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JUDGMENT 1999 (2) SCR 1111 The Judgment of the Court was delivered by MISRA, J. Special leave granted in all the special leave petitions. We are witnessing in this case exhibition of Federalism in true spirit. Contrary to the usual pouring in of citizen's writ petitions for vending their grievances against the States, here we are drawn to decide issue inter se between two distinct sets of States, one challenging and the other upholding certain provisions of The Lotteries (Regulation) Ordinance 1997 (Ordinance No. 20 Of 1997) (hereinafter referred to as the "Ordinance No 20") and now the Lotteries (Regulation) Act, 1998 (hereinafter referred to as the " 1998 Act"). The Union Government, of course has joined this issue with one such set of States for upholding its Act. The issue here is confined to the State lotteries under Entry 40, List I of the Seventh Schedule of the Constitution of India. As a consequence of the order passed by the State of U.P. banning State lotteries of other States by virtue of power entrusted under Section 5 of the impugned Ordinance Act, various affected States, challenged the provisions in different High Courts. In some of them, interim orders were passed and in others, the High Courts finally disposed of the petitions. The Gujarat High Court upheld the validity, while the Guwahati High Court struck down some of its provisions as ultra vires. Against all the aforesaid orders and Judgments, the aforesaid appeals have been filed. One writ petition under Article 32 has also been filed raising the same issue. Some of the aforesaid petitions are transfer petitions seeking transfer of petitions pending in the various High Courts raising similar issues. We permitted learned counsel for the petitioners in these transfer petitions to argue the common points which, if fact, is the bone of contentions of all the parties. As in all these petitions, common issues are raised, we are disposing of all, after hearing learned counsel for the parties, by this composite judgment. Apart from the common issues, we are not disposing of nor propose to dispose of any of the individual residuary points, if any, remain after pur this adjudication.

In order to adjudicate issues in this case, one of the fundamental question raised is, what is the character of State lotteries. If lotteries are gambling in nature, does it loose its character as such when it takes on the cloak of State lotteries? Whether such cloak dissolves its character as res extra Commercium? In any case, even it is legalised, would it qualify to be or can it be held to be a trade within the meaning of Chapter XIII of the Constitution of India? If it is a trade, are the provisions of the impugned Act violative of the Articles of Chapter XIII? Challenge to some of the provisions are based on the ground of it being discriminatory and arbitrary, hence violative of Article 14 of the Constitution. Finally; entrustment of power to the States under Section 5 is attacked as it being unbridled without any guideline thus liable to be struck down, Before taking up for consideration the various points raised, it is necessary to dwell Certain bare facts to reveal the resulting cause of filing of various petitions in the various High Court is before finally reaching this Court for adjudication. The whole gambit of sale of lottery tickets in India, both private and State lotteries, from the very inception is drawing with concern attention of various authorities and Government including courts, as to how to control the evil effects of lotteries on its people at large, more so, when in complete banning, it effects in times of need, the Very useful source of State revenue. Basically, lotteries are gambling and its business is res extra commercium; but to shed off this, the State in the interest of State revenue has been finding avenues to legitimate it through some legitimisation under the law to eliminate the impediments in collecting the State revenue and dilute, if possible, the exploitation of the people. The details of which we shall be referring hereinafter. The immediate reference to which we are concerned is Ordinance No. 20 of 1997 which was issued on 1st October, 1997, which came into force on 2nd October, 1997 which restricted the lottery business organised by the States and enabled the State Government to prohibit sale of tickets of lotteries of other States. Under the said Ordinance, the State of U.P. issued notification dated 7th October, 1997 banning sale of lottery tickets of the State of Nagaland in the State of U.P- This notification and the aforesaid Ordinance was challenged by the State of Nagaland in the Gauhati High Court in Civil Rule No, 4986 of 1997. The High Court stayed this notification. This Ordinance was also subject matter of challenge in the High Court of Gujarat where in Special Civil Appeal No. 7903 of 1997 ( The Gujarat Lottery Sellers Association v. The State of Gujarat and another), the High Court upheld this Ordinance and the notification of Gujarat Government which banned the State lotteries within the State of Gujarat. Against this, Civil Appeal arising out of SLP (C) No, 22423 of 1997 has been filed which we are considering and disposing of by means of this judgment. The State of U.P. filed Civil Appeals arising out of SLP(C) Nos. 21304-21307 of 1997 as against the aforesaid interim; order passed by the Guwahati High Court staying the Ordinance in which this Court directed the State of U.P. to move the Gauhati High Court. This order was passed as an interim measure. In a Writ Petition No. 2200 of 1997 filed before the Allahabad High Court (Lucknow Bench) by M/s. Ganga Agencies (Manipur State Lotteries), the High Court ordered that so long the interim order of the Gauhati High Court is operative the sale of lottery tickets shall be permitted to be sold in U.P. this Court finally disposed of SLP (C) Nos. 21304-21307 of 1997 (Civil Appeal No. 8858-8861 of 1997) by observing that Gauhati High Court is free to dispose of the petition pending before it in accordance with law, since hearing had already completed. As the Ordinance No. 20 was lapsing, Ordinance No. 31/97 (second Ordinance) was promulgated. Under it, the notification dated 29th October, 1997 of the State of U.P. was also stayed by the Guwahati High Court. Against this order, also SLP (C) No, 4710-4712 of 1998 State of U.P. v. State of Mizoram and otters, was filed in this Court. Finally, the Guwahati High Court declared the Ordinance No. 20 to be unconstitutional on the ground that Ordinance was not legislation by the Parliament within Article 298 of the Constitution of India, hence it could not restrict executive powers of the State to carry on lottery business. It also held Section 5 to be ultra vires the Central Legislative powers on the ground of excessive delegation and also violative of Articles 301 and 303 of the Constitution. It further held mat Section 4(a), (f) and (g) imposes unreasonable restrictions, therefore, unconstitutional. Against this, the State of U.P. filed Civil Appeals arising out of SLP (C) No. 5224-28 of 1998 and the Union of India filed Civil Appeals arising out of SLP (C) Nos. 5081-5085 of 1998, which is also the subject matter of consideration through this judgment.

In order to maintain the continuity, the Central Government issued the Lotteries (Regulation) Ordinance, 1998 (No. 6 of 1998) (third Ordinance) on 23rd April, 1998. This last Ordinance was also challenged along with Notification dated 29th October, 1997 of State of U.P. in Civil Rule 2315 of 1998 Ms. Jyoti Agencies & Anr. v. Union of India & Ors. before the Gauhati High Court which was also stayed by means of interim order dated 22nd May, 1998. Civil Appeal arising out of SLP (C) No. 15978 of 1998 has been filed against this order by the State of U.P. The Ordinance No. 6 of 1998 (third ordinance) has finally rolled into the Lotteries (Regulation) Act, 1998 (No. 17 of 1998) (hereinafter referred to as `1998 Act'). This Act along with Notifications dated 29th October, 1997, 17th March, 1998 and 20th April, 1998 of the State of U.P. were challenged in Civil Rule No. 3296 of 1998 State of Nagaland v. Union of India & Ors. before the Guwahati High Court, The Guwahati High Court by order dated 10th July, 1998 stayed the provisions of Section 4(a), (g), (h), (j) Sections 5 and 6 of the 1998 Act and also the aforesaid notifications issued by the State of U.P. : Even SLP against this order has been filed before this Court being SLP (C) No. 17566 of 1998. The Gujarat Lottery Sellers' Association has challenged the constitutional validity of the Ordinance No. 20 promulgated on 1st October, 1997 and also challenged the Notification dated 30th September, 1997, issued by Government of Gujarat, banning the instant lotteries within the State w.e.f. 1st November, 1997. One of the grounds raised by the petitioner before the Gujarat High Court was that the State notification dated 30th September, 1997 was issued even before the Ordinance which came into force on 2nd October, 1997, hence without authority of law. The Gujarat High Court by its judgment and order dated 24th. October, 1997 dismissed the petition holding that instant lottery is gambling and can be restrained by the State Government. The High Court held the Ordinance No,20 to be valid. Aggrieved by this, the aforesaid Civil Appeal raising out of SLP(C) No, 22423 of 1997 was filed. Similar matter also came in the Delhi High Court, when it, by means of interim order dated 3rd December, 1997 in Civil Writ Petition No. 5105 of 1997 disagreed with the view of the Guwahati High Court and agreeing with the view of the Gujarat High Court, declined to stay the impugned Ordinance. Hence, the Stale Ordinance remained in operation within the National Capital Territory of Delhi. The Guwahati High Court on 30th March, 1998 in Miscellaneous Case No. 310 of 1998 in C.R. No. 31 of 1998 State of Nagaland v. U.O.I. and Others stayed me order of the Government of Delhi directing implementation of the aforesaid order passed by the Delhi High Court. Thereafter, on 30th April, 1998 the Delhi High Court observed that the Delhi Government may move the appropriate forum against this order of the Guwahati High Court, This led to filing of Transfer Petition by the National Capital Territory of Delhi in this Court being Transfer Petition No. 670 of 1998.

Civil Appeal arising out of S.L.P c No. 10356 of 1997 (B.R. Enterprises V. State of UP, & Anr.,) is against the order of the Allahabad High Court dismissing the writ petition filed by an agency of State lottery Manipur holding such dispute between the State of Manipur and State of U.P. could only be decided by the Supreme Court. It held, so far manipur lotteries, unless it was declared to be State lottery, the petitioner has no locus standi, hence writ was dismissed. Another Civil Appeal arising out of SLP c No. 10357 of 1998 is filed by the State of U.P. against an order passed by the Allahabad High Court confirming the interim stay order. Civil Appeal arising out of SLP c No. 15978 of 1998 is filed by the State of U.P. against an interim order of Guwahati High Court staying the Ordinance No. 6/98. Civil Appeals arising Out of SLP @ Nos. 16021, 16617, 17566 and 17782 of 1998 are all filed against the interlocutory orders passed by the Guwahati High Court staying Section 4 (a), (g), (h), Sections 5 and 7 of the Central Act No. 17/98. The first and third Of these SLPs are filed by the State of U.P. and the second by Government of N.C.T. of Delhi. Remaining petitions are transfer petitions seeking transfer of the cases from Madras High Court, Karnataka High Court. Andhra Pradesh High Court and Delhi High Court to this Court. These also challenge either the Ordinances or Lotteries (Regulation) Act, 1998 (ActNo. 17/98) (hereinafter referred to as `Lotteries Act'). They all raise the same issues, as aforesaid. For proper appreciation of the submissions of learned counsels for the parties, we herewith quote Sections 4, 5 and 7 of the Act, which are the subject matter of challenge :