Gujarat High Court
Gujarat Lottery Sellers Association vs State Of Gujarat And Ors. on 24 October, 1997
Equivalent citations: (1998)1GLR10
Author: Chief Justice
Bench: Chief Justice
JUDGMENT R.A. Mehta, J.
1. The petitioner. Gujarat Lottery Sellers Association has by this petition challenged the Constitutional validity of the Lotteries (Regulation) Ordinance. 1997, promulgated by the President of India on 1st October 1997 and bringing into force on 2nd October 1997 The petitioner has also challenged the Government of Gujarat notification dated 30th September, 1997 banning the instant lotteries within the State with effect from 1st November 1997.
2. Lotteries (Regulation) Ordinance provides that no State Government shall organise conduct or promote any lottery save as provided in Section 4. Section 4 reads as follows:
4 A State Government may organise, conduct or promote a lottery, subject to the following conditions, namely:
(a) prizes shall not be offered on any pre-announced number or on the basis of a single digit,
(b) the State Government shall print the lottery tickets bearing the imprint and logo of the State in such manner that the authenticity of the lottery ticket is ensured;
(c) the State Government shall sell the tickets either itself or through distributors or selling agents;
(d) the State Government itself shall conduct the draws of all the lotteries;
(e) the prize money unclaimed within such time as may be prescribed by the State Government or not otherwise distributed, shall become the property of the Government;
(f) the place of draw shall be located within the State concerned;
(g) no lottery shall have more than one draw in a week;
(h) the draws of all kinds of lotteries shall be conducted between such period of the day as may be prescribed by the State Government;
(i) the number of bumper draws of a lottery shall not be more than six in a calendar year;
(j) such other conditions as may be prescribed by the Central Government;
Section 5 reads as follows:
5. A Stale Government may, within the State, prohibit the sale of tickets of a lottery organised, conducted or promoted by another State.
3. The learned Counsel for the petitioner has submitted that the petitioner and their members are the sellers of lottery tickets of lotteries floated by States like Assam, Meghalaya, Manipur, Mizoram, Himachal Pradesh, Tamil Nadu etc. It is submitted that by this way, backward States have been generating income for development and that the petitioners are paying sales tax on the sale of lottery tickets.
4. The learned Counsel for the petitioner has submitted that the condition precedent for issuing the proclamation is not satisfied and it is submitted that there was no material before the President to satisfy himself that circumstances exist which rendered it necessary for him to take immediate action. It is submitted that lotteries are being organized by various Stale Governments since years and there was no such emergency for taking immediate action by the Ordinance.
Article 123 of the Constitution reads as follows:
123. Power of President to promulgate Ordinance during recess of Parliament (1) If at any time, excfept when both Houses of Parliament are in session, the President is satisfied that circumstances exist which render it necessary for him to take immediate action, he may promulgate such Ordinances as the circumstances appear to him lo require.
5. Secondly, it is submitted that Section 5 of the Ordinance empowers the State Government to prohibit sale of tickets of other State lotteries and it is submitted that this is violative of Constitutional scheme of distribution of the legislative powers and the power to legislate on the State lotteries is only with the Union Legislature under List I Entry 40 and therefore, this is violative of that entry.
6. Thirdly it is submitted that the State Notification dated 30th September, 1997 is passed even before the issuance of the Ordinance which has come into force on 2nd October, 1997 and therefore, it is without any authority.
7. Crucial provision of the Lotteries (Regulation) Ordinance is Section 4 which does not ban and clearly permits and regulates the lotteries organised, conducted and promoted by the State Governments. There is no ban or prohibition of State lotteries. However, what is sought to be ensured by Section 4 is that they should be genuine lotteries organised by the State Governments. In the case of Stale of Haryana v. Suman Enterprises Supreme Court had an occasion to consider the question as to what lotteries can be said to be organised by a State Government in contra-distinction to lotteries authorised by the State Government. In para 3 of the judgment, the Supreme Court observed as follows:
Prima facie, it appears to us that the concept of a lottery 'organised' by a State would require certain basic and essential concomitants to be satisfied as indeed members of the public when investing their money in such a lottery proceed on a trust and on certain assumptions as to the genuineness, bona fides, safety security, the rectitude of administration etc. associated with Governmental functioning. If some of the basic functions characterising a State-organised lottery are delegated or abdicated by the State this public trust is impaired. The first of those requirements is that the tickets which bear the imprint and logo of the State must be printed by or directly at the instance of the State Government so as to ensure their authenticity and genuineness and further to ensure that any possibility of duplication of the tickets and sale of fake tickets is provided against and rendered impossible. Secondly the State itself must sell the tickets though if it thinks necessary or proper so to do, through a sole distributor or selling agent or several agents or distributors under terms and conditions regulated by the agreement reached between the parties. The sale proceeds of the tickets either sold in retail or wholesale shall be credited to the funds of the Government. Thirdly, the draws for selecting the prize-winning tickets must be conducted by the State itself, irrespective of the size of the prize money. Fourthly if any prize money is unclaimed or is otherwise not distributed by way of prize, it must revert to and become the properly of the state Government. These, prima facie appear lo us to be the minimal characteristics of a lottery which can claim to be 'organised by the state, The Supreme Court also referred to royalty being paid lo the State Governments when the lotteries are said to be run by the State Governments and the Supreme Court found that the idea of fixed sum of royalty paid by the agent would be more consistent with the idea of enfranchisement or farming out of a right to organised a lottery than with the idea of an agency. If the basic and essential features indicated by the Supreme Court were ensured, it would be possible to raise a presumption that the lottery is organised by the State itself and not merely authorised by it.
The basic and essential features pointed out by the Supreme Court are now incorporated in Section 4 of the Ordinance. Therefore, what has been done by the Ordinance is to see that only genuine State lotteries are permitted to operate. The State lotteries, as observed by the Supreme Court, have an element of trust and certain assumptions as the genuineness, bona fides, safety and rectitude of administration etc., associated with Governmental functioning. It is with that in view that Section 4 permits the State Governments to organised, conduct and promote lotteries subject to conditions mentioned in Sections 4(a) to (j) quoted earlier. No exception can be taken to the legislation giving effect to and adopting the Supreme Court findings with a view to see that only genuine State lotteries are allowed to function and operate.
8. The nature and gravity of social evil of lottery has been recognized and emphasised at several places, several times in various form. This is permitted to the limited extent of a State Government itself organizing, conducting and promoting a lottery for the benefit of the public or for the benefit of the States. However, in the name of the State Governments, if other lotteries which cannot be said to have been for the benefit of the State concerned are permitted different considerations would arise. It is mentioned by the Supreme Court in the aforesaid judgment that if the entire collection of all wholesale and retail sales go to the State exchequer and all the sales and draws are conducted by the State Government and other conditions of genuine State lottery are satisfied, they are not prohibited by Section 4. This is only a regulatory measure with a view to prevent abuse of the name of State lotteries by running lotteries in the name of State Government not fulfilling the essential and basic criteria laid down by the Supreme Court and which are now incorporated in the Ordinance. This provision cannot be said to be violative of any fundamental right of the petitioners who are mere sellers of the lottery tickets.
9. The argument that the President could not have been satisfied about the necessity of immediate action does not have any basis. By mere casual averment, it cannot be said that there is no such Presidential satisfaction. In the case of A.K. Roy v. Union of India paras 29 and 30, the Supreme Court has dealt with such a contention. The existence of circumstances which satisfied the President about the necessity for immediate action would be within the special knowledge of the Executive, yet the Supreme Court did not cast the burden on the Executive to establish those circumstances and it was held that the petitioners had at least to prima facie make out that there could not have existed any circumstances necessitating the issuance of the Ordinance. The Supreme Court held that every casual or passing challenge to the existence of the circumstances will not be enough to shift the burden of proof to the Executive to establish those circumstances. In this case, the petitioners have not led any acceptable foundation to hold that no circumstances existed or could have existed which rendered it necessary for the President to take immediate action by promulgating the impugned Ordinance. The need to deal with the social evil and extensive abuse of the lotteries in the name of State would be sufficient justification for satisfying the President about the necessity to take immediate action. On this ground, the Ordinance cannot be set aside.
10. The second contention that by enacting Section 5 and enabling the State Government to prohibit the sale of State lotteries within the State is violative of Entry 40 of List-1. It is to be realised that on the subject of State lotteries, the legislative power is with the Union Legislature and the Union Legislature is competent to enact law and delegate the power. In the present case, merely because the power is delegated to State Governments with respect to the area within that State, it cannot be said that thereby the Union Legislature has abrogated that entry or committed any violation. The enactment of Section 5 is within the competence of the Union Legislature and by enacting that provision the States have been enabled to prohibit the sale of tickets of lotteries of other States within their State only. This cannot be said to be in any manner violative of Entry 40 of List I.
11. The third contention that the State Government has issued the impugned notification dated 30th September 1997 even prior to the issuance of the Ordinance, is wholly misconceived. The notification of the State Government has nothing to do with the Ordinance or exercise of power under Section 5 of the Ordinance. The notification has been issued wholly independently of the Ordinance. In fact it has been issued in pursuance of a writ petition filed in Gujarat High Court being Special Civil Application No. 4169 of 1997 where on an application of one Sama Mohmmed Husein Kasam, the High Court had taken cognizance and issued notice to the State authorities. In the application, it was stated that lottery is a social evil and was required to be banned. It was also noticed that the State Government had sought legal opinion for imposing ban on lotteries. The opinion was that the State Government is not competent to ban sale of lotteries organised by other States in view of Entry 40 of Union List and a reference was made to the Supreme Court Judgment in the case of State of Haryana v. Suman Enterprises (supra) The High Court referred to para 3 of the judgment of the Supreme Court and also the judgment of the Karnataka High Court in the case of State of Goa v. State of Karnataka reported in AIR 1997 Karnataka 161. In that case, the petitioner State of Goa aggrieved by the withdrawal of permission granted to State of Goa for running the instant lottery in Karnataka approached the Karnataka High Court. The withdrawal of permission was upheld by the Karnataka High Court, wherein it was held that it is open to the State Government to re-examine such cases whether the State lottery is really organised by the State Government or by mere authorised agencies which virtually organised such sale of lottery tickets and it was held that such lotteries which are practically organised and run by the private agencies could be banned by the State Government. I he Gujarat Government was, therefore, directed to re-examine this aspect will respect to lotteries which were operated in the State of Gujarat. This order was passed on 2nd September 1997. It is in pursuance of this order that the notification data 30ih September. 1997 came to be passed by which the ban is put only on instant lotteries.
12. It may be noted that instant lotteries are run not only very frequently ant with a frequency of less than a week or less than a day, but there are hourly and half hourly draws going on which show that these lotteries are instant lotteries. A sample of such results of lotteries are given below:
Govt. Of Nagaland Result on 23-10-1997 Draw Every Thursday
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Weekly Draw 1st Prize Weekly Draw 1st Prize Lottery Name time No. Lottery Name time No.
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Royal Savera 9-00 429566 Royal Sagar 3-30 143170 Brown a.m. Brown. p.m. Royal Suraj 9-30 213132 Royal Crown 4-00 126253 Brown. a.m. Brown. p.m. Royal Morning 10-00 225412 Royal Silver 4-30 163722 Brown. a.m. Brown p.m. Royal Gold 10-30 283613 Royal Evening 5-00 213324 Brown. a.m. Brown. p.m. Royal Diamod 11-00 111384 Royal Star 5-30 202734 Brown a.m. Brown. p.m. Royal Sitara 11-20 105931 Royal Sandhya 6-00 309433 Brown. a.m. Brown. p.m. Royal Sangam 12-00 233830 Royal Shyam 6-30 169321 Brown. p.m. Brown. p.m. Royal Vijay 12-30 179358 Royal Shubh- 7-00 106636 Brown. p.m. ratri Brown. p.m. Royal 100 1-00 214409 Royal Ratrani 7-30 125737 Brown. p.m. Brown. p.m. Royal Raja 1-30 189578 Royal Night 8-00 192230 Brown. p.m. Brown. p.m. Royal After- 2-00 296011 Royal Rajni 8-30 157227 noon Brown. p.m. Brown. p.m. Royal Rani 2-30 161826 Royal Chandni 9-00 159516 Brown. p.m. Brown. p.m. Royal Nirma l3-00 235459 We are not responsible for printing Brown. p.m. errors. Please check the gazette copy.
In all the above lotteries, the first prize Rs. 2,000/- and second prize Rs. 1,000/- on the last digit.
Issued by Jt. Sec. (Fin) & Director State Lotteries, Government of Nagaland, Kohima.
Result of Weekly Draw held on 23-10-1997 Himachal Pradesh State Lottery
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Time of Draw Ist Prize Last Prize
No. No.
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Mala Rajashri Weekly 10-00 a.m. B-709106 7K Mohak Rajashri Weekly 10-30 a.m. C-552349 50 Manak Rajashri Weekly 11-00 a.m. B-216320 51 Marina Rajashri Weekly 11-30 a.m. B-606504 95 Madhuri Rajashri Weekly 11-40 a.m. A-085479 45 Mangal Rajashri Weekly 12-00 Noon C-144760 30 Mira Rajashri Weekly 12-30 p.m. C-266792 56 Mukund Rajashri Weekly 12-35 p.m. A-015866 68 Manik Rajashri Weekly 1-00 p.m. B-438353 83 Metro Rajashri Weekly 1-30 p.m. B-131110 21 Maya Rajashri Weekly 2-00 p.m. B-620554 13 Mamta Rajashri Weekly 2-30 p.m. B-901693 14 Malati Rajashri Weekly 3-00 p.m. B-778037 68 Mohini Rajashri Weekly 3-05 p.m. 208366 96 Manisha Rajashri Weekly 3-30 p.m. B-828473 68 Mayur Rajashri Weekly 4-00 p.m. C-353196 43 Mayank Rajashri Weekly 4-30 p.m. A-258300 73 Mina Rajashri Weekly 5-00 p.m. B-651684 22
Thus, though the title given is weekly lotteries, these lotteries are so organised as to result into hourly draws. The Kamataka High Court therefore, rightly declared such lotteries to be gambling and betting and therefore within the competence of State Legislature under Entry 34 of List 1. The above samples also show that first and second prizes are based on last digit, i.e., single digit.
13. In view of the notification of 30th September 1997 issued by the Gujarat Government, the petition seeking the ban came to be disposed of as infructuous.
14. Now the present petitioner Association of lottery sellers submits that they are running genuine State lotteries and they are complying with the provisions of Section 4 of the Ordinance. They have also agreed and undertaken that they will not be running weekly, daily or hourly draw lotteries. The undertaking of the President of the Association is taken on record.
15. If that is the case of the petitioner and if this be true, there is no reason for the petitioner to have any apprehension. The State Government has merely banned the instant lotteries. The Central Ordinance has continued the genuine State lotteries.
16. We have been shown a copy of a interim order of Assam High Court in civil rule No. 996 of 1997 in the case of State of Manipur v. Union of India and Ors. Wher in the Assam High Court has granted stay of operation of the Ordinance we are with respect, unable to agree with the same. We do not find any prima facie case nor balance of convenience in favour of the petitioner.
17. Since none of the contentions raised by the petitioner has any merit, the petition is dismissed.