CONSTITUTION AND BUSINESS (2 credits)

Trimester I, Integrated Programme in Management (September-December 2021)

Department of Management Studies (DoMS), NALSAR University of Law, Hyderabad

Instructor: Sidharth Chauhan, Assistant Professor (Law).

Official email: sidharth.chauhan@nalsar.ac.in, Personal email: sidharth.chauhan1983@gmail.com.

Course description and objectives:

Business studies have traditionally placed a lot of emphasis on how managerial decisions are shaped with
respect to the interests of those who are closely connected with businesses. To take the representative case
of publicly held corporations, the quality of decisions is usually assessed in terms of how they relate to
the interests of internal stakeholders such as the board of directors, the shareholders and employees as
well as those of proximate ones such as collaborators, competitors and customers. In this course, we will
move away from this emphasis on internal and proximate stakeholders to appreciate how there are several
other external stakeholders whose interests have to be accounted for as part of the overall business
environment. Prominent among these external stakeholders are the state and the numerous interest groups
that exist in society.

A meaningful understanding of the business environment is only possible if we examine how the different
arms of the government (legislature, executive and judiciary) seek to regulate economic affairs. Modern
business forms such as proprietary concerns(single owner), partnership firms (multiple owners) and joint
stock companies rely on recognition from the state as an essential condition for their existence. This
element of recognition bears a correlation with the state’s regulatory role in laying down rules that govern
how business entities raise capital, pursue profit-making activities and eventually close down. These
rules are framed to ensure that the pursuit of productive activities also maintains a balance between the
rights and responsibilities of different stakeholders within a firm. While subsequent courses on corporate
and commercial laws will delve deeper on these topics, the scope of the present course is to gain an
understanding of how the state apparatus interacts with business forms in numerous other ways as well.
As the title of the course suggests, many of the examples that we will discuss in class require a three-
pronged analysis. Therefore in Sessions 1-2, we will begin by sketching out a framework for exploring
issues that are at the intersection of (i) how law operates as a tool of social control, (ii) what motivations
shape the behavior of those who run businesses and (iii) the interaction between various interest groups in
society. We will also examine the scenarios where legal interventions become necessary, often in
response to structural market failures.

[Govt failures vs market failures, 1 st portion focues on law, 2nd on the management side of the leadership
position (desire to earn profits, prestige and popularity, influence on government) Dominant role of
business on political parties, how Indian laws have not recognized and regulated party financing,
Electoral Bond Scheme – which makes financing of parties less transparent, interaction between interest
groups in society, how the interlinkage of the three points is the brief of this trimester]

In democratic regimes, we presume that the government is likely to act on collective preferences shaped
by the continuous competition among several interest groups in society. These interest groups can bear

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different characteristics and vary in their levels of organization. Some interest groups such as political
parties are fairly well-organized and attempt to articulate their point of view through the formal
channels of electoral politics. Other interest groups such as those based on common language, religion,
caste, kinship and ethnicity may command a large membership but may be less organised and hence
unable to pursue their agenda without the assistance of political parties. Similarly, formal as well as
informal associations may represent the interests of particular industrial sectors, professions, other service
providers and workers. Hence, the patterns of conflict, negotiation or cooperation among these interest
groups can be understood through a multi-layered analysis. At the preliminary level, we have to
understand how these formations (namely political parties, professional bodies, industrial chambers and
other civil society groups) interact with each other and then examine how they shape decision-making by
public officials.

[Just like markets are competitive and politics is, their cumulative intersection should make a good
environment, interest based groups in an economic sense, FICCI and CII, collaboration of influential
groups, law shapes business and vice versa also true, formally and informally organized sectors, Real
estate developers CRDAI, groups of telecom service providers, how contributing to a political party will
feel obligated to do well with respect to them, popular agitation and litigation also ways to influence
parties]

Therefore, in Sessions 3-4 we will examine the prevailing forms of electoral finance, since that is a
prominent way in which organised businesses try to influence the creation of rules and policies. This
raises several questions about business ethics as well as probity in public life. Should there be limits
placed on the extent of financial contributions that businesses can make to political parties? Should
political parties be required to disclose their sources of finance, so that voters have a fair understanding of
whose interests are likely to be addressed through governance? Is the act of making a financial
contribution to a political party comparable to the exercise of political speech which should not be
hindered or is it closer to commercial speech such as advertising that needs tight regulation? Should
'lobbying' on behalf of organised businesses be recognised as a legitimate professional activity?

[Electoral Bond Scheme, Is the act of political speech comparable to an economic donation aspect since
that allows imbalance and gives them more power, heavily debated in the American context, should we
allow lobbying on behalf of business and recognize them as business activity or pose restrictions?, not
recognized in India yet,]

Another significant area of inquiry is the role that businesses play in shaping the flow of information in
society. In Session 5-6, we will unpack the conceptual links between the 'freedom of speech' and
economic freedoms, so that we have a coherent picture of the role played by the press, be it through the
print, broadcasting or digital medium. We will examine the controversies surrounding the harmful
consequences of the concentration of ownership of news outlets, the recurring problem of 'paid news',
unethical advertising and the proverbial pandemic of disinformation in our lives. The central issue is
that despite the rapid growth of Information and Communication Technology (ICT) over the last two
decades, we now appear to be far less informed about public affairs than our previous generations. From
the standpoint of the mainstream media establishments, it seems that the professional duty to report the
truths in our society has been replaced by the incentive to maximise profits through sensationalism,
voyeurism and fake news.
[News what we see not exactly what naturally happens on the ground, what happens when ownership
of news outlets is concentrated in a few hands, and people largely listening to the aganda of a few
businessmen, ‘fake news’ where the real source turns out to be over digital medium ‘whatsapp uncles
and aunties’, we tend to be far less informed about government this decade,]

In the latter half of the course, we will examine some provisions of the Indian Constitution and how they
shape the business environment. In Sessions 7-8, we will focus on the judicial interpretation of the 'right
to property' [currently located in Article 300A], while in Sessions 9-11 we will closely examine the
scope of the 'freedom to pursue a profession, occupation, trade or business' which is mentioned in Article
19(1)(g). Discussing the content and interpretation of these provisions will help students to holistically
understand the different possibilities of state intervention in economic activity. We will look at specific
case-studies to understand how these rights have been understood and articulated by private parties in the
past, often in response to excessive state interventions. For example, 'the right to property' which was
earlier a fundamental right under Article 19(1)(f), was invoked to oppose agrarian land reforms,
acquisition of property for industrial development and the nationalisation of poorly-performing
businesses. In comparison, the rights flowing from Article 19(1)(g) are the main pillar of economic
freedoms under the Indian Constitution, though they are subjected to state interventions on multiple
grounds, which can range from economic to socio-political reasons. Economic reasons for governmental
intervention can range from supply-shortages and excessive prices to the breach of contractual
obligations in the chain of production, distribution and sale of goods and services. Social as well as
political reasons can be far broader, with restrictions justified in the name of public order, public health
and even morality apart from apprehensions about harmful consequences of some forms or business
activities. We must be aware of the state's regulatory powers when it comes to restricting trade and
commerce in specific sectors as well as the powers to act against monopolies.

[how fundamental rights are superior, and can be used to test the validity of other parts of the law,
Article 19 numerates personal freedoms, nationalization of businesses (bad loans or anything 
government takes over and revives it), law of contracts regulates private relationships and can shape
commercial activity, why excise rates of alcohol are very high]

In Session 12, we will look at the arguments for extending affirmative action policies to the private sector.
While the Indian Constitution has provisions that mandate the representation of historically disadvantaged
communities when it comes to higher education [Article 15(4), 15(5)], public employment [Article 16(4)]
and elected bodies [Articles 330, 332, 243D, 243 T], there is no explicit requirement for the same when
it comes to privately owned businesses. Should there be tangible policy interventions made to ensure that
the private sector ensures proper representation of social diversity, especially when it comes to positions
of responsibility inside corporate forms?

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Sequence of coverage:

Theme for class coverage Reading Material

Sessions 1-2: The Role of the Joseph E. Stiglitz, 'Government Failure v. Market Failure: Principles of
State in Economic Regulation Regulation', pp. 13-51 in Edward J. Balleisen & David A. Moss (eds.),
Government and Markets: Toward a New Theory of Regulation
(Cambridge University Press, 2009).

Sessions 3-4: Electoral Finance M.V. Rajeev Gowda & E. Sridharan, 'Reforming India's Party
and Interest-Group Analysis Financing and Election Expenditure Laws', 11(2) Election Law Journal
226-240 (2012).

Milan Vaishnav, 'Electoral Bonds: The Safeguards of Indian

Democracy are Crumbling', Carnegie Endowment for International
Peace (Nov. 25, 2019).

Sessions 5-6: Business, Media C.P. Chandrasekhar, 'The Business of News in the Age of the Internet',
and Public Discourse Frontline Magazine (May 3, 2013).

'Consultation Paper on Issues Related to Media Ownership', Telecom

Regulatory Authority of India (Nov. 15, 2013); focus on pp. 43-73

Sessions 7-8: Right to Property A.K. Ganguli, 'Right to Property: Its Evolution and Constitutional
in the Indian Constitution Development in India', 48(4) Journal of the Indian Law Institute 489-
526 (2006).

Jaivir Singh, '(Un)Constituting Property: The Deconstruction of the

Right to Property in India', Centre for the Study of Law and
Governance (CSLG), JNU Working Paper Series (2005).

Sessions 9-11: Economic Rohit De, A People's Constitution: The Everyday Life of Law in the
Freedoms under the Indian Indian Republic (Princeton University Press, 2018); focus on Chapter
Constitution 2, pp. 77-121.

Law Commission of India (276th Report), Legal Framework: Gambling

and Sports Betting including in Cricket in India (Ministry of Law and
Justice, July 2018); focus on pp. 6-47.

Session 12: Social Exclusion in Sukhadeo Thorat & Paul Atewell, 'The Legacy of Social Exclusion: A
the Private Sector Correspondence Study of Job Discrimination in India', 42(41)
Economic and Political Weekly 4141-4145 (October 13, 2007).

Sukhadeo Thorat & Nidhi Sadana, 'Caste and Ownership of Private

Enterprises', 44(23) Economic and Political Weekly 13-16 (June 6,
 2009).

Class & Evaluation Pattern:

This course carries 2 credits, which implies that there will be a minimum of 18 hours devoted to
classroom instruction. There will be 12 sessions of 90 minutes each. Students will be required to attend a
few guest lectures on topics related to the course-content. The methods of teaching will include a
combination of lecturing and interactions. Reading assignments will be circulated in advance for each
class. The discussions during the classes will be meaningful if students are well prepared to ask incisive
questions and explore issues with analytical depth. The evaluation will be based on the following
components:

 Mid-Term Assignment (40 marks): This will be in the nature of a issue-spotting exercise. The
instructor will circulate a hypothetical situation based on the ideas and examples discussed
between Sessions 1-6. The students will be given a 3 hour window to prepare their written
answers (800-1,000 words) where they would be expected to identify and analyse the relevant
ethical and legal issues raised in the hypothetical situation.

[After 6 classes] Early November

[Ideas covered so far, and identiy the relevant issues, also give analysis on the chosen issues,
memasures understanding]

[Principles taught in class will be used, plagiarism will not be tolerates]

 End-Term Assignment (40 marks): The assignment will be based on the class coverage between
Sessions 7-12. The format will be the same as the Mid-Term Assignment.

 Attendance & Class Participation (20 marks): Weightage will be based on attendance
(automatically recorded in Webex Meetings) and the quality of class participation throughout the
course. The instructor may require students to make separate presentations as part of smaller
groups in the after-class hours.

[Class interaction GDs , presentations, questions asked in class]

[A theme to present or questions to respond to, only that is issued in CP]

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Reference Books:

1. Ian Worthington & Chris Britton (eds.), The Business Environment, 5th edn. (Pearson Education
Limited, 2006)

[TEXTBOOK FOR ORGANIZATIONAL BEHAVIOUR ALSO]

2. Paranjoy Guha Thakurta, Media Ethics: Truth, Fairness and Objectivity, 2 nd edn. (Oxford University
Press, 2011).

3. Robert E. Goodin, Phillip Pettit & Thomas Pogge (eds.), A Companion to Contemporary Political
Philosophy, 2nd edn. (Blackwell Publishing Ltd., 2007)

4. Rohit De, A People's Constitution: The Everyday Life of Law in the Indian Republic (Princeton
University Press, 2018).

5. Sujit Choudhry, Pratap Bhanu Mehta & Madhav Khosla (eds.), Oxford Handbook of the Indian
Constitution (Oxford University Press, 2016).

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