B.A. LL.B. (Five Years) Sem 9 Competition Law 2015 Dec Question Paper with Solutions

For full marks, cover: the provisions grouped by the question each answers: the trader's right and its limits (Article 19(1)(g), 19(6)) with Hamdard Dawakhana (Wakf) Lal Kuan v. Union of India; the State as a trader (Article 19(6)(ii), Article 298); trade across State borders (Articles 301 to 304) with Jindal Stainless Ltd v. State of Haryana; the guiding goals (Articles 38 and 39(b), (c)); the law-making entries (List I, Entry 42; List II, Entry 26; List III, Entries 21 and 33); for the full 16 marks also how reasonableness is judged (Mohd. Hanif Quareshi v. The State of Bihar, Narendra Kumar v. Union of India), equality in State dealings (Article 14, Ramana Dayaram Shetty v. International Airport Authority of India), the rest of Part XIII and how the law developed (Atiabari Tea Co. Ltd v. The State of Assam, The Automobile Transport (Rajasthan) Ltd v. The State of Rajasthan), the Competition Act, 2002 as a reasonable restriction (Mahindra Electric Mobility Ltd. v. Competition Commission of India); a table.

2. The State as a trader

Article 19(6)(ii) allows a law under which the State, or a corporation it owns, carries on any trade "to the exclusion, complete or partial, of citizens". Article 298 extends the executive power of the Union and each State "to the carrying on of any trade or business". Public sector monopolies rest on these provisions. When the State trades, it is also an "enterprise" under the Competition Act, 2002.

3. Trade across the country

Article 301 declares that trade, commerce and intercourse throughout India "shall be free". Parliament may restrict it in the public interest (Article 302). A State may tax goods from other States only without discrimination (Article 304(a)). It may impose reasonable restrictions with the President's previous sanction (Article 304(b)).

Jindal Stainless Ltd v. State of Haryana, (2017) 12 SCC 1, decided by nine judges on 11 November 2016, settled how far this freedom goes. By majority, the Court held that taxes simpliciter are outside Part XIII. Only discriminatory taxes offend Article 304(a). It rejected the compensatory tax theory.

6. How reasonableness is judged

A restriction is reasonable only if it is proportionate to the public interest it serves. Mohd. Hanif Quareshi v. The State of Bihar, decided on 23 April 1958, tested State laws banning cattle slaughter against butchers' right to trade. A total ban on slaughtering cows and calves was upheld as reasonable. But a total ban on slaughtering she-buffaloes, breeding bulls and working bullocks after they ceased to be useful was not reasonable. Narendra Kumar v. Union of India, AIR 1960 SC 430, decided on 3 December 1959, added that a restriction may even amount to prohibition. However, the greater the restriction, the stronger the justification required.

7. Equality in State dealings (Article 14)

When the State grants licences, contracts or permits, it must act fairly. In Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628, decided on 4 May 1979, the Authority accepted a tender from a bidder who did not meet its own published standard. The Supreme Court held this arbitrary and discriminatory against others who could have tendered, and so invalid under Article 14. Fair access to State business is part of fair competition.

9. The Competition Act, 2002 tested

Competition law is itself a restriction on traders. It is justified under Article 19(6) as a reasonable restriction in the public interest, and it serves the goals of Articles 38 and 39(c). Its validity was challenged on the separation of powers in Mahindra Electric Mobility Ltd. v. Competition Commission of India, decided by the Delhi High Court on 10 April 2019. The Court upheld the Act, striking down only the casting vote in section 22(3) and giving directions on how the Commission sits.

Applying the provisions: three examples

1. A State taxes goods coming from other States more heavily than local goods. The tax discriminates, so it offends Article 304(a), as Jindal Stainless explains. A non-discriminatory tax would be valid.
2. The Centre fixes the maximum price of an essential metal and requires permits. This restricts traders' freedom under Article 19(1)(g). It is valid under Article 19(6) if reasonable and made in the manner the law requires, as Narendra Kumar shows.
3. A State reserves a trade for its own corporation. Article 19(6)(ii) and Article 298 allow this. Article 305 also saves such laws from Part XIII.

Conclusion. The Constitution regulates trade at every level. It protects the trader's right subject to reasonable restrictions, judged by proportionality as Mohd. Hanif Quareshi and Narendra Kumar show, and Hamdard Dawakhana shows such a restriction upheld. Article 14 requires the State to deal fairly, as Ramana Dayaram Shetty holds, and the State may itself trade. Part XIII keeps trade free across States, as developed from Atiabari to Jindal Stainless. Articles 38 and 39 set the goals and the legislative lists give Parliament power over monopolies and combines. The Competition Act, 2002 rests on these provisions and was upheld in Mahindra Electric.