Part XIII: Trade, Commerce, and Intercourse

Article 305: Saving of Existing Laws and State Monopolies

Original Article:

Nothing in Articles 301 and 303 shall affect the provisions of any existing law except in so far as the President may by order otherwise direct; and nothing in Article 301 shall affect the operation of any law made before the commencement of the Constitution (Fourth Amendment) Act, 1955, in so far as it relates to, or prevent Parliament or the Legislature of a State from making any law relating to, any such matter as is referred to in sub-clause (ii) of clause (6) of Article 19.

Explanations:

Article 305 of the Indian Constitution provides a safeguard to certain existing laws and allows for the establishment of state monopolies in specific areas, without interference from the constitutional guarantees of free trade and commerce laid down in Articles 301 and 303.

Clause-by-Clause Explanation:

Protection of Existing Laws

Article 305 states that Articles 301 and 303, which ensure the freedom of trade, commerce, and intercourse across the territory of India, shall not affect any existing law unless directed otherwise by the President. This ensures that state or central laws predating the Fourth Amendment can continue to operate without challenge on the grounds of trade freedom.

Laws Relating to State Monopolies

This article also exempts any law made before the Fourth Amendment (1955) that establishes state monopolies in specific fields from the purview of Article 301. It further empowers Parliament and state legislatures to enact laws that could establish or sustain monopolistic control over certain sectors if deemed in the public interest.

Real-Life Example:

A practical application of Article 305 can be observed in state-controlled liquor distribution. Many states operate state-run monopolies over the sale and distribution of alcohol, thereby controlling revenue and ensuring regulatory compliance. This provision is upheld by Article 305, allowing states to restrict private competition in such sectors despite Article 301’s guarantee of trade freedom.

Legislative History:

The Fourth Amendment of 1955 specifically introduced modifications to Article 305 to protect state monopolies and pre-existing laws from being overridden by trade freedom provisions. This amendment was necessary to allow the government to continue policies of economic control and regulation that support state monopolies in areas like transportation and distribution of essential commodities.

Historical Significance:

The historical significance of Article 305 lies in its role in balancing free trade with state economic control. The post-independence era witnessed a preference for economic regulation over unrestricted trade to enable government control in critical areas.