Article 306

Article 306 was an original provision of the Constitution of India that conferred special powers upon certain Part B States regarding trade, commerce, and intercourse. It existed during the formative years of the Republic to accommodate the unique political and administrative circumstances of the princely states that had joined the Indian Union after independence. However, following the administrative reorganisation of states, the provision was repealed by the Constitution (Seventh Amendment) Act, 1956, marking a significant step toward economic and administrative uniformity across India.

Historical Background and Context

When the Constitution of India came into force on 26 January 1950, the country comprised various categories of states—Part A, Part B, Part C, and Part D—as listed in the First Schedule.

• Part A States were former Governor’s Provinces of British India.
• Part B States consisted largely of former princely states or groups of princely states that had acceded to India.
• Part C and D States included centrally administered territories.

Part B States such as Hyderabad, Mysore, Travancore-Cochin, Madhya Bharat, and Rajasthan had recently integrated into the Indian Union. These states had distinct legal and administrative systems, including trade and commerce regulations inherited from their pre-independence governance.
Article 306 was introduced to protect the autonomy of these newly integrated states during the transitional phase, enabling them to regulate trade and commerce within their territories while gradually harmonising with the national framework.

Content and Purpose of Article 306

Article 306 empowered the Legislatures of Part B States to impose certain restrictions on trade, commerce, and intercourse within their jurisdictions, notwithstanding the general freedom guaranteed by Article 301.
The purpose of this provision was twofold:

1. To allow Part B States to maintain temporary control over internal trade and commerce until uniform national policies could be established.
2. To ensure that the economic systems of these states were gradually aligned with those of the rest of India, avoiding abrupt disruption to local markets and industries.

In essence, Article 306 represented a transitional safeguard, recognising the administrative diversity that characterised the early post-independence period.

Reasons for Repeal

Article 306 became redundant with the passage of time as India moved toward greater administrative and constitutional integration. The Constitution (Seventh Amendment) Act, 1956, enacted in response to the recommendations of the States Reorganisation Commission (1955), reorganised India’s states primarily on linguistic and administrative lines, replacing the earlier categorisation of Part A, B, C, and D States with a uniform classification of States and Union Territories.
The reasons for repealing Article 306 included:

• The elimination of the Part B State category, which made the provision obsolete.
• The need for a common framework of trade and commerce laws across all states.
• The desire to strengthen economic unity and promote a single national market under the principles of Articles 301–305.

The repeal thus represented a move toward constitutional uniformity and economic integration across the Indian Union.

Legal and Economic Implications

The removal of Article 306 had several important consequences for the Indian constitutional and economic order:

• Uniformity of Trade Regulation: The repeal established a common system of trade and commerce laws applicable to all states, ensuring consistency with the freedom of trade guaranteed under Article 301.
• Enhanced Economic Integration: By removing regional exceptions, it facilitated the creation of a national market, reducing economic fragmentation.
• Administrative Simplification: The elimination of Part B State powers simplified the legislative framework and promoted uniform economic governance.
• Strengthened Federal Cohesion: It reinforced the federal principle by ensuring that all states operated under the same constitutional rules in trade and commerce matters.

Related Constitutional Provisions

The key articles connected with the objectives of Article 306 are:

• Article 301: Guarantees the freedom of trade, commerce, and intercourse throughout India.
• Article 302: Empowers Parliament to impose restrictions on such freedom in the public interest.
• Article 303: Prohibits discrimination between states in matters of trade and commerce.
• Article 304: Allows states to impose certain taxes or reasonable restrictions in the public interest, subject to constitutional safeguards.
• Article 305: Protects existing laws and allows for state monopolies in trade.

Together, these articles (301–305) form the constitutional foundation for India’s internal trade and commerce framework, making Article 306 unnecessary after the 1956 reforms.

Judicial Developments

There were no significant Supreme Court cases directly concerning Article 306, primarily because it existed only for a brief period before its repeal. However, the broader principles of trade freedom and state regulation, which Article 306 temporarily qualified, have been explored extensively in subsequent judicial decisions interpreting Articles 301 to 305, such as:

• Atiabari Tea Co. Ltd. v. State of Assam (1961)
• Automobile Transport (Rajasthan) Ltd. v. State of Rajasthan (1962)

These cases established that while trade across India is to be free, it remains subject to reasonable restrictions and public interest regulations under the constitutional framework.

Constitutional Amendment and Repeal

The Seventh Amendment Act, 1956, which repealed Article 306, was a landmark reform aimed at reorganising India’s internal administrative structure. The amendment:

• Abolished the distinction between Part A, Part B, Part C, and Part D States.
• Created a uniform system of States and Union Territories.
• Repealed obsolete provisions, including Article 306, which had lost relevance.

By doing so, the amendment advanced the goal of administrative efficiency and economic unity, aligning India’s constitutional structure with the principles of federal equality and integrated governance.

Significance of the Repeal

The repeal of Article 306 symbolised a decisive step in India’s constitutional and economic evolution. Its significance can be summarised as follows:

• It marked the end of transitional autonomy for former princely states.
• It reinforced the principle of uniformity in trade and commerce regulations.
• It contributed to economic integration and national unity.
• It reflected the maturity of Indian federalism, moving from accommodation to consolidation.

By removing the temporary privileges of certain states, the Constitution affirmed the vision of a single, cohesive nation with equal legal and economic standards across all regions.

Present Constitutional Status

Today, Article 306 stands repealed and has no operative effect in Indian constitutional law. Its objectives have been fully absorbed within the general framework of Articles 301 to 305, which together govern the freedom and regulation of trade and commerce across the country.The repeal underscores the transition from the fragmented federal arrangements of the early Republic to a unified economic and administrative system, ensuring that all states participate equally in the national market under the same constitutional principles.