{"id":244783,"date":"1994-04-21T00:00:00","date_gmt":"1994-04-20T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/state-of-haryana-vs-suman-enterprises-on-21-april-1994"},"modified":"2017-12-19T10:25:55","modified_gmt":"2017-12-19T04:55:55","slug":"state-of-haryana-vs-suman-enterprises-on-21-april-1994","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/state-of-haryana-vs-suman-enterprises-on-21-april-1994","title":{"rendered":"State Of Haryana vs Suman Enterprises on 21 April, 1994"},"content":{"rendered":"
Supreme Court of India<\/div>\n
State Of Haryana vs Suman Enterprises on 21 April, 1994<\/div>\n
Equivalent citations: 1994 SCC (4) 217, \t 1994 SCALE (2)844<\/div>\n
Author: M Venkatachalliah<\/div>\n
Bench: Venkatachalliah, M.N.(Cj)<\/div>\n
           PETITIONER:\nSTATE OF HARYANA\n\n\tVs.\n\nRESPONDENT:\nSUMAN ENTERPRISES\n\nDATE OF JUDGMENT21\/04\/1994\n\nBENCH:\nVENKATACHALLIAH, M.N.(CJ)\nBENCH:\nVENKATACHALLIAH, M.N.(CJ)\nJEEVAN REDDY, B.P. (J)\nSAWANT, P.B.\nYOGESHWAR DAYAL (J)\nMOHAN, S. (J)\n\nCITATION:\n 1994 SCC  (4) 217\t  1994 SCALE  (2)844\n\n\nACT:\n\n\n\nHEADNOTE:\n\n\n\nJUDGMENT:\n<\/pre>\n
\t\t\t   ORDER
\n\t\t     TAMIL NADU MATTERS
\nWrit Petition (C) Nos. 739, 756, 982, 1019, 1054, 1057, 1204
\nand  1205  of 1990, SLP (C) Nos. 9238, 11611  and  11613  of
\n1990, TC Nos. 70, 66, 67 and 68 of 1990, WP (C) No. 1121  of
\n1990<\/span>\n<\/p>\n
1.   There is an executive order No. GOMs No. 1101 dated  6-
\n10-1989, promulgated by the State of Tamil Nadu\t prohibiting
\nthe  sale of lottery tickets of other States.  The  relevant
\npart of the said order reads thus:\n<\/p>\n
\t      “2.  The\tlotteries  mainly  fall\t under\tfive
\n\t      different categories.\n<\/p><\/blockquote>\n
\t      (a)   Lotteries organised by the Government of
\n\t      India.\n<\/p><\/blockquote>\n
\t      (b)   Lotteries organised by the Government of
\n\t      Tamil Nadu.\n<\/p><\/blockquote>\n
\t      (c)   Lotteries\torganised  by  other   State
\n\t      Governments.\n<\/p><\/blockquote>\n
\t      (d)   Private    Lotteries    authorised\t  by
\n\t      Government of Tamil Nadu, and\n<\/p><\/blockquote>\n
\t      (e)   Private  Lotteries authorised  by  other
\n\t      Governments   but\t not  authorised   by\tthis
\n\t      Government.\n<\/p><\/blockquote>\n
Government have decided, in view of the reasons referred  to
\nin  para  1 above that the sale of lottery  tickets  of\t the
\nGovernment  of\tTamil Nadu and the  lotteries  organised  by
\nGovernment  of India or other State Governments\t alone\twill
\nhenceforth  be\tpermitted within the State  of\tTamil  Nadu.
\nPrivate Lotteries of any kind are not authorised to be\tsold
\nwithin the State of Tamil Nadu.”\n<\/p>\n
220<\/span><\/p>\n
2.   The  order\t clearly implies  if it did not,  it  would
\nhave  required\tthe  order to be read down to  mean   that
\nprohibition  does not extend to the sale of lottery  tickets
\nof  lotteries  ‘organised’  by other States.   This  is\t the
\nimplication arising out of a proper construction of Entry 40
\nof  List I and Entry 34 of List 11 of the Seventh  Schedule.
\nThe  said  Entry  34  of  List\tII  provides  “Betting\t and
\nGambling”.  Entry 40 of List I provides “Lotteries organised
\nby the Government of India or the Government of a State”.\n<\/p>\n
3.   In\t the  present case we have  examined,  prima  facie,
\nwhether the lottery claimed to have been ‘organised’ by\t the
\nState  of Sikkim can be said to be a lottery ‘organised’  by
\nthe  State  of\tSikkim\tand  not  merely  authorised  by  it
\nauthorising  the so-called ‘Agents’ themselves\tto  organise
\nthe  lottery.  We have examined this in the context  of\t the
\nquestion  whether the earlier interim order granted by\tthis
\nCourt should continue or not till the final disposal of\t the
\nmain cases.  Prima facie, it appears to us that the  concept
\nof  a lottery ‘organised’ by a State would  require  certain
\nbasic and essential concomitants to be satisfied as, indeed,
\nmembers\t of the public when investing their money in such  a
\nlottery proceed on a trust and on certain assumptions as  to
\nthe genuineness, bona fides, safety, security, the rectitude
\nof   administration   etc.  associated\t with\tgovernmental
\nfunctioning.  If some of the basic functions  characterising
\na State-organised lottery are delegated or abdicated by\t the
\nState  this  public trust is impaired.\tThe first  of  those
\nrequirements is that the tickets which bear the imprint\t and
\nlogo  of  the State must be printed by or  directly  at\t the
\ninstance  of  the  State Government so as  to  ensure  their
\nauthenticity and genuineness and further to ensure that\t any
\npossibility  of duplication of the tickets and sale of\tfake
\ntickets\t  is  provided\tagainst\t and  rendered\t impossible.
\nSecondly, the State itself must sell the tickets though,  if
\nit  thinks  necessary  or proper so to do,  through  a\tsole
\ndistributor   or   selling  agent  or  several\t agents\t  or
\ndistributors  under  terms and conditions regulated  by\t the
\nagreement reached between the parties.\tThe sale proceeds of
\nthe  tickets  either sold in retail or\twholesale  shall  be
\ncredited to the funds of the Government.  Thirdly, the draws
\nfor selecting the prize-winning tickets must be conducted by
\nthe  State  itself, irrespective of the size  of  the  prize
\nmoney.\t Fourthly,  if any prize money is  unclaimed  or  is
\notherwise not distributed by way of prize, it must revert to
\nand  become  the property of the State\tGovernment.   These,
\nprima facie, appear to us to be the minimal  characteristics
\nof a lottery which can claim to be ‘organised’ by the State.\n<\/p>\n
4.   The  concept  of ‘royalty’ being paid  by\tthe  ‘agent’
\nwould\tperhaps\t  not  be  consistent  with  the   idea\t  of
\nrelationship between the principal and agent.  This Court in
\nAkadasi\t Padhan\t v. State of Orissa’<\/a> though in\ta  different
\ncontext indicated what kind of transaction detracts from the
\nidea of an ,agency’.  It was observed: (SCR pp. 721, 722))
\n\t      “Clause  provides that subject to other  terms
\n\t      and  conditions,\tall charges and\t out  goings
\n\t      shall be paid by the agent and he shall not be
\n\t      1\t 1963 Supp 2 SCR 691 : AIR 1963 SC’ 1047
\n\t      221<\/span>
\n\t      entitled\tto any compensation  whatsoever\t for
\n\t      any  loss that may be sustained by reasons  of
\n\t      fire,  tempest, disease, pest, flood,  drought
\n\t      or other natural calamity, or by any  wrongful
\n\t      act  committed by any third party or  for\t any
\n\t      loss  sustained by him through  any  operation
\n\t      undertaken    in\t the   interest\t  of\tfire
\n\t      conservancy.   This clause clearly shows\tthat
\n\t      the  agent becomes personally liable  to\tbear
\n\t      the  loss\t which, under the  normal  rules  of
\n\t      agency, the principal would have to bear.\t  We
\n\t      have not thought it necessary to refer to\t all
\n\t      the clauses in detail because we are satisfied
\n\t      that   even  if  the  agreement\tis   broadly
\n\t      considered,  it leaves no room for doubt\tthat
\n\t      the  person appointed under the  agreement  to
\n\t      work the monopoly of the State is not an agent
\n\t      in  the strict and narrow sense of  the  terms
\n\t      contemplated by Article 19(6)(ii).  The  agent
\n\t      appointed under this agreement seems to  carry
\n\t      on the trade substantially on his own account,
\n\t      subject,\tof  course, to the  payment  of\t the
\n\t      amount specified in the contract.\t If he makes
\n\t      any  profit  after  complying  with  the\tsaid
\n\t      terms,  the  profit is his; if he\t incurs\t any
\n\t      loss  owing  to  circumstances  specified\t  in
\n\t      clause  6, the loss is his.  In terms,  he  is
\n\t      not made accountable to the State\t Government;
\n\t      and  in  terms, the State\t Government  is\t not
\n\t      responsible for his actions.  In such a  case,
\n\t      it  is impossible to hold that  the  agreement
\n\t      ‘in  question is consistent with the terms  of
\n\t      Section 3 of the Act.”\n<\/p>\n
It  would, therefore, prima facie, seem that the idea  of  a
\nfixed  sum  of ,royalty’ paid by the ‘agent’ would  be\tmore
\nconsistent  with the idea of enfranchisement or farming\t out
\nof  a right to organise a lottery than with the idea  of  an
\n“Agency”.\n<\/p>\n
5.   If the basic and essential features indicated above are
\nensured,  it might be possible to raise a  presumption\tthat
\nthe  lottery  is  one  that  could  be\tsaid  to  have\tbeen
\n‘organised’   by  the  State  itself  and  not\tone   merely
\nauthorised  by the State under which the  so-called  ‘agent’
\nhimself\t organises the lottery.\t In the present case,  prima
\nfacie\twe abstain from any final  pronouncement  of  this
\nquestion which requires to be decided at the final hearing
\nsome of these essential characteristics seem to be  missing.
\nIt  will not be possible at the interlocutory stage to\thold
\nthat  the  Sikkim  scheme  is outside  the  State  power  of
\nregulation  of “Betting and Gambling” and does\tnot  attract
\nthe   ban  contemplated\t by  the  Tamil\t Nadu\tGovernment’s
\nNotification GOMs No. 1101 dated 6- 10- 19 89.\n<\/p>\n
6.   Shri  K.K. Venugopal, teamed Senior  Counsel  appearing
\nfor  the State of Sikkim, however, made an impassioned\tplea
\nthat  a\t small border State of\t the country  which  has  no
\nsubstantial  independent economic resources of its  own\t has
\nbeen  deriving considerable income from these  lotteries  by
\nsale  of tickets in other affluent parts of the country\t and
\nthat  the stopping the sale of the tickets in the  State  of
\nTamil Nadu as now sought to be done, will have the effect of
\ncutting off the economic arteries sustaining the State.\n<\/p>\n
  7.  While we appreciate the predicament of the  State,  we
\ncannot also overlook the power of the State to regulate\t the
\nsale of lottery tickets not
\n222<\/span>
\norganised  by  the Union or other States.  If the  State  of
\nSikkim\tor  any\t other State  organises\t its  lottery  which
\nsatisfies  the aforesaid essential features which can  alone
\nqualify a lottery as one ‘organised’ by the State, it  would
\nquite obviously be outside the regulatory power of any other
\nState  under  Entry  40\t of  List  11  and  accordingly\t the
\nprohibition  would  not apply.\tIt is open to the  State  of
\nSikkim to evolve an appropriate and acceptable scheme and if
\nnecessary  seek\t the protection of its rights  to  sell\t the
\ntickets\t under\tthat scheme by\tan  appropriate\t application
\nbefore court.\n<\/p>\n
8.   The  schemes  of lotteries of the\tStates\tof  Mizoram,
\nNagaland, Arunachal Pradesh, Goa and Kerala are more or less
\nsimilar.   All\tinterim\t and interlocutory  orders  of\tstay
\ngranted\t in  favour  of\t the  States  of  Sikkim,   Mizoram,
\nNagaland,  Arunachal  Pradesh, Goa and\tKerala\tshall  stand
\nvacated.    However,  in  order\t that  the  rights  of\t the
\npurchasers  of tickets already sold in respect of  the\tnext
\ndraw  are  not\taffected, the earlier order  of\t stay  shall
\ncontinue to operate till 5-5-1994.\n<\/p>\n
MADHYA PRADESH MATTERS
\nO.S. No. 1 of 1993 and Writ Petition (C) No. 356 of 1993\n<\/p>\n
9.   The stay prayed for is refused.\n<\/p>\n
10.  We are prima facie of the view that the extant  lottery
\nscheme\t of  Mizoram  does  not\t satisfy  the\trequirements
\nindicated  in  the order made today in Tamil  Nadu  matters.
\nIf, however, a revised scheme which conforms to the  minimal
\nrequirements   which  render  the  scheme  eligible  to\t  be
\nrecognised as one organised by the State, the State may move
\nfor appropriate protection of the right to sell the  tickets
\nin the State of Madhya Pradesh.\t With these observations and
\nliberty so reserved, the stay application is dismissed.
\nWrit Petition (C) No. 356 of 1993\n<\/p>\n
11.  Petitioner\t claims to be an agent who is  dealing\twith
\nlottery\t tickets of lotteries organised by  various  States.
\nPetitioner’s  argument\tis  that the  law  which  imposes  a
\nblanket\t ban on the sale of lottery tickets  cannot  operate
\nirrespective  of  the question whether the  tickets  are  of
\nlotteries  ‘organised’ by the State or of  lotteries  merely
\nauthorised  by\tthe State.  The contention  of\tthe  learned
\ncounsel\t for the petitioner is that the State has  no  power
\nunder  Entry  34 of List 11 to impose a ban on the  sale  of
\ntickets\t of  lotteries\t‘organised’ by the  Union  or  other
\nStates.\t  Learned counsel says that the lotteries  organised
\nby  the\t States of Haryana, Rajasthan,\tWest  Bengal,  Uttar
\nPradesh,  Delhi, Mizoram, Kerala, Karnataka and\t Tamil\tNadu
\nare  themselves\t instances in point.  It is urged  that\t the
\ntickets\t  of  the  lotteries  of  these\t States\t cannot\t  be
\nprohibited from being sold in the State of Madhya Pradesh.\n<\/p>\n
12.  The  essential  question is whether under\tthe  various
\nschemes\t sponsored by the other States the lotteries can  be
\nsaid  to be those ‘organised’ by the State as distinct\tfrom
\nthose merely authorised by them.  In the course of our order
\nmade today in Tamil Nadu matters we have indicated   though
\nas  a  prima facie indication at the interlocutory  stage
\nwhat prima facie
\n223<\/span>
\nappeals\t to  us to be the minimal criteria  which  render  a
\nlottery\t to  be eligible to be called one ‘organised’  by  a
\nState.\t We  do not propose to examine the  details  of\t the
\nschemes of the various States referred to by the petitioner.
\nHowever,  the  petitioner  shall be at liberty\tto  make  an
\nappropriate  application before the State of Madhya  Pradesh
\nurging\tthat the lotteries organised by the States  referred
\nto are immune from the State’s regulatory power and that the
\npetitioner is entitled to sell the tickets of the  lotteries
\nof  these States in the State of Madhya Pradesh.  The  State
\nGovernment  will examine the representation in the light  of
\nthe criteria indicated in our order made today in Tamil Nadu
\nmatters and make appropriate order whether, in its  opinion,
\nthe schemes of lotteries of the aforesaid States qualify for
\nbeing reckoned as lotteries ‘organised’ by those States.  If
\nit  comes  to that conclusion, it shall declare\t and  notify
\nthat  the tickets in respect of those lotteries are  outside
\nthe  ban contemplated by Madhya Pradesh\t Lottery  Pratibandh
\nAct,  1993.   The  State shall make  a\tspeaking  order\t and
\ndispose\t of the representations within four weeks  from\t the
\nday the representation is submitted.\n<\/p>\n
13.  Shri  S.K. Agnihotri, learned standing counsel for\t the
\nState  of  Madhya  Pradesh  states  that  the  Director\t  of
\nLotteries  in  the  State will be  the\tauthority  who\twill
\nexamine and dispose of the representation.  This  submission
\nis placed on record.\n<\/p>\n
\t\t       BIHAR MATTERS
\nCivil Appeal Nos. 2144-47 of 1994\n<\/p>\n
14.  We\t have heard Shri M.L. Verma, learned Senior  Counsel
\nfor  the State of Bihar and Shri Gopal Subramaniam,  learned
\nSenior Counsel for the respondents.\n<\/p>\n
15.  Before  the  High Court the  respondents  assailed\t the
\nconstitutional\t validity  of  the  Bihar  Ban\ton   Lottery
\nOrdinance,  1993,  which  sought to  prohibit  the  sale  of
\nlottery tickets in the State of Bihar.\tThe preamble of\t the
\nAct reads as under:\n<\/p>\n
\t      “Whereas\tdetrimental  impact of\tthe  lottery
\n\t      business has been noted on social and economic
\n\t      condition of people particularly on the poorer
\n\t      section of the society;\n<\/p><\/blockquote>\n
\t      And  whereas there has been a serious  adverse
\n\t      effect on public order on account of the\tsaid
\n\t      lottery business;\n<\/p><\/blockquote>\n
\t      And  whereas  in\tview  of  the  above  it  is
\n\t      intended\tto  stop all the  lotteries  in\t the
\n\t      State;\n<\/p><\/blockquote>\n
\t      And  whereas the State Legislature is  not  in
\n\t      session and the Governor of Bihar is satisfied
\n\t      that  circumstances  exist  which\t render\t  it
\n\t      necessary for him to take immediate action  to
\n\t      ban  the sale of lottery tickets in the  State
\n\t      of Bihar.”\n<\/p><\/blockquote>\n
\t      Section 3 of the Act provides:
\n\t      “Ban   on\t  Lottery.-   Notwithstanding\t any
\n\t      agreement\t or  contract entered  into  by\t the
\n\t      State  Government\t with any person  no  person
\n\t      shall be
\n\t      224<\/span>
\n\t      permitted to deal within the trade or business
\n\t      of  lottery  or  be an agent  or\tpromoter  in
\n\t      respect  of  any lottery nor  shall  he  sell,
\n\t      distribute  or  purchase\tany  lottery  ticket
\n\t      within the territory of Bihar State.”
\n\t      .LM0\n<\/p><\/blockquote>\n
\t      16.   Prima  facie, the High  Court  correctly
\n\t      recognised  the  distinction and\tthe  effects
\n\t      that   flow  from\t that  distinction   between
\n\t      lotteries\t ‘organised’ by the State and  those
\n\t      merely authorised by the State.  In para\t10.6
\n\t      the High Court observed as under:
\n\t      “A new case has been sought to be made on\t the
\n\t      written  statement on the question as to\twhat
\n\t      is meant by ‘organised’.\tHowever, I have made
\n\t      it  quite clear that the Act: so far it  deals
\n\t      with cases of lotteries not organised’ by\t the
\n\t      Central Government or any State Government, is
\n\t      valid and the State would be at liberty to act
\n\t      according\t to  the said Act  to  that  extent.
\n\t      Accordingly,  in\ta  given case  where  it  is
\n\t      organised\t or not, shall be determined and  it
\n\t      is not for us to deal with the same in view of
\n\t      the  limited scope or our judgment  as  stated
\n\t      hereinabove, i.e., the question of legislative
\n\t      competency only.”\n<\/p><\/blockquote>\n
The  State has now come up in appeal by special\t leave.\t  It
\nalso  seeks  a stay of the operation of the  judgment  under
\nappeal.\n<\/p>\n
17.  We\t stay  the operation of the  judgment  under  appeal
\npending final disposal of the appeals.\tHowever, it is\topen
\nto the respondents to apply to the State Government pointing
\nout  that  the tickets of the lotteries in the\tbusiness  of
\nsales\tof  which  they\t are  engaged,\tare   of   lotteries
\n‘organised’  by\t the State and that, therefore,\t such  sales
\nshould not be prohibited in the State of Bihar.\t If such  an
\napplication  is made, the State Government will examine\t the
\nmatter and make a speaking order whether in its opinion\t the
\nschemes of the lotteries are such as to render the lotteries
\n‘organised’  by\t the States concerned  or  merely  lotteries
\nauthorised  by the States.  In doing so the State  of  Bihar
\nshall take into account and apply the criteria indicated  in
\nour order made today in Tamil Nadu matter.\n<\/p>\n
18.  Shri  Verma, learned Senior Counsel for the State\tsays
\nthat  the matte will be examined by the\t Secretary,  Finance
\nDepartment,  Government\t of  Bihar.   That  authority  shall
\ndispose of the representation within 4 weeks from the  dates
\nthey are made.\n<\/p>\n
19.  The stay granted of the operation of the judgment under
\nappeal\tshall,\thowever, operate from 12-5-1994\t onwards  so
\nthat  any  arrangement made in the meanwhile should  not  be
\ndislocated.  No tickets for any draws to be made after 11-5-
\n1994  shall  be sold from 12-5-1994 onwards, except  to\t the
\nextent\tpermitted  by  the specific  order  of\tthe  Finance
\nSecretary.\n<\/p>\n
Court Masters
\n230<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India State Of Haryana vs Suman Enterprises on 21 April, 1994 Equivalent citations: 1994 SCC (4) 217, 1994 SCALE (2)844 Author: M Venkatachalliah Bench: Venkatachalliah, M.N.(Cj) PETITIONER: STATE OF HARYANA Vs. RESPONDENT: SUMAN ENTERPRISES DATE OF JUDGMENT21\/04\/1994 BENCH: VENKATACHALLIAH, M.N.(CJ) BENCH: VENKATACHALLIAH, M.N.(CJ) JEEVAN REDDY, B.P. (J) SAWANT, P.B. YOGESHWAR DAYAL (J) […]<\/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-244783","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nState Of Haryana vs Suman Enterprises on 21 April, 1994 - 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\/state-of-haryana-vs-suman-enterprises-on-21-april-1994\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"State Of Haryana vs Suman Enterprises on 21 April, 1994 - 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