Inter-State Relations

The effective operation of India's federal system requires not only smooth Centre–state relations but also cooperative and harmonious ties among states themselves. The Constitution addresses this through four core mechanisms:

1. Adjudication of water disputes between states (Article 262)
2. Coordination through an inter-state council (Article 263)
3. Mutual recognition of public acts, records, and judicial proceedings (Article 261)
4. Freedom of inter-state trade, commerce, and intercourse (Articles 301–307)

Beyond the Constitution, Parliament has established Zonal Councils as statutory bodies to further promote inter-state cooperation.

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Constitutional Basis

Article 262 empowers Parliament to enact laws for adjudicating disputes over the use, distribution, and control of waters of any inter-state river or river valley. Crucially, Parliament can also bar the Supreme Court and all other courts from exercising jurisdiction over such disputes — a significant departure from the ordinary role of the judiciary.

Why an Extra-Judicial Mechanism?

Ordinary legal principles drawn from private property rights over water are ill-suited for resolving large-scale public disputes where the welfare of entire populations is at stake. Experience from multiple countries has shown that such disputes require specialised, non-judicial resolution.

Legislations Enacted

Pursuant to Article 262, Parliament enacted two laws:

1. River Boards Act (1956)

• Provides for the establishment of River Boards by the Central government.
• Boards are set up at the request of concerned state governments.
• Their role is advisory — to guide states on the regulation and development of inter-state rivers and river valleys.

2. Inter-State Water Disputes Act (1956)

• Empowers the Central government to constitute an ad hoc tribunal to adjudicate a water dispute between two or more states.
• The tribunal's decision is final and binding on all parties.
• Neither the Supreme Court nor any other court can entertain such disputes once referred to a tribunal.

Tribunals Set Up (as of 2016)

Exam Trap: The Supreme Court's jurisdiction is explicitly excluded for disputes referred to these tribunals — this is an important exception to the Supreme Court's general role as the highest adjudicator.

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Constitutional Provision

Article 263 authorises the President to establish an Inter-State Council whenever it appears that the public interest would be served by doing so. The President also determines the council's duties, organisation, and procedure.

The duties assignable under Article 263 are:

• Enquiring into and advising on inter-state disputes.
• Investigating and discussing subjects of common interest to states or between the Centre and states.
• Making recommendations for better coordination of policy and action on such subjects.

Key Distinction: Unlike courts, the Council's function is entirely advisory — it cannot issue binding decisions. Its role in inter-state disputes is complementary to the Supreme Court, which handles legal controversies; the Council can engage with both legal and non-legal matters.

Councils Established Under Article 263 (Before 1990)

Prior to the permanent Inter-State Council, the President established:

• Central Council of Health
• Central Council of Local Government and Urban Development
• Four Regional Councils for Sales Tax (Northern, Eastern, Western, Southern zones)

(Note: The Central Council of Indian Medicine and Central Council of Homoeopathy were set up under Acts of Parliament, not Article 263.)

The Permanent Inter-State Council (Established 1990)

The Sarkaria Commission on Centre-State Relations (1983–87) strongly recommended a permanent Inter-State Council under Article 263. It suggested naming it the Inter-Governmental Council to distinguish it from other Article 263 bodies, and proposed charging it with duties under clauses (b) and (c) of Article 263.

Acting on this recommendation, the V.P. Singh-led Janata Dal government established the Inter-State Council on 28 May 1990.

Composition

Functions

• Investigating and deliberating on subjects of common interest.
• Making recommendations for better policy coordination.
• Deliberating on any matter of general interest to states referred by the Chairman.

Working Procedure

• Meets at least thrice a year.
• Meetings are held in camera.
• All decisions are taken by consensus (not voting).

Standing Committee

Set up in 1996 for continuous consultation and processing of matters before the full Council.

• Chairman: Union Home Minister
• Members: Five Union Cabinet Ministers + Nine Chief Ministers

Secretariat

• The Inter-State Council Secretariat was set up in 1991, headed by a Secretary to the Government of India.
• Since 2011, it also functions as the secretariat of the Zonal Councils.

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The Full Faith and Credit Clause

Since each state's jurisdiction is territorially limited, acts and records of one state might otherwise not be recognised in another. Article 261 resolves this through the "Full Faith and Credit" doctrine, which has three components:

1. Universal Recognition: Full faith and credit must be given throughout India to public acts, records, and judicial proceedings of the Union and every state.

   • Public acts = both legislative and executive acts of government.
   • Public records = official books, registers, or records made by public servants in their official capacity.

2. Parliamentary Power over Proof and Effect: Parliament determines the manner and conditions under which such acts, records, and proceedings are proved and their legal effect determined across state boundaries.

3. Civil Judgements: Final judgements and orders of civil courts anywhere in India are enforceable throughout India — no fresh suit is needed. However, this rule applies only to civil judgements, not criminal ones. Courts of one state are not obliged to enforce the penal laws of another state.

Exam Focus: The Full Faith and Credit clause does NOT apply to criminal judgements. This is a frequently tested distinction.

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The Freedom Guarantee (Article 301)

Article 301 declares that trade, commerce, and intercourse throughout India shall be free. This freedom aims to eliminate border barriers between states and treat India as a single economic unit. Critically, this freedom applies to both inter-state and intra-state trade — restrictions at any stage (before, at, or after a state boundary) can violate Article 301.

Permissible Restrictions

The freedom under Article 301 is not absolute. Articles 302–305 carve out exceptions:

Parliament's Power (Article 302):

• May impose restrictions on inter-state or intra-state trade in the public interest.
• Cannot, however, give preference to one state over another or discriminate between states — except in cases of scarcity of goods in any part of India.

State Legislature's Power (Article 304):

• A state may impose reasonable restrictions on trade within or with that state, in the public interest.
• A bill for this purpose requires the prior sanction of the President before introduction in the state legislature.
• States cannot grant preference to one state over another or discriminate between states.

Taxation by States:

• A state may levy taxes on goods imported from other states or UTs, but only if similar goods manufactured in that state are subject to the same tax. This prevents discriminatory taxation favouring locally produced goods.

Nationalisation Laws:

• The freedom under Article 301 does not prevent Parliament or state legislatures from enacting laws for government monopolies in trade, business, industry, or services — whether wholly or partially excluding citizens.

Regulatory Authority

Parliament may appoint an authority (akin to the Inter-State Commerce Commission in the USA) to carry out the purposes of Articles 301–304. No such authority has been appointed in India so far.

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Nature and Origin

Zonal Councils are statutory bodies — not constitutional bodies. They were created by the States Reorganisation Act, 1956, which divided India into five zones and provided a council for each.

Exam Trap: Zonal Councils are not established by the Constitution. They are creatures of an Act of Parliament.

Criteria for Zone Formation

Zones were drawn considering: natural geographic divisions, river systems and communication networks, cultural and linguistic affinity, and requirements of economic development, security, and law and order.

The Five Zonal Councils

Composition of Each Council

Voting Members:

• Home Minister of the Central government (common Chairman of all five councils)
• Chief Ministers of all states in the zone
• Two other ministers from each state in the zone
• Administrator of each Union Territory in the zone

Non-Voting Advisors:

• A nominee of the Planning Commission (now NITI Aayog)
• Chief Secretary of each state in the zone
• Development Commissioner of each state in the zone

Each Chief Minister serves as Vice-Chairman by rotation for one year at a time.

Functions and Objectives

Zonal Councils are purely deliberative and advisory bodies. Their aims include:

• Achieving emotional integration of the country.
• Containing state-consciousness, regionalism, linguism, and parochialism.
• Easing post-reorganisation friction and fostering integration.
• Enabling Centre–state cooperation on social and economic matters.
• Facilitating speedy execution of major development projects.
• Securing political equilibrium across regions.

They deliberate on and make recommendations about matters such as economic and social planning, linguistic minorities, border disputes, and inter-state transport.

North-Eastern Council

A separate North-Eastern Council was created by the North-Eastern Council Act, 1971 and came into existence on 8 August 1972.

Members: Assam, Manipur, Mizoram, Arunachal Pradesh, Nagaland, Meghalaya, Tripura, and Sikkim (added in 2002).

Additional Functions (beyond ordinary zonal council duties):

• Formulating a unified and coordinated regional plan for matters of common importance.
• Periodically reviewing measures taken by member states for security and public order in the region.

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• Article 262 vs Article 131: Article 262 excludes Supreme Court jurisdiction over water disputes referred to tribunals; Article 131 gives the Supreme Court original jurisdiction over inter-state legal controversies.
• Inter-State Council vs National Development Council: The ISC is a constitutional (Article 263) body; NDC is an extra-constitutional body. The ISC's decisions are advisory; courts give binding decisions.
• Zonal Councils — statutory, not constitutional: Created by the States Reorganisation Act, 1956, not by the Constitution.
• Full Faith and Credit — civil only: Criminal judgements are excluded; penal laws of one state need not be enforced by courts of another.
• Article 301 — intra-state included: Freedom of trade applies to both inter-state and intra-state movement.
• State bills on trade restrictions — prior presidential sanction required before introduction in the legislature.
• No authority appointed under Article 307 — unlike the USA's Inter-State Commerce Commission, India has not set up any such body.