IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 14/01/2003 CORAM THE HONOURABLE THE CHIEF JUSTICE And MALAI SUBRAMANIAN, J W.A.M.P.No. 6057 OF 2002 AND W.A.M.P.NOS. 6056, 6205, 5729, 5730, 5731 of 2002 in W.A.Nos. 3358, 3627, 3446 of 2002 and W. P.M.P.Nos. 1728, 1729, 1739, 1740, 1741, 1742, 1756, 1263, 1264, 1777 , 1950 of 2003, 64894, 64895, 63909, 63910, 63840, 63841, 63831, 638 32, 64599, 64600, 63395, 63397, 67740, 67755 of 2002 in W.P.Nos. 1390 , 1391, 1401, 1402, 1403, 1404, 1405, 1012, 1013, 1560 of 2003, 44221 , 43469, 43417, 43409, 44041, 43026, 43028, 46599, 46614 of 2002 :ORDER
(Order of the Court was made by the Honourable the Chief Justice)
These writ appeals and writ petitions arise out of the Lotteries (Regulation)
Act, 1998, hereinafter referred to as the Lotteries Act.
2. The first batch of cases filed before 8.1.2003 relate to the power of
the State Government to monitor the sale of lottery tickets organised by other
States. The State Government had framed Rules titled Tamil Nadu State
Lotteries (Regulation) Rules, 2002, in exercise of the powers conferred by
sub-Sections (1) and (2) of Section 2 of the Lotteries Act. The Lotteries Act
is a Central piece of legislation and the pre-8.1.2003 cases impugn the
State’s intervention in the sale of tickets organised and conducted by other
States through the agencies, by acting under Rule 20, contending that Rule 20
is arbitrary and ultra vires the Act. The first of the orders was passed on
13.11.2002 to the effect that all tickets shall be processed through the
centralised person nominated in that regard and on the said person submitting
the application with pre-paid challan evidencing the payment of compounded
sales tax and there upon, directing the concerned Commercial Tax Officer to
issue a certificate enabling the said agent or the persons nominated by him to
sell the tickets with enumerated numbers. Again an order was passed on
17.12.2002 continuing the above order to operate, by adding a rider that the
agent or agents shall not indulge in sale of single digit lotteries.
3. It is pertinent to note that the State of Tamil Nadu had been selling
its lotteries. There was no Act operating in the field of lotteries. Each
State was organising and conducting its lotteries, either within the State or
beyond. Lotteries is a legislative filed provided in Item 40 of List 1 of
Seventh Schedule of Indian Constitution. Any provision of law made by State
Legislature relating to lotteries, which is repugnant to Lotteries Act, would
be infractive of Article 254 (1) of the Constitution. The constitutionality
of Rule 20 of the Lotteries Rule of 2002 framed by the State of Tamil Nadu is
to be tested on the touchstone of the above constitutional provision in
Article 2 54 (1) of the Constitution. But meanwhile, the State Government has
issued impugned G.O. Ms. No.20 (Home – Courts – II) Department, dated
8.1.2003 in exercise of the powers conferred by Section 5 of the Lotteries Act
prohibiting the sale of tickets within the territory of Tamil Nadu of all
lotteries organised, conducted or promoted by every State, including the State
of Tamil Nadu. The above notification is challenged as being illegal and
arbitrary. But the above G.O. is apparently conforming to the legal
principles enunciated by the Supreme Court in V.R. ENTERPRISES v. STATE OF
U.P. (1999) 9 S.C.C. 700). Repelling the contention raised on behalf of the
petitioners therein that Lotteries Act is ultra vires the Constitution, the
Supreme Court held that the Act is intra vires the Constitution and that the
State Government may organise, conduct or promote a lottery subject to the
compliance of the conditions enumerated in Section 4 of the Act. Interpreting
Section 5 of the Act, the Supreme Court held that a State is entitled to
prohibit the sale of tickets of a lottery organised, conducted or promoted by
other States provided that State does not run a lottery of its own. As such,
we prima facie hold that the State Government has got power to issue the above
Government Order.
4. With regard to the argument focussing on the arbitrariness in
the exercise of the above delegated power under Section 5 of the Act, they can
only be considered on merits in the final hearing. But pending the final
adjudication, we have to dispose of these interlocutory applications basing
upon the prima facie case made out.
5. Before imposing the ban by the impugned G.O., the State of
Tamil Nadu was running its lottery and consequently, the tickets of the
lotteries organised by other States are also being sold in the territory of
Tamil Nadu. In the impugned G.O., no date is set for its commencement. Then
the ban comes into effect from 9.1.2003. Section 5 of the Act empowers the
State Government to prohibit the sale of tickets of a lottery, either
organised by it or other States. The State prohibition can operate only
prospectively from 9.1.2003 and the prohibition being on sale of tickets, any
sale of tickets made upto 8th January 2003 cannot be nullified. The sale of
tickets, which was permissible under law upto 8th January 2003, conferred
vested right on the persons dealing with the same who had obtained
certificates from the concerned Commercial Tax Officer on the deposit of the
advance sales tax, as contemplated by Section 7-D of the Tamil Nadu General
Sales Tax Act with a right to conduct the draws on the dates scheduled. There
is no provision in the Act to impose a ban on the draw of the lottery tickets
once the tickets are allowed to be sold.
6. In view of the same, the petitioners shall be entitled for the
drawal of the lottery tickets for which there is a certification by the
concerned Commercial Tax Officer. Only such certified lottery tickets with
the enumerated numbers can be sold by the petitioners. The sale of the above
certified lottery tickets shall be completed within one week from today.
Thereafter, the authorities under the Rules framed by the Government of Tamil
Nadu mentioned above shall conduct the draws. All the W.A.M.Ps. and
W.P.M.Ps. are thus disposed of.
(B.S.R, CJ) (M.S., J) bh/ 14.01.2003 Internet : Yes
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