Freedom of Trade, Business and Profession: In-Depth Analysis

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Democracy is enshrined in the famous motto- “of the people, by the people and for the people” and this motto of democracy is upheld with strong and effective establishment of fundamental rights by the state. The Indian Constitution is backed with six major fundamental rights and out of which Freedom to Carry Trade, Occupation, Business and Profession is one. This right is guaranteed by our constitution under Article 19(1)(g), which states that all the citizens have right to practise any profession, or to carry on any occupation, trade and business. This basic intention of this fundamental rights is to evolve socio-economic strengthening throughout the country. However, this fundamental right is not unregulated and is to be read with Article 19(6) which states that the state is not prevented from making a law in interest of general public and thereby impose reasonable restrictions on the exercise of the above right. Also, Article 301 helps in maintaining economic unity, in both aspects intra as well as inter states, in our country. The main objective behind these articles is to promote free trade, commerce and inter-course activities within the territory of India.

Laws relating to trade and commerce in India were made as early as in the Smritis and the Arthashastra. These laws were made with the objective of providing goods at fair price to all and to make possible a wholesome prosperity of the state. The makers of the laws aimed at the interest of all classes of the society and their unanimous development.

Agriculture and trade expanded under the Vijayanagar kingdom. As village self-rule declined, there was the emergence of a class of locally powerful people who used their social status for developing agriculture by providing additional facilities for which an extra charge was made.[1] Thus, despite continuous wars in that era, there was growth of trade and urbanization in south India between 14th and 16th centuries, even though the position of fundamental freedom of trade and commerce of citizens was not praiseworthy.

In the 17th and 18th centuries India was a great agricultural country, manufacturer, and housed trading centres for export to Asia and Europe. The East India Company and the British parliament, following the selfish commercial policy, discouraged Indian manufacturers in order to make India inferior to the industries of Great Britain. They imposed unreasonable restriction on trade and emphasized on production of raw materials in order to supply those to the looms of Great Britain.

The dawn of new era in the freedom of trade and commerce in India began with the transfer of power from the English East India Company to the British crown in 1858. The Government of India Act, 1935 conferred certain rights but in the form of protection of British Subjects in India. The fundamental freedom of trade and commerce was discussed by Constituent Assembly under Article 13 (1) (g) and 6 of the Draft Constitution. A lot of discussion and argument had ensued while Article 19 (1) (g) and the clause 2 of the same Article was being drafted.

The essence of true and just democracy is derived from the powers provided to every citizen of any nation. These powers are in form of fundamental rights guaranteed by State. The Indian Constitution provides six basic fundamental rights to citizens of India.

Article 19(1)(g) ensures that all citizens earn their right to earn livelihood and guarantees to all citizens the right to practise any profession or to carry on any occupation, trade or business. The ambit of this article tries to cover all forms and means to earn livelihood and do economic activity. Kuldeep Singh, J has defined the four expressions, i.e., profession, occupation, trade and business in Sodan Singh’s case[2] as follow –

“’Profession’ means an occupation carried on by a person by virtue of his personal and specialised qualifications, training or skill. The word ‘occupation’ has a wide meaning such as any regular work, profession, job, principal activity, employment, business or a calling in which an individual is engaged. ‘Trade’ in its wider sense includes any bargain or sale, any occupation or business carried on for subsistence or profit, it is an act of buying and selling of goods and services. It may include any business carried on with a view to profit whether manual or mercantile. ‘Business’ is very wide term and would include anything which occupies the time. Attention and labour of am man for the purpose of profit. It may include in its form trade, profession, industrial and commercial operations, purchase and sale of goods and would include anything which is an occupation as distinguished from pleasure”[3]

Thus, the basic underlying intention behind using such overlapping words is to make the article a comprehensive piece of legislature which covers the entire ambit.

The restrictions laid for right in Article 19(1)(g) is defined in Article 19(6)[4]. This clause six of Article 19 brings forward three major contentions: –

The foremost thing which state should keep in mind while deciding reasonability of restrictions imposed under Article 19(6) is the nature of the economic activity and its indelible effect on public interest. Though there is no well- defined contention on public policy but the state after in detail analysis of the restrictions backed by reasonable interpretation should impose any. Thus, reasonableness of restriction is to be determined in an objective manner and from the standpoint of interest of the general public and make sure that restriction imposed is not from the view point on whom the restriction is imposed but from the viewpoint of the interest of public at large. [5]

There are certain sectors which are termed as grievously injurious to public policy. The Supreme Court has removed such sectors from the ambit as well as protection of Article 19(1)(g). In the Nashirwar liquor trading case[6] , the Supreme Court interpreted that there was no inherent right to carry on trade in liquor because it was clearly against the interest of general public and also it was properly abridged with the essence laid down in Part IV of our constitution, i.e., Article 47 of Directive Principle of State Policy. The State can exercise any kind of restrictions as well as prohibition on the trade of liquor, but this does not mean they have lost their all fundamental rights. They can approach court if any restriction imposed on liquor trade is found to be arbitrary, irrational or unreasonable.[7] In cases of betting and gambling, the Supreme Court has removed them from purview as well as protection of Article 19(1)(g) on the ground of being against public policy. The reason for removing certain businesses lies in the fact that it does not emphasize on public welfare at large. Also for cases in regards to money-lending, the Supreme Court discarded this economic activity out of the purview of Article 19(1)(g)’s protection stating that this kind of exploitative activity is undoubtedly against the interest general public and also the said is anti-social and unscrupulous.

Also, the State’s action to curb production, supply and distribution of commodities essential to life of the public at large during any emergency or paucity of any commodity/commodities is not at all violative of Article19(1)(g) because it is in the interest of general public and also empowered by Essential Commodities Act,1955.

Article 19(6)(ii) was added by First Constitutional Amendment,1951. It lays down the empowering provision for the State under which the State can make any law related to complete or partial exclusion of citizens or otherwise from any economic activity which the State deem fits. The said provision is also subject to implied restrictions. The said concept of State is that she is the parent of her citizen[8] and it is the implied restriction upon the State commanded by Article19(6)(ii) that the State will always undertake any action pro bono[9]. In landmark case of Akdasi Padhan v. State of Orissa[10] , the Supreme Court laid down the test to check the validity as well as the nature of State Monopoly. The following were the major points to be considered:-

In order to analyse the freedom of trade, profession and business under the Constitution of India, it is essential to understand the relationship between Article 19(1)(g) and Article 301.  

“Article 301- FREEDOM TO TRADE, COMMERCE AND INTERCOURSE- TRADE, COMMERCE AND INTERCOURSE THROUGHOUT THE TERRITOTY OF INDIA SHALL BE FREE, SUBJECT TO PROVISIONS.” [12]

The scope and content of Article 301 depends on the interpretation of three expressions used in the provision, namely ‘trade’, ‘commerce’ and ‘intercourse’, ‘throughout the territory of India’. The word ‘trade’ means buying or selling of goods. ‘Commerce’ includes all forms of transportation such as by land, air or water. [13] ‘Intercourse’ means movement of goods from one place to another place. The framers of the Indian Constitution, instead of leaving the idea of intercourse to be implied by the process of judicial interpretations, expressly incorporated the same in Article 301.

The main objective behind this article is to establish economic unity and equality in all parts of India. The essence of the said article was borrowed from Section 92 of the Australian Constitution which stated that trade, commerce and inter-course shall be absolutely free. Now in context of India, the said article is not subject to absolute and unqualified freedom because giving unrestricted liberty may get misused. For the same, in Article 302[14], absolute power is given to the Parliament for imposing restriction in the interest of general public and subsequent provisions. Also, the restrictions laid down should have indirect consequences and they should not directly curtail the freedom laid down in Article19(1)(g). Article19(1)(g) is a fundamental right and can only be invoked by citizens of India. On the other hand, Article 301 is an explanatory provision to Article 19(1)(g) and also Article 301 is very limited because it can be invoked only when free flow of trade, commerce and intercourse is hampered through any direct impediment from the state as such. Also, Article 301can be used by citizen as well as non-citizen and corporate person/private entity, removing the limited scope of civilians under Article 19(1)(g).

The major differences between Article 19(1)(g) and Article 301 are:

  1. Article 19 (1) (g) is a Fundamental Right, and enforceable directly by the Supreme Court under Article 32[15], while Article 301 is a Constitutional Right;
  2. The proclamation of emergency suspends Article 19 (1) (g) but Article 301 remains unaffected whereby the courts may take recourse to Article 301 to judge the validity of a restriction on commerce;
  3. Freedom of trade and commerce under Article 301 is a wider concept than that of an individual’s freedom to trade guaranteed by Article 19 (1) (g) as Article 19 (1) (g) as is confined to a citizen, as distinct from an alien or even corporation; Article 301 is quite general and it can be invoked by a non-citizen, corporation and even by a state on complaints of discrimination or preference which are outlawed by Article 303;
  4. While restriction of the right under Article 19 (1) (g) must be reasonable, whether imposed by Parliament or by a State Legislature, it need not be regarded freedom under Article 301 if the restriction imposed by State law is examined under the procedure laid down in the provisions of the Article 301;
  5. Article 301 can be invoked only when an individual is prevented from sending his goods across the state, or from one point to another in the same state, while Article 19 (1) (g) can be invoked when the complaint is with regard to the right of an individual to carry on business unrelated to or irrespective of, the movement of goods while Article 301 contemplates the right of trade in motion.
  6. Article 301 covers much interference with trade which may not ordinarily come within Article 19 (1) (g). An individual who is affected by the violation of Article 301 and Article 304 [16]can also complain of an infringement of Article 19 (1) (g) and bring an application under Article 32, even though Articles 301, 304 also ordinarily constitute an infringement of the fundamental right to trade which is granted by Article 19 (1) (g), but a tax which is compensatory in character cannot be held to constitute a restriction.

The freedom guaranteed under Article 301 is freedom from all restrictions on trade, commerce, intercourse but the restrictions are specified in Articles 302-305 in Part XIII of the Constitution and are not subject to the provisions of the other parts of the constitution. These provisions clearly show that the guarantee under Article 301 cannot be taken away by an executive action as it is imposition of a constitutional limitation on the legislative power of Parliament and State Legislatures.

Article19(1)(g) tries to cover all spheres of any economic activity at large and the restrictions laid down try to create “level playing field”. This provision also ensures economic equality and upholds the true spirit of democracy. It is believed that state imposes restrictions upon its citizens considering the said fact that the citizens are still not mature enough to declassify for them, what is apt for them or not. There are three major grey areas which the State and the judiciary need to reaffirm of Article19(1)(g): –

Thus, these are major contentions which will help in making the impact of Article19(1)(g) more effective and help in accomplishing the ambition of the makers of the Constitution in relation    to the same.

[1] Dutta R.C., Economic History of India, Vol. II. 1956

[2] Sodan Singh v. New Delhi Municipal Committee AIR 1989 SCC 155

[3] V.N Shukla, Constitution of India 172-173 (Eastern Book Company 12th Ed. 2013)

[4] 19. Protection of certain rights regarding freedom of speech etc

(6) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to,

(i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or

(ii) the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise

[5] M.P Jain, Indian Constitutional Law of India, 1132-1134 (Lexis Nexis Butterworths 6th Ed. 2010)

[6] Nashirwar v. State of Madhya Pradesh AIR 1975 SC 1368

[7] Ugar Sugar Works Ltd. v. Delhi Administartion AIR 2001 SC 1447 SCC 635

[8] “Parens patriae”

[9] “pro bono publico” meaning “for the public good”

[10] AIR 1963 SC 1047

[11] Supra Note 5

[12] The Constitution of India, 1950

[13] Explaining the word “Commerce” in the commerce clause of the U.S. constitution, Marshall, C.J. Stated as early as 1824 in Gibbans v Ogden that commerce is traffic but it is something more it is intercourse.

[14] 302. Power of Parliament to impose restrictions on trade, commerce and intercourse Parliament may by law impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory of India as may be required in the public interest, The Constitution of India, 1950

[15] 32. Remedies for enforcement of rights conferred by this Part

(1) The right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by this Part is guaranteed, The Constitution of India, 1950

[16] 304. Restrictions on trade, commerce and intercourse among States Notwithstanding anything in Article 301 or Article 303, the Legislature of a State may by law

(a) impose on goods imported from other States or the Union territories any tax to which similar goods manufactured or produced in that State are subject, so, however, as not to discriminate between goods so imported and goods so manufactured or produced; and

(b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest: Provided that no Bill or amendment for the purposes of clause shall be introduced or moved in the Legislature of a State without the previous sanction of the President, The Constitution of India, 1950

This article is written by Soham Chakraborty and Shamayita Pal.

Disclaimer:  This article is an original submission of the Author. Lex Insight does not hold any liability arising out of this article. Kindly refer to our Terms of use or write to us in case of any concerns. This article is a part of the 1st National Essay Competition, 2019.

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