Power of State to Create Monopoly in Trade or Business

State trade monopoly power flows from Article 19(6) of the Constitution, which permits the State to carry on any trade, business, industry or service by itself, whether to the complete or partial exclusion of citizens or in competition with them. This is one of the express carve-outs to the fundamental right under Article 19(1)(g) — the right of citizens to practise any profession or carry on any occupation, trade or business — and it explains why government-run enterprises, public sector undertakings, and State-run services can coexist with a constitutional guarantee of trade freedom.

Article 19(1)(g): Freedom of Trade and Business

Article 19(1)(g) guarantees all citizens the right to practise any profession, or to carry on any occupation, trade or business. This is one of the six freedoms protected under Article 19 and is described as a wide right because it covers virtually every lawful means of earning a livelihood. It does not, however, protect trades that are inherently immoral (such as trafficking in women or children) or inherently dangerous (such as dealing in harmful drugs or explosives); the State may prohibit such activities altogether or regulate them tightly through licensing.

Article 19(6): The State's Power to Restrict and to Monopolise

Article 19(6) allows the State to impose reasonable restrictions on the Article 19(1)(g) right in the interest of the general public. Crucially, it also confers two specific powers on the State beyond ordinary restriction. First, the State may prescribe professional or technical qualifications necessary for practising a profession or carrying on an occupation, trade or business. Second, and more significantly, the State is empowered to carry on by itself any trade, business, industry or service — whether to the complete or partial exclusion of citizens, or by competing directly with them. This second power is the constitutional basis for State monopolies: no objection can be raised under Article 19(1)(g) merely because the government chooses to run a trade or service exclusively, or alongside private operators.

The Doctrine of Eclipse: Bhikaji Narain Dhakras v. State of M.P. (1955)

The interaction between State monopoly power and Article 19(1)(g) is illustrated by Bhikaji Narain Dhakras v. State of Madhya Pradesh (1955), the case in which the Supreme Court enunciated the doctrine of eclipse. Section 43 of the Motor Vehicles Act, 1939, as amended by a provincial amendment, empowered the State Government to take over the motor transport business to the exclusion of individual operators. When the Constitution commenced in 1950, this provision became void because it conflicted with the fundamental right under Article 19(1)(g) as it then stood — the original Article 19(6) did not yet permit a State monopoly of this kind. The First Amendment Act, 1951, subsequently amended Article 19(6) to expressly enable the government to take over any trade or business, either exclusively or in competition with individuals. Once this amendment removed the constitutional conflict, the previously void provision was no longer in conflict with Part III and became fully operative again — it was not re-enacted, but simply ceased to be "eclipsed." The case thus shows how a constitutional amendment can revive a law that was earlier shadowed by a fundamental right, rather than being void from inception.

Article 305 and State Monopolies under Part XIII

The Constitution's provisions on trade, commerce and intercourse within India, found in Part XIII, work alongside Article 19(6). Article 301 guarantees freedom of trade, commerce and intercourse throughout India, while Article 302 allows Parliament to impose restrictions on this freedom in the public interest, and Article 303 restricts the legislative power of the Union and States from creating trade preferences, subject to exceptions. Article 305 expressly saves existing laws and laws providing for State monopolies, reinforcing that the constitutional scheme accommodates the State stepping into trade and business as a monopolist without this being treated as an unconstitutional restriction on citizens' trade freedom.

Significance

The power to create a State monopoly under Article 19(6) is the constitutional foundation for the public sector's historical role in India — from State-run transport corporations to monopolies in specific services. It illustrates that Article 19(1)(g) protects citizens against the State restricting or excluding them from a trade through arbitrary regulation, but does not prevent the State itself from becoming a market participant, or the sole participant, in a given trade or service when it chooses to do so.

UPSC Relevance

Prelims

• Article 19(6) empowers the State to carry on any trade, business, industry or service, to the exclusion (complete or partial) of citizens or in competition with them.
• The doctrine of eclipse was enunciated in Bhikaji Narain Dhakras v. State of Madhya Pradesh (1955).
• Article 305 saves existing laws and laws providing for State monopolies under Part XIII.

Mains

• Discuss the constitutional basis for State monopolies in trade and business, and how it is reconciled with the fundamental right under Article 19(1)(g).
• Explain the doctrine of eclipse with reference to the Bhikaji Narain Dhakras case and its implications for laws inconsistent with fundamental rights at the commencement of the Constitution.

FAQ

Q1. What is the constitutional basis for the State creating a monopoly in a trade or business? Article 19(6) permits the State to carry on any trade, business, industry or service itself, to the complete or partial exclusion of citizens or in competition with them.

Q2. What is the doctrine of eclipse, and which case established it? It holds that a pre-Constitution law inconsistent with a fundamental right is not void from the outset but remains dormant ("eclipsed") until the inconsistency is removed, for instance by constitutional amendment; it was enunciated in Bhikaji Narain Dhakras v. State of Madhya Pradesh (1955).

Q3. Which provision of Part XIII deals with State monopolies in trade? Article 305 saves existing laws and laws providing for State monopolies from the freedom of trade, commerce and intercourse guaranteed under Article 301.

Q4. Does Article 19(1)(g) prevent the government from running a business? No. Article 19(6) specifically allows the State to run any trade, business, industry or service, whether exclusively or alongside private citizens.

Quick Revision

• Article 19(1)(g): right to practise any profession or carry on any trade/business/occupation.
• Article 19(6): allows reasonable restrictions and State monopoly (exclusion or competition).
• Bhikaji Narain Dhakras case (1955): doctrine of eclipse; Motor Vehicles Act provision revived after 1st Amendment changed Article 19(6).
• Article 305 (Part XIII): saves laws providing for State monopolies from Article 301's trade freedom.

Sources

• The Constitution of India — Articles 19, 301–305, https://legislative.gov.in
• Supreme Court of India — Bhikaji Narain Dhakras v. State of Madhya Pradesh (1955), official judgment records

Further Reference

For deeper reading on this topic and the wider polity syllabus, these standard works are recommended:

• M. Laxmikanth, Indian Polity (McGraw Hill) — the standard UPSC handbook.
• D.D. Basu, Introduction to the Constitution of India (LexisNexis) — authoritative constitutional-law treatment.
• The Constitution of India — Bare Act — the official text.

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