“Res Extra Commercium” is a Roman law doctrine that translates to “things outside commerce”.[i] In State of Bombay v R.M.D. Chamarbaugwala, Justice Das introduced this doctrine into the Indian jurisprudence. The doctrine was introduced to constrict the scope of freedom of trade and commerce, a fundamental right, guaranteed under Article 19(1)(g) of the Indian Constitution. It constricts the scope by excluding certain “immoral” or “noxious” trade activities from the scope of Article 19(1)(g) and thereby, depriving them of Constitutional protection.
This essay criticizes the import of the doctrine in Indian jurisprudence. First, the essay argues that a wrong conception of “res extra commercium” was imported by Das J. which ended up giving the backdoor entry to the American doctrine of “police power” in India. Second, the essay argues that the doctrine of “police powers” and ex-ante regulations do not find a place under the scheme of Article 19(1)(g) of the Indian Constitution.
A Wrong Conception of “Res Extra Commercium”
As stated above, the doctrine of “res extra commercium” traces its root to Roman law. So, if we look at the genesis of this phrase, it initially meant “things incapable of ownership”.[ii] The things that were considered as “res extra commercium” involved public properties such as religious places that were not subjected to anyone’s private ownership. Another important characteristic for determining if something falls under the category of “res extra commercium” is the “mercantile” character of goods. If something is non-marketable, then it would not fall under the ambit of “res extra commercium”.
In light of this, the doctrine applies to those things that are not objects of commerce i.e., they are extra commercio. In Justinian’s Institutes of Roman Law, only three classes of entity are conceptually treated as res extra commercium:[iii]
- res divini (religious places);
- res publicae (State property used for discharging public functions); and
- res omnium communes (Commons such as air and water).
It is important to note that the prohibition on owning these types of things does not result from an overriding moral justification, but rather from the theoretical embargo on the ownership of these kinds of things. So, it can be said that morality has no role to play in the conceptualization of this doctrine.
Despite this, Das J. used this expression in a completely different sense. In State of Bombay v. R.M.D Chamarbaugwala,the Bombay Lotteries and Prize Competition Control and Tax (Amendment) Act of 1952 was challenged,and herein, Das J. used moral grounds to outcast gambling from the scope of Article 19(1)(g) and declare it as extra commercium. In the subsequent cases, the Supreme Court (“SC”) extended the scope of this doctrine to include activities like liquor trade. Had the doctrine been applied rightly, these activities would not have been considered as “res extra commercium” as both of these activities are capable of private ownership and being sold for private benefit.
Das J. made another flaw in his ruling by equating the status of criminal activities with that of gambling to hold that such activities cannot be given the protection of Article 19(1)(g). There is no doubt that any trade involving crime cannot be permitted. However, crime is something that is expressly penalised by law and it does not need to have a necessary connection with immorality. Something that is immoral does not become a crime on its own. The problem with Das J.’s reasoning is that it does not use the ground of criminality or illegality to outcast gambling from the scope of Article 19(1)(g) but uses immorality as a ground whereas immorality in itself does not constitute illegality and hence cannot be used to constrict the scope of Article 19(1)(g).
In Krishan Kumar Narula v. the State of J&K, Subba Rao J. in his majority opinion expressed his reservation about how the doctrine was being applied. The issue, in this case, was whether trade in liquor falls under the category of “trade and business” under Article 19(1)(g). He observed that the business in liquor does fall under the ambit of Article 19(1)(g) as it can be manufactured and sold just like any other commercial good. This statement of Subba Rao J. makes it clear that he was relying on the original conception of the doctrine “Res extra commercium.” Given this, he also critiqued the ‘test of morality’ as used by Das J. in theR.M.D Chamarbaugwala case and held that the standard of morality can be used to justify the restrictions but it cannot curtail the scope of any fundamental right. Subba Rao J.’s judgment in Narula makes it clear that activities like liquor trade cannot be categorized as “res extra commercium” as per the traditional understanding of the doctrine.
However, the final judgement in Narula could not overrule R.M.D. Chamarbaugwala because both benches possessed the same numerical strength. Additionally, in later cases such as Nashiwar v. State of M.P. and Harshankar v. Deputy Excise & Taxation Commissioner, the SC has held that the judgement of Narula cannot be interpreted to mean that there is a fundamental right to trade in liquor and upheld the position of Das J. in R.M.D. Chamarbaugwala.
Entry of “Police Power” Doctrine in the Guise of “Res Extra Commercium”
While applying the doctrine of “res extra commercium”, Das J. was actually introducing the “police powers” doctrine in the Indian jurisprudence. It was actually the “police powers” doctrine that was used to justify the ex-ante regulation. Ex-ante regulation means those regulations which exclude certain activities from the preview of fundamental rights as opposed to ex-post regulations contained in Article 19(6) which only provides for reasonable restrictions.
There is an ongoing debate on the exact scope of the term “police powers”. However, it is usually interpreted in two ways. Its narrow interpretation is that its scope is limited to the acts done by the Government in the furtherance of public health, morality, and safety. Whereas, a broad interpretation of this doctrine includes all the residuary power vested in the states of U.S.[iv] It is the narrow interpretation of this doctrine that entered Indian jurisprudence in the guise of “res extra commercium”. As stated above, Das J. used the ground of morality to outcast gambling from constitutional protection and as the moral ground cannot be used for declaring certain activity as “res extra commercium”, it was the doctrine of “police power” that was being used.
The result of the use of “police power” under Article 19(1)(g) is that it categorizes certain types of trades as constitutional outcasts by imposing an ex-ante embargo that prevents them from falling within the protection of a constitutionally protected right. Hence, it can be said that the exclusion of the activity from the ambit of “trade and business” i.e., res extra commercium was just an effect of ex-ante regulation which was justified on the grounds of the “police power” doctrine. So, when Das J. excluded gambling from the scope of a fundamental right of trade on the grounds of morality, he was not really applying “res extra commercium” but the doctrine of “police power”.
Although Das J. did not directly mention the term “police power” in his judgment, subsequent judgments provide proof that it was actually the doctrine of “police power” which was being used to exclude these activities from the ambit of constitutional protection. One such judgment is Nashiwar v. the State of M.P.
In this case, the issue was whether the liquor trade can come under the ambit of the fundamental right of trade and commerce or not. The court held that there is no fundamental right to trade in liquor and gave three reasons to support their argument. One primary reason used by the Court was that the State has the police power to restrict or prohibit the trade in intoxicants like liquor to enforce public morality. So, it can be ascertained from this judgment that it is the doctrine of “police power” which is really working in the guise of res extra commercium. Now, the question arises is the imposition of ex-ante regulation based on the exercise of police power permissible under the scheme of Article 19(1)(g)?
Ex Ante Regulations and “Police Power” Doctrine: Permissible under Article 19(1)(G)?
Article 19(1)(g) provides every citizen with the freedom to carry on any business and engage in any trade. It does not talk about the character of activities that can fall under the definition of trade and business. So, the morality of a particular activity does not form an express ground for determining whether something is protected under Article 19(1)(g) or not. However, public morality can be one of the grounds for justifying the reasonable restrictions imposed on this right under Article 19(6). This view was supported by Subba Rao J. in Krishna Narula wherein it was held that the standard of morality can be used to justify the restrictions but it cannot curtail the scope of any fundamental right. Which means that Article 19 protects the right of every citizen to trade and business which can only be curtailed by the ex-post restriction imposed by the law that needs to be reasonable under Article 19(6).
The freedoms protected by Article 19 are considered to be the natural freedoms of human beings which cannot be granted by law but only be protected by law.[v] So, if these freedoms are not something that is granted by law, then ex-ante restrictions cannot be used to declare that these freedoms do not even exist for certain activities.
Moreover, if we accept that ex-ante regulation is justified under Article 19(1)(g) then, it would render the reasonable restrictions clause to be obsolete. As the “police power” doctrine allows the exclusion of those activities from Article 19(1)(g) which are against public health, safety, and morality, then only those activities would be left protected under the Article that do not endanger public health, safety, and morality. This will make the existence of a reasonable restriction clause redundant.
This implication has even confused the judges. In Cooverjee B. Bharucha v. Excise Commissioner, the SC observed on the issue of trade in liquor that there is no inherent right of citizens to carry on trade in liquor based on the “police power” doctrine but at the same time, judged the reasonableness of restriction under Article 19(6). The issue of regulating liquor under 19(6) could not even arise if we say that dealing in liquor does not come under Article 19(1)(g). On the other hand, if we test the reasonableness of restrictions under Article 19(6) then it logically follows that trading in liquor falls under the ambit of Article 19(1)(g).
This ambiguity can easily be avoided if we stick to the plain reading of Article 19(1)(g) and do not use the American unwritten doctrine of “police power” to define the scope of this right. The introduction of this doctrine has also been denied earlier by the SC in the case of A.K. Gopalan v. Union Of India due to the differences in the structures of the Indian and U.S. Constitution.
In some places, Article 47 is also used to justify the introduction of the “police power” doctrine. However, this argument does not hold any power because Article 47 calls upon the State to completely ban the consumption of intoxicating drugs and drinks. But, as the State has already allowed the citizens to produce and do business in liquor, it has neglected the provisions of Article 47. So, as long as these activities are allowed by the State, Article 47 cannot be used to justify the ex-ante regulation which declares these activities as constitutionally outcast. Hence, it can be observed that the Indian Constitution does not allow the use of ex-ante regulations justified on the ground of the doctrine of “police power” to constrict the scope of Article 19(1)(g).
The above discussion establishes how the use of the doctrine of “res extra commercium” constricted the ambit of Article 19(1)(g). It was argued that the wrong formation of the doctrine was introduced by Das J. in State of Bombay v. R.M.D Chamarbaugwala which gave entry to the doctrine of “police power” into the Indian jurisprudence. The impact of such import was aptly summarized by B.K. Mukherjee J. in Chrianjit Lal Chaudhary v. Union of India in which he observed that:
“the importing of expressions like “police power”, which is a term of variable and indefinite connotation in American law, can only make the task of interpretation more difficult.”
This is evident from the confusion that the import of this doctrine in Article 19(1)(g) jurisprudence has created i.e., confusing the power given under Article 19(6) to be a police power despite the major difference that Article 19(6) presupposed the existence of the right in the citizen to carry on trade in the regulated field, while the exercise of police power presupposed no such right. Lastly, it was argued that the introduction of this doctrine is not in harmony with the provisions of the Indian Constitution as Article 19(1)(g) does not allow ex-ante regulations.
[i] Arvind P. Datar, V. Res. Extra Commercium – Morals Trump Law, 21 NLSIR 145 (2009)
[ii] Arvind P. Datar, Privilege, Police Power and Res Extra Commercium – Glaring Conceptual Errors 21 NLSIR 133 (2009)
[iii] Caesar Flavius Justinian, Introduction to The Institutes of Justinian (fifth edn., Thomas Sandars trans 2009)
[iv] Walter Wheeler Cook, What Is the Police Power? 7(5) CLR 322 (1907)
[v] Arvind Datar and Shivprasad Swaminathan, Police Powers and the Constitution of India: The Inconspicuous
Ascent of an Incongruous American Implant 28 Emory Int’l L. Rev 63 (2014)
Harshit is a 3rd-year law student at the National Law School of India University, Bangalore.
Image Credits: The Hans India
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