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Shri P.K. Gowami, learned senior counsel, appearing for the State of Arunachal Pradesh, adopted the arguments raised by other learned senior counsel He also made references to sub-section (1) of Section 4 which prohibits the `single digit' lottery which is said to be arbitrary as there is no rational nexus for this restriction. The submission is that the continuance of the single digit lottery does not have an adverse affect on the purchasers.

Learned senior counsel, Shri G.L. Sanghi, also appearing for the State of Nagaland in Civil Appeals arising out of SLP c Nos. 5081-5085 of 1998, submitted that with reference to Bhutan lotteries, the effect of treaty is that the Bhutan lotteries can be sold throughout India without fulfilling any obligations under the Lotteries Act without complying with the conditions under Section 4 of the Act, on the other hand, State organised lotteries has to comply with the conditions and cannot be sold through its territory by virtue of exclusion, if any, by the order of the State. The Lotteries Act in question which is intended to control and prevent the earnings through lotteries results in conferring complete monopoly in favour of a foreign lottery, thus the evil sought to be arrested is let loose in most irrational, objectionable and arbitrary manner, hence violative of Articles 14 and 302 of the Constitution. He submits that the Parliament should not have under Section 5 given a carte blanche to the executive of all the States to decide, whether any restrictions be imposed on lotteries organised by other States, This delegation of power is arbitrary, unbridled and also in breach of Articles 302 and 303 of the Constitution. He referred to the case of Hamdard Dawakhana, (supra) and also in Arminder Singh v. State of Punjab. [1979] 1 SCR 845 at 855-856. He also made reference to the invalidity of the sub-section(g) of Section 4 of the Act, this refers to the place of draw to be located within the State concerned, Mr, Rakesh Dwivedi, learned senior counsel appearing for the State of Manipur in Civil Appeals arising but of SLP Nos. 5224-28 of 1998, submits by posing a question, namely, whether it is permissible to the Parliament under Article 298 to delegate power to the State Government Vide Section 5 of the impugned Act to impose ban on the state organised lottery of other States? Secondly, as has been submitted by other counsel, whether state Organised lottery can be said to be res extra commercium? He referred to the Government of India Act, 1935 and also to the draft Constitution before the Constituent Assembly and also the debate which led to bring in Article 298 in the present from. His submission is that the draft Article 266 which is now Article 289 provided for trade and business of States being subject matter of union taxation. To this, Provinces protested which led to the insertion of Article 298 as a compromise to enable the States to carry on trade and business throughout the country, even with respect to subject matter in List I for earning more revenue. This expanded power was made subject to legislation by the Parliament. He referred to the case of S.R. Bommai & Ors. v. Union of India & Ors., [1994] 3 SCC 1 at page 216, to contend that federalism is a basic feature of our Constitution and thus Article 298 should be understood in the light of federalism. Proviso (b) to Article 298 is not merely a repetition of the Article 248 read with List I entries of Seventh Schedule. This was with a purpose to enhance the revenue earning power of the States. Thus, he submits that the Parliament cannot make a law empowering the State Government of one State to perform the functions with respect to another State or with respect to an acquired foreign territory (with reference to Bhutan lotteries). One State Government cannot be delegated the power to increase or diminish the area of the activity of another State. He also referred to Articles 292 and 293 (1), namely, borrowing by the Government of India and borrowing by States respective. Articles 269(3) and 286(3) refer to the faxes levied and collected by the Union but assigned to the States and restrictions as to imposition of tax on the sale or purchase of goods respectively and finally Article 289(3) which refers to the exemption of property and income of a State from Union taxation just to show the demarcation under the Constitution and the distribution of revenue between Union and the States, Thus, he submits that the power to totally prohibit the carrying on of any trade or business by the State executives is only with the Parliament and it must be done by legislation. The carrying on of business or the non- carrying on are both comprehended under Article 298. This cannot be delegated to any State executive. His submission is that Article 298 has also to be interpreted in the light Of the basic feature of federalism under which all the States are co-equal. One State cannot be sub-ordinated to another State with respect to the matters which are in the Central List. Repelling the argument on behalf of the State of Uttar Pradesh by Shri R.N. Trivedi, learned Additional Solicitor General, that Article 258 empowers the Parliament to delegate powers and duties upon the State or its officers or authorities of the State, he submits that under Article 258(1) the President can only entrust power to the State Government with the consent of the State Government. This starts with the words, "notwithstanding anything in this Constitution". But Article 258(2) does not begin with the non-obstante clause thus, if Article 298 inhibits delegation of powers to the State Government, then Article 258(2) cannot be used by the Parliament for delegating the power to the State Government.

Next it is submitted is that the executive power of the State extends not only to matters under Article 162 but also to the field of proviso (b) of Article 298 of the Constitution, thus confers extra territorial jurisdiction. But for Article 298 State could not have organised even its own lotteries until Parliament enacts a law. Thus, when the State runs its own lotteries under Article 298, it does only because it is `trade and business.' The entrustment of executive power to the State is for carrying on any trade or business. Under the Constitution., the word `trade' used in Article 298 should be given the same meaning as is given to it under Article 301, If Article 301 does hot encompass State lotteries as `trade', it would also not fall under Article 298 then the State would also have no power to run its own lotteries, until the Parliament makes the law. Reference is made to the Anraj case-I (supra), in which holding of State lotteries by the State under its executive power was held to fall under Article 298. Thus, it is submitted that the lotteries organised by the State has to be treated as trade. Mr. Rakesh Dwivedi, learned counsel for the State of Manipur, further submits that under the Government of India Act, 1935 and the draft Constitution by the Constituent Assembly there was no provision like Article 298. Draft Article 266 (now Article 289) provided for trade and business of States being subject to Union Taxation. This led in the Constituent Assembly a considerable debate. "The Provinces were protesting regarding this. As a consequence not only draft Article 266 underwent modification, but during the last the stages Article 298 Was inserted as a compromise. This was brought in, so that the States could carry on its `trade arid business' throughout the country even with respect to subject matter covered by list 1 and earn more revenue. He submits that proviso(b) to Article 298 is riot merely a repetition of Article 246 read with entries of List I of the Seventh Schedule but was for a purpose to enhance the revenue earning of the States. Mr. R.N. Trivedi, learned Additional Solicitor General, submitted that Article 298 does not confer any plenary right On any State to carry to on any trade or business, even though this Article does not provide specifically, but in substance it is subject to other provisions of the Constitution, like a State cannot without obtaining a licence under the provisions of the industries Development Regulation Act start an industry mentioned in its Schedule. Similarly, a State cannot insist as a matter of right to sell liquor in another State where there is complete prohibition. Thus, this extended executive power of the State to carry on any trade or business for any purpose should be a trade which falls under the scheme of the Constitution and not what is impliedly prohibited. Article 298 is subject to Parliamentary legislation, it is also subject to provisions of Articles 245 and 246. He submits that the provisions of Articles 298 should be read down to be subject to provisions of Articles 53 and 258 of the Constitution. Meaning to the phrase `trade and business `under Article 298 should be given with reference to Article 19(1 )(g). Thus, Article 298 does not refer to `trade' which are not so recognised under Article 19(1 Kg)- Mr. R.P..Goel, learned Advocate General of U.P., also submitted to the sartie effect. Repelling the part of the argument,, in respect of Article 258, it is submitted by Mr. Dwivedi that under Article 258(1), the President can entrust powers to the State Government only with consent of the State Government and further it starts with the words "notwithstanding anything in this Constitution" but there is no non-obstante clause under Article 258(2). Thus, Article 258(2) would be subject to Article 298. When Article 298 inhibits delegation of powers to State Government then Article 258(2) cannot be used to submit entrustment of power by the Union to the State.

To test the submission, it is necessary to examine Whether the words "trade or business' used in Article 298 should be given the same meaning as the words `trade and commerce' used under Article 301.

Before, we do, we proceed to examine the Anraj case-I (supra). There the Government of Maharashtra and other States requested the Union to authorise them to conduct their lotteries, which was authorised, subject to the conditions that their lottery tickets shall not be sold in another State without express consent of the other State concerned. This was done through Presidential order under Article 258(1), which also entrusted the Government of Maharashtra the executive power of the Union, in respect of lotteries. On this basis, the Government of Maharashtra banned the sale of lottery tickets in its State or other States. This was challenged. This Court held that the Government of Maharashtra cannot purport to ban the sale of lottery tickets of other States by virtue of entrustment of the executive power of the Union under Article 258(1). This case records;

(Emphasis supplied) This merely records that there was no need for a State to Obtain the permission of the Union for organising State lotteries, they could have done so under Article 298. Here there was no issue, whether the words `trade and commerce' is used under Article 30) and the words `trade and business' used under Article 298 should be given the meaning or whether State lotteries are gambling or if it is gambling, would it still be covered by the words `trade and commerce' Under Article 301, In view of what is held in this Anraj Case-I, there could be no doubt that the State could organise its own lotteries by virtue of its executive power under Article 298 until law is made .by the Parliament In other words, the question raised is, once it is covered by proviso(b) to Article 298, necessarily it would fall under Chapter XIII of the Constitution. Reply is that Article 298 does not confer any plenary right on any State to carry on any trade or business but it is subject to other provisions of the Constitution and for the other provisions, he referred to Articles 53 and 258 to submit that Union can entrust power to the State Government with the consent of the State Government under Article 258(1). We feel that it is not necessary to go into this as this was considered in the Anraj case-l (supra). in that case, though the Presidential Order war issued under Article 258(1), it was held that this Presidential Order conferring the State to run its own lotteries was not necessary, as State could have exercised its executive power under Article 298 and the State cannot prohibit lotteries of other States under the executive power entrusted to it by the President, This bring us back to Article 298 to see whether there is any significant difference between the words used under Article 298 and Article 301. This difference could indicate the scope and periphery of the field of operation of these two Articles. Relevant portion of Article 298 is quoted hereunder :