State of Bombay vs R. M. D. Chamarbaugwalia.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1955 Supreme(Bom) 4

IN THE HIGH COURT OF BOMBAY
Chagla, C.J. and Dixit Y.V, J.
Appellants: State of Bombay
Vs.
Respondent: R.M.D. Chamarbaugwalia and Ors.
O.C.J. Appeal No. 72 of 1954
Decided On: 12.01.1955
Counsels:
For Appellant/Petitioner/Plaintiff: H.M. Seervai, Adv. and M.P. Amin, Adv. General
For Respondents/Defendant: M.L. Manekshaw and N.A. Palkhiwala, Advs.

Headnote:
The Bombay Prevention of Gambling Act, 1887, defined "gaming" but did not define "lottery". The Indian Penal Code defined "lottery" but did not deal with lotteries as understood in English law. The petitioners, a private limited company, conducted a crossword competition in Bombay. The respondents, the State of Bombay, passed the Bombay Lotteries and Prize Competitions Control and Tax Act, 1952, which amended the 1887 Act. The 1952 Act defined "lottery" and "prize competition" and imposed a tax on lotteries and prize competitions. The petitioners challenged the validity of the 1952 Act, arguing that it was ultra vires the State Legislature, that the tax was not a tax on gambling, and that the restrictions imposed on their business were unreasonable and in violation of their fundamental rights under the Constitution.
Fact of the Case:

The petitioners, a private limited company, conducted a crossword competition in Bombay. The respondents, the State of Bombay, passed the Bombay Lotteries and Prize Competitions Control and Tax Act, 1952, which amended the 1887 Act. The 1952 Act defined "lottery" and "prize competition" and imposed a tax on lotteries and prize competitions. The petitioners challenged the validity of the 1952 Act, arguing that it was ultra vires the State Legislature, that the tax was not a tax on gambling, and that the restrictions imposed on their business were unreasonable and in violation of their fundamental rights under the Constitution.
Finding of the Court:

The Court held that the 1952 Act was intra vires the State Legislature, that the tax was a tax on gambling, and that the restrictions imposed on the petitioners' business were reasonable and in the public interest. However, the Court also held that the tax was not justified because it did not comply with the restrictions contained in Article 276(2) of the Constitution, and that the restrictions could not be justified because they did not satisfy the proviso to Article 304(b) of the Constitution.
Issues: 1. Whether the Bombay Lotteries and Prize Competitions Control and Tax Act, 1952, was ultra vires the State Legislature? 2. Whether the tax imposed by the Act was a tax on gambling? 3. Whether the restrictions imposed on the petitioners' business were unreasonable and in violation of their fundamental rights under the Constitution?
Ratio Decidendi: 1. The Court held that the 1952 Act was intra vires the State Legislature because the topic of legislation was gambling and the Legislature was competent to legislate under entry 34 of the State List. 2. The Court held that the tax was a tax on gambling because it was imposed on the gross receipts from the entry fees paid by the people in the State of Bombay. 3. The Court held that the restrictions imposed on the petitioners' business were reasonable and in the public interest because they were necessary to protect the poor man who may be induced to part with his hard earned income in pursuit of a remote and hypothetical gain.
Final Decision: The Court dismissed the appeal and held that the State of Bombay was prevented from enforcing the Act against the petitioners.

Judgment

1. Petitioners No. 2 carried on the activity of running a crossword competition in Bombay prior to August 1948. After August 1948, they transferred their activity to the State of Mysore and they carried on that activity after obtaining the necessary license from that State. The registered office of the petitioners is situated in Bangalore. They own and run a weekly newspaper called the Sporting Star.

This paper is printed and published in Bangalore and it contains a crossword prize competition called the R. M. D. C. Crosswords for which entries are received from various parts of India including the State of Bombay. The petitioners have agents and depots in various places in the territory of India, including the State of Bombay, to collect entry forms and fees for being forwarded to the petitioners at Bangalore. The petitioners advertise their crossword prize competition in various publications in various places in India including the State of Bombay.

The Legislature of the State of Bombay passed the Act, being Act 30 of 1952, which amended Act 54 of 1948, by which they purported to tax the gross receipts of petitioners No. 2 from the residents of Bombay who had submitted entries for the crossword competition, and by this Act also the Legislature imposed certain restrictions upon the manner in which petitioners No. 2 should carry on their activity in the State of Bombay.

The petitioners by tins petition contended that the provisions in the Act taxing petitioners No. 2 and also" imposing restrictions upon their activity was ultra vires of the State Legislature, The petition was heard by Desai J. who held that certain provisions of the Act were ultra vires. The State of Bombay has now come in appeal.

2. Several questions of the utmost importance both to the citizen and to the State have been agitated at the Bar. It may be that it is possible to dispose of tins appeal on a very narrow ground, but both Mr. Seervai on behalf of the State of Bombay and Mr. Manekshaw on behalf of the petitioners have asked us to decide the various questions which were raised in the Court below, because both parties are anxious that they should get a final and authoritative opinion on questions of this importance.

We are told that the matter will ultimately be agitated before the Supreme Court and it is desirable that the Supreme Court should have the view of this Court on these various questions that have been discussed before us.

Ordinarily we would have been most reluctant to decide questions which do not directly arise for our determination. A Court like an individual should only cross a hurdle when it reaches it and there is always time enough to decide questions as and when they directly arise for our determination.

But in view, as we said, of the importance of the questions and in view of the desire of both the petitioners and the State, we have departed from the ordinary principle which we follow in these matters and we have heard arguments at some length and we also propose to give our opinion on the various questions raised at the Bar.

3. The first question that arises for our consideration is with regard to the legislative competence of the State Legislature to enact this Act. In our opinion, the correct principle which should be applied in order to ascertain whether the State Legislature is competent to pass an impugned piece of legislation is in the first place to look at the Lists annexed to the Seventh Schedule of the Constitution in order to determine whether the Legislature has legislated upon a topic within its competence. If it has legislated upon a topic not within its competence, then the legislation is clearly ultra vires and no further question arises.

But even if it has legislated upon a topic within its competence, the next question that must arise is whether there is a territorial nexus between the subject-matter and the State. The competence of the State Legislature arises by virtue of the provisions of Article 245 and Article

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