The State Government's power to make rules under Section 12 of the Central Act 17 of 1998 cannot be exercised to interfere with the authority of other states to organize, conduct, and promote their lotteries.

JUDGMENT :

This writ petition was filed by a private limited company engaged in marketing and sale of lottery tickets organised by the State of Nagaland in the State of Kerala. The petitioner challenges an amendment brought to the Kerala Paper Lotteries (Regulation) Rules, 2005. These amendments were brought into force in the State with effect from 28/4/2018 vide Government order, G.O.(P).No.66/2018/TD. Pending the writ petition, the writ petition was amended by incorporating challenge to Ext.P12 and P17 communications. These communications issued by the Principal Secretary to the Government and Director of State Lotteries respectively are in tune with the amendment directing the petitioner to comply with the amended rules to market lotteries of other States.

2. In exercise of the power conferred upon the State Government to make Rules under Section 12 of the Lotteries (Regulation) Act, 1998 (hereinafter referred to as the “Central Act 17 of 1998”), the State of Kerala formulated the Kerala Paper Lotteries (Regulation) Rules, 2005. This came into effect from 20/4/2005. These Rules originally conceived to regulate lotteries organised by the State of Kerala. The Rules underwent amendment on different intervals. The amendment now impugned in this writ petition is having the characteristics to impact upon the lotteries organised by the other States. The rule making power of the State Government is traced out to Section 12 of Act 17 of 1998. The lottery is in Entry 40 in the Union List under Schedule VII of the Constitution of India. The essential question that arises for consideration in this writ petition is regarding the power of the State Government under Section 12 of Central Act 17 of 1998 to make Rules that govern a lottery organised by the State other than the State of Kerala.

3. It is appropriate to refer the relevant Rules as brought in by the amendment in the year 2018 to understand the issue in a perspective as raised in the writ petition. The amended rules are reproduced hereunder:

2. Amendment of the Rules.-In the Kerala Paper Lotteries (Regulation) Rules, 2005,-

(1) in rule 2,

(a) after clause (3), the following clause shall be inserted, namely:-

“(3A) ‘Authority’ means the Secretary to Government, Department or authority or officer specifically appointed by the Government to organise State Lottery and regulate the sale of other State lotteries within the state as provided in the Act.”

(b) after clause (6), the following clause shall be inserted, namely:-

“(6A) ‘Enforcement agency’ means the District Collector, District Superintendent of Police, Commissioner of Police or any other officer authorised by the Government or officers mentioned herein before and they shall exercise the powers of enforcement as specified in these rules.”

(2) In rule 4 after sub-rule (3), the following sub-rule shall be inserted, namely:-

“(4) The Secretary to Government, Taxes Department or any authority specifically appointed by the Government for this purpose shall be the authority for the conduct of all or any particular lottery in the State including lotteries run/organized/promoted by other States.

(5) The authority shall have the powers to monitor the sale of all lotteries including the lotteries run/organized/promoted by other States and Union Territories in accordance with the provisions of the Act and the rules.

(3) After rule 9 the following rule shall be inserted namely:-“9A Sale of other state paper lottery tickets in Kerala.-(1) Any other State or Union Territory organising, conducting or promoting lottery as per section 4 of the Lotteries (Regulation) Act, 1998 (Central Act 17 of 1998), it shall submit to Taxes Department, of the Government the following documents and details before starting the sale of paper lotteries namely:-

(a) details as per section 4 of the Act;

(b) copy of the rules, if any, made under section 12 of the Act;

(c) specimen ticket shall be submitted with name of lottery, type of scheme, order of draws along with details o