The Cole v Whitfield Test for Section 92 of the Australian Constitution and the Free Trade Jurisprudence of the Supreme Court of India

Abstract

Article 301 of the Constitution of India provides that ... trade, commerce and intercourse throughout the territory of India shall be free. The Supreme Court of India has consistently held that the freedom is impaired only if the legislation directly and immediately restricts the interstate movement of goods, as distinct from regulating it (Atiabari Tea Co Ltd v State of Assam & Others (1961) 1 SCR 809). Restrictions obstruct the freedom. Regulations promote it (Automobile Transport (Rajasthan) Ltd v State of Rajasthan & Others (1963) 1 SCR 491). The present test for invalidity is too artificial and technical. This is not surprising when it is considered that the words of Art 301 and their interpretation by the Supreme Court are based on s 92 of the Australian Constitution and the series of wrongly decided cases predating the decision of the High Court of Australia in Cole v Whitfield (1988) 165 CLR 360. For many years, the High Court mistakenly developed the requirement that, unless the legislation directly burdened an activity of interstate trade, commerce or intercourse, s 92 would not be breached. The exception of reasonable regulation was developed concurrently. This school of thought set precedent in the Bank Nationalisation Case (Bank of New South Wales v Commonwealth (1948) 76 CLR 1). Held in 1948, the decision informed the preparation of Part XIII of the Indian Constitution by the Constituent Assembly. The Bank Nationalisation Case is now recognised by the High Court as having been wrongly decided. Regrettably, the Supreme Court has failed to take notice of this re-interpretation. This paper argues that the Supreme Court would give clarity of meaning and certainty of operation to Art 301 if it were to apply the Cole v Whitfield test for s 92. Under that test, a law infringes s 92 only if it imposes a burden on interstate trade and commerce and that burden is discriminatory in a protectionist sense.