The Telangana State Govt. passed a law that transport of rice outside the state is prohibited because of price hike. Is the legislation valid?

Facts of the Case

The Telangana State Government passed a law prohibiting the transport of rice outside the state on the ground that the price of rice had increased within the state. The objective of the Government was to control inflation and ensure availability of essential food grains to residents. The issue is whether the state legislature has the constitutional authority to impose such restrictions on inter-state trade and commerce.

Issues in the Case

1. Whether a State Government can restrict movement of rice (a commodity) outside the state under the Constitution.
2. Whether such a restriction violates freedom of trade, commerce, and intercourse under Article 301 of the Constitution.
3. Whether the legislation is protected under reasonable restrictions permitted by Articles 302 to 304.

Legal Principles Covered

A. Constitutional Provisions

1. Article 301 – Freedom of Trade, Commerce and Intercourse
   • Ensures free movement of goods throughout the territory of India.
   • Any restriction must not unreasonably obstruct inter-state trade.
2. Article 302 – Power of Parliament to Impose Restrictions
   • Only Parliament, not states, can impose restrictions on inter-state trade in public interest.
3. Article 304(b) – Power of State to Impose Reasonable Restrictions
   • States may impose reasonable restrictions on trade in the public interest, but only with the prior sanction of the President.
4. Entry 42, List I (Union List) – Inter-state trade falls under Union jurisdiction.
5. Essential Commodities Act, 1955
   • Central Government regulates storage, distribution, and transport of essential food grains.
   • State regulation must conform to Central law.

B. Judicial Precedents

1. Atiabari Tea Co. v. State of Assam (1961)
   • Restrictions on inter-state trade must have legislative competence and should not violate Article 301.
2. State of Bihar v. Bihar Distillery Ltd. (1997)
   • States cannot completely prohibit movement of goods across states unless authorized by Parliamentary law.
3. Saghir Ahmed v. State of U.P. (1954)
   • State action must be reasonable and in public interest, not arbitrary.

Possible Judgement / Legal Conclusion

1. The legislation restricts free trade under Article 301.
2. The State Government can impose restrictions only if:
   • It is reasonable,
   • It is in the public interest, and
   • It has received prior approval of the President under Article 304(b).
3. If the Telangana law does not have Presidential assent, or completely bans inter-state movement instead of regulating it, it is unconstitutional because:
   • It exceeds the powers of the State Legislature,
   • Violates Article 301, and
   • Conflicts with the Essential Commodities Act, 1955, a Central Law.

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Understand your constitutional rights on free trade and commerce under Article 301 at Lawgnan.in. Learn how the Telangana rice transport ban raises questions of state legislative competence, President’s assent under Article 304(b), and reasonable restrictions on inter-state trade. Our legal experts explain how freedom of trade operates across India and the balance between public interest and economic liberty. If you want to know whether a state can restrict movement of goods, visit Lawgnan.in for expert insights, case law explanations, and complete legal guidance on constitutional trade freedoms.