1725
  38. M.P. Jain, Indian Constitutional Law 791 (Kamal Law House, Calcutta, 5th edn., 1998)
  39. AIR 1954 SC 728, 742
  40. AIR 1951 SC 257
  41. AIR 1956 Bom. 21
  42. Supra note 1 at 755

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