Constitution Guarantees Right To Trade, Not Profit-Allahabad High Court Dismisses Stamp Venders' Plea Seeking Continuation Of Stamp Papers in Physical form

A Single Bench of Justice Yashwant Varma dismissed the Association's contention that discontinuation of paper stamps by the State Government violates the constitutional protections guaranteed by Articles 19(1)(g), 21 and 38 of the Constitution.

At the outset, it was observed that merely because the Government has introduced E-Stamping Rules, does not show that it has discontinued the use of physical stamp altogether. Even otherwise, the Association's members' right to deal in stamps is not a right but it is founded exclusively on the license granted under the UP Stamp Rules 1942.

Thus,

"A right to engage in the trade, business or occupation of collecting tax for and on behalf of the Government was not one which was recognised even in common law. It therefore needs to be understood that the petitioners do not and cannot in law be recognised in law to possess an inalienable right to carry on the trade or business of stamps except in accordance with the grant as conferred under the Act and the Rules framed thereunder."

It is significant to note that the matter was placed before the Bench of Varma in light of the difference of opinion expressed by the Justices SP Kesarwani and Ajay Bhanot, constituting a Division Bench of the Court.

While Justice Kesarwani held that the writ petition would merit dismissal, Justice Bhanot was of the opinion that the Respondents must be required to file their counter affidavits in the matter to enable the Court to deal with the questions raised in greater detail.

In his order, Justice Varma concurred with Justice Kesarwani. It has been held,

"if the submission addressed on behalf of the petitioners be accepted in literal terms, it would essentially mean recognizing a right vesting in them to compel the Government to necessarily engage in business or enter into a contract with the petitioners for the sale of physical stamps in posterity to the exclusion of all other modes. As a necessary corollary, the Court would also have to recognise a right inhering in the petitioners to compel parties to instruments to purchase physical stamps. Neither of the above can be countenanced as a right which can be legitimately traced to Articles 19(1)(g), 21 or 38."

The main contention of the Petitioner-Association was that the terms of the agreement as structured under the Uttar Pradesh E-Stamping Rules, 2013 were bound to place licensed stamp vendors in a disadvantageous position and necessarily result in them suffering a loss.

It was submitted that the commission which was guaranteed to them under the 1942 Rules should also govern the trade and distribution of e-stamps.

Constitution guarantees right to trade, not profit

The Single Bench was however of the opinion that the assertions made in the writ petition are based entirely on assumptions and presumptions. It noted that no material or evidence had been brought forth to establish conclusively that the Petitioners would in fact suffer losses under the new e-stamp Rules.

On this note, the Bench proceeded to make a significant observation— "What the Constitution essentially guarantees is the right to engage in a profession, occupation, trade or business. It neither proffers nor holds forth a guarantee of a profit in that trade or business."

The Bench has made it clear that a business or a trade may become unprofitable or unviable on account of various factors such as the advent of technology, change in consumer preferences, entrance of new competitors, a policy shift of the Government aimed at subserving larger public interest or security of revenue. But in the end, these are mere vagaries of trade which cannot be recognised as constituting the infringement of a fundamental right to carry on that trade or business.

The order stated,

"the petitioner cannot possibly assert or place an obligation upon the appropriate government to frame a business model which may necessarily guarantee a return or a profit in a particular trade or business.

Ultimately it is for the individual to ascertain and assess whether it would be profitable for him to engage in that business or pursuit. Any existing trade would be susceptible to change or disruption in the business environment. In fact disruption is a specter which always exists as technological advances are made and new and more efficient processes evolve. The Constitution holds forth no guarantees against such fluctuations."

Introduction of E-Stamps germane to avoid fraud

The Bench observed that the Petitioner and its members have not been deprived of the right to engage in the trade of physical stamp paper. In fact, the agreement proposed by Stock Holding Corporation of India, (the Central Record Keeping Agency) and the 2013 Rules additionally empower the petitioner to engage in the sale and distribution of e stamps.

It noted,

"The introduction of [e-stamping] system rests on sound, germane and weighty reasons such as avoidance of fraud and forgery of stamp paper, securing collection of State revenue and a host of other factors which were taken into consideration. E stamping in essence represents a policy initiative formulated by the State. The aforesaid policy decision has neither been assailed nor has it been established to be arbitrary.

Ultimately it is for the State to take a principled decision and formulate its policy with respect to the quantity and value of physical stamp paper that may be permitted to circulate and to determine how much of the total demand of stamp paper is to be in the physical or e stamp form. This Court would be treading down perhaps an impermissible or at least uncertain path if it were to either arrogate to itself this power or decide this issue by way of a judicial fiat and that too in respect of an issue which clearly falls in the realm of policy."

Case Title: All UP Stamp Vendors Association v. Union of India & Ors.

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