H. Anraj and Others Etc. v. State of Maharashtra

·. CHJNNAPPA REDDY, J. The seve.ral petitioners in these writ petitions are agents for the sale of tickets. for the lotteries conducted by n1e Governments of various States other than Maharashtra. They question the ba11 sought to be imposed by the ·Government.of Maha~ rashtra on the sale within the State of Maharashtra of ticket~ of lotteries conduc.ted by the Government o(otherStates. They, generally, seek a writ in the . nature of it Mandamus directing'.the State ·or Maharashtra.to forbear from interferring with the sale or distribu-tion of lottery tick~ts in·respect of the lotteries organise'd by the Governments bf States. other than Maharashtra.

There is no express notification ·or order of the Government ·of Maharashtra imposing a ban on the sale ·of lottery tickets of o.ther .States in .the State of Maharashira. The ban is sought to be spelt 'out from a Press relcas·e of the Director of Publicity, Sachivalaya, Bombay dated Septeniber 24, 1969 and· a •communication dated August 24, · 19ill addressed by ·the. Government of Maharashtra,.

H. ANRAJ 'v. MAHARASHTRA (Chinndppa f!rddy'. J.). 443 Finance Department, to some of the petitioners individually. The .Press release is as follows :

SALE OF LOTTERY TICKETS

OF OTHER STATES UNLAWFUL

Warning to' Pul:ilic .. .

On September 16, the Minister for Finance in a Press conference, followed by q''press note, made it dear to age~ts who arc selling lOJJery tickels that the sale pf lottery tickets · of other States in this State· is .unlawful. The Government . of India, in giving permission for conducting State lotteries had made a condition: that the lottery tickets should not be sold in another_ State, without the express ·consent of that State, No such permission has been given in Maharashtra · for the sale· of outside State. !ottecy tickets. Despite the warning given .by the Minister, nnautl!orised sales of lottery tickets of outside States continues, and the· Government is therefore .taking steps to stop these obviously unlawful practices by seizing all stocks of tickets of other. States' lotteries. · T.he public are warned· ihat no tickets other that the Maharashtra State Lottery tickets can' be sold within : the Maharashtra State".

The communications addressed to the petitioners are m the following terms :

Sir,

I am directed io refer to your letter No. DA/PL/81/6~, dated.22.6.1981 on the above mentioned subject and to 'state that there is ban on the sale of other ·State Lottery tickets in State of Maharashtra. It is, therefore, regretted that your request to ·permit you to sell your Slate Lottery tickets in this State cannot be. accepted. .

• Yours .faithfully, Sd/- State. Lottery Officer, Finance Department. The basic subrnissfon on behalf of the petitioners is that there. is no legal 'authority for the imposition of the ban. It is argued that under the Constitution, .'Lotteri.es organised by the. Government of India or the Government of a State' is a subject which is within the exclusive legislative competence of·Parliament and that it is not 0pen to the Government of any State purporting to act in exercise of its executive power to impose ·such a ban as that sought to be imposed by the Government of Maharashtra. On the· other hand, it is sought to be-argued on behalf of.the Govern1ftent of Maharasht.ra 'that the ·Union Government's executive power is co-extensive with the power of Parliament to make laws, that the President in exercise of his power ·_1 under Art. 258(i) has entrusted to the Government of Maharashtra the executive power of the Union in respect of lotteries run by the State and therefore,: it was competent for the Government of Maha· rashtra to impose the ban.

Entry 40 of List I of the V!Ith Schedule to the Constitution is "Lotteries .organised by the Go.v.ernment of India or tk Government ·of a State". Enirv 34 of List II of Vllth Schedule is, "Betting and gambling". There is no dispute before us that the expressi~n "Betting and gambling" includes and has alw~ys been understood to have included the conduct ·of lotteries. Quite· obviously, the subject 'Lotteries organised by the Governmerrt of India or the Governmen.t of a State' has been taken out·from the legislative field comprised by the expression "Betting and gambling" and is reserved to be dealt with by ·Parliament. Siilce tii.e subject 'Lotteries organised by the Government of India or the Governm~nt of a State' has been made a subject within the .exch!sive legislative competence of Parliament, it j must follow, in view law of Aci. 246(1) arid (3), that no legislature of~ ·State can make a wuching lotteries organised by the Government of lnd'a or the Government of a State. ·This. much is be;ond con-troversy and the Maharashtra legislature has acknowledged the posi-tion, as indeed it must, in Sec. 32 of the Bombay Lotteries (Control and Tax) and Prize Competitions (Tax) Act,· 1958. It is an .~ct to control and ·tax lotteries and to tax prize competitions in· the State ·of Maharashtra. · Section 32(b) expressly provides that nothing in the Act shall apply to "a lottery organised_ by the Central Government or a State G;overnment". This, as we said, is but' a· recognition of the. prevailing situation i!nder the Constitution. The Constitutional postion cannot be. alterd by an ~ct of the State legislature.

It appears that the Government of Maharashtra and various . 0ther State ·Governments requested the :Union Government to authorise them to conduct lotteries for the purpose of 'finding funds for J'inancing their development plants'. Such authorisation was, of course, strictly, not necessary in the absence of a law made by Parlia-ment pursuant to Entry 40 of List I ofthe VIIth Schedule to the Constitution ... Article 298 of the Constitution extends the executive power of the Union and ~ach State to the carrying .on of any trade or business and to the acquisition, holding and disposal.of property· . and the making of contracts for any purpose; with the stipulation that if the trade, ·business or purpose is not one with respect to which Parliament may make laws, the said executive power of Parliament shall be subject in each State to legislaticJn by .the State and if the trade, business or purpose is not one with ·respect to which the State legislature may make laws, the said executive power of the State shall be subject te. Jegislation by Parliament. Thus, while the· Government of a State is free. to earry on any trade or b~siness in respect of which it may not have. the· power to make laws the power to carry on such· trade or business shall be subjectto legislation by Parliament. There-fore, the Government of a State has the rig ht to conduct lotteries subject to legislation by Parliament. · Since there is at present no legislation by Parliament on the subject of lotteries organised by the Government of India or the Government of a St;i.te, the Government of every State has the unrestrictect' right to organise lotteries of. its own. We will consider the effect of the impact of Art. 73, Art. 258(1) and . Entry • 40 of List I read with Art. 246 on this right a little later.

To continue • the expose of facts, in response to ·the request <if • . the several State Governments, the Minisiry of Home Affairs, Govern-ment of India, addressed a communication dated July 1, 1968 to the Chief Secretaries to the Government of all States. It was stated in the letter that though the Central Government was opposed to the idea of lotteries being cond1Jcted by Governments, they had decided . to authorise the State Governments to conduct lotteries in view of the representations of some of the State. Governments that it w<;mld help theni 'to mobilise savings and to find funds. for financing their development plans'. However, it was added : - .

"At the same time, it is also felt that suitable steps should be taken to safeguard the interests of s11ch State Governments, who, as a matter of policy, do not desire to start State Lotie-ries or permit sale of tickets of lotteries organised ·in other States, within their jurisdiction. In order to avoid objections frbm .such States, it has been decided that the . Central Government's permission for conducting State Lotteries is available on the condition that tickeis to such a iottery will

not be sold in another State without the express consent · of the State· Government concerned. I am. to· add that in · order to achieve this object an amendment of Section 294-A. tPC is being undertaken to make sitle of tickets, .without the consent. of the State Government concerned, .a penal . offence" ..

.We may mention )1ere lhat the proposal to :imend Section 294-A IPc to achieve the object. of preventing the sale of lottery tickets of . on~ State being· ~old in States which· are opposed to the conduct of lotteries .as ·a matter of policy has rema'ined a static proposal and no" 1_ ~uch amendment ha.s so far been attempted to be made.

'The communication dated July' l', 1968 from. the Government '..·~ · of India was followed by Presidential Order under Art. 258(1) of the· Constitution. .The' Presidential Order relating to the State of Maha-, rashtra w;th which we are concerned, is· as follows :-'

No. 29/29/63-P.IV . Governmeii.t of India . Ministry of Home Affairs New Delhi, the 2nd Aptil, 1969.

ORDER

· Whe~as ·the Government of Maharashtra propose to organise a State lottery;

'

And whereas· the Central Government has no .objection to it ; · ·

. Now, therefore, the President is pleas.ed to permit the. Government of Maharashtra to ·conduct a State . lottery, subject to the .condition. that the ti.ckets of the lottery· shall not be sold in another State without the permissiOn. of the Government of-that State. · ·

The President is further pleased to entrust to. the . Government of Maharashtra under clause(!) of Article 258 of \he Constitution the .executi:ve power of the Union in : respect of lotteries. organised by that Government. .

. , Sd/-

(D.D. JOSHI)

Deputy Secretary to the Government of India.

H. ANRAJ v. MAf!ARASHTRA (Chinnappa Reddy, !.). 447 It was after this entrustmeni of executive power of the Union ·A to the Government of Maharashtra 'i)l respect oflotteries organised by that Government' .that the Government of Maharashtra ·proceeded· to. issue the Press release and thereafter the individual communica-tions, earlier referred. to, making it known that the s~ie of lottery tickets .of other States was banned in the State of Maharashtra.

The source of powerfor the ban is claimed to be the entrustmenf of power by the President under Art. 258(1) of the Constitution. But J . the terms of the entnistment.do not justify the claim; 'The entrust-·

men.t of power, as is seen, is only 'iii respect of lotteries organised by that Goveru.ment'. The expression 'that·Go·rermrient' in the context of the entrustment of power to ·the Government of Maharashtra . cajl only mean the Government of Maharashtra and no· other. Nor can it ever be that such executive power as the Union Government may possess -in respect· of the trading,. bu.siness or, for tha.t matter, .. any other activity of the Government of one State may be entrusted· to the Government' of another State. That would be destructive of the very scheme and structme of our C~nstitution. The Govern-ment of Maharashtra cannot therefore purport to ban the sale. of lottery tickets of other States by virtue of the entruslinent of power under Article 258(1) of the Constitution. ·

It is. then said that the permission granted to each State to conduct its lotteries is expressly subject to the condition that the tickets of the lottery shall not be sold in another State ·without 'the permission of the Government of .that State. We have already pointed out that 'r 'Ai:ticle 298 of the Constitution extends the· executiv.e power of every,.

State to the carrying on of any trade or business even if such trade or business is one with respect of which Parliament alone has. the exclusive power to make laws, "Subject to the ~tipulation. that such . executive "power of the State shall be subject to ·r Pariiamentary legisla- · tion. It is true that in view of Entry 40 of List of the VIIth Schedule to the Constitution Parliament has exclusive ·power to make laws .with• respect to "Lotteries organised by the Government of India or the · Government of a State", that Article '73 of the Constitution extends the eltecullve power of of the union .to .the matter~ with respect to which· Parliament bas power to make laws and, therefore, the executive ·o power of the Union must extends to the subject "Lotteries organised by the Government of India of the Government of a Slate". But tlie executive power of the unioii, b; the very opening wbrds of · Article 73, is "subject to the provisions of this Constitution". ·It follci)VS that the executive .. power of the UniQn with respect to lotteries

organised by the Gov~rnment of a State has necessarily to be exercised subject to the provisions of the Constitution, including Article 298, which· expressly extends · the executive power of the ·State to the carro/ing on 'of any trade or business subject only to · legislation by Parliament if the trade or business is not one with respect· to which. the . State legislature may. make laws. It is to B.. be .noted. that Article 298 does not open with the words 'subject to

the. provisions of Che Constitution', .as· does Article 7,3. Reading and considering .Articles 73 an1 298 togetiier, .as thev should indeed be read and considered, it is clear that the executive power .of a' State in the matter of carrying on any trade or bus.iness with respect J. to which the State legislature may not make laws iS subject to legish-tion by Parliament but is not subject to the executive' power of the union. That is why we mentioned earlier that tl:)e. Government. of a .State is not . required .to obtain the permission of the Union Government in order to orgai1is; its lotteries, in the absence of Parlia-mentary legislation.· Even assuming that such permission is necessary, we dci not see how a condition imposed by such. permission th~t lottery . tickets of o~e State may not be sold in another State m•Y be enforced . by the other State. The other State has no ·power to make law~. in . . ·regard to· the lotteries .by the first State. Its executive· power, by virtue of Article 298,. extends io lotteries organised by itself but not .to· lotteries.organised by the other State. If a State acts in breach of · Arthet_co ndition imposed.by the President while e.ntrustthing po"'.er_underr ·.

Jc 1 e 258, it is open to the President to revoke e perm1sswn o. to take such further or other action as may be constitutionally per-missible but it cannot possibly enable the Government of the other. State. to do a thing about it except to complain, perhaps, t~ the Umon Government. The Government of India is quite obvwusly ahve to the position that there is no way of enforcing the.stipulation that lottery tickets of one State·shall not be· sold in another except by . Parliament mahing a law in that behalf.· The awareness is reveal;:d by the last sentence in the letter dated July 1, 1968 which says,

"I am to add that in order to achieve this object an amendment of 'Section 294-A IPC is· being undertaken to make sale of tickets, without .the consent of the State

. ed • penal offence" ..

Government concern ' .

. the light of dav.

. ent is vet to see 7.'he rfrf'lnno;:;~if :imenc\m ..

found favour with the appears to have • ' A submission which

H .. ANRAJ v. MAHARASHTRA (Chinnappa,_ Reddy, J.) 449 High Court of Bombay in Kamal Agency v. State"> and the High_ Court of Madras in H.G. Jain v. State of Tamil Nadu( a 2> was that in Entry 40 of List I and the respective loca.l Acts, lotter1 organised by a State must be colistrued to refer to a lottery Jawfully organised by ·a State and that if a lottery is not lawfully organised by a State it would not fall within Entry 40 of List I but. would fall under the head 'gambling' under Entry 34 of List II and the State -legislature would then be empowered to legislate in respect of the same. Where the State Legislature could thus legislate, it was said, th' State Gover.n-ment cou'd take execuUve ·action in . respect of lotteries organised bf another State if they were unlawfl11. The Gujarat and Andhra . Pradesh High Col'rts have dissented fwm this view. Jn Special . Civil Application No. 1309 of 1970 Bhagwat;;. C.J. presiding over a Didsi0n Bench of the Gujarat High Court. and in L.B. Paradise Lottery Centn v. State(3> cine of us sitting singly in the Andhia Pradesh High Court have explained !hit there is no justification for first reading·. the word 'lawfully' into Entry 40 of :List I ·and the1i proceeding to interpret the expression !Lottery lawfully organised' as meaning a lottery ~rganised persuant to the entr.ustment of executive power of the Union under Article 258 of the Constitution. It was observed "legislative power cannot be fed into Entry 34, by feeding the word 'lawful' into Entry 40 oi List I and thus artifici11ly. restricting the scope of Entry 40':. It was pointed out that if the Go;ernment of a State otgenised a lottery without the entrustnient of executi\ie power . as contemplated b; ,(\rtide 2 58 o_r in disregard or defiance· of any 'E condition that ma/ have been imposed while entrusting executive power under Arti& 258 it would IJever be a matter for the legislature of one State to take upon itseif the power to decl~re unlawful the lottery run by the Government o.f another State; anci even· less so could the Government of a State declare unlawful a Jottecy run by the Government of another State and thereafter bari the sale of the tickets of the lotteries otganised by that State. In the .Madras case it was also obser~ed that the entrustmcnt order carried with it all powers which the State Government might take to realise the maximum collection. We ca1111ot subscribe to this view .. That would really amount to the· entrustment of vital legislatiye powers to the St.ate Government which would be conslitutionaH; impermissilile. We do.not think it necessary to· refer in any further detail to the decisions· of the Gujarat, Andhra Pradesh, . Bombay ·and Madras decisions

(1) AIR 1971, 332.

(2) AIR 1973 Madras 402.

except to say that we generally agree with the reasoning in the Gujarat . and Andhra Pradesh ded.sions and disagree with ihe reasoning in the . B~mbay .and. Madras decisions.· Jn the t:esJ.Ilt we allow the Write . petitions and direct the :;>tate of Maharashtra· ,to forbear from giving .effect to the ban on· the sa.Je or distribution of tickets of lotteries orga-nised by other States. There is no order regarding to costs. · RV.K.· ·, Appeal allowed: