H. ANRAJ AND OTHERS ETC. . y. eos . : : . . . . a
STATE OF. MAHARASHTRA | i January 23, 1984
[0. Cnnsnabnn Repoy, E. 8. VENKATARAMIAH AND R. B. Misra, mm ft __ Constitution of India 1950
Articles 73 and 298-—-Government of State— Whether could organise lotteries—., Whether competent to. ban sale of | tickets of lotteries conducted by other State Governments. mm , .
mi 40 List I VHT Schedule, Entry 34 List H Vit f Schedule é& Articles 246(1) and 1G ;
"State Legislature whether competent to enact a law touching lotteri ies organised by the Government of India or a State’Government. ag
Lotteries Sale of tickets of lotteries conducted by other State Governments—Staté Government Whether competent to dant within 11s own State.
By a press release, the Government of Maharashtra declared that the sale of lottery tickets of States other than the State of Maharashtra was unlawfuland warned the public that no lottery ticket of other States should be sold within the State.
“The petitioners who were agents for the gale of tickets for lotteries conducted by various:State Governments other than the State ‘of Maharashtra contended in their writ petitions, that the aforesaid ban that was sought to be iniposed had no legal authority. Under the Constitution lotteries organised by the Government of India or, the Government of a State was a subject which was within the exclusive . legislative competence of Parliament and that it was not open‘to the Governnient of any State purporting to Act i in exercise of its executive power to impose such a*
. ban. .On behalf of the State Government-respondent’ it was'contended. that the -
Union Governmenit’s executive power was co-extensive with the power to make laws, that the President in exercise of his power under Article 258(1) had entrusted to the State Government the executive power of the Union through a Presidential Order dated April 2, 1969 in respect of lotteries run by the State, and therefore it
“was competent for the State ‘Government to impose. the ban.
--
Allowing the writ petitions, a
HELD: 1. The Government of Maharashtra cannot purport to ban the
*
_H. ANRAJ ‘¥. MAHARASHTRA so 44] ; sale of lottery tickets of other State by virtue of the entrustment of power under 4 "Article 258(1) of the Constitution. [447 D] , eS ‘ 2. Entry 40 of List I of the VIIIth Schedule to the Constitution is “Lotteries organised by the Government of India or the Government of a State”. Entry 34 | of List II of VHIM& Schedule is, “Betting and gambling”. Since the subject ‘Lotteries organised by the Government of India or the Governnient of a State’ has been taken out from the legislative field comprised by the expressién “Betting and gambling” and reserved to be dealt with by Parliament, within its exclusive legislative competence it must follow, in view of Articl#246(1) and (3) that no legislature of a a State, can niake a law touching lotteries organised by the: Government of India “hor the Government of a State. [444 D Ey
3. Article 73 extends the executive power of the Union to the matters with respect to which Parliament has power to make laws. Butgthe executive power * \ of the Unidn, by the very opening words of Art. 73 is “subject to the provisions
. of the Constitution”. It therefore follows that the executive power of the Union with respect to lotteries organised by the Government of a State has necessarily to be exercised subject to the provisions of the Constitution, including Art. 298, which
€ - . expressly extends the executive power of the State to the.carrying on of any trade
Sd or business subject only to legislation by Parliament if the trade or ‘business is not one ¢ with respect to which the State Legislature’ may make laws. [447G-H; 440A-B lig
4. Reading and considering Articles 73 and 298 together, it is clear that the executive power of a State in the matter of carrying on any trade on business with respect to which the State legislature may not make laws ‘is subject to legislation by’ Parliament but is not subject to the executive power of the Union. The Goyernment of a State is not required to obtain the permission of the Union Government
, 8 in order’to organise its lotteries, in the absence of Parliamentary legislation. - Even x assuming that such permission is necessary, a condition imposed by such permission that lottery tickets of one State may not bé sold in another State cannot’ be enforced . by the other State. The other State has no power 1o make any laws in regard to \. lotteries organised by the first State.. Its executive power, by virtue of Article 298, _ | extends to logtteries oranised. by, itself but not to lotteries organised by the other - ' State. [448C-E]
5. af. a State acts in breach of the condition imposed by the President while- x ‘entrusting power under Article 258 it is open to the President to revoke the per-.
_ mission or to take such further or other action.as may be consitutionally permissible :
so but it cannot possibly enable the Government of the other Staté to do anything . about it except to complain perhaps to the Union Government.’ [448 E-F]
In the instant case the source of power for the ban is claimed to be the entrustment of power by the President under Act 258(1) through the Presidential Order “Dated April 2, 1969. But the terms of the entrustment do not justify the claim ©
. The entrustment of power is only ‘in respect of lotteries organised by that Govern-’ nient’. .The expression ‘that Government’ in,the context of the entrustment of * power to the Government of Maharashtra can only mean the Government of
Maharashtra and no other. (447 B-C]
ZB. Paradise Lottery Contre v. State, AIR 1975 AP 50 Shri Indravadan Chaman ' Lal Thacker v. State of Gujarat, S. C4 A. 1308/70 approved.” .
442 - “SUPREME COURT REPORTS >” 1984] 2c
’ Komal Agency v. State, AIR 1971 Bonibay 332 and H. G. Jain v. State of
Tamilnadu, AYR 1973 Madras 402; oversruled. Onrcrvas TuRIspICTION : writ Petition Nos. 2333 or 2336 of 1983. : “Under Article 32 of the’ Constitution ¢ of India). Advocates for the Petitioners .
‘LM. Singhvi, A.M. Singhvi, Vimal Dave,. and. Krishan Kumar.
= 7 S. Krishnamurthy. Iver, Naresh Kumar Stn rma vand Vineet Kumar. re
Dr. Y.S. Chitale, (Not present) Mrs. Sadhana Ramehandran and .
te
Raju Ramchandran and. Har vjinder Singh (Not Present)
Advocates for ‘the Responents :
. AD. Rangamaid Mrs. Sarta Chandra for the State of Ta amiInadu. :
N, H. Gurusahani, Ashwani Kumar, N. N. Reshwani and Mt N.
Shroff and A. S. Nambiar Not Present.
“The »Todgment “of the Court was ; delivered by:
“*. CHINNABPA Reppy, J The several petitioners in these writ -
- petitions are agents for the sale of tickets for the lotteries conducted by the ‘Governments of various States other than Maharashtra. They | question the ban sought to be imposed by the Government. of Maha- - -rashtra on the sale within the State of Maharashtra of tickets of ~ lotteries conducted by the Government of other States. They, generally, seek a’ writ in the . nature of a@ Mandamus directing‘ the State _ Of Maharashtra to forbear from interferring with the sale or distribu- ton of lottery tickets in'respéct of the lotteries organised by the Governments of States other than Maharashtra.
There is no express notification ‘or order of the Government
“of Maharashtra imposing a ban on the sale of lottery tickets of other --
' States in. the State of Maharashtra. -The ban is sought to be spelt
‘out from, a Press release of the Director of Publicity, Sachivalaya, : Bombay dated | September 24, 1969 and-a *communication dated - August 24,-1981 addressed by the, Government. of Maharashtra,
H. ANRAT ¥. "MAHARASHTRA (Chinnappa Redd, I) | 443°
Finance Department, to some of the petitioners individually. The Press’ telease ‘is as follows +
SALE OF LOTTERY TICKETS OF OTHER STATES UNLAWFUL
Warning to’ Public: - . oo
4 _ On September 16, the Minister for Finance in a Press 4 : ’ conference, followed by 2"press note, made it clear to agents —
_ who are selling lottery tickets that the sale of lottery tickets ~*~. of other States in this State-is unlawful. The Government - 7 _of India, in giving permission for conducting State lotteries -
=e | _.. had made'a condition that the lottery tickets should not be sold in another State, without the express consent of. that | State. No such permission has been given in Maharashtra * for the salé of outside State lottery. tickets. Despite the + _ warning given by the Minister, unauthorised sales of lottery _ tickets of outside States continues, and the: Government is therefore taking steps to stop these obviously unlawful practices by seizing all .stocks of tickets of other. States’ lotteries:. The public are warned’ that no tickets other that ' the Maharashtra State Lottery tickets can- be sold within ; the Maharashtra State’’.
The communications addressed to “the petitioners are in the
"following terms : mo a Tam directed to. refer to your letter No. DA/PL/81/622,
4 dated 22.6.1981 on the above inentioned subject and to ‘state ~ oO that there is ban on the sale of other State Lottery tickets ineee. State of Maharashtra, It is, therefore, regretted that your an fequest to ‘permit you to sell your State Lottery tickets in ‘ this State cannot be accepted. ;
* oo Yours faithfully, . eet, oe mS _ - . State Lottery Officer, a , an ae Finance Department. .
: The basic submission on behalf of the petitioners is that there”
et .
444 SUPREME COURT REPORTS [1984] 2 8.c.R.
"is no legal authority for the imposition of the ban. It is argued that under the Constitution, ‘Lotteries organised by the. Government of India or the Government of a State’ is a subject which is within
' the exclusive legislative competence of’ Parliament and that it is not open to the Government of any State purporting to act in exercise of its executive power to impose such a ban as that sought to be imposed
_ by the Government of Maharashtra. On the. other hand, it is sought - to be argued on behalf’ of: the Governifient of Maharashtra that the Union Government’s executive power is co-extensive with the power of
Parliament to make laws, that the President in exercise of his power
~* under Art. 258(i) has entrusted to the Government of Maharashtra the executive power of the Union in respect of lotteries :run by the State and therefore,’ it was competent for the Government of Maha-
" tashtra to impose the-ban. |
Entry 40 of List I of the VIIth Schedule to the Constitution is “Lotteries organised by the Government of India or the Government
‘of a State”, Entry 34 of List II of VIIth Schedule is, “Betting and gambling”. There is no dispute before us that the expression “Betting .
_and gambling” includes. and has always been understood to have included the conduct ‘of lotteries. Quite- obviously, the subject ‘Lotteries organised by the Government of India or the Government of a State’ has been taken out‘from the legislative field comprised by the expression “Betting and gambling” and is reserved. to be dealt -
' with by Parliament. Since the subject ‘Lotteries organised by the
Government of India or the Governmént of a State’ has been made a Subject-within the exclusive legislative competence of Parliament, it must follow, in view of Act, 246(1) and (3), that no legislature of a
‘State can make a law couching lotteries organised by the Government of Ind‘a or the Government of a State. ‘This. much is.beyond con-
~ troversy and the Maharashtra legislature has acknowledged the posi- tion, as indeed it must, in Sec. 32 of the Bombay Lotteries (Control
_ and Tax) and Prize Competitions (Tax) Act, 1958. It is an Act to © control and ‘tax lotteries and to tax prize competitions in the State
‘of Maharashtra. Section 32(b) expressly providés that nothing in the Act shall apply to “a lottery organised by the Central Government | or a State Government”, This, as we said, is but’a’ recognition of
’ the. prevailing situation under the Constitution. The Constitutional Postion cannot be. alterd by an dct of the: State legislature.
It appears that the Government of Maharashtra ‘and various - other State Governments requested the. Union Government to “. authorise them to conduct lotteries for the purpose of ‘finding funds
H. ANRAJ y. MAHARASHTRA (Chinnappa Reddy, J). 445 | for financing their development plants’. Such authorisation was, of
" course, strictly, not necessary in the absence of a law made by Partia- _ -, Ment pursuant to Entry 40 of List I of the ViIth Schedule to the-
Constitution.” Article 298 of the Constitution extends the executive power of the Union and each State to the cafrying on of any trade . or business and to the acquisition, holding and disposal-of property |
.and the making of contracts for any purpose, with the stipulation that if the trade, - business or purpose is not one with respect to which Parliament may make laws, the said executive power of. Payliament shall be subject in each State to legislation by the State and if the
. trade, business or purpose is not one with respect to which the State legislature may make laws, the said executive power of the.State shall be subject te. legislation by Parliament. Thus, while the Government of a State is free-to éarry on any trade or business i in respect of which it may not have the power to make laws the power to carry on such’
_ trade or business shall be subject to legislation by Parliament, Thére- fore, the Government of a State has the right to conduct lotterjes subject to legislation by Parliament. Since there is at present no legislation by Parliament on the subject of lotteries organised by the Government of India or the Government ofa State, the Government of every State has the unrestricted right to organise lotteries of its own.
_ We will consider the effect of the impact of Art. 73, Art. 258(1) and _ Entry 40 of List I read with h Att. 246 on this right alittle later.
oe
To continue the expose of facts, in response tothe request of
. the several State Governments, the Ministry of Home Affairs, Govern- - ment of India, addressed a communication dated July 1, 1968 to the Chief Secretaries to the Government of all States. It was stated. in the letter that though the Central Government was opposed to the idea of lotteries being conducted by Governments, they had decided
“to authorise the State Governments to conduct lotteries in view of the representations of some of the State’ Governments that it would help them ‘to mobilise savings and to find funds. for financing their development plans’. However, it was added :
“At the same time, it is also felt that suitable steps should be taken to safeg uard the interests of such State Governments, who, as a matter of policy, do not desire to start State Lotterie$ or permit sale of tickets of lotteries organised ‘in other States, within their jurisdiction. In order to avoid objections from such States, it has been’ decided that the . Central Government’s permission for conducting State Lotteries is available on the condition that. tickets to such a lottery will
" not -be sold in another State without the express consent of the State Government concerned. J-am to add ‘that in | order to achieve this object an amendment of Section 294-A
. IPC is being undertaken to make sale of tickets, without the consent.of the State Government concerned, .a penal affence’’.
We may mention here that the proposal to amend Section 204 -A IPC to achieve the object of preventing the sale of Jottery tickets of |
SUPREME COURT REPOR'TS {1984} 2 s.cRr. - -
- one State ‘being ‘sold in States which are opposed tothe conduct of --
: _ lotteries as‘a.matter of policy has remained a static proposal: and no- such amendment has so far been attempted to be made.
‘The communication dated July’ Y, 1968 from. the Government of India was followed by Presidential Order under Art. 258(1) of the ‘Constitition.. The: Presidential Order relating to the State of Maha-.
' rashtra- with which we are concerned, is- as follows :—
‘No. 29/29/63-P. IV - Government of India: _ Ministry of Home Affairs New Delhi, the 2nd Apul, | 1969.
"ORDER “ ‘Whertas ‘the Government of ‘Maharashtra propose to organise a State lottery;
And whereas the Central Government has no 0 objection.
to it ;
Government of Maharashtra to conduct a State lottery,
. subject to the condition that the tickets of the lottery shall
- not be sold in another State without the permission. of the -
Government of -that State.
*.
’ The President is fiarthes pleased to entrust ‘to. the : _.Government of Maharashtra under clause (1) of Article 258 - of. the Constitution the. executive power of the Union in: | ‘respect of lotteries organised by that Government. .
_ Sd/- (D.D. JOSHI)
Deputy Secretary to the Government of India. -
Now, therefore, the President is , pleased to permit the i. ANRAI y. MAHARASHTRA (Chinnappa Reddy, J.). “4a
It was after this entrustment of executive power of the Union to the Government of Mahar ashtra ‘in respect of lotteries organised
. by that Government’ that the Government of Maharashtra proceeded.
to issue the Press release and thereafter the individual communications, earlier referred. to, making it known that the-sale of lottery tickets of other States was banned i in the State of Maharashtra.
The se source of power fot the ban is claimed to 5 be the entrustment ;
. of power by the President under Art. 258(1) of the Constitution. . But the terms of the entrustment.do not justify the claim: ‘The entrust-: ” ment of power, as is seen, is only ‘in respect-of lotteries organised by —
- that Govergment’. The expression ‘that: Government’ in the context of the entrustment of power to the Government of Maharashtra , can only mean the Government of Maharashtra and no’ other. Nor can it ever: be that such executive power as the Union Government may possess in respect’ of the trading, business or, for that matter,”
‘any other activity of the Government of one Stdte may be entrusted to the Government of another State. That would: be destructive of the very scheme did structure of our Constitution. The Government of Maharashtra cannot therefore purport to ban the sale. of lottery tickets of other States by virtue of the entrustment of power . under Acticle 258(1) of the Constitution.
Iti is then said that the permission granted to , each State to coniduct its lotteries is expressly subject to the condition that the tickets of the —
-. lottery shall ‘not be sold in another State without the permission of - the Government of. that State. We. have aiready pointed out that Article 298 of the Constitution extends. the executive power of every «© State to the ‘carrying on of any ‘trade or businéss even if such trade
"or business is one with respect of which Patliament alone has’. the | exclusive power to make laws, ‘subject to the stipulation that such
_executive power of the State shall be subject to Parliamentary legisla- . . tion. It is true that in view of Entry 40 of List’ lof the VIIth Schedule ry to the Constitution Parliament has exclusive power to make laws with respect to “Lotteries organised by the Government of India or the --
~- Government of a State’’, that ‘Article -73 of the Constitution extends - _ the executive power of of the union to the matters with respect to which Parliament bas power to’ make laws and, therefore, the executive power of the Union must extends to: the subject “Lotteries organised’ . ‘by the Government of India of the Government of a State”. But the: executive power of the unioa,.b j the very opening words of ~ Article 73, is “subject to the provisions of this Constitution”. It follows that the executive power of the Unign with respect to lotteries c
.
- 448 SUPREME COURT REPORTS - _ {1984] 2 s.e.r.
A organised by the Government of a State has necessarily to be exercised — subject to the provisions of the Constitution, including Article 298, which expressly extends - the executive power of the State to the
" carrying on of any trade or business subject only to: legislation one with
‘by Parliament if the trade “or business is ‘not It is to
_ Fespect: to which.the State legislature may. make laws. ~ be noted that Article 298 does not open with the words ‘subject to
’ the. provisions of the Constitution’, as does Article 73. Reading and considering Avticles 73 and 298 together,.as they should indeed -
_ be read and consideted, ‘it is cleat that the executive power of a
State in the matter of carrying on any trade or business with respect . to which the State legislature may not make Jaws is subject to legisla- . tion by Parliament but is not subject to the executive power of the union, That is why we. mentioned earlier that the Government. of .
a State is not Tequired to obtain the permission of the Union
Government in order to organise its lotteries, in the absence of Parlia~ mentary legislation, Even assuming that such permission is necessary, we do not see how a condition imposed by such permission that lottery tickets of one State may not be sold in another State may be enforced by the other State. The other State has no power'to make laws in,
—.Tegard to the lotteries by the first State. Its executive: power, by virtue of Article 298,. extends to. lotteries organised by itself but not to lotteries: organised by the other State. If a State acts in breach of »
"the condition imposed by the President while entrusting power under Article 258, it is Open to the President to revoke the permission of to take such further or other action as may be constitutionally per-
* missible but it cannot possibly enable the Government of the other State to do a thing about it except to complain, perhaps, to the Union ‘Government. The Government of India is quite obviously alive to the position that there is no way of enforcing the.stipulation that lottery tickets of one State-shall not be sold in another except. by.
- Parliament mahing a Jaw in that behalf. The awareness is revealed
- - by the last sentence in the letter dated July 1, 1968 which says, -
“Tam to add that in order to achieve this object an
‘G: amendment of Section 294-A IPC is being undertaken to mane sale of tickets, without the consent of the State ani o frence”’.. . Government concerned, a penal )
The n anosed am Ss : o Y | | ‘c | v fa our 1 , i whi ears to ha’ (} found : ; A submission whi h app' 4 un ny
H. ANRAJ Y. MAHARASHTRA (Chinnappa,, Reddy, J.) . 449
High Court of Bombay in Kamal Agency v. State and the High, Court of Madras in H.G. Jain-y. State of Tamil Nadu’ wag that in Entry 40 of List I and the respective local Acts, a lottery organised by a State must be cofstrued to refer to a lottery Jawfully organised by'a State and that if a lottery is not lawfully organised by a State it would: not fall within Entry 40 of List I but would fall-under the head ‘gambling’ under Entry 34 of List II and: the State -legislature would then be-empowered to legislate in respect of the same. Where the
State Legislature could thus legislate, it was said, the State Government could take executive action in respect of lotteries organised _ by another State if they were unlawful. The Gujarat and Andhra. ° Pradesh High Courts have dissented from this view. Jn Special .
Civil Application No. 1309 of 1970 Bhagwati; C.J. presiding over a Division Bench of the Gujarat High Court and in L.B. Paradise Lottery Centre y. State’? one of us sitting singly in the Andhia Pradesh
High Court have explained that there is no justification for first reading". the word ‘awfully’ into: Entry 40 of List I-and then proceeding to interpret the expression ‘Lottery lawfully organised’ as meaning a lottery organised persuant to the entrustment of executive power of the Union under Article 258 of the Constitution. It was observed
* “legislative power cannot be fed into Entry 34, by feeding the word
‘lawful’ into Entry 40 of List I and thus artificially restricting the scope of Entry 40°. It was pointed out that if the Government of a State organised a lottery without the entrustmient of executive power as contemplated by Article 258 or in disregard or defiance of any condition that may have been- imposed while entrusting executive power under Artici¢ 258 it would never bea matter for the legislature of one State to take upon itseif ‘the power to declare unlawful the ..
lottery run by the Government of another State; and even’ less so
‘could the Government of a State declare unlawful a lottery run. by the
Government of another State and thereafter ban the sale of the tickets
’ of the lotteries organised by that State. In the Madras case it was _ also observed that the entrustment order carried with it. all powers © which the State Government might take to realise the maximum collection. We cannot subscribe to this view,. That would. really amount to the entrustment of vital legislative powers to the State Government which would be constitutionally impermissible. We do not think it-necessary to-refer in any further detail to the decisions.
of the Gujarat, Andhra Pradesh, Bombay -and Madras decisions -
(1) AIR ‘1971, 332.°
(2) AIR 1973 Madras 402, .(3) AIR 1975 A. .P 50.
* .
"E
-F-
4500 " SUPREME court REPORTS 7 , [i984] 28.0.R oo except to say. that we generally aproe with the easoning in the Gujarat .
and Andhra Pradesh decisions and disagree with the reasoning in the
. . Bombay and Madras decisions. dn the result we allow thé Write .
_ petitions and direct the. State of Maharashtra to forbear from giving effect to the ban. onthe sale or distribution ‘of tickets of lotteries orga- . hised by other States: There is no order régarding to costs.: -
ONV.K, - | Ce, me . co, - Appeal allowed, ve