Important Point
When the constitutionality of an enactment is challenged on the ground of violation of any of the Articles in Part III of the Constitution, the ascertainment of its true nature and character becomes necessary, i.e. its subject matter the area in which it is intended to operate, its purport and intent have to be determined.

Headnote:(i) Lotteries (Regulation) Ordinance, 1997—Lotteries (Regulation) Act, 1998—Sections 4 and 5—Ban on lotteries — Power of States—Scheme of Act limited in its application—Admits subject it is dealing is gambling in nature—Decision to collect or not to collect revenue through State Lotteries exclusively within policy decision of States—Neither Union nor Parliament interferes nor any indication under the Act—Whenever State decides to run or not to run its lotteries it is State to decide as public policy in public interest—State can continue to have their own lotteries—Where any State decides not to have any lotteries territorial area of such State is only curtailment—Decision of Guwahati High Court holding provisions of Ordinance to be ultra vires and consequently staying provisions of impugned Act cannot be sustained—Any decision of any Court or any interim order contrary to decision set aside.
       Held : Decision to collect or not to collect revenue through State lotteries is exclusively within the policy decision of the State and for this, neither the Union nor the Parliament interferes nor there is any indication under the Act. (Para 77)
       The impugned provision does not prohibit such State not to run its own lotteries. Such State can continue to have their own lotteries. Only where any State decides not to have any lottery the territorial area of such State is only curtailment. (Para 81)
       The decision of the Guwahati High Court which holds the provisions of the Ordinance to be ultra vires and consequently staying the provisions of the impugned Act cannot be sustained which is hereby quashed. Any decision of any Court or any interim order contrary to the decision, as aforesaid, are hereby set aside. The various petitions which have been transferred and which are subject matter of decision, as aforesaid, stand disposed of in terms of this decision. (Para 84)
       (ii) Lotteries (Regulation) Act, 1998—Ban on lotteries—Nature and character of—Lotteries remain in the realm of gambling—Even where it is State sponsored still looked down as an evil.
       Held : Lottery remains in the realm of gambling. Even where it is state sponsored still it was looked down as an evil. Right from ancient time till the day all expressed concern to eliminate this, even where it was legalised for raising revenue either by the king or in the modern times by the State. Even this legitimisation was for the sole purpose of raising revenue, was also for a limited period, since this received condemnation even for this limited purpose. All this gives clear picture of the nature and character of lottery as perceived through the conscience of the people, as revealed through ancient scriptures, also by various courts of the countries. (Para 43)
       (iii) Lotteries (Regulation) Act, 1998—Constitution of India, 1950—Articles 301 to 303 of Chapter XIII—Lotteries if goods—Could contract for sale of such goods be conferred status of trade and commerce as used in—Lottery tickets ‘goods’—When sold it is under a contract between seller, State or its agent and purchaser buying for consideration—Sale of lottery tickets organised by State could not be construed to be trade and commerce—No violation of Articles 301 to 303 of Chapter XIII of Constitution.
       Held : We have no hesitation to hold that sale of lottery tickets organised by the State could not be construed to be trade and commerce and even if it could be construed to be so, it cannot be raised to the status of ‘trade and commerce’ as understood at common parlance or ‘trade and commerce’ as used under Article 301. Hence, question of violation of either Articles 301 and 303 does not arise. Strong reliance was placed on Khazan Singh, case, (supra), if a State has a power to carry on trade in its own State it can carry on the same in every part of India. For the finding we have recorded that State lotteries (Gambling) would not be ‘trade’, this case would have no application. Hence, for these reasons, it is not necessary to go into various submissions pertaining to violation of Articles 301 to 303 of Chapter XIII of the Constitution. (Para 66)
       (iv) Lotteries (Regulation) Act, 1998—Section 5—Validity of—Section 5 empowers State Govt. within its State to prohibit sale of tickets of lotteries organised by every other State—State could exercise such discretion if it decides not to have any lottery within its territory including its own lotteries—Which itself clear guide to State—Cannot be said to be arbitrary nor unbridled—Interpre-tation given by Union approved—Impugned provision not violative of Article 14 of Constitution of India—Valid piece of legislation.
       Held : In view of settled principle of interpretations, the interpretation given by the Union to read down the provision has substance. This would mean State could only exercise such discretion if it decides not to have any lottery within its territory including its own lottery. In this situation, the delegatee is tied down by this limitation which itself is a clear guide to a State hence cannot be said to be unbridled delegation. So even to the first part it cannot be said to be arbitrary nor unbridled. So, we have no hesitation to approve the interpretation given by the Union to uphold the validity of Section 5. (Para 80)
       (v) Lotteries (Regulation) Act, 1998—Section 4(a), (g) and (h)—Validity of—Condition (g) dealing with place of draw to be located within State concern—Condition of (a) that prizes not to be offered on any pre-announced number or on basis of single digit or that no lottery to have more than one draw in a week—(h) or other conditions in Section 4 cannot be held to be ultra vires or invalid—Lotteries organised by State gambling in nature—Principle laid down in RMDC case equally applicable to case of State Lotteries — State lotteries cannot be construed to be trade and business within meaning of Articles 301 to 303 of Constitution—Impugned provisions not violative of Article 14 of Constitution—Nor delegation of power by Parliament to State Govt. could be said to be delegation of its any essential legislative power or delegation unguided or unbridled—Section 5 and various sub-clauses of Section 4 valid piece of legislation.
       Held : It is again a question of policy and it is for the State executive to take decision pertaining to law and order, for that reason no legislation can be held to be ultra vires or to be struck down. Similar condition of (a) that prizes shall not be offered on any pre-announced number or on the basis of single digit or that no lottery shall have more than one draw in a week. (h); or other conditions in Section 4 are all those which cannot be said to be such to hold these provisions to be ultra vires, or invalid. None of them are such which would constitute to be violative of any provision of the Constitution. Hence, we have no hesitation to conclude that this last submission is also without any merit. (Para 82)
       Holding lotteries organised by the State is also gambling in nature, thus the principle as laid down in RMDC case, 1957 SCR 874 would equally be applicable to the case of State lotteries. Thus, State lotteries cannot be construed to be a ‘trade and business’ within the meaning of Articles 301 to 303 of the Constitution of India. We also hold that the impugned provisions are not violative of Article 14 nor the delegation of power by the Parliament to the State Government could be said to be delegation of its any essential legislative power or a delegation, which is unguided or unbridled. Thus, we uphold Section 5 and various sub-clauses of Section 4 to be valid piece of legislation. (Para 83)

43. From the references from Dharashastra, opinions of distinguished authors, references in the Encyclopedia of Britannica and Boston Law Review and others, we find that each concludes, as we have observed, lottery remains in the realm of gambling. Even where it is state sponsored still it was looked down as an evil. Right from ancient time till the day all expressed concern to eliminate this, even where it was legalised for raising revenue either by the king or in the modern times by the State. Even this legitimisation was for the sole purpose of raising revenue, was also for a limited period, since this received condemnation even for this limited purpose. All this gives clear picture of the nature and character of lottery as perceived through the conscience of the people, as revealed through ancient scriptures, also by various courts of the countries. It is in this background now we proceed to examine, if lotteries are goods, could a contract for sale of such goods be conferred the status of trade and commerce as used in Chapter XIII of our Constitution.

44. Thus, now we proceed to examine what are lottery tickets? What ate the ingredients of a contract of sale of lottery tickets? Whether its ingredients constitute it to be trade and to be such trade as to receive protection under our Constitution? In other words, could such trade qualify to be a fundamental right or a right conferred by the Statute? If it is a right out of creature of a Statute could it not be regulated, curtailed or banned by the same Statute. Whether a right spoken of “free trade” under Article 301 speaks about fundamental right or does it include trade of the nature we are concerned? Whether mere legalisation of a transaction by itself becomes `commercium’ of the nature as to qualify to be a trade as understood under Article 301.

45. In the Anraj case-I (supra), sale of lottery tickets was held to be ‘goods’, hence liable for sales tax. It holds:

“A sale of a lottery ticket confers on the purchaser thereof two rights (a) a right to participate in the draw and (b) a right to claim a prize contingent upon his being successful in the draw. Both would be beneficial interests in movable property. Lottery tickets, not as physical articles, but as slips of paper or memoranda evidence not one but both these beneficial interest in movable property which are capable of being transferred, assigned or sold and on their transfer, assignment or sale both these beneficial interest are made over to the purchaser for a price. .................... The right to participate in the draw under a lottery ticket remains a valuable right till the draw takes place and it is for this reason that licensed agents or wholesalers or dealers of such tickets are enabled to effect sales thereof till the draw actually takes place and as such till then the lottery tickets constituted their stock-in-trade and therefore a merchandise and goods, capable of being bought or sold in the market.”

46. In this case, neither there was any issue nor any contest, whether the sale of such lottery tickets would be a ‘trade and commerce’ or not within the meaning of Chapter XIII of our Constitution. This decision proceeded as if it is trade and commerce, hence after applying various decisions of this Court, right from Atiabari Tea Co. Ltd. (supra) to the later decisions on the touch stone of principle laid down therein on a question whether these ‘lottery tickets’ of others when subjected to sales tax while not imposing sales tax on the lottery tickets sold by the State of Tamil Nadu, are violative of Article 301 read with Article 304 (a) of the Constitution being discriminative or not was held to be so. Hence, this case does not go beyond holding lottery tickets as ‘goods’ for the purpose of adjudicating the issue before us. It does not test nor there is any issue, whether sale of such ‘goods’ viz., lottery tickets would or would not be a ‘trade or commerce’ within the meaning of Chapter XIII of the C

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1999 Supreme(SC) 617

Cases Referred (36)