Swadeshi Cotton Mills v Union of India
Swadeshi Cotton Mills v. Union of India (1981) 3 SCC 64
Background and Facts
Swadeshi Cotton Mills, a textile manufacturing company, was affected by government policies that imposed restrictions and controls on the textile industry.
The government enacted laws under the Industrial Policy and Textile Control Acts, aiming to regulate production, pricing, and distribution of textiles to protect consumers and promote the public interest.
Swadeshi Cotton Mills challenged these laws, arguing that the restrictions violated fundamental rights (especially Article 19(1)(g) – the right to practice any profession or carry on any occupation, trade, or business) and were beyond the legislative competence of the government.
The company contended that the government’s interference was arbitrary and unreasonable.
Key Legal Issues
Whether the restrictions imposed on Swadeshi Cotton Mills amounted to an unreasonable restriction on the right to carry on business under Article 19(1)(g).
Whether the government’s action was justified under the reasonable restrictions permitted under Article 19(6) (which allows the state to impose reasonable restrictions in the interest of the general public).
Scope of judicial review on economic legislation related to trade and industry.
Doctrine of “Public Interest” and its application in industrial regulation.
Legal Principles & Court’s Reasoning
1. Right to Carry on Business Under Article 19(1)(g)
The Court recognized that Article 19(1)(g) guarantees the right to carry on any trade, business, or profession.
However, this right is not absolute and is subject to reasonable restrictions imposed by law in the interest of the general public.
2. Reasonable Restrictions (Article 19(6))
Restrictions imposed on business are valid if:
They are provided by law.
They are reasonable.
They serve a public purpose, such as regulation of industries to safeguard consumers, ensure fair prices, or maintain public order.
The Court held that regulations aiming to control the production and distribution of textiles were reasonable because they related to public welfare and were not arbitrary.
3. Scope of Judicial Review
The Court emphasized that courts should exercise restraint in interfering with economic or industrial policy.
The legislature and executive have special competence to regulate trade and industry for public benefit.
The judiciary must ensure that such regulations are not unconstitutional or manifestly arbitrary, but should avoid substituting their own views on policy matters.
4. Doctrine of Public Interest
The government’s power to impose restrictions is guided by the doctrine of public interest.
If a regulation is designed to achieve a legitimate public purpose such as protecting consumer interest, preventing monopolies, or ensuring equitable distribution, it will be upheld.
Relevant Case Law Principles
A.K. Roy v. Union of India (1982) 1 SCC 271: Court held that restrictions on business must be reasonable and for public welfare.
State of Madras v. V.G. Row (1952) SCR 597: Defined the scope of reasonable restrictions on the freedom to carry on business.
M/s. Bennett Coleman & Co. v. Union of India (1973) 1 SCC 788: On restrictions related to freedom of press and trade.
Bhagwati Motors v. Union of India (1973) 3 SCC 244: Validated industrial policy measures in the public interest.
Outcome
The Supreme Court upheld the government’s regulations restricting Swadeshi Cotton Mills’ business operations.
The Court held that such regulations were reasonable restrictions under Article 19(6).
The government’s aim to regulate the textile industry for public good and economic stability was a legitimate exercise of its legislative powers.
Therefore, the challenge by Swadeshi Cotton Mills failed.
Significance of the Case
This case reaffirmed the principle that the right to carry on business under Article 19(1)(g) is subject to reasonable restrictions for public welfare.
It emphasized judicial deference to economic policy decisions of the government.
It established that courts will uphold industrial and trade regulations designed to protect consumers and maintain economic order, so long as they are not arbitrary or discriminatory.
It laid down the test of reasonableness for restrictions on business activities.
Summary Table
| Aspect | Holding / Principle |
|---|---|
| Article 19(1)(g) | Right to carry on business is fundamental but not absolute |
| Article 19(6) | Permits reasonable restrictions in public interest |
| Reasonableness test | Restrictions must be by law, reasonable, and for public good |
| Judicial review on economic policy | Courts should exercise restraint and respect legislative competence |
| Outcome | Government regulation on textiles upheld |
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