UNIT-4

A) FREEDOM OF TRADE, COMMERCE AND INTERCOURSE

Introduction
India, with its rich history of trade and commerce, has always been a hub for merchants and
traders. The Indian Constitution, recognizing the importance of trade, has dedicated an entire
part to ensure its free flow. Drawing inspiration from the Australian Constitution, the framers
of the Indian Constitution envisioned a nation where trade barriers would be minimal, and
commerce would thrive.

Objective
The free flow of trade, commerce and intercourse within and across Inter-state borders is an
important perquisite for ensuring economic unity, stability, and prosperity in a two-tier polity
country. The Indian constitution includes provisions that guarantee freedom of inter -state
trade and commerce through India’s territory. In a federation, it is essential to reduce the
barriers (tariffs, non-tariffs, quotas, etc.) between the states as much as possible so that the
people feel that they are members of the same country though living in different geographical
areas of the nation.
Ex- if Mr. A lives in Gujarat and expands his business and sell his products in other states,
let’s say he wants to do business in Punjab so he has freedom of trade, commerce and
intercourse as per article 301 of the Constitution of India.

Constitutional Provisions: Part XIII

Part XIII of the Indian Constitution, spanning Articles 301 to 307, is a testament to the
importance the framers placed on trade. These articles were not just legal mandates but were
designed to foster unity, ensuring that India, despite its diverse states, functioned as a single
economic entity.

Key Terminologies Explained

Trade: Trade means buying and selling of goods for profit-making purposes. In the context of
Article 301, trade isn’t limited to mere transactions but extends to organized activities that
have a clear economic purpose. It’s synonymous with business, emphasizing its organized
nature.
Commerce: Commerce encompasses the entire spectrum of activities that facilitate trade.
This includes transportation, communication, and any medium that aids the movement of
goods and services. It’s the backbone that supports trade, ensuring that goods reach from
producers to consumers.
Intercourse: The term “intercourse” in Article 301 is used in juxtaposition with trade and
commerce, implying “commercial-intercourse.” It doesn’t refer to purposeless motion but to
meaningful commercial interactions. However, for the purpose of Article 301, the focus is
primarily on commercial intercourse, ensuring a seamless flow of trade across states.
Freedom under Article 301 of Indian Constitution
Article 301 promises that, barring certain exceptions, trade, commerce, and intercourse will
remain free throughout India. However, this freedom isn’t absolute. It doesn’t mean an
absence of regulations but assures that these activities won’t face undue obstructions.

Restrictions and Regulations

While the Constitution promotes free trade, it also recognizes the need for regulations:

Parliamentary Oversight (Article 302):

The Parliament, understanding the diverse needs of the nation, can impose necessary
restrictions on trade and commerce. These restrictions, though, must be in the public interest
and not discriminate between states.

State’s Role (Article 303 and 304):

States, too, have a role in regulating trade. While they can’t discriminate against goods from
other states, they can impose reasonable restrictions, especially if they are crucial for public
order or health.

Discrimination and Preferential Treatment (Article 303)

Article 303 ensures that neither the Parliament nor the State Legislatures can give preferential
treatment to any state or discriminate against any state by virtue of any entry related to trade
and commerce. However, in cases of scarcity of goods in any part of India, the Parliament
may make laws favoring that particular region.

Prohibition on Discrimination: Article 303(1) prohibits both the Parliament and state
legislatures from giving preference to one state over another or discriminating against any
state.
Exception: Article 303(2) provides an exception, allowing the Parliament to make any law
giving preference to one state over another or discriminating against any state if it’s necessary
for the country’s overall development.
Levy of Taxes and Freedom of Trade (Article 304)
Article 304 empowers states to impose taxes on goods imported from other states, provided
similar goods within the state are also taxed. This ensures a level playing field and prevents
discrimination against goods coming from outside the state.

Taxation by States: States have the power to impose taxes on goods imported from other
states. However, these taxes cannot discriminate between goods produced within the state and
goods imported from other states.
Restrictions for Public Interest: States can impose reasonable restrictions on the freedom of
trade, commerce, or intercourse with other states for public interest. However, such laws
require the President’s prior assent.
Saving of Existing Laws and Laws for Carrying Out International Agreements (Article 305)
Article 305 protects existing laws and laws made for implementing international agreements
from being challenged on the grounds of contravening the freedom of trade provisions.

Existing Laws: Despite the provisions of Articles 301 and 303, any existing law (a law in
force before the commencement of the Constitution) will continue to be in effect unless
amended or repealed by a competent legislature.
International Agreements: The Parliament has the power to make laws that may be contrary
to the provisions of Part XIII if they are necessary for implementing international treaties,
agreements, or conventions.
Contemporary Challenges and Discussions
In today’s globalized world, the provisions of Part XIII are more relevant than ever. With the
rise of e-commerce and digital trade, the definitions of trade and commerce are evolving.
While the Constitution provides a robust framework, it’s essential to adapt to the changing
times, ensuring that India remains a vibrant hub for trade and commerce.

Origin of Trade, Commerce, and Intercourse

The concept of free trade and commerce is not unique to India. Countries like the USA,
Canada, and Australia have similar provisions in their constitutions, ensuring a seamless flow
of trade and commerce.

1. USA:
Article 1, Section, 8 Clause 3 in US’s constitution is referred to as Commerce clause in the
constitution of USA, which essentially lists the power of Congress, which by necessary
implication has been interpreted to have robbed the states of their power to tax interstate
commerce, while the Congress has the power to regulate commerce within states (also with
foreign nations & Indian Tribes). This constitutes the freedom of commerce in the United
States.
“Article 1 Section 8 Clause 3: The Congress shall have power to regulate commerce with
foreign nations, and among the several states, and with the Indian tribes.”

2. Canada:
Section 121 of the Constitution Act, 1867 (formerly the British North America Act, 1867: a
part of Canadian Constitution) entitles the Canadian Manufactures to have their growth,
produce or manufacture free admission into any of the provinces, thereby rendering the
borders of the provinces within Canada totally permeable.

“Section 121- All Articles of the Growth, Produce, or Manufacture of any one of the
Provinces shall, from and after the Union, he admitted free into each of the other Provinces.”

3. Australia:
Section 92 of the Constitution of Australia ensures that the Trade, Commerce & interstate
intercourse via internal carriage or ocean navigation shall be absolutely free except for
imposition of Uniform duties of Customs. However newly created states have an additional
liability regarding the above for a period of two years. It appears that Section 92 also extends
to Exclusive Economic Zone (and possibly Continental Shelf) of Australia.

“Section 92: On the imposition of uniform duties of customs, trade, commerce, and
intercourse among the States, whether by means of internal carriage or ocean navigation,
shall be absolutely free.
But notwithstanding anything in this Constitution, goods imported before the imposition of
uniform duties of customs into any State, or into any Colony which, whilst the goods remain
therein, becomes a State, shall, on thence passing into another State within two years after the
imposition of such duties, be liable to any duty chargeable on the importation of such goods
into the Commonwealth, less any duty paid in respect of the goods on their importation.”

4. India:
The Constitution of India secures the freedom of Trade, Commerce and Intercourse within the
Territory of India under Article 301, subject to reasonable restrictions & public interest
ranging from Article 302- 307. It is worth mentioning that Part XIII (Art. 301-307) is in
addition to Articles 14 & 19.

Since freedom of trade, commerce & intercourse is inextricable to the concept of federalism;
it’s worthy to note similar laws in three of the most federal countries in the world- USA,
Canada & Australia.
Activities Which Are Not Trade
Certain activities, though they might involve transactions, are not considered trade under
Article 301. This includes illegal activities like lottery, gambling, and other criminal
endeavors. The bar on these illegal activities was upheld by the Supreme Court in the case of
State of Bombay v. R.M.D. Chamarbaugwala (1957). In this case, it was held that all
activities of criminal nature or those activities which are undesirable would not be given any
protection under Article 301. Some examples of such activities can be clicking obscene
pictures for money, trafficking of women and children, hiring goondas or terrorists, etc.
Though the forms, methods, and procedures of trade may be applied these activities are extra-
commercial, and thus are not covered under Article 301.

Interrelation Between Article 301 and Article 19(1)g

Both articles play a pivotal role in ensuring the freedom of trade and commerce. While
Article 301 focuses on the free flow of trade across the country, Article 19(1)(g) provides
individuals the freedom to practice any occupation, trade, or business.

Constitutional Right
The right under Article 301 is constitutional and can be claimed by anyone.

Fundamental Right
The right under Article 19(1)(g) is fundamental and can be claimed only by citizens.

SEPARATE PROVISION FOR RESTRICTION

Article 301 is accompanied by Article 302-307 which lay down the restrictions to the free
flow of trade in the country.

CONTAINS RESTRICTIONS
Article 19(1)(g) contains restrictions to the freedom of carrying an occupation or trade
The Modern Landscape: E-commerce and Digital Trade
With the advent of technology, the definition of trade and commerce has expanded. E-
commerce platforms and digital trade have blurred state boundaries, making the provisions of
Part XIII even more relevant. The Constitution, while drafted decades ago, provides a robust
framework that can accommodate these modern trade forms.
Changing Dynamics: With the rise of digital platforms, the very nature of trade and
commerce is evolving. This section can delve into how the Constitution’s provisions apply to
these new forms of trade.
Challenges and Opportunities: E-commerce presents a new set of challenges, from taxation to
regulation. Understanding how the constitutional provisions apply in this context is crucial
for the modern trader.
Role of the Judiciary in Upholding Freedom of Trade
 The Indian judiciary has played a pivotal role in interpreting and upholding the
freedom of trade provisions. Through landmark judgments, the courts have ensured
that the spirit of the Constitution is upheld, and trade and commerce flourish without
undue restrictions.
 Judicial Interpretation: Over the years, the judiciary has played a pivotal role in
interpreting the provisions of Part XIII, ensuring that the freedom of trade, commerce,
and intercourse is upheld while balancing the need for regulations.
 Public Interest vs. Freedom of Trade: The courts have often been tasked with
determining the fine line between what constitutes public interest and what might be
an undue restriction on trade.
Landmark Judgments
Atiabari Tea Co. vs the State of Assam (1961)
Facts:
Assam Taxation Act imposed a tax on goods transported through Inland Waterways and road.
The petitioner transported tea to Calcutta via Assam and was taxed under this Act.

Issues:
The rationality of The Assam Taxation Act of 1954 was questioned on the grounds that:

● whether it is violative of Article 301 or not?

● whether it could be protected by making it fall under the ambit of Article 304 (b) or not?

Judgement:
The Supreme Court ruled that the tax directly infringed the movement of goods, making it
violative of Article 301. The tax was deemed unconstitutional. A seminal case that
emphasized the importance of Article 301. The court held that any restriction on trade and
commerce would be unconstitutional unless it was justified by subsequent articles.
Automobile Transport Ltd. vs State of Rajasthan (1963)
Facts:
Rajasthan imposed an annual tax on motor vehicles. The government argued this was to
prevent unhealthy competition between omnibuses and regular buses.

Issues:
The appellant challenged the validity of the tax levied under Article 301. Now whether the
tax levied was constitutionality correct or not had to be checked.

Judgement:
The Supreme Court held the tax as compensatory and regulatory, not violating Article 301.
This case further clarified the scope of restrictions, stating that regulatory measures or
compensatory taxes would not violate Article 301.

State of Mysore vs Sanjeeviah (1967)

Facts:
Under the Mysore Forest Act, 1900, a law was enacted prohibiting the movement of forest
produce between sunrise and sunset.

Issues:
Whether it was violative of the freedom guaranteed Article 301 of the Constitution?

Judgment:
The Supreme Court declared the law void, stating that it was restrictive and not merely
regulatory. Such a restriction was in violation of the freedom provided under Article 301. The
court, in this case, highlighted the state’s role, asserting that states could regulate trade if it
was in the public interest.

G.K. Krishna vs State of Tamil Nadu (1975)

Facts:
A government notification under the Madras Motor Vehicles Act increased the motor vehicle
tax on omnibuses. The government justified this increase by stating it was to curb unhealthy
competition between omnibuses and regular stage carriage buses.
Issues:
The petitioner in his argument questioned:

● whether the tax was compensatory or regulatory?

● whether it was a barrier to the freedom of trade, commerce, and intercourse or not?

Judgment:
The Supreme Court upheld the tax, deeming it compensatory and regulatory in nature. The
tax was not seen as a direct impediment to the freedom of trade but rather a measure to
facilitate organized and fair trade practices. A landmark judgment that delved deep into the
meaning of ‘freedom’ in Article 301, emphasizing that it meant freedom from restrictive and
not regulatory measures.

State of Bombay v. R.M.D. Chamarbaugwala (1957)

Facts:
The case revolved around the legality of lotteries and gambling activities. The state of
Bombay imposed restrictions on these activities.

Judgment:
The Supreme Court held that activities of a criminal nature or those deemed undesirable
would not receive protection under Article 301. Thus, lotteries and gambling, being extra-
commercial activities, were not protected.

The Indian Constitution, through its provisions, seeks to strike a balance between the freedom
of trade and the power of the state to regulate it. These landmark judgments by the Supreme
Court have played a pivotal role in shaping the interpretation and application of these
constitutional provisions, ensuring that the spirit of economic unity and prosperity is upheld.

Conclusion
The Indian Constitution, with its foresight, has laid a strong foundation for trade and
commerce. By ensuring freedom and at the same time allowing for necessary regulations, it
strikes a perfect balance. As India marches forward, these provisions will play a pivotal role
in shaping its economic landscape.
B) EMERGENCY PROVISIONS (SHARING A DOCUMENT)
C) AMENDMENT OF THE CONSTITUTION

Meaning of the Amendment of the Constitution

The Amendment of the Constitution refers to the process of making changes such as the
addition, variation, or repeal of any provision of the Constitution in accordance with the
procedure laid down for the purpose. The purpose of Constitutional Amendments is to ensure
that the Constitution remains a living document capable of adapting to changing
circumstances while upholding its fundamental principles and values.

Provisions of Amendment of Indian Constitution

The Indian Constitution, being a living document, provides for its amendment. The detailed
provisions regarding the Amendment of the Constitution of India are contained in Article 368
in Part XX of the Indian Constitution. These provisions define the process and scope of
amending the Constitution.
Procedure for Amendment to the Indian Constitution
The procedure for the Amendment of the Constitution of India as per Article 368 is as
follows:
 A bill for the amendment of the Constitution can be introduced only in either house of
the Parliament, not in the State Legislatures.
 The bill can be introduced either by a minister or by a private member and does not
require prior permission of the President.
 The bill must be passed in each House by a Special Majority, that is, a majority (more
than 50 percent) of the total membership of the House and a majority of two-thirds of
the members of the House present and voting.
 Each House must pass the bill separately. In case of a disagreement between the two
Houses, there is no provision for holding a joint sitting of the two Houses for
deliberation and passage of the bill.
 If the bill seeks to amend the federal provisions of the Constitution, it must also be
ratified by the legislatures of half of the states by a Simple Majority, that is, a majority
of the members of the House present and voting.
 After duly passed by both Houses of Parliament and ratified by the State Legislatures,
where necessary, the bill is presented to the President for his/her assent.
 The President must give his assent to the bill. He can neither withhold his assent to
the bill nor return the bill for reconsideration by the Parliament.
 After the President’s assent, the bill becomes an Act (i.e. a Constitutional Amendment
Act), and the Constitution stands amended as per the changes made by the Act.
Types of Amendments in Indian Constitution
Significance of the Constitutional Amendment
The provision for amendment of the Indian Constitution carries multifarious significance as
listed below:
 Adaptability in Governance: The Constitution lays down fundamental principles of
governance. A diverse and constantly evolving country like India cannot be governed
by a set of fixed rules. The amendment of the constitution enables to bring changes in
governance as per needs and situations.
 Accommodating New Rights: With rising awareness, various sections of society are
becoming assertive of their rights. For example, of late, the LGBT community has
been demanding their rights. The amendment enables providing for such rights.
 Evolution of New Rights: New interpretations of the Constitution led to the evolution
of new rights. For example, a new interpretation of the Right to Life and Personal
Liberty gave rise to the Right to Privacy. The amendment enables accommodating
such rights.
 Addressing Emerging Issues: It enables addressing new emerging trends like bans,
vigilantism, etc.
 Bringing Social Reform: It enables the eradication of outdated socio-cultural practices
to usher in modernity.
Criticism of the Amendment Procedure
The procedure for amendment of the Indian constitution has been criticized on the following
grounds:
 There is no provision for a special body for amending the Constitution such as the
Constitutional Convention or Constitutional Assembly. The constituent power is
vested in the Legislative Body itself i.e. the Parliament and the State Legislatures (in a
few cases).
 There is no provision for a special process for amending the Constitution. Except for
the requirement of Special Majority, the process of amendment is similar to that of a
legislative process.
  The power to initiate an amendment lies only with the Parliament. The states have no
such powers (except for passing a resolution to create or abolish state legislative
councils).
 A major part of the Constitution can be amended by the Parliament alone. Only in a
few cases, the consent of the state legislatures is required, and that too, only half of
them.
 Lack of provision for holding a joint sitting of both Houses of Parliament for a
constitutional amendment bill, sometimes, leads to the situation of a deadlock.
 The provisions relating to the amendment procedure, being too sketchy, leave a wide
scope for creating disputes and taking the matters to the judiciary.
The process of amending the constitution is a crucial aspect of maintaining the relevance and
adaptability of India’s legal framework to changing societal needs and circumstances. These
constitutional amendments have played a significant role in shaping the country’s governance
and legal framework. It ensures that the Constitution remains a living document, reflective of
its people’s aspirations, challenges, and evolving societal values, ensuring its relevance and
efficacy for generations to come.

DOCTRINE OF BASIC STRUCTURE

Meaning of the Doctrine of Basic Structure
 The Doctrine of the Basic Structure of the Constitution refers to the principle
established by the Indian Judiciary that certain core principles and features of the
Constitution are inviolable and cannot be amended or altered by the Parliament.
 As per this doctrine, any amendment that seeks to alter or abolish these basic features
is deemed unconstitutional and void. Thus, this doctrine acts as a safeguard against
arbitrary or radical changes to the Constitution, ensuring its stability, continuity, and
adherence to core constitutional values.
Evolution of the Doctrine of Basic Structure
 The Doctrine of Basic Structure of the Constitution is not expressly provided for in
the Constitution.
It is, actually, a judicial doctrine, which has evolved through a series of judgments of
the Supreme Court on cases related to the amending power of the Parliament.
 The debate regarding the scope of the power of the Parliament to amend the
Constitution under Article 368 started way back in 1951.
This issue initiated a tussle between the Legislature and the Judiciary, which
ultimately culminated in the evolution of the doctrine of the Basic Structure of the
Constitution.
The Evolution of this Doctrine over the years can be seen as follows:
Shankari Prasad Case, 1951
In this case, the Supreme Court ruled that the term ‘law’ in Article 13 includes only ordinary
laws and not Constitutional Amendment Acts. Thus, Parliament can take away or abridge any
of the Fundamental Rights by enacting a Constitutional Amendment Act.
Golak Nath Case, 1967
In this case, the Supreme Court reversed its earlier stand and held that the term ‘law’ in
Article 13 also includes Constitutional Amendment Acts. Hence, the Parliament cannot take
away or abridge a Fundamental Right through a Constitutional Amendment Act.
24th Constitutional Amendment Act, 1971
To counter the Supreme Court verdict in the Golak Nath Case, the Parliament passed the 24th
Constitutional Amendment Act, 1971, which amended Article 13 and Article 368.
It declared that the Parliament can take away or abridge any of the Fundamental Rights
through a Constitutional Amendment Act under Article 368 and such an act will not be
considered a law under the meaning of Article 13.
Kesavananda Bharati Case, 1973
In this case, the Supreme Court upheld the validity of the 24th Constitutional Amendment Act
and stated that the Parliament can take away or abridge any of the Fundamental Rights.
However, it laid down a new Doctrine of the Basic Structure of the Constitution, according to
which, the constituent power of Parliament under Article 368 does not enable it to alter the
‘basic structure’ of the Constitution.
Thus, the overall position after the pronouncement of this judgment is that the Parliament
cannot take away or abridge a Fundamental Right that forms a part of the ‘basic structure’ of
the Constitution.
42nd Constitutional Amendment Act, 1976
As a reaction to the new Doctrine of Basic Structure, the Parliament enacted the 42nd
Constitutional Amendment Act, 1976.
It amended Article 368 to declare that there is no limitation on the constituent power of
Parliament. Accordingly, no amendment can be questioned in the court of law on any ground,
including that of the contravention of the Fundamental Rights.
Minerva Mills Case, 1980
In this case, the Supreme Court invalidated the above provision of the 42nd Constitutional
Amendment Act of 1976 on the ground that it excluded Judicial Review which is a ‘basic
feature’ of the Constitution.
Waman Rao Case, 1981
In this case, the Supreme Court adhered to the Doctrine of Basic Structure and clarified that it
would apply to all the Constitutional Amendment Acts enacted after the date of the
Kesavananda Bharati Case Judgment i.e. April 24, 1973.
Present Position
Thus, the present position is that the Parliament under Article 368 can amend any part of the
Constitution, including Fundamental Rights, but without affecting the Basic Structure of the
Constitution.
Elements of the Basic Structure of the Indian Constitution
From the various judgments, the following have emerged as the basic features of the
Constitution:
 The Supreme Court has not yet defined what constitutes the ‘basic structure’ of the
Constitution. It has kept evolving the elements of basic structure through various
judgments.
Some of the major elements of the Basic Structure of the Constitution as listed as follows:

Significance of the Basic Structure Doctrine

The Doctrine of Basic Structure of the Constitution holds a place of paramount significance
in the constitutional framework of India. Its importance can be understood as follows:
 Preserves Constitutional Integrity – The doctrine strikes a balance between the need
for constitutional flexibility and the imperative of maintaining the fundamental
integrity and identity of the Constitution. This helps maintain the integrity and
stability of the constitutional order.
  Maintains Supremacy of the Constitution – The doctrine upholds the principle that the
Constitution is supreme and serves as the highest law of the land.
 Upholds Constitutional Morality – It upholds the principles of constitutional morality
and ensures that constitutional amendments adhere to the overarching values of
justice, equality, and fairness.
 Prevents Authoritarianism – This doctrine acts as a bulwark against authoritarian
tendencies to dismantle democratic institutions or undermine constitutional norms.
 Ensures Stability and Consistency – The doctrine prevents frequent and radical
changes to the constitution that could disrupt governance, thereby contributing to the
stability and consistency of the legal system.
 Protects Democracy – By protecting the democratic values as ‘basic features’ of the
Constitution, this ensures that India remains a sovereign, socialist, secular, and
democratic republic.
 Protects Fundamental Rights – By preserving these fundamental rights from
infringement through constitutional amendments, this doctrine safeguards individual
liberties and promotes social justice.
 Promotes Judicial Review – This doctrine empowers the judiciary to review
constitutional amendments while enhancing its role as a guardian of the constitution
and promoting the rule of law.
Criticism of the Basic Structure Doctrine
While the Doctrine of Basic Structure of the Constitution has been instrumental in
safeguarding constitutional integrity and protecting fundamental principles, it has also faced
criticism from various quarters on the following grounds:
 Lack of Constitutional Basis – One common criticism is that the doctrine is not
supported by any explicit provision in the Constitution.
 Lack of Clarity – This doctrine lacks precise definition and clarity regarding its
elements. This ambiguity opens the door to judicial discretion and interpretation,
leading to uncertainty and inconsistency in its application.
 Inherent Subjectivity – The determination of what constitutes the Basic Structure is
inherently subjective and varies based on individual judges’ interpretations which can
lead to conflicting decisions by different benches of the judiciary.
 Judicial Activism – Critics argue that the Basic Structure doctrine vests excessive
power in the judiciary, enabling judges to engage in judicial activism and make
subjective determinations about constitutional amendments.
 Violation of Separation of Powers – By allowing the judiciary to intervene in the
legislative and constituent power of the Parliament, it leads to a violation of the
principle of the separation of powers.
 Undemocratic Nature – At times, it leads to undemocratic practices as it allows
unelected judges to override decisions made by democratically elected
representatives.
 Stifling Constitutional Evolution – By imposing rigid constraints on the amending
power of the legislature, the doctrine may impede the evolution of the Constitution in
response to new challenges and circumstances in response to changing societal needs.
The Doctrine of Basic Structure of the Constitution stands as a cornerstone of constitutional
jurisprudence, providing a framework for the preservation of fundamental principles and
values inherent in the Constitution. It is a testament to the visionary foresight of the Indian
judiciary that safeguards the foundational principles of the constitution from arbitrary
changes.