CONSTITUTION

3.2. Freedom of Trade and Commerce

Introduction

The Indian Constitution adopted the provisions regarding

trade, commerce, and intercourse from the Constitution of
Australia as per Section 92. When India borrowed this
provision, framers also made sure to include hat the free
flow of goods is allowed not only between different states
but also within a state as well.

Thus, in the Indian Constitution Inter-State as well as

Intra-State trade is allowed in the country in in part XIII of
the Indian Constitution.

Meaning & Scope of Trade, Commerce, and

Intercourse

Trade is the activity of buying and selling or exchanging

goods and services between people or countries for profit
making. Under Article 301, the word trade means an
actual, organized & structured activity with a definite
motive or purpose. For the motive of Article 301, the word
trade is interchangeably used with business.
It encompasses the buying and selling of goods and includes activities
integral to the transaction, such as the transport of goods or merchandise
from one place to another, and the interchange or exchange of
commodities (Atiabari Tea Co. v State of Assam AIR 1961 SC 232).

Article 301 applies solely to activities deemed lawful trading activities and
does not extend to activities outside the realm of trade, commerce, or
business (State of Bombay v R.M.D.C. AIR 1957 SC 699).

For instance, in the case of lotteries, where chance prevails over skill, it
falls outside the domain of res commercium. The sale of lottery tickets does
not constitute a right under Article 301.
Interchanging of goods or services, especially on a large
scale between different countries or between different
parts of the same country for trade or business purposes.
Essential for commerce under Article 301 is transportation
or transmission and not gain or profit.

Intercourse means communication or exchange between

individuals or it can also be said as mutual dealing.

Analysis of Part XIII of the Indian Constitution

The rights granted under it are in the form of a prohibition

on legislative and executive competence:

Article 301:
Article 301 stipulates: "Subject to the other provisions of this Part, trade,
commerce, and intercourse throughout the territory of India shall be free."

The "freedom" articulated under Article 301 can be construed as the

entitlement to unrestricted movement of persons or goods, whether
tangible or intangible, commercial or non-commercial, without hindrance
from barriers, whether inter-State, intra-State, or any other impediment
functioning as such barriers.

Therefore, 'freedom of trade, commerce, and intercourse' signifies the

uninhibited movement, transportation, and exchange of goods, indicating
the absence of prior restraint on trade and commerce.

A contravention of the freedom safeguarded by Article 301 occurs only

when a legislative or executive action directly and immediately
constrains trade, commerce, or intercourse, as opposed to creating some
indirect or inconsequential obstacle, which may be considered remote.
If the restriction targets the flow of trade and commerce, or if the levy is
excessive, it can be deemed direct and would violate Article 301
(Automobile Transport Ltd. v State of Rajasthan AIR 1962 SC 1406;
Atiabari Tea Co.). The freedom may be encroached upon by both fiscal
and non-fiscal measures.

The term "free" in Article 301 does not imply freedom from regulation.
"There exists a clear distinction between laws impinging on the freedom to
conduct the activities constituting trade and laws imposing rules of proper
conduct or other restraints aimed at the orderly conduct of such activities"
(G.K. Krishnan v State of T.N. AIR 1975 SC 583).

Therefore, measures such as traffic regulations, vehicle licensing, road

maintenance charges, marketing and health regulations, price controls,
economic and social planning, and the prescription of minimum wages,
instead of hindering trade, actually facilitate the free movement of trade or
commerce.

Article 302:
This Article empowers the Parliament to establish
reasonable restrictions on the freedom of trade, commerce,
and intercourse between one state and another within the
boundaries of India, in the public interest.

Article 303:
Article 303(1) acts as an exception to Article 302 of the
Indian Constitution. Through this Article, the right of the
Parliament to make laws to impose restrictions on freedom
of trade and commerce is restricted, as neither the
Parliament nor the legislation of the state is allowed to
make any such law that differentiates, discriminates, or
gives preference to any one state over another.
303(2) acts as an exception to Article 303(1). It permits
the Parliament to make any law which may, if in
discrimination or giving preference to another state is a
valid law if the same is required to be enacted as a result
of any such circumstance or situation which has arisen
from the scarcity of goods in that particular part of the
territory of India.

However, the same is permitted only for the Parliament to

make law and not for the State Legislature. Hence, when
the Parliament is faced with the task of meeting an
emergency situation that has been created as a result of
scarcity of goods, in any particular part of India.

Article 304:
Article 304 prohibits the states from making any
discrimination against goods 'imported' from other
states in taxing them. It only authorises the states to
impose 'reasonable' restrictions in the public interest with
the sanction of the President.

This clause permits the levy on goods from sister States

any tax to which similar goods manufactured or produced
in that State are subject. In other words, goods imported
from sister states are placed on par with similar
goods manufactured or produced within the state in
regard to state taxation within the state-allotted field. A
state cannot discriminate beyond its capacity between its
own goods and imported goods.

Article 305:
Article 305 includes the provision for saving the existing
laws and providing the laws for State monopolies. It states
that the provisions of Articles 301 and 303 will not affect
any other existing laws. The only exception is when the
President directs any changes. Also, Article 301 does not
affect any other law made before the 4th
Constitutional (Amendment) Act, 1955.
Article 307:

Article 307 explains the appointment of authority to

carry out the provisions of Articles 301 to 304
smoothly. Article 307 states that the Parliament can
appoint such authority it thinks fit for fulfilling and carrying
 out the provisions as mentioned and explained under
Articles 301 to 304. Parliament can confer powers and
duties it thinks fit on such authority as appointed

3.3. Services under Centre and State: doctrine of

pleasure and constitutional safeguards
Part XIV of the Constitution of India deals with Services under The Union and The State. Article 309
empowers the Parliament and the State legislature regulate the recruitment, and conditions of
service of persons appointed, to public services and posts in connection with the affairs of the Union
or of any State respectively.

The constitutional safeguards serve two primary objectives:

 Independence from Political Influence: Safeguards protect civil
servants from arbitrary decisions made by politicians or other
authorities, ensuring that they can carry out their duties fairly.
 Protection of Public Interest: These safeguards are designed to
strike a balance between protecting the rights of civil servants and
ensuring that the government can take action in the public interest
when necessary, such as in cases of misconduct or inefficiency.

Doctrine of Pleasure: Article 310

The Doctrine of Pleasure, as incorporated in Article 310 of the Indian
Constitution, allows civil servants to serve at the pleasure of the
President or Governor. This doctrine is derived from British common
law, where government employees serve at the discretion of the
Crown and can be dismissed without providing reasons. The maxim
"durante bene placito" (during pleasure) encapsulates this
concept.

in India, Article 310(1) states:

“Except as expressly provided by this Constitution, every person
who is a member of a defence service or of a civil service of the
Union or of an All India service or holds any post connected with
defence or any civil post under the Union, holds office during the
pleasure of the President, and every person who is a member of a
civil service of a State or holds any civil post under a State holds
office during the pleasure of the Governor of the State.”

Under this doctrine, civil servants can be dismissed from their

positions at any time, without assigning reasons. However, this
 power is not absolute in India, unlike in the UK. The Doctrine of
Pleasure is subject to important safeguards under
Article 311 of the Constitution, which puts restrictions on arbitrary
dismissals or removal from service. It places procedural restrictions
on the government’s power to dismiss, remove, or reduce the rank
of civil servants.

Article 311(1)
“No person who is a member of a civil service of the Union or an All
India service or a civil service of a State or holds a civil post under
the Union or a State shall be dismissed or removed by an authority
subordinate to that by which he was appointed.”

This provision ensures that a civil servant cannot be dismissed by a

lower-ranking authority than the one that appointed them. The
purpose of this safeguard is to prevent arbitrary or whimsical
dismissal by a subordinate officer and to provide a degree of job
security.

Article 311(2)
“No such person as aforesaid shall be dismissed or removed or
reduced in rank except after an inquiry in which he has been
informed of the charges against him and given a reasonable
opportunity of being heard in respect of those charges.”

This is the most crucial safeguard provided to civil servants. Before

a civil servant can be dismissed, removed, or reduced in rank, they
must be provided with:
1. A formal inquiry: The civil servant must be informed of the specific
charges against them.
2. Reasonable opportunity to be heard: The civil servant must be
given a chance to defend themselves and present their case.
These safeguards help ensure that any disciplinary action taken
against civil servants is fair, transparent, and follows due process.

Procedural Requirements for Dismissal

The procedural requirements under Article 311 are designed to
prevent arbitrary dismissal and ensure that civil servants receive a
fair hearing before any punitive action is taken. Let’s explore the
procedural safeguards in more detail:
 Charge Sheet and Statement of Allegations: The civil servant
must be served with a charge sheet, explaining the charges against
them in detail, along with a statement of allegations. This ensures
 that the civil servant understands the nature of the accusations and
can prepare their defence accordingly.
 Inquiry Process: An inquiry must be conducted where the civil
servant is allowed to present evidence in their defence and cross-
examine witnesses. The inquiry officer is expected to conduct the
proceedings fairly and impartially.
 Representation: The civil servant is allowed to make
representations in their defence, providing explanations and
justifications for their actions.
 Opportunity to Appeal: In most cases, civil servants have the
opportunity to appeal the decision or the findings of the inquiry.
These procedural safeguards embody the principles of natural
justice, ensuring that civil servants are treated fairly and are
protected from malicious or unjust actions.
Exemptions to the Safeguards in Article 311(2)
While Article 311(2) provides essential safeguards to civil servants,
there are certain circumstances in which these protections may be
waived. The Constitution provides for three exceptions where the
procedural safeguards of Article 311(2) do not apply:
Conviction on a criminal charge
If a civil servant is convicted on a criminal charge, they may be
dismissed or removed from service without the need for an inquiry
or a hearing.
Where holding an inquiry is not practicable
If the authority responsible for dismissing the civil servant is
satisfied that it is not reasonably practicable to hold an inquiry (e.g.,
due to a threat to witnesses or the nature of the misconduct), the
inquiry may be waived. However, the authority must record reasons
in writing justifying why an inquiry is not feasible.
State security
If the President or Governor is satisfied that holding an inquiry is not
expedient in the interest of the security of the state, the inquiry can
be dispensed with.
These exceptions allow the government to take swift action in cases
where maintaining national security or public order takes
precedence over the civil servant’s right to a hearing.

NOTE:

 Compulsory Retirement: Compulsory retirement is not considered

a punishment under Article 311, as it is not punitive in nature. It is
an administrative action taken in the public interest when a civil
servant’s continued service is no longer beneficial to the
administration. Since it does not cast a stigma on the civil servant or
 result in a loss of rank, compulsory retirement does not require an
inquiry.
 Suspension: Suspension is a temporary measure taken while an
inquiry or investigation is pending and is not considered a
punishment. Civil servants do not have a right to a hearing before
being suspended, as suspension is not covered by the safeguards of
Article 311.

Temporary Employees and Probationers

While Article 311 primarily protects permanent civil servants, the
judiciary has extended certain protections to temporary employees
and probationers under certain circumstances. If a temporary
employee or probationer is dismissed in a manner that casts a
stigma on their character or involves allegations of misconduct, the
safeguards of Article 311 may apply.

In State of Punjab v. Sukh Raj Bahadur, the Supreme Court held

that if the dismissal of a temporary employee is punitive in nature, it
must comply with the requirements of Article 311, including a formal
inquiry and an opportunity to be heard.

Judicial Interpretation:

In State of U. P. v A. N. Singh: The protective safe guards given under Article 311 are applicable only
to civil servants, i.e. public officers. They are not available to defence personnel.

In State of Punjab v Kishan Das: The Supreme Court held that a mere reduction in the salary in the
same cadre is not reduction in rank.

 Khem Chand v. Union of India (1958): In this case, the Supreme

Court of India clarified the scope of “reasonable opportunity” as
mentioned in Article 311(2). The Court held that “reasonable
opportunity” includes the right to know the charges, the right to
cross-examine witnesses, and the right to present one’s defence.
 Union of India v. Tulsi Ram Patel (1985): This case dealt with
the exceptions to Article 311(2). The Supreme Court upheld that a
civil servant can be dismissed without an inquiry if they are
convicted of a criminal offence or if conducting an inquiry is not
feasible due to reasons related to national security.

MODULE 4

4.1. Tribunals
 The term ‘Tribunal’ is derived from the word ‘Tribunes’, which
means ‘Magistrates of the Classical Roman Republic’.
o Tribunal is referred to as the office of the ‘Tribunes’ i.e., a
Roman official under the monarchy and the republic with the
function of protecting the citizen from arbitrary action by the
aristocrat magistrates.
Tribunal is a quasi-judicial institution that is set up to deal with problems
such as resolving administrative or tax-related disputes. It performs a
number of functions like adjudicating disputes, determining rights
between contesting parties, making an administrative decision,
reviewing an existing administrative decision and so forth.

Need for Tribunals

 To overcome the situation that arose due to the pendency of
cases in various Courts, domestic tribunals and other Tribunals
have been established under different Statutes, hereinafter
referred to as the Tribunals.
 The Tribunals were set up to reduce the workload of
courts, to expedite decisions and to provide a forum which
would be manned by lawyers and experts in the areas falling
under the jurisdiction of the Tribunal.

Constitutional Provisions
 Tribunals were not part of the original constitution, it was
incorporated in the Indian Constitution by 42nd Amendment Act,
1976.
o Article 323-A deals with Administrative Tribunals.
o Article 323-B deals with tribunals for other matters.
 Under Article 323 B, the Parliament and the state legislatures are
authorised to provide for the establishment of tribunals for the
adjudication of disputes relating to the following matters:
o Taxation, Foreign exchange, import and export, Industrial and
labour, Land reforms, Ceiling on urban property, Elections to
Parliament and state legislatures, Food stuff and Rent and
tenancy rights.
  Articles 323 A and 323 B differ in the following three
aspects:
o While Article 323 A contemplates the establishment of
tribunals for public service matters only, Article 323
B contemplates the establishment of tribunals for certain
other matters (mentioned above).
o While tribunals under Article 323 A can be established
only by Parliament, tribunals under Article 323 B can be
established both by Parliament and state legislatures
with respect to matters falling within their legislative
competence.
o Under Article 323 A, only one tribunal for the Centre
and one for each state or two or more states may be
established. There is no question of the hierarchy of
tribunals, whereas under Article 323 B a hierarchy of
tribunals may be created.
 Article 262: The Indian Constitution provides a role for the
Central government in adjudicating conflicts surrounding
inter-state rivers that arise among the state/regional
governments.
Different Tribunals in India
 Administrative Tribunals
Administrative Tribunals was set-up by an act of
Parliament, Administrative Tribunals Act, 1985. It owes its origin
to Article 323 A of the Constitution.
It adjudicates disputes and complaints with respect to recruitment
and conditions of service of persons appointed to the public
service and posts in connection with the affairs of the Union
and the States.
The Administrative Tribunals Act, 1985 provides for three types of
tribunals:
The Central Government establishes an administrative tribunal
called the Central Administrative Tribunal (CAT).
The Central Government may, upon receipt of a request in this
behalf from any State Government, establish an administrative
tribunal for such State employees.
Two or more States might ask for a joint tribunal, which is called
the Joint Administrative Tribunal (JAT), which exercises powers
of the administrative tribunals for such States.
There are tribunals for settling various administrative and tax-
related disputes, including:
Central Administrative Tribunal (CAT), Income Tax Appellate
Tribunal (ITAT), Customs, Excise and Service Tax Appellate
Tribunal (CESTAT), National Green Tribunal (NGT),
Competition Appellate Tribunal (COMPAT) and Securities
Appellate Tribunal (SAT), among others.
Central Administrative Tribunal
It has jurisdiction to deal with service matters pertaining to the
Central Government employees or of any Union Territory, or local
or other government under the control of the Government of India,
or of a corporation owned or controlled by the Central Government.
The CAT was set-up on 1 November 1985.
It has 17 regular benches, 15 of which operate at the principal
seats of High Courts and the remaining two at Jaipur and
Lucknow.
These Benches also hold circuit sittings at other seats of High
Courts. The tribunal consists of a Chairman, Vice-Chairman and
Members.
The Members are drawn, both from judicial as well as
administrative streams so as to give the Tribunal the benefit of
expertise both in legal and administrative spheres.
The appeals against the orders of an Administrative Tribunal shall
lie before the Division Bench of the concerned High Court.
 State Administrative Tribunal
Article 323 B empowers the state legislatures to set up tribunals for
various matters like levy, assessment, collection and enforcement
of any of the tax matters connected with land reforms covered by
Article 31A.
 Water Disputes Tribunal
The Parliament has enacted Inter-State River Water Disputes
(ISRWD) Act, 1956 have formed various Water Disputes
Tribunal for adjudication of disputes relating to waters of inter-State
rivers and river valleys thereof.
Standalone Tribunal:
The Inter-State River Water Disputes (Amendment) Bill, 2019 is
passed by Parliament for amending the existing ISRWD Act, 1956
to constitute a standalone Tribunal to remove with the need to
set up a separate Tribunal for each water dispute which is
invariably a time-consuming process.
 Armed Forces Tribunal (AFT)
It is a military tribunal in India. It was established under the Armed
Forces Tribunal Act, 2007.
It has provided the power for the adjudication or trial by AFT of
disputes and complaints with respect to commission, appointments,
enrolments and conditions of service in respect of persons subject
to the Army Act, 1950, The Navy Act, 1957 and the Air Force
Act, 1950.
Besides the Principal Bench in New Delhi, AFT has Regional
Benches at Chandigarh, Lucknow, Kolkata, Guwahati, Chennai,
Kochi, Mumbai and Jaipur.
Each Bench comprises of a Judicial Member and an
Administrative Member.
The Judicial Members are retired High Court
Judges and Administrative Members are retired Members of
the Armed Forces who have held the rank of Major General/
equivalent or above for a period of three years or more, Judge
Advocate General (JAG), who have held the appointment for at
least one year are also entitled to be appointed as the
Administrative Member.
 National Green Tribunal (NGT)
The National Environment Tribunal Act, 1995 and National
Environment Appellate Authority Act, 1997 were found to be
inadequate giving rise to demand for an institution to deal with
environmental cases more efficiently and effectively.
The Law Commission in its 186th Report suggested multi-faceted
Courts with judicial and technical inputs referring to the practice of
environmental Courts in Australia and New Zealand.
The Tribunal is mandated to make and endeavour for disposal of
applications or appeals finally within 6 months of filing of the
same.
Initially, the NGT is proposed to be set up at five places of sittings
and will follow circuit procedure for making itself more accessible.
 the Tribunal and Bhopal, Pune, Kolkata and
Chennai shall be the other four place of sitting of
the Tribunal.
 Income Tax Appellate Tribunal
o Section 252 of the Income Tax Act, 1961 provides that
the Central Government shall constitute an Appellate
Tribunal consisting of many Judicial Members and
Accountant members as it thinks fit to exercise the
powers and functions conferred on the Tribunal by the
Act.