1970 Supreme(Bom) 120

IN THE HIGH COURT OF BOMBAY
N.A Mody, Ag. C.J. and G.N Vaidya, J.
Appellants: Kamal Agency and Ors.
Vs.
Respondent: The State of Maharashtra
Misc. Petn. No. 748 of 1969 Decided On: 08.09.1970
Counsels:
For Appellant/Petitioner/Plaintiff: D.S. Parikh and Sheela P. Bakshi, Advs.
For Respondents/Defendant: Atul M. Setalvad and R.J. Joshi, Advs.
For State of Uttar Pradesh: J.I. Mehta and V.V. Tulzapurkar, Advs.

A State Government has no power or authority to prevent sale of or dealings in tickets of State Lotteries organised and conducted by any other State in the Union of India in so far as such sales or dealings take place within the territory of the State of Maharashtra.

Headnote:

LOTTERY - STATE LOTTERY - ORGANISATION AND CONDUCT - EXECUTIVE POWER - STATE GOVERNMENT - CONDITIONS - ENTRUSTMENT BY PRESIDENT - BOMBAY LOTTERIES (CONTROL AND TAX) AND PRIZE COMPETITIONS (TAX) ACT, 1958 (BOM. 54 OF 1958), SEC. 3, 32(B).

Fact of the Case:

Petitioner, a partnership firm, was appointed an agent by each of the States of Kerala, Punjab, Haryana, Rajasthan, Uttar Pradesh, West Bengal, Tamilnadu, Jammu and Kashmir, Madhya Pradesh and Assam for sale within the territory of the respondent State of tickets of lotteries organised and conducted by each of those States. The petitioner also sells within the territory of the respondent State tickets of lotteries organised and conducted by the respondent State. The police authorities seized from the petitioners certain tickets of lotteries organised and conducted by certain States other than the respondent State. The petitioners prayed for a Writ of Mandamus under Article 226 of the Constitution of India against the State of Maharashtra ordering the respondents to forbear from doing any act or thing so as to prevent, obstruct or interfere in any manner with the free and unrestricted sale and distribution of and/or leadings in lottery tickets of lotteries organised or conducted by any other State in India by the Petitioners.

Finding of the Court:

1. A State Government has no power or authority to prevent sale of or dealings in tickets of State Lotteries organised and conducted by any other State in the Union of India in so far as such sales or dealings take place within the territory of the State of Maharashtra, which is the respondent in this Petition. 2. The executive power of a State extends to the carrying on of any trade or business and the making of contracts for any purpose. However, organising and conducting a lottery is not carrying on of a trade or business and is therefore not entitled to protection under Article 19 (1) (g) or Article 301 of the Constitution of India, nor has a State any executive power in respect thereof under Article 298. 3. No State Government can organise or conduct a lottery save and except according to the provisions of the law, if any, enacted by the Parliament or unless the functions or powers of the Government of India are entrusted to the State Government under and in accordance with the provisions of Article 258 (1) and only to the extent that the functions or powers are so entrusted. 4. A lottery not organised by a State under or in accordance with a legislation of Parliament or in accordance with a valid entrustment under Article 258 (1) would not be lawful. 5. The said letter dated 1st July 1968 relied upon on behalf of the State of Uttar Pradesh is not an entrustment by the President within the meaning of Article 258 (1).

Issues: 1. Whether a State Government has power or authority to prevent sale of or dealings in tickets of State Lotteries organised and conducted by any other State in the Union of India in so far as such sales or dealings take place within the territory of the State of Maharashtra? 2. Whether organising and conducting a lottery is carrying on of a trade or business and is therefore entitled to protection under Article 19 (1) (g) or Article 301 of the Constitution of India? 3. Whether a State has any executive power in respect of a lottery under Article 298 of the Constitution of India? 4. Whether a State Government can organise or conduct a lottery save and except according to the provisions of the law, if any, enacted by the Parliament or unless the functions or powers of the Government of India are entrusted to the State Government under and in accordance with the provisions of Article 258 (1)? 5. Whether a lottery not organised by a State under or in accordance with a legislation of Parliament or in accordance with a valid entrustment under Article 258 (1) would be lawful? 6. Whether the said letter dated 1st July 1968 relied upon on behalf of the State of Uttar Pradesh is an entrustment by the President within the meaning of Article 258 (1)?

Ratio Decidendi: 1. Entry 40 of List I of the Seventh Schedule to the Constitution itself pre-supposes that a State has power to organise and conduct a lottery; a lottery organised by a State would, therefore, be lawful, that the Parliament can legislate in respect of such lottery only after it is organised by the State and further, as a consequence, that any activity of a State relating to the organising and conducting of such a lottery would be a lawful activity. 2. Articles 73 and 162 of the Constitution deal with only distribution of executive powers between the Union and a State. The executive powers of a State are not only those mentioned in Article 162. A State has an executive power under Article 298 to carry on any trade or business and to make contracts for any purpose, A lottery conducted by a private person may be shunned but a lottery organised by a State would stand on a different footing because it would be for the benefit of the public generally and that therefore a lottery organised by a State is a business or trade or the making of a contract and is therefore within the executive powers of a State. 3. In respect of a lottery organised by a State no other State has power to legislate because under the provisions contained in Entry 40 of List I the power is in the Parliament and that therefore the provisions of the Bombay Lotteries Act, in so far as they are sought to be invoked in respect of a lottery organised by a State, are beyond the competence of the respondent State. 4. No State can have any executive power in respect of a lottery organised by another State and the former State can take action against or in respect of such a lottery only if the Parliament passes legislation in respect of such lottery already organised and then delegates power in respect of It to another State to take preventive Action. 5. Under Section 32 (b) of the Bombay Lotteries Act a lottery organised by a State is exempted from the application of that Act, that a lottery organised by another State is lawful, but that even if the lottery is not lawful it is yet a lottery organised by a State and is entitled to the exemption under Section 32 (b) and the respondent State cannot take any action under that Act in respect of such a lottery.

Final Decision: Petition dismissed.