{"id":171034,"date":"1957-04-09T00:00:00","date_gmt":"1957-04-08T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-state-of-bombay-vs-r-m-d-chamarbaugwala-on-9-april-1957"},"modified":"2018-03-15T11:13:59","modified_gmt":"2018-03-15T05:43:59","slug":"the-state-of-bombay-vs-r-m-d-chamarbaugwala-on-9-april-1957","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-state-of-bombay-vs-r-m-d-chamarbaugwala-on-9-april-1957","title":{"rendered":"The State Of Bombay vs R. M. D. Chamarbaugwala on 9 April, 1957"},"content":{"rendered":"
Supreme Court of India<\/div>\n
The State Of Bombay vs R. M. D. Chamarbaugwala on 9 April, 1957<\/div>\n
Equivalent citations: 1957 AIR 699, \t\t 1957 SCR 874<\/div>\n
Author: S R Das<\/div>\n
Bench: Das, Sudhi Ranjan (Cj), Aiyyar, T.L. Venkatarama, Sinha, Bhuvneshwar P., Das, S.K., Gajendragadkar, P.B.<\/div>\n
           PETITIONER:\nTHE STATE OF BOMBAY\n\n\tVs.\n\nRESPONDENT:\nR.   M. D. CHAMARBAUGWALA\n\nDATE OF JUDGMENT:\n09\/04\/1957\n\nBENCH:\nDAS, SUDHI RANJAN (CJ)\nBENCH:\nDAS, SUDHI RANJAN (CJ)\nAIYYAR, T.L. VENKATARAMA\nSINHA, BHUVNESHWAR P.\nDAS, S.K.\nGAJENDRAGADKAR, P.B.\n\nCITATION:\n 1957 AIR  699\t\t  1957 SCR  874\n\n\nACT:\n  Lottery--Prize  competitions,\t if and when of\t a  gambling\nmature--Legislation  taxing  Promoters of  such\t competition\ncarried\t on through newspaper printed and Published  outside\nthe  State--Validity-Test-Territorial  nexus--Gambling,\t  if\ntrade\t and   commerce\t  within   the\t meaning   of\t the\nConstitution--Constitutionality\t    of\t   enactment--Bombay\nLotteries  and Prize Competition Control and Tax  Act  (Bom.\nLIV  of 1948), as amended by the Bombay Lotteries and  Prize\nCompetition  Control and Tax (Amendment) Act (Bom.   XXX  of\n1952),\tss.  2(I) (d), 12 A--Constitution  of  India,  Arts.\n19(1) (g), 301.\n\n\n\nHEADNOTE:\n  The first respondent was the founder and Managing Director\nof a company, the second respondent in the appeal, which was\nincorporated  in the State of Mysore and conducted  a  Prize\nCompetition  called  the R. M. D. C. Cross-words  through  a\nweekly\tnewspaper printed and published at Bangalore.\tThis\npaper  had a wide circulation in the State of Bombay,  where\nthe  respondents set up collection depots to  receive  entry\nforms  and fees, appointed local collectors and invited\t the\npeople by advertisements in the paper to participate in\t the\ncompetitions.  On November 20, 1952, the Bombay\t Legislature\npassed\tthe Bombay Lotteries and Prize Competitions  Control\nand  Tax (Amendment) Act of 1952, and widened the  scope  of\nthe definition of 'prize competition ' contained in S.\t2(1)\n(d)  of the Bombay Lotteries and Prize\tCompetition  Control\nand  Tax  Act of 1948, so as to include\t prize\tcompetitions\ncarried on through newspapers printed and published  outside\nthe State and inserted a new section, S. 12A, levying a\t tax\non  the\t promoters of such competitions for  sums  collected\nfrom  the  State.   Thereupon, on  December  18,  1952,\t the\nrespondents moved the High Court of Bombay under Art. 226 of\nthe  Constitution and contended that the Act as amended\t and\nthe  Rules  framed thereunder in so far as they\t applied  to\nsuch   prize  competitions  were  ultra\t vires\t the   State\nLegislature and violated their fundamental rights under Art.\n19(1) (g) and freedom of inter-State trade under Art. 301 of\nthe Constitution.  The Single Judge who heard the matter  in\nthe  first  instance as also the court of  appeal  found  in\nfavour\tof  the respondents, though  on\t somewhat  different\ngrounds, and the State of Bombay preferred the appeal.\t The\nprincipal  question canvassed in this Court related  to\t the\nvalidity.  or  otherwise  of  the  impugned  Act.   It\t was\ncontended  on behalf of the appellant that the impugned\t Act\nwas -a law relating to betting and gambling and as such\t was\ncovered\n875\nby  Entries 34 and 62 of List II in the Seventh Schedule  to\nthe Constitution, whereas the contention of the\t respondents\nwas that the Act was with respect to trade and commerce\t and\ncame under Entries 26 and 60 of that List.\nHeld,  that  in\t testing  the validity\tof  an\tAct  it\t was\nnecessary, in the first place, to decide whether it was with\nrespect\t to  a\ttopic  assigned\t to  the  legislature\tand,\nsecondly,  where it was so and the legislature was  a  State\nLegislature  and  the Act purported to\toperate\t beyond\t the\nState,\twhether\t there was sufficient territorial  nexus  to\nvalidate  such operation and, lastly, whether the powers  of\nthe  legislature  were\tin any other  way  fettered  by\t the\nConstitution.\tSo judged, the impugned Act was a  perfectly\nvalid  legislation  and\t its  constitutionality\t was  beyond\nquestion.\nRegard being had to the purpose and scope of the Act read as\na  whole there could be no doubt that all the categories  of\nprize  competitions included in the definition contained  in\ns.  2(1)  (d)  of the Act were of a  gambling  nature.\t The\nqualifying'  clause  appearing at the end of  cl.  (1)\tmust\napply to each of the five kinds enumerated therein, and\t the\nword  'or' appearing after the word I promoters' and  before\nthe  word  'for'  in  the clause  must\tbe  read  as  'and'.\nSimilarly,  cl. (ii), properly construed, could not  include\nany  prize  competitions  other than  those  of\t a  gambling\nnature.\nElderton  v. Totalisator Co. Ltd., (1945) 2 All E.  R.\t624,\nheld inapplicable.\nThe impugned Act was, therefore, a legislation with  respect\nto  betting and gambling and fell under Entry 34 of List  II\nof  the Seventh Schedule to the Constitution and was  within\nthe competence of the State Legislature.\nTaxes  on gambling are a well recognised group\tof  indirect\ntaxes  and  s. 12A of the Act in seeking to  tax  the  gross\ncollections  in\t the hands of the promoters, and  not  their\nprofits,  was only following an easy and convenient  way  of\ngetting at the gambler's money in their hands and this\tmade\nno  difference in the character of the tax, essentially\t one\non  betting  and  gambling  and\t not  on  any  trade,\tand,\nconsequently, the section fell within Entry 62 and not Entry\n6o of List II of the Seventh Schedule to the Constitution.\nA  prize  competition that did not to a\t substantial  degree\ndepend upon the exercise of skill for its solution would  be\nof   a\tgambling  nature  and  a  scrutiny  of\t the   prize\ncompetitions offered by the respondents clearly showed\tthat\nthere  was  an\telement\t of  chance  to\t start\twith,\tand,\nconsequently,  they  must be of a gambling nature  and\tfell\nwithin the mischief of the Act.\nThe  doctrine  of territorial nexus was\t a  well-established\ndoctrine  and  could  apply only when  (1)  the\t territorial\nconnection  between the persons sought to be taxed  and\t the\nlegislating  State  was real and not illusory  and  (2)\t the\nliability  sought  to  be  imposed  was\t pertinent  to\tthat\nconnection.  The existence of sufficient\n876\nterritorial  nexus  in a particular case was  essentially  a\nquestion  of fact.  There could hardly be any doubt  in\t the\ninstant case that the impugned Act satisfied all these tests\nand,  consequently,  it was unassailable on  the  ground  of\nextra-territoriality.\n  Gambling activities were in their very nature and  essence\nextra-commercium although they might appear in the trappings\nof  trade.   They  were\t considered  to\t be  a\tsinful\t and\npernicious vice by the ancient seers and law-givers of India\nand  have been deprecated by the laws of England,  Scotland,\nUnited\tStates of America and Australia.  The  Constitution-\nmakers of India, out to create a welfare State, could  never\nhave intended to raise betting and gambling to the status of\ntrade, business, commerce or intercourse.\n  The petitioners, therefore, had no fundamental right under\nArt. 19(1) (g) or freedom under Art. 301 Of the Constitution\nin  respect  of\t their\tprize  competitions  that  could  be\nviolated  and the validity of the impugned Act, in pith\t and\nsubstance  an Act relating to gambling, did not fall  to  be\ntested by Arts. 19(6) and 304 Of the Constitution.\njudicial  decisions  on\t Art. 1, s. 8,\tsub-s.\t(3)  Of\t the\nConstitution  of  the  United  States  and  S.\t92  of\t the\nAustralian  Constitution  should be used  with\tcaution\t and\ncircumspection in construing Arts. 19(1) (g) and 301 of\t the\nIndian Constitution.\nState  of  Travancore-Cochin v. The Bombay Co.\tLtd.  (1952)\nS.C.R.\t1112  and P. P. Kutti Keya v. The State\t of  Madras,\nA.I.R.<\/a> (1954) Mad. 621, referred to.\n The  King  v. Connare, (1939) 61 C.L.R. 596,  The  King  v.\nMartin,\t (1939) 62 C.L.R. 457, Commonwealth of Australia  v.\nBank  of New South Wales, L.R. (195o) A.C. 235,\t Mansell  v.\nBeck,  Australian  Law\tjournal\t Vol. 3o,  NO.\t7,  P.\t346,\nChampion  v. Ames, 47 L.Ed. 492, Hipolite Egg Co. v.  United\nStates,\t 55 L.Ed. 364, Hoke v. United States, 57 L.Ed.\t523,\nUnited States v. Kahriger, 97 L.Ed. 754 and Lewis v.  United\nStates, 99 L.Ed.475, discussed.\n\n\n\nJUDGMENT:\n<\/pre>\n
    CIVIL  APPELLATE JURISDICTION: Civil Appeal No.  134  of
\n1956.\n<\/p>\n
   Appeal  under  articles 132 (1) and 133 (I)\t(c)  of\t the
\nConstitution  of  India from the Judgment  and\tOrder  dated
\nJanuary 12, 1955, of the Bombay High Court in Appeal No.  72
\nof  1954 arising out of the Judgment and Order\tdated  April
\n22,  1954,  of the Bombay High Court in its  Original  Civil
\nJurisdiction in Miscellaneous Application No. 365 of 1952.
\n C. K. Daphtary, Solicitor-General of India, H. M.  Seervai,
\nPorus A. Mehta and R. H.   Dhebar, for the appellant.\n<\/p>\n
877<\/span><\/p>\n
   M.  C.  Setalvad, Attorney-General for India,  Sir  N.  P.
\nEngineer, N. A. Palkhivala, R. A. Gagrat, S. V. Subramanian,
\nand G. Gopal Krishnan,<\/a> for the respondents.
\nG.   R.\t Ethirajulu Naidu, Advocate-General, Mysore,   Porus
\nA. Mehta and T. M. Sen, for the intervener.\n<\/p>\n
1957.  April 9. The Judgment of the Court was delivered by
\nDAS  C.J.-This is an appeal by the State of Bombay from\t the
\njudgment and order passed on January 12, 1955, by the  Court
\nof  Appeal  of.\t the  High Court  of  Judicature  of  Bombay
\nconfirming,  though  on\t somewhat  different  grounds,\t the
\njudgment  and  order passed on April 22, 1954, by  a  single
\nJudge of the said High Court allowing with costs the present
\nrespondents’ petition under Art. 226 of the Constitution  of
\nIndia.\t The  said petition was presented  before  the\tHigh
\nCourt of Judicature at Bombay on December 18, 1952.  In\t the
\nsaid petition there were two petitioners who are now the two
\nrespondents  to\t this appeal.  The first  petitioner  is  an
\nindividual  who\t claims\t to be a citizen of  India  and\t the
\nfounder\t and  Managing Director of  the\t second\t petitioner,
\nwhich  is a company incorporated in the State of Mysore\t and
\nhaving\tits  registered head office at\t2,  Residency  Road,
\nBangalore   in\tthat  State.   That  petition  was   further
\nsupported  by an affidavit sworn by the first petitioner  on
\nthe same day.\n<\/p>\n
The allegations appearing in the said petition and affidavit
\nmay  now  be  shortly  stated.\t In  July,  1946  the  first
\npetitioner applied for and obtained from the then  Collector
\nof  Bombay a licence, being Licence No. 84 of 1946, for\t the
\nperiod\tending March 31, 1947, to conduct what was known  as
\nthe Littlewood’s Football Pool Competitions in India.\tThat
\nlicence\t was  granted  to the  first  petitioner  under\t the
\nprovisions  of the Bombay Prize Competitions Tax Act,  (Bom.
\nXI of 1939) (hereinafter referred to as the 1939 Act), which
\nwas  then  in  force.  The said licence was  renewed  for  a
\nperiod\tof  one year from April 1, 1947 to March  31,  1948.
\nDuring\tthat  period the first petitioner paid,\t by  way  of
\ncompetition tax, to the Bombay Provincial
\n113<\/span>
\n878<\/span>
\nGovernment  a  sum  of\trupees\tone  lakh  per\tannum.\t The
\nGovernment  of\tBombay having declined to  renew  the  first
\npetitioner’s  licence  for  a  further\tperiod,\t the   first
\npetitioner  filed  a petition under s. 45  of  the  Specific
\nRelief\t Act  in  the  High  Court  of\tBombay,\t which\t was
\neventually,  after  various proceedings,  dismissed  by\t the
\ncourt of appeal on or about March 28, 1949.\n<\/p>\n
In  the\t meantime, in view of the delay\t and  difficulty  in
\nobtaining  a  renewal of the licence in\t Bombay,  the  first
\npetitioner in or about August, 1948, shifted his  activities
\nfrom Bombay to the State of Mysore, where he promoted and on
\nFebruary 26,1949, got incorporated a company under the\tname
\nof   R.M.D.C.  (Mysore)\t Limited,  which  was\tthe   second
\npetitioner  in the High Court and is the  second  respondent
\nbefore\tus.  The first petitioner, who was the\tpromoter  of
\nthe  second petitioner became the Managing Director  of\t the
\nsecond\tpetitioner.  All the shareholders and  Directors  of
\nthe second petitioner are said to be nationals and  citizens
\nof India.  The second petitioner also owns and runs a weekly
\nnewspaper  called ” Sporting Star “, which was and is  still
\nprinted and published at Bangalore in a Press also owned  by
\nthe  second petitioner.\t It is through this  newspaper\tthat
\nthe second petitioner conducts and runs a Prize\t Competition
\ncalled\tthe  R.M.D.C.  Crosswords  for\twhich  entries\t are
\nreceived from various parts of India including the State  of
\nBombay through agents and depots established in those places
\nto  collect entry forms and fees for being forwarded to\t the
\nhead office at Bangalore.\n<\/p>\n
The 1939 Act was replaced by the Bombay Lotteries and  Prize
\nCompetition  Control  and  Tax\tAct  (Bom.   LIV  of  1948),
\n(hereinafter  referred to as the 1948 Act) which  came\tinto
\nforce on December 1, 1948.  The 1939 Act as well as the 1948
\nAct,   as  originally  enacted,\t did  not  apply  to   prize
\ncompetitions contained in a newspaper printed and  published
\noutside\t the Province of Bombay.  So the  Prize\t Competition
\ncalled the R.M.D.C. Crosswords was not affected by either of
\nthose two Acts.\n<\/p>\n
On June 21, 1951, the State of Mysore, however, enacted\t the
\nMysore Lotteries and Prize Competition
\n879<\/span>
\nControl and Tax Act, 195 1, which was based- upon the  lines
\nof  the\t said 1948 Act.\t That Mysore Act  having  come\tinto
\nforce on February 1, 1952, the second petitioner applied for
\nand obtained a licence under that Act and paid the requisite
\nlicence fees and also paid and is still paying to the  State
\nof  Mysore the tax at the rate of 15% (latterly\t reduced  to
\n121%)  of  the\tgross receipts in respect  of  the  R.M.D.C.
\nCrosswords  Prize  Competition and continued  and  is  still
\ncontinuing  the\t said  Prize Competition  through  the\tsaid
\nweekly\tnewspaper “The Sporting Star” and to  receive  entry
\nforms  with  fees from all parts of the territory  of  India
\nincluding the State of Bombay.\tIt is said, on the  strength
\nof the audited books of account, that after distribution  of
\nprizes to the extent of about 33% of the receipts and  after
\npayment\t of  taxes  in Mysore amounting\t to  about  15%\t and
\nmeeting the other expenses aggregating to about 47%, the net
\nprofit of the second petitioner works out to about 5% only.
\n  On  November\t20,  1952, the State of\t Bombay\t passed\t The
\nBombay\tLotteries  and Prize Competitions  Control  and\t Tax
\n(Amendment)  Act (Bom.\tXXX of 1952).  This Act amended\t the
\nprovisions  of the 1948 Act in several\tparticulars.   Thus,
\nthe  words  ”  but  does not  include  a  prize\t competition
\ncontained  in a newspaper printed and published outside\t the
\nProvince  of  Bombay”, which occurred in the  definition  of
\nPrize  Competition  in s. 2 (1) (d) of the  1948  Act,\twere
\ndeleted\t and the effect of this deletion was that the  scope
\nand  the  application  of the 1948  Act\t so  amended  became
\nenlarged  and  extended so as to  cover\t prize\tcompetitions
\ncontained  in newspapers printed and published\toutside\t the
\nState of Bombay.  After cl. (d) of s. 2 (1) the Amending Act
\ninserted a new cl. (dd) which defined the word “Promoter  “.
\nA new section was substituted for the old s. 12 and  another
\nnew section was inserted after s. 12 and numbered as a. 12A.
\nBy  this  new  s. 12A provision was made  for  the  levy  in
\nrespect of every prize competition contained in a  newspaper
\nor  a  publication printed outside the State of\t Bombay\t for
\nwhich a licence was obtained under the Act of a tax at\tsuch
\nrates as might be specified not exceeding the
\n880<\/span>
\nrates  specified in s. 12 or in a lump sum having regard  to
\nthe   circulation  or  distribution  of\t the  newspaper\t  or
\npublication in the State of Bombay.  It is pointed out\tthat
\nthe  margin  of net profit being only 5%, if tax has  to  be
\npaid to the State of Bombay under the 1948 Act, as  amended,
\n(hereinafter  referred\tto as the impugned Act)\t the  second
\npetitioner will be unable to carry on its prize\t competition
\nexcept at a loss.\n<\/p>\n
  Reference is also made to the rules framed by the State of
\nBombay\tcalled the Bombay Lotteries -and  Prize\t Competition
\nControl and Tax Rules, 1952 (herein-‘ after called the\tsaid
\nRules), which came into force on and from December 8,  1952.
\nThe  said  Rules  require the petitioner to  apply  for\t and
\nobtain a licence in Form ” H ” which imposes certain onerous
\nconditions.   The  petitioners point out that  it  would  be
\nimpossible  for\t them,\tin a commercial\t sense\tand  from  a
\npractical  point of view, to run the prize  competitions  in
\nthe  territory of India if they are required to\t comply\t not
\nonly  with  the restrictions and conditions imposed  by\t the
\nMysore\tState where the newspaper is printed  and  published
\nbut  also  with\t the  varying  and  different  restrictions,
\nconditions  and\t taxes imposed by the State  of\t Bombay\t and
\nother  States  in  the territory of  India  where  the\tsaid
\nnewspaper  containing the advertisements; of the said  prize
\ncompetitions  are circulated.  The petitioners\tsubmit\tthat
\nthe provisions of the impugned Act and the Rules, in so\t far
\nas they apply to prize competitions contained in  newspapers
\nand  other  publications printed and published\toutside\t the
\nState  of  Bombay, are ultra vires void and  inoperative  in
\nlaw.\n<\/p>\n
 Upon  the  presentation of the petition a Rule\t was  issued
\ncalling\t upon the State of Bombay to appear and show  cause,
\nif any it had, why the writ or orders prayed for should\t not
\nbe  issued or made.  The State of Bombay filed an  affidavit
\nraising\t  several   technical  legal   objections   to\t the
\nmaintainability of the petition and refuting the allegations
\nand  submissions  contained therein and\t in  the  supporting
\naffidavit.  It submitted that, as the second petitioner\t was
\na corporation , and the first petitioner, who was a Managing
\nDirector
\n881<\/span>
\nthereof, had no rights independent of the second petitioner,
\nneither of them could lay any claim to any fundamental right
\nunder  Art.  19(1) (g) and no question could  arise  of\t any
\nviolation  of the petitioner’s alleged\tfundamental  rights.
\nIt further submitted that, having.  Regard to the fact\tthat
\nlotteries  and\tprize competitions were\t opposed  to  public
\npolicy,\t there\tcould  be no ” business\t ”  in\tpromoting  a
\nlottery\t or  a\tprize competition and the  question  of\t the
\nviolation  of  the petitioners’ alleged\t rights\t under\tArt.
\n19(1)  (g) of the Constitution did not arise.  It  was\talso
\ncontended  that if the provisions of the Act and  the  Rules
\noperated as restrictions, then the same were reasonable\t and
\nin  the\t interest of the general public.   Likewise  it\t was
\nsubmitted that, having regard to the fact that lotteries and
\nprize competitions are opposed to public policy, there could
\nbe  no\t“business  ”  in promoting  a  lottery\tor  a  prize
\ncompetition  and  the  question\t of  the  violation  of\t the
\nprovisions  of Art. 301 of the Constitution did\t not  arise.
\nIt  was\t denied that ss. 10 and 12 of the Act  violated\t the
\nequal  protection clause of the Constitution.  An  affidavit
\nin  reply was filed by the first petitioner  traversing\t the
\nallegations,  submissions and contentions set forth  in\t the
\naffidavit  in  opposition filed on behalf of  the  State  of
\nBombay.\n<\/p>\n
The  main contentions of the present respondents before\t the
\ntrial Judge were:-\n<\/p>\n
(a)The\timpugned Act and particularly its taxing  provisions
\nwere  beyond  the competence of the  State  Legislature\t and
\ninvalid\t inasmuch as they were not legislation with  respect
\nto  betting and gambling under Entry 34 or with\t respect  to
\nentertainments and amusements under Entry 33 or with respect
\nto  taxation on entertainments and amusements, betting.\t and
\ngambling under Entry 62 of the State List.  The\t legislation
\nwas with respect to trade and commerce and the tax levied by
\nthe  Impugned  Act  was a tax on the  trade  or\t calling  of
\nconducting  prize competitions and fell within Entry  60  of
\nthe State List.\n<\/p>\n
(b)  The  respondents’ prize competition was not  a  lottery
\nand could not be regarded as gambling
\n882<\/span>
\ninasmuch  as it was a competition in which skill,  knowledge
\nand judgment had real and effective play.\n<\/p>\n
(c)  The  impugned Act itself contained distinct  provisions
\nin  respect  of prize competitions and\tlotteries  ,-thereby
\nrecognising that prize competitions were not lotteries.\n<\/p>\n
 (d)  The said tax being in substance and fact a tax on\t the
\ntrade  or  business  of carrying on  prize  competitions  it
\noffended against s. 142A (2) of the Government of India Act,
\n1935 and Art. 276 (2) of the Constitution which respectively
\nprovide\t that such a tax shall not exceed fifty\t rupees\t and
\ntwo hundred and fifty rupees per annum.\n<\/p>\n
(e)  The impugned Act was beyond the legislative  competence
\nof the Bombay Legislature and invalid as it was\t legislation
\nwith  respect to trade and commerce not within\tbut  outside
\nthe State.\n<\/p>\n
(f)  The impugned Act operated extra-territorially  inasmuch
\nas  it\taffected the trade or business of  conducting  prize
\ncompetitions ‘ outside the State and was, therefore,  beyond
\nthe competence of the State Legislature and invalid.\n<\/p>\n
(g)  The  impugned  Act\t offended against Art.\t301  of\t the
\nConstitution  inasmuch as it imposed restrictions on  trade,
\ncommerce  and  intercourse between the States  and  was\t not
\nsaved by Art. 304 (b) of the Constitution.\n<\/p>\n
(h)  The  restrictions\timposed by the impugned Act  on\t the
\ntrade  or  business of the petitioners were  not  reasonable
\nrestrictions  in  the interests of the general\tpublic\tand,
\ntherefore,   contravened  the  fundamental  right   of\t the
\npetitioners,  who were citizens of India, to carry on  their
\ntrade or business under Art. 19 (1) (g) of the Constitution.\n<\/p>\n
(i)  That  ss.\t10,  12 and 12A of  the\t said  Act  offended
\nagainst\t Art.  14  of  the  Constitution  inasmuch  as\tthey
\nempowered   discrimination   between   prize\tcompetitions
\ncontained   in\tnewspapers  or\tpublications   printed\t and
\npublished  within the State and those printed and  published
\noutside the State.\n<\/p>\n
The  State of Bombay, which is now the appellant before\t us,
\non the other hand, maintained that
\n883<\/span>\n<\/p>\n
(a)  The  prize\t competitions conducted by  the\t petitioners
\nwere a lottery.\n<\/p>\n
(b)  The  provisions  of  the impugned Act  were  valid\t and
\ncompetent  legislation\tunder Entries 33, 34 and 62  of\t the
\nState List.\n<\/p>\n
(c)The\timpugned  Act  was  not\t extra-territorial  in\t its
\noperation.\n<\/p>\n
(d)The prize competitions conducted by the petitioners\twere
\nopposed\t to  public policy and there could therefore  be  no
\ntrade or business of promoting such prize competitions.\n<\/p>\n
  (e)As\t the  petitioners were not carrying on\ta  trade  or
\nbusiness, no question of offending their fundamental  rights
\nunder  Art. 19 (1) (g) or of a violation of Art. 301 of\t the
\nConstitution could arise.\n<\/p>\n
  (f)The  second  petitioner being a Corporation was  not  a
\ncitizen\t  and  could  not  claim  to  be  entitled  to\t the
\nfundamental right under Art. 19 (1) (g) of the Constitution.\n<\/p>\n
  (g)In\t any event the restrictions on the alleged trade  or
\nbusiness  of  the  petitioners\timposed\t by  the  Act\twere
\nreasonable  restrictions in the public interest with in\t the
\nmeaning of Art. 19 (6) and Art. 304 (b) of the Constitution.
\nThe trial Judge held:\n<\/p>\n
   (a)The tax levied under ss. 12 and 12A of the Act was not
\na  tax on entertainment, amusement, betting or gambling\t but
\nthat it was a tax on the trade or calling of the respondents
\nand fell under Entry 60 and not under Entry 62 of the  State
\nList.\n<\/p>\n
  (b)The prize competition conducted by the petitioners\t was
\nnot a lottery and it could not be said to be either  betting
\nor gambling inasmuch as it was a competition in which skill,
\nknowledge  and judgment on the part of the competitors\twere
\nessential ingredients.\n<\/p>\n
 (c)The levy of the tax under the said sections was void  as
\noffending against Art. 276 (2) of the Constitution.\n<\/p>\n
(d)The\trestrictions  imposed by the impugned  Act  and\t the
\nRules\tthereunder   offended  against\tArt.  301   of\t the
\nConstitution and were not saved by Art,
\n884<\/span>
\n304(b)\tinasmuch  as the restrictions imposed  were  neither
\nreasonable nor in the public interest.\n<\/p>\n
(e)The\tsecond petitioner, although it was a company, was  a
\ncitizen of India and was entitled to the protection of\tArt.
\n19 of the Constitution.\n<\/p>\n
(f)The\trestrictions  imposed by the impugned  Act  and\t the
\nRules  made  thereunder were neither reasonable nor  in\t the
\ninterests  of the general public and were void as  offending
\nagainst Art. 19 (1) (g) of the Constitution.
\nIn  the\t result the rule nisi was made absolute and  it\t was
\nfurther\t ordered that the State of Bombay, its servants\t and
\nagents,\t do  forbear from enforcing or taking any  steps  in
\nenforcement, implementation, furtherance or pursuance of any
\nof  the\t provisions of the impugned Act and the\t 1952  Rules
\nmade thereunder and particularly from -enforcing any of\t the
\npenal  provisions against the petitioners, their  Directors,
\nofficers,  servants or agents and that the State of  Bombay,
\nits  servants and agents, do allow the petitioners to  carry
\non their trade and business of running the Prize Competition
\nmentioned  in  the petition and do forbear  from  demanding,
\ncollecting  or\trecovering from the petitioners any  tax  as
\nprovided in the impugned Act or the said Rules in respect of
\nthe  said Prize Competition and that the State of Bombay  do
\npay to the petitioners their costs of the said applications.
\n  Being\t aggrieved by the decision of the trial\t Judge,\t the
\nState  of Bombay preferred an appeal on June 8,\t 1954.\t The
\nCourt of Appeal dismissed the appeal and confirmed the order
\nof  the trial Judge, though on somewhat\t different  grounds.
\nIt differed from the learned trial Judge on the view that he
\nhad  taken that there was no legislative competence  in\t the
\nLegislature  to\t enact the legislation.\t It  held  that\t the
\ntopic of legislation was I gambling’ and the Legislature was
\ncompetent to enact it under Entry 34 of the State List.\t It,
\nhowever,  agreed with the learned trial Judge that  the\t tax
\nlevied\tunder s. 12A was not a tax on gambling but  that  it
\nwas a tax which fell under Entry 60. It held that there was
\n885<\/span>
\nlegislative competence in the Legislature to impose that tax
\nbut that the tax was invalid because it did not comply\twith
\nthe   restriction  contained  in  Art.\t 276  (2)   of\t the
\nConstitution.\tIt  also took the view that  the  tax,\teven
\nassuming  it was a tax on betting or gambling, could not  be
\njustified  -because it did not fall under Art. 304 (b).\t  It
\ndiffered  from\tthe learned trial Judge when he found  as  a
\nfact  that the scheme underlying the prize competitions\t was
\nnot  a\tlottery\t and came to the  conclusion  that  the\t Act
\napplied\t to the prize competitions of the  respondents.\t  It
\nheld  that the challenge of the petitioners to the  impugned
\nprovisions  succeeded because the restrictions contained  in
\nthe impugned Act controlling the business of the petitioners
\ncould not be justified as the requirements of the provisions
\nof Art. 304 (b) had not been complied with.  The High  Court
\nagreed\twith the learned trial Judge that  the\tpetitioners’
\nprize competitions were their “business ” which was entitled
\nto  the\t protection guaranteed under the  Constitution.\t  It
\ntook the view that although the activity of the\t petitioners
\nwas  a\tlottery, it was not an activity\t which\twas  against
\npublic interest and, therefore, the provisions of Part\tXIII
\nof the Constitution applied to the respondents’ business.
\n  Being\t aggrieved  by\tthe said judgment of  the  Court  of
\nAppeal,\t the appellant applied for and obtained under  Arts.
\n132(1)\tand  133(1)  of the Constitution  a  certificate  of
\nfitness\t for  appeal  to this Court and\t hence\tthis  appeal
\nbefore us.\n<\/p>\n
 The  principal question canvassed before us relates to\t the
\nvalidity  or  otherwise of the impugned Act.  The  Court  of
\nAppeal has rightly pointed out that when the validity of  an
\nAct is called in question, the first thing for the court  to
\ndo is to examine whether the Act is a law with respect to  a
\ntopic  assigned to the particular Legislature which  enacted
\nit.   If it Is, then the court is next to consider  whether,
\nin  the\t case  of  an Act passed by  the  Legislature  of  a
\nProvince  (now\ta State), its operation extends\t beyond\t the
\nboundaries  of\tthe  Province or the State,  for  under\t the
\nprovisions   conferring\t legislative  powers  on   it\tsuch
\nLegislature  can only make a law for its territories or\t any
\npart thereof
\n114<\/span>
\n886<\/span>
\nand its laws cannot, in the absence of a territorial  nexus,
\nhave  any extra territorial operation.\tIf the impugned\t law
\nsatisfies  both these tests, then finally the court  has  to
\nascertain  if  there is anything in any other  part  of\t the
\nConstitution  which  places any fetter\ton  the\t legislative
\npowers\tof such Legislature.  The impugned law has  to\tpass
\nall these three tests.\n<\/p>\n
 Taking\t the first test first, it will be recalled that\t the
\n1948 Act was enacted by the Provincial Legislature of Bombay
\nwhen the Government of India Act, 1935, was in force.  Under
\nss.  99\t and 100 of that Act the Provincial  Legislature  of
\nBombay had power to make laws for the Province of Bombay  or
\nany  part  thereof  with  respect  to  any  of\tthe  matters
\nenumerated  in List 11 in the Seventh Schedule to that\tAct.
\nIt will also be remembered that the 1948 Act was amended  by
\nBombay\tAct XXX of 1952 after the Constitution of India\t had
\ncome  into operation.  Under Arts. 245 and 246,\t subject  to
\nthe  provisions of the Constitution, the Legislature of\t the
\nState of Bombay has power to make laws for the whole or\t any
\npart  of  the  State of Bombay with respect to\tany  of\t the
\nmatters enumerated in List II of the Seventh Schedule to the
\nConstitution.\tThe State of Bombay, which is the  appellant
\nbefore us, claims that the impugned Act including s. 12A  is
\na law made with respect to topics covered by Entries 34\t and
\n62  of List II in the Seventh Schedule to  the\tConstitution
\nwhich reproduce Entries 36 and 50 of List II in the  Seventh
\nSchedule to the Government of India Act, 1935.\tOn the other
\nhand,  the  petitioners,  who  are  respondents\t before\t us,
\nmaintain that the impugned Act is legislation under  Entries
\n26  and\t 60  in\t List 11 of  the  Seventh  Schedule  to\t the
\nConstitution  corresponding to Entries 27 and 46 of List  II
\nin  the Schedule to the\t Government of India Act, 1935,\t and
\nthat, in any event, s. 12A of the impugned Act, in so far as
\nit  imposes  a tax, comes under Entry 60 of List II  in\t the
\nSeventh Schedule to the Constitution corresponding to  Entry
\n46  of List II in the Seventh Schedule to the Government  of
\nIndia  Act, 1935, and not under Entry 62 of List 11  in\t the
\nSeventh Schedule to the Constitution corresponding to  Entry
\n50 of List 11 in the Seventh Schedule to the
\n887<\/span>
\nGovernment  of India Act, 1935, and that as the tax  imposed
\nexceeds\t Rs.  250\/-  it is void under  Art.  276  (2)  which
\nreproduces  s.\t142A of the Government of India\t Act,  1935.
\nReference  will\t hereafter  be made  only  to  the  relevant
\nEntries\t of  List  II  in the Seventh  Schedule\t r,  to\t the
\nConstitution,  for they are substantially in the same  terms
\nas  the\t corresponding\tEntries of List 11  in\tthe  Seventh
\nSchedule  to  the Government of India Act, 1935.   For\teasy
\nreference,  the relevant Entries in List II in\tthe  Seventh
\nSchedule to the Constitution are set out below:
\n”  26.\tTrade and commerce within the State subject  to\t the
\nprovisions of Entry 33 of List III.\n<\/p>\n
34.  Betting and gambling.\n<\/p>\n
60.  Taxes    on   professions,\t  trades,   callings,\t and
\nemployments.\n<\/p>\n
62.  Taxes  on luxuries, including taxes on  entertainments,
\namusements, betting and gambling.”\n<\/p>\n
  In order to correctly appreciate the rival contentions and
\nto come to a decision as to the particular Entry or  Entries
\nunder  which the impugned Act including s. 12A\tthereof\t has
\nbeen  enacted, it is necessary to examine and  to  ascertain
\nthe  purpose and scope of the impugned legislation.  It\t may
\nbe  mentioned that the 1939 Act was enacted to regulate\t and
\nlevy a tax on prize competitions in the Province of  Bombay.
\nIt  did\t not  deal  with lotteries at  all.   That  Act\t was
\nrepealed by the 1948 Act which was enacted to control and to
\nlevy  a tax not only on prize competitions but on  lotteries
\nalso.  It is not unreasonable to conclude that the  clubbing
\ntogether of lotteries and prize competitions in the 1948 Act
\nindicates that in the view of the Legislature the two topics
\nwere, in a way, allied to each other.  As already indicated,
\nthe  1948 Act was amended in 1952 by Bombay Act XXX of\t1952
\nso  as\tto  extend  its\t operation  to\tprize\tcompetitions
\ncontained  in newspapers printed and published\toutside\t the
\nState of Bombay.  In s. 2(1) (d) of the impugned Act will be
\nfound  the  definition\tof ” prize competition\t”  to  which
\nreference will be made hereafter in greater detail.   Clause
\n(dd)  was inserted in s. 2(1) in 1952  defining\t “promoter”.
\nSection 3 declares that subject to the
\n888<\/span>
\nprovisions  of\tthe Act, all lotteries and  all\t prize\tcom-
\npetitions are unlawful.\t This is a clear indication that the
\nlegislature regarded lotteries and prize competitions as  on
\nthe  same footing and declared both of them to be  unlawful,
\nsubject, of course, to the provisions of the Act.  Section 4
\ncreates\t certain offences in connection with  lotteries\t and
\ncompetitions punishable, as therein mentioned.\tWe may\tskip
\nover  ss. 5 and 6 which deal exclusively with lotteries\t and
\npass on to s. 7. Section 7 provides that a prize competition
\nshall be deemed to be an unlawful prize competition unless a
\nlicence in respect of such competition has been obtained  by
\nthe promoter thereof.  There are two provisos to the section
\nwhich  are not material for our present purpose.  Section  8
\nimposes\t certain a additional penalty for  contravention  of
\nthe provisions of s. 7. -Section 9 regulates the granting of
\nlicences on such fees and conditions and in such form as may
\nbe prescribed, that is to say prescribed by rules.   Section
\n10 makes it lawful for the Government, by general or special
\norder,\tto,  inter alia, prohibit the grant of\tlicences  in
\nrespect\t of  a\tlottery or prize  competition  or  class  of
\nlotteries  or prize competitions throughout the State or  in
\nany  area.  Section II empowers the Collector to suspend  or
\ncancel\t a  licence  granted  under  this  Act\tin   certain
\ncircumstances therein specified.  Section 12 authorises\t the
\nlevy  of  a tax on lotteries and prize competitions  at\t the
\nrate  of 25% of the total sum received Or due in respect  of
\nsuch  lottery  or prize competition.  This  section  directs
\nthat  the tax shall be collected from the promoter  of\tsuch
\nlottery or prize competition as the case may be. Sub-section
\n(2) of s. 12 empowers the State Government by a Notification
\nin  the official Gazette, to enhance the rate of tax  up  to
\n50%  of\t the total sum received or due in  respect  of\tsuch
\nprize  competition as may be specified in the  Notification.
\nSection\t 12A, which is of great importance for -the  purpose
\nof this appeal, runs as follows:\n<\/p>\n
”  12A.\t Notwithstanding anything contained in\tsection\t 12,
\nthere  shall be levied in respect of every lottery or  prize
\ncompetition contained in a newspaper or publication  printed
\nand published outside the State,
\n889<\/span>
\nfor which a licence has been obtained under section 5, 6  or
\n7  ,  a tax at such rates as may be specified by  the  State
\nGovernment  in\ta notification in the Official\tGazette\t not
\nexceeding  the\trates specified in section 12  on  the\tsums
\nspecified  in the declaration made under section 15  by\t the
\npromoter of the lottery or prize competition as having\tbeen
\nreceived  or  due  in  respect\tof  such  lottery  or  prize
\ncompetition   or  in  a\t lump  sum  having  regard  to\t the
\ncirculation or distribution of the newspaper or\t publication
\nin the State.”\n<\/p>\n
Section\t 15  requires every person promoting  a\t lottery  or
\nprize competition of any kind to keep and maintain  accounts
\nrelating to such lottery or prize competition and to  submit
\nto the Collector statements in such form and at such  period
\nas  may be prescribed.\tIt is not necessary for the  purpose
\nof this appeal to refer to the remaining sections which\t are
\ndesigned to facilitate the main purpose of the Act and\tdeal
\nwith procedural matters except to s. 31 which confers  power
\non  the\t State Government to make rules for the\t purpose  of
\ncarrying  out  the provisions of the Act.   In\texercise  of
\npowers\tso  conferred on it, the State\tGovernment  has,  by
\nNotification  in  the Official Gazette, made  certain  rules
\ncalled\tthe Bombay Lotteries and Prize Competitions  Control
\nand  Tax  Rules,  1952,\t to which  reference  will  be\tmade
\nhereafter.\n<\/p>\n
 The petitioners contend that the object of the impugned Act
\nis  to control and to tax lotteries and prize  competitions.
\nIt  is\tnot the purpose of the Act to  prohibit\t either\t the
\nlotteries  or  the prize competitions.\tThey urge  that\t the
\nimpugned  Act deals alike with prize competitions which\t may
\npartake\t  of   the  nature  of\tgambling  and\talso   prize
\ncompetitions which call for knowledge and skill for  winning
\nsuccess and in support of this contention reliance is placed
\non  the definition of “prize competition” in s.\t 2(1)(d)  of
\nthe impugned Act.  We are pressed to hold that the  impugned
\nAct  in its entirety or at any rate in so far as  it  covers
\nlegitimate  and\t innocent prize competition is\ta  law\twith
\nrespect\t to trade and commerce under Entry 26 and  not\twith
\nrespect\t to betting and gambling under Entry 34.  They\talso
\nurge that in any event the taxing provisions,
\n890<\/span>
\nnamely\tss.  12 and 12A, are taxes on the trade\t of  running
\nprize  competitions under Entry 60 and not taxes on  betting
\nand  gambling under Entry 62.  We are unable to\t accept\t the
\ncorrectness  of the aforesaid contentions for reasons  which
\nwe proceed immediately to state.\n<\/p>\n
As it has already been mentioned, the impugned Act  replaced
\nthe  1939  Act\twhich dealt only  with\tprize  competitions.
\nSection 2(2) of the 1939 Act defined “prize competition”  in
\nthe terms following:—-\n<\/p>\n
  2(2) “Prize Competition ” includes-\n<\/p>\n
  (a)\t  crossword   prize   competition,   missing   words
\ncompetition,   picture\tprize  competition,   number   prize
\ncompetition,  or  any  other  competition,  for\t which\t the
\nsolution  is  prepared beforehand by the  promoters  of\t the
\ncompetition or for which the solution is determined by lot;\n<\/p>\n
 (b)any\t  competition  in  which  prizes  are  offered\t for
\nforecasts  of the results either of a future event or  of  a
\npast event the result of which is not yet ascertained or not
\nyet generally known; and\n<\/p>\n
(c)  any other competition success in which does not  depend
\nto a substantial degree upon the exercise of skill,
\nbut  does  not include a prize competition  contained  in  a
\nnewspaper  or periodical printed and published\toutside\t the
\nProvince of Bombay.”\n<\/p>\n
The  1948  Act\ts.  2(1)(d),  as  originally  enacted,\tsub-
\nstantially reproduced the definition of ” prize\t competition
\n”  as given in s. 2(2) of the 1939 Act.\t Section 2(1)(d)  of
\nthe 1948 Act, as originally enacted, ran as follows:
\n2(1)(d)\t “Prize Competition ” includes\n<\/p>\n
(i)  cross-word\t prize\tcompetition,  missing  words
\nprize  competition, picture prize competition, number  prize
\ncompetition, or any other competition for which the solution
\nis, prepared beforehand by the promoters of the\t competition
\nor for which the solution is determined by lot;\n<\/p>\n
(ii)any\t  competition  in  which  prizes  are  offered\t for
\nforecasts  of the results either of a future event or  of  a
\npast event the result of which is not yet ascertained or not
\nyet generally known; And
\n891<\/span>\n<\/p>\n
(iii)any other competition success in which does not  depend
\nto a substantial degree upon the exercise of skill,
\n  but  does not include a prize competition contained  in  a
\nnewspaper  printed  and published outside  the\tProvince  of
\nBombay; ”\n<\/p>\n
 The  collocation  of  words in the first  category  of\t the
\ndefinitions  in\t both  the  1939 Act and  the  1948  Act  as
\noriginally  enacted made it quite clear that the  qualifying
\nclause “for which the solution is prepared beforehand by the
\npromoters  of the competition or for which the\tsolution  is
\ndetermined  by\tlot ” applied equally to each  of  the\tfive
\nkinds  of prize competitions included in that  category\t and
\nset  out  one after another in a  continuous  sentence.\t  It
\nshould also be noted that the qualifying clause consisted of
\ntwo parts separated from each other by the disjunctive\tword
\n“or”.\tBoth parts of the qualifying clause  indicated\tthat
\neach  of  the five kinds of prize  competitions\t which\tthey
\nqualified   were  of  a\t gambling  nature.   Thus  a   prize
\ncompetition for which a solution was prepared beforehand was
\nclearly\t a gambling prize competition, for  the\t competitors
\nwere  only  invited  to guess  what  the  solution  prepared
\nbeforehand by the promoters might be, or in other words,  as
\nLord  Hewart  C. J. observed in Coles v. Odhams\t Press\tLtd.
\n(1), ” the competitors are invited to pay certain number  of
\npence  to  have the opportunity of taking blind shots  at  a
\nhidden target.” Prize competitions to which the second\tpart
\nof the qualifying clause applied, that is to say, the  prize
\ncompetitions  for which the solution was determined by\tlot,
\nwas necessarily a gambling adventure.  On the language\tused
\nin the definition section of the 1939 Act as well as in\t the
\n1948  Act,  as originally enacted, there could be  no  doubt
\nthat  each of the five kinds of prize competitions  included
\nin the first category to each of which the qualifying clause
\napplied\t was  of  a  gambling  nature.\t Nor  has  it\tbeen
\nquestioned  that the third category, which comprised  ”\t any
\nother  competition  success in which does not  depend  to  a
\nsubstantial degree upon the exercise of skill constituted a
\n(1)  L.R. (1936) 1 K.B. 416.\n<\/p>\n
892<\/span><\/p>\n
gambling  competition.\tAt one time the notion was  that  in
\norder to be branded as gambling the competition must be\t one
\nsuccess\t in  which depended entirely on chance.\t If  even  a
\nscintilla of skill was required for success the\t competition
\ncould not be regarded as of a gambling nature.\tThe Court of
\nAppeal\tin the judgment under appeal has shown how  opinions
\nhave  changed since the earlier decisions were given and  it
\nis  not\t necessary for us to discuss the matter\t again.\t  It
\nwill  suffice to say that we agree with the Court of  Appeal
\nthat a competition in order to avoid the stigma of  gambling
\nmust  depend  to a substantial degree upon the\texercise  of
\nskill.\t Therefore, a competition success wherein  does\t not
\ndepend to a substantial degree upon the exercise of skill is
\nnow  recognised to be of a gambling nature.  From the  above
\ndiscussion  it follows that according to the  definition  of
\nprize  competition given in the 1939 Act as in the 1948\t Act
\nas originally enacted, the five kinds of prize\tcompetitions
\ncomprised  in the first category and the competition in\t the
\nthird  category were all of a gambling nature.\t In  between
\nthose two categories of gambling competitions were  squeezed
\nin,  as the second category, “competitions in  which  prizes
\nwere offered for forecasts of the results either of a future
\nevent  or  of a past event the result of which\tis  not\t yet
\nascertained   or   is  not  yet\t  generally   known.”\tThis
\njuxtaposition\tis  important  and  significant\t  and\twill
\nhereafter be discussed in greater detail.
\nAs already stated the 1948 Act was amended in 1952 by Bombay
\nAct  XXX  of  1952.   Section 2(1)(d)  as  amended  runs  as
\nfollows:\n<\/p>\n
  Prize competition ” includes-<\/p>\n
    (i)\t  (1) cross-word prize competition,
\n\t (2)   missing word prize competition,
\n\t(3)    picture prize competition,
\n\t (4)   number prize competition, or
\n\t (5)   any other prize competition, for which
\nthe  solution  is  or  is not  prepared\t beforehand  by\t the
\npromoters or for which the solution is determined by lot  or
\nchance;\n<\/p>\n
 (ii)\t  any  competition in which prizes are\toffered\t for
\nforecasts of the results either of a future event or of
\n893<\/span>
\na  past event the result of which is not yet ascertained  or
\nnot yet generally known; and\n<\/p>\n
(iii) any other competition success in which does not depend
\nto a substantial degree upon the exercise of skill;
\nIt  will be noticed that the concluding sentence ” but\tdoes
\nnot  include  a prize competition contained in\ta  newspaper
\nprinted\t and published outside the Province of\tBombay”\t has
\nbeen  deleted.\tThis deletion has very far reaching  effect,
\nfor   it  has  done  away  with\t the  exclusion\t  of   prize
\ncompetitions contained in a newspaper printed and  published
\noutside\t  the  State  of  Bombay  from\tthe  scope  of\t the
\ndefinition.  In the next place, it should be noted that\t the
\ndefinition  of\tprize  competition  still  comprises   three
\ncategories  as before.\tThe second and the third  categories
\nare  couched  in  exactly the same language  as\t were  their
\ncounterparts in the earlier definitions.  It is only in\t the
\nfirst  category\t that certain changes are  noticeable.\t The
\nfive  kinds of prize competitions that were included in\t the
\nfirst  category of the old definitions are still  there\t but
\ninstead\t of  their  being set out one  after  another  in  a
\ncontinuous  sentence,  they  have been\tset  out  one  below
\nanother\t with  a separate number assigned to each  of  them.
\nThe  qualifying\t clause has been amended  by  inserting\t the
\nwords  “or is not” after the word “is” and before  the\tword
\n“prepared”  and by adding the words “or chain ce” after\t the
\nword “lot”.  The qualifying clause appears, as before, after
\nthe  fifth item in the first category.\tIt will\t be  noticed
\nthat there is a comma after each of the five items including
\nthe fifth item.\t The mere assigning a separate number to the
\nfive  items  of\t prize competitions included  in  the  first
\ncategory  does\tnot, in our judgment, affect  or  alter\t the
\nmeaning,  scope and effect of this part of  the\t definition.
\nThe  numbering of the five items has not dissociated any  of
\nthem  from the qualifying clause.  If the qualifying  clause
\nwere  intended to apply only to the fifth item,\t then  there
\nwould  have  been  no comma after the fifth  item.   In\t our
\nopinion, therefore, the qualifying clause continues to apply
\nto each of the five items as before the amendment.  There is
\ngrammatically no difficulty in reading
\n115<\/span>
\n894<\/span>
\nthe  qualifying\t clause as lending colour to each  of  those
\nitems.\n<\/p>\n
 Accepting that the qualifying clause applies to each of the
\nfive  kinds  of\t prize competitions included  in  the  first
\ncategory, it is urged that the qualifying clause as  amended
\nindicates that the Legislature intended to include  innocent
\nprize competitions within the definition so as to bring\t all
\nprize  competitions,  legitimate or  otherwise,\t within\t the
\noperation of the regulatory provisions of the Act  including
\nthe taxing sections.  The argument is thus formulated.\tAs a
\nresult\tof  the\t amendment the qualifying  clause  has\tbeen
\nbroken up into three parts separated from each other by\t the
\ndisjunctive word ” or “. The, three parts are (1) for  which
\nthe  solution is prepared beforehand by the  promoters,\t (2)
\nfor  which  the solution is not prepared beforehand  by\t the
\npromoters  and (3) for which the solution is  determined  by
\nlot  or\t chance.   The\tfirst and the  third  parts  of\t the
\nqualifying clause, it is conceded, will, when applied to the
\npreceding five kinds of prize cometitions, make each of them
\ngambling  a  ventures;\tgut  it\t is  contended\tthat   prize
\ncompetitions  to  which the second part\t of  the  qualifying
\nclause\tmay  apply, that is to say  prize  competitions\t for
\nwhich  the solution is not prepared beforehand, need not  be
\nof a gambling nature at all and at any rate many of them may
\nwell  be  of an innocent type.\tThis argument hangs  on\t the
\nfrail peg of unskilful draftsmanship.  It has been seen that
\nin  the\t old  -definitions  all\t the  five  kinds  of  prize
\ncompetitions  included\tin  the first  categorv\t were  of  a
\ngambling nature.  We find no cogent reason-and none has been
\nsuggested-why  the Legislature_which treated  lotteries\t and
\nprize  competitions  on\t the same  footing  should  suddenly
\nenlarge\t the first category so as to include innocent  prize
\ncompetitions.\tTo  hold that the first\t category  of  prize
\ncompetitions  include  innocent prize competitions  will  go
\nagainst the obvious tenor of the impugned Act.\tThe 1939 Act
\ndealt with prize competitions only and the first category in
\nthe   definition   given  there\t comprised   only   gambling
\ncompetitions.\tThe 1948 Act clubbed together lotteries\t and
\nprize  competitions  and  the first category  of  the  prize
\ncompetitions
\n\t\t\t    895<\/span>
\nincluded in the definition ‘as originally enacted was purely
\ngambling  as  both parts of the\t qualifying  clause  clearly
\nindicated.  Section 3 of the Act declared all lotteries\t and
\nall  prize competitions unlawful.  There could be no  reason
\nfor  declaring\tinnocent prize competitions  unlawful.\t The
\nregulatory provisions for licensing and taxing apply to\t all
\nprize  competitions.   If  it  were  intended  to   include.
\ninnocent prize competitions in the first category, one would
\nhave   expected\t the  Legislature  to  have  made   separate
\nprovisions  for the legitimate prize  competitions  imposing
\nless  rigorous\tregulations than what had  been\t imposed  on
\nillegitimate  prize competitions.  It will become  difficult
\nto  apply the same taxing sections to legitimate as well  as
\nto    illegitimate   competitions.    Tax   on\t  legitimate
\ncompetitions may well be a tax under Entry 60 on the  trader
\nwho  carries  on  the  trade  of  innocent  and\t  legitimate
\ncompetition.   It may be and indeed it has been the  subject
\nof  serious controversy whether an illegitimate\t competition
\ncan  be\t regarded A a trade at all and in one  view  of\t the
\nmatter the tax may have to be justified as a tax on  betting
\nand gambling under Entry 62.  Considering the nature,  scope
\nand  effect  of\t the  impugned Act  we\tentertain  no  doubt
\nwhatever  that the first category of prizecompetitions\tdoes
\nnot include any innocent prize competition.  Such is what we
\nconceive  to  be the clear intention of the  Legislature  as
\nexpressed  in the impugned Act read as a whole and  to\tgive
\neffect to this obvious intention, as we are bound to do,  we
\nhave  perforce\tto  read  the word  “or”  appearing  in\t the
\nqualifying  clause after the word “promoter” and before\t the
\nword  “for” as “and”.  Well known canons of construction  of
\nStatutes   permit  us  to  do  so.  (See  Maxwell   on\t the
\nInterpretation of Statutes, 10th edition, page 238).
\nA similar argument was sought to be raised on a construction
\nof  cl. (ii) of s. 2(1) (d).  As already stated, in  between
\nthe  first  and the third categories of\t prize\tcompetitions
\nwhich,\tas  already  seen,  are of  a  gambling\t nature\t the
\ndefinition has included a second category of competitions in
\nwhich prizes are offered for forecasts of the results either
\nof a future event or of a past event
\n896<\/span>
\nthe  result  of\t which is not yet  ascertained\tor  not\t yet
\ngenerally  known.  It is said that forecasts of such  events
\nas are specified in the section need not necessarily  depend
\non chance, for it may be accurately done by the exercise  of
\nknowledge  and\tskill  derived from a  close  study  of\t the
\nstatistics  of similar events of the past.  It may  be\tthat
\nexpert statisticians may form some idea of the result of  an
\nuncertain  future  event but it is difficult  to  treat\t the
\ninvitation  to\tthe general public to participate  in  these
\ncompetitions  as  an  invitation to a game  of\tskill.\t The
\nordinary   common   people  who\t usually   join\t  in   these
\ncompetitions  can hardly be credited with such abundance  of
\nstatistical skill as will enable them, by the application of
\ntheir  skill, to attain success.  For most, if not  all,  of
\nthem the forecast is nothing better than a shot at a  hidden
\ntarget.\t Apart from the unlikelihood that the Legislature in
\nenacting   a  statute  tarring\tboth  lotteries\t and   prize
\ncompetitions with the same brush as indicated by s’ 3  would
\nsqueeze\t in  innocent  prize  competitions  in\tbetween\t two
\ncategories  of\tpurely gambling varieties of them,  all\t the
\nconsiderations\tand  difficulties  we have  adverted  to  in
\nconnection with the construction of the ,first category\t and
\nthe qualifying clause therein will apply mutatis mutandis to
\nthe interpretation of this second clause.
\nReliance  is  placed  on s. 26 of the  English\tBetting\t and
\nLotteries Act, 1934 (24 and 25 Geo.  V c. 58) in aid of\t the
\nconstruction  of the second category of\t prize\tcompetitions
\nincluded  in the definition given in the impugned Act.\t The
\nrelevant portion of s. 26 of the aforesaid Act runs thus:
\n  ”  26. (1) It shall be unlawful to conduct in\t or  through
\nany  newspaper, or in connection with any trade or  business
\nor the sale of any article to the public\n<\/p>\n
(a)  any  competition\tin  which  prizes  are\toffered\t for
\nforecasts  of the result either of a future event, or  of  a
\npast event the result of which is not yet ascertained or not
\nyet generally known;\n<\/p>\n
(b)  any other competition success in which does not  depend
\nto a substantial degree upon the exercise of skill.\n<\/p>\n
\t\t\t    897<\/span><\/p>\n
It  will  be noticed that this section is not  a  definition
\nsection\t at all but is a penal section which  makes  certain
\ncompetitions mentioned in the two clauses unlawful.   Clause\n<\/p>\n
(a) of that section which corresponds to our second category
\nis  not sandwiched between two categories of gambling  prize
\ncompetitions.\tIn Elderton v. Totalisator Co. Ltd.  (1)  on
\nwhich  the  petitioners rely the question  was\twhether\t the
\nfootball  pool\tadvertised in newspapers  by  the  appellant
\ncompany\t came  within the wide language of cl. (a)  of\tthat
\nsection\t which\twas  in Part II of  the\t Act.\tWhether\t the
\nappellant  company’s football pool called for any  skill  on
\nthe part of the “investors” or whether it was of a  gambling
\nnature\twas not directly relevant to the discussion  whether
\nit fell within cl. (a).\t The penal provisions of the English
\nAct  and the decision of the Court of Appeal throw no  light
\non  the construction of our definition clause.\tSeeing\tthat
\nprize competitions have been clubbed together with lotteries
\nand  dealt with in the same Act and seeing that\t the  second
\ncategory  of  the definition of\t ”  prize competition  ”  is
\nsandwiched  in\tbetween the other two categories  which\t are
\nclearly\t of  a\tgambling nature and in\tview  of  the  other
\nprovisions  of the impugned Act and in particular s.  3\t and
\nthe  taxing  sections, we are clearly of  opinion  that\t the
\ndefinition of ” prize competition ” on a proper construction
\nof  the\t language of s. 2(1) (d )in the light of  the  other
\nprovisions  of the Act read as a whole comprises only  prize
\ncompetitions  which  are of the nature of a lottery  in\t the
\nwider sense, that is to say, of the nature of gambling.\t The
\nCourt  of Appeal took the view that although as a matter  of
\nconstruction  the  definition  did  include  innocent  prize
\ncompetitions,  yet by the application of another  principle,
\nnamely,\t that  a  literal construction\twill  make  the\t law
\ninvalid because of its overstepping the limits- of Entry 26,
\nwhich  comprises only trade and commerce within\t the  State,
\nthe  definition should be read as limited only\tto  gambling
\nprize  competitions so as to make it a law with\t respect  to
\nbetting\t and gambling under Entry 34.  It is  not  necessary
\nfor us in this case to consider whether the
\n(1)  (1945) 2 A.E.R. 624.\n<\/p>\n
898<\/span><\/p>\n
principle  laid\t down  by Sir Maurice Gwyer  C.\t J.  in\t the
\nHindu  Women’s Right to Property Act case (1) can be  called
\nin aid to cut down the scope of a section by omitting one of
\ntwo  things  when  the\tsection\t on  a\tproper\tconstruction
\nincludes two things, for we are unable, with great  respect,
\nto  agree  with\t the  Court  of\t Appeal\t that  on  a  proper
\nconstruction   the  definition\tcovers\tboth  gambling\t and
\ninnocent competitions.\tIn our view, the section, on a\ttrue
\nconstruction,  covers only -gambling prize competitions\t and
\nthe Act is a law with respect to betting and gambling  under
\nEntry  34.  As, for the foregoing reasons, we  have  already
\narrived at the conclusion just stated, it is unnecessary for
\nus  to refer to the language used in the third category\t and
\nto invoke the rule of construction which goes by the name of
\nnoscitur  a  sociis  relied on by learned  counsel  for\t the
\nappellant.\n<\/p>\n
The  next  point urged is that, although the  Act  may\tcome
\nunder  Entry 34, the taxing provisions of s. 12A  cannot  be
\nsaid to impose a tax on betting and gambling under Entry  62
\nbut imposes a tax on trade under Entry 60.  Once it is\theld
\nthat  the  impugned  Act  is on the  topic  of\tbetting\t and
\ngambling under Entry 34, the tax imposed ‘by such a statute,
\none  would  think, would be a tax on  betting  and  gambling
\nunder  Entry  62.  The Appeal Court has expressed  the\tview
\nthat  s. 12A does not fall within Entry 62, for it does\t not
\nimpose\ta tax on the gambler but imposes a tax on the  peti-
\ntioners\t who do not themselves gamble but who  only  promote
\nthe  prize  competitions.   So\tfar  as\t the  promoters\t are
\nconcerned, the tax -levied from them can only be regarded as
\ntax  on the trade of prize competitions carried on by  them.
\nThis.’\twith  respect, is taking a very narrow view  of\t the
\nmatter.\t Entry 62 talks of taxes on betting and gambling and
\nnot  of\t taxes\ton  the\t men  who  bet\tor  gamble.   It  is
\nnecessary,,  therefore, to bear in mind the real  nature  of
\nthe  tax.   The\t tax  imposed by s.  12A  is,  in  terms,  a
\npercentage  of\tthe sums specified in the  declaration\tmade
\nunder  a. 15 by the promoter or a lump sum having regard  to
\nthe circulation and distribution of the newspaper, or
\n(1) (1941) F.C.R. 12.\n<\/p>\n
\t\t\t    899<\/span><\/p>\n
publication  in\t the State.  Under s. 15 the promoter  of  a
\nprize  competition carried on in a newspaper or\t publication
\nprinted\t and  published\t outside  the State  is\t to  make  a
\ndeclaration  in\t such  form and at such\t period\t as  may  be
\nprescribed.   Form ‘J’ prescribed by r. 11 (c) requires\t the
\npromoter to declare, among other things, the total number of
\ntickets\/coupons received for the competition from the  State
\nof  Bombay  and the total receipts out of the  sale  of\t the
\ntickets\/coupons\t from the State of Bombay.   The  percentage
\nunder a. 12A is to be calculated on the total sums specified
\nin  the declaration.  It is clear, therefore, that  the\t tax
\nsought to be imposed by the impugned Act is a percentage  of
\nthe  aggregate of the entry fees received from the State  of
\nBombay.\t On ultimate analysis it is a tax on each entry\t fee
\nreceived from each individual competitor who remits it\tfrom
\nthe  State of Bombay.  In gigantic prize competitions  which
\nthe  prize competitions run by the  petitioners\t undoubtedly
\nare,  it  is  extremely\t difficult  and\t indeed\t well\tnigh
\nimpossible   for  the  State  to  get  at  each\t  individual
\ncompetitor and the provision for collecting the tax from the
\npromoters  after  the entry fees come into  their  hands  is
\nnothing\t but a convenient method of collecting the tax.\t  In
\nother words, the taxing authority finds it convenient in the
\ncourse\tof administration to collect the duty in respect  of
\nthe  gambling activities represented by each of the  entries
\nwhen  the same reaches the hands of the promoters.  The\t tax
\non gambling is a well recognised group of indirect taxes  as
\nstated by Findlay Shirras in his Science of Public  Finance,
\nvol.  II p. 680.  It is a kind of tax which, in the language
\nof J. S. Mill quoted by Lord Hobhouse in Bank of Toronto  v.
\nLambe (1), is demanded from the promoter in the\t expectation
\nand intention that he shall indemnify himself at the expense
\nof  the\t gamblers who sent entrance fees to him.   That,  we
\nthink,\tis the general tendency of the tax according to\t the
\ncommon\tunderstanding of men.  It is not difficult  for\t the
\npromoters  to pass on the tax to the gamblers, for they\t may
\ncharge the proportionate percentage on the amount of
\n(1)  L.R. (1887) 12 A.C. 575.\n<\/p>\n
900<\/span><\/p>\n
each  entry as the seller of goods charges the sales tax  or
\nhe  may increase the entrance fee from 4 annas to 5 annas  6
\npies to cover the tax.\tIf in particular circumstances it is
\neconomically  undesirable or practically impossible to\tpass
\non  the\t tax  to the gamblers, that circumstance  is  not  a
\ndecisive  or even a relevant consideration for\tascertaining
\nthe  true  nature  of the tax, for it does  not\t affect\t the
\ngeneral\t tendency of the tax which remains.  If taxation  on
\nbetting\t and  gambling\tis  to be regarded  as\ta  means  of
\ncontrolling  betting  and  gambling  activities,  then\t the
\neasiest\t and  surest  way  of doing so\tis  to\tget  at\t the
\npromoters who encourage and promote the unsocial  activities
\nand  who  hold\tthe gamblers’ money in their  –\t hands.\t  To
\ncollect\t the  tax  from\t the promoters is  not\tto  tax\t the
\npromoters  but\tis a convenient way of imposing the  tax  on
\nbetting\t and  gambling and indirectly  taxing  the  gamblers
\nthemselves.   It is to be noted that the tax here is not  on
\nthe  profits made by the petitioners but it is a  percentage
\nof  the total sum received by them from the State of  Bombay
\nas entrance fees without the deduction of any expense.\tThis
\ncircumstance also indicates that it is not a tax on a trade.
\nAccording to the general understanding of men, as stated  by
\nLord  Warrington of Clyffe in Rex v.  Caledonian  Collieries
\nLtd.  (1),  there are marked distinctions between a  tax  on
\ngross  collection  and a tax on income\twhich  for  taxation
\npurposes  means gains and profits.   Similar  considerations
\nmay  apply  to tax on trade.  There is\tyet  another  cogent
\nreason\tfor holding that the tax imposed by s. 12A is a\t tax
\non  betting  and  gambling.  In\t enacting  the\tstatute\t the
\nLegislature  was  undoubtedly making a law with\t respect  to
\nbetting\t and  gambling\tunder Entry 34\tas  here  in  before
\nmentioned.  By the amending Act XXX of 1952 the\t Legislature
\nby deleting the concluding words of the definition of ‘prize
\ncompetition’,  namely, ” but does not include etc., etc.,  ”
\nextended  the  operation of the Act  to\t prize\tcompetitions
\ncarried\t on in newspapers printed and published outside\t the
\nState  of  Bombay.   They knew that  under  Art.  276  which
\nreproduced s. 142A of the Government of India Act,
\n(1)  L.R. (1928) A.C. 358.\n<\/p>\n
901<\/span><\/p>\n
1935,  they could not impose a tax exceeding the sum of\t Rs.
\n250 on any trade or calling under Entry 60.  If the tax\t can
\nbe  referable  either to Entry 60 or to Entry 62,  -then  in
\nview of the fact that s. 12A will become at least partially,
\nif  not wholly, invalid as a tax on trade or  calling  under
\nEntry 60 by reason of Art. 276(2), the court must, in  order
\nto uphold the section, follow the well established principle
\nof construction laid down by the Federal Court of India\t and
\nhold  that the Legislature must have been  contemplating  to
\nmake a law with respect to betting and gambling under  Entry
\n62,  for there is no constitutional limit to the quantum  of
\ntax  which  can be imposed by a law made under\tthat  Entry.
\nFor  reasons stated above, we are satisfied that s.  12A  is
\nsupportable as a valid piece of legislation under Entry 62.
\nThe next point urged by the petitioners is that under  Arts.
\n245  and 246 the Legislature of a State can only make a\t law
\nfor  the  State or any part thereof and,  consequently,\t the
\nLegislature overstepped the limits of its legislative  field
\nwhen by the impugned Act it purported to affect men residing
\nand carrying on business outside the State.  It is submitted
\nthat  there is no sufficient territorial nexus\tbetween\t the
\nState  and the activities of the petitioners who are not  in
\nthe  State.   The  doctrine of\tterritorial  nexus  is\twell
\nestablished  and there is no dispute as to  the\t principles.
\nAs  enunciated\tby learned counsel for the  petitioners,  if
\nthere is a territorial nexus between the person sought to be
\ncharged and the State seeking to tax him the taxing  statute
\nmay  be upheld.\t Sufficiency of the  territorial  connection
\ninvolves  a  consideration of two elements, namely  (a)\t the
\nconnection  must  be  real  and not  illusory  and  (b)\t the
\nliability  sought  to be imposed must be pertinent  to\tthat
\nconnection.   It is conceded that it is of no importance  on
\nthe  question of validity that the liability imposed  is  or
\nmay  be\t altogether  disproportionate  to  the\t territorial
\nconnection.  In other words, if the connection is sufficient
\nin the sense mentioned above, the extent of such  connection
\naffects\t merely\t the  policy and not  the  validity  of\t the
\nlegislation.   Keeping these principles in mind we  have  to
\nascertain if in the case before us there
\n116<\/span>
\n902<\/span>
\nwas  sufficient\t territorial nexus to  entitle\tthe  Bombay.
\nLegislature to make the impugned law.  The question  whether
\nin  a  given case there is sufficient territorial  nexus  is
\nessentially  one  of fact.  The trial court took  the’\tview
\nthat the territorial nexus was not sufficient to uphold\t the
\nvalidity of the law under debate.  The Court of Appeal\ttook
\na  different view of the facts and upheld the law.  We\tfind
\nourselves  in  agreement  with the  Court  of  Appeal.\t The
\nnewspaper “Sporting Star” printed and published in Bangalore
\nis   widely  circulated\t in  the  State\t of   Bombay.\t The
\npetitioners  have set up collection depots within the  State
\nto  receive entry forms and the fees.  They  have  appointed
\nlocal collectors.  Besides the circulation of the copies  of
\nthe  ”\tSporting Star “, the petitioners print\tover  40,000
\nextra coupons for distribution which no doubt are  available
\nfrom   their   local   collectors.    The   most   important
\ncircumstance   in   these  competitions\t is   the   alluring
\ninvitation  to\tparticipate in the  competition\t where\tvery
\nlarge prizes amounting to thousands of rupees and  sometimes
\nrunning into a lakh of rupees may be won at and for a paltry
\nentrance fee of say 4 annas per entry.\tThese advertisements
\nreach  a  large number of people resident within  the  Stat.
\nThe gamblers, euphemistically called, the competitors,\tfill
\nup the entry forms and either leave it along with the  entry
\nfees at the collection depots set up in the State of  Bombay
\nor-  send the same by poet from Bombay.\t All the  activities
\nthat  the gambler is ordinarily expected to  undertake\ttake
\nplace,\tmostly if not entirely, in the State of\t Bombay\t and
\nafter sending the entry forms and the fees the gamblers hold
\ntheir  soul in patience in great expectations  that  fortune
\nmay  smile  on them.  In our judgment the  standing  invita-
\ntions, the filling up of the forms and the payment of  money
\ntake place within the State which is seeking to tax only the
\namount received by the petitioners from the State of Bombay.
\nThe  tax  is on gambling although it is collected  from\t the
\npromoters.   All  these,  we  think,  constitute  sufficient
\nterritorial  nexus  which entitles the State  of  Bombay  to
\nimpose\ta  tax on the gambling that takes place\t within\t its
\nboundaries  and the law cannot be struck down on the  ground
\nof extra territoriality.\n<\/p>\n
903<\/span><\/p>\n
Assuming   that\t the  impugned\tAct  is\t well\twithin\t the
\nlegislative competence of the Bombay Legislature and that it
\nis not invalid on the ground of extra territorial operation,
\nwe have next to examine and see if there is anything else in
\nthe Constitution which renders it invalid.  The\t petitioners
\ncontend\t that  even  if the  prize  competitions  constitute
\ngambling  transactions,\t they  are  nevertheless  trade\t  or
\nbusiness activities and that that being so the impugned\t Act
\ninfringes  the\tpetitioners’ fundamental  right\t under\tArt.
\n19(1)(g)  ‘of  the Constitution to carry on their  trade  or
\nbusiness and that the restrictions imposed by the Act cannot
\npossibly  be  supported as reasonable  restrictions  in\t the
\ninterests  of  the  general public  permissible\t under\tArt.
\n19(6).\t The  petitioners also point out that the  trade  or
\nbusiness  carried  on  by them is not  confined\t within\t the
\nlimits\tof the State of Mysore but extends across the  State
\nboundaries into other States within the territories of India
\nand even into lands beyond the Union of India and they\turge
\nthat  in  view of the inter-State nature of their  trade  or
\nbusiness the restrictions imposed by the impugned Act offend
\nagainst\t Art. 301 which declares that, subject to the  other
\nprovisions of Part XIII of the Constitution, trade, commerce
\nand  intercourse throughout the territory of India shall  be
\nfree  and  cannot be supported under Art.  304(b),  for\t the
\nrestrictions cannot be said to be reasonable or required  in
\nthe public interest and because the procedural\trequirements
\nof  the\t proviso thereto had not been  complied\t with.\t The
\nState  of  Bombay repudiates these contentions\tand  submits
\nthat  as  prize competitions are opposed  to  public  policy
\nthere can be no “trade” or “business”” in promoting a  prize
\ncompetition   and   the\t question  of  infraction   of\t the
\npetitioner’s fundamental right to carry on trade or business
\nguaranteed  by\tArt.  19(1)(g) or of the  violation  of\t the
\nfreedom\t of trade, commerce or intercourse declared by\tArt.
\n301  does  not arise at all and that in any  event  if\tArt.
\n19(1)(g)  or  Art.  301 applies\t at  all,  the\trestrictions
\nimposed\t by  the impugned Act  are  reasonable\trestrictions
\nnecessary in the interest of the general public and saved by
\nArt. 19(6) and by Art. 304(b),of the Constitution.  It is
\n904<\/span>
\nconceded  that\tthe bill which became Act XXX  of  1952\t and
\namended the 1948 Act in the manner here in before stated was
\nintroduced  in\tthe  Legislature of the\t State\twithout\t the
\nprevious  sanction of the President and,  consequently,\t the
\ncondition precedent to the validity of the resulting Act  as
\nlaid  down in the proviso had not been complied with but  it
\nis submitted, we think correctly, that the defect was cured,
\nunder  Art.  255, by the assent given  subsequently  by\t the
\nPresident to the impugned Act.\tIt is, however, admitted  by
\nlearned counsel appearing for the appellant State that under
\nArt.  255 the subsequent assent of the President  will\tsave
\nthe Act if the other condition embodied in Art. 304(b) as to
\nthe  restrictions  imposed  by it being\t reasonable  in\t the
\npublic interest is held to be satisfied but it will not save
\nthe  rules framed under a. 31 of the impugned Act which\t had
\nnever  been  placed before the President or assented  to  or
\napproved  by him.  We now proceed to examine and  deal\twith
\nthese rival, contentions.\n<\/p>\n
The first branch of the argument on this part of the  appeal
\nraises\ta  question  of a very\tfar  reaching  nature.\t The
\nquestion  posed\t before us is: Can the\tpromotion  of  prize
\ncompetitions,  which  are  opposed  to\tpublic\tpolicy,\t  be
\ncharacterised as a ” trade or business ” within the  meaning
\nof Art. 19(1)(g) or “trade, commerce and intercourse” within
\nArt.  301 ? The learned trial Judge has expressed  the\tview
\nthat  if  he were able to hold that the\t prize\tcompetitions
\nconducted  by the petitioners were of a gambling nature,  he
\nwould  have had no difficulty in concluding that  they\twere
\noutside\t the protection of the Constitution.  The  Court  of
\nAppeal,\t however, took a different view.  What weighed\twith
\nthe  Court of Appeal was the fact that the  legislature\t had
\nnot  prohibited gambling outright but only  made  provisions
\nfor  regulating\t the  same and further that  the  State\t was
\nmaking\ta profit out of these prize competitions by  levying
\ntaxes  thereon.\t It is necessary to consider  the  arguments
\nthat have been adduced before us by learned counsel for\t the
\nparties in support of their respective contentions.\n<\/p>\n
905<\/span><\/p>\n
It will be noted that Art. 19(1) (g) in very general  -terms
\nguarantees  to\tall  citizens  the right  to  carry  on\t any
\noccupation,  trade  or\tbusiness  and el.  (6)\tof  Art.  19
\nprotects  legislation  which  may, in the  interest  of\t the
\ngeneral\t public,  impose  reasonable  restrictions  on\t the
\nexercise of the right conferred by Art. 19(1) (g).  Likewise
\nArt.  301  declares  that trade,  commerce  and\t intercourse
\nthroughout  the territory of India shall be free  but  makes
\nsuch  declaration  subject to the other provisions  of\tPart
\nXIII  of the Constitution.  Arts. 302305, which are in\tthat
\nPart,  lay  down certain restrictions subject to  which\t the
\ndeclaration  contained in Art. 301 is to  operate.   Article
\n302 empowers Parliament by law to impose restrictions on the
\nfreedom of trade, -commerce or intercourse not only  between
\none State and another but also within the State, provided in
\neither\tcase  such restrictions are required in\t the  public
\ninterest.  Article 304 (b) authorises the State Legislatures
\nto  impose reasonable restrictions on the freedom of  trade,
\ncommerce or intercourse with or within the States as may  be
\nrequired in the public interest, provided the formalities of
\nprocedure  are complied with Arts. 19(1) (g) and 301, it  is
\npointed out are two facets -of the same thing-the freedom of
\ntrade\tArt. 19(1)(g) looks at the matter from the point  of
\nview   of  the\tindividual  citizens  and   protects   their
\nindividual right to carry on their trade or business,\tArt.
\n301  looks  at\tthe matter from the point  of  view  of\t the
\ncountry’s  trade and commerce as a whole, as  distinct\tfrom
\nthe  individual interests of the citizens and it relates  to
\ntrade,\tcommerce  or intercourse both with  and\t within\t the
\nStates.\t The question which calls for our decision is as  to
\nthe  true  meaning,  import  and scope\tof  the\t freedom  so
\nguaranteed  and declared by our Constitution.  We have\tbeen
\nreferred  to  a large number of -decisions  bearing  on\t the
\nAustralian   and  American  Constitutions  in  aid  of\t the
\nconstruction of the relevant articles of our Constitution.
\nIn the Commonwealth of Australia Constitution Act (63 and 64
\nVic.  c. 12) there is s. 92 from which our Art. 301  appears
\nto have been taken.  The material part of a. 92 -runs thus:\n<\/p>\n
906<\/span><\/p>\n
On  the\t imposition  of uniform duties\tof  customs,  trade,
\ncommerce and intercourse among the States, whether by  means
\nof   internal  carriage\t or  ocean  navigation,\t  shall\t  be
\nabsolutely free.\n<\/p>\n
It  has been held in James v. Commonwealth of Australia\t (1)
\nthat  the word”‘ absolutely ” adds nothing but\temphasis  to
\nthe width of the section.  In the same case it has also been
\nstated and decided that the section imposes a fetter on\t the
\nlegislative  power not only of the  Commonwealth  Parliament
\nbut  also  of  the Parliament of the States.   It  has\tbeen
\nequally\t authoritatively  held that the words ”\t whether  by
\nmeans  of internal carriage or ocean navigation ”  occurring
\nin the section do not restrict its operation to such  things
\nand  persons  as  are carried by land or sea  but  that\t the
\nsection\t extends  to all activities carried on by  means  of
\ninterState  transactions (Commonwealth of Australia v.\tBank
\nof  New\t South Wales (2) ). The Privy Council  in  the\tlast
\nmentioned case has also said at p. 299 that it is no  longer
\narguable that freedom from customs or other monetary charges
\nalone  is secured by the section.  The idea  underlying\t the
\nsection was that the Federation in Australia should  abolish
\nthe  frontiers between the different States and\t create\t one
\nAustralia and that conception involved freedom from  customs
\nduties,\t import&,  border prohibitions and  restrictions  of
\nevery kind, so that the people of Australia would be free to
\ntrade with each other and to pass to and fro from one  State
\nto  another  without any let or hindrance,  or\twithout\t any
\nburden\tor  restriction based merely on the fact  that\tthey
\nwere not members of the same State (James v. Commonwealth of
\nAustralia(1)).\n<\/p>\n
One  cannot  but  be struck by the  sweeping  generality  of
\nlanguage  used in the section.\tSuch a wide  enunciation  of
\nthe  freedom of inter-State trade, commerce and\t intercourse
\nwas bound to lead to difficulties.  The full import and true
\nmeaning of the general words had to be considered, as  years
\nwent past, in relation to the vicissitudes of altering facts
\nand  circumstances  which from time to\ttime  emerged.\t The
\nchanging  circumstances\t and the necessities  compelled\t the
\ncourt
\n(1) L.R. (1936) A.C. 578, 627.\n<\/p>\n
(2) L.R. (1950) A.C. 235, 302$-303.\n<\/p>\n
907<\/span><\/p>\n
to  reach the conclusion that the conception of\t freedom  of
\ntrade, commerce and intercourse in a community regulated  by
\nlaw   presupposed   some  degree  of  restriction   on\t the
\nindividual.   Cases  arose  out\t of  statutes  enacted\t for
\nrestricting  competition of privately owned  motor  vehicles
\nwith publicly owned railways, or to compel users of motor to
\ncontribute to the upkeep of the roads e.g. Willard v. Rawson
\n(1); R. v. Vizzard(2) and O. Gilpin Ltd. v. Commissioner  of
\nRoad  Transport\t and Tramways(1).  In each  of\tthese  three
\ncases  the State law was upheld as not offending against  s.\n<\/p>\n
92.   Cases  arose under statutes which were  sought  to  be
\nsupported on the ground of health.  In Ex parte Nelson\t(No.\n<\/p>\n
1) (4) a New South Wales statute prohibited entry of  cattle
\nfrom   tick  infected  area  until  dipped.   Applying\t the
\nprinciple  of  pith  and substance, it\twas  held  that\t the
\nrestrictions looked at in their true light, were aids to and
\nnot  restrictions  upon the freedom  of\t inter-State  trade,
\ncommerce and intercourse.  In Tasmania v. Victoria (5).\t the
\nabsolute prohibition of imports of potatoes from Tasmania to
\nVictoria could not on facts be supported as a health measure
\nand  consequently was struck down as a violation of  s.\t 92.
\nIn  James  v.  Commonwealth  of\t Australia(6)  came  up\t for
\nconsideration the Dried Fruits Act 1928-35 which  prohibited
\nthe  carrying of any dried fruit from one State\t to  another
\nexcept\tunder a licence and which provided for\tpenalty\t for
\nits contravention.  The regulations authorised the  Minister
\nto  direct  the licensee to export a certain  percentage  of
\ndried  fruits  from  Australia.\t The Minister  by  an  order
\ndetermined that it would be a condition of the licence. that
\nthe licensee should export a percentage of the dried  fruits
\nas therein mentioned.  The appellant having refused to apply
\nfor a licence, his consignments of dried fruits shipped from
\nAide for delivery at Sydney in performance of contracts\t for
\nsale  were  seized.   The appellant brought  an\t action\t for
\ndamages for what he alleged to be a wrongful seizure.  After
\nholding that the section bound the Parliament of
\n(1)  (1933) 48 C.L.R.316.    (4)   (1928) 42.C.L.R. 209.
\n(2)  (1933) 50 C.L.R. 30.    (5)(1935) 52 C.L.R. 157.
\n(3)  (1935) 52 C.L.R. 189.   (6)   L.R.\t (1936)\t A.C.\t578,\n<\/p>\n
627.
\n908<\/span>
\nCommonwealth  equally with those of the States the  Judicial
\nCommittee  proceeded to say that the freedom declared in  s.
\n92  must  be somehow limited and the only  limitation  which
\nemerged\t from  the  context and which  could  logically\t and
\nrealistically  apply  was freedom at what  was\tthe  crucial
\npoint in inter-State trade, namely at the State barrier\t (p.\n<\/p>\n
631).\tIn  the later case of Commonwealth of  Australia  v.
\nBank  of  New South Wales (1) it has been  said\t that  those
\nwords were to be read secundum subjectam materiam and  could
\nnot be interpreted as a decision either that it was only the
\npassage\t of goods which is protected by s. 92 or that it  is
\nonly  at the frontier that the stipulated freedom  might  be
\nimpaired (p. 308).\n<\/p>\n
Learned\t counsel  for the State has strongly relied  on\t two
\ndecisions of the Australian High Court in both of which\t the
\nvalidity  of a New South Wales Statute called the  Lotteries
\nand  Art  Unions  Act  1901-1929  was  called  in  question.
\nSection\t 21 of that Act provided: “Whoever sells  or  offers
\nfor sale or accepts any money in respect of the purchase  of
\nany ticket or share in a foreign lottery shall be liable  to
\na  penalty.”  In the first of those two\t cases-The  King  v.
\nConnare(2)-the appellant offered for sale in Sydney a ticket
\nin  a  lottery\tlawfully  conducted  in\t Tasmania  and\t was
\nconvicted  of  an offence under s. 21.\t He  challenged\t the
\nvalidity  of the law on the ground that it  interfered\twith
\nthe  freedom  of trade, commerce and intercourse  among\t the
\nStates\tand consequently violated the provisions of  s.\t 92.
\nIt  was\t held  by Starke, Dixon,  Evatt\t and  McTiernan\t JJ.
\n(Latham C.J. and Rich J. dissenting) that the provisions  of
\ns.  21\tdid  not  contravene s. 92  and\t the  appellant\t was
\nproperly convicted.  Starke J. discussed the question as  to
\nwhether the sale in -question was an ‘inter-State or  intra-
\nstate  transaction but did not think it necessary to  decide
\nthat question.\tAfter referring to the observations of\tLord
\nWright\tin  James v. The Commonwealth (3) that\tthe  freedom
\ndeclared by s. 92 meant freedom at the frontier, the learned
\nJudge observed that the question
\n(1) L.R. (1950) A.C. 235, 302-303:  (2) (1939) 51 C.L.R.596.
\n(3) L.R. (1936) A.C. 578,627.\n<\/p>\n
909<\/span><\/p>\n
whether\t that  freedom\thad  been  restricted  or   burdened
\ndepended upon the true character and effect of the Act.\t  He
\ntook  the view (at p. 616) that the main purpose of the\t Act
\nwas  to prevent or suppress lotteries and  particularly,  in
\nss.  19, 20 and 21, foreign lotteries and that it was  aimed
\nat preventing what he graphically described as “illegitimate
\nmethods\t of  trading”,\tif sales  of  lottery  tickets\twere
\nregarded  as  trading.\tThe learned Judge took note  of\t the
\nfact  that New South Wales law allowed State  lotteries\t and
\nconcluded that the true character of the impugned Act was to
\nsuppress  gambling in foreign lottery tickets  and  examined
\nfrom  the historical point of view, from, the  character  of
\nthe  Act,  its\tfunction and its effect\t upon  the  flow  of
\ncommerce,  the Act did not, in his view, restrict or  hinder
\nthe freedom of any trade across the frontier of the  States.
\nDixon J., as he then was, gave two reasons for his  opinion,
\nnamely that the transaction was not in itself a\t transaction
\nof inter-State trade’ commerce or intercourse but was a sale
\nin  New South Wales of a ticket then in New South Wales\t and
\nthat, apart from the State lottery and permitted  charitable
\nraffles,  the  Act  suppressed uniformly  the  sale  of\t all
\nlottery\t tickets  in  New South\t Wales.\t  Adverting  to\t the
\nargument  which,  in substance, asked the Court\t to  declare
\nthat s. 92 had created an overriding constitutional right to
\ntraffic or invest in lotteries so long as the trafficker  or
\ninvestor  could\t succeed in placing some boundary  or  other
\nbetween\t himself and the conductor of the lottery  Evatt  J.
\nsaid at pp. 619-20:\n<\/p>\n
it  in my opinion such a proposition cannot be supported  in
\nprinciple  or by reference to authority.  For it is  obvious
\nthat the appellant’s argument also involves the assertion of
\nthe  constitutional  right of a citizen, so long as  he\t can
\nrely upon, or if necessary artificially create, some  inter-
\nState  connection  in  his business, to\t sell  indecent\t and
\nobscene\t  publications,\t diseased  cattle,   impure   foods,
\nunbranded  poisons, unstamped silver, ungraded fruit and  so
\nforth.”\n<\/p>\n
The obvious inconvenience and undesirability of the  effects
\nto be produced if such extravagant arguments
\n117<\/span>
\n910<\/span>
\nwere  to prevail led the learned Judge to think (at p.\t620)
\nthat  in the interpretation of s. 92 it was  permissible  to
\naccept\tsome  postulates  or axioms demanded  alike  by\t the
\ndictates  of common sense and by some knowledge of what\t was
\nbeing\tattempted   by\tthe  founders  of   the\t  Australian
\nCommonwealth.\tMaking\tthese  assumptions  and\t concessions
\nEvatt J. opined (at p. 621) that the guarantee contained  in
\ns.  92 had nothing whatever,\/ to say on the topic of  inter-
\nState  lotteries and could not be invoked to prevent  either
\nthe suppression or the restriction in the public interest of
\nthe  practice  of gambling or investing in  such  lotteries.
\nThe  learned Judge did not think that lottery tickets  could
\nbe  regarded as goods or commodities which were entitled  to
\nthe protection of s. 92 and concluded thus at p. 628:
\n ”  If they are goods or commodities they belong to  a\tvery
\nspecial\t category, so special that in the interests  of\t its
\ncitizens  the  State may legitimately exile  them  from\t the
\nrealm  of trade, commerce or business.\t The  indiscriminate
\nsale  of  such tickets may be regarded as  causing  business
\ndisturbance  and loss which, on general grounds\t of  policy,
\nthe State is entitled to prevent or at least minimize.”
\n  McTiernan J. was even more forthright in placing  gambling
\noutside the pale of trade, commerce and intercourse.  At  p.
\n631 he said:\n<\/p>\n
”  Some\t trades\t are more adventurous  or  speculative\tthan
\nothers, but trade or commerce as a branch of human  activity
\nbelongs\t to  an\t order entirely\t different  from  gaming  or
\ngambling.   Whether a particular activity falls\t within\t the
\none or the other order is a matter of social opinion  rather
\nthan   jurisprudence……   …………………   It\t  is
\ngambling,  to  buy a ticket or shard in a lottery.   Such  a
\ntransaction  does not belong to the commercial\tbusiness  of
\nthe  country.\tThe purchaser stakes money in a\t scheme\t for
\ndistributing prizes by chance.\tHe is a gamester.”
\n   A little further down the learned Judge observed:
\n  “It  is  not a commercial arrangement to  sell  a  lottery
\nticket; for it is merely the acceptance of money
\n911<\/span>
\nor  the\t promise of money for a chance.\t In  this  case\t the
\npurchase  of  a\t lottery ticket merely founds  a  hope\tthat
\nsomething will happen in Tasmania to benefit the purchaser.”
\n  Naturally  enough learned counsel for the appellant  State
\nseeks to fasten upon the observations quoted or referred  to
\nabove  in support of his thesis that gambling is not  trade,
\ncommerce or intercourse within the meaning alike of s. 92 of
\nthe  Australian Constitution and our Art. 19(1)(g) and\tArt.\n<\/p>\n
301.
\n  In  the  second  case-The  King  v.  Martin  (1)-the\tsame
\nquestion  came up for reconsideration.\tThe only  difference
\nin  fact was that there was no actual sale by delivery of  a
\nlottery ticket in New South Wales but money was received  by
\nthe  agent of the Tasmania promoter in New South  Wales\t and
\ntransmitted to Tasmania from where the lottery ticket was to
\nbe  sent.   The State law was again  upheld.   Latham  C.J.,
\nRich,  Starke,\tEvatt  and Mctiernan JJ.  adhered  to  their
\nrespective  opinions  expressed in the earlier case  of\t The
\nKing  v. Connare (2 ). Dixon J., as he then was, gave a\t new
\nreason for his opinion that notwithstanding the\t inter-State
\ncharacter  of the transaction s. 21 of the impugned Act\t was
\nvalid.\tSaid the learned Judge at pp. 461-462:
\n  ” The reason for my opinion is that the application of the
\nlaw does not depend upon any characteristics of lotteries or
\nlottery\t transactions in virtue of which they are  trade  or
\ncommerce or intercourse nor upon any inter-State element  in
\ntheir  nature.\tThe only criterion of its operation  is\t the
\naleatory description of the acts which it forbids.  There is
\nno   prohibition  or  restraint\t placed\t upon  any  act\t  in
\nconnection  with  a lottery because either the\tact  or\t the
\nlottery\t is or involves commerce or trade or intercourse  or
\nmovement  into\tor out of New South Wales  or  communication
\nbetween\t\tthat\t    State\t and\t     another
\nState……………………………\tTo say\tthat  inter-
\nState trade, commerce and intercourse shall be free, means,,
\nI think, that no restraint or burden shall be placed upon an
\nact  falling under that description because it is  trade  or
\ncommerce or
\n(1) (1939) 62 C.L.R. 457.   (2) (1939) 61 C.L.R. 596.\n<\/p>\n
912<\/span><\/p>\n
intercourse    or   involves   inter-State    movement\t  or
\ncommunication.”\n<\/p>\n
  In  this view of the matter Dixon J. now upheld s.  21  of
\nthe  impugned  Act on the ground that the criterion  of\t its
\napplication   was  the\tspecific  gambling  nature  of\t the
\ntransactions  which  it\t penalised and\tnot  anything  which
\nbrought\t the  transactions under the description  of  trade,
\ncommerce  or  intercourse or made them interState  in  their
\nnature.\n<\/p>\n
  Then\tcame the case of  Commonwealth of Australia v.\tBank
\nof New South Wales(1) commonly called the Bank case where it
\nwas held that s. 46 of the Banking Act, 1947, was invalid as
\noffending  against  s. 92 of  the  Australian  Constitution.
\nSub-section (1) of s. 46 provided that a private bank should
\nnot,  after  the commencement of the Act, carry\t on  banking
\nbusiness  in  Australia except as required by  the  section.
\nSubsection (2) laid down that each private bank should carry
\non  banking business in Australia and should not, except  on
\nappropriate  grounds,  cease  to  provide  any\tfacility  or
\nservice provided by it in the course of its banking business
\non the fifteenth day of August one thousand nine hundred and
\nforty seven.  Sub-section (4) authorised that the  Treasurer
\nmight,\tby  notice  published in the gazette  and  given  in
\nwriting\t to  a private bank, require that  private  bank  to
\ncease,\tupon  a date specified in the  notice,\tcarrying  on
\nbusiness  in Australia.\t Sub-section (8) provided that\tupon
\nand  after the date specified in a notice under\t sub-s.\t (4)
\nthe  private bank to which that notice was given should\t not
\ncarry on banking business in Australia.\t It also provided  a
\npenalty\t of pound 10,000 for each day on which\tthe  contra-
\nvention\t occurred.  The question was: Whether  this  section
\ninterfered   with   the\t freedom  of  trade,   commerce\t  or
\nintercourse  among  the\t States declared by  s.\t 92  of\t the
\nAustralian  Constitution ? It was held that the business  of
\nbanking\t which\tconsisted of the creation  and\ttransfer  of
\ncredit,\t the making of loans, the purchase and\tdisposal  of
\ninvestments  and  other kindred\t transactions  was  included
\namong  those  activities described as  trade,  commerce\t and
\nintercourse in s. 92
\n(1) L.R. (1950) A.C. 235.\n<\/p>\n
913<\/span><\/p>\n
and,  accordingly,  the impugned s. 46 which  while  leaving
\nuntouched the Commonwealth and State Banks,, prohibited\t the
\ncarrying  on  in  Australia of the business  of\t banking  by
\nprivate\t banks,\t was invalid as contravening  s.  92.\tLord
\nPorter\tdelivering  the judgment of the\t Judicial  Committee
\npointed out that it was no longer arguable that freedom from
\ncustoms\t or other monetary charges alone was secured by\t the
\nsection.  Then after reviewing and explaining at some length
\nthe two cases of James V. Cowan (1) and James v. The Common-
\nwealth(2),   his   Lordships  proceeded\t to   make   certain
\nobservations  on the distinction between restrictions  which
\nare  regulatory\t and do not offend against s. 92  and  those
\nwhich  are something more than regulatory and do so  offend.
\nHis  Lordship  deduced\ttwo general  propositions  from\t the
\ndecided cases, namely (1) that regulation of trade, commerce
\nand  intercourse  among\t the  States  was  compatible\twith
\nabsolute freedom and (2) that s. 92 was violated only when a
\nlegislative  or\t executive act operated to  restrict  trade,
\ncommerce   and\tintercourse  directly  and  immediately\t  as
\ndistinct  from\tcreating  some\tindirect  or   consequential
\nimpediment  which might fairly be regarded as  remote.\t The
\nproblem\t whether  an enactment was regulatory  or  something
\nmore  or whether a restriction was direct or only remote  or
\nonly  incidental involved, his Lordship pointed out, not  so
\nmuch legal as political, social or economic  considerations.
\nReferring  to  the  case  of  Australian  National   Airways
\nProprietory  Ltd.  v.  The  Commonwealth  (3)  his  Lordship
\nexpressed   his\t  agreement  with  the\tview   that   simple
\nprohibition  was  not regulation.  A  little  further  down,
\nhowever,  his  Lordship made a reservation that he  did\t not
\nintend\tto  lay\t down that in  no  circumstances  could\t the
\nexclusion of competition so as to create a monopoly,  either
\nin  a  State  or Commonwealth agency, or in  some  body,  be
\njustified  and\tthat every case must be judged\ton  its\t own
\nfacts and in its own setting of time and circumstances,\t and
\nthat it might be that in regard to some economic  activities
\nand at some stage of social development it might be
\n(1) L.R. (1932) A.C. 542.     (3) (1945) 71 C.L.R. 29.
\n(2)L.R. (1936) A.C. 578, 627.\n<\/p>\n
914<\/span><\/p>\n
maintained  that prohibition with a view to  State  monopoly
\nwas the only practical and reasonable manner of\t regulation,
\nand  that inter-State trade, commerce and  intercourse\tthus
\nprohibited  and thus  monopolised remained absolutely  free.
\nHis  Lordship further added that, regulation of trade  might
\nclearly\t take  the  form of denying  certain  activities  to
\npersons by age or circumstances unfit to perform them or  of
\nexcluding  from\t passage  across the  frontier\tof  a  State
\ncreatures  or  things  calculated to  injure  its  citizens.
\nReferring  to  the  doctrine of\t “pith\tand  substance”\t his
\nLordship  observed that it, no doubt, raised  in  convenient
\nform  an appropriate question in cases where the real  issue
\nwas  one of subject matter as when the point was  whether  a
\nparticular piece of legislation was a law in respect of some
\nsubject within the permitted field, but it might also  serve
\na  useful  purpose  in the process of  deciding\t whether  an
\nenactment   which  worked  some\t interference  with   trade,
\ncommerce and intercourse among the States was, nevertheless,
\nuntouched by s.\t    92\tas being essentially  regulatory  in
\ncharacter.\n<\/p>\n
The  last  Australian case on the point cited before  us  is
\nMansell v. Beck(1).  In this case also the provisions of the
\nLotteries and Art Unions Act of New South Wales came up\t for
\nconsideration and the decisions in the King v. Connare\t(11)
\nand  the  King v. Martin(1). were considered  and  approved.
\nDixon C.J. and Webb J. observed that the true content of the
\nState  law must be ascertained to see whether the  law\tthat
\nresulted  from\tthe whole impaired the freedom which  s.  92
\nprotected.   Their Lordships pointed out that lotteries\t not
\nconducted under the authority of Government were  suppressed
\nas  pernicious.\t  The  impugned legislation  was,  in  their
\nLordships’  view,  of a traditional  kind  directed  against
\nlotteries   as\tsuch  independently  altogether\t of   trade,
\ncommerce  and  intercourse  between  States.   McTiernan  J.
\nreiterated  the\t views he had expressed in the case  of\t the
\nKing v. Connare (2) in the following words:
\n(1)  (Australian Law journal, Vol. 3o.\tNo. 7 P. 346).
\n(2)  (1939) 61 C.L.R. 596.\n<\/p>\n
(3)  (1939) 62 C.L.R. 457.\n<\/p>\n
915<\/span><\/p>\n
It is important to observe the distinction that gambling  is
\nnot trade, commerce and intercourse within the meaning of s.
\n92  otherwise the control of gambling in Australia would  be
\nattended with constitutional difficulties.”
\n  Williams  J. did not consider it necessary to express\t any
\nfinal opinion on the question whether there could be  inter-
\nState  commerce in respect of lottery tickets.\tHe took\t the
\nview  that ss. 20 and 21 of the New South Wales Act were  on
\ntheir  face  concerned and concerned only  with\t intra-State
\ntransactions  and  that their provisions  did  not  directly
\nhinder,\t burden or delay any inter-State trade, commerce  or
\nintercourse.   His Lordship observed that there was  nothing
\nin  the\t reasoning in the judgment in the Bank\tcase  or  in
\nsubsequent decisions to indicate that the King v. Connare(1)
\nand’ King v. Martin(2) were not rightly decided.  He quoted,
\nwith  approval,\t the observations of Dixon  J.\tin  Martin’s
\ncase.\tFullagar  J. also took the view\t that  the  previous
\ndecisions  of  the  High Court in  Connare’s  case  (1)\t and
\nMartin’s case(2) were rightly decided for the reasons  given
\nby  Dixon  J.  Kitto J. dissented from\tthe  majority  view.
\nTaylor\tJ.  who was also in favour of the  validity  of\t the
\nimpugned law, observed:\n<\/p>\n
  ” No simple legislative expedient purporting to  transmute
\ntrade  and commerce into something else will remove it\tfrom
\nthe  ambit of s. 92.  But whilst asserting the width of\t the
\nfield in which s. 92 may operate it is necessary to  observe
\nthat not every transaction which employs the forms of  trade
\nand  commerce  will,  as  trade\t and  commerce,\t invoke\t its
\nprotection.  The sale of stolen goods, when the\t transaction
\nis  juristically analysed, is no different from the sale  of
\nany other goods but can it be doubted that the Parliament of
\nany  State  may prohibit the sale of  stolen  goods  without
\ninfringing  s.\t92 of the Constitution ?  The  only  feature
\nwhich  distinguishes  such  a  transaction  from  trade\t and
\ncommerce  as  generally\t understood is to be  found  in\t the
\nsubject\t of the transaction; there is no difference  in\t the
\nmeans adopted for carrying it out.  Yet it may be said\tthat
\nin essence such a transaction
\n(1) (193) 61 C.L.R. 596.   (2) (1939) 62 C.L.R. 457.\n<\/p>\n
916<\/span><\/p>\n
constitutes no part of trade and commerce as that expression
\nis   generally\tunderstood.   Numerous\texamples  of   other
\ntransactions  may  be given, such as the sale  of  a  forged
\npassport,  or, the sale of counterfeit money, which  provoke
\nthe same comment and, although legislation prohibiting\tsuch
\ntransactions  may,  possibly,  be  thought  to\tbe   legally
\njustifiable  pursuant  to  what\t has,  on  occasions,\tbeen
\nreferred to as a “Police power”, I prefer to think that\t the
\nsubjects  of  such transactions are not, on  any  view,\t the
\nsubjects of trade and commerce as that expression is used in
\ns.  92 and that the protection afforded by that section\t has
\nnothing\t to do with such transactions even though  they\t may
\nrequire,  for their consummation, the employment of  instru-
\nments,\twhereby inter-State trade and commerce\tis  commonly
\ncarried on.”\n<\/p>\n
  After referring to the history of lotteries in England the
\nlearned Judge concluded:\n<\/p>\n
  ”  The foregoing observations give some indication of\t the
\nattitude  of  the  law for over two  and  a  half  centuries
\ntowards\t the carrying on of lotteries.\tBut they  show\talso
\nthat,  in this country, lotteries were, from the  moment  of
\nits first settlement, common and public nuisances and  that,
\nin  general,  it was impossible to conduct  them  except  in
\nviolation  of the law.\tIndeed it was impracticable for\t any
\nperson to conduct a lottery without achieving the status  of
\na rogue and a vagabond.”\n<\/p>\n
  In the Constitution of the United States of America  there
\nis  no counterpart to Art. 301 of our Constitution or s.  92
\nof  the\t Australian Constitution.  The problem\tof  gambling
\ncame  up  before the courts in America\tin  quite  different
\nsetting.  Article 1, s. 8, sub-s. (3) of the Constitution of
\nthe  United States compendiously called the commerce  clause
\ngives  power  to  the Congress\tto  regulate  commerce\twith
\nforeign\t nations and among the several States and  with\t the
\nIndian tribes.\tCongress having made law regulating gambling
\nactivities  which  extended across the\tState  borders,\t the
\nquestion arose whether the making of the law was within\t the
\nlegislative  competence\t of  the Congress, that\t is  to\t say
\nwhether it could be brought within the commerce
\n917<\/span>
\nclause.\t The question depended for its answer on the further
\nquestion whether the gambling activities could be said to be
\ncommerce amongst the States.  If it could, then it was\topen
\nto  Congress to make the law in exercise of its\t legislative
\npowers\tunder  the  commerce clause.  More  often  than\t not
\ngambling activities extend from State to State and, in\tview
\nof the commerce clause, no State Legislature can make a\t law
\nfor  regulating\t inter-State  activities in  the  nature  of
\ntrade.\t If  betting and gambling does not fall\t within\t the
\nambit of the commerce clause, then neither the Congress\t nor
\nthe  State Legislature can in any way control the same.\t  In
\nsuch circumstances, the Supreme Court of America thought  it
\nright to give a wide meaning to the word “commerce” so as to
\ninclude\t gambling  within the commerce\tclause\tand  thereby
\nenable the Congress to regulate and control the same.\tThus
\nin Champion v. Ames(1) the carriage of lottery tickets\tfrom
\n‘one  State to another by an express company was held to  be
\ninter-State  commerce and the court upheld the law  made  by
\nCongress  which made such carriage an offence.\tIn  Hipolite
\nEgg  Co.  v.  United  States(2)\t the  Pure  Food  Act  which
\nprohibited the importation of adulterated food was upheld as
\nan  exercise  of  the  power of\t the  Congress\tto  regulate
\ncommerce.   The prohibition of transportation of  women\t for
\nimmoral purposes from one State to another or to a  foreign,
\nland  has  also been held to be within the  commerce  clause
\n(see Hoke v. United States (3) ). SO has the prohibition  of
\nobscene literature and articles for immoral use.   Reference
\nhas  also  been\t made  to the  cases  of  United  States  v.
\nKahriger(4)  and Lewis V.  United States(5) to\tsupport\t the
\ncontention of the appellant State that the Supreme Court  of
\nthe  United States looked with great disfavour\ton  gambling
\nactivities.   In  the  last mentioned case  it\twas  roundly
\nstated\tat p. 480 that “there is no constitutional right  to
\ngamble “.\n<\/p>\n
(1)  [1903] 188 U.S. 321 ; 47 L. Ed. 492.\n<\/p>\n
(2)  [1911] 220 U.S. 45 ; 55 L. Ed. 364.\n<\/p>\n
(3)  [1913] 227 U.S. 308 ; 57 L. Ed. 523.\n<\/p>\n
(4)  [1953] 345 U.S. 22 ; 97 L. Ed. 754.\n<\/p>\n
(5)  [1955] 348 U.S. 419; 99 L. Ed. 475.\n<\/p>\n
918<\/span><\/p>\n
In  construing\tthe  provisions\t of  our  Constitution\t the
\ndecisions  of  the American Supreme Court  on  the  commerce
\nclause and the decisions of the Australian High Court and of
\nthe  Privy Council on s. 92 of the  Australian\tConstitution
\nshould,\t for reasons pointed out by this Court in  State  of
\nTravancore-Cochin  1. The Bombay Co. Ltd. (1), be used\twith
\ncaution\t and circumspection.  Our Constitution differs\tfrom
\nboth  American\tand  Australian\t Constitutions.\t  There\t  is
\nnothing\t in the American Constitution corresponding  to\t our
\nArt.  19(1)  (g)  or Art. 301.\tIn  the\t United\t States\t the
\nproblem\t was  that  if\tgambling did  not  come\t within\t the
\ncommerce  clause,  then neither the Congress nor  any  State
\nLegislature  could  interfere with or  regulate\t inter-State
\ngambling.  Our Constitution, however, has provided  adequate
\nsafeguards in cl. (6) of Art. 19 and in Arts. 302-305.\t The
\nscheme of the Australian Constitution also is different from
\nthat of ours, for in the Australian Constitution there is no
\nsuch provision as we have in Art. 19(6) or Arts. 302-304  of
\nour Constitution.  The provision of s. 92 of the  Australian
\nConstitution  being in terms unlimited and  unqualified\t the
\njudicial  authorities  interpreting the same had  to  import
\ncertain\t restrictions  and limitations\tdictated  by  common
\nsense and the exigencies of modern society.  This they\tdid,
\nin  some cases, by holding that certain activities  did\t not
\namount\tto  trade,  commerce or intercourse  and,  in  other
\ncases,\tby applying the doctrine of pith and  substance\t and
\nholding that the impugned law was not a law with respect  to
\ntrade, commerce or intercourse.\t The difficulty which  faced
\nthe   judicial\tauthorities  interpreting  s.  92   of\t the
\nAustralian Constitution cannot arise under our Constitution,
\nfor our Constitution did not stop at declaring by Art. 19(1)\n<\/p>\n
(g) a fundamental right to carry on trade or business or  at
\ndeclaring  by  Art. 301 the freedom of trade,  commerce\t and
\ninter. course but proceeded to make provision by Art.  19(6)
\nand  Arts.  302-305  for imposing in  the  interest  of\t the
\ngeneral\t public reasonable restrictions on the\texercise  of
\nthe  rights guaranteed and declared by Art. 19 (1)  (g)\t and
\nArt. 301.  As one of us said in P. P. Kutti Keya
\n(1)  (1952) S.C.R. 1112 at p. 1121
\n919<\/span>
\nv.   The State of Madras(1) the framers of our Constitution,
\nbeing  aware  of  the problems\twith  which  the  Australian
\nGovernment had been confronted by reason of s. 92, sought to
\nsolve  them by enacting limitations in Part XIII  itself  on
\nthe  freedom guaranteed in Art. 301.  Our  task,  therefore,
\nwill be to interpret our Constitution and ascertain  whether
\nthe prize competitions falling within the definition of\t the
\nimpugned Act, all of which are of a gambling nature, can  be
\nsaid to be a “trade or business” within the meaning of\tArt.
\n19(1)  (g) or “trade, commerce and intercourse ” within\t the
\nmeaning of Art. 301 of our Constitution.\n<\/p>\n
The scheme of our Constitution, as already indicated, is  to
\nprotect\t the freedom of each individual citizen to carry  on
\nhis trade or business.\tThis it does by Art. 19(1)(g).\tThis
\nguaranteed  right is, however, subject to Art.\t19(6)  which
\nprotects a law which imposes, in the interest of the general
\npublic,\t reasonable  restrictions  on the  exercise  of\t the
\nfundamental  right  guaranteed\tby  Art.  19(1)\t (g).\t Our
\nConstitution  also  proclaims  by Art. 301  the\t freedom  of
\ntrade, commerce and intercourse throughout the territory  of
\nIndia’\tsubject\t to the provisions of  Arts.  302-305  which
\npermit\t the   imposition  of  reasonable   restriction\t  by
\nParliament and the State Legislatures.\tThe ‘underlying idea
\nin  making trade, commerce and intercourse with, as well  as
\nwithin,\t the  States free undoubtedly was to  emphasise\t the
\nunity  of India and to ensure that no barriers might be\t set
\nup  to break up the national unity.  One important point  to
\nnote  is that the language used in Art. 19(1) (g)  and\tArt.
\n301 is quite general and that the provisions for restricting
\nthe  exercise  of  the fundamental right  and  the  declared
\nfreedom of the country’s trade, commerce and intercourse are
\nmade  separately,  e.g., by Art. 19(6)\tand  Arts.  302-305.
\nThis  circumstance is fastened upon by learned\tcounsel\t for
\nthe petitioners for contending that the right guaranteed  by
\nArt.  19(1)(g) and the freedom declared by Art. 301  should,
\nin  the\t first\tinstance and to start with,  be\t widely\t and
\nliberally construed and then reasonable restrictions may  be
\nsuperimposed on that right under Art. 19(6) or Arts. 302-305
\nin the interest of the general public.\tAccording
\n(1)  A.I.R. (1954) mad. 621.\n<\/p>\n
920<\/span><\/p>\n
to him the words “trade” or “business” or “commerce”  should
\nbe  read in their widest amplitude as meaning  any  activity
\nwhich  is  undertaken or carried on with a view\t to  earning
\nprofit.\t  There is nothing in those two Arts.  19(1)(g)\t and
\n301, which, he says, may qualify or cut down the meaning  of
\nthe   critical\twords.\t He  contends  that  there   is\t  no
\njustification for excluding from the meaning of those  words
\nactivities  which may be looked upon with disfavour  by\t the
\nState or the Court as injurious to public morality or public
\ninterest.  The argument is that if the trade or business  is
\nof  the\t last  mentioned  character,  then  the\t appropriate
\nLegislature   may   impose  restrictions   which   will\t  be
\njusticiable  by\t the  courts and this  restriction  may,  in
\nappropriate  cases, even extend to total  prohibition.\t Our
\nattention has been drawn to Art. 25 where the limiting words
\n”  subject to public order, morality and health ”  are\tused
\nand it is pointed out that no such limiting words are to  be
\nfound  in Art. 19(1)(g) or Art. 301.  In short the  argument
\nis  that Art. 19(1) (g) and Art. 301 guarantee\tand  declare
\nthe freedom of all activities undertaken and carried on with
\na  view to earning profit and the safeguard is\tprovided  in
\nArt.  19(6) and Arts. 302-305.\tThe proper approach  to\t the
\ntask   of   construction   of  these   provisions   of\t our
\nConstitution*,\tit  is\turged, is  to  start  with  absolute
\nfreedom\t and  then to permit the State to cut  it  down,  if
\nnecessary,  by restrictions which may even extend  to  total
\nprohibition.  On this argument it will follow that  criminal
\nactivities undertaken and carried on with a view to  earning
\nprofit\twill be protected as fundamental rights\t until\tthey
\nare  restricted\t by law.  Thus there will  be  a  guaranteed
\nright to carry on a business of hiring out goondas to commit
\nassault or even murder, of housebreaking, of selling obscene
\npictures,  of trafficking in women and so on until  the\t law
\ncurbs  or  stops such activities. This appears to us  to  be
\ncompletely  unrealistic and incongruous.  We have  no  doubt
\nthat   there  are  certainactivities  which  can  under\t  no
\ncircumstance  be regarded as trade or business\tor  commerce
\nalthough  the  usual  forms  and  instruments  are  employed
\ntherein.   To exclude those activities from the\t meaning  of
\nthose words is not to cut down their meaning at all
\n921<\/span>
\nbut to say only that they are not within the true meaning of
\nthose words.  Learned counsel has to concede that there\t can
\nbe  no “trade” or “business” in crime but submits that\tthis
\nprinciple should not be extended and that in any event there
\nis no reason to hold that gambling does not fall within\t the
\nwords  “trade”\tor “business” or “commerce” as used  in\t the
\nArticles  under consideration.\tThe question arises  whether
\nour  Constitution makers ever intended that gambling  should
\nbe  a fundamental right within the meaning of Art.  19(1)(g)
\nor within the protected freedom declared by Art. 301.
\n  The  avowed  purpose of our Constitution is  to  create  a
\nwelfare State.\tThe directive principles of State policy set
\nforth  in Part IV of our Constitution enjoin upon the  State
\nthe  duty to strive to promote the welfare of the people  by
\nsecuring and protecting, as effectively as it may, a  social
\norder  in  which justice, social,  economic  and  political,
\nshall inform all the institutions of the national life.\t  It
\nis the duty of the State to secure to every citizen, men and
\nwomen,\tthe right to an adequate means of livelihood and  to
\nsee that the health and strength of workers, men and  women,
\nand  the tender age of children are not abused,\t to  protect
\nchildren  and youths against exploitation and against  moral
\nand material abandonment.  It is to be the endeavour of\t the
\nState to secure a living wage, conditions of work ensuring a
\ndecent\tstandard of life and full enjoyment of\tleisure\t and
\nsocial\tand  cultural opportunities, to protect\t the  weaker
\nsections  of the people from social injustice and all  forms
\nof  exploitation,  to raise the standard of  living  of\t its
\npeople\tand the improvement of public health.  The  question
\ncanvassed  before us is whether the Constitution makers\t who
\nset up such an ideal of a welfare State could possibly\thave
\nintended  to  elevate betting and gambling on the  level  of
\ncountry’s trade or business or commerce and to guarantee  to
\nits citizens, the right to carry on the same.  There can  be
\nonly one answer to the question.\n<\/p>\n
  From\tancient times seers and law givers of  India  looked
\nupon gambling as a sinful and pernicious vice and deprecated
\nits practice.  Hymn XXXIV of the
\n922<\/span>
\nRigveda proclaims the demerit of gambling.  Verses 7, 10 and
\n13 say:\n<\/p>\n
”  7  Dice verily are armed with goads\tand  driving  hooks,
\ndeceiving  and tormenting, causing grievous woe.  They\tgive
\nfrail  gifts  and  then destroy the man\t who  wins,  thickly
\nanointed with the player’s fairest good.\n<\/p>\n
 10  The  gambler’s wife is left forlorn and  wretched:\t the
\nmother
\n mourns the son who wanders homeless.\n<\/p>\n
 In  constant fear, in debt, and seeking riches, he goes  by
\nnight unto the home of others.\n<\/p>\n
 11 Play not with dice: no, cultivate thy corn-
\nland.\n<\/p>\n
  Enjoy the gain, and deem that wealth sufficient.
\n  There are thy cattle, there thy wife, O gambler.  So\tthis
\ngood
\nSavitar himself hath told me.”\n<\/p>\n
  The  Mahabharata  deprecates\tgambling  by  depicting\t the
\nwoeful conditions of the Pandavas who had gambled away their
\nkingdom.   Manu\t forbade  gambling  altogether.\t  Verse\t 221
\nadvises\t the  king to exclude from his\trealm  gambling\t and
\nbetting,  for those two vices cause the destruction  of\t the
\nkingdom\t of  princes.  Verse 224 enjoins upon the  king\t the
\nduty  to  corporally  punish all those\tpersons\t who  either
\ngamble\tor bet or provide an opportunity for it.  Verse\t 225
\ncalls  upon the king to instantly banish all  gamblers\tfrom
\nhis town.  In verse 226 the gamblers are described as secret
\nthieves\t who  constantly harass the good subjects  by  their
\nforbidden  practices.\tVerse  227  calls  gambling  a\tvice
\ncausing great enmity and advises wise men not to practise it
\neven for amusement.  The concluding verse 228 provides\tthat
\non  every  man\twho  addicts himself  to  that\tvice  either
\nsecretly or openly the king may inflict punishment according
\nto his discretion.  While Manu condemned gambling  outright,
\nYajnavalkya  sought to bring it under State control  but  he
\ntoo  in\t verse 202(2) provided that  persons  gambling\twith
\nfalse  dice  or\t other instruments  should  be\tbranded\t and
\npunished by the king.  Kautilya also advocated State control
\nof gambling and, as a practical person that he was, was
\n923<\/span>
\nnot-averse  to\tthe State earning  some\t revenue  therefrom.
\nVrihaspati dealing with gambling in chapter XXVI, verse 199,
\nrecognises that gambling had been totally prohibited by Manu
\nbecause it destroyed truth, honesty and -wealth, while other
\nlaw givers permitted it when conducted under the control  of
\nthe  State so as to allow the king a share of  every  stake.
\nSuch  was the notion of Hindu law givers regarding the\tvice
\nof  gambling.  Hamilton in his Hedaya, vol.  IV, book  XLIV,
\nincludes  gambling as a kiraheeat or abomination.  He  says:
\n“It  is an abomination to play at chess, dice or  any  other
\ngame;  for  if anything is staked it is gambling,  which  is
\nexpressly prohibited in the Koran; or if, on the other band,
\nnothing\t be hazarded it is useless and vain.”  The  wagering
\ncon.  tracts of the type which formed the subject-matter  of
\nthe case of Ramloll v. Soojumnull (1) and was upheld by\t the
\nPrivy  Council\tas not repugnant to the English\t Common\t Law
\nwere  subsequently prohibited by Act XXI of 1948  which\t was
\nenacted on the suggestion of Lord Campbell made in that case
\nand  introduced in India provisions similar to those of\t the
\nEnglish\t Gaming Act (8 & 9 Vict. c. 109).   Bengal  Gambling
\nAct (Ben.  II of 1867) provided for the punishment of public
\ngambling  and  the  keeping of common gaming  house  in\t the
\nterritories  subject to the Lieutenant Governor\t of  Bengal.
\nLottery has been, since 1870, made an offence, under s. 294A
\nof  the\t Indian Penal Code.  Gambling agreements  have\tbeen
\ndeclared to be void under the Indian Contract Act, 1872\t (s.\n<\/p>\n
30).  This in short is how gambling is viewed in India.
\n  Before  the Legislature intervened, gambling and  wagering
\nwere  not prohibited by the English Common Law although\t the
\nEnglish courts looked upon it with disfavour and discouraged
\nit  on\tgrounds\t of  public  policy  by\t denying  procedural
\nfacilities  which  were\t granted to  other  litigants.\t The
\nScottish  courts, however, have always refused to  recognise
\nthe  validity  of  wagering contracts  and  have  held\tthat
\nsponsiones ludicroe, as they style such contracts, are\tvoid
\nby the Common Law of Scotland.\tGambling and Betting Act,
\n(1)  (1848) 4 M.I.A. 339.\n<\/p>\n
924<\/span><\/p>\n
1664 (16 Car. 11, c. 7) was directed against fraudulent\t and
\nexcessive gambling and betting at games or sports.  This was
\nfollowed by the Gaming Act of 1710 (9 Anne.c.\t  19).\t The
\nMarine Insurance Act 1745 (19 Geo. 11 C.     37)   for\t the
\nfirst  time prohibited wagering policies on risks  connected
\nwith British shipping.\tThis was supplemented by the  Marine\n<\/p>\n
-Insurance  Act\t 1788  (28  Geo.   III\tc.  56).   The\tLife
\nInsurance Act, 1774 (14 Geo.  III c. 48) though not intended
\nto  prohibit wagering in general, prohibited wagering  under
\nthe cloak- of a mercantile document which purported to be  a
\ncontract of insurance.\tThen came the Gaming Act of 1845  (8
\nand  9 Vict. c. 109) which for the first time  declared\t all
\ncontracts   made   by  way  of\tgaming\tor   wagering\tvoid
\nirrespective   of   their  form\t or   subject-matter.\t The
\nprovisions  of this Act were adopted by our Act XXI of\t1948
\nas here in before mentioned.  The Gaming Act of 1892 (55 and
\n56 Viet. c. 9) further tightened up the law.
\nAs  far back as 1850 the Supreme Court of America in  Phalen
\nv. Virginia(1) observed:\n<\/p>\n
   ” Experience has shown that the common forms of  gambling
\nare  comparatively  innocuous when placed in  contrast\twith
\nwidespread pestilence of lotteries.  The former are confined
\nto  a  few persons and places, but the\tlatter\tinfests\t the
\nwhole community; it enters every dwelling; it reaches  every
\nclass;\tit  preys  upon the hard earnings of  the  poor;  it
\nplunders the ignorant and the simple.\n<\/p>\n
  The observations were quoted, with approval, in Douglas v.
\nKentucky  (2  ). After quoting the passage  from  Phalen  v.
\nVirginia (1) the judgment proceeded:\n<\/p>\n
  “Is  the state forbidden by the supreme law ‘of  the\tland
\nfrom protecting its people at all times from practices which
\nit  conceives to be attended by such ruinous  results?\t Can
\nthe  Legislature  of  a State contract\taway  its  power  to
\nestablish such regulations as are reasonably necessary\tfrom
\ntime to time to protect the public morals against the, evils
\nof lotteries ?”\n<\/p>\n
(1)  [1850] 49 U.S. 163; 12 L. Ed. 1030,1033.
\n(2)  [1897] 168 U.S. 488 ; 42 L.  Ed. 553, 555.\n<\/p>\n
925<\/span><\/p>\n
It will be abundantly clear from the foregoing\tobservations
\nthat  the  activities  which have  been\t condemned  in\tthis
\ncountry\t from  ancient\ttimes appear to\t have  been  equally
\ndiscouraged  and  looked  upon with  disfavour\tin  England,
\nScotland,  the United States of America and in Australia  in
\nthe cases referred to above.  We find it difficult to accept
\nthe  contention\t that  those activities\t which\tencourage  a
\nspirit of reckless propensity for making easy gain by lot or
\nchance,\t which lead to the loss of the hard earned money  of
\nthe  undiscerning  and improvident common  man\tand  thereby
\nlower  his standard of living and drive him into  a  chronic
\nstate  of indebtedness and eventually disrupt the peace\t and
\nhappiness  of  his  humble home\t could\tpossibly  have\tbeen
\nintended  by  our Constitution makers to be  raised  to\t the
\nstatus of trade, commerce or intercourse and to be made\t the
\nsubject-matter\tof’ a fundamental right guaranteed  by\tArt.
\n19(1) (g).  We find it difficult to persuade ourselves\tthat
\ngambling was ever intended to form any part of this  ancient
\ncountry’s  trade, commerce or intercourse to be declared  as
\nfree under Art. 301.  It is not our purpose nor is it neces-
\nsary  for us in deciding this case to attempt an  exhaustive
\ndefinition    of   the\t word\t“trade”,   “business”,\t  or
\n“intercourse”.\t We  are, however, clearly of  opinion\tthat
\nwhatever  else may or may not be regarded as falling  within
\nthe  meaning  of these words, gambling cannot  certainly  be
\ntaken  as one of them.\tWe are convinced and satisfied\tthat
\nthe  real  purpose  of Arts. 19(1) (g)\tand  301  could\t not
\npossibly  have been to guarantee or declare the\t freedom  of
\ngambling.  Gambling activities from their very nature and in
\nessence\t are extra-commercium although the  external  forms,
\nformalities  and  instruments of trade may be  employed\t and
\nthey are not protected either by Art. 19 (1) (g) or
\nArt. 301 of our Constitution.\n<\/p>\n
  The  Court of Appeal; we have already said, took the\tview
\nthat it was not open to the State, which had not thought fit
\nto prohibit these prize competitions but had sought to\tmake
\na  profit  out of them by levying a tax, to contend  at\t the
\nsame  time that it was illegal or was not a “trade” at\tall.
\nBut as pointed out in United
\n119<\/span>
\n926<\/span>
\nStates\tv.  Kahrigar (1), the fact of issuing a\t licence  or
\nimposing a tax means nothing except that the licensee  shall
\nbe  subject  to no penalties under the law if  he  pays\t it.
\nLewis  v. United States of America (2) also recognises\tthat
\nthe Federal Government may tax what it also forbids and that
\nnobody\thas a constitutional right to gamble but that if  he
\nelects\tto  do, so, though it be unlawful, he must  pay\t the
\ntax.   In  this\t connection reference may  be  made  to\t the
\nobservation of Rowlatt J. in Mann v. Nash  (3) :
\n   ”  The revenue authorities, representing the\t State,\t are
\nmerely looking at an accomplished fact.\t It is not condoning
\nit or taking part in it.\n<\/p>\n
Further down he said:\n<\/p>\n
”  It  is  merely taxing the individual\t with  reference  to
\ncertain\t facts.\t  It  is not a partner or a  sharer  in\t the
\nillegality.”\n<\/p>\n
  That\tcrime is not a business is also recognised in F.  A.
\nLindsay,  A. E. Woodward and W. Hiscox v. The  Commissioners
\nof Inland Revenue (4)(per Lord President Clyde and per\tLord
\nSands) and in Southern (H.  M. Inspector of Taxes) v. A.  B.
\nThe  fact  that regulatory provisions have been\t enacted  to
\ncontrol\t gambling by issuing licences and by imposing  taxes
\ndoes  not in any way alter the nature of gambling  which  is
\ninherently vicious and pernicious.\n<\/p>\n
We  also arrive at the same result by applying the  doctrine
\nof ‘pith and substance’.  As Lord Porter pointed out: ”\t The
\nphrase\traised in a convenient form an appropriate  question
\nin  cases where the real issue is one of subject matter\t and
\nit  may\t also  serve  a useful purpose\tin  the\t process  of
\ndeciding  whether  a  particular enactment  is\ta  law\twith
\nrespect to trade, commerce or intercourse as such or whether
\nit  is\ta  law\twith respect to\t some  other  subject  which
\nincidentally trenches upon trade, commerce and intercourse.”
\nReference has already been made to the observations
\n (1) 345 U.S. 22; 97 L. Ed. 754.\n<\/p>\n
(2)  348 U.S. 49 ; 99 L. Ed- 475.\n<\/p>\n
(3) L. R.(1932) 1 K.B.D. 752 at P. 757.\n<\/p>\n
(4)  18 T.C. 43.\n<\/p>\n
(5)  L.R. (1933) 1 K.B. 713; 18 T.C. 59.\n<\/p>\n
927<\/span><\/p>\n
of Dixon J., as he then was, in King v. Martin (1).   Adapt-
\ning  his  language,  we\t may say  that\twhen  Art.  19(1)(g)
\nguarantees  or Art. 301 declares the freedom of\t trade\tthey
\ndescribe human activities in a specific aspect.\t They single
\nout  attributes\t which the act or transaction may  wear\t and
\nmake  the  freedom,  which they confer,\t depend\t upon  those
\nattributes.   The  freedom secured by the two  Articles,  we
\nthink,\timplies\t that no unreasonable  restraint  or  burden
\nshall  be placed upon an act falling under that\t description
\nbecause\t it  is trade or commerce or intercourse.   We\thave
\nanalysed the provisions of the impugned Act and it is  quite
\nclear  that the Act does not purport directly  to  interfere
\nwith  trade,  commerce\tor  intercourse\t as  such,  for\t the
\ncriterion of its application is the specific gambling nature
\nof  the transaction which it restricts.\t The purpose of\t the
\nAct   is   not\tto  restrict  anything\twhich\tbrings\t the
\ntransactions  under  the description of trade,\tcommerce  or
\nintercourse.   In  other  words,  the Act  is  in  pith\t and
\nsubstance  an Act with respect to betting and gambling.\t  To
\ncontrol\t and  restrict\tbetting\t and  gambling\tis  not\t  to
\ninterfere with trade, commerce or intercourse as such but to
\nkeep  the flow of trade, commerce and intercourse  free\t and
\nunpolluted  and to save it from anti-social activities.\t  In
\nour opinion, therefore, the impugned Act deals with gambling
\nwhich is not trade, commerce or business and, therefore, the
\nvalidity  of the Act has not to be decided by the  yardstick
\nof  reasonableness  and public interest laid down  in  Arts.
\n19(6)  and  304.   The appeal  against\tthe  stringency\t and
\nharshness,  if\tany, of the law does not lie to a  court  of
\nlaw.\n<\/p>\n
 In  the view we have taken, it is not necessary for  us  to
\nconsider  or express any opinion on this occasion as to\t the
\nvexed  question\t whether restriction, as con.  templated  in
\nArts. 19(6) and 304(b), may extend to total prohibition\t and
\nthis is so because we cannot persuade ourselves to hold that
\nArt.   19(1)(g)\t or  Art.  301\tcomprises   all\t  activities
\nundertaken  with  a  view to profit as\t“trade”\t within\t the
\nmeaning\t of those Articles.  Nor is it necessary for  us  on
\nthis occasion to consider
\n (1) (1939) 62 C.L.R. 457.\n<\/p>\n
928<\/span><\/p>\n
whether a company is a citizen within the meaning of Art’ 19
\nand indeed the point has not been argued before us.
\nThe  last  point urged by the petitioners is  that  assuming
\nthat  the  impugned Act deals only with\t gambling  and\tthat
\ngambling is not “trade” or “business” or “commerce” and\t is,
\ntherefore,   not   entitled  to\t the   protection   of\t our
\nConstitution, the prize competitions run by them are in fact
\nnot  of\t a gambling nature.  The trial court  accepted\tthis
\ncontention  while the Court of Appeal rejected it.  We\thave
\nexamined the scheme and the rules and the official solutions
\nand the explanations in support thereof and we have come  to
\nthe  conclusion that the competition at present run  by\t the
\npetitioners  under the name of R.M.D.C. Crosswords are of  a
\ngambling  nature.  Our view so closely accords with that  of
\nthe  Court of Appeal that we find it unnecessary to go\tinto
\nthe details of the scheme.  To start with, we find that\t the
\nBoard of Adjudicators pick up nine of the clues and  -select
\nonly  those competitors whose answers correspond  with\t‘the
\nofficial solution of those nine clues.\tThose nine clues may
\nbe  from the top, may be from the bottom or may be  selected
\nat  random.  It is said that they-are like  nine  compulsory
\nquestions  in  a  school examination but then  in  a  school
\nexamination,  the  students  are told  which  are  the\tnine
\ncompulsory questions and they can take particular care\twith
\nregard\tto  those; but in this scheme there  is\t no  knowing
\nwhich  nine  will be selected and  those  competitors  whose
\nanswers\t do  not  accord  with\tthe  official  solution\t are
\ndebarred  from\tbeing  considered for the  first  prize.   A
\ncompetitor  may have given correct answers to eight  of\t the
\nnine  selected clues and may have given correct\t answers  to
\nthe  remaining eight so that he has sent in sixteen  correct
\nanswers but he will, nevertheless, not be considered for the
\nfirst  prize  because  his  answers  to\t the  nine  selected
\nquestions did not agree with the official solutions of those
\nnine  clues.   This is a chance element to start  with.\t  We
\nhave then seen that the competing words out of which one  is
\nto  be selected are in some cases equally apt.\tWe  are\t not
\nsatisfied that the word selected by the Board is the
\n929<\/span>
\nmore  apt  word in many. cases.\t The reasons given  by\tthem
\nappear\tto  us\tto  be\tlaboured  and  artificial  and\teven
\narbitrary in some cases.  On the whole, we have come to\t the
\nconclusion  that  the  Court  of Appeal\t was  right  in\t its
\nconclusion that in point of fact the prize competitions\t run
\nby  the\t petitioners  partake  of  a  gambling\tnature\tand,
\ntherefore, fall within the definition and are to be governed
\nby the regulatory and taxing provisions of the Act.
\n For  the  reasons  stated  above,  we\thave  come  to\t the
\nconclusion  that the impugned law is a law with\t respect  to
\nbetting and gambling under Entry 34 and the impugned  taxing
\nsection is a law with respect to tax on betting and gambling
\nunder  Entry  62  and that- it was  within  the\t legislative
\ncompetence  of\tthe State Legislature to  have\tenacted\t it.
\nThere  is sufficient territorial nexus to entitle the  State
\nLegislature  to\t collect the tax from  the  petitioners\t who
\ncarry  on  the prize competitions through the  medium  of  a
\nnewspaper printed and published outside the State of Bombay.
\nThe  prize  competitions being of a  gambling  nature,\tthey
\ncannot\tbe  regarded as trade or commerce and  as  such\t the
\npetitioners  cannot claim any fundamental right\t under\tArt.
\n19(1)(g)  in  respect  of such competitions,  nor  are\tthey
\nentitled  to  the  protection  of  Art.\t 301.\tThe  result,
\ntherefore, is that this appeal must be allowed and the order
\nof the lower court set aside and the petition dismissed\t and
\nwe do so with costs throughout.\n<\/p>\n
\t\t\t\tAppeal allowed.\n<\/p>\n
930<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India The State Of Bombay vs R. M. D. Chamarbaugwala on 9 April, 1957 Equivalent citations: 1957 AIR 699, 1957 SCR 874 Author: S R Das Bench: Das, Sudhi Ranjan (Cj), Aiyyar, T.L. Venkatarama, Sinha, Bhuvneshwar P., Das, S.K., Gajendragadkar, P.B. PETITIONER: THE STATE OF BOMBAY Vs. RESPONDENT: R. M. D. CHAMARBAUGWALA […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-171034","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nThe State Of Bombay vs R. M. D. Chamarbaugwala on 9 April, 1957 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/the-state-of-bombay-vs-r-m-d-chamarbaugwala-on-9-april-1957\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The State Of Bombay vs R. M. D. 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