Patna High Court
Iqbal Chand Khurana And Anr. Etc. Etc. vs State Of Bihar And Ors. Etc. Etc. on 14 January, 1994
Equivalent citations: AIR1994PAT134, 1994(42)BLJR702, AIR 1994 PATNA 134, (1994) 2 EASTCRIC 379, 1994 BLJR 1 702, (1994) 2 BLJ 21, (1994) 1 PAT LJR 554
JUDGMENT B.C. Basak, C.J.
1. In these four writ petitions the petitioners have challenged the constitutional validity of the Bihar Ban on Lottery Act, 1993, (hereinafter referred to as 'the said Act) which replaces the Bihar Ban on Lottery Ordinance, 1993 (hereinafter referred to as (the said Ordinance).
2. The said Act provides as follows:--
"The Bihar Ban on Lottery Act, 1993.
2. Definitions -- In this Act unless the context otherwise requires -
(a) "Agent" means and includes Main Stockist or by whatever name called, who may be an individual or a group of persons or a company registered under the Companies Act, 1956 or a Partnership firm entrusted with the responsibility of sale of State Lottery tickers on an agency basis on behalf of the State Government.
(b) "Lottery" means a scheme for distribution of prizes by lot or chance to those persons participating in the chances of a prize by purchasing ticket.
(c) "Promoters" in relation to a lottery includes an organiser or any person having control on the conduct of a lottery.
3. Ban on Lottery -- Notwithstanding any agreement or contract entered into by the State Government with any person, no person shall be permitted to deal within the trade or business of lottery or be an agent or promoter in respect of any lottery, nor shall, he sell, distribute or purchase any lottery ticket within the territory of Bihar State.
4. Penalty-- If any person acts as an agent or promoter of a trader in lottery, or sells, distributes or purchases the lottery tickets, he shall be punished with rigorous imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees, or with both.
5. Other Offences Connected with Lottery.-- If any person with a view to the promotion or conduct of any lottery-
(a) prints or publishes any ticket, coupon or other document for use in the lottery; or
(b) sells or distributes or offers or advertises for sale or distribution or has in his possession for the purpose of sale or distribution any ticket, coupon or other document for use in the lottery; or
(c) prints, publishes or distributes or has in his possession for the purpose or publication distribution-
(i) any advertisement of the lottery; or
(ii) any list (whether complete or not) or prise winners in the lottery; or
(iii) any such matter description of, or otherwise relating to the lottery as is calculated to act as an inducement to persons to participate in the lottery;
(d) brings, or invites any person to send into the territories of Bihar State, for the purpose of sale, or distribution, any ticket, coupon or other document for use in, or any advertisement of lottery;
(e) sends or attempts to send, out of Bihar State any money or valuable things received in respect of the sale or distribution of any ticket, coupon or other document for use in this lottery; or
(f) uses any premises, or causes or knowingly permits any premises to be used for purpose connected with the promotion or conduct of the lottery; or
(g) causes or procures or attempts to procure any person to do any of the above mentioned acts, he shall be punished with rigorous imprisonment for a term which may extend to two years or with fine which may extend to ten thousand rupees, or with both.
8. Offence cognizable and non-bailable-- The offence under this Act shall be cognizable and non-bailable."
3. The said Act and the Ordinance were challenged mainly on two grounds. Firstly, it was challenged on the ground of legislative competency. It was contended that the State Legislature has no legislative competency to enact the same as it is covered by List I, Entry 40. Secondly, it was argued that it violates the fundamental rights of the petitioner to carry on trade and business within the meaning of Article 19(l)(g) of the Constitution of India and that it is not saved by Article 19(6).
4. A counter-affidavit on behalf of the State Government has been filed, the relevant portion of which provides as follows :--
"Since the whole dispute raises only questions of law, no prejudice can arise by the delay in filing the counter-affidavit."
(Para 3) "The other ground of challenge on the claim of fundamental right of the petitioner being unreasonably taken away the deponent is advised to submit that nobody neither the petitioners have any fundamental right in betting or gambling which characterises the business claimed by the petitioners to be a fundamental right".
(Para 5) That the legislative power by virtue of Article 245 of the Constitution of India is limited to every State within its own territory.
Parliament cannot enlarge the powers of the State legislatures to enact extra territorial legislation."
(Para 7) "That the alleged agreements with other State and the petitioners cannot operate in the State of Bihar or cut down the legislative power of the State of Bihar under Entry No. 34 of List II operating in the State of Bihar. In the facts and circumstances of the present position in the State of Bihar, it is manifest that in any event the State impugned legislation must operate against the person establishing a lottery scheme, and this will operate in discrimination against them in favour of those who claim as agents of other States for selling their tickets in Bihar. It will also impede on the economy of the State of Bihar to aid the economy of other States".
(Para 8) "That even lotteries organised by State Governments are still nomious (sic) and cannot constitute a fundamental right."
(Para 10) 5.1 On behalf of the petitioners, both oral and written arguments were advanced. It was submitted that the said Act and Ordinance are violative of the Constitutional provisions contained in Articles 245 and 246 of the Constitution of India and are ultra vires. The scheme of the Constitution read with the Legislative Entries clearly contemplates three kinds of lotteries; (i) Lotteries which are organised by the Government of India or the Government of State. The "Lotteries" of this kind are referable to Entry 40, List I which refers to "Lotteries organised by the Government of India or the Government of State"; (ii) Lotteries which are authorised by the Government of India or the Government of State and; (iii) Lotteries by the private persons or organisations and (sic) and Gambling. The Lotteries of the last type may be relatable to Entry 34, List II which refers to "Betting and Gambling."
5.2 It was submitted that it is now settled by the decisions of the Supreme Court that Betting and Gambling is a wide (sic). In relation to such Betting and Gambling Entry 34 of List II confers wide powers on the State Legislature. However, lotteries which are run by the Government of India or by the Government of State stand at an entirely different footing and the same are subject-matter of Entry 40, List I. To the extent the impugned Act imposes a ban on lotteries of Government of India and the Government of States other than the State of Bihar, the same is clearly ultra vires the Constitution and there is no legislative competence in favour of the Bihar State Legislature to enact such a law. Reference was made in this connection to the decision in H. Anraj v. State of Maharashtra, (1984) 2 SCC 292 : (AIR 1984 SC 781) (at pages 296, 299 and 300, paragraphs 4, 5, 8 and 9). It was submitted that the State of Himachal Pradesh and the State of Manipur have requisite constitutional authority to conduct lotteries throughout the country in the absence of any Parliamentary legislation under Entry 40, List I to the contrary. Article 298 of the Constitution authorises the State of Himachal Pradesh and the State of Manipur to carry on business or trade in the matter of lotteries and such business is permissible in view of Clause (b) of proviso to Article 298. Reference was made in this connection to Anraj's case (ibid). In the instant case the lotteries which have been conducted in the State of Himachal Pradesh and Manipur are lotteries 'organised' by the respective Governments and not the lotteries 'authorised' by the State. Therefore, in respect of such lotteries Parliament alone has competence under Entry 40, List 1. Reference was made in this connection to J. K. Bharati v. State of Maharashtra, (1984) 2 SCC 704 : (AIR 1984 SC 1542) and it was submitted that the same is distinguishable and it was inapplicable to lotteries 'organised' by the Stale Government.
5.3 It was next submitted that the ban imposed by the impugned Act on lotteries organised by the State Governments was not in public interest and that it is violative of Articles 14 and 19 of the Constitution of India. However, in view of our decision herein on the first point, it is not necessary to deal with the same.
6. On behalf of the State, it was submitted by the learned Advocate General that the Act was covered by List II, Entry 34. It was enacted to prevent any person or organisation to do business in lottery in this State. It was further sought to be argued that the lotteries are not in the present case "organised" by other States. To come within the scope of "organised", it was argued, the State Government concerned must have a selling establishment/counter to sell the lotteries in this State themselves and those States must have disciplinary control over the persons engaged in doing such business.
7. Before dealing with the said submissions 1 shall refer to the decisions cited.
7.1 In the case of H. Anraj v. State of Maharashtra, (1984) 2 SCC 292 : (AIR 1984 SC 781) it was observed-
Entry 40 of List I of the VIIth Schedule to the Constitution is "Lotteries organised by the Government of India or the Government of a State". Entry 34 of List II of VIIth Schedule is "Betting and gambling". There is no dispute before us that the expression "Betting and gambling" included and has always been understood to have included the conduct of lotteries. Quite obviously, the subject 'Lotteries organised by the Government of India or the Government of a State has been taken out from the legislative field comprised by the expression "Betting and gambling" and is reserved to be dealt with by Parliament. Since the subject 'Lotteries organised by the Government of India or the Government of a State' has been made a subject within the exclusive legislative competence of Parliament, it must follow in view of Article 246(1) and (3) that no legislature of a State can make a law touching lotteries organised by the Govt. of India or the Government of a State. This much is beyond controversy and the Maharashtra legislature has acknowledged the position as indeed it must in Section 32 of the Bombay Lotteries (Control and Tax) and Prize Competitions (Tax) Act, 1958. It is an Act to control and tax lotteries and to tax price competitions in the State of Maharashtra. Section 32(b) expressly provides that nothing in the Act shall apply to "a lottery organised by the Central Govt. or a State Government". This as we said is but a recognition of the prevailing situation under the Constitution. The Constitutional position cannot be altered by an act of the State legislature. (Para 4) 7.2 In the case of J. K. Bharati v. State of Maharashtra, (1984) 3 SCC 704 : (AIR 1984 SC 1542) the Supreme Court has held as follows :--
"This order is virtually a post script to our judgment in H. Anraj v. State of Maharashtra. What was in question in Anraj v. State of Maharashtra was the ban imposed by the Government of Maharashtra on the sale of tickets of lotteries conducted by the Government of other States in the State of Maharashtra. What is presently in question in the writ petitions before us is the ban on the sale of tickets of lotteries authorised but not organised by the Government of other States. Specifically, we are concerned with the ban on sale, within the State of Maharashtra, of tickets of lotteries organised by the Indian Red Cross Society, Dadra and Nagar Haveli branch and authorised by the administration of Dadra and Nagar Haveli. In Anraj v. State of Maharashtra we held that the subject "Lotteries organised by the Government of India or the Government of a State" had been taken out from the legislative field, comprised by the expression "Betting and Gambling" in Entry 34 of List II of Schedule VII and was reserved to be dealt with by Parliament under Entry 40 of List I of Schedule VII. Even so, we held Article 298 of the Constitution left the Government of a State free to carry on any trade or business in respect of which it may not have the power to make laws, but that the power to carry on such trade or business shall be subject to legislation by Parliament. Therefore, we said, in the absence of Praliamentary legislation, the Government of every State had the unrestricted right to organise lotteries and this right was not subject to the executive and legislative powers of other States. Consequently, we held that the Government of Maharashtra did not have the right to impose a ban on the sale and distribution of tickets of lotteries organised by other States in the State of Maharashtra. In the instant cases, we are concerned not with the ban on lotteries organised by the Governments of other States but with the ban on lotteries authorised by such Governments and organised by institutions and persons other than the Governments. The source of power is not in question. It is to be found in Entry 34 of List II of Schedule VII which empowers the State Legislature to make laws in respect of "Betting and Gambling", which expression has always been held to include the conduct of lotteries. While lotteries organised by the Government of India or the Government of a State have been taken out of Entry 34 of List II of Schedule VII by Entry 40 of List I, there is no question about the competence of the Legislature of Maharashtra to legislate in respect of the sale or distribution, in the State of Maharashtra of tickets of all lotteries organised by any agency whatsoever other than the Government of India or the Government of a State. (Para 1) The Bombay Lotteries (Control and Tax) and Prize Competition (Tax) Act, 1958 is an Act to control and tax lotteries and prize competition in the State of Maharashtra. Section 3 of the Act declares: "Save as provided by the Act, all lotteries are unlawful". The Act contains detailed provisions for the licensing, regulation and control of lotteries within State of Maharashtra. By Section 32(c), it is provided that nothing in the Act shall apply to "a lottery specially authorised by the State Government". The submission of Dr. Chitale, learned counsel for the petitioners, was that the exemption from the applicability of the Act granted to lotteries "specially authorised by the State Government", that is, by the Government of Maharashtra was discriminatory; the exemption should be extended to all lotteries authorised by the Government of any State whatsoever. Article 14 of the Constitution is invoked in aid of the submission. The reason for exempting lotteries authorised by the Government of Maharashtra from the applicability of the Act and not lotteries authorised by the Governments of other States is patent. In the case of lotteries authorised by the Government of Maharashtra, the Government of Maharashtra may retain to itself all necessary powers for the regulation and control and the prevention of misuse of funds and exploitation of guideless members of the public. In the case of lotteries authorised by the Governments of other States it may be difficult and even impossible for the Government of Maharashtra to take adequate regulatory steps to prevent abuse of the authority given by Governments of other States to non-governmental agencies to organise lotteries. It may be equally difficult for the Governments of other States to take adequate measures for prevention of abuse of such authority within the State of Maharashtra. We are, therefore, satisfied that no hostile discrimination whatever is involved in not extending the exemption from the applicability of the Act to lotteries authorised but not organised by the Governments of other States. The writ petitions are accordingly dismissed with costs."
(Para 2)
8. In view of the language of the relevant entries in List I and List II of the Seventh Schedule as interpreted by the aforesaid decisions of the Supreme Court, I have no hesitation in holding that there is inherent lack of legislative competency of the State legislature to enact any provision so far as lotteries organised by Central Government and State Government are concerned. This is totally covered by Entry 40, List I. So far as Entry 34, List II is concerned, it may be very general in nature, but so far as lotteries organised by the Central Government and the other State Governments are concerned, the State legislature has no legislative competency in the matter. It may be pointed out that for this very reason, as it appear from the decision in H. Anraj case (ibid), there was a section in the Maharashtra Act, namely, Section 32(b) which expressly provided that nothing in the Maharashtra Act shall apply to "a lottery organised by the Central Government or a State Government". There is no such provision in the present Act. As pointed out by Supreme Court, even if Entry 34 of List II is of very general and wide in nature, having regard to Entry 40 of List I, this Act, so far as it relates to lotteries organised by the Central Government or any other State Government, is beyond the legislative competency of the State of Bihar and to that extent it is unconstitutional and void. The arguments advanced by the learned Advocate General has no merit. Whether it is "organised" by the Central Government or other State Governments or not is a matter to be ascertained on facts. As pointed out by the Supreme Court, there is a difference between "organised" by the Government of India or the Government of State and "authorised" by the Government of India or the Government of State Lotteries "organised" by the Central Government and the other State Governments come within the scope of the Parliamentary legislation.
9. So far as Article 258 is concerned, no such case was sought to be made out in the counter-affidavit of the State Government or argued by the learned Advocate General and, accordingly, I need not go into the same. In any event, I am only concerned with the Act as such. The Act is a comprehensive one. It covers all lotteries. The Act in question does not make any distinction between lotteries "organised" by the Central Government or the State Government and the other lotteries. It is very wide in nature and covers all kinds of lotteries. The petitioners are entitled to carry on business in lotteries "organised" by the Central Government or any other State Government. As long as there is no law by a competent body, as envisaged by the Constitution, and as explained by the Supreme Court decisions, the State Government cannot prevent any one from carrying on any trade or business in such lotteries.
10. A written argument on behalf of the State was submitted at a very late stage and quite sometime after the hearing was concluded, wherein many new propositions and contentions were sought to be raised, including certain questions of facts, most of which are neither relevant nor tenable. Moreover, no such argument was raised during the hearing. Accordingly, it is not necessary to deal with the same in details. However, I shall make one or two comments regarding the same.
10.1 Whether any law has been framed by the Central Government under Entry 40, List I or not is immaterial, while considering the question of the legislative competency of the legislature in question. If a State legislation or a portion of it clearly comes within the scope of Entry 40, List I, the question of any conflict or repugnancy does not arise. The question of repugnancy under Article 254 arises only when there are two laws, one by the Parliament and another by the State, both under the scope of the Concurrent List. Otherwise, it is a question of applying the principle of 'pith and substance'. If a State law or any portion of it comes within the Union List, whether any such law has been made by the Parliament in exercise of its power or not is immaterial and for that reason itself, it shall not confer any power on the State Legislature to enact a law which is undoubtedly comes within the scope of List I. 10.2 The proposition that where there are overlapping entries, especially when there is no law of the Central Government, the State Entry has to be given wider meaning than the Entry of the Union List is not merely not well settled as alleged, it is not a correct proposition of law at all.
10.3 Regarding the general principles on interpretation of the different Lists of the Seventh Schedule, the law is well settled and it does not require any repetition and, accordingly, I need not refer to the specific decisions referred to in the said written argument, none of which was cited during the oral argument. We have also discussed the scope of the said principle in our various decisions, including the "Degraded Forest Land case" and the Delhi Cloth and General Mills' case, 10.4 So far as the other contention in the written argument that the lottery must be organised by the Government of a State to claim exemption from the purview of List I is concerned, there is no difference of opinion regarding the same and for this purpose I have referred to the two Supreme Court judgments herein above.
10.5 On the question of meaning of "organised by", that has also been dealt with by us.
10.6 A new case has been sought to be made in the written argument on the question as to what is meant by 'organised'. However, I have made it quite clear that the Act, so far it deals with cases of lotteries not "organised" by the Central Government or any State Government, is valid and the State would be at liberty to act according to the said Act to that extent. Accordingly, in a given case, where it is organised or not, it shall be determined and it is not for us to deal with the same, in view of the limited scope of our judgment as stated hereinabove, i.e., the question of legislative competency only.
10.7 I need not go into the contentions made in the written argument regarding Article 19(1) (g) and Article 302 of the Constitution, as I have not gone into the said question having regard to my decision on the question of legislative competency.
10.8 The comments made under the heading 'territorial jurisdiction' was not argued during the hearing and, in any event, having regared to my finding, it is not necessary to go into the same.
10.9 The contentions made in paragraph 15 of the written argument are not tenable, as no such case was taken in the counter affidavit.
10.10 The different arguments raised in respect of diferent petitions on facts are untenable, firstly because they are new points not taken in the counter affidavit, and, in any event, having the limited scope of our judgment regarding legislative competency, it is not necessary to deal with the same.
11.1 Exclusive power of the State legislation has to be exercised subject to Clause (1) of Article 246 i.e., the exclusive power which the Parliament has in respect of the matters enumerated in List I. Assuming that there is conflict between an Entry in List I and Entry 49 of List II which is not capable of reconciliation, the power to Parliament to legislate in respect of the matter which is exclusively entrusted to it must supersede pro tanto the exercise of power of the legislature.
S. C. Nawn v. W.T.O. Calcutta, AIR 1969 SC 59 (Para 7), India Cement Ltd. etc. etc. v. State of Tamil Nadu etc., AIR 1990 SC 85.
11.2 In assessing the field covered by an Act of the Parliament, one should be guided not merely by the actual provisions of the Central Act and the Rules made thereunder but should also take into account matters and aspects which can legitimately be brought within the scope of the said Statute. On such assessment if it appears that the State Act has trespassed into the field covered by the Central Act, it would be unconstitutional.
The Hingir-Rampur Coal Co. Ltd. v. The State of Orissa, AIR 1961 SC 459; State of Orissa v. M. A. Tulloch & Co; AIR 1964 SC 1284; Bharat Coking Coal v. State of Bihar, (1990) 2 Scale 256; Orissa Cement Ltd. v. State or Orissa, AIR 1991 SC 1676 (paras 51 to 54).
12. Accordingly, I hold that the said Act is ultra vires the Constitution of India, so far as lotteries organised by the Central Government or any other State Government is concerned, as it lacks legislative competency to that extent. A declaration is made to that extent. I make it clear that there is no lack of legislative competency so far as other lotteries are concerned.
13. In view of my decision to this effect, it is not necessary to deal with any other question.
14. These applications are disposed of accordingly.
Choudhary S.N. Mishra, J.
15. I agree.