Right to do business

In this blog post, Noopur Kalpeshbhai Dalal, pursuing M.A. in business law from NUJS, Kolkata, talks about the steps you can take if your right to do business is curtailed by a Government notification.

I. Conceptualization

The right to do business is a fundamental right given to the citizens of India under Article 19 (1) (g) of part III of the Constitution of India which came into force on 26th November, 1949. Upon its enactment the Constitution of India laid down six fundamental rights for the benefit and development of each and every citizen of India irrespective of their race, place of birth, religion, caste or gender.

Amongst the six fundamental rights, Article 19 (1) (g)[1] provides all the citizens of the country the right to practice any profession, occupation, business or trade of their choice subject to certain restrictions as laid down under Article 19 (6)[2]. Article 19 (1) (g) is a general right available to all the citizens of the country to carry on any type of business, occupation or profession to satisfy their livelihood needs. However, this fundamental right does not confer the right to carry on any business, trade, occupation or profession which is unlawful or is hindering general public interest[3].

Thus, if the nature of any business is such that it hinders the working of any government statutory body or prevents the enforcement of any statutory law enacted by the government or is illegal then that person carrying on such business is not entitled to claim his fundamental right of occupation as per  Article 19 (1) (g)[4]. Also the state or any statutory body does not possess any power to impose any restrictions or create any situations which make any business unlawful or create any circumstances to help any person procure customers for his business[5].

Article 19 (6) provides that nothing stated in the Article 19 (1) (g) shall prevent the government from enactment of any new law or prevents the working of any existing law in the interest of general public as a whole. Sub clause (i) of Article 19 (6) states the enactment of any law for any professional or technical occupation or trade or business which requires any particular professional or technical qualifications that can only be carried on by a personal having such professional or technical qualifications for the same. Sub clause (ii) of Article 19 (6) states the enactment of any law for carrying on of any business, industry or service by the state or by a corporation which is controlled by the state either exclusively or partially.

The terms Business, Constitution and Fundamental rights are explained hereunder:

  • Business

The term business means any commercial activity, trade, employment, profession or occupation for earning profit or livelihood. As per the Income Tax Act, 1961 the term business includes any trade, commerce, manufacture or even any adventure or concern in nature of trade, commerce or manufacture. The term includes every trade occupation or profession.

  • Constitution

The term Constitution refers to the framework which defines the fundamental rules, principals, functions, duties, procedures & powers of government institutions. It also establishes the fundamental rights, directive principles, duties of the citizens.

  • Fundamental Rights

The term Fundamental Rights mean the general human freedom which every citizen is entitled to for his proper personality development.

II. Scope of Article 19 (1) (g)

A. Freedom to carry on any business

“Right to do Business” under Article 19 (1) (g) gives a huge and general right to the people of India to carry on any business of their choice. The freedom to carry on any business of one’s choice does not include a right to carry on any activity which is illegal of nature such as business of selling and buying of liquor and drugs in a prohibited area/state.

Also the freedom to carry on any business does not include the right to carry on such activity which hinders public interest or peace of the country such as creating riots, bandh or any such activity which hampers the public peace. The freedom to do any business can be availed by an individual only if it does not prevent imposing of any existing or new statutory laws in the country.

Thus, the freedom to do Business includes the freedom to carry out any commerce, activity, trade or profession which is in benefit of the general public and is a legal activity as per the prevailing laws of the country. Also, one cannot claim his right to do business if by carrying out his business it hinders the human or fundamental rights of any other individual.

B. Right to do any business under Article 19 (1) (g) is available against the State and not any particular person

Indian judiciary in many cases has upheld that the fundamental rights given to the citizens of India under Article 19 (1) (g) are available against any state or state body. Any claim for violation of any such rights against any particular individual cannot be claimed under the fundamental rights it has to be subjected under the Law of Torts in the Civil Courts.

Thus, it is clear that only when the violation of any fundamental right is on the part of the state, the aggrieved person has the below mentioned three options:

  • He can approach the Ordinary Court.
  • He can approach the High Court under Article 226 of the Constitution of India.
  • He can approach the highest court i.e. the  Supreme Court under Article 32 of the Constitution of India.

C. Right to do any business under Article 19 (1) (g) is available only to the Citizens of India

The right to do business under Article 19 (1) (g) is available only to the Citizens of India i.e. living natural humans having Indian Citizenship and not available to non-citizens. A non-citizen cannot claim the fundamental rights under Article 19 of the Constitution of India[6]. Thus, in such cases, the burden of proof of citizenship is on the person who is claiming his right against any state or body.

For the purpose of the Right to Business the below mentioned entitles are considered to be non-citizens:

  • A Company incorporated under the Companies Act, 1956 or the Companies Act, 2013.
    However, the fundamental rights of the members or shareholders of the Company are not taken away by law for being associated with such company.[7]
  • A religious sect or group or a section thereof.
  • Municipal Committee.
  • A Juridical Union or a juristic person.
  • A Deity.

From the above it is clear that the right to do business under Article 19 (1) (g) of the Constitution of India, 1949 is available to any citizen of India. As per the judgement in a case the Supreme Court held that when the infringement of any fundamental right is claimed by an association of persons who are the citizens of India or corporation being the aggregation of the Citizens of India. In such case, the association of people or corporation is not considered to be a company/non-citizens.

D. Whether right to do business under Article 19 (1) (g) is available to the foreigners

It is clear from point C above that the rights under Article 19 (1) (g) are not available to Non-Citizens, hence, the same cannot be claimed by the foreigners. However, Article 14, 20, 21 and 22 are even available to the non-citizens.

A non-citizen though not entitled to the fundamental rights under article 19 is entitled to equal protection of law and equality before Law by the Constitution of India. The Honourable Supreme Court of India has held in many cases that the judiciary in any such case will not tolerate any inequality before law or judicial review in case of any contract or arrangement where a foreign party/ individual/ entity is involved. However, any foreigner/non-citizen cannot challenge the constitutionally of any law by applying his rights under Article 14 and 21 of the Constitution of India, 1949.

III. Right to do Business as read with the Laws of Other Countries

  • SWITZERLAND

Article 31 guarantees freedom of trade and industry throughout the confederation, but reserves the following to the states, viz. salt and gunpowder monopolies, federal duties, import duties of wine and other alcoholic beverages[8].

  • GERMANY

Article 12 declares that all Germans have the rights of free choice of occupation, place of employment and place of training. Pursuit of occupation may be regulated by legislation. No one shall be forced to do a particular job except in virtue of an established general obligation to perform a public service lying equally upon all[9].

  • SOUTH AFRICA

Section 136 provides that there shall be free trade throughout the union. And the parliament shall frame the law to provides the custom duties and levy the excise duties on productions so as to enable every citizen to secure the rightful work[10].

  • ROMANIA

Article 19 declares that all citizens have right to work and the State shall gradually secures this right by planned organization for the development of national economy[11].

  • USA

There is no specific provision in the Constitution of the USA guaranteeing the right to freedom of profession, trade or occupation etc. but right to freedom of trade, business and profession has been held by the judicial interpretation, which follow from the right and property. The 14th Amendment assuring the citizens that the state shall deprive any person of life, liberty or property without due process of any contains the guarantee to the individual freedom to practice any profession, trade or occupation he chooses[12].

IV. Restrictions on the Right to do Business as per Article 19 (6)

What is Restriction?

Restriction means to pass an order or rule to limit your freedom to something, to limit the quantity, size or amount of something you can do or any such limit which prevents you to do what you want to do as per your own choice. So, restriction is basically putting a limit on some person to prevent him/ her from doing what he wants to do.

In reference to the right to do business, restriction means imposing restriction to the fundamental rights given to the Citizen of India under Article 19 (1) (g).

Article 19 (6) of the Constitution of India, 1949 has imposed certain restrictions on the right to do business given by the Constitution to the citizens of India under Article 19 (1) (g). The restrictions as per the Article 19 (6) can be summarized as under:

1.     Imposing reasonable restrictions on the freedom to trade, occupation, profession and business in the interest of general public
2.    Professional and technical qualifications
3.    To carry on any trade or Business

The above three restrictions as imposed by Article 19 (6) can be briefly understood as under:

a.  Reasonable Restrictions

Reasonable means which is supported with a reason behind it. Thus, reasonable restrictions refer to such limits or restrictions imposed on the right to do business of a citizen with which any logic or intelligent care and deliberations are taken into considerable before imposing such restrictions. Mere arbitrariness cannot be defined as a reasonable restriction.

When a reasonable restriction is imposed on a person for enjoyment of his right to do business, then it should not be arbitrary or it should not be excessive or beyond what is actually needed in the interest of general public.

Also, to justify a restriction as reasonable, the restriction must be in relation to the object to which the law is seeking attainment and it should not be in excessive nature[13].

There must be a nexus between the restriction and the object which is sought to be attained and also it should not be objectionable to the whole spirit of the Constitution[14].

The Reasonable restrictions should always be in the interest of the general public and not in the interest of a particular person or citizen[15].

How to test whether a particular restriction is a Reasonable restriction or not?

The test of reasonability of a restriction is of complex nature. Judiciaries at different point of time in different cases have given distinguished decisions and judgments for the test of reasonability based on the merits of the case. The Judiciary or Legislation has not prescribed any stringent rules for the test of reasonability of a restriction imposed on a person on a rule. However, there are some basic factors on basis of which we can decide if a particular restriction is reasonable or not.

The basic factors can be summarized as below:

  1. The purpose of the restriction
  2. The nature of the right which is curtailed
  3. The prevailing social and other conditions at that time in the state/country
  4. The interest of general public involved with such restriction
  5. The extent to which such restriction is imposed

b. Unreasonable Restrictions

The restrictions which are not reasonable in nature are unreasonable restrictions. A restriction which curtails the right to business given by the constitution of India to its citizens without any reasonable object behind it is an unreasonable restriction.

Unreasonable restrictions can be better understood based on the below-mentioned examples:

  1. When the right to do business of the business of a citizen is restricted due to political bandhs created by any political party.
  2. Granting of monopoly trade license to some trader by the municipal commissioner for his personal benefits and restricting the right to do business of the local traders and their means of livelihood.

Also, it is necessary to note that a restriction cannot be categorized as an unreasonable restriction on the grounds that it operates severely, even if the aggrieved parties are local traders.

c. Prohibition for the interest of General Public

When the state or a central legislature totally takes away the fundamental right to do business of an individual for the benefit of the society and in the interest of the public, then it is said to be a prohibition.

Sometimes, it may be possible that the reasonable restriction imposed on some business is a complete prohibition. Though, the Constitution of India has given full freedom to work under the fundamental rights, the state and central has right to impose complete restriction on the said right if the same is in order to bring political, social, and general order in the society for the interest of general public and protecting the common good of the people.

For example, if some restriction is imposed by the state to maintain public peace during riots, to protect public morale, prevent crime and corruption then such restriction is in the interest of general public and claim cannot be made under the fundamental rights for protection of the right to do business of a person.

There are some basic factors on basis of which we can decide if a particular restriction is for the interest of general public. The basic factors can be summarized as below:

  1. The time and place when such restriction is imposed, i.e. judging the circumstances prevailing.
  2. The nature of the business on which such restriction is imposed.
  3. Its effect on general public and society, and;
  4. Other factors which may be develop and affected with the passage of time.

Permanent restrictions or Prohibition can be illustrated as below:

  1. When the nature of business of a person is buying and selling of narcotic drugs and illegal drugs then for the benefit of the society restriction can be put by the state for buying and selling of such illegal products.
  2. When the nature of business of a person is of a bootlegger in an area were Liquor is banned such as in the state of Gujarat.
  3. When the business involves import and export of expensive imported goods without payment of custom duty or illegally.
  4. Cow slaughter– the business of cow slaughter is informally banned in India, following the religious faith and tradition of the majority of the population of India. Cow is considered to be holy in India and is worshipped by majority as a mother or deity. Thus, to protect the religious beliefs of the population of the country, government has put a ban on the cow slaughter and the business of beef. The government has put a total prohibition on slaughter of cows of any age in the country and such prohibition is a valid prohibition as it is in the interest of general public as a whole[16].

d. Can the directive principle of a state policy be treated as a reasonable restriction?

The judiciary in many cases has taken the decision based on the nexus between the restriction and objective behind the restriction in case of a directive principal of the state. 

So, in the case of  State of Bombay v/s Balsara the Hon’ble Supreme Court had stated that when the directive principal of the state that the consumption of intoxicant drugs is banned except in case of any medical conditions then such directive principle shall be considered as a reasonable restriction on the fundamental right to do business.

e. Professional and Technical Qualifications

The right and freedom to do business does not mean that any person can carry on any business which requires certain professional and technical qualification. Such as the business of a doctor, solicitor, chartered accountants, company secretaries can only be practiced by a person who has got professional qualification to carry out such profession/business.

Also, when some individual who is possessing such professional or technical qualifications is found to be involved in any unethical business or unlawful act then their respective institutes/ councils/state has the powers to restrict the individual/professional from practicing that profession or do the business of that profession by cancelling his/ her license or professional degree.

The same can be better understood based on the below examples:

  1. As per the Prenatal Diagnostic Act introduced by the Indian Government for the determination of the gender of the fetus during pregnancy of a woman, any medical practitioner at any point of time during the pregnancy cannot disclose the gender of the fetus either to the patient or her family members, to protect the girl child killing prevailing in the Country.
    Thus, if any gynaecologist or any other medical practitioner is found to be involved in the business of determination of the sex of the fetus of pregnant women then the state has the powers to prohibit him from doing so and restrict his right to do business by cancellation of his degree/ qualification.[17]
  2.  Also, the business of a doctor can only be carried out by an individual who possesses the degree as per the Medical Act, 1858 to 1886 or Dentist Act, 1921.
  3. The business of practicing lawyer can only be done by an individual who has taken Sanad/License by passing the Bar Council Examination.

V.  On What Grounds a Restriction Can be Challenged by any Aggrieved Party?

Any restriction which is imposed upon any person by the state under any law on the right guaranteed to the person under Article 19 (1) (g) can be challenged on the below-mentioned grounds:

a) The imposed restriction is unreasonable.

b) The imposed restriction is excessive in nature of the right.

c) The Business undertaken by the person is not malicious or illegal.

d) The procedure stated for curtailing any business is either unjust, unreasonable or is arbitrary.

Thus, if the aggrieved person is able to satisfy any of the above options then he can challenge the state on restricting him to carry out his right to do business of his own choice.

VI. Conclusion

As per the elaborated narration above, if the right to do business is curtailed by the government notification, one has to assess the constitutionality, reasonableness and cause of action pertaining to the said notification debarring this fundamental right.

Though “cause of action” is not accurately defined under any statutes, one may infer it from the various judgements of the statutory bodies and includes the facts the person has to plead to prove that he has obvious and reasonable grounds to sue. There must be circumstances to enforce the aggrieved party to approach the authorities to seek justice and redressal.

Accordingly, it needs to be assessed whether the notification to debar the person from the right to do business is issued/enacted by an appropriate authority and under the act which is permitted under the legislation. Generally, parliament (central government) and state legislature can make and amend the laws in their jurisdiction and wisdom of the legislation in enacting the law cannot be challenged.

Till 1971, 24th Constitutional Amendment, the fundamental rights were deemed to be permanent which cannot be diluted by the government. However, Article 13 (4) was introduced which enabled the government (through parliament) to make laws on Part III of the constitution. Later on, its validity was upheld by the Supreme Court. But, it was also noted that the basic structure of the constitution containing basic foundation denoting freedom of the individual cannot be taken away or destroyed making amendment in the constitution.

The aggrieved party can make writ petitions under Article 32 or 226 only when he has been aggrieved with some civil consequences which ostensibly deprive his fundamental rights. Apprehension of any civil consequences is not a valid ground to entertain the writ petitions.

The place of accrual of the cause of action decides the jurisdiction of the High Court which can address and admit the writ petition which challenges the jurisdictional validity of such notification whether of state or center. Place of state legislature or parliament is not material in deciding the jurisdiction.

Thus, presuming the government notification expressly violates the fundamental rights and is unreasonable as per Article 19 (1) (g) discussed hereinabove, and if the aggrieved party has actually suffered the civil consequences because of such notification, he has rights to approach the high court or supreme court filing writ petition elaborating the substance and cause of action.

What are your views on this? Feel free to comment below & share the article.

 

Reference-
[1] Article 19 (1) (g) in The Constitution of India 1949 states “to practice any profession, or to carry on any occupation, trade or business”
[2] Article 19(6) in The Constitution Of India 1949 states “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 practicing any profession or carrying on any occupation, trade or business.
(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.
[3] Fertilizer Corporation Kamgar Union Sindri v/s Union of India; AIR 1981 SC 344
[4] State of Gujarat v/s Dharamdas; AIR 1982 SC 781
[5] Chaitanya Prakash v/s Board of Secondary Education Rajasthan; 1960 Raj L.W. 209
[6] Martiner Joan v/s Union of India AIR NOC 2010 AP 87
[7] Bennett Coleman &  Company v/s Union of India AIR 1972 SC 106
[8] As stated in Article 31 of the Constitutional rights conferred to the citizens of Switzerland
[9] As stated in Article 12 of the Constitutional rights conferred to the citizens of Germany
[10] As stated in Article 136 of the Constitutional rights conferred to the citizens of South Africa
[11] As stated in Article 19 of the Constitutional rights conferred to the citizens of Rumania
[12] The right to do business as per the Constitution of USA
[13] P.P. Enterprises V/s Union of India 1982 SCC 341
[14] Habibullah v/s Gulam Ahamed Baba 1979
[15] Kochuni v/s State of Madras 196 SCR 887 (1914)
[16] Mohd. Hanif Quareshi & Others vs The State Of Bihar
[17] Dr. Umesh Murlidhar Karanjkar vs 2 The District Collector on 6 June, 2011

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